NetApp lowers annual revenue, profit forecast on sluggish data storage demand

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(Reuters) -NetApp lowered its revenue and profit forecast for fiscal year 2025 on Wednesday, hurt by sluggish demand for its data storage services as businesses pull back spending.

The shares of the San Jose, California-based company fell 13% in extended trading.

Businesses have kept a tight leash on spending amid rising macroeconomic uncertainty and inflation, impacting demand for data storage products after a pandemic-driven boom.

Companies are not yet ready to expand capacity for small model training and inferencing for enterprise application (Enterprise AI), as the process is still in early stages and is not expected to help with incremental demand until 2026, according to analysts at brokerage Susquehanna.

The company now expects 2025 adjusted earnings per share between $7.17 and $7.27, compared with its prior forecast of $7.20 to $7.40.

It also lowered its revenue forecast to between $6.49 billion and $6.64 billion, compared with prior expectations of $6.54 billion to $6.74 billion.

NetApp helps businesses improve efficiency of their data storage infrastructure and counts companies such Amazon.com’s Amazon Web Services, Alphabet’s Google Cloud and Microsoft’s Azure as clients.

The company posted third-quarter revenue of $1.64 billion, compared with analysts’ estimates of $1.69 billion according to data compiled by LSEG.

On an adjusted basis, the company reported per share earnings of $1.91, in line with estimates.

(Reporting by Kritika Lamba in Bengaluru; Editing by Krishna Chandra Eluri)