NetApp (NasdaqGS:NTAP) 2025 Conference October 14, 2025 12:00 PM ET Company ParticipantsJason Benedicic - Hybrid Cloud SpecialistGlenn Dekhayser - Global Principal TechnologistGlenn Sizemore - Data Services Product ManagerMartin Smith - Official Resident DJ and Experience StrategistGeorge Kurian - CEOKeith Aasen - Director of Product ManagementNone - Video NarratorGabie Boko - CMOThomas Kurian - CEOJensen Huang - President and CEOChris Gebhardt - Principal Product ManagerNick Howell - Global Field CTOKevin ...

Summary of NetApp (NTAP) 2025 Conference Call Company Overview - **Company**: NetApp, a 30-year-old company specializing in data and storage management through its software solution ONTAP [3][4] - **Business Segments**: Divided into hybrid cloud segment (traditional sales and growing storage as a service) and public cloud segment (partnerships with hyperscalers) [4][5] Core Business Transformation - **Revenue Shift**: Transitioned from a legacy hard disk drive business to a model driven by public cloud services and all-flash solutions, which now account for over two-thirds of total revenue [5][6] - **Record Performance**: Achieved records in total revenue, all-flash revenue, support revenue, and public cloud revenue in FY '25 [6] Market Position and Growth Drivers - **Market Share Gains**: Strong market share gains noted, particularly in the all-flash market, with a reported gain of almost three points in calendar 2024 [25][26] - **Revenue Growth Vectors**: Identified four primary growth drivers: 1. **All Flash**: Benefiting from a shift away from hard disk drives [17][18] 2. **Block Only Market**: Introduction of ONTAP optimized for block services to capture market share [21][22] 3. **Cloud Services**: First-party and marketplace services growing over 40% [22] 4. **Enterprise AI**: Anticipated growth in AI-related storage demand, with a fivefold increase in AI business noted in Q4 [23][24] Partnerships and Customer Engagement - **Hyperscaler Partnerships**: Collaborations with AWS, Microsoft Azure, and Google Cloud to provide ONTAP software, enhancing customer access to high-performance file services [10][12][14] - **Customer Base Expansion**: Cloud offerings attract new customers who may not have traditional data centers, allowing for easier entry into NetApp's services [15] Financial Performance and Projections - **Gross Margins**: Product gross margin targeted in the mid to upper 50s, with expectations for gradual improvement throughout FY '26 [29][30] - **Earnings Growth**: Anticipated earnings growth driven by revenue growth, gross margin expansion, and operational efficiency [34] Macro Environment and Risks - **Market Uncertainty**: Acknowledgment of increased macroeconomic uncertainty, particularly in the US public sector and European markets [45][46] - **Caution in Guidance**: Embedded caution in guidance due to potential customer hesitance and economic conditions [46] Strategic Focus on AI - **AI Integration**: Plans to leverage AI internally for efficiency and embed AI into products to enhance customer performance [37][38] - **Market Opportunity**: Expectation that storage demand for enterprise AI will outpace model training, with significant opportunities in AI centers of excellence [39][40] Key Takeaways for Investors - **Transformation Recognition**: Emphasis on the significant transformation of the business over the past five years, positioning for future growth in an AI-driven market [52][53] - **Customer-Centric Solutions**: NetApp's ability to help customers build intelligent data infrastructures is increasingly relevant as enterprises focus on AI [53]

Financial Performance - NetApp's Q3 FY25 revenue reached $1.64 billion, a 2.2% year-over-year increase[61] - Billings for Q3 FY25 amounted to $1.71 billion, representing a 1.5% year-over-year growth[61] - The company's all-flash array annualized revenue run rate grew by 10% year-over-year, reaching $3.8 billion[59] - First party and marketplace cloud storage services revenue grew approximately 46% year-over-year[59] - Capital returns totaled $306 million in Q3 FY25[61] Guidance - NetApp projects Q4 FY25 revenue between $1.65 billion and $1.80 billion[97] - The company anticipates a Non-GAAP gross margin of 69% to 70% and a Non-GAAP operating margin of approximately 28% for Q4 FY25[97] - NetApp expects Non-GAAP earnings per share to be in the range of $1.84 to $1.94 for Q4 FY25[97] Strategic Focus - NetApp secured over 100 AI and data lake modernization deals, including AI-as-a-Service wins[59] - The company divested Spot by NetApp to refine its Public Cloud business focus[59] - NetApp launched new all-flash AFF A-series and C-series, enhanced StorageGRID object storage capabilities, and expanded cloud storage offerings[59]