NetApp NTAP · USD

15. Segment, Geographic, and Significant Customer InformationOur 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 ProfitFinancial information by segment is as follows (in millions, except percentages): 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 Segment gross margin 70.6 % 75.2 % 71.1 % Unallocated cost of revenues1 58 Total gross profit $ 4,613 Total gross margin 70.2 % 1 Unallocated cost of revenues are composed of $30 million of stock-based compensation expense and $28 million of amortization of intangible assets.

17. Commitments and ContingenciesPurchase Orders and Other CommitmentsIn 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. A significant portion of our reported purchase commitments arising from these agreements consist of firm, non-cancelable, and unconditional commitments. As of April 25, 2025, we had $0.4 billion in non-cancelable purchase commitments for inventory. We record a liability for firm, non-cancelable and unconditional purchase commitments for quantities in excess of our future demand forecasts consistent with the valuation of our excess and obsolete inventory. As of April 25, 2025 and April 26, 2024, such liability amounted to $22 million and $20 million, respectively, and is included in accrued expenses in our consolidated balance sheets. To the extent that such forecasts are not achieved, our commitments and associated accruals may change.In addition to inventory commitments with contract manufacturers and component suppliers, 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. As of April 25, 2025, we had $0.6 billion in other purchase obligations.Of the total $1.0 billion in purchase commitments, $0.6 billion is due in fiscal 2026, with the remainder due thereafter. Financing GuaranteesWhile 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.

Although management at present believes that the ultimate outcome of these proceedings, individually and in the aggregate, will not materially harm our financial position, results of operations, cash flows, or overall trends, legal proceedings are subject to inherent uncertainties, and unfavorable rulings or other events could occur. Unfavorable resolutions could include significant monetary damages. In addition, in matters for which injunctive relief or other conduct remedies are sought, unfavorable resolutions could include an injunction or other order prohibiting us from selling one or more products at all or in particular ways or requiring other remedies.

13. Income TaxesIncome before income taxes is as follows (in millions): Year Ended April 25, 2025 April 26, 2024 April 28, 2023 Domestic $ 606 $ 472 $ 420 Foreign 777 791 646 Total $ 1,383 $ 1,263 $ 1,066 The provision (benefit) for income taxes consists of the following (in millions): Year Ended April 25, 2025 April 26, 2024 April 28, 2023 Current: Federal $ 131 $ 89 $ 209 State 38 25 39 Foreign 128 110 150 Total current 297 224 398 Deferred: Federal (102 ) 24 (44 ) State (16 ) 6 (3 ) Foreign 18 23 (559 ) Total deferred (100 ) 53 (606 ) Provision (benefit) for income taxes $ 197 $ 277 $ (208 ) 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.During the second quarter of fiscal 2023, we completed an intra-entity asset transfer of certain IP to our international headquarters (the “IP Transfer”). The transaction resulted in a step-up of tax-deductible basis in the transferred assets, and accordingly, created a temporary difference where the tax basis exceeded the financial statement basis of such intangible assets, which resulted in the recognition of a discrete tax benefit and related deferred tax asset of $524 million during the second quarter of fiscal 2023. Management applied significant judgment when determining the fair value of the IP, which serves as the tax basis of the deferred tax asset. With the assistance of third-party valuation specialists, the fair value of the IP was determined principally based on the present value of projected cash flows related to the IP which reflects management’s assumptions regarding projected revenues, earnings before interest and taxes, and a discount rate. The tax-deductible amortization related to the transferred IP rights will be recognized in future periods and any amortization that is unused in a particular year can be carried forward indefinitely. The deferred tax asset and the tax benefit were measured based on the enacted tax rates expected to apply in the years the asset is expected to be realized. We expect to realize the deferred tax asset resulting from the IP Transfer and will assess the realizability of the deferred tax asset quarterly.

9. 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 25, 2025, have remaining lease terms not exceeding 17 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 25, 2025, have remaining lease terms not exceeding 4 years. As of April 25, 2025, our automobile leases have remaining lease terms not exceeding 5 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 25, 2025 April 26, 2024 Operating lease cost $ 51 $ 53 Variable lease cost 15 15 Total lease cost $ 66 $ 68 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 25, 2025 April 26, 2024 Cash paid for amounts included in the measurement of operating lease liabilities $ 48 $ 50 Right-of-use assets obtained in exchange for new operating lease obligations $ 25 $ 17 The supplemental balance sheet information related to our operating leases is as follows (in millions, except lease term and discount rate): April 25, 2025 April 26, 2024 Other non-current assets $ 241 $ 247 Total operating lease ROU assets $ 241 $ 247 Accrued expenses $ 40 $ 40 Other long-term liabilities 216 220 Total operating lease liabilities $ 256 $ 260 Weighted Average Remaining Lease Term 8.5 years 9.2 years Weighted Average Discount Rate 3.4 % 3.

4. Business Combinations Fiscal 2023 Acquisition Instaclustr AcquisitionOn May 20, 2022, we acquired all the outstanding shares of privately-held Instaclustr US Holding, Inc. (Instaclustr) for $498 million. Instaclustr is a leading platform provider of fully managed open-source database, pipeline and workflow applications delivered as-a-service.The acquisition-date values of the assets acquired and liabilities assumed are as follows (in millions): Amount Cash $ 4 Intangible assets 107 Goodwill 413 Other assets 19 Total assets acquired 543 Liabilities assumed (45 ) Total purchase price $ 498 The components of the intangible assets acquired were as follows (in millions, except useful life): Amount Estimated useful life(years) Developed technology $ 55 5 Customer contracts/relationships 50 5 Trade name 2 3 Total intangible assets $ 107 The acquired net assets and assumed debt of Instaclustr were recorded at their estimated values. We determined the estimated values with the assistance of valuations and appraisals performed by third party specialists and estimates made by management. We expect to realize revenue synergies and anticipate opportunities for growth through the ability to leverage additional future products and capabilities. These factors, among others, contributed to a purchase price in excess of the estimated value of its identifiable net assets acquired, and as a result, we have recorded goodwill in connection with the acquisition. The goodwill is not deductible for income tax purposes. The results of operations related to the acquisition of Instaclustr have been included in our consolidated statements of income from the acquisition date. Pro forma results of operations have not been presented because the impact from the acquisition was not material to our consolidated results of operations.

Item 1C. Cybersecurity Risk Management and StrategyThe 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 engages third-party providers in support of endpoint detection and responses, data loss prevention efforts, and incident management efforts.

14. Net Income per ShareThe following is a calculation of basic and diluted net income per share (in millions, except per share amounts): Year Ended April 25, 2025 April 26, 2024 April 28, 2023 Numerator: Net income $ 1,186 $ 986 $ 1,274 Denominator: Shares used in basic computation 204 208 217 Dilutive impact of employee equity award plans 5 5 3 Shares used in diluted computation 209 213 220 Net Income per Share: Basic $ 5.81 $ 4.74 $ 5.87 Diluted $ 5.67 $ 4.63 $ 5.