NetApp's Q2 Earnings & Revenues Surpass Estimates, Stock Up

Core Insights - NetApp, Inc. (NTAP) reported strong second-quarter fiscal 2026 results, with non-GAAP earnings of $2.05 per share, exceeding estimates by 8.5% and increasing 9.6% year over year [1][9] - Revenues reached $1.71 billion, a 3% year-over-year increase, driven by demand for AI offerings and cloud storage services [2][9] Financial Performance - Non-GAAP gross margin was 72.6%, up 60 basis points from the prior year, while non-GAAP operating margin improved to 31.1% from 28.6% [12] - Total billings rose 4% year over year to $1.65 billion, with deferred revenues totaling $4.5 billion, an increase of 8.4% [11][13] Segment Performance - Revenues from the Hybrid Cloud segment increased 3% year over year to $1.5 billion, while the Public Cloud segment saw a 2% rise to $171 million [6] - Within the Hybrid Cloud segment, product revenues accounted for 51.4% and increased 2.6% year over year to $788 million [6] Outlook and Guidance - Management updated its fiscal 2026 outlook, expecting revenues between $6.625 billion and $6.875 billion, with non-GAAP EPS projected between $7.75 and $8.05 [3] - For the third quarter, revenues are anticipated to be in the range of $1.615 billion to $1.765 billion, with non-GAAP EPS expected between $2.01 and $2.11 [15] Shareholder Returns - The company returned $353 million to shareholders through dividends and share repurchases in the fiscal second quarter [14] - A dividend of 52 cents per share has been announced, payable on January 21, 2026 [14] Market Reaction - Following the earnings announcement, NTAP's shares rose 6% in pre-market trading, with a 6-month increase of 8.6% compared to the Computer Storage Devices industry's growth of 76.7% [4]