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10-K – 2026-06-05 – ntap-20260424.htm
contribute to a general decrease in economic activity or corporate spending on IT, or directly impact our marketing, manufacturing, financial and logistics functions, or impair our ability to meet our customer demands, our operating results and financial condition could be materially adversely affected. Our headquarters is located in Northern California, an area susceptible to earthquakes and wildfires. If any significant disaster were to occur there, our ability to operate our business and our operating results, financial condition and cash flows could be adversely impacted.
We could be subject to additional income tax liabilities.
Our effective tax rate is influenced by a variety of factors, many of which are outside of our control, including fluctuations in our earnings and financial results in the various countries and states in which we do business, changes to the tax laws in such jurisdictions and the outcome of income tax audits. Changes to any of these factors could materially impact our operating results, financial condition and cash flows.
We receive significant tax benefits from sales to our non-U.S. customers. These benefits are contingent upon existing tax laws and regulations in the U.S. and in the countries in which our international operations are located. For example, in July 2025, the One Big Beautiful Bill Act was enacted, which introduced significant changes to U.S. tax law, including permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act of 2017, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions including the immediate expensing of United States research and development expenditures. Future changes in domestic or international tax laws and regulations or a change in how we manage and structure our international operations could adversely affect our ability to continue realizing these tax benefits. More broadly, our effective tax rate could also be adversely affected by changes in, or reinterpretations of, applicable tax laws and regulations, which could result in higher tax liabilities on our pre-tax income and cash balances. Changes in how we manage and structure our business and operations could similarly expose us to additional tax obligations. Any of the foregoing could harm our operating results and financial condition. We continue to evaluate the impacts of changes in tax laws and regulations on our business.
Many countries around the world are beginning to implement legislation and other guidance to align their international tax rules with the Organization for Economic Co-operation and Development’s Base Erosion and Profit Shifting Project (BEPS) recommendation and related action plans that aim to standardize and modernize global corporate tax policy, including changes to cross-border tax, transfer pricing documentation rules and nexus-based tax incentive practices. We operate in jurisdictions that participate in the BEPS inclusive framework (Inclusive Framework), which is implementing measures such as the global minimum tax framework known as Pillar Two and standardized profit requirements for baseline marketing and distribution activities under Amount B of Pillar One. These rules, along with the continued expansion of the Inclusive Framework to additional jurisdictions or any changes to the scope or requirements of these frameworks, could increase our worldwide effective tax rate and adversely affect our operating results, financial condition, and cash flows.
We are routinely subject to income tax audits in the U.S. and several foreign tax jurisdictions. If the ultimate determination of income taxes or at-source withholding taxes assessed under these audits results in amounts in excess of the tax provision we have recorded or reserved for, our operating results, financial condition and cash flows could be adversely affected.
We may not be able to maintain appropriate internal financial reporting controls and procedures.
Any failure to maintain or implement required new or improved controls, or any difficulties we encounter in their implementation, including in connection with our ERP system, could result in significant deficiencies or material weaknesses in our internal control over financial reporting, cause us to fail to timely meet our periodic reporting obligations, or result in material misstatements in our financial statements. Any such failure could also adversely affect the results of periodic management evaluations and annual auditor attestation reports regarding disclosure controls and the effectiveness of our internal control over financial reporting required under the Sarbanes-Oxley Act and the rules promulgated thereunder. The existence of a material weakness could result in errors in our financial statements that could result in a restatement of financial statements, cause us to fail to timely meet our reporting obligations, or cause investors to lose confidence in our reported financial information, which could cause a decline in the market price of our stock and we could be subject to sanctions or investigations by the SEC or other regulatory authorities including equivalent foreign authorities. Further, irrespective of the controls that we adopt, we cannot be assured that we will not experience fraudulent financial reporting in the future.
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It em 1B. Unresolved Staff Comments
Not applicable.
Item 1C. Cybersecurity
Risk Management and Strategy
The Company regularly assesses risks from cybersecurity threats, monitors its information systems for potential vulnerabilities, and tests those systems pursuant to the Company’s cybersecurity policies, standards, processes and practices, which are integrated into the Company’s overall risk management system. To protect the Company’s information systems from cybersecurity threats, the Company uses various security technologies and tools that help the Company identify, escalate, investigate, manage, resolve and recover from security incidents in a timely manner. These efforts include:
• ongoing collection of threat intelligence and environment awareness through monitoring,
• data protection management and vulnerability monitoring through data loss prevention and exfiltration tools,
• cybersecurity risk management processes and practices,
• control assurance,
• secure development of new products,
• identity and access management,
• incident response, auditing and monitoring, and
• maintaining a 24x7 security operations center to allow for always available incident response.
The Company takes a risk-based approach to cybersecurity and has implemented cybersecurity policies throughout its operations that are designed to address cybersecurity threats and incidents. In particular, the Company follows an incident escalation process that is incorporated into its incident and risk management processes. In the event the Company identifies a cybersecurity incident, its senior management, consisting of the Chief Financial Officer, Chief Information Security Officer (CISO), Chief Administrative Officer, and Executive Vice President of Business Technology and Operations review the facts and circumstances involved in such cybersecurity incident, or series of related cybersecurity incidents.
The Company partners with third parties to assess the effectiveness of its cybersecurity prevention and response systems and processes, including third-party review of the Company’s Information Security Management System for ISO 27001 controls, assessment of the Company’s cloud products and managed services according to the American Institute of CPAs (AICPA) Service Organization Control (SOC) Audit Type II, and new product validation as part of the Company’s secure development lifecycle. The Company additionally engage s third-party providers in support of endpoint detection and responses, data loss prevention efforts, and incident management efforts.
To date, the Company is not aware of cybersecurity threats, including as a result of any previous cybersecurity incidents, that have materially affected or are reasonably likely to materially affect the Company, including its business strategy, results of operations or financial condition. For additional discussion of cybersecurity risks and potential related impacts on the Company, refer to the risk factors in Part I, Item 1A – “Risk Factors,” including “If a material cybersecurity or other security breach impacts our services, systems, supply chain, or end-user customer systems, or if stored data is improperly accessed, our business could suffer significant harm.”
Governance
NetApp's Board of Directors oversees the Company’s risk management process, including cybersecurity risks, directly and through its committees. The Audit Committee of the Board of Directors oversees the Company’s risk management program, which focuses on the most significant risks the Company faces in the short-, intermediate-, and long-term timeframes. The Company’s CISO presents cybersecurity updates to the Audit Committee at least twice a year, and has a standing quarterly private session to update the Audit Committee on any relevant matters, as needed. Such updates include a review of cybersecurity risks affecting the Company, related metrics, and any incidents or issues that require attention from the Audit Committee or Board of Directors. Additionally, the Board of Directors receives a presentation at least annually regarding key developments and topics in cybersecurity from management along with a third party cybersecurity expert.
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The CISO provides leadership, strategic direction, and oversight for NetApp’s Global Security Risk and Compliance functions and security program. Global Security executives oversee management of risks and track projects progress, remediations, and any issues related to cybersecurity risks.
NetApp’s CISO is responsible for leading the assessment and management of cybersecurity risks. The current CISO has over 30 years of experience in IT and information security, including over 16 years with NetApp in roles of increasing seniority, and is a Certified Information Security Auditor, Certified Information Security Manager with ISACA and a Certified Information Systems Security Professional with ISC2. The CISO stays informed on information security risks through regular meetings on key cybersecurity projects and KPIs. Updates are communicated to the Global Security Steering Committee, which provides quarterly reports to the Board of Directors and to the Audit Committee.
Item 2. P roperties
Our corporate headquarters are located in San Jose, California. We own and lease office facilities and research and development facilities throughout the United States and internationally, primarily in Asia, Europe and North America. We do not consider any of our facilities to be material for disclosure purposes.
It em 3. Legal Proceedings
For a discussion of legal proceedings, see Note 16 – Commitments and Contingencies of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K, which is incorporated herein by reference.
It em 4. Mine Safety Disclosures
Not applicable.
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PA RT II
It em 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
The Company’s common stock is traded on the NASDAQ Stock Market LLC (NASDAQ) under the symbol NTAP.
Price Range of Common Stock
The price range per share of common stock presented below represents the highest and lowest intraday sales prices for the Company’s common stock on the NASDAQ during each quarter of our two most recent fiscal years.
Fiscal 2026
Fiscal 2025
High
Low
High
Low
First Quarter
$
110.32
$
86.70
$
135.01
$
100.24
Second Quarter
$
126.66
$
100.56
$
134.37
$
112.87
Third Quarter
$
119.72
$
93.69
$
135.45
$
112.86
Fourth Quarter
$
113.78
$
94.46
$
127.78
$
71.84
Holders
As of May 28, 2026, there were 387 holders of record of our common stock.
Dividends
The Company paid cash dividends of $0.52 per outstanding common share in each quarter of fiscal 2026 and fiscal 2025 for an aggregate of $413 million and $424 million, respectively, and paid cash dividends of $0.50 per outstanding common share in each quarter of fiscal 2024 for an aggregate of $416 million. On May 21, 2026, the Company declared a cash dividend of $0.52 per share of common stock, payable on July 29, 2026 to shareholders of record as of the close of business on July 10, 2026. Decisions regarding future dividends are within the discretion of our Board of Directors, and depend on a number of factors, including, general business and economic conditions, and other factors which are discussed in the “Risk Factors” in Item 1A of this Annual Report on Form 10-K.
33
Performance Graph
The following graph shows a comparison of cumulative total shareholder return, calculated on a dividend reinvested basis, of an investment of $100 for the Company, the S&P 500 Index, the S&P 500 Information Technology Index and the S&P 1500 Technology Hardware & Equipment Index for the five years ended April 24, 2026. The comparisons in the graphs below are based upon historical data and are not indicative of, nor intended to forecast, future performance of our common stock. The graph and related information shall not be deemed “soliciting material” or be deemed to be “filed” with the SEC, nor shall such information be incorporated by reference into any past or future filing with the SEC, except to the extent that such filing specifically states that such graph and related information are incorporated by reference into such filing.
April 2021
April 2022
April 2023
April 2024
April 2025
April 2026
NetApp, Inc.
$
100.00
$
100.38
$
88.91
$
146.70
$
130.57
$
163.57
S&P 500 Index
$
100.00
$
100.21
$
102.88
$
127.80
$
140.33
$
184.25
S&P 500 Information Technology Index
$
100.00
$
101.89
$
110.13
$
154.18
$
171.25
$
260.29
S&P 1500 Technology Hardware & Equipment Index
$
100.00
$
113.78
$
120.80
$
127.97
$
152.61
$
234.04
We believe that a number of factors may cause the market price of our common stock to fluctuate significantly. See Item 1A. – Risk Factors.
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Purchases of Equity Securities by the Issuer and Affiliated Purchasers
The following table provides information with respect to the shares of common stock repurchased by us during the three months ended April 24, 2026:
Total Number of Shares
Approximate Dollar Value
Total Number
Average
Purchased as Part of
of Shares That May Yet
of Shares
Price Paid
Publicly Announced
Be Purchased Under The
Period
Purchased
per Share
Program
Repurchase Program
(Shares in thousands)
(Shares in thousands)
(Dollars in millions)
January 24, 2026 - February 20, 2026
599
$
100.33
389,407
$
642
February 21, 2026 - March 20, 2026
634
$
100.30
390,041
$
579
March 21, 2026 - April 24, 2026
749
$
102.33
390,790
$
502
Total
1,982
$
101.07
In May 2003, our Board of Directors approved a stock repurchase program. Under this program, we may purchase shares of our outstanding common stock through solicited or unsolicited transactions in the open market, in privately negotiated transactions, through accelerated share repurchase programs, pursuant to a Rule 10b5-1 plan or in such other manner as deemed appropriate by our management. The stock repurchase program may be suspended or discontinued at any time. On May 21, 2026, our Board of Directors authorized the repurchase of an additional $1.0 billion of our common stock. For further information, see Note 9 - Stockholders' Equity of the Notes to Consolidated Financial Statements included in Part II, Item 8.
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It em 6. [Reserved]
36
It em 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion of our financial condition and results of operations should be read together with the financial statements and the accompanying notes set forth under Part II, Item 8. – Financial Statements and Supplementary Data. The following discussion also contains trend information and other forward-looking statements that involve a number of risks and uncertainties. The Risk Factors set forth in Part I, Item 1A. – Risk Factors are hereby incorporated into the discussion by reference.
Executive Overview
Our Company
NetApp is a global leader in Intelligent Data Infrastructure, empowering organizations to realize the full potential of their data in a rapidly evolving digital world. Headquartered in San Jose, California, and serving customers in approximately 150 countries, NetApp delivers innovative solutions that enable seamless data management, protection, and mobility across on-premises, hybrid, and multi-cloud environments.
Our flagship ONTAP® data management software, together with a comprehensive portfolio of all-flash, hybrid-flash, and cloud-native offerings, forms the foundation for customers’ digital transformation initiatives. NetApp’s deep integration with all major public cloud providers—AWS, Microsoft Azure, and Google Cloud—enables our customers to run critical workloads anywhere, with consistent performance, security, and governance.
NetApp's strategic focus is on modernizing data infrastructure, enabling resilient and secure operations, optimizing cloud strategies, and accelerating artificial intelligence (AI) adoption. Through continued investment in innovation, we have expanded our portfolio to include advanced AI-ready infrastructure, Storage-as-a-Service (Keystone), and robust cyber resilience solutions. Our partnerships with leading technology companies and a global ecosystem of channel partners further extend our reach and solution capabilities.
Our operations are organized into two segments: Hybrid Cloud and Public Cloud.
Hybrid Cloud offers a unified data storage portfolio of storage management and infrastructure solutions that helps customers modernize their data centers. Our Hybrid Cloud portfolio accommodates both structured and unstructured data with unified storage optimized for flash, disk, and cloud storage, capable of handling data-intensive workloads and applications. Hybrid Cloud includes software, hardware, and related support, along with professional and other services.
Public Cloud offers a portfolio of products delivered primarily as-a-service, including related support. This portfolio includes cloud storage, data services, and operational services. These services are generally available on the leading public clouds, including AWS, Microsoft Azure, and Google Cloud.
Global Business Environment
Supply Chain
Inflationary pressures and supply chain constraints have impacted our operations beginning in the second half of fiscal 2026. We have experienced increased costs for memory and other components, which have affected our gross margins, and we expect costs will remain elevated, or continue to increase, in the near term. Additionally, the tight supply environment for specific products, which is anticipated to persist, could pose challenges in meeting customer demand for those products.
To address these challenges, we have implemented several strategic actions:
• We raised our pricing in the fourth quarter of fiscal 2026, in line with market trends. We expect to continue adjusting prices as necessary to offset rising costs and remain aligned with the market. While we aim to match supplier costs with our pricing to customers, we recognize the need to give customers time to adjust to these changes.
• We are leveraging our relationships with multiple suppliers where available to enable component availability and manage costs effectively. This strategy helps us maintain competitive positions in the market from a pricing standpoint. Our history of successful supplier management positions us well to navigate these challenges.
• We continue to offer a wide range of solutions to meet various customer needs and priorities. This includes competitive storage options, all-flash solutions, hybrid-flash solutions, public cloud solutions, and our Keystone Storage-as-a-Service offering. By providing diverse options, we aim to align with our customers’ budget priorities and deliver the best value offerings.
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These actions are part of our ongoing efforts to mitigate the impact of inflation and supply chain constraints on our operating results. We will continue to monitor these trends and uncertainties and adjust our strategies as needed to maintain our financial performance.
Financial Results and Key Performance Metrics Overview
The following table provides an overview of key financial metrics for the years indicated (in millions, except per share amounts and percentages):
Year Ended
April 24, 2026
April 25, 2025
April 26, 2024
Net revenues
$
6,925
$
6,572
$
6,268
Gross profit
$
4,899
$
4,613
$
4,433
Gross margin
71
%
70
%
71
%
Income from operations
$
1,674
$
1,337
$
1,214
Income from operations as a percentage of net revenues
24
%
20
%
19
%
Provision for income taxes
$
372
$
197
$
277
Net income
$
1,276
$
1,186
$
986
Diluted net income per share
$
6.35
$
5.67
$
4.63
Net cash provided by operating activities
$
2,067
$
1,506
$
1,685
April 24, 2026
April 25, 2025
Deferred revenue
$
4,845
$
4,536
• Net revenues : Our net revenues increased 5% in fiscal 2026 compared to fiscal 2025, due to increases in both product revenues and services revenues.
