CORRECTING and REPLACING NetApp Reports First Quarter Fiscal Year 2019 Results
Net Revenues of
- 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
The corrected release reads:
NETAPP REPORTS FIRST QUARTER FISCAL YEAR 2019 RESULTS
Net Revenues of
- 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
“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
First Quarter Fiscal Year 2019 Financial Results
- Net Revenues:
$1.47 billion , increased 12% year-over-year from$1.32 billion * in the first quarter of fiscal 2018 - Net Income: GAAP net income of
$283 million , compared to GAAP net income of$131 million * in the first quarter of fiscal 2018; non-GAAP net income1 of$281 million , compared to non-GAAP net income of$166 million * in the first quarter of fiscal 2018 - Earnings per Share: GAAP earnings per share2 of
$1.05 compared to GAAP earnings per share of$0.47* in the first quarter of fiscal 2018; non-GAAP earnings per share of$1.04 , compared to non-GAAP earnings per share of$0.60* in the first quarter of fiscal 2018 - Cash, Cash Equivalents and Investments:
$4.8 billion at the end of the first quarter of fiscal 2019 - Cash from Operations:
$326 million , compared to$250 million in the first quarter of fiscal 2018 - Share Repurchase and Dividend: Returned
$605 million to shareholders through share repurchases and cash dividends
* In the first quarter of fiscal 2019,
Second Quarter Fiscal Year 2019 Financial Outlook
The Company provided the following financial guidance for the second quarter of fiscal year 2019:
|
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GAAP |
Non-GAAP |
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|
$0.79-$0.85 | $0.94-$1.00 |
Dividend
Next cash dividend of
First Quarter Fiscal Year 2019 Business Highlights
NetApp Expands the Industry's Most Complete Cloud Data Services
- Azure NetApp Files is now available in public preview. Jointly
developed by
Microsoft andNetApp , Azure NetApp Files is a native Azure service powered by NetApp’s leading ONTAP technology and storage expertise. NetApp announcedNetApp Cloud Volumes Services forGoogle 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 flagshipNetApp 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.
- 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.3NetApp 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.
Webcast and Conference Call Information
About
“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
Footnotes
1Non-GAAP net income excludes, when applicable,
(a) amortization of intangible assets, (b) stock-based compensation
expenses, (c) litigation settlements, (d) acquisition-related expenses,
(e) restructuring charges, (f) asset impairments, (g) gains/losses on
the sale of properties, and (h) our GAAP tax provision, but includes a
non-GAAP tax provision based upon our projected annual non-GAAP
effective tax rate for the first three quarters of the fiscal year and
an actual non-GAAP tax provision for the fourth quarter of the fiscal
year.
2GAAP earnings per share and non-GAAP earnings per share are calculated using the diluted number of shares.
3Leader in Gartner’s 2018 Magic Quadrant for Solid-State
Arrays, Gartner Magic Quadrant for Solid-State Arrays, by
4Leader in IDC’s MarketScape for Object-Based Storage, “IDC
MarketScape: Worldwide Object-Based Storage 2018 Vendor Assessment,” by
5Storage Performance Council SPC-1 Result, http://spcresults.org/benchmarks/results/spc1-spc1e#A32007
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
NetApp’s management uses these non-GAAP measures in making operating decisions because it believes the measurements provide meaningful supplemental information regarding NetApp’s ongoing operational performance. These non-GAAP financial measures are used to: (1) measure company performance against historical results, (2) facilitate comparisons to our competitors’ operating results and (3) allow greater transparency with respect to information used by management in financial and operational decision making.
A. Amortization of intangible assets.
B. Stock-based compensation expenses.
C. Litigation settlements.
D. Acquisition-related expenses.
E. Restructuring charges. These charges consist of restructuring charges that are incurred based on the particular facts and circumstances of restructuring decisions, including employment and contractual settlement terms, and other related charges, and can vary in size and frequency. We therefore exclude them in our assessment of operational performance.
F. Asset impairments. These are non-cash charges to write down assets when there is an indication that the asset has become impaired. Management finds it useful to exclude these non-cash charges due to the unpredictability of these events in its assessment of operational performance.
G. Gains/losses on the sale of properties. These are gains/losses from the sale of our properties. Management believes that these transactions do not reflect the results of our underlying, on-going business and, therefore, cannot be relied upon for future planning or forecasting.
H. Income tax adjustments. NetApp’s non-GAAP tax provision is based upon a projected annual non-GAAP effective tax rate for the first three quarters of the fiscal year and an actual non-GAAP tax provision for the fourth quarter of the fiscal year. The non-GAAP tax provision also excludes, when applicable, (a) tax charges or benefits in the current period that relate to one or more prior fiscal periods that are a result of events such as changes in tax legislation, authoritative guidance, income tax audit settlements and/or court decisions, (b) tax charges or benefits that are attributable to unusual or non-recurring book and/or tax accounting method changes, (c) tax charges that are a result of a non-routine foreign cash repatriation, (d) tax charges or benefits that are a result of infrequent restructuring of the Company’s tax structure, (e) tax charges or benefits that are a result of a change in valuation allowance, and (f) tax charges resulting from the integration of intellectual properties from acquisitions. Management believes that the use of non-GAAP tax provisions provides a more meaningful measure of the Company’s operational performance.
These non-GAAP measures are not in accordance with, or an alternative
for, measures prepared in accordance with GAAP, and may be different
from non-GAAP measures used by other companies. In addition, these
non-GAAP measures are not based on any comprehensive set of accounting
rules or principles.
