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1. Company Snapshot

1.a. Company Description

NetApp, Inc.provides cloud-led and data-centric services to manage and share data on-premises, and private and public clouds worldwide.It operates in two segments, Hybrid Cloud and Public Could.


The company offers intelligent data management software, such as NetApp ONTAP, NetApp Snapshot, NetApp SnapCenter Backup Management, NetApp SnapMirror Data Replication, NetApp SnapLock Data Compliance, NetApp ElementOS software, and NetApp SANtricity software; and storage infrastructure solutions, including NetApp All-Flash FAS series, NetApp Fabric Attached Storage, NetApp FlexPod, NetApp E/EF series, NetApp StorageGRID, and NetApp SolidFire.It also provides cloud storage and data services comprising NetApp Cloud Volumes ONTAP, Azure NetApp Files, Amazon FSx for NetApp ONTAP, NetApp Cloud Volumes Service for Google Cloud, NetApp Cloud Sync, NetApp Cloud Tiering, NetApp Cloud Backup, NetApp Cloud Data Sense, and NetApp Cloud Volumes Edge Cache; and cloud operations services, such as NetApp Cloud Insights, Spot Ocean Kubernetes Suite, Spot Security, Spot Eco, and Spot CloudCheckr.In addition, the company offers application-aware data management service under the NetApp Astra name; and professional and support services, such as strategic consulting, professional, managed, and support services.


Further, it provides assessment, design, implementation, and migration services.The company serves the energy, financial service, government, technology, internet, life science, healthcare service, manufacturing, media, entertainment, animation, video postproduction, and telecommunication markets through a direct sales force and an ecosystem of partners.NetApp, Inc.


was incorporated in 1992 and is headquartered in San Jose, California.

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1.b. Last Insights on NTAP

NetApp's recent performance was impacted by a decrease in investor holdings, with Asset Management One Co. Ltd. and Corient Private Wealth LLC reducing their positions by 6.4% and 20.0%, respectively. Additionally, Federated Hermes Inc. lessened its position by 21.1%. However, some investors increased their stakes, including Machina Capital S.A.S., which boosted its holdings by 138.0%. The company's Q2 earnings beat estimates, with quarterly earnings of $2.05 per share. NetApp's valuation upside reflects growth in 2026E, with a 'Buy' rating at $105/share.

1.c. Company Highlights

2. NetApp's Q3 Earnings: A Strong Performance Driven by AI and Cloud Growth

NetApp reported a revenue of $1.71 billion for Q3, representing a 4% year-over-year increase, with a non-GAAP earnings per share of $2.12, up 11% from the same period last year. Excluding the divested Spot business, total revenue was up 6%. The company achieved record highs in operating income and EPS, driven by its strong performance in AI and cloud-related businesses. The adjusted gross margin was 71.2%, up 50 basis points year-over-year, indicating a healthy profitability. As noted by CEO George Kurian, the company's data platform optimized for AI has helped enterprises solve data challenges, securing significant wins with its AFX disaggregated storage system.

Publication Date: Mar -01

📋 Highlights
  • Revenue & Non-GAAP EPS Growth:: NetApp reported Q3 revenue of $1.71 billion (+4% YoY) and non-GAAP EPS of $2.12 (+11% YoY), with 6% growth excluding the divested Spot business.
  • Keystone Growth:: Storage-as-a-Service (Keystone) revenue surged 65% YoY, while Public Cloud Services revenue rose 17%.
  • Q4 Guidance:: Anticipated revenue of $1.87 billion (±$75 million) and EPS of $2.21–$2.31, reflecting 8% YoY growth.
  • AI Business Momentum:: 300 customer wins in AI, with 40% of AI business in production/training, driven by AFX storage and AI Data Engine solutions.
  • Margin Stability:: Adjusted gross margin reached 71.2% (+50 bps YoY), with operating income and EPS hitting record highs.

Segment Performance

The company's Keystone storage-as-a-service offering grew approximately 65% year-over-year, while Public Cloud Services revenue grew 17%, driven by first-party and marketplace services. The strong growth in these segments was a key driver of NetApp's overall performance. Operating expenses were $686 million, down 3% sequentially, indicating disciplined cost management.

Guidance and Outlook

For Q4, NetApp expects revenue of $1.87 billion, plus or minus $75 million, representing an 8% year-over-year growth. EPS is expected to be between $2.21 and $2.31. For the full year 2026, the company expects revenue to be between $6.772 billion and $6.922 billion, with a growth of 4% year-over-year. EPS is expected to be in the range of $7.92 to $8.02. Analysts estimate next year's revenue growth at 5.1%, indicating a positive outlook for the company's future performance.

Valuation Metrics

NetApp's current valuation metrics indicate a premium valuation. The stock has a P/E Ratio of 16.18, P/B Ratio of 16.93, and P/S Ratio of 2.95. The EV/EBITDA ratio is 12.02, and the Dividend Yield is 2.1%. The actual EPS of $2.12 beat estimates of $2.07, indicating a positive surprise. These metrics suggest that the market has high expectations for NetApp's future growth, driven by its strong position in the AI and cloud storage markets.

AI and Cloud Strategy

NetApp's focus on AI and cloud storage is driving its growth, with 300 customer wins in AI business, and 40% of its AI business in production, training, or production inferencing use cases. The company's AFX disaggregated storage system is purpose-built for AI, and its Keystone and Public Cloud Services offerings are also gaining traction. The company's investment in innovation, particularly in AI, is expected to drive long-term value for customers and shareholders.

