01—Abstract
Summary
Summary of the 10-Q filed September 2, 2026. Cited figures are marked; the original filing is the authoritative source.
NetApp, Inc. reported net revenues of $2.03 billiona for the first quarter of fiscal 2027 (three months ended July 31, 2026), up from $1.56 billion a year earlier, with the filing noting that the extra week in the quarter (a 14-week first quarter in a 53-week fiscal year) contributed approximately $65 million of services revenue.
Net income rose to $375 millionb from $233 million, and diluted EPS was $1.88 versus $1.15. Income from operations was $484 million, against $309 million in the prior-year quarter, though results included $56 million of restructuring charges tied to a plan to redirect resources and reduce costs. Management stated that inflationary pressures and supply constraints, particularly for memory and other components, have affected gross margins and are expected to remain elevated, and cited price increases made in the fourth quarter of fiscal 2026 and at the start of the second quarter of fiscal 2027.
Cash flow and balance sheet activity were mixed. Operating cash flow was $503 millionc, down from $673 million, with inventories up $176 million on strategic component purchases and accounts receivable down $317 million. Cash, cash equivalents and short-term investments totaled $3.58 billion, roughly flat versus April 24, 2026.
The company repurchased 1.5 million shares for $200 milliond, paid $102 million in dividends, and completed the DataPelago acquisition for $193 million total ($87 million paid in cash at closing, with $106 million of contingent consideration still payable). Working capital fell by $651 million, mainly because $550 million of 2.375% senior notes due June 2027 moved to current liabilities. The filing also reports $5.6 billion in remaining performance obligations, of which 44% is expected to be recognized in the next 12 months, and $2.3 billion in purchase commitments, of which $2.1 billion is due within twelve months.
The company disclosed patent litigation brought by non-practicing entities but recorded no material accrual for these matters. Management concluded that disclosure controls were effective as of July 31, 2026.
02—Key points
Key Highlights
- Net revenues rose to $2.03 billion from $1.56 billion, with product revenues up to $987 million from $654 million and services revenues up to $1.04 billion from $905 million.
- Net income was $375 million (diluted EPS $1.88), compared with $233 million (diluted EPS $1.15) a year earlier; income from operations was $484 million versus $309 million.
- Gross margin was flat at 70% of net revenues, with management citing higher memory and component costs offset by price increases.
- Restructuring charges of $56 million were recorded in the quarter as part of a plan to redirect resources and reduce costs, with activities expected to be substantially complete by the end of fiscal 2027.
- Cash, cash equivalents and short-term investments totaled $3.58 billion, while operating cash flow was $503 million; the company repurchased $200 million of stock and paid $102 million in dividends.
- The DataPelago acquisition closed on July 16, 2026, for $193 million, including $106 million of contingent consideration; goodwill of $151 million was recorded.
- Remaining performance obligations were $5.6 billion, with 44% expected to be recognized in the next 12 months; $2.3 billion of purchase commitments were outstanding.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2027, NetApp kept $0.19.
- Revenue$2.02B100.0%
- Cost of revenue−$606.0M29.9%
- Gross profit$1.42B70.1%
- Operating costs−$935.0M46.2%
- Operating income$484.0M23.9%
- Interest, other & tax−$109.0M5.4%
- Net income$375.0M18.5%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2027filed September 2, 2026Financial Statements
Q1 FY2027 against Q1 FY2026
| Line item | Q1 FY2027Q1 FY2026 | Change |
|---|---|---|
| Revenue | $2.02B$1.56B | +29.9% |
| Cost of Revenue | $606.00M$461.00M | +31.5% |
| Gross Profit | $1.42B$1.10B | +29.2% |
| R&D Expenses | $274.00M$242.00M | +13.2% |
| Operating Expenses | $935.00M$789.00M | +18.5% |
| Operating Income | $484.00M$309.00M | +56.6% |
| Net Income | $375.00M$233.00M | +60.9% |
| EPS (Basic) | $1.91$1.16 | +64.7% |
| EPS (Diluted) | $1.88$1.15 | +63.5% |
| Shares Outstanding (Basic) | 196.00M201.00M | −2.5% |
| Shares Outstanding (Diluted) | 200.00M203.00M | −1.5% |
05—Questions
Frequently Asked Questions
How did NetApp's revenue and profitability change in the first quarter of fiscal 2027?
Net revenues increased to $2.03 billion from $1.56 billion, and net income increased to $375 million from $233 million. The filing attributes the revenue increase mainly to higher product revenues and, to a lesser extent, services revenues, and notes that the extra week in the quarter contributed approximately $65 million of services revenue.
What pressures on margins does the filing describe?
The filing states that inflationary pressures and supply constraints have increased costs for memory and other components, which have affected gross margins, and that these costs are expected to remain elevated or continue rising in the near term. NetApp says it raised prices in the fourth quarter of fiscal 2026 and at the start of the second quarter of fiscal 2027 to offset these costs.
How is the company using its cash and capital?
During the quarter NetApp repurchased 1.5 million shares for $200 million, paid $102 million in dividends, and spent $102 million on property and equipment. It completed the DataPelago acquisition for $87 million in cash at closing, with a further $106 million contingent payment recorded. The Board authorized an additional $1.0 billion of repurchases on May 21, 2026, and $1.3 billion remained available at quarter end.
What debt obligations become near-term?
Of the $2.5 billion principal amount of senior notes, $550 million of 2.375% notes due June 2027 were reclassified to current liabilities, which reduced working capital to $1.1 billion. The company stated that it was in compliance with all covenants and that no commercial paper was outstanding at quarter end.
Are there any significant legal or contingent risks disclosed?
NetApp is involved in patent litigation brought by non-practicing entities and other third parties. Management believes it has strong arguments and intends to defend vigorously, and it states that no material accrual has been recorded for these matters as of July 31, 2026, while acknowledging that an unfavorable outcome could have a material adverse impact.
06—Continue