Netapp Inc

Revenue Growth and Guidance: NetApp reported Q3 FY 2025 revenue of $1.64 billion, a 2% year-over-year increase but below internal expectations. The full-year revenue guidance was revised to between $6.49 and $6.64 billion, indicating a slight reduction primarily driven by foreign exchange fluctuations and the divestiture of Spot by NetApp, which is expected to impact future revenues.

Operating Margin and Cash Flow: The company posted an operating margin of 30%, above expectations, demonstrating disciplined expense management. However, operating cash flow decreased year-over-year to $385 million, attributed to lower collections and higher cash outflows for strategic SSD purchases. Free cash flow was also lower at $338 million versus $448 million a year prior, resulting in an expectation of continued pressure on cash flow due to working capital changes.

Sales Execution Challenges: CEO George Kurian noted issues with sales execution towards the end of Q3, particularly with several large deals slipping into Q4 due to procurement delays and changes in customer decision-making. This underscored a need for greater scrutiny in deal progression and tighter controls over closing plans moving forward.