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NetApp, Inc. NTAP reported strong third-quarter fiscal 2026 results, with both top and bottom lines surpassing the Zacks Consensus Estimate.
The company’s revenue growth was driven by accelerating demand for AI-ready data infrastructure, strong momentum in all-flash arrays, and expanding adoption of public cloud and Keystone storage-as-a-service offerings.
Net income on a GAAP basis was $334 million or $1.67 per share compared with $299 million or $1.44 per share in the prior-year quarter. Top-line growth and lower operating expenses boosted the bottom line during the quarter.
Non-GAAP net income in the reported quarter was $423 million or $2.12 per share compared with $397 million or $1.91 per share in the prior-year quarter. The bottom line surpassed the Zacks Consensus Estimate by 5 cents and also marginally exceeded the company’s guided range of $2.01-$2.11.
NetApp, Inc. price-consensus-eps-surprise-chart | NetApp, Inc. Quote
Net sales during the quarter increased to $1.71 billion from $1.64 billion in the year-ago quarter. The figure was within the guidance of $1.615-$1.765 billion. The top line beat the consensus estimate of $1.69 billion.
NTAP reports revenues under two segments — Hybrid Cloud and Public Cloud.
The Hybrid Cloud segment includes revenues from the enterprise data center business, including product, support and professional services.
The Public Cloud segment comprises revenues from products delivered as a service and related support. The portfolio contains cloud automation and optimization services, storage and cloud infrastructure monitoring services.
The Hybrid Cloud segment’s revenues increased to $1.54 billion from $1.47 billion in the prior-year quarter. The top line beat our estimate of $1.5 billion. The Public Cloud segment revenues remain static at $174 million compared with the prior-year quarter. The top line fell short of our revenue estimate of $178.7 million.
Within the Hybrid Cloud segment Product revenues (51.1% of segmental revenues) increased to $786 million from $758 million in the prior-year quarter. Support Contracts (42.5% of segmental revenues) generated $654 million in revenues, up from the year-ago quarter’s $621 million. The company reported a 12.5% year-over-year improvement in revenues from the Professional and Other Services (6.4% of segmental revenues) to $99 million.
Region-wise, the Americas, Europe, the Middle East and Africa, and Asia Pacific contributed 52%, 34% and 14% to total revenues, respectively.
Direct and indirect revenues added 24% and 76%, respectively, to total revenues.
In the third quarter, the company’s All-Flash Array revenues increased 11% year over year to $1 billion, representing an annualized run rate of $4.2 billion.
Total billings rose 10% year over year to $1.89 billion. Deferred revenues and financed unearned services revenues totaled $4.63 billion, up 12.3%. Remaining performance obligations were $5.11 billion.
Non-GAAP gross margin of 71.2% was up 70.7% from the prior-year quarter’s levels.
The Hybrid segment’s gross margin was 69.6% compared with 70.1% in the prior year. The
Public Cloud segment witnessed a gross margin of 85.1%, up from 76.4%.
Non-GAAP operating expenses were $686 million, up from the year-ago quarter’s $669 million.
Non-GAAP operating income increased 8.3% year over year to $533 million.
Non-GAAP operating margin was 31.1%, up from 30%.
As of Jan. 23, 2026, the company had $3 billion in cash and cash equivalents and $2.49 billion of long-term debt.
Net cash from operations was $317 million compared with $385 million in the previous-year quarter.
Free cash flow was $271 million (free cash flow margin of 15.8%) compared with $338 million in the prior-year quarter (20.6%).
The company returned $303 million to its shareholders as dividend payouts and share repurchases in the fiscal third quarter.
NTAP also announced a dividend of 52 cents per share payable on April 22, 2026, to its shareholders of record as of the close of business on April 3.
For the fourth quarter of fiscal 2026, NetApp expects revenues in the range of $1.795-$1.945 billion. The company expects non-GAAP gross margin to be in the range of 69.5-70.5%, non-GAAP operating margin in the band of 30.5% to 31.5%. Non-GAAP EPS is projected to be between $2.21 and $2.31.
Management updated its outlook for fiscal 2026. It expects revenues in the range of $6.772-$6.922 billion. Non-GAAP earnings per share are forecasted to be between $7.92 and $8.02 compared with the prior view of $7.75-$8.05. Non-GAAP gross margin is anticipated to be in the range of 70.7-71.7% and non-GAAP operating margin to be in the band of 29.3-30.3%. Earlier, the company projected non-GAAP gross margin to be in the 71.7-72.7% range and non-GAAP operating margin to be in the band of 29.5-30.5%.
NetApp currently carries a Zacks Rank #3 (Hold).
Ubiquiti Inc. UI currently sports a Zacks Rank #1 (Strong Buy). It delivered an earnings surprise of 38.08% in the last reported quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.
.It offers a broad portfolio of networking solutions for enterprises and service providers. Its efficient and flexible business model supports healthy margins and scalable expansion. The company continues to invest in research and development to launch innovative networking products and advanced technologies. Strong channel management and a wide global distributor network improve demand visibility and inventory control.
Analog Devices, Inc. ADI carries a Zacks Rank #2 (Buy) at present. In the last reported quarter, it delivered an earnings surprise of 6.96%.
With rising AI and industrial demand, Analog Devices is strongly positioned to drive future growth from the semiconductor upcycle. Its expanding data-center power portfolio, resilient industrial exposure, and strong analog expertise help maintain solid margins and deliver scalable, high-performance solutions across key end markets.
Celestica Inc. CLS carries a Zacks Rank #2 at present. In the last reported quarter, it delivered an earnings surprise of 8.62%.
Celestica is well-positioned to benefit from the rising demand for AI and cloud infrastructure. Its focus on higher-margin markets, diversified portfolio, and strong engineering capabilities support scalable production of complex electronic and data-center solutions. Its strong research and development capabilities enable it to produce high-volume electronics manufacturing across multiple industries.
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This article originally published on Zacks Investment Research (zacks.com).
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