NetApp, Inc.

Previous wording

During the first three months of fiscal 2026, we repurchased 3.0 million shares of our common stock at an average price of $99.76 per share, for an aggregate purchase price of $300 million. We also declared aggregate cash dividends of $0.52 per share in that period, for which we paid $104 million.

Current wording

During the first six months of fiscal 2026, we repurchased 5.2 million shares of our common stock at an average price of $106.05 per share, for an aggregate purchase price of $550 million. We also declared aggregate cash dividends of $1.04 per share in that period, for which we paid $207 million.

Previous wording

The increase in net revenues for the first quarter of fiscal 2026 compared to the corresponding period of the prior year was due to an increase in services revenues, partially offset by a decrease in product revenues. Product revenues as a percentage of net revenues decreased by one percentage point in the first quarter of fiscal 2026 compared to the corresponding period of fiscal 2025. Fluctuations in foreign currency exchange rates favorably impacted net revenues percent growth by approximately one percentage point in the first quarter of fiscal 2026, compared to the corresponding period of fiscal 2025.

Current wording

The increase in net revenues for the second quarter and first six months of fiscal 2026 compared to the corresponding periods of fiscal 2025 was due to an increase in both product and services revenues. Product revenues as a percentage of net revenues remained relatively flat in the second quarter of fiscal 2026 and decreased one percentage point during the first six months of fiscal 2026, as compared to the corresponding periods of fiscal 2025. Fluctuations in foreign currency exchange rates favorably impacted net revenues percentage growth by approximately one percentage point in the second quarter and first six months of fiscal 2026, compared to the corresponding periods of fiscal 2025.

Previous wording

Total product revenues decreased in the first quarter of fiscal 2026 compared to the corresponding period of the prior year primarily due to lower sales of hybrid systems, partially offset by higher sales of all-flash array systems and the favorable impact from foreign exchange rate fluctuations.

Current wording

Total product revenues increased in the second quarter of fiscal 2026 compared to the corresponding period of the prior year primarily due to higher sales of all-flash array systems and the favorable impact from foreign exchange rate fluctuations.

Previous wording

Support revenues increased marginally in the first quarter of fiscal 2026 compared to the corresponding period of the prior year, partly due to the favorable impact from foreign exchange rate fluctuations.

Current wording

Support revenues increased marginally in the second quarter and first six months of fiscal 2026 compared to the corresponding periods of the prior year, primarily due to the favorable impact from foreign exchange rate fluctuations.

Previous wording

Professional and other services revenues increased in the first quarter of fiscal 2026 compared to the corresponding period of the prior year primarily due to an increase in revenues from our Keystone storage-as-a-service offering.

Current wording

Professional and other services revenues increased in the second quarter and first six months of fiscal 2026 compared to the corresponding periods of the prior year primarily due to an increase in revenues from our Keystone storage-as-a-service offering.

Previous wording

Public Cloud revenues increased marginally in the first quarter of fiscal 2026 compared to the corresponding period of the prior year, due to higher customer demand, driven by NetApp’s diversified cloud offerings and overall growth in the cloud market, partially offset by the loss of revenue from our Spot by NetApp business which we sold in the fourth quarter of fiscal 2025.

Current wording

Public Cloud revenues increased marginally in the second quarter and first six months of fiscal 2026 compared to the corresponding periods of the prior year, due to higher customer demand, driven by NetApp’s diversified cloud offerings and overall growth in the cloud market, partially offset by the loss of revenue from our Spot by NetApp business which we sold in the fourth quarter of fiscal 2025.

Previous wording

Cost of Hybrid Cloud product revenues represented 46% of product revenues for the first quarter of fiscal 2026, compared to 40% for the corresponding period of the prior year. Materials costs represented 89% of cost of Hybrid Cloud product revenues for the first quarter of fiscal 2026, compared to 88% for the corresponding period of the prior year.

Current wording

Cost of Hybrid Cloud product revenues represented 40% and 43% of product revenues for the second quarter and first six months of fiscal 2026, respectively, compared to 40% for the corresponding periods of the prior year. Materials costs represented 91% and 90% of cost of Hybrid Cloud product revenues for the second quarter and first six months of fiscal 2026, respectively, compared to 89% for the corresponding periods of the prior year.

Previous wording

Materials costs increased by $30 million in the first quarter of fiscal 2026 compared to the corresponding period of the prior year.

