Core Insights - NetApp exceeded Wall Street expectations for second-quarter profit and revenue, driven by robust demand for its data storage services and all-flash storage products utilized in artificial intelligence applications [1] Financial Performance - The company reported a significant increase in revenue, attributed to strong sales in its data storage segment [1] - Profit margins improved due to the high demand for all-flash storage solutions, which are increasingly being adopted in AI technologies [1] Market Demand - There is a notable surge in demand for data storage services, particularly in sectors leveraging artificial intelligence [1] - The trend towards all-flash storage products is becoming more pronounced as companies seek faster and more efficient data management solutions [1]

Financial Performance - Total net revenues for the three months ended October 24, 2025, were $1,705 million, a 2.8% increase from $1,658 million for the same period in 2024[20] - Net income for the three months ended October 24, 2025, was $305 million, up from $299 million in the same period of 2024, representing a 2.0% increase[22] - NetApp reported net income of $538 million for the six months ended October 24, 2025, compared to $547 million for the same period in the previous year, reflecting a decrease of approximately 1.6%[28] - Total net revenues for the three months ended October 24, 2025, were $1,705 million, compared to $1,658 million for the same period in 2024, reflecting a year-over-year increase of 2.8%[92] - Revenues from the Americas for the three months ended October 24, 2025, were $863 million, slightly up from $862 million in the same period of 2024[95] Profitability - Gross profit for the six months ended October 24, 2025, was $2,325 million, compared to $2,275 million for the same period in 2024, reflecting a 2.2% increase[20] - The gross profit margin for Hybrid Cloud was 71.4% for the three months ended October 24, 2025, slightly down from 71.8% in the same period of 2024[92] - Total gross profit for the six months ended October 24, 2025, was $2,325 million, compared to $2,275 million for the same period in 2024, marking an increase of 2.2%[94] Cash Flow and Liquidity - Cash flows from operating activities for the six months ended October 24, 2025, were $800 million, compared to $446 million for the same period in 2024, indicating a significant increase[25] - Total cash and cash equivalents decreased to $2,072 million as of October 24, 2025, down from $2,742 million as of April 25, 2025, representing a decline of about 24.4%[39] - Cash, cash equivalents, and short-term investments decreased by $832 million to $3.0 billion as of October 24, 2025, primarily due to debt repayment and stock repurchases[155] Assets and Liabilities - Total current assets decreased to $4,654 million as of October 24, 2025, down from $5,851 million as of April 25, 2025, a decline of 20.4%[15] - Total liabilities decreased to $8,644 million as of October 24, 2025, from $9,783 million as of April 25, 2025, a reduction of 11.6%[17] - Total stockholders' equity as of October 24, 2025, was $986 million, a decrease from $1,040 million as of April 25, 2025[17] - The company’s total liabilities decreased to $1,277 million as of October 24, 2025, down from $1,401 million as of April 25, 2025, indicating a decline of approximately 8.8%[43] Stock and Dividends - The company repurchased $550 million of common stock during the six months ended October 24, 2025[25] - The company declared cash dividends of $0.52 per common share during the reporting period[27] - Cash dividends declared were $207 million for the six months ended October 24, 2025, compared to $213 million for the same period in the previous year, a decrease of approximately 2.8%[28] - Dividends declared per share remained at $1.04 for the six months ended October 24, 2025, with total dividend payments allocated to retained earnings amounting to $65 million[75] Expenses - Research and development expenses for the three months ended October 24, 2025, were $251 million, slightly down from $257 million in the same period of 2024[20] - Total operating expenses for Q2 and the first six months of fiscal 2026 were $805 million (47% of net revenues) and $1,592 million (49% of net revenues), reflecting a decrease of two percentage points year-over-year[140] - Sales and marketing expenses decreased by 4% in Q2 and 3% in the first six months of fiscal 2026 compared to the prior year, totaling $465 million and $926 million respectively[142] - General and administrative expenses increased by 16% in Q2 and 14% in the first six months of fiscal 2026, totaling $77 million and $173 million respectively[146] Restructuring and Charges - The company incurred restructuring charges of $25 million during the first six months of fiscal 2026, with a balance of $32 million remaining at the end of the period[80] - Restructuring charges recorded in the second quarter of fiscal 2026 totaled $23 million, contributing to a total of $25 million for the first six months[118] Future Projections - Future amortization expense related to purchased intangible assets is projected to be $31 million, with $9 million for the remainder of fiscal 2026 and $21 million for fiscal 2027[38] - Capital expenditures for the remainder of fiscal 2026 are anticipated to be between $90 million and $140 million[170] Other Financial Metrics - The effective tax rate for the six months ended October 24, 2025, was 22.8%, an increase from 17.0% in the prior year[81] - Interest income for the three months ended October 24, 2025, was $27 million, while interest expense was $(26) million, resulting in total other income of $(6) million[49] - The company has a total of $2.5 billion in Senior Notes, with maturities ranging from June 2027 to March 2035[166] Market and Sales - Hybrid Cloud product revenues for the three months ended October 24, 2025, were $788 million, an increase from $768 million in the same period of 2024, representing a growth of 2.6%[92] - Public Cloud revenues for the three months ended October 24, 2025, were $171 million, up from $168 million in the same period of 2024, indicating a growth of 1.8%[92] - Product revenues for the second quarter of fiscal 2026 were $768 million, a 3% decrease from $788 million in the same period of fiscal 2025[123] - Services revenues for the second quarter of fiscal 2026 were $917 million, reflecting a 3% increase from $890 million in the same period of fiscal 2025[126]

