NetApp Inc. (NTAP) Stock: Drops Over 4% Despite Q3 Earnings Beat and Soft Revenue Outlook

TLDR

• Q3 CY2025 revenue rose 2.8% to $1.71 billion, beating estimates.
• Adjusted EPS of $2.05 exceeded forecasts by 8.8%.
• Next quarter revenue guidance came in slightly below expectations.
• Full-year EPS guidance raised to $7.90 at midpoint.
• Operating margin improved to 23.4%, signaling stronger efficiency.

NetApp Inc. (NASDAQ: NTAP) traded at $108.92, down over 4% in early trading, after posting Q3 CY2025 results that surpassed analyst expectations.

NetApp, Inc., NTAP

The data storage provider also recently reported its Q2 GAAP earnings, which showed year-over-year profit growth. NetApp’s earnings date for the latest release highlighted its continued consistency in profitability, even as revenue growth remains muted and forward guidance for the next quarter signals modest expectations.

Quarterly Performance and Key Highlights

NetApp generated $1.71 billion in Q3 revenue, representing a 2.8% increase from last year and a 1.1% beat versus estimates. The company posted adjusted EPS of $2.05, up from $1.87 a year earlier. This marked an 8.8% beat and reflected stronger margin performance across key business lines.

Management reaffirmed full-year revenue guidance at $6.75 billion while raising full-year adjusted EPS guidance to $7.90, a 1.9% improvement. Operating margin expanded to 23.4%, an increase of 2.6 percentage points from last year, pointing to disciplined cost control. Free cash flow margin held steady at 4.6%.

Q2 GAAP Earnings Snapshot

In its recent Q2 report, NetApp posted GAAP earnings of $305 million, up from $299 million a year ago. GAAP EPS came in at $1.51, compared to $1.42 last year. Revenue reached $1.705 billion, up 2.8%. The company issued next-quarter EPS guidance of $2.01 to $2.11 and revenue guidance of $1.615–$1.765 billion. Full-year forecasts call for EPS between $7.75 and $8.05 and revenue between $6.625 and $6.875 billion.

Revenue Trends and Growth Outlook

Over the past five years, NetApp delivered a modest 3.7% CAGR in revenue. Its two-year growth rate of 4.3% is only slightly higher, confirming steady but limited demand across enterprise segments. The latest quarter’s 2.8% increase shows stable performance but no acceleration.

Looking ahead, analysts expect revenue to rise 4.4% over the next 12 months, pointing to no meaningful shift in top-line momentum. NetApp’s scale and market penetration create challenges for high-growth expansion, leaving innovation and pricing strategy as its primary levers.

Profitability and Margins

NetApp has maintained elite profitability for its sector, averaging a 19.3% operating margin over five years. This quarter’s 23.4% result reinforces that the company remains efficient and resilient, supported by a scalable cost structure.

Earnings Per Share Analysis

EPS growth continues to outpace revenue. NetApp’s five-year EPS CAGR of 12.5% reflects strategic execution and disciplined operations. Shorter-term performance is even stronger, with two-year EPS growth at 14.9%, signaling momentum.

Q3 adjusted EPS of $2.05 beat expectations, and analysts forecast 11% EPS growth over the next year, setting a positive tone for shareholder returns. NetApp’s latest results underscore durable earnings strength and steady financial discipline, even as revenue growth remains restrained.

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