NetApp (NTAP) risk factors, FY2025 10-K

Risks Related to Our Business and Industry

1. 01Global economic and geopolitical conditions have adversely affected and may in the future continue to adversely affect our industry, business operations, and financial performance, including our revenue growth, profitability, financial condition and cash flows
2. 02Our business may be negatively impacted by technological trends in our market or our inability to keep pace with rapid industry, technological, and market changes
3. 03The global nature of our business exposes us to risks that could materially harm our operations, revenues, and financial results
4. 04policies, treaties or laws, local labor conditions, transportation costs, government spending patterns, geopolitical tensions and uncertainties, acts of terrorism, international conflicts, natural disasters, and adverse public health developments
5. 05The dynamic markets in which we operate and our sales and distribution structure make it challenging to forecast revenues, and any disruption could harm our business, operating results, financial condition, and cash flows
6. 06customer relationships weaken, if they fail to comply with legal or regulatory requirements, or if we cease to do business with them for these or other reasons, our business, operating results, financial condition and cash flows could be adversely affected
7. 07Our gross margins may fluctuate
8. 08Issues related to the development and use of artificial intelligence (AI), including GenAI, could lead to legal or regulatory action, damage our reputation, or otherwise materially harm our business
9. 09Increasing competition and industry consolidation could harm our business, operating results, financial condition and cash flows
10. 10Transition to consumption-based business models may adversely affect our revenues and profitability in other areas of our business, potentially harming our business, operating results, financial condition and cash flows
11. 11If we are unable to attract and retain qualified personnel, our business, operating results, financial condition and cash flows could be harmed
12. 12Our acquisitions or divestitures may not achieve the expected benefits and could increase our liabilities, disrupt our existing business, and harm our operating results, financial condition and cash flows

Risks Related to Our Operations

1. 13We often incur expenses before receiving related benefits, and it may be difficult to reduce expenses quickly if demand declines
2. 14Initiatives to improve our cost structure, business processes, and systems may not achieve the expected benefits and could negatively impact our reputation, business, operating results, financial condition and cash flows
3. 15vendor payments, pay employees, fulfill contractual obligations, report financial results, maintain effective internal controls, or operate our business effectively
4. 16We are exposed to credit risks, fluctuations in the market value of our investment portfolio, and potential adverse effects on our cash and cash equivalents if the financial institutions holding them fail
5. 17Our initiatives and disclosures related to sustainability and corporate responsibility matters expose us to risks that could adversely affect our reputation and performance

Risks Related to Our Customers and Sales

1. 18A portion of our revenues is generated by large, recurring purchases from various customers, resellers and distributors
2. 19If we are unable to maintain and develop relationships with strategic partners, our revenues may be harmed
3. 20To successfully offer our products and services in a rapidly evolving market, we need effective planning, forecasting, and management processes that allow us to scale and adjust our business in response to changing market opportunities and conditions
4. 21Reduced U.S. government demand could materially harm our business, operating results, financial condition and cash flows
5. 22If we do not achieve forecasted sales orders in any quarter, our operating results, financial condition and cash flows could be harmed
6. 23We are exposed to the credit and non-payment risk of our customers, resellers and distributors, especially during times of economic uncertainty and tight credit markets, which could result in material losses

Risks Related to Our Products and Services

1. 24Any disruption to our supply chain could materially harm our business, operating results, financial condition and cash flows
2. 25Disruptions due to floods, earthquakes, storms, fires and other natural disasters, especially those caused by climate change, and particularly in countries with limited infrastructure and disaster recovery resources
3. 26We rely on a limited number of suppliers for critical product components
4. 27If 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
5. 28error, malfeasance, stolen or fraudulently obtained log-in credentials or otherwise, our reputation could be damaged, our business may be harmed and we could incur significant liabilities
6. 29If a data center or other third-party who relies on our products experiences a disruption in service or a loss of data, such disruption could be attributed to the quality of our products
7. 30Failure to comply with new and existing laws and regulations related to privacy, data protection, AI and information security could cause harm to our reputation, result in liability (including regulatory penalties and litigation), and adversely impact our business
8. 31If our products or services are defective, or are perceived to be defective, including as a result of improper use or maintenance, our operating results and customer relationships may be harmed
9. 32Changes in regulations relating to our products or their components, or the manufacture, sourcing, distribution or use thereof, may harm our business, operating results, financial condition and cash flows
10. 33the United Kingdom, and Australia, have adopted regulations to address the risk of human trafficking in supply chains, which govern how workers are recruited and managed
11. 34Any violation of U.S. export control laws and other laws affecting the countries in which our products and services may be sold, distributed, or delivered could have a material and adverse effect on our business, operating results, financial condition and cash flows
12. 35Our failure to protect our intellectual property could harm our business, operating results, financial condition and cash flows
13. 36We may be found to infringe on intellectual property rights of others
14. 37We rely on software from third parties, and a failure to properly manage our use of third-party software could result in increased costs or loss of revenue
15. 38Our failure to adjust to emerging standards may harm our business

Risks Related to Our Securities

1. 39Our stock price is subject to volatility
2. 40Our quarterly operating results may fluctuate materially, which could harm our common stock price
3. 41There are risks associated with our outstanding and future indebtedness

General Risks

1. 42Our business could be materially and adversely affected as a result of natural disasters, terrorist acts or other catastrophic events
2. 43We could be subject to additional income tax liabilities
3. 44the 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
4. 45We may not be able to maintain appropriate internal financial reporting controls and procedures