Skip to content

Investor Relations


Press Releases

Data Provided by Refinitiv. Minimum 15 minutes delayed.

<< Back
Aug 26, 2020

NetApp Reports First Quarter of Fiscal Year 2021 Results

Net Revenues of $1.30 Billion; Up 5% Year-over-Year

  • NetApp public cloud services annualized recurring revenue of $178 million, an increase of 192% year-over-year
  • All-flash array annualized net revenue run rate of $2.3 billion, an increase of 34% year-over-year
  • Billings1 of $1.15 billion, increased 6% year-over-year
  • Completed Spot and CloudJumper acquisitions, further extending our customer value proposition in the cloud
  • $107 million returned to shareholders in cash dividend

SUNNYVALE, Calif.--(BUSINESS WIRE)--Aug. 26, 2020-- NetApp (NASDAQ: NTAP) today reported financial results for the first quarter of fiscal year 2021, which ended on July 31, 2020.

“We executed well in the first quarter. Revenue, operating margin and EPS all exceeded our guidance, despite a challenging environment. Enterprises are increasingly prioritizing transformational and hybrid cloud projects, which drove our momentum as customers turn to NetApp to help them achieve these goals,” said George Kurian, chief executive officer. “We are building on a strong foundation of industry-leading data-centric software innovation, trusted customer relationships and an open-ecosystem approach that is strengthened by partnerships with the leading public cloud companies who endorse our Data Fabric Strategy. NetApp is uniquely positioned to help our customers unlock the best of cloud.”

First Quarter of Fiscal Year 2021 Financial Results

  • Net Revenues: $1.30 billion, compared to $1.24 billion in the first quarter of fiscal year 2020
  • Net Income: GAAP net income of $77 million, compared to GAAP net income of $103 million in the first quarter of fiscal year 2020; non-GAAP net income2 of $163 million, compared to non-GAAP net income of $157 million in the first quarter of fiscal year 2020
  • Earnings per Share: GAAP net income per share3 of $0.35 compared to GAAP net income per share of $0.42 in the first quarter of fiscal year 2020; non-GAAP net income per share of $0.73, compared to non-GAAP net income per share of $0.65 in the first quarter of fiscal year 2020
  • Cash, Cash Equivalents and Investments: $3.77 billion at the end of the first quarter of fiscal year 2021
  • Cash Provided by Operations: $240 million, compared to $310 million in the first quarter of fiscal year 2020 
  • Dividend: Returned $107 million to shareholders through cash dividend

Second Quarter of Fiscal Year 2021 Financial Outlook

The company provided the following financial guidance for the second quarter of fiscal year 2021:

  • Net revenues are expected to be in the range of:

 

$1.225 billion to $1.375 billion

GAAP

Non-GAAP

  • Earnings per share is expected to be in the range of:

 

$0.28 - $0.36

$0.66 - $0.74

Dividend

Next cash dividend of $0.48 per share to be paid on October 28, 2020, to shareholders of record as of the close of business on October 9, 2020.

First Quarter of Fiscal Year 2021 Business Highlights

Delivering Groundbreaking Product Innovations

  • NetApp announced the latest release of NetApp Active IQ, which uses advanced artificial intelligence for IT operations (AIOps) to automate the proactive care and optimization of NetApp environments. It adds new interface features, new workloads, and a new customer experience.
  • NetApp announced that NetApp HCI now offers a two-node storage cluster, providing a scalable entry point for customer workloads with the latest release of NetApp Element 12.0 and NetApp HCI 1.8.

Strategic Acquisitions and Partnerships

  • NetApp acquired Spot to establish leadership in application-driven infrastructure (ADI), offering a portfolio of compute and storage services that monitor and analyze the needs of applications and automatically optimize cloud resources
  • NetApp acquired a leading virtual desktop infrastructure (VDI) player CloudJumper and launched the new NetApp Virtual Desktop Service, giving customers a simple and secure path to manage current environments alongside their new remote desktop.
  • NetApp and Cleondris expanded their partnership to bring to market a simple, seamless disaster recovery experience for NetApp HCI with Cleondris HCI Control Center.
  • NetApp and Commvault partnered to create a solution for backing up data with NetApp AFF and NetApp StorageGRID using Commvault software.
  • NetApp announced support for HashiCorp Vault Enterprise 1.3, a key manager that complies with Key Management Interoperability Protocol (KMIP) and is secure, scalable, and easy to implement for NetApp ONTAP software-based and hardware-based data-at-rest encryption.
  • NetApp announced a partnership with cnvrg.io, using the cnvrg.io dataset caching tool and NetApp ONTAP AI to deliver an AI and machine language (AI/ML) data science pipeline solution that is streamlined and improves productivity and efficiency.
  • The U.S. Department of Veterans Affairs expanded its NetApp FlexPod converged infrastructure for remote access environments, enabling additional users and services. NetApp is offering 25TB of NetApp Cloud Volumes Service for Google Cloud free of charge for 90 days for IT teams that are addressing the digital fallout of the COVID-19 pandemic.

