Title

Earning Preview: NetApp Q3 FY2026 revenue is expected to increase by 0.27%, and institutional views are cautiously bullish

Abstract

NetApp, Inc. will announce fiscal third-quarter results on February 26, 2026 Post Market, with consensus pointing to modest top-line growth and healthy EPS expansion, as investors gauge momentum across core storage, software maintenance, and public cloud while tracking recent shifts in analyst ratings.

Market Forecast

Consensus for the fiscal third quarter implies revenue of 1.70 billion, up 0.27% year over year, EBIT of 526.64 million, up 7.03% year over year, and adjusted EPS of 2.07, up 8.20% year over year. Forecast margins are not explicitly provided; the mix and operating discipline embedded in recent results set the context for potential stability in the gross margin profile, while profit expansion is implied by the EPS and EBIT outlooks.

Management’s focus on product and software maintenance continuity remains central, supporting resilient recurring revenue and services attachment. Public cloud stands out as the most promising segment, anchored by last quarter’s 171.00 million in revenue and continued strategic emphasis on cloud-delivered storage and data services.

Last Quarter Review

NetApp, Inc. delivered prior-quarter revenue of 1.71 billion, a gross profit margin of 71.96%, GAAP net profit attributable to the parent of 305.00 million, a net profit margin of 17.89%, and adjusted EPS of 2.05, up 9.63% year over year; total revenue grew 2.84% year over year.

A notable highlight was the quarter-on-quarter improvement in bottom-line efficiency, with GAAP net profit up 30.90% sequentially, reflecting mix, cost execution, and operating leverage. In main-business composition, Products contributed 788.00 million (approximately 46.22% of revenue), Software Maintenance 647.00 million (approximately 37.95%), Public Cloud 171.00 million (approximately 10.03%), and Professional and Other Services 99.00 million (approximately 5.81%).

Current Quarter Outlook (with major analytical insights)

Core enterprise storage and software maintenance

The near-term setup for core enterprise storage is one of incremental stability, with revenue run-rate supported by an installed base that continues to refresh arrays and attach maintenance and software entitlements. The previous quarter’s gross profit margin of 71.96% indicates that mix and software intensity are supportive, particularly when professional services and recurring maintenance are healthy components of the portfolio. For the current quarter, the 1.70 billion revenue expectation and EPS growth of 8.20% year over year suggest that margin structure remains disciplined even as headline growth is modest.

In this construct, software maintenance revenue is critical to smoothing cyclicality in hardware orders and sustaining operating leverage. Renewal dynamics, cross-sell into data protection and data management features, and premium support tiers all contribute to predictable unit economics. If enterprises continue to proceed with selective modernization and capacity additions for data-intensive workloads, maintenance and software line items can help buffer any timing variability in large hardware deals.

Price realization and competitive promotions can influence hardware gross margin, but the broader mix of products plus software historically provides a counterweight. Investors will watch for evidence that product bookings align with seasonal patterns and that maintenance renewal rates remain in normal ranges, which would underpin the earnings cadence embedded in the consensus EPS and EBIT growth profiles.

Public cloud services

Public cloud is the strategic growth vector, with last quarter’s 171.00 million revenue demonstrating the scale now embedded in cloud-delivered storage and data services. The fiscal third-quarter consensus does not break out cloud revenue separately, yet the overall EPS and EBIT growth outpacing total revenue growth implies that higher-margin and software-rich elements—including cloud subscriptions—are contributing positively to mix. The positioning of cloud-based data management, snapshots, and performance tiers for analytics and AI workloads is a structural tailwind for attach and expansion.

Customer adoption patterns often start with targeted workloads and expand to broader datasets and regions over time, producing a compounding effect on consumption. The most constructive scenario for this quarter would see continued workload migrations and growth in recurring usage, which shows up in annualized recurring revenue trends and deferred revenue metrics. While the exact year-over-year rate for the public cloud line is not provided in the dataset, the strategic emphasis and the scale achieved last quarter highlight its role as a medium-term accelerator for total company growth.