NETAPP, INC. |
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CONDENSED CONSOLIDATED BALANCE SHEETS |
|||||||
(In millions) |
|||||||
(Unaudited) |
|||||||
July 27, |
April 27, |
||||||
ASSETS | |||||||
Current assets: | |||||||
Cash, cash equivalents and investments | $ | 4,811 | $ | 5,391 | |||
Accounts receivable | 616 | 1,047 | |||||
Inventories | 97 | 122 | |||||
Other current assets | 329 | 392 | |||||
Total current assets | 5,853 | 6,952 | |||||
Property and equipment, net | 768 | 756 | |||||
Goodwill and purchased intangible assets, net | 1,820 | 1,833 | |||||
Other non-current assets | 464 | 450 | |||||
Total assets | $ | 8,905 | $ | 9,991 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 425 | $ | 609 | |||
Accrued expenses | 592 | 825 | |||||
Commercial paper notes | 200 | 385 | |||||
Short-term deferred revenue and financed unearned services revenue | 1,623 | 1,712 | |||||
Total current liabilities | 2,840 | 3,531 | |||||
Long-term debt | 1,542 | 1,541 | |||||
Other long-term liabilities | 964 | 992 | |||||
Long-term deferred revenue and financed unearned services revenue | 1,637 | 1,651 | |||||
Total liabilities | 6,983 | 7,715 | |||||
Stockholders' equity | 1,922 | 2,276 | |||||
Total liabilities and stockholders' equity | $ | 8,905 | $ | 9,991 | |||
NETAPP, INC. |
|||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||||
(In millions, except per share amounts) |
|||||||
(Unaudited) |
|||||||
Three Months Ended | |||||||
July 27, |
July 28, |
||||||
Revenues: | |||||||
Product | $ | 875 | $ | 727 | |||
Software maintenance | 229 | 223 | |||||
Hardware maintenance and other services | 370 | 371 | |||||
Net revenues | 1,474 | 1,321 | |||||
Cost of revenues: | |||||||
Cost of product | 398 | 376 | |||||
Cost of software maintenance | 7 | 7 | |||||
Cost of hardware maintenance and other services | 106 | 114 | |||||
Total cost of revenues | 511 | 497 | |||||
Gross profit | 963 | 824 | |||||
Operating expenses: | |||||||
Sales and marketing | 409 | 423 | |||||
Research and development | 208 | 193 | |||||
General and administrative | 73 | 68 | |||||
Restructuring charges | 19 | — | |||||
Total operating expenses | 709 | 684 | |||||
Income from operations | 254 | 140 | |||||
Other income, net | 18 | 5 | |||||
Income before income taxes | 272 | 145 | |||||
Provision (benefit) for income taxes | (11 | ) | 14 | ||||
Net income | $ | 283 | $ | 131 | |||
Net income per share: | |||||||
Basic | $ | 1.08 | $ | 0.49 | |||
Diluted | $ | 1.05 | $ | 0.47 | |||
Shares used in net income per share calculations: | |||||||
Basic | 262 | 270 | |||||
Diluted | 269 | 278 | |||||
Cash dividends declared per share | $ | 0.40 | $ | 0.20 | |||
NETAPP, INC. |
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
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(In millions) |
||||||||
(Unaudited) |
||||||||
Three Months Ended | ||||||||
July 27, |
July 28, |
|||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 283 | $ | 131 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Depreciation and amortization | 49 | 51 | ||||||
Stock-based compensation | 40 | 48 | ||||||
Deferred income taxes | (26 | ) | — | |||||
Other items, net | 8 | 5 | ||||||
Changes in assets and liabilities, net of acquisitions of businesses: | ||||||||
Accounts receivable | 423 | 226 | ||||||
Inventories | 25 | 24 | ||||||
Accounts payable | (177 | ) | (58 | ) | ||||
Accrued expenses | (221 | ) | (135 | ) | ||||
Deferred revenue and financed unearned services revenue |
(87 | ) | (102 | ) | ||||
Long-term taxes payable | 5 | — | ||||||
Changes in other operating assets and liabilities, net | 4 | 60 | ||||||
Net cash provided by operating activities | 326 | 250 | ||||||
Cash flows from investing activities: | ||||||||
Redemptions of investments, net | 248 | 112 | ||||||
Purchases of property and equipment | (64 | ) | (36 | ) | ||||
Acquisitions of businesses, net of cash acquired | — | (24 | ) | |||||
Other investing activities, net | 2 | 1 | ||||||
Net cash provided by investing activities | 186 | 53 | ||||||
Cash flows from financing activities: | ||||||||
Proceeds from issuance of common stock under employee stock award plans |
63 | 48 | ||||||
Payments for taxes related to net share settlement of stock awards |
(84 | ) | (57 | ) | ||||
Repurchase of common stock |
(500 | ) | (150 | ) | ||||
Proceeds from (repayments of) commercial paper notes, net |
(185 | ) | 394 | |||||
Dividends paid |
(105 | ) | (54 | ) | ||||
Other financing activities, net |
(1 | ) | — | |||||
Net cash provided by (used in) financing activities | (812 | ) | 181 | |||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (14 | ) | 19 | |||||
Net increase (decrease) in cash, cash equivalents and restricted cash | (314 | ) | 503 | |||||
Cash, cash equivalents and restricted cash: | ||||||||
Beginning of period | 2,947 | 2,450 | ||||||
End of period | $ | 2,633 | $ | 2,953 | ||||
SELECTED CONDENSED CONSOLIDATED BALANCE SHEET LINE ITEMS |
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(In millions) |
|||||||||||
(Unaudited) |
|||||||||||
As of April 27, 2018 | |||||||||||
As Previously |
Impact of ASC |
As Adjusted | |||||||||
ASSETS | |||||||||||
Accounts receivable | $ | 1,009 | $ | 38 | $ | 1,047 | |||||
Inventories | 126 | (4 | ) | 122 | |||||||
Other current assets | 330 | 62 | 392 | ||||||||
Other non-current assets | 420 | 30 | 450 | ||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
Short-term deferred revenue and financed unearned services revenue | $ | 1,804 | $ | (92 | ) | $ | 1,712 | ||||
