Shares of NetApp fell 8.1% in pre-market trading on Thursday after the data infrastructure company reported record first-quarter results but issued guidance that signaled a significant deceleration in growth for the second half of its fiscal year.
The company posted revenue of $2.03 billion for the quarter ended July 31, exceeding the consensus estimate of approximately $1.84 billion. Non-GAAP earnings per share reached $2.58, topping projections near $2.12. Despite the strong performance, NetApp’s stock slipped to $166.11 in pre-market activity, down from Wednesday’s close of $180.77 and well below its 52-week high of $209.06.
Free cash flow declined 35% year-over-year to $401 million, reflecting increased capital expenditures. The company also disclosed a sequential drop in the number of AI and data lake-related contracts closed, from roughly 500 in the prior quarter to about 350, though average contract values increased.
NetApp’s updated annual guidance implies a sharp slowdown in revenue growth, with expectations for the second half of the fiscal year to expand by just 9%–10%, compared with 26% in the first quarter and 23% in the second. The outlook contrasts with the strong start to the year and raises concerns about sustained demand.
Evercore ISI maintained its In Line rating on the stock following the results, acknowledging the record first-quarter performance but highlighting the implied second-half slowdown as a key pressure point. The broader market offered little support, with the S&P 500 trading nearly flat and the Nasdaq slightly lower, indicating no broad-based technology sector rebound to offset the specific decline in NetApp shares.