The incremental opportunity comes from tighter integration with hyperscale environments and from performance tiers that enable enterprise data services to run closer to compute-intensive tasks. If customers prioritize resilience, performance, and cost optimization for cloud workloads, the portfolio’s alignment with those needs can support above-company-average growth rates over time, even when headline revenue growth at the consolidated level is subdued.

Stock price drivers this quarter

The equity setup heading into February 26, 2026 centers on the balance between modest revenue growth and better profit trajectory, as captured by the consensus delta between revenue (up 0.27% year over year) and EPS (up 8.20% year over year). Investors are likely to focus on signals around demand for large enterprise storage refresh cycles, the cadence of public cloud expansion, and whether gross margins remain anchored near recent levels given the mix. Any commentary on the durability of maintenance renewals and visibility into subscription and cloud pipelines can materially influence sentiment around forward EPS quality.

Recent rating changes and the January sell-off in U.S. hardware technology names underscored the market’s sensitivity to perceived demand risk and valuation. In this context, guidance color—particularly around the balance of on-premises hardware, software maintenance, and cloud recurring revenue—can drive multiple compression or expansion. Management’s articulation of deal timing, win rates, and early fiscal fourth-quarter visibility could be pivotal for how shares trade immediately after results.

Given the modest top-line growth expectation, investors may apply a higher bar for incremental margin delivery and free-cash-flow conversion. A reiterated path to sustaining high-60s to low-70s gross margins and operational cost discipline would support the case that EPS expansion is not solely dependent on aggressive cost controls but also on mix and ongoing demand for software and cloud services. Conversely, any sign of deceleration in cloud consumption or an unexpected step-down in maintenance renewals would challenge the positive EPS narrative embedded in the quarter’s forecast.

Analyst Opinions

Across identifiable views since January 1, 2026, the ratio of bullish to bearish stances is approximately 2:1, indicating a majority skew toward positive expectations for NetApp, Inc.’s setup into the fiscal third-quarter print. The bullish camp highlights disciplined execution and mix that supports margin durability, with emphasis on software maintenance resiliency and continued public cloud momentum. Representatives of this cohort include well-followed institutions that reaffirmed Buy ratings and constructive outlooks on product-cycle positioning and cloud alignment.

Supportive analysts argue that the spread between modest revenue growth and higher EPS growth is credible given cost control, portfolio mix, and the evolution of recurring revenue streams. The rationale frequently centers on two components: first, that the portfolio’s software density and maintenance attachment naturally underpin gross margin resilience; second, that cloud-delivered storage and data services are entering a phase of broader enterprise adoption that can compound through seat or workload expansion. In this narrative, consensus EPS of 2.07, up 8.20% year over year, and EBIT of 526.64 million, up 7.03% year over year, look attainable under a steady demand backdrop.

Bullish views also point to the prior quarter as a demonstration of operating leverage, where GAAP net profit rose to 305.00 million and net margin reached 17.89% amid a 71.96% gross margin. They frame the current quarter’s modest revenue growth expectation of 0.27% year over year as conservative against a backdrop of sticky maintenance renewals and cloud adoption that remains early relative to the enterprise data estate. While acknowledging that hardware order timing can introduce volatility, they see the company’s emphasis on recurring elements as a stabilizer that can sustain double-digit EPS growth in environments where top-line expansion is restrained.

The positive skew in institutional commentary since early January also reflects confidence that portfolio depth—spanning products, software maintenance, and cloud subscriptions—allows for multiple pathways to deliver the forecast EPS outcome. That flexibility, according to bullish analysis, reduces reliance on any single end market or order cycle to meet quarterly objectives. In their view, this multi-pronged monetization approach offers a partial hedge against macro variability while preserving exposure to secular data growth and cloud migration themes that continue to shape enterprise IT spending.