Other long-term liabilities | 961 | 31 | 992 | ||||||||
Long-term deferred revenue and financed unearned services revenue | 1,673 | (22 | ) | 1,651 | |||||||
Total stockholders' equity | 2,067 | 209 | 2,276 | ||||||||
NETAPP, INC. | |||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||
(In millions, except per share amounts) | |||||||||||
(Unaudited) | |||||||||||
Three Months Ended July 28, 2017 | |||||||||||
As Previously Reported |
Impact of ASC 606 |
As Adjusted | |||||||||
Revenues: | |||||||||||
Product | $ | 723 | $ | 4 | $ | 727 | |||||
Software maintenance | 234 | (11 | ) | 223 | |||||||
Hardware maintenance and other services | 368 | 3 | 371 | ||||||||
Net revenues | 1,325 | (4 | ) | 1,321 | |||||||
Cost of revenues: | |||||||||||
Cost of product | 371 | 5 | 376 | ||||||||
Cost of software maintenance | 7 | — | 7 | ||||||||
Cost of hardware maintenance and other services | 113 | 1 | 114 | ||||||||
Total cost of revenues | 491 | 6 | 497 | ||||||||
Gross profit | 834 | (10 | ) | 824 | |||||||
Operating expenses: | |||||||||||
Sales and marketing | 425 | (2 | ) | 423 | |||||||
Research and development | 193 | — | 193 | ||||||||
General and administrative | 68 | — | 68 | ||||||||
Total operating expenses | 686 | (2 | ) | 684 | |||||||
Income from operations | 148 | (8 | ) | 140 | |||||||
Other income, net | 5 | — | 5 | ||||||||
Income before income taxes | 153 | (8 | ) | 145 | |||||||
Provision for income taxes | 17 | (3 | ) | 14 | |||||||
Net income | $ | 136 | $ | (5 | ) | $ | 131 | ||||
Net income per share: | |||||||||||
Basic | $ | 0.50 | $ | (0.01 | ) | $ | 0.49 | ||||
Diluted | $ | 0.49 | $ | (0.02 | ) | $ | 0.47 | ||||
Shares used in net income per share calculations: | |||||||||||
Basic | 270 | 270 | 270 | ||||||||
Diluted | 278 | 278 | 278 | ||||||||
NETAPP, INC. | |||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||
(In millions, except per share amounts) | |||||||||||
(Unaudited) | |||||||||||
Three Months Ended October 27, 2017 | |||||||||||
As Previously Reported |
Impact of ASC 606 |
As Adjusted | |||||||||
Revenues: | |||||||||||
Product | $ | 807 | $ | 12 | $ | 819 | |||||
Software maintenance | 240 | (16 | ) | 224 | |||||||
Hardware maintenance and other services | 375 | (3 | ) | 372 | |||||||
Net revenues | 1,422 | (7 | ) | 1,415 | |||||||
Cost of revenues: | |||||||||||
Cost of product | 399 | (2 | ) | 397 | |||||||
Cost of software maintenance | 6 | — | 6 | ||||||||
Cost of hardware maintenance and other services | 115 | (3 | ) | 112 | |||||||
Total cost of revenues | 520 | (5 | ) | 515 | |||||||
Gross profit | 902 | (2 | ) | 900 | |||||||
Operating expenses: | |||||||||||
Sales and marketing | 420 | 1 | 421 | ||||||||
Research and development | 194 | — | 194 | ||||||||
General and administrative | 69 | — | 69 | ||||||||
Total operating expenses | 683 | 1 | 684 | ||||||||
Income from operations | 219 | (3 | ) | 216 | |||||||
Other income, net | 6 | — | 6 | ||||||||
Income before income taxes | 225 | (3 | ) | 222 | |||||||
Provision for income taxes | 50 | (2 | ) | 48 | |||||||
Net income | $ | 175 | $ | (1 | ) | $ | 174 | ||||
Net income per share: | |||||||||||
Basic | $ | 0.65 | $ | — | $ | 0.65 | |||||
Diluted | $ | 0.64 | $ | (0.01 | ) | $ | 0.63 | ||||
Shares used in net income per share calculations: | |||||||||||
Basic | 269 | 269 | 269 | ||||||||
Diluted | 275 | 275 | 275 | ||||||||
NETAPP, INC. | ||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||
(In millions, except per share amounts) | ||||||||||||
(Unaudited) | ||||||||||||
Three Months Ended January 26, 2018 | ||||||||||||
As Previously Reported |
Impact of ASC 606 |
As Adjusted | ||||||||||
Revenues: | ||||||||||||
Product | $ | 920 | $ | 32 | $ | 952 | ||||||
Software maintenance | 237 | (16 | ) | 221 | ||||||||
Hardware maintenance and other services | 366 | — | 366 | |||||||||
Net revenues | 1,523 | 16 | 1,539 | |||||||||
Cost of revenues: | ||||||||||||
Cost of product | 468 | 1 | 469 | |||||||||
Cost of software maintenance | 6 | — | 6 | |||||||||
Cost of hardware maintenance and other services | 108 | — | 108 | |||||||||
Total cost of revenues | 582 | 1 | 583 | |||||||||
Gross profit | 941 | 15 | 956 | |||||||||
Operating expenses: | ||||||||||||
Sales and marketing | 423 | (4 | ) | 419 | ||||||||
Research and development | 193 | — | 193 | |||||||||
General and administrative | 72 | — | 72 | |||||||||
Gain on sale of properties | (218 | ) | — | (218 | ) | |||||||
Total operating expenses | 470 | (4 | ) | 466 | ||||||||
Income from operations | 471 | 19 | 490 | |||||||||
Other income, net | 14 | — | 14 | |||||||||
Income before income taxes | 485 | 19 | 504 | |||||||||
Provision for income taxes | 991 | (8 | ) | 983 | ||||||||
Net loss | $ | (506 | ) | $ | 27 | $ | (479 | ) | ||||
Net loss per share: | ||||||||||||
Basic | $ | (1.89 | ) | $ | 0.10 | $ | (1.79 | ) | ||||
Diluted | $ | (1.89 | ) | $ | 0.10 | $ | (1.79 | ) | ||||
Shares used in net loss per share calculations: | ||||||||||||
Basic | 268 | 268 | 268 | |||||||||
Diluted | 268 | 268 | 268 | |||||||||
NETAPP, INC. | |||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||
(In millions, except per share amounts) | |||||||||||
(Unaudited) | |||||||||||
Three Months Ended April 27, 2018 | |||||||||||
As Previously Reported |
Impact of ASC 606 |
As Adjusted | |||||||||
Revenues: | |||||||||||
Product | $ | 1,011 | $ | 16 | $ | 1,027 | |||||
Software maintenance | 247 | (13 | ) | 234 | |||||||
