NetApp Inc at Goldman Sachs Technology Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Katherine Campagna - Goldman Sachs Group Inc - Analyst : Now that you've gotten some time to get a little bit more comfortable and get a look under the hood, we'd love to know if there's any opportunities that you would highlight as most exciting for you at NetApp.

Question: Katherine Campagna - Goldman Sachs Group Inc - Analyst : Awesome. You reported earnings two weeks ago for fiscal 1Q '26. Before we dig into some more strategic questions, could you do a brief recap for the quarter and make sure there's any highlights that you'd wanted this audience is familiar with?

Question: Katherine Campagna - Goldman Sachs Group Inc - Analyst : Maybe one more high-level question. We can get into some of those strategic growth drivers that you talked about at the top. But the company has long talked about ONTAP as the backbone of your unified data management capabilities. Why is having a unified operating system a competitive differentiator for NetApp? And why is that something that your competitors aren't able to do because their portfolios are either built through M&A or otherwise have disparate operating systems across their products?

Question: Katherine Campagna - Goldman Sachs Group Inc - Analyst : So maybe turning to each of those four strategic growth areas that you mentioned in turn: flash, block, cloud, and AI. We'll start -- we'll do them in that order, but maybe starting with flash. Obviously, there's a secular benefit to flash as we transition, particularly at the midrange from more legacy hard disk type of storage media. But can you talk about the transition that's happening at the midrange? And when you think flash will be more competitive for some of the more nearline storage opportunity? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 09, 2025 / 10:05PM, NTAP.OQ - NetApp Inc at Goldman Sachs Technology Conference

Question: Katherine Campagna - Goldman Sachs Group Inc - Analyst : So I wanted to talk about the IDC leadership that you mentioned earlier in the all-flash category in the most recent quarter. What do you think has been driving NetApp's above-market growth in all-flash? And how sustainable do you think this market share leadership position is especially as you have other competitors either distracted or increasingly investing in their all-flash capabilities as well?

Question: Katherine Campagna - Goldman Sachs Group Inc - Analyst : So on the block appliance, I think ASA is the appliance that you introduced a few years ago for dedicated block storage. Why did NetApp feel there was a need for a dedicated appliance for block as opposed to the differentiated, unified kind of opportunity that you have in the rest of the portfolio? And how has that platform been? Obviously, it's been contributing to growth, but what other opportunities do you see for that dedicated block platform going forward?

Question: Katherine Campagna - Goldman Sachs Group Inc - Analyst : For people who may be less familiar with the different requirements of a block or a file system, why does it have -- what's the advantage of having a standalone block appliance as opposed to a bundled solution? What can you do better or more cost effectively with the standalone plan?

Question: Katherine Campagna - Goldman Sachs Group Inc - Analyst : Yeah. So let's shift gears to public cloud and maybe talking about file as well. How has NetApp's legacy as a file vendor helped with your first-party relationships with the cloud providers, Azure, GCP, AWS? And again, maybe for those who are less familiar with what the product suite looks like, what is NetApp's offering in these -- in the first-party cloud marketplace?

Question: Katherine Campagna - Goldman Sachs Group Inc - Analyst : Awesome. And what about NetApp has allowed you to have that differentiated first-party relationship?

Question: Katherine Campagna - Goldman Sachs Group Inc - Analyst : And you mentioned this earlier as a headwind, just for the public cloud segment from a growth rate perspective. But in the last few quarters, NetApp has narrowed the scope of its public cloud segment with the divestiture of Spot and also CloudCheckr. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 09, 2025 / 10:05PM, NTAP.OQ - NetApp Inc at Goldman Sachs Technology Conference So can you talk about why it makes sense to narrow the scope of what you're looking to achieve in the cloud portfolio and in the public cloud portfolio? And why this is the right mix of business where you are right now?

Question: Katherine Campagna - Goldman Sachs Group Inc - Analyst : And maybe jumping ahead a little bit, but talking to the guidance raise that you mentioned on your outlook for public cloud margins. Encouraging to see that raise in long-term outlook. And is it just the mix into more first party that's going to get you from the 80% that you've reported a couple of weeks ago to that 80% to 85% range or the high end of that range? Or are there any other drivers in public cloud that should help gross margins?

Question: Katherine Campagna - Goldman Sachs Group Inc - Analyst : And is there any time frame we should be paying attention to for that depreciation of the investments that you made for one of your hyperscaler partners?

