NetApp, Inc.
For the period ended Jan 23, 2026. Filed Feb 26, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jan 23, 2026 · Filed Feb 26, 2026
NTAP$169.19-0.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-10-24; filed 2025-11-25.
0001193125-25-297237
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-01-23; filed 2026-02-26.
0001193125-26-076622
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 117 previous paragraphs and 118 current paragraphs.
80 unchanged; 35 reworded; 3 added; 2 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 16 previous and 16 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (3)
Current report
The increase in sales and marketing expenses in the third quarter of fiscal 2026 compared to the corresponding period of the prior year was primarily due to higher commission expenses, partially offset by lower compensation costs.
Current report
Interest income increased in the third quarter and first nine months of fiscal 2026 compared to the corresponding periods of the prior year, primarily due to higher average cash and investment balances.
Current report
Accounts payable decreased by $98 million, primarily reflecting the timing of purchases from, and payments to, our contract manufacturers.
Removed paragraphs (2)
Previous report
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 report
Deferred revenue and financed unearned services revenue decreased by $107 million, reflecting a decrease in deferred revenue for support contracts.
Reworded paragraphs (35)
Previous 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.
Current wording
During the first nine months of fiscal 2026, we repurchased 7.0 million shares of our common stock at an average price of $107.26 per share, for an aggregate purchase price of $750 million. We also declared aggregate cash dividends of $1.56 per share in that period, for which we paid $310 million.
Previous wording
In the first six months of fiscal 2026, we approved a restructuring plan to redirect resources to highest return activities and reduce costs. Aggregate charges recorded from restructuring plans during the second quarter and first six months of fiscal 2026 totaled $23 million and $25 million, respectively.
Current wording
In the first nine months of fiscal 2026, we approved a restructuring plan to redirect resources to highest return activities and reduce costs. Aggregate charges recorded from restructuring plans during the first nine months of fiscal 2026 totaled $22 million.
Previous 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.
Current wording
The increase in net revenues for the third quarter and first nine 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 third quarter and first nine 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 two percentage points in the third quarter and first nine months of fiscal 2026, compared to the corresponding periods of fiscal 2025.
Previous 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.
Current wording
Total product revenues increased in the third quarter and first nine months of fiscal 2026 compared to the corresponding periods 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 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.
Current wording
Support revenues increased in the third quarter and first nine months of fiscal 2026 compared to the corresponding periods of the prior year, primarily due to a higher aggregate support contract value for our installed base and the favorable impact from foreign exchange rate fluctuations.
Previous 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.
Current wording
Professional and other services revenues increased in the third quarter and first nine 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 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.
Current wording
Public Cloud revenues were flat in the third quarter and increased marginally in the first nine 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, 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 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.
Current wording
Cost of Hybrid Cloud product revenues represented 45% and 44% of product revenues for the third quarter and first nine months of fiscal 2026, respectively, compared to 43% and 41% for the corresponding periods of the prior year, respectively. Materials costs represented 90% of cost of Hybrid Cloud product revenues for the third quarter and first nine months of fiscal 2026, compared to 89% for the corresponding periods of the prior year.
Previous 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.
Current wording
Materials costs increased by $25 million and $73 million in the third quarter and first nine months of fiscal 2026, respectively, compared to the corresponding periods of the prior year.
Previous 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.
Current wording
Hybrid Cloud product gross margins decreased one percentage point in the third quarter and decreased three percentage points in the first nine 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 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.
Current wording
Cost of Hybrid Cloud services revenues, which are composed of the costs of support and professional and other services, increased in the third quarter and first nine 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 the third quarter and first nine months of fiscal 2026 and the corresponding periods of the prior year.
Previous 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.
Current wording
Hybrid Cloud support gross margins were relatively flat in the third quarter and first nine months of fiscal 2026 compared to the corresponding periods of the prior year. Hybrid Cloud professional and other services gross margins increased by three percentage points in the third quarter of fiscal 2026 and five percentage points in the first nine 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 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.
Current wording
Cost of Public Cloud revenues decreased and gross margins increased by nine percentage points in the third quarter and first nine 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 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.
Current wording
Unallocated cost of services revenues decreased in the third quarter and first nine 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 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.