Hardware maintenance and other services | 383 | — | 383 | ||||||||
Net revenues | 1,641 | 3 | 1,644 | ||||||||
Cost of revenues: | |||||||||||
Cost of product | 500 | (4 | ) | 496 | |||||||
Cost of software maintenance | 6 | — | 6 | ||||||||
Cost of hardware maintenance and other services | 113 | — | 113 | ||||||||
Total cost of revenues | 619 | (4 | ) | 615 | |||||||
Gross profit | 1,022 | 7 | 1,029 | ||||||||
Operating expenses: | |||||||||||
Sales and marketing | 461 | (18 | ) | 443 | |||||||
Research and development | 203 | — | 203 | ||||||||
General and administrative | 71 | — | 71 | ||||||||
Total operating expenses | 735 | (18 | ) | 717 | |||||||
Income from operations | 287 | 25 | 312 | ||||||||
Other income, net | 16 | — | 16 | ||||||||
Income before income taxes | 303 | 25 | 328 | ||||||||
Provision for income taxes | 32 | 6 | 38 | ||||||||
Net income | $ | 271 | $ | 19 | $ | 290 | |||||
Net income per share: | |||||||||||
Basic | $ | 1.02 | $ | 0.07 | $ | 1.09 | |||||
Diluted | $ | 0.99 | $ | 0.07 | $ | 1.06 | |||||
Shares used in net income per share calculations: | |||||||||||
Basic | 265 | 265 | 265 | ||||||||
Diluted | 273 | 273 | 273 | ||||||||
NETAPP, INC. | ||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||
(In millions, except per share amounts) | ||||||||||||
(Unaudited) | ||||||||||||
Year Ended April 27, 2018 | ||||||||||||
As Previously Reported |
Impact of ASC 606 |
As Adjusted | ||||||||||
Revenues: | ||||||||||||
Product | $ | 3,461 | $ | 64 | $ | 3,525 | ||||||
Software maintenance | 958 | (56 | ) | 902 | ||||||||
Hardware maintenance and other services | 1,492 | — | 1,492 | |||||||||
Net revenues | 5,911 | 8 | 5,919 | |||||||||
Cost of revenues: | ||||||||||||
Cost of product | 1,738 | — | 1,738 | |||||||||
Cost of software maintenance | 25 | — | 25 | |||||||||
Cost of hardware maintenance and other services | 449 | (2 | ) | 447 | ||||||||
Total cost of revenues | 2,212 | (2 | ) | 2,210 | ||||||||
Gross profit | 3,699 | 10 | 3,709 | |||||||||
Operating expenses: | ||||||||||||
Sales and marketing | 1,729 | (23 | ) | 1,706 | ||||||||
Research and development | 783 | — | 783 | |||||||||
General and administrative | 280 | — | 280 | |||||||||
Gain on sale of properties | (218 | ) | — | (218 | ) | |||||||
Total operating expenses | 2,574 | (23 | ) | 2,551 | ||||||||
Income from operations | 1,125 | 33 | 1,158 | |||||||||
Other income (expense), net | 41 | — | 41 | |||||||||
Income before income taxes | 1,166 | 33 | 1,199 | |||||||||
Provision for income taxes | 1,090 | (7 | ) | 1,083 | ||||||||
Net income | $ | 76 | $ | 40 | $ | 116 | ||||||
Net income per share: | ||||||||||||
Basic | $ | 0.28 | $ | 0.15 | $ | 0.43 | ||||||
Diluted | $ | 0.28 | $ | 0.14 | $ | 0.42 | ||||||
Shares used in net income per share calculations: | ||||||||||||
Basic | 268 | 268 | 268 | |||||||||
Diluted | 276 | 276 | 276 | |||||||||
NETAPP, INC. | ||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||
(In millions, except per share amounts) | ||||||||||||
(Unaudited) | ||||||||||||
Year Ended April 28, 2017 | ||||||||||||
As Previously Reported |
Impact of ASC 606 |
As Adjusted | ||||||||||
Revenues: | ||||||||||||
Product | $ | 3,006 | $ | 54 | $ | 3,060 | ||||||
Software maintenance | 965 | (60 | ) | 905 | ||||||||
Hardware maintenance and other services | 1,548 | (22 | ) | 1,526 | ||||||||
Net revenues | 5,519 | (28 | ) | 5,491 | ||||||||
Cost of revenues: | ||||||||||||
Cost of product | 1,614 | (2 | ) | 1,612 | ||||||||
Cost of software maintenance | 28 | — | 28 | |||||||||
Cost of hardware maintenance and other services | 487 | — | 487 | |||||||||
Total cost of revenues | 2,129 | (2 | ) | 2,127 | ||||||||
Gross profit | 3,390 | (26 | ) | 3,364 | ||||||||
Operating expenses: | ||||||||||||
Sales and marketing | 1,633 | 18 | 1,651 | |||||||||
Research and development | 779 | — | 779 | |||||||||
General and administrative | 271 | — | 271 | |||||||||
Restructuring charges | 52 | — | 52 | |||||||||
Gain on sale of properties | (10 | ) | — | (10 | ) | |||||||
Total operating expenses | 2,725 | 18 | 2,743 | |||||||||
Income from operations | 665 | (44 | ) | 621 | ||||||||
Other income (expense), net | — | — | — | |||||||||
Income before income taxes | 665 | (44 | ) | 621 | ||||||||
Provision for income taxes | 156 | (16 | ) | 140 | ||||||||
Net income | $ | 509 | $ | (28 | ) | $ | 481 | |||||
Net income per share: | ||||||||||||
Basic | $ | 1.85 | $ | (0.10 | ) | $ | 1.75 | |||||
Diluted | $ | 1.81 | $ | (0.10 | ) | $ | 1.71 | |||||
Shares used in net income per share calculations: | ||||||||||||
Basic | 275 | 275 | 275 | |||||||||
Diluted | 281 | 281 | 281 | |||||||||
NETAPP, INC. | ||||||||||||||||||||||||||||
SUPPLEMENTAL DATA | ||||||||||||||||||||||||||||
(In millions except net income per share, percentages, DSO, DIO, DPO, CCC and Inventory Turns) | ||||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||
Q1 FY'19 | Q4 FY'18 | Q3 FY'18 | Q2 FY'18 | Q1 FY'18 | FY 2018 | FY 2017 | ||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||
Product | $ | 875 | $ | 1,027 | $ | 952 | $ | 819 | $ | 727 | $ | 3,525 | $ | 3,060 | ||||||||||||||
Strategic | $ | 612 | $ | 747 | $ | 657 | $ | 566 | $ | 498 | $ | 2,468 | $ | 2,000 | ||||||||||||||
Mature | $ | 263 | $ | 280 | $ | 295 | $ | 253 | $ | 229 | $ | 1,057 | $ | 1,060 | ||||||||||||||
Software Maintenance | $ | 229 | $ | 234 | $ | 221 | $ | 224 | $ | 223 | $ | 902 | $ | 905 | ||||||||||||||
Hardware Maintenance and Other Services | $ | 370 | $ | 383 | $ | 366 | $ | 372 | $ | 371 | $ | 1,492 | $ | 1,526 | ||||||||||||||