Current wording

Materials costs increased by $18 million and $48 million in the second quarter and first six months of fiscal 2026, respectively, compared to the corresponding periods of the prior year.

Previous wording

Hybrid Cloud product gross margins decreased by six percentage points in the first quarter of fiscal 2026 compared to the corresponding period of the prior year primarily due to higher component costs.

Current wording

Hybrid Cloud product gross margins decreased one percentage point in the second quarter and three percentage points in the first six months of fiscal 2026 compared to the corresponding periods of the prior year primarily due to higher component costs.

Previous wording

Cost of Hybrid Cloud services revenues, which are composed of the costs of support and professional and other services, increased in the first quarter of fiscal 2026 compared to the corresponding period of the prior year. Cost of Hybrid Cloud services revenues represented 16% of Hybrid Cloud services revenues for both the first quarter of fiscal 2026 and the corresponding period of the prior year.

Current wording

Cost of Hybrid Cloud services revenues, which are composed of the costs of support and professional and other services, increased in the second quarter and first six months of fiscal 2026 compared to the corresponding periods of the prior year. Cost of Hybrid Cloud services revenues represented 16% of Hybrid Cloud services revenues for both the second quarter and first six months of fiscal 2026 and the corresponding periods of the prior year.

Previous wording

Hybrid Cloud support gross margins were relatively flat in the first quarter of fiscal 2026 compared to the corresponding period of the prior year. Hybrid Cloud professional and other services gross margins increased by eight percentage points in the first quarter of fiscal 2026 compared to the corresponding period of the prior year due primarily to the mix of services provided.

Current wording

Hybrid Cloud support gross margins were relatively flat in the second quarter and first six months of fiscal 2026 compared to the corresponding periods of the prior year. Hybrid Cloud professional and other services gross margins increased by four percentage points in the second quarter of fiscal 2026 and six percentage points in the first six months of 2026 compared to the corresponding periods of the prior year due primarily to the mix of services provided.

Previous wording

Cost of Public Cloud revenues decreased and gross margins increased by nine percentage points in the first quarter of fiscal 2026 compared to the corresponding period of the prior year. The decrease in cost of Public Cloud revenues and improved gross margins was due to cost optimization that included a decrease in fixed assets depreciation, and the mix of offerings provided which was impacted by the sale of our Spot by NetApp business in the fourth quarter of fiscal 2025.

Current wording

Cost of Public Cloud revenues decreased and gross margins increased by nine percentage points in the second quarter and first six months of fiscal 2026 compared to the corresponding periods of the prior year. The decrease in cost of Public Cloud revenues and improved gross margins was due to cost optimization that included a decrease in fixed assets depreciation, and the mix of offerings provided which was impacted by the sale of our Spot by NetApp business in the fourth quarter of fiscal 2025.

Previous wording

Unallocated cost of services revenues decreased in the first quarter of fiscal 2026 compared to the corresponding period of the prior year, due to lower intangible asset amortization expense from the derecognition of certain intangible assets as a result of the sale of our Spot by NetApp business during the fourth quarter of fiscal 2025.

Current wording

Unallocated cost of services revenues decreased in the second quarter and first six months of fiscal 2026 compared to the corresponding periods of the prior year, due to lower intangible asset amortization expense from the derecognition of certain intangible assets as a result of the sale of our Spot by NetApp business during the fourth quarter of fiscal 2025.

Previous wording

Sales and marketing, research and development, and general and administrative expenses for the first quarter of fiscal 2026 totaled $787 million, or 50% of net revenues, reflecting a decrease of two percentage points compared to the corresponding period of the prior year, primarily due to the increase in net revenues.

Current wording

Sales and marketing, research and development, and general and administrative expenses for the second quarter and first six months of fiscal 2026 totaled $805 million, or 47% of net revenues, and $1,592 million, or 49% of net revenues, respectively, each reflecting a decrease of two percentage points compared to the corresponding periods of the prior year, primarily due to the increase in net revenues.

Previous wording

Total compensation costs included in sales and marketing, research and development and general and administrative expenses in the first quarter of fiscal 2026 were relatively flat compared to the corresponding period of the prior year, despite the unfavorable impact from fluctuations in foreign currency exchange rates.

Current wording

Total compensation costs included in sales and marketing, research and development and general and administrative expenses in the second quarter and first six months of fiscal 2026 were relatively flat compared to the corresponding periods of the prior year.