Current wording
Sales and marketing, research and development, and general and administrative expenses for the third quarter and first nine months of fiscal 2026 totaled $778 million, or 45% of net revenues, and $2,370 million, or 48% of net revenues, respectively, reflecting a decrease of two percentage points and one percentage point, respectively, 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 second quarter and first six months of fiscal 2026 were relatively flat compared to the corresponding periods of the prior year.
Current wording
Total compensation costs included in sales and marketing, research and development and general and administrative expenses in the third quarter and first nine months of fiscal 2026 were relatively flat compared to the corresponding periods of the prior year, despite the unfavorable impact from fluctuations in foreign currency exchange rates.
Previous 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.
Current wording
The decrease in sales and marketing expenses in the first nine months of fiscal 2026 compared to the corresponding period of the prior year was primarily due to lower compensation costs.
Previous 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.
Current wording
Research and development expenses decreased in the third quarter and first nine 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 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.
Current wording
General and administrative expenses increased in the third quarter and first nine 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 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.
Current wording
In the first nine 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 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.
Current wording
In the first nine 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 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.
Current wording
Interest expense increased in the third quarter and first nine 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
The differences in Other, net in the second quarter and first six months of fiscal 2026 compared to the corresponding periods of the prior year are primarily due to fluctuations in foreign exchange gains and losses year-over-year.
Current wording
The difference in Other, net in the first nine months of fiscal 2026 compared to the corresponding period of the prior year is primarily due to fluctuations in foreign exchange gains and losses year-over-year.
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 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.
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 nine months ended January 23, 2026 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 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.
Current wording
As of January 23, 2026, we had $71 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.
Previous 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.
Current wording
As of January 23, 2026, our cash, cash equivalents and short-term investments were $3.0 billion, which represents a decrease of $838 million during the first nine months of fiscal 2026. The decrease was primarily due to a $750 million principal repayment of our 1.875% Senior Notes due June 2025, $750 million used for the repurchase of our common stock, $310 million used for the payment of dividends, and $148 million used for purchases of property and equipment, partially offset by $1.1 billion provided by operating activities. Our working capital was $1.4 billion as of January 23, 2026, representing an increase of $213 million compared to April 25, 2025.
Previous 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.
Current wording
During the first nine months of fiscal 2026, cash provided by operating activities reflected net income of $872 million which was increased for non-cash depreciation and amortization expense of $151 million and non-cash stock-based compensation expense of $282 million. During the first nine months of fiscal 2025, cash provided by operating activities reflected net income of $846 million which was increased for non-cash depreciation and amortization expense of $190 million and non-cash stock-based compensation expense of $291 million.
Previous wording
Significant changes in assets and liabilities in the first six months of fiscal 2026 included the following:
Current wording
Significant changes in assets and liabilities in the first nine months of fiscal 2026 included the following:
Previous wording
Accrued expenses decreased by $277 million, primarily due to employee compensation payments related to our fiscal 2025 incentive compensation plan accrual.
Current wording
Accrued expenses decreased by $248 million, primarily due to employee compensation payments related to our fiscal 2025 incentive compensation plan accrual.
Previous 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.
Current wording
During the first nine months of fiscal 2026, we used $282 million in purchases of investments, net of maturities and sales, and paid $148 million for capital expenditures, as compared to the same period of fiscal 2025, in which we generated $590 million from maturities and sales of investments, net of purchases, and paid $133 million for capital expenditures.
Previous 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.
Current wording
During the first nine months of fiscal 2026, we used $750 million for the principal repayment upon maturity of our 1.875% Senior Notes due in June 2025, $750 million for the repurchase of 7.0 million shares of common stock, and $310 million for the payment of dividends. During the first nine months of fiscal 2025, we used $900 million for the repurchase of 7.4 million shares of common stock, $400 million principal repayment upon maturity of our 3.30% Senior Notes due in September 2024 and $319 million for the payment of dividends.
Previous 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.
Current wording
As of January 23, 2026 and April 25, 2025, $2.6 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 $394 million and $1.3 billion, respectively, were available in the U.S.
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 $90 million and $140 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 $50 million and $100 million.
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 October 24, 2025, the remaining authorized amount for stock repurchases under this program was $902 million.
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 January 23, 2026, the remaining authorized amount for stock repurchases under this program was $702 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 $1.2 billion as of October 24, 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 $1.1 billion as of January 23, 2026.