NetApp Reports First Quarter Fiscal Year 2019 Results
Net Revenues of $1.47 Billion Grew 12% Year-over-Year
·Product revenue grew 20% year-over-year
·All-flash array annualized net revenue run rate of $2.2 billion increased 50% year-over-year
·Free cash flow was 18% of revenue and increased 22% year-over-year
·$605 million returned to shareholders in share repurchases and cash dividends
Sunnyvale, Calif.—August 15, 2018—NetApp (NASDAQ: NTAP) today reported financial results for the first quarter of fiscal year 2019, which ended July 27, 2018.
“We delivered a very strong first quarter with revenue, gross margin, operating margin, and earnings per share all above our guidance. In Q1, we introduced substantial innovation across our portfolio, expanding our industry-leading cloud data services and introducing new partnerships, products and solutions to help data-driven organizations thrive,” said George Kurian, chief executive officer. “Enterprises are signaling strong confidence in NetApp by making long-term investments to enable the NetAppTM Data Fabric across their entire enterprise.”
* In the first quarter of fiscal 2019, NetApp adopted Revenue from Contracts with Customers (ASC 606), a new accounting standard which establishes a comprehensive new revenue recognition model designed to depict the transfer of goods or services to a customer in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. The full retrospective method of adoption was employed. Accordingly, NetApp’s condensed consolidated balance sheet as of April 27, 2018, condensed consolidated statements of operations and cash flows for all prior periods presented, and all related financial statement metrics included herein, have been restated to conform to the new rules. The adoption of the standard had no impact to cash provided by or used in operating, investing or financing activities as presented on the condensed consolidated statement of cash flows.
Second Quarter Fiscal Year 2019 Financial Outlook
NetApp Expands the Industry's Most Complete Cloud Data Services
·Azure NetApp Files is now available in public preview. Jointly developed by Microsoft and NetApp, Azure NetApp Files is a native Azure service powered by NetApp’s leading ONTAP technology and storage expertise.
·NetApp announced NetApp Cloud Volumes Services for Google Cloud Platform offering customers a fully-managed, cloud-native file storage service that is integrated with Google Cloud Platform.
New Products and Solutions that will Help Data-Driven Organizations Thrive
·NetApp introduced the AFF A800 array, a high performance, cloud-connected flash system to power artificial intelligence and compute-intensive applications. The NetApp AFF A800 is the first available end-to-end NVMe enterprise grade all flash array and boasts the industry’s first support of 30TB solid state drives.
·The latest update to our flagship NetApp ONTAPTM 9 software includes enhancements to FabricPool and improves hybrid cloud data tiering and adds support for Microsoft Azure. ONTAP will automatically move inactive data to a lower-cost storage tier to save money and bring data back when needed.
·NetApp Active IQTM technology provides new cloud-based analytics for all NetApp systems that predicts future performance needs and identifies unprotected data to optimize operations.
·NetApp StorageGRID object-based storage solution now provides superior next-generation, cloud-architected infrastructure for financial and personal data retention compliance as one integrated resource across public and private clouds.
Cisco and NetApp Simplify the Delivery of Cloud Infrastructure and Industry-Specific Applications
·The new Managed Private Cloud solution built on FlexPodTM enables customers to realize a cloud-like, As-a-Service model for their on-premises IT with remote management, securing critical customer data and advancing cloud-capabilities for both partners and their customers.
·New FlexPod industry solutions provide a proven platform to quickly deploy key applications across industries that are challenged by the increasingly diverse, dynamic and distributed nature of data. The initial industry solution, FlexPod Datacenter for Epic EHR, simplifies IT infrastructure for healthcare customers, helping them move faster and improve patient care.
Recognition for Industry Leading Products
·NetApp all-flash array technology was recognized as a Leader in Gartner’s 2018 Magic Quadrant for Solid-State Arrays.3 NetApp has improved its position in the Leaders Quadrant with a higher rating for its ability to execute.
·NetApp StorageGRID named a Leader in IDC’s MarketScape for Object-Based Storage.4 IDC recognizes the strength of applying StorageGRID capabilities across our broader NetApp portfolio, and specifically praises a few capabilities in the report, including integration with NetApp FabricPool technology.
·According to a new Storage Performance Council SPC-1 Result,5 tests of the AFF A800 system places it as number 1 overall in terms of SPC-1 Response Time and makes it the top-performing enterprise all-flash array among the industry’s leading storage providers. The AFF A800 is also in the top 4 on the SPC-1 Performance list. The SPC-1 tests of the AFF A800 were conducted with compression and deduplication enabled, just as they would be under real-world conditions.
NetApp is the data authority for hybrid cloud. We provide a full range of hybrid cloud data services that simplify management of applications and data across cloud and on-premises environments to accelerate digital transformation. Together with our partners, we empower global organizations to unleash the full potential of their data to expand customer touchpoints, foster greater innovation and optimize their operations. For more information, visit www.netapp.com. #DataDriven
NetApp and the NetApp logo and the marks listed at http://www.netapp.com/TM are trademarks of NetApp, Inc. Other company and product names may be trademarks of their respective owners.
“Safe Harbor” Statement Under U.S. Private Securities Litigation Reform Act of 1995
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, all of the statements made under the Second Quarter Fiscal Year 2019 Financial Outlook section and statements about enterprise customers making long term investments in the NetApp Data Fabric. All of these forward-looking statements involve risk and uncertainty. Actual results may differ materially from these statements for a variety of reasons, including, without limitation, general global political, macroeconomic and market conditions, changes in U.S. government spending, revenue seasonality and matters specific to our business, such as our ability to expand our total available market and grow our portfolio of products, customer demand for and acceptance of our products and services, our ability to successfully execute new business models, our ability to successfully execute on our Data Fabric strategy to generate profitable growth and stockholder return and our ability to manage our gross profit margins. These and other equally important factors are described in reports and documents we file from time to time with the Securities and Exchange Commission, including the factors described under the section titled “Risk Factors” in our most recently submitted report on 10-K. We disclaim any obligation to update information contained in this press release whether as a result of new information, future events, or otherwise.
NetApp Usage of Non-GAAP Financial Information
To supplement NetApp’s condensed consolidated financial statement information presented in accordance with generally accepted accounting principles in the United States (GAAP), NetApp provides investors with certain non-GAAP measures, including, but not limited to, historical non-GAAP operating results, non-GAAP net income, non-GAAP effective tax rate and free cash flow, and historical and projected non-GAAP earnings per diluted share.
NetApp believes that the presentation of non-GAAP net income, non-GAAP effective tax rates, and non-GAAP earnings per share data when shown in conjunction with the corresponding GAAP measures, provides useful information to investors and management regarding financial and business trends relating to its financial condition and results of operations. NetApp believes that the presentation of free cash flow, which it defines as the net cash provided by operating activities less cash used to acquire property and equipment, to be a liquidity measure that provides useful information to management and investors because it reflects cash that can be used to, among other things, invest in its business, make strategic acquisitions, repurchase common stock, and pay dividends on its common stock. As free cash flow is not a measure of liquidity calculated in accordance with GAAP, free cash flow should be considered in addition to, but not as a substitute for, the analysis provided in the statement of cash flows.