NetApp CEO: ‘Innovation At The Fastest Pace In Our History’ With AI, Cloud, All-Flash Storage
‘We are well positioned to bridge the divide between AI systems and enterprise data. We help customers bring AI to their data, regardless of location or method, through an approach that is intelligent, dynamic, and secure. By eliminating data silos, we give customers a unified and structured view of their data assets. This empowers them to effortlessly explore, understand, unify, and prepare their data for AI applications,’ says NetApp CEO George Kurian.
Growth in its AI, cloud, all-flash storage, and storage-as-a-service sales gave NetApp and its investors a lot to cheer about.
NetApp CEO George Kurian Thursday told financial industry analysts on the company’s second fiscal quarter 2025 quarterly financial conference call that the storage and cloud technology developer’s solid growth across the board showed how closely NetApp is meeting customer needs.
“We achieved record Q2 operating margin and EPS, ahead of our expectations,” Kurian said. “Our uniquely differentiated solutions in flash, block, cloud storage, and AI address markets which are bolstered by both secular and company-specific tailwinds.”
Investors liked what they heard. NetApp stock rose in after-hours trading 5.3 percent to $133.34 per share Thursday.
Highlights for the quarter included a 19-percent year-over-year increase in all-flash storage, a 55-percent increase in Keystone storage-as-a-service revenue, and a 43-percent growth in first-party and marketplace cloud storage services revenue, Kurian said.
“We experienced solid growth across all these strategic focus areas, affirming the strength of our value proposition for both existing and new-to-NetApp customers,” he said. “This positive momentum not only underscores our strong execution, but also demonstrates our customers' confidence and commitment to our intelligent data infrastructure platform. We are delivering innovation at the fastest pace in our history, setting the stage for our continued success and growth.
Organizations are proactively investing in data-driven strategies to drive competitive advantage, Kurian said.
“These businesses recognize the value of adopting a cohesive data strategy, leveraging data as a valuable enterprise-wide asset to fuel agile problem-solving,” he said. “To accomplish this, they require a cutting-edge data architecture founded on NetApp's intelligent data infrastructure platform. With NetApp's expertise and state-of-the-art solutions, customers are confidently paving their way to becoming data-driven leaders.”
NetApp for the quarter saw its annualized all-flash array revenue run rate reach an all-time high of $3.8 billion, up 19 percent year-over-year, which Kurian said was the fourth consecutive quarter of high-teens to low-twenties percent annual growth.
“We continue to gain share in the all-flash market, far outpacing the growth rates of both the industry and all of our competition,” he said.
NetApp in the quarter expanded its all-flash storage portfolio with new high-end ASA block-optimized all-flash and FAS hybrid-flash array arrays, Kurian said.
“We have already seen new ASA deals close across multiple regions and industries, reaching new customers and expanding our wallet share with new workloads,” he said. “The pipeline is growing as our message of simple, powerful, and affordable resonates with partners and customers.”
NetApp also expanded its Keystone storage-as-a-service offering with Cloud Insights to give businesses an integrated view across their infrastructure from virtual machines to network to storage, on-premises and in the cloud, Kurian said.
On the AI front, NetApp is using the technology to bridge the gap between on-premises and public clouds and empower customers to utilize their data with any application anywhere, Kurian said.
“We are well positioned to bridge the divide between AI systems and enterprise data,” he said. “We help customers bring AI to their data, regardless of location or method, through an approach that is intelligent, dynamic, and secure. By eliminating data silos, we give customers a unified and structured view of their data assets. This empowers them to effortlessly explore, understand, unify, and prepare their data for AI applications.”
NetApp’s AI offerings provide customers with policy-based classification, governance, and security measures that accompany data throughout the AI lifecycle, including automated AI data change detection and updates to keep data up-to-date and precise in every context, Kurian said.
“While we believe the large opportunity of enterprise AI is still ahead of us, we are already seeing accelerating momentum today,” he said. “Our AI business performed ahead of our expectations in Q2 with well over 100 AI and data lake modernization wins. These wins span geographies and industries, with notable early momentum in public sector, manufacturing, financial services, healthcare, and life sciences industries. We continue to advance our strong position with the development of GenAI cloud and on-premises solutions in partnership with industry leaders.”
To expand its AI capabilities, NetApp deepened its partnerships with companies such as Domino Data Lab, Nvidia, Lenovo, Google Cloud, and more, Kurian said.
NetApp also continued its rapid innovation on the public cloud side, including an update to its Cloud Volumes Ontap to include advanced autonomous ransomware protection and write-once, read-many capabilities to help strengthen customers’ ability to defend against ransomware attacks, and enhanced Google Cloud NetApp Volumes with petabyte-scale volumes and auto-tiering to further expand the number of workloads the company serves, he said.
“We remain focused on disciplined execution to meet the evolving needs of our growing customer base,” he said. “We have broadened our all-flash storage portfolio substantially with updated high-performance flash, capacity flash, and block optimized products. We have significantly increased our range of capabilities in public cloud storage with vastly more cloud data centers, more price and capacity points, new features, and expanded workload support. We have integrated more intelligent services to make our storage the most secure with simplicity built in with scale.”
NetApp By The Numbers
For its second fiscal quarter 2025, which ended October 25, NetApp reported total revenue of $1.66 billion, up 6.4 percent over the $1.56 billion the company reported for its second fiscal quarter 2024.
That includes product revenue of $768 million, up from last year’s $706 million, and service revenue of $890 million, up from $856 million.
NetApp also reported revenue by segment, with hybrid cloud segment revenue of $1.49 billion, up from $1.41 billion, and public cloud segment revenue of $168 million, up from $154 million.
The Americas commercial business accounted for 38 percent of NetApp’s second fiscal quarter 2025 revenue, up from 37 percent, while the U.S. public sector accounted for 14 percent, up from 11 percent.
Indirect sales accounted for 77 percent of the company’s revenue, a ratio that was flat year-over-year.
Total revenue beat analyst expectations by $20 million, according to Seeking Alpha.
For the quarter, NetApp reported GAAP net income of $299 million or $1.42 per share, up from $233 million or $1.10 per share. On a non-GAAP basis, the company reported net income of $392 million or $1.87 per share, up from last year’s $334 million or $1.58 per share.
Non-GAAP earnings beat analyst recommendations by 9 cents per share, according to Seeking Alpha.
Looking ahead, NetApp raised its full fiscal year 2025 outlook, with revenue in the year slated to be $6.54 billion to $6.74 billion. This compares to the $6.27 billion the company reported for its fiscal year 2024 revenue. The company also expects GAAP earnings of $5.48 per share to $5.68 per share, and non-GAAP earnings of $7.20 per share to $7.40 per share. This compares to last year’s GAAP earnings of $4.63 per share and non-GAAP earnings of $6.46 per share.