• Gross margin: Our gross margin increased less than one percentage point in fiscal 2026 compared to fiscal 2025, due to the increase in gross margins on services revenues, partially offset by lower gross margins on product revenues.
• Income from operations as a percentage of net revenues: Our income from operations as a percentage of net revenues increased by four percentage points in fiscal 2026 compared to fiscal 2025, primarily due to higher net revenues.
• Provision for income taxes: Our provision for income taxes increased in fiscal 2026 compared to fiscal 2025 primarily due to benefits related to the Internal Revenue Service ("IRS") examination of our fiscal 2018 and 2019 U.S. income tax returns in the prior year.
• Net income and Diluted net income per share: The increase in both net income and diluted net income per share in fiscal 2026 compared to fiscal 2025 reflect the factors discussed above.
Stock Repurchase Program and Dividend Activity
During fiscal 2026, we repurchased 9.0 million shares of our common stock at an average price of $105.89 per share, for an aggregate purchase price of $950 million. We also declared aggregate cash dividends of $2.08 per share in fiscal 2026, for which we paid a total of $413 million.
Restructuring Events
During fiscal 2026, we executed a restructuring plan and recognized expenses totaling $21 million consisting primarily of employee severance-related costs related to the current year and prior year plans.
Senior Notes Repayment
On June 23, 2025, upon maturity, we repaid the 1.875% Senior Notes due June 2025 for an aggregate amount of $757 million, comprised of the principal and unpaid interest.
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Results of Operations
Our fiscal year is reported on a 52- or 53-week year that ends on the last Friday in April. An additional week is included in the first fiscal quarter approximately every six years to realign fiscal months with calendar months. Fiscal years 2026, 2025 and 2024, which ended on April 24, 2026, April 25, 2025 and April 26, 2024, respectively, are all 52-week years, with 13 weeks in each of their quarters. Unless otherwise stated, references to particular years, quarters, months and periods refer to our fiscal years ended in April and the associated quarters, months and periods of those fiscal years .
The following table sets forth certain consolidated statements of income data as a percentage of net revenues for the periods indicated:
Year Ended
April 24, 2026
April 25, 2025
April 26, 2024
Revenues:
Product
46
%
46
%
45
%
Services
54
54
55
Net revenues
100
100
100
Cost of revenues:
Cost of product
20
20
18
Cost of services
9
10
11
Gross profit
71
70
71
Operating expenses:
Sales and marketing
27
28
29
Research and development
14
15
16
General and administrative
5
5
5
Restructuring charges
—
1
1
Acquisition-related expense
—
—
—
Total operating expenses
47
50
51
Income from operations
24
20
19
Other (expense) income, net
—
1
1
Income before income taxes
24
21
20
Provision for income taxes
5
3
4
Net income
18
%
18
%
16
%
Percentages may not add due to rounding
Discussion and Analysis of Results of Operations
Net Revenues (in millions, except percentages):
Year Ended
April 24, 2026
April 25, 2025
% Change
April 26, 2024
% Change
Net revenues
$
6,925
$
6,572
5
%
$
6,268
5
%
The increase in net revenues for fiscal 2026 compared to fiscal 2025 was due to an increase in both product revenues and services revenues. Product and services revenues as a percentage of net revenues remained relatively flat in fiscal 2026 as compared to fiscal 2025. Fluctuations in foreign currency exchange rates favorably impacted net revenues percentage growth year-over-year by two percentage points.
The increase in net revenues for fiscal 2025 compared to fiscal 2024 was due to an increase in both product revenues and services revenues. Product revenues as a percentage of net revenues increased by one percentage point in fiscal 2025 compared to fiscal 2024, while services revenues as a percentage of net revenues decreased by one percentage point.
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Two customers, each of which is a distributor, accounted for 10% or more of net revenues:
Year Ended
April 24, 2026
April 25, 2025
April 26, 2024
Customer A
22
%
21
%
22
%
Customer B
21
%
24
%
22
%
Product Revenues (in millions, except percentages):
Year Ended
April 24, 2026
April 25, 2025
% Change
April 26, 2024
% Change
Product revenues
$
3,194
$
3,040
5
%
$
2,849
7
%
Hybrid Cloud
Product revenues are derived through the sale of our Hybrid Cloud solutions and consist of sales of configured all-flash array systems (including AFF A-Series and AFF C-Series with capacity flash) and hybrid systems (including FAS), which are bundled hardware and software products, as well as add-on flash, disk and/or hybrid storage and related OS, StorageGrid, OEM products and add-on optional software.
Total product revenues increased in fiscal 2026 compared to fiscal 2025, primarily due to higher sales of all-flash array systems and the favorable impact from foreign exchange rate fluctuations. Product revenues in fiscal 2026 also benefited from the execution of a multi-year enterprise agreement.
Total product revenues increased in fiscal 2025 compared to fiscal 2024, primarily due to higher sales of all-flash array systems, partially offset by a decrease in sales of hybrid systems.
Services Revenues (in millions, except percentages):
Year Ended
April 24, 2026
April 25, 2025
% Change
April 26, 2024
% Change
Services revenues
$
3,731
$
3,532
6
%
$
3,419
3
%
Support
2,636
2,512
5
%
2,488
1
%
Professional and other services
407
355
15
%
320
11
%
Public cloud
688
665
3
%
611
9
%
Hybrid Cloud
Hybrid Cloud services revenues are derived from the sale of: (1) support, which includes both hardware and software support contracts (the latter of which entitle customers to receive unspecified product upgrades and enhancements, bug fixes and patch releases), and (2) professional and other services, which include customer education and training.
Support revenues increased in fiscal 2026 compared to fiscal 2025 primarily due to a higher aggregate support contract value for our installed base and the favorable impact from foreign exchange rate fluctuations. Support revenues increased marginally in fiscal 2025 compared to fiscal 2024.
Professional and other services revenues increased in fiscal 2026 and fiscal 2025 compared to the respective prior years primarily reflecting higher revenues from our Keystone Storage-as-a-Service offering.
Public Cloud
Public Cloud revenues are derived from the sale of public cloud offerings delivered primarily as-a-service, which include cloud storage, data services and operational services.
Public Cloud revenues increased in fiscal 2026 and fiscal 2025 compared to the respective prior years primarily due to higher customer demand, driven by NetApp’s diversified cloud offerings and overall growth in the cloud market. The smaller increase in fiscal 2026 reflects the loss of revenue from our Spot by NetApp business which we sold in the fourth quarter of fiscal 2025.
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Hybrid Cloud Segment Net Revenues by Storage Category (in millions, except percentages):
The following table presents Hybrid Cloud segment net revenues by storage category for the periods indicated:
Year Ended
April 24, 2026
April 25, 2025
April 26, 2024
Hybrid Cloud segment net revenues
$
6,237
$
5,907
$
5,657
All-flash revenues as a percentage of Hybrid Cloud segment net revenues
67
%
64
%
58
%
Hybrid-flash and other revenues as a percentage of Hybrid Cloud segment net revenues
33
%
36
%
42
%
Percentages may not add due to rounding
The increases in all-flash revenues (comprised of all-flash product and related service revenues) as a percentage of total Hybrid Cloud segment net revenues for fiscal 2026 and fiscal 2025 as compared to the respective prior years reflect growing customer demand for our all-flash storage solutions, aided by all-flash market expansion.
Net Revenues by Geographic Area:
Year Ended
April 24, 2026
April 25, 2025
April 26, 2024
United States, Canada and Latin America (Americas)
51
%
51
%
51
%
Americas Commercial
41
%
40
%
40
%
U.S. Public Sector
10
%
11
%
11
%
Europe, Middle East and Africa (EMEA)
34
%
34
%
34
%
Asia Pacific (APAC)
15
%
15
%
15
%
Percentages may not add due to rounding
Sales to United States (U.S.) public sector markets includes revenue from the U.S. federal government and U.S. state governments, local municipalities and education institutions. Demand across geographies was relatively consistent for each fiscal year presented.
Cost of Revenues
Our cost of revenues consists of:
(1) cost of product revenues, composed of (a) cost of Hybrid Cloud product revenues, which includes the costs of manufacturing and shipping our products, inventory write-downs, and warranty costs, and (b) unallocated cost of product revenues, which includes stock-based compensation, and;
(2) cost of services revenues, composed of (a) cost of support revenues, which includes the costs of providing support activities for hardware and software support, global support partnership programs, and third-party royalty costs, (b) cost of professional and other services revenues, constituting the cost of delivering such services which includes depreciation expense, (c) cost of public cloud revenues, constituting the cost of providing our Public Cloud offerings which includes depreciation and amortization expense and third-party datacenter fees, and (d) unallocated cost of services revenues, which includes stock-based compensation and amortization of intangibles.
Cost of Product Revenues (in millions, except percentages):
Year Ended
April 24, 2026
April 25, 2025
% Change
April 26, 2024
% Change
Cost of product revenues
$
1,401
$
1,284
9
%
$
1,137
13
%
Hybrid Cloud
1,395
1,278
9
%
1,131
13
%
Unallocated
6
6
—
%
6
—
%
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Hybrid Cloud
Cost of Hybrid Cloud product revenues represented 44%, 42% and 40% of Hybrid Cloud product revenues in fiscal 2026, 2025 and 2024, respectively. Materials costs represented 91%, 89% and 88% of cost of Hybrid Cloud product revenues in fiscal 2026, 2025 and 2024, respectively.
Materials costs increased by $126 million in fiscal 2026 compared to fiscal 2025 primarily reflecting the increase in product revenues and higher component costs. Materials costs increased by $140 million in fiscal 2025 compared to fiscal 2024 primarily reflecting the increase in product revenues.
Hybrid Cloud product gross margins decreased by two percentage points in fiscal 2026 compared to fiscal 2025 primarily due to higher component costs, partially offset by the favorable impact from a multi-year enterprise agreement. Hybrid Cloud product gross margins decreased by two percentage points in fiscal 2025 compared to fiscal 2024 primarily due to higher component costs.
In response to rising component costs, we raised our prices in the fourth quarter of fiscal 2026, which we expect to support product gross margins in early fiscal 2027. We expect to continue adjusting our pricing as necessary to align with any significant changes in component costs.
Unallocated
Unallocated cost of product revenues were consistent for each fiscal year presented.
Cost of Services Revenues (in millions, except percentages):
Year Ended
April 24, 2026
April 25, 2025
% Change
April 26, 2024
% Change
Cost of services revenues
$
625
$
675
(7
)%
$
698
(3
)%
Support
198
197
1
%
195
1
%
Professional and other services
281
261
8
%
243
7
%
Public cloud
113
165
(32
)%
203
(19
)%
Unallocated
33
52
(37
)%
57
(9
)%
Hybrid Cloud
Cost of Hybrid Cloud services revenues, which are composed of the costs of support and professional and other services, increased in fiscal 2026 and fiscal 2025 compared to the respective prior years reflecting the increase in Hybrid Cloud services revenues. Cost of Hybrid Cloud services revenues represented 16% of Hybrid Cloud services revenues in fiscal 2026, 2025 and 2024.
Hybrid Cloud support gross margins were similar in fiscal 2026, fiscal 2025 and fiscal 2024. Hybrid Cloud professional and other services gross margins increased by five percentage points in fiscal 2026 compared to fiscal 2025 and by two percentage points in fiscal 2025 compared to fiscal 2024 primarily due to the mix of services provided in each year.
Public Cloud
Cost of Public Cloud revenues decreased, while Public Cloud gross margins increased by eight percentage points, in fiscal 2026 and fiscal 2025 compared to the respective prior years. These fluctuations were due to cost optimization that included a decrease in fixed assets depreciation, and the mix of offerings provided which was impacted by the sale of our Spot by NetApp business in the fourth quarter of fiscal 2025.
Unallocated
Unallocated cost of services revenues decreased in fiscal 2026 and fiscal 2025 compared to the respective prior years due to the derecognition of certain intangible assets resulting from the sale of our Spot by NetApp business during the fourth quarter of fiscal 2025.
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Operating Expenses
Sales and Marketing, Research and Development and General and Administrative Expenses
Sales and marketing, research and development, and general and administrative expenses for fiscal 2026 totaled $3,204 million, or 46% of net revenues, representing a decrease of three percentage points compared to fiscal 2025, primarily due to an increase in net revenues. While fluctuations in foreign currency exchange rates favorably impacted net revenues in fiscal 2026 compared to fiscal 2025, they adversely impacted sales and marketing, research and development and general and administrative expenses.
Sales and marketing, research and development, and general and administrative expenses for fiscal 2025 totaled $3,188 million, or 49% of net revenues, representing a decrease of one percentage point compared to fiscal 2024.
Compensation costs represent the largest component of operating expenses. Included in compensation costs are salaries, benefits, other compensation-related costs, stock-based compensation expense and employee incentive compensation plan costs.
Total compensation costs included in sales and marketing, research and development and general and administrative expenses remained relatively flat in fiscal 2026, 2025 and 2024.
Sales and Marketing (in millions, except percentages):
Year Ended
April 24, 2026
April 25, 2025
% Change
April 26, 2024
% Change
Sales and marketing expenses
$
1,869
$
1,865
—
%
$
1,828
2
%
Sales and marketing expenses consist primarily of compensation costs, commissions, outside services, facilities and IT support costs, advertising and marketing promotional expense and travel and entertainment expense.
Sales and marketing expenses in fiscal 2026 were relatively flat compared to fiscal 2025. The increase in sales and marketing expenses in fiscal 2025 compared to fiscal 2024 was primarily due to an increase in sales commission expenses.
Research and Development (in millions, except percentages):
Year Ended
April 24, 2026
April 25, 2025
% Change
April 26, 2024
% Change
Research and development expenses
$
991
$
1,012
(2
)%
$
1,029
(2
)%
Research and development expenses consist primarily of compensation costs, facilities and IT support costs, depreciation, equipment and software related costs, prototypes, non-recurring engineering charges and other outside services costs.
The decrease in research and development expenses in fiscal 2026 compared to fiscal 2025 was primarily attributable to lower compensation costs and lower spend on engineering projects. The decrease in research and development expenses in fiscal 2025 compared to fiscal 2024 was primarily due to lower compensation costs.
General and Administrative (in millions, except percentages):
Year Ended
April 24, 2026
April 25, 2025
% Change
April 26, 2024
% Change
General and administrative expenses
$
344
$
311
11
%
$
308
1
%
General and administrative expenses consist primarily of compensation costs, professional and corporate legal fees, outside services and facilities and IT support costs.
The increase in general and administrative expenses in fiscal 2026 compared to fiscal 2025 was primarily due to increases in all components of compensation costs, predominately salaries and stock-based compensation expense, and higher spend on professional services. General and administrative expenses remained relatively flat in fiscal 2025 compared to fiscal 2024.
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Restructuring Charges (in millions, except percentages):
Year Ended
April 24, 2026
April 25, 2025
% Change
April 26, 2024
% Change
Restructuring charges
$
21
$
83
(75
)%
$
44
89
%
In an effort to reduce our cost structure and redirect resources to our highest return activities, in fiscal 2026, 2025 and 2024, we initiated a number of business realignment plans designed to streamline our business and focus on key strategic opportunities. These plans resulted in aggregate charges of $21 million, $83 million, and $44 million, respectively, consisting primarily of employee severance-related costs. Additionally, the aggregate charges for fiscal 2025 and fiscal 2024 included optimization of our global office space for our hybrid work model. See Note 11 – Restructuring Charges of the Notes to Consolidated Financial Statements included in Part II, Item 8 for more details regarding our restructuring plans.
Other (Expense) Income, Net (in millions, except percentages)
The components of other (expense) income, net were as follows:
Year Ended
April 24, 2026
April 25, 2025
% Change
April 26, 2024
% Change
Interest income
$
113
$
112
1
%
$
112
—
%
Interest expense
(109
)
(64
)
70
%
(64
)
—
%
Other, net
(30
)
(2
)
NM
1
NM
Total
$
(26
)
$
46
(157
)%
$
49
(6
)%
NM - Not Meaningful
Interest income in fiscal 2026 was relatively flat compared to fiscal 2025. Interest expense increased in fiscal 2026 compared to fiscal 2025 due to a higher average outstanding aggregate principal amount of Senior Notes, with a higher average coupon rate. The difference in Other, net in fiscal 2026 compared to fiscal 2025 is primarily due to fluctuations in foreign exchange gains and losses year-over-year.