Previous wording

The decrease in sales and marketing expenses in the first quarter of fiscal 2026 compared to the corresponding period of the prior year was primarily due to lower compensation costs and lower spend on outside services.

Current wording

The decrease in sales and marketing expenses in the second quarter and first six months of fiscal 2026 compared to the corresponding periods of the prior year was primarily due to lower compensation costs and lower commissions expenses.

Previous wording

Research and development expenses decreased in the first quarter of fiscal 2026 compared to the corresponding period of the prior year, primarily attributable to lower compensation costs.

Current wording

Research and development expenses decreased in the second quarter and first six months of fiscal 2026 compared to the corresponding periods of the prior year, primarily attributable to lower compensation costs and lower spend on engineering projects.

Previous wording

General and administrative expenses increased in the first quarter of fiscal 2026 compared to the corresponding period of the prior year, primarily attributable to higher compensation costs.

Current wording

General and administrative expenses increased in the second quarter and first six months of fiscal 2026 compared to the corresponding periods of the prior year, primarily attributable to higher compensation costs and higher spend on professional services.

Previous wording

In the first quarter of fiscal 2026, we incurred charges related to a restructuring plan previously approved by management in the fourth quarter of fiscal 2025 to redirect resources to the highest return activities and reduce costs. The activities under the plan were substantially completed by the end of the first quarter of fiscal 2026.

Current wording

In the first six months of fiscal 2026, we incurred charges related to a restructuring plan previously approved by management in the fourth quarter of fiscal 2025, as well as a restructuring plan approved by management in the second quarter of fiscal 2026 to redirect resources to the highest return activities and reduce costs. The activities under these plans are expected to be substantially complete by the end of fiscal 2026.

Previous wording

In the first quarter of fiscal 2025, management approved a restructuring plan to redirect resources to highest return activities and reduce costs. The activities under the plan were substantially completed by the end of fiscal 2025.

Current wording

In the first six months of fiscal 2025, management approved restructuring plans to redirect resources to the highest return activities and reduce costs. The activities under these plans were substantially completed by the end of fiscal 2025.

Previous wording

Interest expense increased in the first quarter of fiscal 2026 compared to the corresponding period of the prior year due to a higher average outstanding aggregate principal amount of Senior Notes, with a higher average coupon rate.

Current wording

Interest expense increased in the second quarter and first six months of fiscal 2026 compared to the corresponding periods of the prior year due to a higher average outstanding aggregate principal amount of Senior Notes, with a higher average coupon rate.

Previous wording

Our effective tax rate reflects the impact of a significant amount of earnings being taxed in foreign jurisdictions at rates below the United States (U.S.) statutory rate which is offset by non-deductible stock-based compensation and state taxes. Our effective tax rate for the three months ended July 25, 2025 includes a decrease in discrete tax benefits related to stock-based compensation compared to the corresponding period of the prior year.

Current wording

Our effective tax rate reflects the impact of a significant amount of earnings being taxed in foreign jurisdictions at rates below the United States (U.S.) statutory rate which is offset by non-deductible stock-based compensation and state taxes. Our effective tax rate for the three and six months ended October 24, 2025 includes a decrease in discrete tax benefits related to stock-based compensation compared to the corresponding periods of the prior year.

Previous wording

As of July 25, 2025, we had $69 million of gross unrecognized tax benefits. Inclusive of penalties, interest and certain income tax benefits, $48 million of net unrecognized tax benefits would affect our provision for income taxes if recognized and have been recorded in other long-term liabilities.

Current wording

As of October 24, 2025, we had $70 million of gross unrecognized tax benefits. Inclusive of penalties, interest and certain income tax benefits, $49 million of net unrecognized tax benefits would affect our provision for income taxes if recognized and have been recorded in other long-term liabilities.

Previous wording

As of July 25, 2025, our cash, cash equivalents and short-term investments were $3.3 billion, which represents a decrease of $522 million during the first three months of fiscal 2026. The decrease was primarily due to a $750 million principal repayment of our 1.875% Senior Notes due June 2025, $300 million used for the repurchase of our common stock, $104 million used for the payment of dividends, and $53 million used for purchases of property and equipment, partially offset by $673 million provided by operating activities. Our working capital was $1.1 billion as of July 25, 2025, reflecting a decrease of $71 million when compared to April 25, 2025.