Hardware Maintenance Support Contracts | $ | 303 | $ | 310 | $ | 300 | $ | 306 | $ | 298 | $ | 1,214 | $ | 1,258 | ||||||||||||||
Professional and Other Services | $ | 67 | $ | 73 | $ | 66 | $ | 66 | $ | 73 | $ | 278 | $ | 268 | ||||||||||||||
Net Revenues | $ | 1,474 | $ | 1,644 | $ | 1,539 | $ | 1,415 | $ | 1,321 | $ | 5,919 | $ | 5,491 | ||||||||||||||
Geographic Mix | ||||||||||||||||||||||||||||
% of Q1 FY'19 Revenue | % of Q4 FY'18 Revenue | % of Q3 FY'18 Revenue | % of Q2 FY'18 Revenue |
% of Q1 FY'18
Revenue |
% of FY 2018
Revenue |
% of FY 2017
Revenue |
||||||||||||||||||||||
Americas | 57 | % | 54 | % | 53 | % | 56 | % | 55 | % | 54 | % | 55 | % | ||||||||||||||
Americas Commercial | 46 | % | 42 | % | 43 | % | 40 | % | 42 | % | 41 | % | 42 | % | ||||||||||||||
U.S. Public Sector | 11 | % | 12 | % | 10 | % | 16 | % | 13 | % | 13 | % | 13 | % | ||||||||||||||
EMEA | 29 | % | 33 | % | 33 | % | 30 | % | 30 | % | 32 | % | 32 | % | ||||||||||||||
Asia Pacific | 14 | % | 13 | % | 14 | % | 14 | % | 15 | % | 14 | % | 13 | % | ||||||||||||||
Pathways Mix | ||||||||||||||||||||||||||||
% of Q1 FY'19 Revenue | % of Q4 FY'18 Revenue | % of Q3 FY'18 Revenue | % of Q2 FY'18 Revenue |
% of Q1 FY'18
Revenue |
% of FY 2018
Revenue |
% of FY 2017
Revenue |
||||||||||||||||||||||
Direct | 29 | % | 21 | % | 22 | % | 22 | % | 20 | % | 21 | % | 22 | % | ||||||||||||||
Indirect | 71 | % | 79 | % | 78 | % | 78 | % | 80 | % | 79 | % | 78 | % | ||||||||||||||
Non-GAAP Gross Margins | ||||||||||||||||||||||||||||
Q1 FY'19 | Q4 FY'18 | Q3 FY'18 | Q2 FY'18 | Q1 FY'18 | FY 2018 | FY 2017 | ||||||||||||||||||||||
Non-GAAP Gross Margin | 66.2 | % | 63.3 | % | 63.0 | % | 64.5 | % | 63.3 | % | 63.5 | % | 62.1 | % | ||||||||||||||
Product | 55.7 | % | 52.7 | % | 51.8 | % | 52.7 | % | 49.5 | % | 51.8 | % | 48.4 | % | ||||||||||||||
Software Maintenance | 96.9 | % | 97.4 | % | 97.3 | % | 97.3 | % | 96.9 | % | 97.2 | % | 96.9 | % | ||||||||||||||
Hardware Maintenance and Other Services | 72.2 | % | 71.0 | % | 71.3 | % | 70.4 | % | 70.1 | % | 70.7 | % | 68.9 | % | ||||||||||||||
Non-GAAP Income from Operations, Income before Income Taxes & Effective Tax Rate | ||||||||||||||||||||||||||||
Q1 FY'19 | Q4 FY'18 | Q3 FY'18 | Q2 FY'18 | Q1 FY'18 | FY 2018 | FY 2017 | ||||||||||||||||||||||
Non-GAAP Income from Operations | $ | 326 | $ | 360 | $ | 329 | $ | 269 | $ | 201 | $ | 1,159 | $ | 906 | ||||||||||||||
% of Net Revenues | 22.1 | % | 21.9 | % | 21.4 | % | 19.0 | % | 15.2 | % | 19.6 | % | 16.5 | % | ||||||||||||||
Non-GAAP Income before Income Taxes | $ | 344 | $ | 376 | $ | 343 | $ | 275 | $ | 206 | $ | 1,200 | $ | 906 | ||||||||||||||
Non-GAAP Effective Tax Rate | 18.3 | % | 18.4 | % | 15.7 | % | 19.6 | % | 19.4 | % | 18.1 | % | 18.4 | % | ||||||||||||||
Non-GAAP Net Income | ||||||||||||||||||||||||||||
Q1 FY'19 | Q4 FY'18 | Q3 FY'18 | Q2 FY'18 | Q1 FY'18 | FY 2018 | FY 2017 | ||||||||||||||||||||||
Non-GAAP Net Income | $ | 281 | $ | 307 | $ | 289 | $ | 221 | $ | 166 | $ | 983 | $ | 739 | ||||||||||||||
Non-GAAP Weighted Average Common Shares Outstanding, Diluted | 269 | 273 | 276 | 275 | 278 | 276 | 281 | |||||||||||||||||||||
Non-GAAP Income per Share, Diluted | $ | 1.04 | $ | 1.12 | $ | 1.05 | $ | 0.80 | $ | 0.60 | $ | 3.56 | $ | 2.63 | ||||||||||||||
Select Balance Sheet Items | ||||||||||||||||||||||||||||
Q1 FY'19 | Q4 FY'18 | Q3 FY'18 | Q2 FY'18 | Q1 FY'18 | ||||||||||||||||||||||||
Deferred Revenue and Financed Unearned Services Revenue | $ | 3,260 | $ | 3,363 | $ | 3,143 | $ | 3,059 | $ | 3,127 | ||||||||||||||||||
DSO (days) | 38 | 58 | 46 | 39 | 37 | |||||||||||||||||||||||
DIO (days) | 17 | 18 | 14 | 18 | 25 | |||||||||||||||||||||||
DPO (days) | 76 | 90 | 71 | 67 | 53 | |||||||||||||||||||||||
CCC (days) | (20 | ) | (14 | ) | (12 | ) | (10 | ) | 8 | |||||||||||||||||||
Inventory Turns | 21 | 20 | 26 | 21 | 15 | |||||||||||||||||||||||
Days sales outstanding (DSO) is defined as accounts receivable divided by net revenues, multiplied by the number of days in the quarter. | ||||||||||||||||||||||||||||
Days inventory outstanding (DIO) is defined as net inventories divided by cost of revenues, multiplied by the number of days in the quarter. | ||||||||||||||||||||||||||||
Days payables outstanding (DPO) is defined as accounts payable divided by cost of revenues, multiplied by the number of days in the quarter. | ||||||||||||||||||||||||||||
Cash conversion cycle (CCC) is defined as DSO plus DIO minus DPO. | ||||||||||||||||||||||||||||
Inventory turns is defined as annualized cost of revenues divided by net inventories. | ||||||||||||||||||||||||||||
Select Cash Flow Statement Items | ||||||||||||||||||||||||||||
Q1 FY'19 | Q4 FY'18 | Q3 FY'18 | Q2 FY'18 | Q1 FY'18 | FY 2018 | FY 2017 | ||||||||||||||||||||||
Net Cash Provided by Operating Activities | $ | 326 | $ | 494 | $ | 420 | $ | 314 | $ | 250 | $ | 1,478 | $ | 986 | ||||||||||||||
Purchases of Property and Equipment | $ | 64 | $ | 48 | $ | 32 | $ | 29 | $ | 36 | $ | 145 | $ | 175 | ||||||||||||||
Free Cash Flow | $ | 262 | $ | 446 | $ | 388 | $ | 285 | $ | 214 | $ | 1,333 | $ | 811 | ||||||||||||||
Free Cash Flow as a % of Net Revenues | 17.8 | % | 27.1 | % | 25.2 | % | 20.1 | % | 16.2 | % | 22.5 | % | 14.8 | % | ||||||||||||||
Free cash flow is a non-GAAP measure and is defined as net cash provided by operating activities less purchases of property and equipment. | ||||||||||||||||||||||||||||