Each component of other (expense) income, net was relatively flat in fiscal 2025 compared to fiscal 2024.
Provision for Income Taxes (in millions, except percentages):
Our provision for income taxes and effective tax rates were as follows:
Year Ended
April 24, 2026
April 25, 2025
% Change
April 26, 2024
% Change
Provision for income taxes
$
372
$
197
89
%
$
277
(29
)%
Effective tax rate
22.6
%
14.2
%
NM
21.9
%
NM
NM - Not Meaningful
The differences in the effective tax rates between fiscal years were primarily due to fiscal 2025 benefits related to the Internal Revenue Service (“IRS”) substantially completing the examination of our fiscal 2018 and fiscal 2019 U.S. income tax returns, which resulted in the recognition of a tax benefit of $36 million attributable to the release of related tax reserves.
Liquidity, Capital Resources and Cash Requirements
(In millions)
April 24, 2026
April 25, 2025
Cash, cash equivalents and short-term investments
$
3,584
$
3,846
Principal amount of debt
$
2,500
$
3,250
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The following is a summary of our cash flow activities:
Year Ended
(In millions)
April 24, 2026
April 25, 2025
Net cash provided by operating activities
$
2,067
$
1,506
Net cash (used in) provided by investing activities
(595
)
147
Net cash used in financing activities
(2,147
)
(828
)
Effect of exchange rate changes on cash, cash equivalents and restricted cash
1
15
Net change in cash, cash equivalents and restricted cash
$
(674
)
$
840
As of April 24, 2026, our cash, cash equivalents and short-term investments totaled $3.6 billion, reflecting a decrease of $262 million from April 25, 2025. The decrease was primarily due to a $750 million principal repayment of our 1.875% Senior Notes due June 2025, $950 million used for the repurchase of our common stock, $413 million used for the payment of dividends, and $198 million used for purchases of property and equipment, partially offset by $2.1 billion provided by operating activities. Net working capital was $1.8 billion as of April 24, 2026, an increase of $566 million compared to April 25, 2025.
Cash Flows from Operating Activities
During fiscal 2026, cash provided by operating activities reflected net income of $1.3 billion which was increased for non-cash depreciation and amortization expense of $200 million and non-cash stock-based compensation expense of $382 million.
Significant changes in assets and liabilities during fiscal 2026 included the following:
• Deferred revenue increased by $281 million, primarily due to an increase in deferred revenue for software and hardware support contracts.
During fiscal 2025, cash provided by operating activities reflected net income of $1.2 billion which was increased for non-cash depreciation and amortization expense of $243 million and non-cash stock-based compensation expense of $386 million.
Significant changes in assets and liabilities during fiscal 2025 included the following:
• Accounts receivable increased by $219 million, primarily reflecting higher billing in the fourth quarter of fiscal 2025 compared to the fourth quarter of fiscal 2024.
• Deferred revenue increased by $208 million, primarily due to an increase in deferred revenue for software and hardware support contracts.
• Long-term taxes payable decreased by $207 million, primarily due to settlements associated with certain IRS tax examinations and changes in prior period tax positions.
We expect that cash provided by operating activities may materially fluctuate in future periods due to a number of factors, including fluctuations in our operating results, shipping linearity, accounts receivable collections performance, inventory and supply chain management, vendor payment initiatives, and the timing and amount of compensation, income taxes and other payments.
Cash Flows from Investing Activities
During fiscal 2026, we used $412 million for the purchases of investments, net of maturities and sales, and paid $198 million for capital expenditures.
During fiscal 2025, we generated $245 million primarily from maturities and sales of investments, net of purchases, and paid $168 million for capital expenditures. Additionally, we received proceeds of $70 million from the sale of our Spot by NetApp business.
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Cash Flows from Financing Activities
During fiscal 2026, we used $950 million for the repurchase of 9.0 million shares of common stock, $413 million for the payment of dividends and $750 million principal repayment upon maturity.
During fiscal 2025, we used $1.2 billion for the repurchase of 10.2 million shares of common stock, $424 million for the payment of dividends and $400 million principal repayment upon maturity, partially offset by $1.24 billion of net proceeds from the issuance of Senior Notes.
Key factors that could affect our cash flows include changes in our revenue mix and profitability, our ability to effectively manage our working capital, in particular, accounts receivable, accounts payable and inventories, the timing and amount of stock repurchases and payment of cash dividends, the impact of foreign exchange rate changes, our ability to effectively integrate acquired products, businesses and technologies and the timing of repayments of our debt. Based on past performance and our current business outlook, we believe that our sources of liquidity, including cash, cash equivalents and short-term investments, cash generated from operations, and our ability to access capital markets and committed credit lines will satisfy our working capital needs, capital expenditures, investment requirements, stock repurchases, cash dividends, contractual obligations, commitments, principal and interest payments on our debt and other liquidity requirements associated with operations and meet our cash requirements for at least the next 12 months and thereafter for the foreseeable future. We may choose to periodically raise additional debt capital based on certain conditions, including the refinancing of upcoming maturities and/or for potential strategic acquisitions and investments. Our ability to obtain this or any additional financing that we may pursue or need, will depend on, among other things, our business plans, operating performance and the condition of the capital markets at the time we seek financing. We may not be able to obtain such financing on terms acceptable to us or at all. In the event our liquidity is insufficient and we are unable to enter into new financing arrangements, we may be required to curtail spending and implement additional cost saving measures and restructuring actions. We cannot be certain that we will continue to generate cash flows at or above current levels. For a discussion of risks related to our cash flows and liquidity requirements, see Item 1A. Risk Factors.
Liquidity
Our principal sources of liquidity as of April 24, 2026 consisted of cash, cash equivalents and short-term investments, cash we expect to generate from operations, and our credit facility and commercial paper program.
Cash, cash equivalents and short-term investments consisted of the following (in millions):
April 24, 2026
April 25, 2025
Cash and cash equivalents
$
2,070
$
2,742
Short-term investments
1,514
1,104
Total
$
3,584
$
3,846
As of April 24, 2026 and April 25, 2025, $2.3 billion and $2.5 billion, respectively, of cash, cash equivalents and short-term investments were held by various foreign subsidiaries and were generally based in U.S. dollar-denominated holdings, while $1.3 billion was available in the U.S as of the end of each fiscal year.
Our principal liquidity requirements are primarily to meet our working capital needs, support ongoing business activities, fund research and development, meet capital expenditure needs, invest in critical or complementary technologies through asset purchases and/or business acquisitions, service interest and principal payments on our debt, fund our stock repurchase program, and pay dividends, as and if declared. In the ordinary course of business, we engage in periodic reviews of opportunities to invest in or acquire companies or units in companies to expand our total addressable market, leverage technological synergies and establish new streams of revenue.
The principal objectives of our investment policy are the preservation of principal and maintenance of liquidity. We attempt to mitigate default risk by investing in high-quality investment grade securities, limiting the time to maturity and monitoring the counterparties and underlying obligors closely. We believe our cash equivalents and short-term investments are liquid and accessible. We are not aware of any significant deterioration in the fair value of our cash equivalents or investments from the values reported as of April 24, 2026.
Our investment portfolio has been and will continue to be exposed to market risk due to trends in the credit and capital markets. We continue to closely monitor current economic and market events to minimize the market risk of our investment portfolio. We routinely monitor our financial exposure to both sovereign and non-sovereign borrowers and counterparties. We utilize a variety of planning and financing strategies in an effort to ensure our worldwide cash is available when and where it is needed. We also have an automatic
46
shelf registration statement on file with the U.S. Securities and Exchange Commission (SEC). We may in the future offer an additional unspecified amount of debt, equity and other securities.
Senior Notes
The following table summarizes the principal amount of our Senior Notes as of April 24, 2026 (in millions):
Amount
2.375% Senior Notes Due June 2027
$
550
2.70% Senior Notes Due June 2030
700
5.50% Senior Notes Due March 2032
625
5.70% Senior Notes Due March 2035
625
Total
$
2,500
Interest on the Senior Notes is payable semi-annually. For further information on the underlying terms, see Note 7 – Financing Arrangements of the Notes to Consolidated Financial Statements included in Part II, Item 8.
On June 23, 2025, upon maturity, we repaid the 1.875% Senior Notes due June 2025 for an aggregate amount of $757 million, comprised of the principal and unpaid interest.
Credit Facility and Commercial Paper Program
We have a senior unsecured credit agreement with a syndicated group of lenders. The credit agreement, which was amended in March 2025, provides for a $1.0 billion revolving unsecured credit facility, with a sublimit of $50 million available for the issuance of letters of credit on our behalf. The credit facility matures on March 5, 2030, with an option for us to extend the maturity date for two additional 1-year periods, subject to certain conditions. The proceeds of the loans may be used by us for general corporate purposes and as liquidity support for our existing commercial paper program. As of April 24, 2026, we were compliant with all associated covenants in the agreement. No amounts were drawn against this credit facility during any of the periods presented.
We also have a commercial paper program (the “Program”), under which we may issue unsecured commercial paper notes. Amounts available under the Program may be borrowed, repaid and re-borrowed, with the aggregate face or principal amount of the notes outstanding under the Program at any time not to exceed $1.0 billion. The maturities of the notes can vary, but may not exceed 397 days from the date of issue. The notes are sold under customary terms in the commercial paper market and may be issued at a discount from par or, alternatively, may be sold at par and bear interest at rates dictated by market conditions at the time of their issuance. The proceeds from the issuance of the notes are used for general corporate purposes. No commercial paper notes were outstanding as of April 24, 2026.
Material Capital Expenditure Requirements
We expect to fund our capital expenditures, including our commitments related to facilities, equipment, operating leases and internal-use software development projects for at least the next 12 months through existing cash, cash equivalents, investments and cash generated from operations. The timing and amount of our capital requirements cannot be precisely determined and will depend on a number of factors, including future demand for products, changes in the enterprise storage and data management industry, hiring plans and our decisions related to the financing of our facilities and equipment requirements.
Transition Tax Payments
The Tax Cuts and Jobs Act of 2017 imposed a mandatory, one-time transition tax on accumulated foreign earnings and profits that had not previously been subject to U.S. income tax. A final transition tax payment of $179 million was paid during the second quarter of fiscal 2026.
Dividends and Stock Repurchase Program
On May 21, 2026, we declared a cash dividend of $0.52 per share of common stock, payable on July 29, 2026 to holders of record as of the close of business on July 10, 2026.
47
Under our common stock repurchase program, we may purchase shares of our outstanding common stock through solicited or unsolicited transactions in the open market, in privately negotiated transactions, through accelerated share repurchase programs, pursuant to a Rule 10b5-1 plan or in such other manner as deemed appropriate by our management. The stock repurchase program may be suspended or discontinued at any time. As of April 24, 2026, the remaining authorized amount for stock repurchases under this program was $0.5 billion. On May 21, 2026 our Board of Directors authorized the repurchase of an additional $1.0 billion of our common stock.
Purchase Commitments
In the ordinary course of business, we make commitments to third-party contract manufacturers and component suppliers to manage manufacturer lead times and meet product forecasts, and to other parties, to purchase various key components used in the manufacture of our products. In addition, we have open purchase orders and contractual obligations associated with our ordinary course of business for which we have not yet received goods or services. These off-balance sheet purchase commitments totaled $1.4 billion at April 24, 2026, of which $1.1 billion is due in fiscal 2027, with the remainder due thereafter.
Legal Contingencies
We are subject to various legal proceedings and claims which arise in the normal course of business. See further details on such matters in Note 16 – Commitments and Contingencies of the Notes to Consolidated Financial Statements included in Part II, Item 8.
Critical Accounting Estimates
Our consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (GAAP), which require management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, net revenues and expenses, and the disclosure of contingent assets and liabilities. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. We believe that the accounting estimates employed and the resulting balances are reasonable; however, actual results may differ from these estimates and such differences may be material.
The summary of significant accounting policies is included in Note 1 – Description of Business and Significant Accounting Policies of the Notes to Consolidated Financial Statements included in Part II, Item 8. An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, if different estimates reasonably could have been used, and if changes in the estimate that are reasonably possible could materially impact the financial statements. The accounting policies described below reflect the significant judgments, estimates and assumptions used in the preparation of the consolidated financial statements.
Revenue Recognition
Our contracts with customers often include the transfer of multiple products and services to the customer. In determining the amount and timing of revenue recognition, we assess which products and services are distinct performance obligations and allocate the transaction price, which may include fixed and/or variable amounts, among each performance obligation on a relative standalone selling price (SSP) basis. The following are the key estimates and assumptions and corresponding uncertainties included in this approach:
Key Estimates and Assumptions
Key Uncertainties
We evaluate whether products and services promised in our contracts with customers are distinct performance obligations that should be accounted for separately versus together.
In certain contracts, the determination of our distinct performance obligations requires significant judgment. As our business and offerings to customers change over time, the products and services we determine to be distinct performance obligations may change. Such changes may adversely impact the amount of revenue and gross margin we report in a particular period.
In determining the transaction price of our contracts, we estimate variable consideration based on the expected value, primarily relying on our history. In certain situations, we may also use the most likely amount as the basis of our estimate.
We may have insufficient relevant historical data or other information to arrive at an accurate estimate of variable consideration using either the “expected value” or “most likely amount” method. Additionally, changes in business practices, such as those related to sales returns or marketing programs,
48
may introduce new forms of variable consideration, as well as more complexity and uncertainty in the estimation process.
In contracts with multiple performance obligations, we establish SSPs based on the price at which products and services are sold separately. If SSPs are not observable through past transactions, we estimate them by maximizing the use of observable inputs including pricing strategy, market data, internally-approved pricing guidelines related to the performance obligations and other observable inputs.
As our business and offerings evolve over time, modifications to our pricing and discounting methodologies, changes in the scope and nature of product and service offerings and/or changes in customer segmentation may result in a lack of consistency, making it difficult to establish and/or maintain SSPs. Changes in SSPs could result in different and unanticipated allocations of revenue in contracts with multiple performance obligations. These factors, among others, may adversely impact the amount of revenue and gross margin we report in a particular period.
Goodwill and Purchased Intangible Assets
We allocate the purchase price of acquisitions to identifiable assets acquired and liabilities assumed at their acquisition date fair values based on established valuation techniques. Goodwill represents the residual value as of the acquisition date, which in most cases is measured as the excess of the purchase consideration transferred over the net of the acquisition date fair values of the assets acquired and liabilities assumed.
The carrying values of purchased intangible assets are reviewed whenever events and circumstances indicate that the net book value of an asset may not be recovered through expected future cash flows from its use and eventual disposition. We periodically review the estimated remaining useful lives of our intangible assets. This review may result in impairment charges or shortened useful lives, resulting in charges to our consolidated statements of income.
We review goodwill for impairment annually and whenever events or changes in circumstances indicate the carrying amount of one of our reporting units may exceed its fair value. The provisions of the accounting standard for goodwill allow us to first assess qualitative factors to determine whether it is necessary to perform the quantitative goodwill impairment test. For our annual goodwill impairment test in the fourth quarter of fiscal 2026, we performed a qualitative assessment of goodwill impairment by evaluating relevant factors to determine whether it is more likely than not that the fair value of each of our reporting units is less than their carrying values. As a result of the qualitative assessment, we determined the quantitative test was not necessary and there was no impairment of goodwill.
49
The following are the key estimates and assumptions and corresponding uncertainties for estimating the value of our goodwill and purchased intangible assets:
Key Estimates and Assumptions
Key Uncertainties
The assessment of fair value for goodwill and purchased intangible assets is based on factors that market participants would use in an orderly transaction in accordance with the accounting guidance for the fair value measurement of nonfinancial assets.
The valuation of purchased intangible assets is principally based on estimates of the future performance and cash flows expected to be generated by the acquired assets from the acquired business.
While we employ experts to determine the acquisition date fair value of acquired intangibles, the fair values of assets acquired and liabilities assumed are based on significant management assumptions and estimates, which are inherently uncertain and highly subjective and as a result, actual results may differ from estimates. If different assumptions were to be used, it could materially impact the purchase price allocation.