Current wording

As of October 24, 2025, our cash, cash equivalents and short-term investments were $3.0 billion, which represents a decrease of $832 million during the first six months of fiscal 2026. The decrease was primarily due to a $750 million principal repayment of our 1.875% Senior Notes due June 2025, $550 million used for the repurchase of our common stock, $207 million used for the payment of dividends, and $102 million used for purchases of property and equipment, partially offset by $800 million provided by operating activities. Our working capital was $1.2 billion as of October 24, 2025, relatively flat compared to April 25, 2025.

Previous wording

During the first three months of fiscal 2026, cash provided by operating activities reflected net income of $233 million which was increased for non-cash depreciation and amortization expense of $51 million and non-cash stock-based compensation expense of $83 million. During the first three months of fiscal 2025, cash provided by operating activities reflected net income of $248 million which was increased for non-cash depreciation and amortization expense of $63 million and non-cash stock-based compensation expense of $85 million.

Current wording

During the first six months of fiscal 2026, cash provided by operating activities reflected net income of $538 million which was increased for non-cash depreciation and amortization expense of $103 million and non-cash stock-based compensation expense of $185 million. During the first six months of fiscal 2025, cash provided by operating activities reflected net income of $547 million which was increased for non-cash depreciation and amortization expense of $126 million and non-cash stock-based compensation expense of $188 million.

Previous wording

Significant changes in assets and liabilities in the first three months of fiscal 2026 included the following:

Current wording

Significant changes in assets and liabilities in the first six months of fiscal 2026 included the following:

Previous wording

Accounts receivable decreased $466 million, reflecting lower billings and more favorable invoicing linearity in the first quarter of fiscal 2026 compared to the fourth quarter of fiscal 2025.

Current wording

Accounts receivable decreased by $261 million, reflecting lower billings in the first six months of fiscal 2026 compared to the last six months of fiscal 2025.

Previous wording

Accrued expenses decreased by $240 million, primarily due to employee compensation payments related to our fiscal 2025 incentive compensation plan accrual.

Current wording

Accrued expenses decreased by $277 million, primarily due to employee compensation payments related to our fiscal 2025 incentive compensation plan accrual.

Previous wording

During the first three months of fiscal 2026, we used $143 million for purchases of investments, net of maturities and sales, and paid $53 million for capital expenditures, as compared to the same period of fiscal 2025, in which we used $10 million for the purchases of investments, net of maturities and sales, and paid $41 million for capital expenditures.

Current wording

During the first six months of fiscal 2026, we generated $155 million from maturities and sales of investments, net of purchases, and paid $102 million for capital expenditures, as compared to the same period of fiscal 2025, in which we generated $597 million from maturities and sales of investments, net of purchases, and paid $86 million for capital expenditures.

Previous wording

During the first three months of fiscal 2026, we used $750 million for the principal repayment upon maturity of our 1.875% Senior Notes due in June 2025, $300 million for the repurchase of 3.0 million shares of common stock, and $104 million for the payment of dividends. During the first three months of fiscal 2025, we used $400 million for the repurchase of 3.3 million shares of common stock and $107 million for the payment of dividends.

Current wording

During the first six months of fiscal 2026, we used $750 million for the principal repayment upon maturity of our 1.875% Senior Notes due in June 2025, $550 million for the repurchase of 5.2 million shares of common stock, and $207 million for the payment of dividends. During the first six months of fiscal 2025, we used $700 million for the repurchase of 5.8 million shares of common stock and $213 million for the payment of dividends.

Previous wording

As of July 25, 2025 and April 25, 2025, $2.8 billion and $2.5 billion , respectively, of cash, cash equivalents and short-term investments were held by various foreign subsidiaries and were generally based in U.S. dollar-denominated holdings, while $514 million and $1.3 billion, respectively, were available in the U.S.

Current wording

As of October 24, 2025 and April 25, 2025, $2.3 billion and $2.5 billion, respectively, of cash, cash equivalents and short-term investments were held by various foreign subsidiaries and were generally based in U.S. dollar-denominated holdings, while $716 million and $1.3 billion, respectively, were available in the U.S.

Previous wording

The principal objectives of our investment policy are the preservation of principal and maintenance of liquidity. We attempt to mitigate default risk by investing in high-quality investment grade securities, limiting the time to maturity and monitoring the counter-parties and underlying obligors closely. We believe our cash equivalents and short-term investments are liquid and accessible. We are not aware of any significant deterioration in the fair value of our cash equivalents or investments from the values reported as of July 25, 2025.