Exhibit 99.1 NetApp Reports Second Quarter of Fiscal Year 2026 Results Net revenues of $1.71 billion for the second quarter, an increase of 3% year-over-year; Second quarter GAAP net income per share 1 of $1.51 and record non-GAAP net income per share 1 of $2.05 News Summary (In millions, except earnings per share and percentages) GAAP Results | | | Q2'FY26 | | Q2'FY25 | % | Change | | --- | --- | --- | --- | --- | --- | --- | | Net revenues | $ | 1,705 | $ | 1,658 | | 3% | | Hybrid Cloud segment revenue | ...

Market Overview - U.S. stock futures showed slight declines, with Nasdaq 100 down approximately 0.19%, S&P 500 down around 0.10%, and Dow Jones down about 0.13% following a strong performance in the previous session [2] - The S&P 500 climbed 1.55% to close at 6,705.12, the Nasdaq Composite surged 2.69% to settle at 22,872.01, and the Dow Jones gained around 202.86 points, or 0.44%, to end at 46,448.27 [3] Economic Indicators - Key economic reports are anticipated, including October's U.S. retail sales and Producer Price Index (PPI) readings, which are crucial for assessing inflation and consumer spending [4] - Upcoming reports include October Durable Orders, November Chicago PMI, October New Home Sales, and October Personal Income and Outlays [4] Company Performance - Alphabet (GOOGL) shares rallied over 6% following the announcement of its upgraded AI model, Gemini 3 [5] - Other AI-related companies saw strong performance: Broadcom surged 11.1%, Micron Technology gained about 8%, Palantir Technologies rose 4.8%, and Advanced Micro Devices advanced 5.5% [5] - Alibaba Group shares surged 5.1% after announcing its AI app, Qwen, had 10 million downloads in its first week [6] - Novo Nordisk shares tumbled 5.6% after a clinical trial for its Alzheimer's treatment failed [6] - Corporación América Airports shares gained 1.6% after reporting third-quarter revenues that beat estimates [6] Market Sentiment - There is a growing expectation of a Federal Reserve interest rate cut in December, with traders betting on an 85% probability of a rate cut next month [8] - Recent dovish remarks from Fed officials have contributed to this shift in expectations, positively impacting stock performance despite concerns about AI sector valuations [8]

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Core Insights - NetApp, Inc. (NTAP) is set to announce its second-quarter fiscal 2026 earnings on November 25, with expected non-GAAP earnings per share between $1.84 and $1.94, and a Zacks Consensus Estimate of $1.89, indicating a 1.1% growth year-over-year [1][2] Financial Performance - Anticipated net sales for the quarter are projected to be between $1.615 billion and $1.765 billion, with a Zacks Consensus Estimate of $1.69 billion, reflecting a 1.7% increase from the previous year [2] - NTAP has exceeded earnings estimates in three of the last four quarters, with an average surprise of 1.68% [2] Demand and Growth Drivers - There is a rising demand for NetApp's modern all-flash arrays, particularly the C-series capacity flash and ASA block-optimized flash, which are expected to drive sustained performance [3] - The annualized revenue run rate for NetApp's all-flash array increased by 6% year-over-year to $3.6 billion in the fiscal first quarter, supported by strong customer engagement [4] - The Hybrid Cloud segment is estimated to generate revenues of $1.51 billion in the fiscal second quarter, marking a 1.1% increase from the prior year [4] AI and Cloud Solutions - Increased demand for cloud storage and AI solutions is promising, with over 125 AI and data lake modernization deals secured in the fiscal first quarter [5] - The Public Cloud segment's revenues rose by 1% to $161 million in the last reported quarter, with a projected growth of 6.4% year-over-year to $178.7 million in the fiscal second quarter [6] Market Conditions - The global macroeconomic environment remains uncertain, with inflation pressures and elevated volatility potentially impacting fiscal second-quarter results [7] Earnings Prediction Model - Current models do not predict an earnings beat for NTAP, with an Earnings ESP of -0.12% and a Zacks Rank of 4 [8]