Evaluations of possible goodwill and purchased intangible asset impairment require us to make judgments and assumptions related to the allocation of our balance sheet and income statement amounts and estimate future cash flows and fair market values of our reporting units and assets.
In response to changes in industry and market conditions, we could be required to strategically realign our resources and consider restructuring, disposing of, or otherwise exiting businesses, which could result in an impairment of goodwill or purchased intangible assets.
Assumptions and estimates about expected future cash flows and the fair values of our reporting units and purchased intangible assets are complex and subjective. They can be affected by a variety of factors, including external factors such as the adverse impact of unanticipated changes in macroeconomic conditions, and technological changes or new product introductions from competitors. They can also be affected by internal factors such as changes in business strategy or in forecasted product life cycles and roadmaps. Our ongoing consideration of these and other factors could result in future impairment charges or accelerated amortization expense, which could adversely affect our operating results.
Income Taxes
We are subject to income taxes in the United States and numerous foreign jurisdictions. We compute our provision for income taxes using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those tax assets or liabilities are expected to be realized or settled. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.
The following are the key estimates and assumptions and corresponding uncertainties for our income taxes:
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Key Estimates and Assumptions
Key Uncertainties
Our income tax provision is based on existing tax law and advanced pricing agreements or letter rulings we have with various tax authorities.
Our provision for income taxes is subject to volatility and could be adversely impacted by future changes in existing tax laws, such as a change in tax rate, possible U.S. changes to the taxation of earnings of our foreign subsidiaries, and uncertainties as to future renewals of favorable tax agreements and rulings.
The determination of whether we should record or adjust a valuation allowance against our deferred tax assets is based on assumptions regarding our future profitability.
Our future profits could differ from current expectations resulting in a change to our determination as to the amount of deferred tax assets that are more likely than not to be realized. We could adjust our valuation allowance with a corresponding impact to the tax provision in the period in which such determination is made.
The estimates for our uncertain tax positions are based primarily on company specific circumstances, applicable tax laws, tax opinions from outside firms and past results from examinations of our income tax returns.
Significant judgment is required in evaluating our uncertain tax positions. Although we believe our reserves are reasonable, no assurance can be given that the final tax outcome or tax court rulings of these matters will not be different from that which is reflected in our historical tax provisions and accruals.
It em 7A. Quantitative and Qualitative Disclosures about Market Risk
We are exposed to market risk related to fluctuations in interest rates and foreign currency exchange rates. We use certain derivative financial instruments to manage foreign currency exchange risks. We do not use derivative financial instruments for speculative or trading purposes. All financial instruments are used in accordance with management-approved policies.
Interest Rate Risk
Fixed Income Investments — As of April 24, 2026, we had fixed income debt investments of $2.1 billion and certificates of deposit of $86 million. Our fixed income debt investment portfolio primarily consists of investments with original maturities greater than three months at the date of purchase, which are classified as available-for-sale investments. These fixed income debt investments, which consist primarily of U.S. Treasury and government debt securities, and our certificates of deposit are subject to interest rate and interest income risk and will decrease in value if market interest rates increase. Conversely, declines in interest rates, including the impact from lower credit spreads, could have a material adverse impact on interest income for our investment portfolio. A hypothetical 100 basis point increase in market interest rates from levels as of April 24, 2026 would have resulted in a decrease in the fair value of our fixed-income securities of $4 million. Volatility in market interest rates over time will cause variability in our interest income. We do not use derivative financial instruments in our investment portfolio.
Our investment policy is to limit credit exposure through diversification and investment in highly rated securities. We further mitigate concentrations of credit risk in our investments by limiting our investments in the debt securities of a single issuer and by diversifying risk across geographies and type of issuer. We actively review, along with our investment advisors, current investment ratings, company-specific events and general economic conditions in managing our investments and in determining whether there is a significant decline in fair value. We monitor and evaluate our investment portfolio on a quarterly basis for any impairments.
Debt — As of April 24, 2026 we have outstanding $2.5 billion aggregate principal amount of Senior Notes. We carry these instruments at face value less unamortized discount and issuance costs on our consolidated balance sheets. Since these instruments bear interest at fixed rates, we have no financial statement risk associated with changes in interest rates. However, the fair value of these instruments fluctuates when interest rates change. See Note 7 – Financing Arrangements of the Notes to Consolidated Financial Statements included in Part II, Item 8 for more information.
Credit Facility — We are exposed to the impact of changes in interest rates in connection with our $1.0 billion five-year revolving credit facility. Borrowings under the facility accrue interest at rates that vary based on certain market rates and our credit rating on our Senior Notes. Consequently, our interest expense would fluctuate with any changes in these market interest rates or in our credit rating if we were to borrow any amounts under the credit facility. As of April 24, 2026, no amounts were outstanding under the credit facility.
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Foreign Currency Exchange Rate Risk
We hedge risks associated with certain foreign currency transactions to minimize the impact of changes in foreign currency exchange rates on earnings. We utilize foreign currency exchange forward contracts to hedge against the short-term impact of foreign currency fluctuations on certain foreign currency denominated monetary assets and liabilities. We also use foreign currency exchange forward contracts to hedge foreign currency exposures related to forecasted sales transactions denominated in certain foreign currencies. These derivatives are designated and qualify as cash flow hedges under accounting guidance for derivatives and hedging.
We do not enter into foreign currency exchange contracts for speculative or trading purposes. In entering into foreign currency exchange forward contracts, we have assumed the risk that might arise from the possible inability of counterparties to meet the terms of the contracts. We attempt to limit our exposure to credit risk by executing foreign currency exchange contracts with creditworthy multinational commercial banks. All contracts have a maturity of 12 months or less. See Note 10 – Derivatives and Hedging Activities of the Notes to Consolidated Financial Statements included in Part II, Item 8 for more information regarding our derivatives and hedging activities.
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It em 8. Financial Statements and Supplementary Data
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Consolidated Balance Sheets
54
Consolidated Statements of Income
55
Consolidated Statements of Comprehensive Income
56
Consolidated Statements of Cash Flows
57
Consolidated Statements of Stockholders’ Equity
58
Notes to Consolidated Financial Statements
59
Reports of Independent Registered Public Accounting Firm (PCAOB ID No. 34 )
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53
NETAPP, INC.
CONSOLIDATED B ALANCE SHEETS
(In millions, except par value)
April 24, 2026
April 25, 2025
ASSETS
Current assets:
Cash and cash equivalents
$
2,070
$
2,742
Short-term investments
1,514
1,104
Accounts receivable
1,286
1,246
Inventories
198
186
Other current assets
708
573
Total current assets
5,776
5,851
Property and equipment, net
592
563
Goodwill
2,772
2,723
Purchased intangible assets, net
22
43
Other non-current assets
1,582
1,643
Total assets
$
10,744
$
10,823
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable
$
550
$
511
Accrued expenses
1,151
1,122
Current portion of long-term debt
—
750
Short-term deferred revenue
2,320
2,279
Total current liabilities
4,021
4,662
Long-term debt
2,487
2,485
Other long-term liabilities
360
379
Long-term deferred revenue
2,525
2,257
Total liabilities
9,393
9,783
Commitments and contingencies (Note 16)
Stockholders' equity:
Preferred stock, $ 0.001 par value, 5 shares authorized; no shares issued or outstanding as of April 24, 2026 or April 25, 2025
—
—
Common stock and additional paid-in capital, $ 0.001 par value, 885 shares authorized; 196 and 201 shares issued and outstanding as of April 24, 2026 and April 25, 2025, respectively
1,209
1,106
Retained earnings
153
—
Accumulated other comprehensive loss
( 11
)
( 66
)
Total stockholders' equity
1,351
1,040
Total liabilities and stockholders' equity
$
10,744
$
10,823
See accompanying notes to consolidated financial statements.
54
NETAPP, INC.
CONSOLIDATED STATEM ENTS OF INCOME
(In millions, except per share amounts)
Year Ended
April 24, 2026
April 25, 2025
April 26, 2024
Revenues:
Product
$
3,194
$
3,040
$
2,849
Services
3,731
3,532
3,419
Net revenues
6,925
6,572
6,268
Cost of revenues:
Cost of product
1,401
1,284
1,137
Cost of services
625
675
698
Total cost of revenues
2,026
1,959
1,835
Gross profit
4,899
4,613
4,433
Operating expenses:
Sales and marketing
1,869
1,865
1,828
Research and development
991
1,012
1,029
General and administrative
344
311
308
Restructuring charges
21
83
44
Acquisition-related expense
—
5
10
Total operating expenses
3,225
3,276
3,219
Income from operations
1,674
1,337
1,214
Other (expense) income, net
( 26
)
46
49
Income before income taxes
1,648
1,383
1,263
Provision for income taxes
372
197
277
Net income
$
1,276
$
1,186
$
986
Net income per share:
Basic
$
6.41
$
5.81
$
4.74
Diluted
$
6.35
$
5.67
$
4.63
Shares used in net income per share calculations:
Basic
199
204
208
Diluted
201
209
213
See accompanying notes to consolidated financial statements.
55
NETAPP, INC.
CONSOLIDATED STATEMENTS O F COMPREHENSIVE INCOME
(In millions)
Year Ended
April 24, 2026
April 25, 2025
April 26, 2024
Net income
$
1,276
$
1,186
$
986
Other comprehensive income (loss):
Foreign currency translation adjustments
52
( 3
)
( 5
)
Defined benefit obligations:
Defined benefit obligation adjustments
1
( 2
)
( 4
)
Unrealized gains on available-for-sale securities:
Unrealized holding gains arising during the period
—
1
—
Unrealized gains (losses) on cash flow hedges:
Unrealized holding gains (losses) arising during the period
—
( 2
)
2
Reclassification adjustments for losses (gains) included in net income
2
( 1
)
( 1
)
Other comprehensive income (loss)
55
( 7
)
( 8
)
Comprehensive income
$
1,331
$
1,179
$
978
See accompanying notes to consolidated financial statements.
56
NETAPP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
Year Ended
April 24, 2026
April 25, 2025
April 26, 2024
Cash flows from operating activities:
Net income
$
1,276
$
1,186
$
986
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization
200
243
255
Non-cash operating lease cost
42
41
45
Stock-based compensation
382
386
357
Deferred income taxes
135
( 100
)
53
Other items, net
55
—
( 13
)
Changes in assets and liabilities:
Accounts receivable
( 36
)
( 219
)
( 33
)
Inventories
( 12
)
( 1
)
( 18
)
Other operating assets
( 248
)
( 87
)
( 62
)
Accounts payable
31
( 8
)
123
Accrued expenses
( 23
)
62
113
Deferred revenue
281
208
( 14
)
Long-term taxes payable
( 7
)
( 207
)
( 106
)
Other operating liabilities
( 9
)
2
( 1
)
Net cash provided by operating activities
2,067
1,506
1,685
Cash flows from investing activities:
Purchases of investments
( 2,758
)
( 1,782
)
( 2,635
)
Maturities, sales and collections of investments
2,346
2,027
2,055
Purchases of property and equipment
( 198
)
( 168
)
( 155
)
Other investing activities, net
15
70
—
Net cash (used in) provided by investing activities
( 595
)
147
( 735
)
Cash flows from financing activities:
Proceeds from issuance of common stock under employee stock award plans
103
108
100
Payments for taxes related to net share settlement of stock awards
( 137
)
( 199
)
( 127
)
Repurchase of common stock
( 950
)
( 1,150
)
( 900
)
Issuances of debt, net of issuance costs
—
1,240
—
Repayments and extinguishment of debt
( 750
)
( 400
)
—
Dividends paid
( 413
)
( 424
)
( 416
)
Other financing activities, net
—
( 3
)
( 1
)
Net cash used in financing activities
( 2,147
)
( 828
)
( 1,344
)
Effect of exchange rate changes on cash, cash equivalents and restricted cash
1
15
( 19
)
Net change in cash, cash equivalents and restricted cash
( 674
)
840
( 413
)
Cash, cash equivalents and restricted cash:
Beginning of period
2,749
1,909
2,322
End of period
$
2,075
$
2,749
$
1,909
See accompanying notes to consolidated financial statements.
57
NETAPP, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In millions, except per share amounts)
Accumulated
Common Stock and
Other
Additional Paid-in Capital
Retained
Comprehensive
Shares
Amount
Earnings
Loss
Total
Balances, April 28, 2023
212
$
945
$
265
$
( 51
)
$
1,159
Net income
—
—
986
—
986
Other comprehensive loss
—
—
—
( 8
)
( 8
)
Issuance of common stock under employee stock award plans, net of taxes
6
( 27
)
—
—
( 27
)
Repurchase of common stock
( 12
)
( 102
)
( 798
)
—
( 900
)
Excise tax on net stock repurchases
—
( 5
)
—
—
( 5
)
Stock-based compensation
—
353
—
—
353
Modification of liability-classified awards
—
4
—
—
4
Cash dividends declared ($ 2.00 per common share)
—
( 171
)
( 245
)
—
( 416
)
Balances, April 26, 2024
206
997
208
( 59
)
1,146
Net income
—
—
1,186
—
1,186
Other comprehensive loss
—
—
—
( 7
)
( 7
)
Issuance of common stock under employee stock award plans, net of taxes
5
( 91
)
—
—
( 91
)
Repurchase of common stock
( 10
)
( 50
)
( 1,100
)
—
( 1,150
)
Excise tax on net stock repurchases
—
( 6
)
—
—
( 6
)
Stock-based compensation
—
386
—
—
386
Cash dividends declared ($ 2.08 per common share)
—
( 130
)
( 294
)
—
( 424
)
Balances, April 25, 2025
201
1,106
—
( 66
)
1,040
Net income
—
—
1,276
—
1,276
Other comprehensive income
—
—
—
55
55
Issuance of common stock under employee stock award plans, net of taxes
4
( 34
)
—
—
( 34
)
Repurchase of common stock
( 9
)
( 98
)
( 852
)
—
( 950
)
Excise tax on net stock repurchases
—
( 5
)
—
—
( 5
)
Stock-based compensation
—
382
—
—
382
Cash dividends declared ($ 2.08 per common share)
—
( 142
)
( 271
)
—
( 413
)
Balances, April 24, 2026
196
$
1,209
$
153
$
( 11
)
$
1,351
See accompanying notes to consolidated financial statements.
58
NETAPP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Description of Business and Significant Accounting Policies
Description of Business — NetApp, Inc. (we, us, NetApp, or the Company) empowers organizations to realize the full potential of their data in a rapidly evolving digital world. NetApp delivers innovative solutions that enable seamless data management, protection, and mobility across on-premises, hybrid, and multi-cloud environments.
Fiscal Year — Our fiscal year is reported on a 52- or 53-week year ending on the last Friday in April. An additional week is included in the first fiscal quarter approximately every six years to realign fiscal months with calendar months. Fiscal years 2026, 2025 and 2024, which ended on April 24, 2026, April 25, 2025 and April 26, 2024, respectively, are all 52-week years, with 13 weeks in each of their quarters. Unless otherwise stated, references to particular years, quarters, months, and periods refer to the Company’s fiscal years ended on the last Friday of April and the associated quarters, months, and periods of those fiscal years .
Principles of Consolidation — The consolidated financial statements include the Company and its subsidiaries. Intercompany accounts and transactions are eliminated in consolidation.
Use of Estimates — The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Such estimates include, but are not limited to, revenue recognition, reserves and allowances; inventory valuation; valuation of goodwill and intangibles; restructuring reserves; employee benefit accruals; stock-based compensation; loss contingencies; investment impairments; income taxes; and fair value measurements. Actual results could differ materially from those estimates, the anticipated effects of which have been incorporated, as applicable, into management’s estimates as of and for the year ended April 24, 2026 .
Cash Equivalents — We consider all highly liquid debt investments with original maturities of three months or less at the time of purchase to be cash equivalents.
Available-for-Sale Investments — We classify our investments in debt securities as available-for-sale investments. Debt securities primarily consist of U.S. Treasury and government debt securities and certificates of deposit. These investments are primarily held in the custody of a major financial institution. A specific identification method is used to determine the cost basis of debt securities sold. These investments are recorded in the consolidated balance sheets at fair value.