Some items may not add or recalculate due to rounding. | ||||||||||||||||||||||||||||
NETAPP, INC. | ||||||||||||||||||||||||||||
RECONCILIATION OF NON-GAAP TO GAAP | ||||||||||||||||||||||||||||
INCOME STATEMENT INFORMATION | ||||||||||||||||||||||||||||
(In millions, except net income (loss) per share amounts) | ||||||||||||||||||||||||||||
Q1'FY19 | Q4'FY18 | Q3'FY18 | Q2'FY18 | Q1'FY18 | FY2018 | FY2017 | ||||||||||||||||||||||
NET INCOME (LOSS) | $ | 283 | $ | 290 | $ | (479 | ) | $ | 174 | 131 | $ | 116 | $ | 481 | ||||||||||||||
Adjustments: | ||||||||||||||||||||||||||||
Amortization of intangible assets | 13 | 12 | 14 | 14 | 13 | 53 | 48 | |||||||||||||||||||||
Stock-based compensation | 40 | 36 | 38 | 39 | 48 | 161 | 195 | |||||||||||||||||||||
Litigation settlements | — | — | 5 | — | — | 5 | — | |||||||||||||||||||||
Restructuring charges | 19 | — | — | — | — | — | 52 | |||||||||||||||||||||
Gain on sale of properties | — | — | (218 | ) | — | — | (218 | ) | (10 | ) | ||||||||||||||||||
Income tax effects | (40 | ) | (31 | ) | 73 | (6 | ) | (26 | ) | 10 | (27 | ) | ||||||||||||||||
Income tax benefit of ASC 606 adoption | (34 | ) | — | — | — | — | — | — | ||||||||||||||||||||
Tax reform | — | — | 856 | — | — | 856 | — | |||||||||||||||||||||
NON-GAAP NET INCOME | $ | 281 | $ | 307 | $ | 289 | $ | 221 | $ | 166 | $ | 983 | $ | 739 | ||||||||||||||
COST OF REVENUES | $ | 511 | $ | 615 | $ | 583 | $ | 515 | $ | 497 | $ | 2,210 | $ | 2,127 | ||||||||||||||
Adjustments: | ||||||||||||||||||||||||||||
Amortization of intangible assets | (9 | ) | (9 | ) | (10 | ) | (9 | ) | (8 | ) | (36 | ) | (29 | ) | ||||||||||||||
Stock-based compensation | (4 | ) | (3 | ) | (3 | ) | (3 | ) | (4 | ) | (13 | ) | (17 | ) | ||||||||||||||
NON-GAAP COST OF REVENUES | $ | 498 | $ | 603 | $ | 570 | $ | 503 | $ | 485 | $ | 2,161 | $ | 2,081 | ||||||||||||||
COST OF PRODUCT REVENUES | $ | 398 | $ | 496 | $ | 469 | $ | 397 | $ | 376 | $ | 1,738 | $ | 1,612 | ||||||||||||||
Adjustments: | ||||||||||||||||||||||||||||
Amortization of intangible assets | (9 | ) | (9 | ) | (10 | ) | (9 | ) | (8 | ) | (36 | ) | (29 | ) | ||||||||||||||
Stock-based compensation | (1 | ) | (1 | ) | — | (1 | ) | (1 | ) | (3 | ) | (4 | ) | |||||||||||||||
NON-GAAP COST OF PRODUCT REVENUES | $ | 388 | $ | 486 | $ | 459 | $ | 387 | $ | 367 | $ | 1,699 | $ | 1,579 | ||||||||||||||
COST OF HARDWARE MAINTENANCE AND OTHER SERVICES REVENUES | $ | 106 | $ | 113 | $ | 108 | $ | 112 | $ | 114 | $ | 447 | $ | 487 | ||||||||||||||
Adjustment: | ||||||||||||||||||||||||||||
Stock-based compensation | (3 | ) | (2 | ) | (3 | ) | (2 | ) | (3 | ) | (10 | ) | (13 | ) | ||||||||||||||
NON-GAAP COST OF HARDWARE MAINTENANCE AND OTHER SERVICES REVENUES | $ | 103 | $ | 111 | $ | 105 | $ | 110 | $ | 111 | $ | 437 | $ | 474 | ||||||||||||||
GROSS PROFIT | $ | 963 | $ | 1,029 | $ | 956 | $ | 900 | $ | 824 | $ | 3,709 | $ | 3,364 | ||||||||||||||
Adjustments: | ||||||||||||||||||||||||||||
Amortization of intangible assets | 9 | 9 | 10 | 9 | 8 | 36 | 29 | |||||||||||||||||||||
Stock-based compensation | 4 | 3 | 3 | 3 | 4 | 13 | 17 | |||||||||||||||||||||
NON-GAAP GROSS PROFIT | $ | 976 | $ | 1,041 | $ | 969 | $ | 912 | $ | 836 | $ | 3,758 | $ | 3,410 | ||||||||||||||
NETAPP, INC. | ||||||||||||||||||||||||||||
RECONCILIATION OF NON-GAAP TO GAAP | ||||||||||||||||||||||||||||
INCOME STATEMENT INFORMATION | ||||||||||||||||||||||||||||
(In millions, except net income (loss) per share amounts) | ||||||||||||||||||||||||||||
Q1'FY19 | Q4'FY18 | Q3'FY18 | Q2'FY18 | Q1'FY18 | FY2018 | FY2017 | ||||||||||||||||||||||
SALES AND MARKETING EXPENSES | $ | 409 | $ | 443 | $ | 419 | $ | 421 | $ | 423 | $ | 1,706 | $ | 1,651 | ||||||||||||||
Adjustments: | ||||||||||||||||||||||||||||
Amortization of intangible assets | (4 | ) | (3 | ) | (4 | ) | (5 | ) | (5 | ) | (17 | ) | (19 | ) | ||||||||||||||
Stock-based compensation | (17 | ) | (15 | ) | (16 | ) | (16 | ) | (21 | ) | (68 | ) | (84 | ) | ||||||||||||||
NON-GAAP SALES AND MARKETING EXPENSES | $ | 388 | $ | 425 | $ | 399 | $ | 400 | $ | 397 | $ | 1,621 | $ | 1,548 | ||||||||||||||
RESEARCH AND DEVELOPMENT EXPENSES | $ | 208 | $ | 203 | $ | 193 | $ | 194 | $ | 193 | $ | 783 | $ | 779 | ||||||||||||||
Adjustment: | ||||||||||||||||||||||||||||
Stock-based compensation | (12 | ) | (11 | ) | (11 | ) | (12 | ) | (15 | ) | (49 | ) | (59 | ) | ||||||||||||||
NON-GAAP RESEARCH AND DEVELOPMENT EXPENSES | $ | 196 | $ | 192 | $ | 182 | $ | 182 | $ | 178 | $ | 734 | $ | 720 | ||||||||||||||
GENERAL AND ADMINISTRATIVE EXPENSES | $ | 73 | $ | 71 | $ | 72 | $ | 69 | $ | 68 | $ | 280 | $ | 271 | ||||||||||||||
Adjustment: | ||||||||||||||||||||||||||||
Stock-based compensation | (7 | ) | (7 | ) | (8 | ) | (8 | ) | (8 | ) | (31 | ) | (35 | ) | ||||||||||||||
Litigation settlements | — | — | (5 | ) | — | — | (5 | ) | — | |||||||||||||||||||
NON-GAAP GENERAL AND ADMINISTRATIVE EXPENSES | $ | 66 | $ | 64 | $ | 59 | $ | 61 | $ | 60 | $ | 244 | $ | 236 | ||||||||||||||
RESTRUCTURING CHARGES | $ | 19 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 52 | ||||||||||||||
Adjustment: | ||||||||||||||||||||||||||||
Restructuring charges | (19 | ) | — | — | — | — | — | (52 | ) | |||||||||||||||||||
NON-GAAP RESTRUCTURING CHARGES | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||
GAIN ON SALE OF PROPERTIES | $ | — | $ | — | $ | (218 | ) | $ | — | $ | — | $ | (218 | ) | $ | (10 | ) | |||||||||||
Adjustment: | ||||||||||||||||||||||||||||
Gain on sale of properties | — | — | 218 | — | — | 218 | 10 | |||||||||||||||||||||
