NetApp Inc at UBS Global Technology and AI Conference Transcript

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

Question: David Vogt - UBS AG - Analyst : So we just came off of earnings last week. So I think this is incredibly timely. What I thought we should do is maybe start with kind of just a quick overview of what you saw last quarter. Results were stronger, gross margin strong despite, I think, people's fear about commodity prices, other competitive issues. So maybe we can start there and talk about kind of what you saw in the quarter and how we're thinking about the January quarter and beyond through your fiscal year.

Question: David Vogt - UBS AG - Analyst : Got it. So I want to come back to margin in a second. And maybe just touch on demand drivers for a second. So obviously, state and local was a little bit better, I think, US federal worse. Is that a fair characterization?

Question: David Vogt - UBS AG - Analyst : Really tough. But to your point, you noted that these -- the money is there. People have to invest. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 02, 2025 / 10:35PM, NTAP.OQ - NetApp Inc at UBS Global Technology and AI Conference

Question: David Vogt - UBS AG - Analyst : So what is sort of the kind of mechanical process to really see that money start to flow into programs and projects that would benefit you? Is it just, hey, the person needs to be in the seat, the correct person needs to be in the right seat. The assets have been sweat so long that they no longer can defer, delay, push out? Like is there anything that you can point to to help us understand like how we should think about? Obviously, we don't think it's going to come this current quarter, as you pointed out, but as we move through the subsequent quarters next year?

Question: David Vogt - UBS AG - Analyst : And does that business coming back? Your all-flash business was very strong again. Prior quarter, it was strong, ex US federal public sector. Are they heavy consumers of flash at this point in the cycle? Or are they still sort of a mixed customer in terms of buying legacy drive systems? Or is it mostly an all-flash solution that they're looking for at this point?

Question: David Vogt - UBS AG - Analyst : Got it. Outside of public sector, obviously, we've had reasonably good demand signals from other vendors. I think we had one earlier today, one of your competitors talked about their first-party IP starting to really accelerate. Do you think the market overall is healthy besides just what you're seeing? Or are you taking material enough share that you're not seeing some of the -- well, let me rephrase that. You're not seeing some of the growth dynamics there. They're talking about acceleration, but they're growing far slower than you. So is that share driven? Is it product mix driven? How do you think about where you're positioned because you've taken a lot of share in the last couple of years? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 02, 2025 / 10:35PM, NTAP.OQ - NetApp Inc at UBS Global Technology and AI Conference

Question: David Vogt - UBS AG - Analyst : Can I go back to the comment you made about compute seeing a little bit of a cycle recovery. If I look at compute historically pre-AI, storage and compute were generally attached at the hip, if you will. We haven't really seen that. Why do you think that's the case? And would that be additive to your outlook or your expectations, not just next year and the year beyond, if we do see a healthy recovery in traditional storage attached to traditional CPU-based server?

Question: David Vogt - UBS AG - Analyst : Right. But I guess maybe what I was trying to ask is we've seen some customers look for more power-efficient compute outside of GPUs.

Question: David Vogt - UBS AG - Analyst : And -- but we haven't seen that translate into traditional storage demand. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 02, 2025 / 10:35PM, NTAP.OQ - NetApp Inc at UBS Global Technology and AI Conference

Question: David Vogt - UBS AG - Analyst : So when -- it's a good point. So when you think about -- in the past, I think you've said you want to bring AI to where the data is, not data to the AI, right? It's expensive. So in that framework, that three-pronged framework that you laid out. So when we think about bringing -- fine-tuning models to the data, like where do you think we are in that cycle when you talk to enterprise customers? And maybe can you talk to like where you are internally? Like I would imagine that you have multiple projects and test cases and are exploring how it benefits NetApp. Like is this a calendar '26 kind of dynamic where we're going to see more use cases and customers really going out in that direction? Or is it more '27, '28 at this point where everything is still training-centric, and we're not really focused on fine-tuning these models and bringing it to where the data is on the enterprise side?

Question: David Vogt - UBS AG - Analyst : Does that suggest a longer tail for legacy systems in storage as companies keep storage longer -- like keep data longer, so maybe, asymptotically, your hybrid system business, that's what, a third of your storage solutions maybe stops declining effectively or the growth meaningfully moderates? I'm just trying to think of like the longer-term ramifications for all of this incremental use case for data. We're going to create a lot of data. People will probably want to preserve said data for unknown potential incremental use cases. I mean is that -- should we think about the storage market then being sort of a healthier market over the long term, intermediate term than what we've seen over the last 5 to 10 years? Is that like a reasonable way to think about it?