Unrealized gains and temporary losses, net of related taxes, are included in accumulated other comprehensive income (loss) (AOCI). Upon realization, those amounts are reclassified from AOCI to earnings. The amortization of premiums and discounts on the investments are included in our results of operations. Realized gains and losses are calculated based on the specific identification method.
We classify our investments as current or noncurrent based on the nature of the investments and their availability for use in current operations.
Impairments on Investments — All of our available-for-sale investments are subject to periodic impairment review. When the fair value of a debt security is less than its amortized cost, we assess what amount of the difference, if any, is caused by expected credit losses. The amount of the difference representing credit losses (defined as the difference between the present value of the cash flows expected to be collected and the amortized cost basis of the debt security) is recognized in earnings, and the amount relating to all other factors is recognized in other comprehensive income (OCI). If we intend to sell the security, or if it is more likely than not we will be required to sell the security before recovery of the amortized cost basis, the entire difference between the amortized cost and the fair value of the debt security is recognized in earnings.
59
Inventories — Inventories are stated at the lower of cost or net realizable value, which approximates actual cost on a first-in, first-out basis. We write down excess and obsolete inventory based on the difference between the cost of inventory and the estimated net realizable value. Net realizable value is estimated using management’s best estimate of forecasts for future demand and expectations regarding market conditions. At the point of a loss recognition, a new, lower cost basis for that inventory is established, and subsequent changes in facts or circumstances do not result in the restoration or increase in that newly established basis. In addition, we record a liability for firm, non-cancelable and unconditional purchase commitments with contract manufacturers and suppliers for quantities in excess of our future demand forecasts consistent with our valuation of excess and obsolete inventory.
Property and Equipment — Property and equipment are recorded at cost.
Depreciation and amortization is computed using the straight-line method, generally over the following periods:
Depreciation Life
Buildings and improvements
10 to 40 years
Furniture and fixtures
5 years
Computer, production, engineering and other equipment
2 to 3 years
Computer software
3 to 5 years
Leasehold improvements
Shorter of remaining lease term or useful life
Construction in progress will be depreciated over the estimated useful lives of the respective assets when they are ready for use. We capitalize interest on significant facility assets under construction and on significant software development projects. Interest capitalized during the periods presented was not material.
Software Development Costs — The costs for the development of new software products and substantial enhancements to existing software products are expensed as incurred until technological feasibility has been established, at which time any additional costs would be capitalized in accordance with the accounting guidance for software. Because our current process for developing software is essentially completed concurrently with the establishment of technological feasibility, which occurs upon the completion of a working model, no costs have been capitalized for any of the periods presented.
Internal-Use Software Development Costs — We capitalize qualifying costs, which are incurred during the application development stage, for computer software developed or obtained for internal-use to property and equipment, net and amortize them over the software’s estimated useful life.
Business Combinations — We recognize identifiable assets acquired and liabilities assumed at their acquisition date fair values, with the exception of contract assets and liabilities, which we recognize in accordance with our revenue recognition policy as if we had originally executed the customer contract. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date values of the assets acquired and liabilities assumed. While we use our best estimates and assumptions as a part of the purchase price allocation process to accurately value assets acquired and liabilities assumed at the acquisition date, our estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, we record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill to the extent that we identify adjustments to the preliminary purchase price allocation. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to our consolidated statements of income.
Goodwill and Purchased Intangible Assets — Goodwill is recorded when the consideration paid for an acquisition exceeds the value of net tangible and intangible assets acquired. Purchased intangible assets with finite lives are generally amortized on a straight-line basis over their economic lives of three to five years for developed technology, two to five years for customer contracts/relationships, two to three years for covenants not to compete and two to five years for trademarks and trade names as we believe this method most closely reflects the pattern in which the economic benefits of the assets will be consumed. In-process research and development is accounted for as an indefinite lived intangible asset and is assessed for potential impairment annually until development is complete or when events or circumstances indicate that their carrying amounts might be impaired. Upon completion of development, in-process research and development is accounted for as a finite-lived intangible asset.
The carrying value of goodwill is tested for impairment on an annual basis in the fourth quarter of our fiscal year, or more frequently if we believe indicators of impairment exist. Triggering events for impairment reviews may be indicators such as adverse industry or economic trends, restructuring actions, lower projections of profitability, or a sustained decline in our market capitalization. For the purpose of impairment testing, we have two reporting units, which are the same as our two reportable segments. We initially conduct a qualitative assessment to determine whether it is necessary to perform a quantitative goodwill impairment test. The performance of the quantitative impairment test requires comparing the fair value of each reporting unit to its carrying amount, including goodwill. The fair value of each reporting unit is based on a combination of the income approach and the market approach.
60
Under the income approach, we estimate the fair value of a reporting unit based on the present value of estimated future cash flows. Cash flow projections are based on discrete forecast periods as well as terminal value determinations, and are derived based on forecasted revenue growth rates and operating margins. These cash flow projections are discounted to arrive at the fair value of each reporting unit. The discount rate used is based on the weighted-average cost of capital of comparable public companies adjusted for the relevant risk associated with business specific characteristics and the uncertainty related to the reporting unit's ability to execute on the projected cash flows. Under the market approach, we estimate the fair value based on market multiples of revenue and earnings derived from comparable publicly traded companies with operating and investment characteristics similar to the reporting unit. In addition, we make certain judgments and assumptions in allocating shared assets and liabilities to individual reporting units to determine the carrying amount of each reporting unit. An impairment exists if the fair value of a reporting unit is lower than its carrying amount. The impairment loss is measured based on the amount by which the carrying amount of the reporting unit exceeds its fair value, with the recognized loss not to exceed the total amount of allocated goodwill. We did not recognize any impairment charges on our goodwill in any of the periods presented.
Impairment of Long-Lived Assets — We review the carrying values of long-lived assets whenever events and circumstances, such as reductions in demand, lower projections of profitability, significant changes in the manner of our use of acquired assets, or significant negative industry or economic trends, indicate that the net book value of an asset may not be recovered through expected future cash flows from its use and eventual disposition. If this review indicates that there is an impairment, the impaired asset is written down to its fair value, which is typically calculated using: (i) quoted market prices and/or (ii) expected future cash flows utilizing a discount rate. Our estimates regarding future anticipated cash flows, the remaining economic life of the products and technologies, or both, may differ materially from actual cash flows and remaining economic life. In that event, impairment charges or shortened useful lives of certain long-lived assets may be required, resulting in charges to our consolidated statements of income when such determinations are made.
Derivative Instruments — Our derivative instruments, which are carried at fair value in our consolidated balance sheets, consist of foreign currency exchange contracts as described below:
Balance Sheet Hedges — We utilize foreign currency exchange forward contracts to hedge against the short-term impact of foreign currency exchange rate fluctuations related to certain foreign currency denominated monetary assets and liabilities, primarily intercompany receivables and payables. These derivative instruments are not designated as hedging instruments and do not subject us to material balance sheet risk due to exchange rate movements because the gains and losses on these contracts are intended to offset the gains and losses in the underlying foreign currency denominated monetary assets and liabilities being hedged, and the net amount is included in earnings.
Cash Flow Hedges — We utilize foreign currency exchange forward contracts to hedge foreign currency exchange exposures related to forecasted sales transactions denominated in certain foreign currencies. These derivative instruments are designated and qualify as cash flow hedges and, in general, closely match the underlying forecasted transactions in duration. The effective portion of the contracts’ gains and losses resulting from changes in fair value is recorded in AOCI until the forecasted transaction is recognized in the consolidated statements of income. When the forecasted transactions occur, we reclassify the related gains or losses on the cash flow hedges into net revenues. If the underlying forecasted transactions do not occur, or it becomes probable that they will not occur within the defined hedge period, the gains or losses on the related cash flow hedges are reclassified from AOCI and recognized immediately in earnings. We measure the effectiveness of hedges of forecasted transactions on a monthly basis by comparing the fair values of the designated foreign currency exchange forward purchase contracts with the fair values of the forecasted transactions.
Factors that could have an impact on the effectiveness of our hedging programs include the accuracy of forecasts and the volatility of foreign currency markets. These programs reduce, but do not entirely eliminate, the impact of currency exchange movements. Currently, we do not enter into any foreign currency exchange forward contracts to hedge exposures related to firm commitments. Cash flows from our derivative programs are included under operating activities in the consolidated statements of cash flows.
Revenue Recognition — We recognize revenue by applying the following five step approach.
• Identification of the contract, or contracts, with a customer — A contract with a customer is within the scope of ASC 606 when it meets all the following criteria:
- It is enforceable
- It defines each party’s rights
- It identifies the payment terms
- It has commercial substance, and
- We determine that collection of substantially all consideration for goods or services that will be transferred is probable based on the customer’s intent and ability to pay
61
• Identification of the performance obligations in the contract — Performance obligations promised in a contract are identified based on the goods or services (or a bundle of goods and services) that will be transferred to the customer that are distinct.
• Determination of the transaction price — The transaction price is determined based on the consideration to which we will be entitled in exchange for transferring goods or services to the customer.
• Allocation of the transaction price to the performance obligations in the contract — Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation.
• Recognition of revenue when, or as, we satisfy a performance obligation — We satisfy performance obligations either over time or at a point in time.
Customarily we have a purchase order from or executed contract with our customers that establishes the goods and services to be transferred and the consideration to be received.
We combine two or more contracts entered into at or near the same time with the same customer as a single contract if the contracts are negotiated as one package with a single commercial objective, if the amount of consideration to be paid on one contract depends on the price or performance of the other contract or if the goods and services promised in each of the contracts are a single performance obligation.
Our contracts with customers may include hardware systems, software licenses, software support, hardware support, public cloud services and other services. Software support contracts entitle our customers to receive unspecified upgrades and enhancements on a when-and-if-available basis, and patch releases. Hardware support services include contracts for extended warranty and technical support with minimum response times. Other services include professional services and customer education and training services.
We identify performance obligations in our contracts to be those goods and services that are distinct. A good or service is distinct where the customer can benefit from the good or service either on its own or together with other resources that are readily available from third parties or from us, and is distinct in the context of the contract, where the transfer of the good or service is separately identifiable from other promises in the contract.
If a contract includes multiple promised goods or services, we apply judgment to determine whether promised goods or services are distinct. If they are not, we combine the goods and services until we have a distinct performance obligation. For example, a configured storage system inclusive of the operating system (OS) software essential to its functionality is considered a single performance obligation, while optional add-on software is a separate performance obligation. In general, hardware support, software support, and different types of professional services are each separate performance obligations.
We determine the transaction price of our contracts with customers based on the consideration to which we will be entitled in exchange for transferring goods or services. Consideration promised may include fixed amounts, variable amounts or both. We sell public cloud services either on a subscription basis or a consumption basis. We sell professional services either on a time and materials basis or under fixed price projects.
We evaluate variable consideration in arrangements with contract terms such as rights of return, potential penalties and acceptance clauses. We generally use the expected value method, primarily relying on our history, to estimate variable consideration. However, when we believe it to provide a better estimate, we use the most likely amount method. In either case, we consider variable consideration only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. Reassessments of our variable consideration may occur as historical information changes. Transaction prices are also adjusted for the effects of time value of money if the timing of payments provides either the customer or us a significant benefit of financing.
Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation on a relative standalone selling price basis. We determine standalone selling price based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, we estimate the standalone selling price by maximizing the use of observable inputs including pricing strategy, market data, internally-approved pricing guidelines related to the performance obligations and other observable inputs. We regularly review standalone selling prices and maintain internal controls over the establishment and updates of these estimates. Variable consideration is also allocated to the performance obligations. If the terms of variable consideration relate to one performance obligation, it is entirely allocated to that obligation. Otherwise, it is allocated to all the performance obligations in the contract.
We typically recognize revenue at a point in time upon the transfer of goods to a customer. Products we transfer at a point in time include our configured hardware systems, OS software licenses, optional add-on software licenses and add-on hardware. Services are typically transferred over time and revenue is recognized based on an appropriate method for measuring our progress toward
62
completion of the performance obligation. Our stand-ready services, including both hardware and software support, are transferred ratably over the period of the contract. Our public cloud services are transferred either 1) for subscription arrangements, ratably over the subscription period or 2) for consumption-based arrangements, as actually consumed by the customer. For other services such as our fixed professional services contracts, we use an input method to determine the percentage of completion. That is, we estimate the effort to date versus the expected effort required over the life of the contract.
Deferred Commissions — We capitalize sales commissions that are incremental direct costs of obtaining customer contracts for which revenue is not immediately recognized and classify them as current or non-current based on the terms of the related contracts. Capitalized commissions are amortized based on the transfer of goods or services to which they relate, typically over one to four years , and are also periodically reviewed for impairment. Amortization expense is recorded to sales and marketing expense in our consolidated statements of income.
Leases — We determine if an arrangement is or contains a lease at inception, and we classify leases as operating or finance leases at commencement. In our consolidated balance sheets, operating lease right-of-use (ROU) assets are included in other non-current assets, while finance lease ROU assets are included in property and equipment, net. Lease liabilities for both types of leases are included in accrued expenses and other long-term liabilities. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments over that term.
Operating and finance lease ROU assets and liabilities are recognized at commencement based on the present value of lease payments over the lease term. ROU assets also include any lease payments made prior to lease commencement and exclude lease incentives. The lease term is the noncancelable period of the lease and includes options to extend or terminate the lease when it is reasonably certain that an option will be exercised. As the rate implicit in our leases is typically not readily determinable, in computing the present value of lease payments we generally use our incremental borrowing rate based on information available at the commencement date. Variable lease payments not dependent on an index or rate are expensed as incurred and not included within the calculation of ROU assets and lease liabilities. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term.
We do not separate non-lease components from lease components for any class of leases, and we do not recognize ROU assets and lease liabilities for leases with a lease term of twelve months or less.
Foreign Currency Translation — For international subsidiaries whose functional currency is the local currency, gains and losses resulting from translation of these foreign currency financial statements into U.S. dollars are recorded in AOCI. For international subsidiaries where the functional currency is the U.S. dollar, gains and losses resulting from the process of remeasuring foreign currency financial statements into U.S. dollars are included in other (expense) income, net.
Benefit Plans — We record actuarial gains and losses associated with defined benefit plans within AOCI and amortize net gains or losses in excess of 10 percent of the greater of the market value of plan assets as of the beginning of the fiscal year or the plans' projected benefit obligation on a straight-line basis over the remaining estimated service life of plan participants. The measurement date for all defined benefit plans is our fiscal year end.
Stock-Based Compensation — We measure and recognize stock-based compensation for all stock-based awards, including restricted stock units (RSUs), comprising time-based RSUs and performance-based RSUs (PBRSUs), and rights to purchase shares under our employee stock purchase plan (ESPP), based on their estimated fair value, and recognize the costs in our financial statements using the straight-line attribution approach over the requisite service period for the entire award.
The fair value of employee time-based RSUs, and PBRSUs that include a performance condition, is equal to the market value of our common stock on the grant date of the award, less the present value of expected dividends during the vesting period, discounted at a risk-free interest rate. The fair value of PBRSUs that include a market condition is measured using a Monte Carlo simulation model on the date of grant.
The fair value of time-based RSUs, and PBRSUs that include a market condition, is not remeasured as a result of subsequent stock price fluctuations. When there is a change in management’s estimate of expected achievement relative to the performance target for PBRSUs that include a performance condition, such as our achievement against a billings result average target, the change in estimate results in the recognition of a cumulative adjustment of stock-based compensation expense.
Our stock price volatility assumption is based on a combination of our historical and implied volatility. The risk-free interest rates are based upon United States (U.S.) Treasury bills with equivalent expected terms, and the expected dividends are based on our history and expected dividend payouts.
We account for forfeitures of stock-based awards as they occur.
63
Income Taxes — Deferred income tax assets and liabilities are provided for temporary differences that will result in tax deductions or income in future periods, as well as the future benefit of tax credit carryforwards. A valuation allowance reduces tax assets to their estimated realizable value.
We recognize the tax liability for uncertain income tax positions on the income tax return based on the two-step process prescribed in the interpretation. The first step is to determine whether it is more likely than not that each income tax position would be sustained upon audit. The second step is to estimate and measure the tax benefit as the amount that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority. Estimating these amounts requires us to determine the probability of various possible outcomes. We evaluate these uncertain tax positions on a quarterly basis. We recognize interest and penalties related to unrecognized tax benefits within the provision for income taxes line on the accompanying consolidated statements of income.
