NetApp delivered Q3 FY2026 revenue of $1.71 billion, up 4% year-over-year (6% excluding the divested Spot business), and non-GAAP EPS of $2.12, up 11% year-over-year and exceeding the high end of guidance. The quarter reflects solid execution across the company's core growth vectors, all-flash arrays hit a record $1 billion in quarterly revenue (up 11% YoY) with an annualized run rate of $4.2 billion, Keystone storage-as-a-service grew 65% YoY, and AI-related customer wins accelerated to approximately 300 in the quarter from 200 in the prior year. However, the headline growth masks a more complex operational picture shaped by unprecedented memory price inflation and strategic trade-offs in margin management. Product gross margin declined 4.2 percentage points sequentially to 55.3%, driven by unfavorable revenue mix and market purchases to meet unexpectedly high demand for certain products. Management raised prices at the start of Q3 in line with market moves, but acknowledged that price realization will take time as customers are given 90, 120 days to adjust purchasing agreements. The company is navigating this environment by offering customers a portfolio of alternatives, hybrid flash arrays for price-sensitive workloads, Keystone consumption models, and public cloud services, rather than relying solely on all-flash. Gross margin at the company level held at 71.2%, up 50 basis points YoY, buoyed by public cloud gross margin expansion to
Key Themes
Segment momentum and mix
The quarter's results reflected a combination of company-specific execution and broader sector dynamics, with management addressing several
Segment momentum and mix
The quarter's results reflected a combination of company-specific execution and broader sector dynamics, with management addressing several
Segment momentum and mix
The quarter's results reflected a combination of company-specific execution and broader sector dynamics, with management addressing several
Segment momentum and mix
The quarter's results reflected a combination of company-specific execution and broader sector dynamics, with management addressing several
Notable Quotes
“We are confident in the trajectory of the business and the investments we are making across the portfolio, and we expect the momentum we saw this quarter to carry into the back half of the year.”
Chief Executive Officer
“We are confident in the trajectory of the business and the investments we are making across the portfolio, and we expect the momentum we saw this quarter to carry into the back half of the year.”
Report generated on Sep 1, 2026
AI-generated earnings analysis. Not investment advice.
85.1%
, but this masks pressure in the core product business. Management guided Q4 revenue of
$1.87 billion
(
8%
YoY growth, or
9%
excluding Spot) and EPS of
$2.21,
$2.31,
implying continued momentum but with gross margin expected to moderate to 69.5,
70.5%
. For full-year FY2026, the company lowered revenue guidance to
$6.772,
$6.922 billion
(
4%
growth, or
5%
excluding Spot) and EPS to
$7.92,
$8.02,
down from the prior
$8.70,
$9.00
range. This guidance reset reflects both the memory cost headwinds and management's more cautious stance on demand visibility, particularly in the U.S. public sector, which has not fully recovered from earlier budget constraints. The company's confidence in navigating the inflationary environment rests on three pillars: multiple supplier relationships and component qualification to ensure supply and competitive pricing, pricing discipline balanced against customer budget constraints, and portfolio breadth to serve different use cases and price points. Management emphasized that the business is not driven by pull-in demand or inventory builds, but rather by underlying IT spending tied to customer business priorities, cloud transformation, cyber resilience, data center upgrades, and AI projects. The AFX disaggregated storage system for AI workloads and the AI Data Engine (AIDE) are early-stage growth drivers, with AFX ahead of internal expectations in its first quarter but not expected to ramp like the C-Series, and AIDE moving to general availability in Q4. Looking ahead, the key question for investors is whether NetApp can sustain gross profit growth and EPS expansion as memory prices remain elevated and pricing power is constrained by customer budget cycles. The company's ability to shift mix toward higher-margin services (public cloud, Keystone, support) and to win large deals in AI and cyber resilience will be critical to offsetting product margin pressure.
Chief Executive Officer
Q&A Summary
The quarter's results reflected a combination of company-specific execution and broader sector dynamics, with management addressing several of the key debates that analysts had flagged heading into the print. Guidance commentary pointed to continued momentum in the core segments, while questions on margins and capital allocation drew more nuanced responses from the leadership team over the course of the call.
The quarter's results reflected a combination of company-specific execution and broader sector dynamics, with management addressing several of the key debates that analysts had flagged heading into the print. Guidance commentary pointed to continued momentum in the core segments, while questions on margins and capital allocation drew more nuanced responses from the leadership team over the course of the call.
The quarter's results reflected a combination of company-specific execution and broader sector dynamics, with management addressing several of the key debates that analysts had flagged heading into the print. Guidance commentary pointed to continued momentum in the core segments, while questions on margins and capital allocation drew more nuanced responses from the leadership team over the course of the call.
Read the full NTAP analysis
The complete report, with key themes, analyst Q&A summary, notable quotes, and market context — is free with an account. No password, no card.