NON-GAAP GAIN ON SALE OF PROPERTIES | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||
OPERATING EXPENSES | $ | 709 | $ | 717 | $ | 466 | $ | 684 | $ | 684 | $ | 2,551 | $ | 2,743 | ||||||||||||||
Adjustments: | ||||||||||||||||||||||||||||
Amortization of intangible assets | (4 | ) | (3 | ) | (4 | ) | (5 | ) | (5 | ) | (17 | ) | (19 | ) | ||||||||||||||
Stock-based compensation | (36 | ) | (33 | ) | (35 | ) | (36 | ) | (44 | ) | (148 | ) | (178 | ) | ||||||||||||||
Litigation settlements | — | — | (5 | ) | — | — | (5 | ) | — | |||||||||||||||||||
Restructuring charges | (19 | ) | — | — | — | — | — | (52 | ) | |||||||||||||||||||
Gain on sale of properties | — | — | 218 | — | — | 218 | 10 | |||||||||||||||||||||
NON-GAAP OPERATING EXPENSES | $ | 650 | $ | 681 | $ | 640 | $ | 643 | $ | 635 | $ | 2,599 | $ | 2,504 | ||||||||||||||
NETAPP, INC. | ||||||||||||||||||||||||||||
RECONCILIATION OF NON-GAAP TO GAAP | ||||||||||||||||||||||||||||
INCOME STATEMENT INFORMATION | ||||||||||||||||||||||||||||
(In millions, except net income (loss) per share amounts) | ||||||||||||||||||||||||||||
Q1'FY19 | Q4'FY18 | Q3'FY18 | Q2'FY18 | Q1'FY18 | FY2018 | FY2017 | ||||||||||||||||||||||
INCOME FROM OPERATIONS | $ | 254 | $ | 312 | $ | 490 | $ | 216 | $ | 140 | $ | 1,158 | $ | 621 | ||||||||||||||
Adjustments: | ||||||||||||||||||||||||||||
Amortization of intangible assets | 13 | 12 | 14 | 14 | 13 | 53 | 48 | |||||||||||||||||||||
Stock-based compensation | 40 | 36 | 38 | 39 | 48 | 161 | 195 | |||||||||||||||||||||
Litigation settlements | — | — | 5 | — | — | 5 | — | |||||||||||||||||||||
Restructuring charges | 19 | — | — | — | — | — | 52 | |||||||||||||||||||||
Gain on sale of properties | — | — | (218 | ) | — | — | (218 | ) | (10 | ) | ||||||||||||||||||
NON-GAAP INCOME FROM OPERATIONS | $ | 326 | $ | 360 | $ | 329 | $ | 269 | $ | 201 | $ | 1,159 | $ | 906 | ||||||||||||||
INCOME BEFORE INCOME TAXES | $ | 272 | $ | 328 | $ | 504 | $ | 222 | $ | 145 | $ | 1,199 | $ | 621 | ||||||||||||||
Adjustments: | ||||||||||||||||||||||||||||
Amortization of intangible assets | 13 | 12 | 14 | 14 | 13 | 53 | 48 | |||||||||||||||||||||
Stock-based compensation | 40 | 36 | 38 | 39 | 48 | 161 | 195 | |||||||||||||||||||||
Litigation settlements | — | — | 5 | — | — | 5 | — | |||||||||||||||||||||
Restructuring charges | 19 | — | — | — | — | — | 52 | |||||||||||||||||||||
Gain on sale of properties | — | — | (218 | ) | — | — | (218 | ) | (10 | ) | ||||||||||||||||||
NON-GAAP INCOME BEFORE INCOME TAXES | $ | 344 | $ | 376 | $ | 343 | $ | 275 | $ | 206 | $ | 1,200 | $ | 906 | ||||||||||||||
PROVISION FOR INCOME TAXES | $ | (11 | ) | $ | 38 | $ | 983 | $ | 48 | $ | 14 | $ | 1,083 | $ | 140 | |||||||||||||
Adjustments: | ||||||||||||||||||||||||||||
Income tax effects | 40 | 31 | (73 | ) | 6 | 26 | (10 | ) | 27 | |||||||||||||||||||
Income tax benefit of ASC 606 adoption | 34 | — | — | — | — | — | — | |||||||||||||||||||||
Tax reform | — | — | (856 | ) | — | — | (856 | ) | — | |||||||||||||||||||
NON-GAAP PROVISION FOR INCOME TAXES | $ | 63 | $ | 69 | $ | 54 | $ | 54 | $ | 40 | $ | 217 | $ | 167 | ||||||||||||||
NET INCOME (LOSS) PER SHARE | $ | 1.05 | $ | 1.06 | $ | (1.79 | ) | $ | 0.63 | $ | 0.47 | $ | 0.42 | $ | 1.71 | |||||||||||||
Adjustments: | ||||||||||||||||||||||||||||
Amortization of intangible assets | 0.05 | 0.04 | 0.05 | 0.05 | 0.05 | 0.19 | 0.17 | |||||||||||||||||||||
Stock-based compensation | 0.15 | 0.13 | 0.14 | 0.14 | 0.17 | 0.58 | 0.69 | |||||||||||||||||||||
Litigation settlements | — | — | 0.02 | — | — | 0.02 | — | |||||||||||||||||||||
Restructuring charges | 0.07 | — | — | — | — | — | 0.19 | |||||||||||||||||||||
Gain on sale of properties | — | — | (0.81 | ) | — | — | (0.79 | ) | (0.04 | ) | ||||||||||||||||||
Income tax effects | (0.15 | ) | (0.11 | ) | 0.27 | (0.02 | ) | (0.09 | ) | 0.04 | (0.10 | ) | ||||||||||||||||
Income tax benefit of ASC 606 adoption | (0.13 | ) | — | — | — | — | — | — | ||||||||||||||||||||
Tax reform | — | — | 3.19 | — | — | 3.10 | — | |||||||||||||||||||||
NON-GAAP NET INCOME PER SHARE | $ | 1.04 | $ | 1.12 | $ | 1.05 | $ | 0.80 | $ | 0.60 | $ | 3.56 | $ | 2.63 | ||||||||||||||
In Q3'FY18, our GAAP net loss per share was calculated using basic shares of 268 million, as the impact of common stock equivalents would have been anti-dilutive. Additionally, each adjustment presented in the reconciliation was computed using basic shares. However, because we reported net income on a non-GAAP basis, non-GAAP net income per share was computed using diluted shares of 276 million. As a result of the difference in the number of shares, the summation of GAAP net loss per share and the adjustments does not equal non-GAAP net income per share. | ||||||||||||||||||||||||||||
RECONCILIATION OF NON-GAAP TO GAAP | ||||||||||||||||||||||||||||
GROSS MARGIN | ||||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||
Q1'FY19 | Q4'FY18 | Q3'FY18 | Q2'FY18 | Q1'FY18 | FY2018 | FY2017 | ||||||||||||||||||||||
Gross margin-GAAP | 65.3 | % | 62.6 | % | 62.1 | % | 63.6 | % | 62.4 | % | 62.7 | % | 61.3 | % | ||||||||||||||
Cost of revenues adjustments | 0.9 | % | 0.7 | % | 0.8 | % | 0.8 | % | 0.9 | % | 0.8 | % | 0.8 | % | ||||||||||||||
Gross margin-Non-GAAP | 66.2 | % | 63.3 | % | 63.0 | % | 64.5 | % | 63.3 | % | 63.5 | % | 62.1 | % | ||||||||||||||
GAAP cost of revenues | $ | 511 | $ | 615 | $ | 583 | $ | 515 | $ | 497 | $ | 2,210 | $ | 2,127 | ||||||||||||||