Question: David Vogt - UBS AG - Analyst : So we have to talk about margins. So storage, historically, has been a market where you've been able to increase prices to offset rising inputs, maybe albeit with a little bit of a lag issue. Do you think we're going to see that same type of cycle from customer behavior where you're going to be able to navigate maybe the higher NAND pricing, higher DRAM prices and other components by raising prices? I mean I think you talked about it on the last call where customers buy dollar amount of storage. I mean maybe can you kind of walk through how we should think about that?

Question: David Vogt - UBS AG - Analyst : And maybe just to go back to your point about customers have a fixed budget of dollars, and they may get more gigabytes in one year, less in the next year. Do customers trade down? So let's say, you were thinking about a higher end, more performative flash solution, maybe they trade down into a more modest cold storage-focused solution if it's adequate to meet that need? Or is it really the demand for that particular use case or workload supersedes that decision and they just buy less of said product for the same dollars?

Question: David Vogt - UBS AG - Analyst : Depends. So the reason I ask is, so is there -- I know you don't break this out, but is there a margin differential across product lines based on performance within your portfolio? So very high-end flash performative, I would imagine, has more robust gross margin, more solution, more software versus maybe a lower-end solution. Is that a good way to frame it?

Question: David Vogt - UBS AG - Analyst : Got it. Maybe on -- pivoting to public, obviously, gross margins have been working their way higher, 83%, congratulations on the quarter. How do we think now that we're anniversarying Spot coming up? How do we think about the growth trajectory in those, I guess, discrete items within your public cloud? So first-party storage, et cetera, like is the holistic solution for public cloud kind of a mid-teens growth driver? And the reason why I'm asking is if I look at the profit dollar contribution from public cloud, it's kind of incrementally on par with your traditional business.

Question: David Vogt - UBS AG - Analyst : And so if it's growing 2x, 3x your traditional business, obviously, then we're going to mix higher to mid-80s gross margin solutions. Is that a fair way to frame it?

Question: David Vogt - UBS AG - Analyst : But mix-wise, it's (multiple speakers) meaningful tailwind.

Question: David Vogt - UBS AG - Analyst : So what -- in this quarter, what was the strength in first -- was there anything you can call out in first-party storage? It was definitely stronger than we expected. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 02, 2025 / 10:35PM, NTAP.OQ - NetApp Inc at UBS Global Technology and AI Conference

Question: David Vogt - UBS AG - Analyst : Within public cloud.

Question: David Vogt - UBS AG - Analyst : Outside of the expansion of the relationship on AI with the public cloud parties, is there anything that you need? I mean you mentioned you added Block to your Google solution. Is there anything else that's sort of missing in the portfolio that you look at like we need this and then we have the portfolio or the complete portfolio that we want at this point?

Question: David Vogt - UBS AG - Analyst : I have to ask the final point, with all of this tailwind potentially for public cloud, for traditional, for disk, for flash, you talked about margins. On supply chain, how do you think about the prospects for incremental capacity coming online? I know you're close to all the memory vendors. Like in your experience, does higher prices mean more supply effectively? What we always hear is the cure for higher prices is higher prices, right? So then supply comes online. But it doesn't feel like that's the case this cycle when you talk to participants in the supply chain responsible for that capacity. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 02, 2025 / 10:35PM, NTAP.OQ - NetApp Inc at UBS Global Technology and AI Conference

Question: David Vogt - UBS AG - Analyst : Got it. So we've been asking everyone today, what do you think the market is missing or a little bit unclear on with regards to your strategy going forward. We've had challenging US Federal. I think everybody understands that. EMEA has been a little bit uneven to be fair but parts of your business are performing exceptionally well given the circumstances. So what do you think the market is missing about the storage industry, the NetApp sort of strategy going forward for the intermediate term? Not next quarter, not the following quarter, but longer term?

Question: David Vogt - UBS AG - Analyst : Great. I think we're out of time. So we're going to end it here.

Question: David Vogt - UBS AG - Analyst : George, thank you for your time. Thank you, everyone.