Core Viewpoint - Oppenheimer has initiated coverage on several technology companies, highlighting their potential in the evolving landscape of data storage, cloud computing, and cybersecurity, with varying ratings based on their growth prospects and market positions [1] Group 1: Pure Storage (PSTG) - Oppenheimer initiated coverage with an Outperform rating and a price target of $120, citing Pure Storage as a beneficiary of the increasing creation and storage of unstructured data for AI applications [1] - The company is expected to gain market share in the all-flash array market due to its technological advantages and is expanding its customer base to include tier-1 and tier-2 hyperscalers [1] Group 2: Akamai (AKAM) - Oppenheimer initiated coverage with an Outperform rating and a price target of $100, believing Akamai will benefit from trends in AI inferencing within cloud computing and API security in cybersecurity [1] - The transformation of Akamai is seen as a key factor in enhancing its growth profile [1] Group 3: Fastly (FSLY) - Oppenheimer initiated coverage with a Perform rating, acknowledging recent operational improvements but remaining cautious until a strong continuation in performance is observed [1] Group 4: NetApp (NTAP) - Oppenheimer initiated coverage with a Perform rating, recognizing NetApp as a leading provider of data storage solutions [1] - The company is currently facing near-term growth challenges, particularly in the US Public Sector and EMEA regions [1] Group 5: Rubrik (RBRK) - Oppenheimer initiated coverage with a Perform rating, agreeing with consensus on Rubrik's product differentiation and market opportunity [1] - The neutral view is attributed to increasing competition in cyber-resilience and the belief that the stock is fairly valued at its current growth trajectory [1]

Core Viewpoint - NetApp is experiencing a decline in stock performance, with a notable loss over the past month, while upcoming earnings are anticipated to show slight growth in EPS and revenue [1][2]. Financial Performance - NetApp plans to announce its earnings on November 25, 2025, with an expected EPS of $1.89, reflecting a 1.07% increase from the prior-year quarter [2]. - The revenue forecast for the upcoming quarter is $1.69 billion, indicating a 1.68% growth compared to the same quarter last year [2]. - For the entire fiscal year, earnings are projected at $7.77 per share and revenue at $6.76 billion, representing increases of 7.17% and 2.85% respectively from the previous year [3]. Analyst Estimates - Recent modifications to analyst estimates for NetApp are crucial as they reflect short-term business trends, with positive revisions indicating a favorable outlook on business health and profitability [4]. - The Zacks Consensus EPS estimate has remained unchanged over the past month, and NetApp currently holds a Zacks Rank of 3 (Hold) [6]. Valuation Metrics - NetApp is trading at a Forward P/E ratio of 14.09, which is below the industry average of 18.9, suggesting it is undervalued compared to its peers [7]. - The company has a PEG ratio of 1.92, aligning with the industry average, which indicates a balance between its earnings growth expectations and current valuation [8]. Industry Context - The Computer-Storage Devices industry, part of the broader Computer and Technology sector, ranks in the top 16% of all industries according to the Zacks Industry Rank [9].

Core Viewpoint - NetApp's stock has underperformed recently, with a return of -8.2% over the past month, while the Zacks S&P 500 composite increased by +4.6% and the Computer-Storage Devices industry gained +23.1% [1] Earnings Estimate Revisions - The consensus earnings estimate for the current quarter is $1.89 per share, reflecting a year-over-year change of +1.1% [4] - The consensus earnings estimate for the current fiscal year is $7.77, indicating a year-over-year change of +7.2% [4] - For the next fiscal year, the consensus earnings estimate is $8.68, showing a change of +11.7% from the previous year [5] - NetApp holds a Zacks Rank 3 (Hold), indicating a neutral outlook based on earnings estimate revisions [6] Revenue Growth Forecast - The consensus sales estimate for the current quarter is $1.69 billion, representing a year-over-year change of +1.7% [10] - The sales estimates for the current and next fiscal years are $6.76 billion and $7.06 billion, indicating changes of +2.8% and +4.4%, respectively [10] Last Reported Results and Surprise History - In the last reported quarter, NetApp generated revenues of $1.56 billion, a year-over-year change of +1.2% [11] - The EPS for the same period was $1.55, compared to $1.56 a year ago, with a revenue surprise of +1.19% and an EPS surprise of +0.65% [11] - Over the last four quarters, NetApp surpassed consensus EPS estimates three times and topped revenue estimates three times [12] Valuation - NetApp is graded B on the Zacks Value Style Score, indicating it is trading at a discount to its peers [16]

Core Viewpoint - The global multi-vendor IT support services market is projected to reach $18.29 billion by 2030, with a compound annual growth rate (CAGR) of 2.8% in the coming years [2]. Market Overview - Multi-vendor IT support services allow companies to provide support for various products from different manufacturers, including their own [1]. - The market is primarily dominated by hardware support services, which account for approximately 63.0% of the market share [11]. - The main application driving demand is sales and marketing, representing about 25.1% of the market [13]. Key Players - Major players in the global multi-vendor IT support services market include IBM, Fujitsu, Hitachi, NetApp, NEC, Lenovo, Dell, Oracle, and Broadcom [8]. - In 2024, the top five vendors are expected to hold around 49.0% of the market share [8]. Market Drivers - Medical technology support enhances IT support efficiency while complying with regulations [19]. - The complexity of managing IT assets drives the need for one-click IT support, as companies migrate applications and data to cloud environments [20]. - Cost and time savings are significant, with IT support management costs potentially reduced by up to 25% and hardware support time savings reaching 20% [21]. Market Challenges - The integration of advanced analytics and AI is necessary to manage IT issues before they escalate [21]. - The development of the Industrial Internet presents opportunities for multi-vendor IT support services software [22]. - The advent of 5G technology is expected to enhance connectivity and support the growth of IoT technologies [23].