Earnings call transcript: NetApp beats Q1 2026 estimates but stock falls

NetApp released its Q1 2026 earnings report, surpassing Wall Street estimates with solid financial performance, yet its stock experienced a significant drop after the market closed. The company reported adjusted earnings per share (EPS) of $2.58 on revenue of $2.03 billion, exceeding analyst expectations of $2.11 EPS and $1.83 billion in sales.

Revenue grew by 30% year-over-year, or 26% excluding an extra week in the quarter. NetApp's strong results were fueled by robust demand for all-flash storage, hybrid cloud products, and public cloud services. The company raised its full-year fiscal 2027 guidance, projecting revenue between $7.975 billion and $8.225 billion, with a midpoint of $8.1 billion, representing a 17% year-over-year growth.

NetApp's operating income increased by 61% to $645 million, while operating margin improved by 6.1 percentage points to 31.9%. Despite the earnings beat, the stock fell sharply in after-hours trading, indicating investors' concerns about future growth prospects. NetApp highlighted two key trends driving demand: enterprise AI projects and the modernization of storage infrastructure.

The company also attributed some of the strength to accelerated buying by large customers and pricing gains due to rising component costs. NetApp's financial health is further supported by a Piotroski Score of 9, indicating strong profitability, efficiency, and leverage.