NetApp raised its full-year fiscal 2027 revenue guidance to $7.98 billion to $8.23 billion, up from prior guidance of $7.53 billion, after first-quarter results beat analyst expectations across revenue, earnings and cash flow.
The company reported Q1 revenue of $2.03 billion against consensus of $1.84 billion, a 30 percent year-over-year increase. Adjusted earnings per share reached $2.58, compared to analyst estimates of $2.12, representing 66 percent growth from the prior year. The strength drove NetApp to lift adjusted EPS guidance for the full year to $9.73 to $10.03, versus prior expectations of $9.01.
Public cloud revenue grew 28 percent year-over-year to $206 million in the quarter, while hybrid cloud segment revenue reached $1.82 billion, also up 30 percent from the prior year. The two segments together accounted for $2.03 billion of the quarter's total revenue. All-flash array revenue hit $1.3 billion during the period.
Billings grew 36 percent year-over-year to $2.06 billion, outpacing revenue growth. Free cash flow came in at $401 million, exceeding the $367 million consensus estimate, though down 35 percent from the prior year. Non-GAAP operating margin in the quarter reached 31.9 percent.
NetApp appointed Alvaro Celis as chief partner and ecosystem officer and completed the acquisition of DataPelago, Inc., a data cataloging company. CEO George Kurian said in the earnings statement that the results "reflect not only the trust of existing customers but also our success in winning new ones, as organizations choose the NetApp Platform to power their AI and hybrid multi-cloud initiatives."
For the second quarter, NetApp guided revenue to $2.03 billion to $2.18 billion, above consensus of $1.85 billion. Adjusted EPS guidance came in at $2.54 to $2.64 versus consensus of $2.17. Non-GAAP operating margins are expected to remain in the 30.9 to 31.9 percent range.
NetApp's cloud revenue grew 28 percent in the quarter. The company's gross margin guidance of 68.1 to 69.1 percent for the year places it above the median of comparable infrastructure software vendors. If NetApp sustains cloud revenue growth above 25 percent through fiscal 2027, its hybrid cloud business, now growing 30 percent, will have narrowed the gap between its own expansion rate and pure-play cloud vendors expanding at similar or faster rates.