Question: Katherine Campagna - Goldman Sachs Group Inc - Analyst : Okay. And last but not least, I want to touch on NetApp's AI opportunity. So encouraging to hear last quarter that you closed 125 AI infrastructure and data lake modernization deals. Maybe starting at a high level, what role does storage and storage appliance play in AI initiatives for enterprises more broadly? Why do they need to modernize their data stacks in anticipation of AI workloads? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 09, 2025 / 10:05PM, NTAP.OQ - NetApp Inc at Goldman Sachs Technology Conference

Question: Katherine Campagna - Goldman Sachs Group Inc - Analyst : Thinking about NetApp's go-to-market in the AI space, you have a number of partnerships that you've discussed in public settings with NVIDIA, Intel, Cisco is in there as well, just thinking about players across the broader AI ecosystem. How should we think about the role of partnerships and go-to-market for AI? And is that different than the way NetApp goes to market with its kind of traditional enterprise storage solution?

Question: Katherine Campagna - Goldman Sachs Group Inc - Analyst : So shifting gears to some more financial outlook-oriented questions. When you reported earnings two weeks ago, you guided to 2% growth for next quarter and 3% growth for the full year on the top line, implying that we should see an acceleration in the top line in the back half of the year. What are the underlying assumptions from a demand perspective across customer verticals or regions? I know you mentioned some weakness in public sector but good strength of large enterprise. What are the expectations for 2Q and really the back half of the year from a demand outlook?

Question: Katherine Campagna - Goldman Sachs Group Inc - Analyst : Maybe on the go-to-market and the investment in your sales force. There was a number of strategic senior hires in North America that were announced in the last couple of weeks. And it would be great if you could dig into what your priorities are for your sales organization and what capabilities do you feel like you need to enhance with these appointments? And it sounds like there's some outlook for the productivity of those new salespeople to really start contributing to growth in the back half. But typically, what do you see as the kind of time to productivity for some of these investments?

Question: Katherine Campagna - Goldman Sachs Group Inc - Analyst : Very helpful. Maybe shifting back to what you mentioned earlier around some of the softness in public sector and you noted the seasonality of 2Q being a particularly strong quarter historically for public sector. How should we think about broader trends in federal spending or kind of a down year in federal spending on NetApp's performance for fiscal 2026? And how conservative of a view have you taken on public sectors contributions to kind of the overall market for the rest of the year?

Question: Katherine Campagna - Goldman Sachs Group Inc - Analyst : And so what are some of the pockets where you're most exposed? Is it more of an issue of state and local or federal or what feels like a more stable area within the broader US public sector segment for NetApp to be doubling down on?

Question: Katherine Campagna - Goldman Sachs Group Inc - Analyst : I want to call on your experience at Western Digital and ask about some of the volatility we've been seeing on the memory side. So maybe first, what is your read on current memory pricing? And then I would love to know now that you're in this seat at NetApp, how you are managing that REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 09, 2025 / 10:05PM, NTAP.OQ - NetApp Inc at Goldman Sachs Technology Conference utility? Is it different than what you would have expected when you were on the other side of the equation? And how you're thinking about things like strategic purchases and planning for kind of changes in pricing?

Question: Katherine Campagna - Goldman Sachs Group Inc - Analyst : Yes. That's very helpful. Maybe one last question, and we can turn it to the audience to see if there's any Q&A. I want to talk about Keystone, the storage-as-a-service platform that NetApp has shown some very strong growth. I think you called out 80% year-over-year growth in Keystone next -- or last quarter. What is really driving Keystone adoption in your view? And is there anything we can think about in terms of changes in the macro environment or like the rate environment that may influence the customer's decision to choose, A, as a service consumption model versus a purchase consumption model or more of a CapEx-type purchase?

Question: Katherine Campagna - Goldman Sachs Group Inc - Analyst : Maybe I'll open it up to the audience, see if there's any questions for Wissam. I have plenty more, so I can keep going. Maybe talking to your capital allocation framework. You mentioned at the top of the call, aspiring to return up to 100% of free cash flow to investors this year, but you're also clearly making investments both on the R&D side and then in your sales force. So what is the framework that you're using beyond as you balance both shareholder returns and investments back into the business?

Question: Katherine Campagna - Goldman Sachs Group Inc - Analyst : And how do you think about M&A within that capital allocation framework? You made acquisitions in the past, but it seems like some of them are also being divested at the same time. So how does inorganic growth factor into some of the capabilities that NetApp wants to further invest in?

Question: Katherine Campagna - Goldman Sachs Group Inc - Analyst : And maybe to close it out here in our last few minutes, can you tie it all together and talk to the key priority and strategic focuses that you and the rest of the management team are really focused on in the next one to two years, and how that factors into the longer-term growth outlook for NetApp?

Question: Katherine Campagna - Goldman Sachs Group Inc - Analyst : Awesome. Well, thank you very much. It's been a privilege to have you here on stage and join us at the conference today. And yeah, it's been great. Thank you very much, Wissam. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 09, 2025 / 10:05PM, NTAP.OQ - NetApp Inc at Goldman Sachs Technology Conference

Question: Katherine Campagna - Goldman Sachs Group Inc - Analyst : Thank you.