Net Income per Share — Basic net income per share is computed by dividing net income by the weighted-average number of common shares outstanding. Diluted net income per share is computed giving effect to the weighted-average number of dilutive potential shares that were outstanding during the period using the treasury stock method. Potential dilutive common shares consist primarily of unvested RSUs and shares to be purchased under our employee stock purchase plan.
Treasury Stock — We account for treasury stock under the cost method. Upon the retirement of treasury stock, we allocate the value of treasury shares between common stock, additional paid-in capital and retained earnings.
2. Recent Accounting Pronouncements
Recent Accounting Pronouncements Not Yet Adopted
In September 2025, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The ASU simplifies the capitalization guidance by removing all references to prescriptive and sequential software development stages (referred to as “project stages”) throughout ASC 350-40. The ASU is effective for annual periods beginning after December 15, 2027, with early adoption permitted. Adoption of this ASU can be applied prospectively; or following a modified transition approach that is based on the status of each project and whether software costs were capitalized before adoption; or retrospectively. We are currently evaluating the effect of this pronouncement on our consolidated financial statements and disclosures.
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires additional disclosure of the nature of expenses included in the income statement. The standard requires disclosures about specific types of expenses included in the expense captions presented in the income statement as well as disclosures about selling expenses. This ASU is effective for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. The requirements should be applied on a prospective basis while retrospective application is permitted. We are currently evaluating the effect of this pronouncement on our disclosures.
Recently Adopted Accounting Pronouncement
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which expands the disclosures required for income taxes. This includes the disclosure of specific categories and greater disaggregation within the income tax rate reconciliation as well as disclosure of disaggregated income taxes paid by significant jurisdiction. This ASU is effective for fiscal years beginning after December 15, 2024. We adopted the standard on a prospective basis for fiscal 2026. See Note 12 - Income Taxes for further information.
3. Concentration of Risk
Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash, cash equivalents, investments, foreign currency exchange contracts and accounts receivable. We maintain the majority of our cash and cash equivalents with several major financial institutions where the deposits exceed federally insured limits. Cash equivalents and short-term investments consist primarily of money market funds, U.S. Treasury and government debt securities and certificates of deposit, all of which are considered high investment grade. Our policy is to limit the amount of credit exposure through diversification and investment in highly rated securities. We further mitigate concentrations of credit risk in our investments by limiting our investments in the debt securities of a single issuer and by diversifying risk across geographies and type of issuer. General macroeconomic uncertainty has led to an increase in market volatility, however, management believes that the financial institutions that hold our cash, cash equivalents and investments are financially sound and, accordingly, are subject to minimal credit risk.
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By entering into foreign currency exchange contracts, we have assumed the risk that might arise from the possible inability of counterparties to meet the terms of their contracts. The counterparties to these contracts are major multinational commercial banks, and we do not expect any losses as a result of counterparty defaults.
We sell our products primarily to large organizations in different industries and geographies. We do not require collateral or other security to support accounts receivable. In addition, we maintain an allowance for potential credit losses. To reduce credit risk, we perform ongoing credit evaluations on our customers’ financial condition. We establish an allowance for doubtful accounts based upon factors surrounding the credit risk of customers, historical trends and other information, including the expected impact of macroeconomic disruptions, and, to date, such losses have been within management’s expectations. Concentrations of credit risk with respect to trade accounts receivable are limited due to the wide variety of customers who are dispersed across many geographic regions.
There are no concentrations of business transacted with a particular market that would severely impact our business in the near term. However, we rely on a limited number of suppliers for certain key components and a few key contract manufacturers to manufacture most of our products; any disruption, or termination of these arrangements could materially adversely affect our operating results.
4. Goodwill and Purchased Intangible Assets, Net
Goodwill activity by reportable segment is summarized as follows (in millions):
Hybrid Cloud
Public Cloud
Total
Balance as of April 26, 2024
$
1,714
$
1,045
$
2,759
Derecognition
—
( 36
)
( 36
)
Balance as of April 25, 2025
1,714
1,009
2,723
Impact of foreign currency translation
—
49
49
Balance as of April 24, 2026
$
1,714
$
1,058
$
2,772
During fiscal 2025, we derecognized a portion of the Public Cloud goodwill in connection with the sale of our cloud optimization and management software business known as Spot by NetApp, which formed part of our Public Cloud reportable segment. See "Gains/losses on the sale or derecognition of assets" section contained in Note 5 – Supplemental Financial Information for additional information related to this derecognition.
Purchased intangible assets, net are summarized below (in millions):
April 24, 2026
April 25, 2025
Gross
Accumulated
Net
Gross
Accumulated
Net
Assets
Amortization
Assets
Assets
Amortization
Assets
Developed technology
$
55
$
( 44
)
$
11
$
55
$
( 33
)
$
22
Customer contracts/relationships
50
( 39
)
11
50
( 29
)
21
Other purchased intangibles
2
( 2
)
—
2
( 2
)
—
Total purchased intangible assets
$
107
$
( 85
)
$
22
$
107
$
( 64
)
$
43
Amortization expense for purchased intangible assets is summarized below (in millions):
Year Ended
Statements of
April 24, 2026
April 25, 2025
April 26, 2024
Income
Classifications
Developed technology
$
11
$
28
$
34
Cost of revenues
Customer contracts/relationships
10
19
22
Operating expenses
Other purchased intangibles
—
—
1
Operating expenses
Total
$
21
$
47
$
57
As of April 24, 2026, future amortization expense related to purchased intangible assets is as follows (in millions):
65
Fiscal Year
Amount
2027
$
21
2028
1
Total
$
22
5. Supplemental Financial Information
Cash and cash equivalents (in millions):
The following table presents cash and cash equivalents as reported in our consolidated balance sheets, as well as the sum of cash, cash equivalents and restricted cash as reported on our consolidated statements of cash flows:
April 24, 2026
April 25, 2025
Cash and cash equivalents
$
2,070
$
2,742
Restricted cash
5
7
Cash, cash equivalents and restricted cash
$
2,075
$
2,749
Inventories (in millions):
April 24, 2026
April 25, 2025
Purchased components
$
14
$
81
Finished goods
184
105
Inventories
$
198
$
186
Property and equipment, net (in millions):
April 24, 2026
April 25, 2025
Land
$
46
$
46
Buildings and improvements
377
374
Leasehold improvements
114
103
Computer, production, engineering and other equipment
1,264
1,172
Computer software
66
329
Furniture and fixtures
61
62
Construction-in-progress
58
49
1,986
2,135
Accumulated depreciation and amortization
( 1,394
)
( 1,572
)
Property and equipment, net
$
592
$
563
Depreciation and amortization expense related to property and equipment, net is summarized below (in millions):
Year Ended
April 24, 2026
April 25, 2025
April 26, 2024
Depreciation and amortization expense
$
179
$
196
$
198
Other non-current assets (in millions):
April 24, 2026
April 25, 2025
Deferred tax assets
$
859
$
994
Operating lease right-of-use (ROU) assets
228
241
Other assets
495
408
Other non-current assets
$
1,582
$
1,643
Other non-current assets as of April 24, 2026 and April 25, 2025 include $ 98 million and $ 92 million, respectively, for our 49 % non-controlling equity interest in Lenovo NetApp Technology Limited (LNTL), a China-based entity that we formed with Lenovo (Beijing) Information Technology Ltd. in fiscal 2019. LNTL is integral to our sales channel strategy in China, acting as a distributor of
66
our offerings to customers headquartered there, and involved in certain OEM sales to Lenovo. LNTL is also focused on localizing our products and services, and developing new joint offerings for the China market by leveraging NetApp and Lenovo technologies.
Accrued expenses (in millions):
April 24, 2026
April 25, 2025
Accrued compensation and benefits
$
543
$
513
Income tax payable
29
146
Operating lease liabilities
42
40
Other current liabilities
537
423
Accrued expenses
$
1,151
$
1,122
Other long-term liabilities (in millions):
April 24, 2026
April 25, 2025
Liability for uncertain tax positions
$
38
$
45
Operating lease liabilities
204
216
Other liabilities
118
118
Other long-term liabilities
$
360
$
379
Deferred revenue
Deferred revenue represents unrecognized revenue related to undelivered product commitments and other product deliveries that have not met all revenue recognition criteria, as well as customer payments made in advance for services, which include software and hardware support contracts, certain public cloud services and other services.
During the years ended April 24, 2026 and April 25, 2025 , we recognized revenue of $ 2,279 million and $ 2,176 million, respectively, that was included in the deferred revenue balance at the beginning of the respective periods.
Remaining performance obligations
As of April 24, 2026, the aggregate amount of the transaction price allocated to the remaining performance obligations related to customer contracts that are unsatisfied or partially unsatisfied was $ 5.7 billion. Because customer orders are typically placed on an as-needed basis, and cancellable without penalty prior to shipment, orders in backlog may not be a meaningful indicator of future revenue and have not been included in this amount. We expect to recognize as revenue 45 % of our remaining performance obligations in the next 12 months and the remainder thereafter.
Deferred commissions
The following table summarizes deferred commissions balances as reported in our consolidated balance sheets (in millions):
April 24, 2026
April 25, 2025
Other current assets
$
117
$
64
Other non-current assets
152
104
Total deferred commissions
$
269
$
168
During the years ended April 24, 2026 and April 25, 2025 , we recognized amortization expense from deferred commissions of $ 106 million and $ 123 million, respectively, and there were no impairment charges recognized.
Other (expense) income, net (in millions):
Year Ended
April 24, 2026
April 25, 2025
April 26, 2024
Interest income
$
113
$
112
$
112
Interest expense
( 109
)
( 64
)
( 64
)
Other, net
( 30
)
( 2
)
1
Total other (expense) income, net
$
( 26
)
$
46
$
49
Statements of cash flows additional information (in millions):
67
Supplemental cash flow information related to our operating leases is included in Note 8 – Leases. Non-cash investing activities and other supplemental cash flow information are presented below:
Year Ended
April 24, 2026
April 25, 2025
April 26, 2024
Non-cash Investing Activities:
Capital expenditures incurred but not paid
$
20
$
14
$
16
Supplemental Cash Flow Information:
Income taxes paid, net of refunds
$
435
$
412
$
357
Interest paid
$
109
$
53
$
59
Gains/losses on the sale or derecognition of assets
During fiscal 2025, we completed the sale of our cloud optimization and management software business known as Spot by NetApp to Flexera Software LLC. Total sale consideration consisted of (i) $ 70 million in up-front cash consideration and (ii) up to $ 49 million in cash consideration contingent upon the achievement of certain financial performance metrics during the period from January 1, 2025 through December 31, 2025. W e received the up-front cash consideration, recognized $ 20 million for contingent consideration in other current assets, derecognized the assets and liabilities conveyed to Flexera, and recorded certain transaction costs. No material gain or loss was recorded to our consolidated statements of income.
T he major classes of assets and liabilities derecognized were (in millions):
Amount
Assets:
Property and equipment, net
$
13
Goodwill
36
Purchased intangible assets, net
34
Total Assets
83
Liabilities:
Short-term deferred revenue
1
During fiscal 2026, based on achievement of certain financial performance metrics, we recognized an additional $ 11 million of c ontingent consideration in other current assets and a corresponding gain to our consolidated statements of income. We expect to receive the cash from the contingent consideration during fiscal 2027.
Financing Transactions
While most of our arrangements for sales include short-term payment terms, from time to time we provide long-term financing to creditworthy customers. We have generally sold receivables financed through these arrangements on a non-recourse basis to third-party financing institutions within 10 days of the contracts’ dates of execution, and we classify the proceeds from these sales as cash flows from operating activities in our consolidated statements of cash flows. We account for the sales of these receivables as “true sales” as defined in the accounting standards on transfers of financial assets, as we are considered to have surrendered control of these financing receivables. Provided all other revenue recognition criteria have been met, we recognize product revenues for these arrangements, net of any payment discounts from financing transactions, upon product acceptance. We sold $ 28 million, $ 65 million and $ 67 million of receivables during fiscal 2026, 2025 and 2024 , respectively.
6. Financial Instruments and Fair Value Measurements
The accounting guidance for fair value measurements provides a framework for measuring fair value on either a recurring or nonrecurring basis, whereby the inputs used in valuation techniques are assigned a hierarchical level. The following are the three levels of inputs to measure fair value:
Level 1 : Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2: Inputs that reflect quoted prices for identical assets or liabilities in less active markets; quoted prices for similar assets or liabilities in active markets; benchmark yields, reported trades, broker/dealer quotes, inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means.
68
Level 3: Unobservable inputs that reflect our own assumptions incorporated in valuation techniques used to measure fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.
We consider an active market to be one in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis, and consider an inactive market to be one in which there are infrequent or few transactions for the asset or liability, the prices are not current, or price quotations vary substantially either over time or among market makers. Where appropriate, our own or the counterparty’s non-performance risk is considered in measuring the fair values of liabilities and assets, respectively.
Investments
The following is a summary of our investments at their cost or amortized cost as of April 24, 2026 and April 25, 2025 (in millions):
April 24, 2026
April 25, 2025
U.S. Treasury and government debt securities
$
2,112
$
2,025
Money market funds
808
1,126
Certificates of deposit
86
24
Mutual funds
49
41
Total debt and equity securities
$
3,055
$
3,216
The fair value of our investments approximates their cost or amortized cost for both periods presented. Investments in mutual funds relate to the non-qualified deferred compensation plan offered to certain employees.
As of April 24, 2026, all our debt investments are due to mature in one year or less.
Fair Value of Financial Instruments
The following table summarizes our financial assets and liabilities measured at fair value on a recurring basis (in millions):
April 24, 2026
Fair Value Measurements at Reporting Date Using
Total
Level 1
Level 2
Cash and cash equivalents:
Cash
$
578
$
578
$
—
Money market funds
808
808
—
Certificates of deposit
86
—
86
U.S. Treasury and government debt securities
598
598
—
Total cash and cash equivalents
2,070
1,984
86
Short-term investments:
U.S. Treasury and government debt securities
1,514
1,514
—
Total short-term investments
1,514
1,514
—
Total cash, cash equivalents and short-term investments
$
3,584
$
3,498
$
86
Other items:
Mutual funds (1)
$
9
$
9
$
—
Mutual funds (2)
$
40
$
40
$
—
Foreign currency exchange contracts assets (1)
$
10
$
—
$
10
Foreign currency exchange contracts liabilities (3)
$
( 1
)
$
—
$
( 1
)
69
April 25, 2025
Fair Value Measurements at Reporting Date Using
Total
Level 1
Level 2
Cash and cash equivalents:
Cash
$
671
$
671
$
—
Money market funds
1,126
1,126
—
Certificates of deposit
24
—
24
U.S. Treasury and government debt securities
921
921
—
Total cash and cash equivalents
2,742
2,718
24
Short-term investments:
U.S. Treasury and government debt securities
1,104
1,104
—
Total short-term investments
1,104
1,104
—
Total cash, cash equivalents and short-term investments
$
3,846
$
3,822
$
24
Other items:
Mutual funds (1)
$
7
$
7
$
—
Mutual funds (2)
$
34
$
34
$
—
Foreign currency exchange contracts assets (1)
$
29
$
—
$
29
Foreign currency exchange contracts liabilities (3)
$
( 2
)
$
—
$
( 2
)
(1) Reported as other current assets in the consolidated balance sheets
(2) Reported as other non-current assets in the consolidated balance sheets
(3) Reported as accrued expenses in the consolidated balance sheets
Our Level 2 debt instruments are held by a custodian who prices some of the investments using standard inputs in various asset price models or obtains investment prices from third-party pricing providers that incorporate standard inputs in various asset price models. These pricing providers utilize the most recent observable market information in pricing these securities or, if specific prices are not available for these securities, use other observable inputs like market transactions involving identical or comparable securities. We review Level 2 inputs and fair value for reasonableness and the values may be further validated by comparison to multiple independent pricing sources. In addition, we review third-party pricing provider models, key inputs and assumptions and understand the pricing processes at our third-party providers in determining the overall reasonableness of the fair value of our Level 2 debt instruments. As of April 24, 2026 and April 25, 2025, we have not made any adjustments to the prices obtained from our third-party pricing providers.
