NetApp (NASDAQ: NTAP) shares closed more than 5% lower on Thursday following the company’s mixed outlook, while the Q3 results came in better than the Street expectations. Q3 EPS was $1.44, beating the Street estimate of $1.28. Revenue grew 10% year-over-year to $1.6 billion, broadly in line with the Street estimate of $1.61 billion.

The company is experiencing significantly higher input costs as a result of suppliers' de-commit, leading to a sharp decline in gross margin over the next few quarters. While the company has put in place plans to drive margins back to normalized levels by the second half of next year, plenty of uncertainties remain.

The company expects Q4/22 EPS to range from $1.21 to $1.31, missing the consensus estimate of $1.35, while seeing revenues in the range of $1.635-1.735 billion, compared to the consensus estimate of $1.67 billion.