NetApp Q3 Revenue Up 4%, EPS Rises 11% as AFX Ships
NetApp reported fiscal Q3 revenue of $1.71 billion, up 4% year-over-year (6% excluding Spot), and non-GAAP EPS of $2.12, an 11% increase versus last year. The company shipped AFX with AI storage wins in neocloud, financial services and semiconductor, grew AI-preparation customers from 200 to 300 and raised full-year guidance.
1. Q3 Financial Performance
NetApp delivered Q3 revenue of $1.71 billion, a 4% increase year-over-year (6% excluding the divested Spot business), and non-GAAP EPS of $2.12, up 11%. CFO Wissam Jabre noted results exceeded the midpoint of revenue guidance and the high end of EPS guidance, and raised the FY26 revenue outlook to about $6.847 billion.
2. AI-Focused Product Momentum
CEO George Kurian highlighted shipment of the AFX disaggregated AI storage system, securing early wins in neocloud, financial services and semiconductor verticals. He said approximately 300 customers selected NetApp for AI data preparation, up from 200 last quarter, and confirmed the AI Data Engine (AIDE) is expected to be generally available in Q4.
3. Cloud and All-Flash Growth
All-Flash Array revenue reached a record $1.0 billion, up 11% year-over-year, implying a $4.2 billion annual run rate. Hybrid cloud revenue was $1.54 billion, up 5%, while public cloud services revenue grew 17% (excluding Spot) to $174 million, driven by first-party and marketplace storage services.
4. Margins, Cash Flow and Capital Returns
Non-GAAP gross margin expanded 50 basis points to 71.2%, and operating margin rose to 31.1%, up 1.1 points. The company generated $271 million in free cash flow, returned $303 million to shareholders through $200 million in share repurchases and $103 million in dividends, and held a net cash position of $522 million.