Fair Value of Debt
As of April 24, 2026 and April 25, 2025 , the fair value of our long-term debt, including the current portion, was $ 2,468 million and $ 3,143 million, respectively. These fair values of our long-term debt were based on observable market prices in a less active market.
70
7. Financing Arrangements
Long-Term Debt
The following table summarizes information relating to our long-term debt, which we collectively refer to as our Senior Notes (in millions, except interest rates):
Effective Interest Rate
April 24, 2026
April 25, 2025
1.875% Senior Notes Due June 2025
2.03 %
$
—
$
750
2.375% Senior Notes Due June 2027
2.51 %
550
550
2.70% Senior Notes Due June 2030
2.81 %
700
700
5.50% Senior Notes Due March 2032
5.71 %
625
625
5.70% Senior Notes Due March 2035
5.90 %
625
625
Total principal amount
2,500
3,250
Unamortized discount and issuance costs
( 13
)
( 15
)
Total senior notes
2,487
3,235
Less: Current portion of long-term debt
—
( 750
)
Total long-term debt
$
2,487
$
2,485
Senior Notes
On June 23, 2025, upon maturity, we repaid the 1.875 % Senior Notes due June 2025 for an aggregate amount of $ 757 million, comprised of the principal and unpaid interest.
In March 2025, we issued $ 625 million aggregate principal amount of 5.50 % Senior Notes due 2032 and $ 625 million aggregate principal amount of 5.70 % Senior Notes due 2035, for which we received total proceeds of $ 1.24 billion, net of discount and issuance costs.
Our Senior Notes, which are unsecured, unsubordinated obligations, rank equally in right of payment with any existing and future senior unsecured indebtedness. Interest on our Senior Notes is payable semi-annually.
We may redeem the Senior Notes in whole or in part, at any time at our option at specified redemption prices. In addition, upon the occurrence of certain change of control triggering events, we may be required to repurchase the Senior Notes under specified terms. The Senior Notes also include covenants that limit our ability to incur debt secured by liens on assets or on shares of stock or indebtedness of our subsidiaries; to engage in certain sale and lease-back transactions; and to consolidate, merge or sell all or substantially all of our assets. As of April 24, 2026, we were in compliance with all covenants associated with the Senior Notes.
As of April 24, 2026, our aggregate future principal debt maturities are as follows (in millions):
Fiscal Year
Amount
2027
$
—
2028
550
2029
—
2030
—
2031
700
Thereafter
1,250
Total
$
2,500
Credit Facility and Commercial Paper Program
We have a senior unsecured credit agreement with a syndicated group of lenders. The credit agreement, which was amended in March 2025, provides for a $ 1.0 billion revolving unsecured credit facility, with a sublimit of $ 50 million available for the issuance of letters of credit on our behalf. The credit facility matures on March 5, 2030 , with an option for us to extend the maturity date for two additional 1 -year periods, subject to certain conditions. The proceeds of the loans may be used by us for general corporate purposes and as liquidity support for our existing commercial paper program. As of April 24, 2026 , we were compliant with all associated covenants in the agreement. No amounts were drawn against this credit facility during any of the periods presented.
71
We also have a commercial paper program (the “Program” ), under which we may issue unsecured commercial paper notes. Amounts available under the Program, as amended in July 2017, may be borrowed, repaid and re-borrowed, with the aggregate face or principal amount of the notes outstanding under the Program at any time not to exceed $ 1.0 billion. The maturities of the notes can vary, but may not exceed 397 days from the date of issue. The notes are sold under customary terms in the commercial paper market and may be issued at a discount from par or, alternatively, may be sold at par and bear interest at rates dictated by market conditions at the time of their issuance. The proceeds from the issuance of the notes are used for general corporate purposes. There were no commercial paper notes outstanding as of April 24, 2026 or April 25, 2025 .
8. Leases
We lease real estate, equipment and automobiles in the U.S. and internationally. Our real estate leases, which are responsible for the majority of our aggregate ROU asset and liability balances, include leases for office space, data centers and other facilities, and as of April 24, 2026 , have remaining lease terms not exceeding 16 years. Some of these leases contain options that allow us to extend or terminate the lease agreement. Our equipment leases are primarily for servers and networking equipment and as of April 24, 2026 , have remaining lease terms not exceeding 3 years. As of April 24, 2026 , our automobile leases have remaining lease terms not exceeding 4 years. All our leases are classified as operating leases except for certain immaterial equipment finance leases.
The components of lease cost related to our operating leases were as follows (in millions):
Year Ended
April 24, 2026
April 25, 2025
Operating lease cost
$
52
$
51
Variable lease cost
15
15
Total lease cost
$
67
$
66
Variable lease cost is primarily attributable to amounts paid to lessors for common area maintenance and utility charges under our real estate leases.
The supplemental cash flow information related to our operating leases is as follows (in millions):
Year Ended
April 24, 2026
April 25, 2025
Cash paid for amounts included in the measurement of operating lease liabilities
$
49
$
48
ROU assets obtained in exchange for new operating lease obligations
$
29
$
25
The supplemental balance sheet information related to our operating leases is as follows (in millions, except lease term and discount rate):
April 24, 2026
April 25, 2025
Other non-current assets
$
228
$
241
Total operating lease ROU assets
$
228
$
241
Accrued expenses
$
42
$
40
Other long-term liabilities
204
216
Total operating lease liabilities
$
246
$
256
Weighted Average Remaining Lease Term
7.7 years
8.5 years
Weighted Average Discount Rate
3.5
%
3.4
%
Future minimum operating lease payments as of April 24, 2026 are as follows (in millions):
72
Fiscal Year
Amount
2027
$
47
2028
43
2029
38
2030
32
2031
30
Thereafter
93
Total lease payments
283
Less: Interest
( 37
)
Total
$
246
9. Stockholders’ Equity
Equity Incentive Programs
The 2021 Plan — The 2021 Equity Incentive Plan (the 2021 Plan) was adopted by our Board of Directors and approved by the stockholders on September 10, 2021. The 2021 Plan provides for the granting of restricted stock, restricted stock units, performance awards, incentive stock options, nonstatutory stock options, and stock appreciation rights to our employees, directors, consultants and independent advisors.
Under the 2021 Plan, the Board of Directors may grant RSUs which include time-based RSUs that generally vest over a four-year period with 25 % vesting on the first anniversary of the grant date and 6.25 % vesting quarterly thereafter. In addition, performance-based RSUs are granted under the 2021 Plan and are subject to performance criteria and vesting terms specified by the Compensation Committee.
During fiscal 2026 , the shares reserved for issuance under the Plan were increased by 5 million shares of common stock. As of April 24, 2026 , 14 million shares were available for grant under the 2021 Plan.
Restricted Stock Units
In fiscal 2026, 2025 and 2024, we granted PBRSUs to certain of our executives. Each PBRSU has performance-based vesting criteria (in addition to the service-based vesting criteria) such that the PBRSUs cliff-vest at the end of a three year performance period, which began on the date specified in the grant agreements and typically ends on the last day of the third fiscal year, following the grant date. The number of shares that will be used to calculate the settlement amount for all of these PBRSUs at the end of the applicable performance and service period will range from 0 % to 200 % of a target number of shares originally granted. For half of the PBRSUs granted in fiscal 2026, 2025 and 2024, the number of shares used to calculate the settlement amount will depend upon our Total Stockholder Return (TSR) as compared to the TSR of a specified group of benchmark peer companies (each expressed as a growth rate percentage) calculated as of the end of the performance period. For the remaining half of the PBRSUs granted , the number of shares used to calculate the settlement amount will depend upon the Company's billings result average over the three-year performance period. The billings result average is computed based on achievement against annual billings targets, with each target set at the beginning of the respective fiscal year, during the three-year performance period. Billings, for purposes of measuring the performance of these PBRSUs, means the total obtained by adding net revenues as reported on the Company's consolidated statements of income to the amount reported as the change in deferred revenue on the consolidated statements of cash flows for the applicable measurement period, excluding the impact of fluctuations in foreign currency exchange rates. The aggregate grant date fair value of all PBRSUs granted in fiscal 2026, 2025 and 2024 was $ 64 million, $ 67 million and $ 39 million, respectively, and these amounts are being recognized to compensation expense over the remaining performance/service periods.
As of April 24, 2026, April 25, 2025 and April 26, 2024 , there were approximately 1 million PBRSUs outstanding.
The following table summarizes information related to RSUs, including PBRSUs (in millions, except for fair value):
73
Number of
Shares
Weighted-
Average
Grant Date
Fair Value
Outstanding as of April 28, 2023
12
$
62.08
Granted
5
$
76.46
Vested
( 5
)
$
59.32
Forfeited
( 1
)
$
65.17
Outstanding as of April 26, 2024
11
$
68.87
Granted
4
$
123.45
Vested
( 5
)
$
72.07
Forfeited
( 2
)
$
78.21
Outstanding as of April 25, 2025
8
$
91.30
Granted
5
$
104.74
Vested
( 4
)
$
86.44
Forfeited
( 1
)
$
89.27
Outstanding as of April 24, 2026
8
$
101.15
We primarily use the net share settlement approach upon vesting, where a portion of the shares are withheld as settlement of employee withholding taxes, which decreases the shares issued to the employee by a corresponding value. The number and value of the shares netted for employee taxes are summarized in the table below (in millions):
Year Ended
April 24, 2026
April 25, 2025
April 26, 2024
Shares withheld for taxes
1
2
2
Fair value of shares withheld
$
137
$
199
$
128
Employee Stock Purchase Plan
Eligible employees are offered shares through a 24 -month offering period, which consists of four consecutive 6 -month purchase periods. Employees may purchase a limited number of shares of the Company’s stock at a discount of up to 15 % of the lesser of the market value at the beginning of the offering period or the end of each 6-month purchase period. During fiscal 2026, the ESPP was amended to increase the shares reserved for issuance by 4 million shares of common stock. As of April 24, 2026 , 5 million shares were available for issuance. The following table summarizes activity related to the purchase rights issued under the ESPP (in millions):
Year Ended
April 24, 2026
April 25, 2025
Shares issued under the ESPP
1
2
Proceeds from issuance of shares
$
103
$
108
Stock-Based Compensation Expense
Stock-based compensation expense is included in the consolidated statements of income as follows (in millions):
Year Ended
April 24, 2026
April 25, 2025
April 26, 2024
Cost of product revenues
$
6
$
6
$
6
Cost of services revenues
22
24
23
Sales and marketing
155
162
143
Research and development
126
135
132
General and administrative
73
59
53
Total stock-based compensation expense
$
382
$
386
$
357
As of April 24, 2026 , total unrecognized compensation expense related to our equity awards was $ 639 million, which is expected to be recognized on a straight-line basis over a weighted-average remaining service period of 2.2 years.
74
Valuation Assumptions
The valuation of RSUs and ESPP purchase rights and the underlying weighted-average assumptions are summarized as follows:
Year Ended
April 24, 2026
April 25, 2025
April 26, 2024
RSUs:
Risk-free interest rate
3.8
%
4.6
%
4.9
%
Expected dividend yield
2.0
%
1.8
%
2.6
%
Weighted-average fair value per share granted
$
104.74
$
123.45
$
76.46
ESPP:
Expected term in years
1.2
1.2
1.2
Risk-free interest rate
4.1
%
5.2
%
4.9
%
Expected volatility
36
%
31
%
30
%
Expected dividend yield
2.1
%
1.7
%
2.8
%
Weighted-average fair value per right granted
$
26.42
$
29.70
$
17.37
Stock Repurchase Program
Under our common stock repurchase program, which we may suspend or discontinue at any time, we may purchase shares of our outstanding common stock through solicited or unsolicited transactions in the open market, in privately negotiated transactions, through accelerated share repurchase programs, pursuant to a Rule 10b5-1 plan or in such other manner as deemed appropriate by our management.
The following table summarizes activity related to the stock repurchase program (in millions, except for per share amounts):
Year Ended
April 24, 2026
April 25, 2025
April 26, 2024
Number of shares repurchased
9.0
10.2
11.5
Average price per share
$
105.89
$
112.55
$
77.87
Stock repurchases allocated to additional paid-in capital
$
98
$
50
$
102
Stock repurchases allocated to retained earnings
$
852
$
1,100
$
798
Remaining authorization at end of period
$
502
$
352
$
502
On May 21, 2026, our Board of Directors authorized the repurchase of an additional $ 1.0 billion of our common stock.
Preferred Stock
Our Board of Directors has the authority to issue up to 5 million shares of preferred stock and to determine the price, rights, preferences, privileges, and restrictions, including voting rights, of those shares without any further vote or action by the stockholders. No shares of preferred stock were issued or outstanding in any period presented.
Dividends
The following is a summary of our activities related to dividends on our common stock (in millions, except per share amounts).
Year Ended
April 24, 2026
April 25, 2025
April 26, 2024
Dividends per share declared
$
2.08
$
2.08
$
2.00
Dividend payments allocated to additional paid-in capital
$
142
$
130
$
171
Dividend payments allocated to retained earnings
$
271
$
294
$
245
On May 21, 2026 , we declared a cash dividend of $ 0.52 per share of common stock, payable on July 29, 2026 to shareholders of record as of the close of business on July 10, 2026 . The timing and amount of future dividends will depend on market conditions, corporate business and financial considerations and regulatory requirements. All dividends declared have been determined by the Company to be legally authorized under the laws of the state in which we are incorporated.
75
10. Derivatives and Hedging Activities
We use derivative instruments to manage exposures to foreign currency risk. Our primary objective in holding derivatives is to reduce the volatility of earnings and cash flows associated with changes in foreign currency exchange rates. The maximum length of time over which forecasted foreign currency denominated revenues are hedged is 12 months. The program is not designated for trading or speculative purposes. Our derivatives expose us to credit risk to the extent that the counterparties may be unable to meet their obligations under the terms of our agreements. We seek to mitigate such risk by limiting our counterparties to major financial institutions. In addition, the potential risk of loss with any one counterparty resulting from this type of credit risk is monitored on an ongoing basis. We also have in place master netting arrangements to mitigate the credit risk of our counterparties and to potentially reduce our losses due to counterparty nonperformance. We present our derivative instruments as net amounts in our consolidated balance sheets. The gross and net fair value amounts of such instruments were not material as of April 24, 2026 or April 25, 2025. All contracts have a maturity of less than 12 months.
The notional amount of our outstanding U.S. dollar equivalent foreign currency exchange forward contracts consisted of the following (in millions):
April 24, 2026
April 25, 2025
Cash Flow Hedges
Forward contracts purchased
$
75
$
81
Balance Sheet Contracts
Forward contracts sold
$
995
$
790
Forward contracts purchased
$
13
$
—
The effect of cash flow hedges recognized in net revenues is presented in the consolidated statements of comprehensive income.
The effect of derivative instruments not designated as hedging instruments recognized in other (expense) income, net on our consolidated statements of income was as follows (in millions):
Year Ended
April 24, 2026
April 25, 2025
April 26, 2024
Gain (Loss) Recognized into Income
Foreign currency exchange contracts
$
( 15
)
$
38
$
( 59
)
11. Restructuring Charges
In fiscal 2026, management approved a restructuring plan to redirect resources to the highest return activities and reduce costs. Charges related to the plan consisted primarily of employee severance-related costs. The activities under this plan were substantially complete by the end of fiscal 2026.
In fiscal 2025, management approved restructuring plans to redirect resources to the highest return activities and reduce costs. Charges related to the plans consisted primarily of employee severance-related costs and lease termination charges. One of the plans related to the sale of our cloud optimization and management software business known as Spot by NetApp. The activities under these plans were substantially complete by the end of fiscal 2025.
In fiscal 2024, management approved restructuring plans to redirect resources to the highest return activities and reduce costs. Charges related to the plans consisted primarily of employee severance-related costs. One of the plans also included termination of certain real estate leases in various countries, resulting in lease termination charges. The activities under these plans were substantially complete by the end of fiscal 2024.
76
Activities related to our restructuring plans are summarized as follows (in millions):
Total
Balance as of April 28, 2023
$
36
Net charges
44
Cash payments
( 70
)
Balance as of April 26, 2024
10
Net charges
83
Cash payments
( 42
)
Balance as of April 25, 2025
51
Net charges
21
Cash payments
( 66
)
Balance as of April 24, 2026
$
6
Liabilities for our restructuring activities are included in accrued expenses in our consolidated balance sheets.