Cost of revenues adjustments: | ||||||||||||||||||||||||||||
Amortization of intangible assets | (9 | ) | (9 | ) | (10 | ) | (9 | ) | (8 | ) | (36 | ) | (29 | ) | ||||||||||||||
Stock-based compensation | (4 | ) | (3 | ) | (3 | ) | (3 | ) | (4 | ) | (13 | ) | (17 | ) | ||||||||||||||
Non-GAAP cost of revenues | $ | 498 | $ | 603 | $ | 570 | $ | 503 | $ | 485 | $ | 2,161 | $ | 2,081 | ||||||||||||||
Net revenues | $ | 1,474 | $ | 1,644 | $ | 1,539 | $ | 1,415 | $ | 1,321 | $ | 5,919 | $ | 5,491 | ||||||||||||||
RECONCILIATION OF NON-GAAP TO GAAP | ||||||||||||||||||||||||||||
PRODUCT GROSS MARGIN | ||||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||
Q1'FY19 | Q4'FY18 | Q3'FY18 | Q2'FY18 | Q1'FY18 | FY2018 | FY2017 | ||||||||||||||||||||||
Product gross margin-GAAP | 54.5 | % | 51.7 | % | 50.7 | % | 51.5 | % | 48.3 | % | 50.7 | % | 47.3 | % | ||||||||||||||
Cost of product revenues adjustments | 1.1 | % | 1.0 | % | 1.1 | % | 1.2 | % | 1.2 | % | 1.1 | % | 1.1 | % | ||||||||||||||
Product gross margin-Non-GAAP | 55.7 | % | 52.7 | % | 51.8 | % | 52.7 | % | 49.5 | % | 51.8 | % | 48.4 | % | ||||||||||||||
GAAP cost of product revenues | $ | 398 | $ | 496 | $ | 469 | $ | 397 | $ | 376 | $ | 1,738 | $ | 1,612 | ||||||||||||||
Cost of product revenues adjustments: | ||||||||||||||||||||||||||||
Amortization of intangible assets | (9 | ) | (9 | ) | (10 | ) | (9 | ) | (8 | ) | (36 | ) | (29 | ) | ||||||||||||||
Stock-based compensation | (1 | ) | (1 | ) | — | (1 | ) | (1 | ) | (3 | ) | (4 | ) | |||||||||||||||
Non-GAAP cost of product revenues | $ | 388 | $ | 486 | $ | 459 | $ | 387 | $ | 367 | $ | 1,699 | $ | 1,579 | ||||||||||||||
Product revenues | $ | 875 | $ | 1,027 | $ | 952 | $ | 819 | $ | 727 | $ | 3,525 | $ | 3,060 | ||||||||||||||
RECONCILIATION OF NON-GAAP TO GAAP | ||||||||||||||||||||||||||||
HARDWARE MAINTENANCE AND OTHER SERVICES GROSS MARGIN | ||||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||
Q1'FY19 | Q4'FY18 | Q3'FY18 | Q2'FY18 | Q1'FY18 | FY2018 | FY2017 | ||||||||||||||||||||||
Hardware maintenance and other services gross margin-GAAP | 71.4 | % | 70.5 | % | 70.5 | % | 69.9 | % | 69.3 | % | 70.0 | % | 68.1 | % | ||||||||||||||
Cost of hardware maintenance and other services revenues adjustment | 0.8 | % | 0.5 | % | 0.8 | % | 0.5 | % | 0.8 | % | 0.7 | % | 0.9 | % | ||||||||||||||
Hardware maintenance and other services gross margin-Non-GAAP | 72.2 | % | 71.0 | % | 71.3 | % | 70.4 | % | 70.1 | % | 70.7 | % | 68.9 | % | ||||||||||||||
GAAP cost of hardware maintenance and other services revenues | $ | 106 | $ | 113 | $ | 108 | $ | 112 | $ | 114 | $ | 447 | $ | 487 | ||||||||||||||
Cost of hardware maintenance and other services revenues adjustment: | ||||||||||||||||||||||||||||
Stock-based compensation | (3 | ) | (2 | ) | (3 | ) | (2 | ) | (3 | ) | (10 | ) | (13 | ) | ||||||||||||||
Non-GAAP cost of hardware maintenance and other services revenues | $ | 103 | $ | 111 | $ | 105 | $ | 110 | $ | 111 | $ | 437 | $ | 474 | ||||||||||||||
Hardware maintenance and other services revenues | $ | 370 | $ | 383 | $ | 366 | $ | 372 | $ | 371 | $ | 1,492 | $ | 1,526 | ||||||||||||||
RECONCILIATION OF NON-GAAP TO GAAP | ||||||||||||||||||||||||||||
EFFECTIVE TAX RATE | ||||||||||||||||||||||||||||
Q1'FY19 | Q4'FY18 | Q3'FY18 | Q2'FY18 | Q1'FY18 | FY2018 | FY2017 | ||||||||||||||||||||||
GAAP effective tax rate | (4.0 | )% | 11.6 | % | 195.0 | % | 21.6 | % | 9.7 | % | 90.3 | % | 22.5 | % | ||||||||||||||
Adjustment: | ||||||||||||||||||||||||||||
Income tax effects | 9.8 | % | 6.8 | % | (9.5 | )% | (2.0 | )% | 9.8 | % | (0.8 | )% | (4.1 | )% | ||||||||||||||
Income tax benefit of ASC 606 adoption | 12.5 | % | — | % | — | % | — | % | — | % | — | % | — | % | ||||||||||||||
Tax reform | — | % | — | % | (169.8 | )% | — | % | — | % | (71.4 | )% | — | % | ||||||||||||||
Non-GAAP effective tax rate | 18.3 | % | 18.4 | % | 15.7 | % | 19.6 | % | 19.4 | % | 18.1 | % | 18.4 | % | ||||||||||||||
RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES | ||||||||||||||||||||||||||||
TO FREE CASH FLOW (NON-GAAP) | ||||||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||
Q1'FY19 | Q4'FY18 | Q3'FY18 | Q2'FY18 | Q1'FY18 | FY2018 | FY2017 | ||||||||||||||||||||||
Net cash provided by operating activities | $ | 326 | $ | 494 | $ | 420 | $ | 314 | $ | 250 | $ | 1,478 | $ | 986 | ||||||||||||||
Purchases of property and equipment | (64 | ) | (48 | ) | (32 | ) | (29 | ) | (36 | ) | (145 | ) | (175 | ) | ||||||||||||||
Free cash flow | $ | 262 | $ | 446 | $ | 388 | $ | 285 | $ | 214 | $ | 1,333 | $ | 811 | ||||||||||||||
Some items may not add or recalculate due to rounding. |
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NETAPP, INC. | ||||
RECONCILIATION OF NON-GAAP GUIDANCE TO GAAP | ||||
EXPRESSED AS EARNINGS PER SHARE | ||||
SECOND QUARTER FISCAL 2019 | ||||
Second Quarter | ||||
Fiscal 2019 | ||||
Non-GAAP Guidance - Net Income Per Share | $0.94 - $1.00 | |||
Adjustments of Specific Items to Net Income | ||||
Per Share for the Second Quarter Fiscal 2019: | ||||
Amortization of intangible assets | (0.05 | ) | ||
Stock-based compensation expense | (0.14 | ) | ||
Income tax effects | 0.04 | |||
Total Adjustments | (0.15 | ) | ||
GAAP Guidance - Net Income Per Share | $0.79 - $0.85 | |||
View source version on businesswire.com: https://www.businesswire.com/news/home/20180815005608/en/
Source:
NetApp
Press Contact:
Madge Miller, 1 408-419-5263
madge.miller@netapp.com
or
Investor
Contact:
Kris Newton, 1 408-822-3312
kris.newton@netapp.com