NetApp Delivers Strong Q3 Performance Despite Execution Challenges, Positions Itself for Future Growth
In its latest quarterly earnings call, NetApp reported a revenue growth of 2% year-over-year in Q3 FY '25, with operating margin exceeding expectations at 30%. While the company's top-line performance was somewhat disappointing, NetApp's CEO George Kurian remained optimistic about the firm's prospects.
One bright spot in the quarter was the continued growth in hybrid cloud revenue, which increased by 1% compared to Q3 a year ago. Additionally, NetApp's all-flash array business saw a significant jump of 10%, with an annualized revenue run rate now standing at $3.8 billion.
Key products such as C-Series capacity flash arrays, storage grid object storage systems, and ASA scale-out all-flash block storage systems all delivered solid growth, with Keystone, NetApp's Storage as a Service offering, growing almost 60% year-over-year.
The company was also recognized for its industry-leading solutions, having been named a customer's choice for primary storage in Gartner's 2025 Voice of the Customer report. This is a testament to NetApp's strong market position and ability to deliver innovation at pace.
In Q3, NetApp introduced new entry-level and mid-range AFF, A-Series high-performance, and C Series capacity flash arrays, completing the refresh of these product lines. The company also launched new entry-level and midrange ASA systems, which make it easier for customers to scale up from a smaller starting point or expand capabilities to remote and branch locations.
These new products are already gaining traction with customers, who appreciate NetApp's ability to unify data across hybrid multi-cloud environments and strong ransomware protection. The company continues to see growth in demand for AI solutions as the large market opportunity for enterprise can AI begins to open and customers seek a unified and structured view of their data assets.
NetApp's AI business performed ahead of expectations, with over 100 AI infrastructure and data lake modernization wins in Q3. These wins span geographies varied in size and included a number of service providers deploying NetApp as the storage foundation for their AI as a service offerings.
Instituting a higher level of scrutiny on deal progression through the pipeline with tighter controls on closing plans, NetApp expects these actions will enhance its execution and improve momentum. Already, a number of deals that slipped out of Q3 have closed, giving the company confidence in its ability to deliver future growth."