Current wording

The principal objectives of our investment policy are the preservation of principal and maintenance of liquidity. We attempt to mitigate default risk by investing in high-quality investment grade securities, limiting the time to maturity and monitoring the counterparties and underlying obligors closely. We believe our cash equivalents and short-term investments are liquid and accessible. We are not aware of any significant deterioration in the fair value of our cash equivalents or investments from the values reported as of October 24, 2025.

Previous wording

We expect to fund our capital expenditures, including our commitments related to facilities, equipment, operating leases and internal-use software development projects over the next few years through existing cash, cash equivalents, investments and cash generated from operations. The timing and amount of our capital requirements cannot be precisely determined and will depend on a number of factors, including future demand for products, changes in the network storage industry, hiring plans and our decisions related to the financing of our facilities and equipment requirements. We anticipate capital expenditures for the remainder of fiscal 2026 to be between $125 million and $175 million.

Current wording

We expect to fund our capital expenditures, including our commitments related to facilities, equipment, operating leases and internal-use software development projects over the next few years through existing cash, cash equivalents, investments and cash generated from operations. The timing and amount of our capital requirements cannot be precisely determined and will depend on a number of factors, including future demand for products, changes in the network storage industry, hiring plans and our decisions related to the financing of our facilities and equipment requirements. We anticipate capital expenditures for the remainder of fiscal 2026 to be between $90 million and $140 million.

Previous wording

The Tax Cuts and Jobs Act of 2017 imposed a mandatory, one-time transition tax on accumulated foreign earnings and profits that had not previously been subject to U.S. income tax. As of July 25, 2025, a final transition tax payment of $179 million remained outstanding and was paid during the second quarter of fiscal 2026.

Current wording

The Tax Cuts and Jobs Act of 2017 imposed a mandatory, one-time transition tax on accumulated foreign earnings and profits that had not previously been subject to U.S. income tax. A final transition tax payment of $179 million was paid during the second quarter of fiscal 2026.

Previous wording

In the first quarter of fiscal 2026, our Board of Directors authorized the repurchase of an additional $1.1 billion of our common stock under our stock repurchase program. Under this program, we may purchase shares of our outstanding common stock through solicited or unsolicited transactions in the open market, in privately negotiated transactions, through accelerated share repurchase programs, pursuant to a Rule 10b5-1 plan or in such other manner as deemed appropriate by our management. The stock repurchase program may be suspended or discontinued at any time. As of July 25, 2025, the remaining authorized amount for stock repurchases under this program was $1.2 billion.

Current wording

In the first quarter of fiscal 2026, our Board of Directors authorized the repurchase of an additional $1.1 billion of our common stock under our stock repurchase program. Under this program, we may purchase shares of our outstanding common stock through solicited or unsolicited transactions in the open market, in privately negotiated transactions, through accelerated share repurchase programs, pursuant to a Rule 10b5-1 plan or in such other manner as deemed appropriate by our management. The stock repurchase program may be suspended or discontinued at any time. As of October 24, 2025, the remaining authorized amount for stock repurchases under this program was $902 million.

Previous wording

In the ordinary course of business, we make commitments to third-party contract manufacturers and component suppliers to manage manufacturer lead times and meet product forecasts, and to other parties, to purchase various key components used in the manufacture of our products. In addition, we have open purchase orders and contractual obligations associated with our ordinary course of business for which we have not yet received goods or services. These off-balance sheet purchase commitments totaled $1.3 billion at July 25, 2025.

Current wording

In the ordinary course of business, we make commitments to third-party contract manufacturers and component suppliers to manage manufacturer lead times and meet product forecasts, and to other parties, to purchase various key components used in the manufacture of our products. In addition, we have open purchase orders and contractual obligations associated with our ordinary course of business for which we have not yet received goods or services. These off-balance sheet purchase commitments totaled $1.2 billion as of October 24, 2025.

Previous wording

We have and continue to enter into financing and leasing contracts through the ordinary course of business. These arrangements and related financing guarantees are described in Note 14 – Commitments and Contingencies of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1. There has been no material change in our financing guarantees as described in our 2025 Annual Report on Form 10-K.

Current wording

We enter into financing and leasing contracts through the ordinary course of business. These arrangements and related financing guarantees are described in Note 14 – Commitments and Contingencies of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1. There has been no material change in our financing guarantees as described in our 2025 Annual Report on Form 10-K.