12. Income Taxes
Income before income taxes is as follows (in millions):
Year Ended
April 24, 2026
April 25, 2025
April 26, 2024
Domestic
$
718
$
606
$
472
Foreign
930
777
791
Total
$
1,648
$
1,383
$
1,263
The provision for income taxes consists of the following (in millions):
Year Ended
April 24, 2026
April 25, 2025
April 26, 2024
Current:
Federal
$
83
$
131
$
89
State
24
38
25
Foreign
130
128
110
Total current
237
297
224
Deferred:
Federal
82
( 102
)
24
State
12
( 16
)
6
Foreign
41
18
23
Total deferred
135
( 100
)
53
Provision for income taxes
$
372
$
197
$
277
77
During the fourth quarter of fiscal 2025, the Internal Revenue Service (“IRS”) substantially completed the examination of our fiscal 2018 and fiscal 2019 U.S. income tax returns, and we recognized a tax benefit of $ 36 million attributable to the release of related tax reserves.
The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate, in accordance with the guidance in ASU 2023-09, as follows (in millions, except percentages):
Year Ended April 24, 2026
Tax Effect
Rate Impact
Tax computed at federal statutory rate
$
346
21.0
%
State and local income taxes, net of federal benefit (1)
30
1.8
%
Foreign tax effects:
Ireland
Statutory tax rate difference between Ireland and U.S.
( 44
)
( 2.7
)%
Ireland earnings taxed at rates other than statutory
14
0.8
%
Other
3
0.2
%
Cyprus
Statutory tax rate difference between Cyprus and U.S.
( 15
)
( 0.9
)%
Deduction for qualifying capital
( 21
)
( 1.3
)%
Other
1
0.1
%
Other foreign jurisdictions
36
2.2
%
Federal:
Effect of cross-border tax laws
Foreign earnings inclusion, net of credits
34
2.1
%
Subpart F income, net of credits
9
0.5
%
Tax credits
Research and development credits
( 24
)
( 1.4
)%
Nontaxable or nondeductible items
2
0.1
%
Changes in unrecognized tax benefits
3
0.2
%
Other
( 2
)
( 0.1
)%
Provision for income taxes
$
372
22.6
%
Percentages may not add due to rounding
(1) State taxes in Illinois, New Jersey, New York, Oregon, and Virginia make up the majority (greater than 50 %) of this category.
The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate, in accordance with the guidance prior to adoption of ASU 2023-09, as follows (in millions):
Year Ended
April 25, 2025
April 26, 2024
Tax computed at federal statutory rate
$
290
$
265
State income taxes, net of federal benefit
14
22
Foreign earnings in lower tax jurisdictions
( 14
)
( 40
)
Stock-based compensation
( 21
)
12
Research and development credits
( 31
)
( 22
)
Benefit for foreign derived intangible income
( 28
)
—
Global minimum tax on intangible income
12
46
Tax charges (benefits) from integration of acquired companies
1
4
Resolution of income tax matters (1)
( 39
)
( 4
)
Other
13
( 6
)
Provision for income taxes
$
197
$
277
(1) During fiscal 2025, we recognized a tax benefit related to the IRS examination of our fiscal 2018 and fiscal 2019 U.S. income tax returns. During fiscal 2024, we recognized a tax benefit related to the lapse of statute of limitations for certain issues in our fiscal 2020 U.S. tax returns.
The components of our deferred tax assets and liabilities are as follows (in millions):
78
April 24, 2026
April 25, 2025
Deferred tax assets:
Reserves and accruals
$
114
$
188
Net operating loss and credit carryforwards
145
138
Stock-based compensation
25
25
Deferred revenue
267
250
Acquired intangibles
441
483
Capitalized research and development (1)
182
198
Other
6
6
Gross deferred tax assets
1,180
1,288
Valuation allowance
( 123
)
( 119
)
Deferred tax assets, net of valuation allowance
1,057
1,169
Deferred tax liabilities:
Prepaids and accruals
104
87
Acquired intangibles
89
84
Property and equipment
33
26
Other
2
6
Total deferred tax liabilities
228
203
Deferred tax assets, net of valuation allowance and deferred tax liabilities
$
829
$
966
(1) As required under the Tax Cuts and Jobs Act of 2017, research and development expenditures were capitalized and amortized beginning in our fiscal 2023. Effective for fiscal 2026, we are expensing research and development expenditures as permitted by the One Big Beautiful Bill Act (OBBB).
The valuation allowance increased by $ 4 million in fiscal 2026. The increase is mainly attributable to corresponding changes in deferred tax assets, primarily certain foreign tax credit carryforwards.
As of April 24, 2026, we have federal net operating loss carryforwards of $ 6 million. In addition, we have gross state net operating loss and tax credit carryforwards of $ 1 million and $ 143 million, respectively. The majority of the state credit carryforwards are California research credits which are offset by a valuation allowance as we believe it is more likely than not that these credits will not be utilized. We also have $ 16 million of U.S. foreign tax credit carryforwards and $ 37 million of foreign tax credit carryforwards of which the majority were generated by our Dutch subsidiary and are fully offset by a valuation allowance. Certain acquired net operating loss carryforwards are subject to an annual limitation under Internal Revenue Code Section 382, but are expected to be realized with the exception of those which have a valuation allowance. The state and foreign net operating loss carryforwards and credits will expire in various years from fiscal 2027 through 2042. The federal net operating loss carryforwards, the California research credit, and the Dutch foreign tax credit carryforwards do not expire.
The following table summarizes income taxes paid (net of refunds) exceeding 5 percent of total income taxes paid (net of refunds) in the following jurisdictions (in millions):
Year Ended April 24, 2026
U.S. Federal
$
261
U.S. States and Local
29
Foreign
Ireland
51
Cyprus
24
Other
70
Total foreign
145
Total income taxes paid (net of refunds)
$
435
79
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in millions):
Year Ended
April 24, 2026
April 25, 2025
April 26, 2024
Balance at beginning of period
$
68
$
220
$
222
Additions based on tax positions related to the current year
7
8
7
Additions for tax positions of prior years
3
4
—
Decreases for tax positions of prior years
( 2
)
( 25
)
( 2
)
Settlements
( 8
)
( 139
)
( 7
)
Balance at end of period
$
68
$
68
$
220
As of April 24, 2026 , we had $ 68 million of gross unrecognized tax benefits, of which $ 38 million has been recorded in other long-term liabilities and $ 8 million has been recorded in other current liabilities. Unrecognized tax benefits of $ 47 million, including penalties, interest and indirect benefits, would affect our provision for income taxes if recognized.
We recognized expense for increases to accrued interest and penalties related to unrecognized tax benefits in the income tax provision of $ 2 million, $ 4 million and $ 11 million, respectively, in fiscal 2026, fiscal 2025 and fiscal 2024 . Accrued interest and penalties of $ 10 million and $ 8 million were recorded in the consolidated balance sheets as of April 24, 2026 and April 25, 2025, respectively.
On July 4, 2025, the reconciliation bill H.R. 1, referred to as the One Big Beautiful Bill Act (OBBB), was signed into law in the United States. The OBBB contains several changes to corporate taxation including the extension of key provisions of the 2017 Tax Cuts and Jobs Act and modifications to the international tax framework. The legislation has multiple effective dates, with certain provisions effective in our fiscal year 2026 and others phased in through our fiscal year 2027. The OBBB did not have a material impact to our income tax provision for fiscal year 2026.
The Organisation for Economic Co-operation and Development (“OECD”) in troduced an international tax framework under Pillar Two that provides for a global minimum tax of 15 % for large multinational companies. We are currently subject to Pillar Two rules enacted in certain foreign jurisdictions in which we operate. As of April 24, 2026, Pillar Two taxes did not have an impact on our financial statements, particularly due to the safe harbor relief during the transition period. On January 5, 2026, the OECD issued administrative guidance outlining a framework under which U.S.-parented groups may be excluded from the application of Pillar Two rules through a “side-by-side arrangement.” Each member jurisdiction will need to adopt this guidance into local law, and the timing and manner of adoption may vary. We will continue to monitor U.S. and international legislative developments, including further announcements on the side-by-side arrangement, to assess any potential impacts to our financial statements.
The tax years that remain subject to examination as of April 24, 2026 for our major tax jurisdictions are shown below:
2023 — 2026
United States — federal income tax
2020 — 2026
United States — state and local income tax
2020 — 2026
Australia
2022 — 2026
Germany
2007 — 2026
India
2019 — 2026
The Netherlands
2019 — 2026
Canada
2020 — 2026
Japan
2020 — 2026
Cyprus
2023 — 2026
United Kingdom
2024 — 2026
France
2019 — 2026
Israel
2022 — 2026
Ireland
We are currently undergoing various income tax audits in the U.S. and audits in several foreign tax jurisdictions. Transfer pricing calculations are key topics under these audits and are often subject to dispute and appeals.
We continue to monitor the progress of ongoing discussions with tax authorities and the impact, if any, of the expected expiration of the statute of limitations in various taxing jurisdictions. We engage in continuous discussion and negotiation with taxing authorities regarding tax matters in multiple jurisdictions.
As of April 24, 2026 , we continue to record a deferred tax liability related to state taxes on unremitted earnings of certain foreign entities as well as a deferred tax liability related to withholding taxes on unremitted earnings of certain foreign entities. We estimate
80
the unrecognized deferred tax liability related to the earnings we expect to be indefinitely reinvested to be immaterial. We will continue to monitor our plans to indefinitely reinvest undistributed earnings of foreign subsidiaries and will assess the related unrecognized deferred tax liability considering our ongoing projected global cash requirements, tax consequences associated with repatriation and any U.S. or foreign government programs designed to influence remittances.
13. Net Income per Share
The following is a calculation of basic and diluted net income per share (in millions, except per share amounts):
Year Ended
April 24, 2026
April 25, 2025
April 26, 2024
Numerator:
Net income
$
1,276
$
1,186
$
986
Denominator:
Shares used in basic computation
199
204
208
Dilutive impact of employee equity award plans
2
5
5
Shares used in diluted computation
201
209
213
Net Income per Share:
Basic
$
6.41
$
5.81
$
4.74
Diluted
$
6.35
$
5.67
$
4.63
The following table presents the numbers of potential shares of common stock from outstanding employee equity awards that have been excluded from the computation of diluted net income per share, as their inclusion would have had an anti-dilutive effect, for the periods presented (in millions):
Year Ended
April 24, 2026
April 25, 2025
April 26, 2024
Employee equity award plans
1
1
2
14. Segment, Geographic, and Significant Customer Information
Our operations are organized into two segments: Hybrid Cloud and Public Cloud. The two segments are based on the information reviewed by our Chief Operating Decision Maker (CODM), who is the Chief Executive Officer, to evaluate results and allocate resources. The CODM measures performance of each segment based on segment revenue and segment gross profit by comparing actual revenue and gross profit results to historical results and previously forecasted financial information. We do not allocate to our segments certain cost of revenues which we manage at the corporate level. These unallocated costs include stock-based compensation and amortization of intangible assets. We do not allocate assets to our segments .
Hybrid Cloud offers a unified data storage portfolio of storage management and infrastructure solutions that helps customers modernize their data centers. This portfolio accommodates both structured and unstructured data with unified storage optimized for flash, disk, and cloud storage, capable of handling data-intensive workloads and applications. Hybrid Cloud includes software, hardware, and related support, along with professional and other services.
Public Cloud offers a portfolio of products delivered primarily as-a-service, including related support. This portfolio includes cloud storage, data services, and operational services. Public Cloud includes certain reseller arrangements in which the timing of our consideration follows the end user consumption of the reseller services.
Segment Revenues and Gross Profit
Financial information by segment is as follows (in millions):
81
Year Ended April 24, 2026
Hybrid Cloud
Public Cloud
Total
Product revenues
$
3,194
$
—
$
3,194
Support revenues
2,636
—
2,636
Professional and other services revenues
407
—
407
Public cloud revenues
—
688
688
Net revenues
6,237
688
6,925
Cost of product revenues
1,395
—
1,395
Cost of support revenues
198
—
198
Cost of professional and other services revenues
281
—
281
Cost of public cloud revenues
—
113
113
Segment cost of revenues
1,874
113
1,987
Segment gross profit
$
4,363
$
575
$
4,938
Unallocated cost of revenues 1
( 39
)
Operating expenses
( 3,225
)
Other expense, net
( 26
)
Income before income taxes
$
1,648
1 Unallocated cost of revenues are composed of $ 28 million of stock-based compensation expense and $ 11 million of amortization of intangible assets.
Year Ended April 25, 2025
Hybrid Cloud
Public Cloud
Total
Product revenues
$
3,040
$
—
$
3,040
Support revenues
2,512
—
2,512
Professional and other services revenues
355
—
355
Public cloud revenues
—
665
665
Net revenues
5,907
665
6,572
Cost of product revenues
1,278
—
1,278
Cost of support revenues
197
—
197
Cost of professional and other services revenues
261
—
261
Cost of public cloud revenues
—
165
165
Segment cost of revenues
1,736
165
1,901
Segment gross profit
$
4,171
$
500
$
4,671
Unallocated cost of revenues 1
( 58
)
Operating expenses
( 3,276
)
Other income, net
46
Income before income taxes
$
1,383
1 Unallocated cost of revenues are composed of $ 30 million of stock-based compensation expense and $ 28 million of amortization of intangible assets.
82
Year Ended April 26, 2024
Hybrid Cloud
Public Cloud
Total
Product revenues
$
2,849
$
—
$
2,849
Support revenues
2,488
—
2,488
Professional and other services revenues
320
—
320
Public cloud revenues
—
611
611
Net revenues
5,657
611
6,268
Cost of product revenues
1,131
—
1,131
Cost of support revenues
195
—
195
Cost of professional and other services revenues
243
—
243
Cost of public cloud revenues
—
203
203
Segment cost of revenues
1,569
203
1,772
Segment gross profit
$
4,088
$
408
$
4,496
Unallocated cost of revenues 1
( 63
)
Operating expenses
( 3,219
)
Other income, net
49
Income before income taxes
$
1,263
1 Unallocated cost of revenues are composed of $ 29 million of stock-based compensation expense and $ 34 million of amortization of intangible assets.
Hybrid Cloud Segment Net Revenues by Storage Category are as follows (in millions):
Year Ended
April 24, 2026
April 25, 2025
April 26, 2024
All-flash revenues
$
4,178
$
3,763
$
3,262
Hybrid-flash and other revenues
2,059
2,144
2,395
Hybrid Cloud segment net revenues
$
6,237
$
5,907
$
5,657
Geographical Revenues and Certain Assets
Revenues summarized by geographic region are as follows (in millions):
Year Ended
April 24, 2026
April 25, 2025
April 26, 2024
United States, Canada and Latin America (Americas)
$
3,505
$
3,347
$
3,193
Europe, Middle East and Africa (EMEA)
2,358
2,204
2,104
Asia Pacific (APAC)
1,062
1,021
971
Net revenues
$
6,925
$
6,572
$
6,268
Americas revenues consist of sales to Americas commercial and U.S. public sector markets. Sales to customers inside the U.S. were $ 3,293 million, $ 3,092 million and $ 2,952 million during fiscal 2026, 2025 and 2024, respectively.
The majority of our assets, excluding cash, cash equivalents, short-term investments and accounts receivable, were attributable to our domestic operations. The following table presents cash, cash equivalents and short-term investments held in the U.S. and internationally in various foreign subsidiaries (in millions):
April 24, 2026
April 25, 2025
U.S.
$
1,322
$
1,320
International
2,262
2,526
Total
$
3,584
$
3,846
With the exception of property and equipment, we do not identify or allocate our long-lived assets by geographic area. The following table presents property and equipment information for geographic areas based on the physical location of the assets (in millions):
April 24, 2026
April 25, 2025
U.S.
$
373
$
344
International
219
219
Total
$
592
$
563
83
Significant Customers
Two customers, each of which is a distributor, accounted for 10% or more of our net revenues:
Year Ended
April 24, 2026
April 25, 2025
April 26, 2024
Customer A
22
%
21
%
22
%
Customer B
21
%
24