3. NewsRoom

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Danske Bank A S Takes $42.81 Million Position in NetApp, Inc. $NTAP

Mar -19

Source: defenseworld.net

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NetApp Unveils New High-Performance EF-Series Models

Mar -17

Source: businesswire.com

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Bank of Nova Scotia Increases Stock Holdings in NetApp, Inc. $NTAP

Mar -17

Source: defenseworld.net

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Banco Bilbao Vizcaya Argentaria S.A. Has $6.08 Million Position in NetApp, Inc. $NTAP

Mar -17

Source: defenseworld.net

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NetApp Accelerates Momentum in AI Leadership with NVIDIA

Mar -16

Source: businesswire.com

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Ameriprise Financial Inc. Decreases Stock Position in NetApp, Inc. $NTAP

Mar -16

Source: defenseworld.net

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NetApp, Inc. $NTAP Shares Acquired by Glenmede Investment Management LP

Mar -14

Source: defenseworld.net

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Barclays PLC Reduces Stake in NetApp, Inc. $NTAP

Mar -09

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.10%)

6. Segments

Hybrid Cloud

Expected Growth: 6.0%

NetApp's hybrid cloud growth of 6.0% is driven by increasing demand for flexible and scalable data management solutions. Key drivers include the adoption of cloud-based services, growing need for data portability, and rising investments in digital transformation initiatives. NetApp's strategic acquisitions and partnerships have also enhanced its hybrid cloud offerings, contributing to the segment's growth.

Public Cloud

Expected Growth: 7.0%

Public Cloud growth at NetApp is driven by increasing demand for cloud storage, scalability, and flexibility. Key drivers include rising adoption of cloud-first strategies, expanding data sets, and NetApp's strategic partnerships with major cloud providers, enabling seamless integration and management of data across environments, fueling 7.0% growth.

7. Detailed Products

NetApp Storage Systems

NetApp storage systems provide a range of storage solutions, including FAS (Fabric-Attached Storage), AFF (All-Flash FAS), and ONTAP Select. These systems offer high-performance, scalable, and reliable storage for various workloads, including file and block storage, databases, and virtualized environments.

ONTAP Operating System

ONTAP is NetApp's operating system for their storage systems, providing a robust and feature-rich platform for data management. ONTAP offers advanced data management capabilities, including data deduplication, compression, and encryption.

NetApp Cloud Services

NetApp Cloud Services provide a range of cloud-based data management solutions, including NetApp Cloud Volumes, Cloud Volumes ONTAP, and Cloud Backup. These services enable organizations to manage their data in the cloud, with features such as data replication, backup, and archiving.

NetApp Data Management Software

NetApp data management software provides a range of tools for managing and protecting data, including NetApp Snapshots, SnapRestore, and SnapVault. These tools enable organizations to manage their data, including backup, restore, and disaster recovery.

NetApp InsightIQ

NetApp InsightIQ provides real-time monitoring and analytics for NetApp storage systems, enabling organizations to optimize their storage infrastructure and improve performance.

8. NetApp, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

NetApp, Inc. operates in the data storage and management industry, where substitutes such as cloud storage, object storage, and other data management solutions exist. However, the company's strong brand recognition, product offerings, and customer relationships mitigate the threat of substitutes.

Bargaining Power Of Customers

NetApp's customers are large enterprises, cloud service providers, and governments, which have significant negotiating power due to their substantial storage needs and purchasing volumes. These customers can demand lower prices, customized solutions, and high service levels.

Bargaining Power Of Suppliers

NetApp has a diverse supplier base and uses commodity components, which reduces its dependence on individual suppliers. The company also has a strong supply chain management system, which enables it to negotiate favorable terms with suppliers.

Threat Of New Entrants

The data storage and management industry has high barriers to entry, including significant R&D investments, complex product development, and established relationships with customers and partners. New entrants face challenges in competing with NetApp's brand recognition, product portfolio, and market presence.

Intensity Of Rivalry

The data storage and management industry is highly competitive, with established players like EMC, IBM, HP, and Dell, as well as newer entrants like Pure Storage and Nutanix. The competition is intense, with companies competing on price, product features, and service levels, which can impact NetApp's market share and profitability.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 69.83%
Debt Cost 4.33%
Equity Weight 30.17%
Equity Cost 10.97%
WACC 6.33%
Leverage 231.41%

11. Quality Control: NetApp, Inc. passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
HP

A-Score: 5.6/10

Value: 9.0

Growth: 4.1

Quality: 4.8

Yield: 8.0

Momentum: 1.5

Volatility: 6.3

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NetApp

A-Score: 5.5/10

Value: 3.4

Growth: 5.7

Quality: 7.4

Yield: 5.0

Momentum: 4.5

Volatility: 7.0

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Arista Networks

A-Score: 5.0/10

Value: 0.6

Growth: 9.4

Quality: 8.3

Yield: 0.0

Momentum: 8.0

Volatility: 3.7

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Dell Technologies

A-Score: 4.6/10

Value: 6.6

Growth: 4.0

Quality: 4.6

Yield: 4.0

Momentum: 5.0

Volatility: 3.7

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Western Digital

A-Score: 4.3/10

Value: 1.8

Growth: 3.4

Quality: 7.3

Yield: 0.0

Momentum: 10.0

Volatility: 3.3

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Super Micro Computer

A-Score: 3.9/10

Value: 3.6

Growth: 9.8

Quality: 5.0

Yield: 0.0

Momentum: 3.5

Volatility: 1.7

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

101.71$

Current Price

101.71$

Potential

-0.00%

Expected Cash-Flows