NetApp Growth and Leadership

  • NetApp is expanding its partner-first approach with updates to the Unified Partner Program to complement and align with its partners’ business capabilities and models.
  • NetApp appointed Cesar Cernuda as president of NetApp, reporting to George Kurian and leading global go-to-market operations.

Webcast and Conference Call Information

NetApp will host a conference call to discuss these results today at 2:00 p.m. Pacific Time. To access the live webcast of this event, go to the NetApp Investor Relations website at investors.netapp.com. In addition, this press release, historical supplemental data tables, and other information related to the call will be posted on the Investor Relations website. An audio replay will be available on the website after 4:00 p.m. Pacific Time today.

“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 in the Second Quarter of Fiscal Year 2021 Financial Outlook section, and statements about the momentum of our business, customer demand for our products and services, and our unique position in the market. 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 (including the impact of the COVID-19 pandemic thereon), changes in U.S. government spending, revenue seasonality and matters specific to our business, such as the impact of the COVID-19 pandemic on the company’s business operations, financial performance and results of operations, 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 annual report on Form 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 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.

Footnotes

1Refer to the NetApp Usage of Non-GAAP Financial Information section below for an explanation of billings.

2Non-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 or derecognition of assets, (h) COVID-19 charges and (i) 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. NetApp makes additional adjustments to the non-GAAP tax provision for certain tax matters as described below. A detailed reconciliation of our non-GAAP to GAAP results can be found at http://investors.netapp.com. 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.

3GAAP net income per share and non-GAAP net income per share are calculated using the diluted number of shares.

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, free cash flow, billings, and historical and projected non-GAAP earnings per diluted share. NetApp also presents the hardware and software components of our GAAP product revenues. Because our revenue recognition policy under GAAP defines a configured storage system, inclusive of the operating system software essential to its functionality, as a single performance obligation, hardware and software components of our product revenues are considered non-GAAP measures. The hardware and software components of our product revenues are derived from an estimated fair value allocation of the transaction price of our contracts with customers, down to the level of the product hardware and software components. This allocation is primarily based on the contractual prices at which NetApp has historically billed customers for such respective components.

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.

NetApp believes that the presentation of the software and hardware components of our product revenues is meaningful to investors and management as it illustrates the significance of the Company’s software and provides improved visibility into the value created by our software innovation and R&D investment.

NetApp approximates billings by adding net revenues as reported on our Condensed Consolidated Statements of Operations for the period to the change in total deferred revenue and financed unearned services revenue as reported on our Condensed Consolidated Statements of Cash Flows for the same period. Billings is a performance measure that NetApp believes provides useful information to management and investors because it represents the amounts under purchase orders received by us during a given period that have been billed.

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.

NetApp excludes the following items from its non-GAAP measures when applicable:

A. Amortization of intangible assets. NetApp records amortization of intangible assets that were acquired in connection with its business combinations. The amortization of intangible assets varies depending on the level of acquisition activity. Management finds it useful to exclude these charges to assess the appropriate level of various operating expenses to assist in budgeting, planning and forecasting future periods and in measuring operational performance.

B. Stock-based compensation expenses. NetApp excludes stock-based compensation expenses from its non-GAAP measures primarily because they are non-cash expenses. While management views stock-based compensation as a key element of our employee retention and long-term incentives, we do not view it as an expense to be used in evaluating operational performance in any given period.

C. Litigation settlements. NetApp may periodically incur charges or benefits related to litigation settlements. NetApp excludes these charges and benefits, when significant, because it does not believe they are reflective of ongoing business and operating results.

D. Acquisition-related expenses. NetApp excludes acquisition-related expenses, including (a) due diligence, legal and other one-time integration charges and (b) write down of assets acquired that NetApp does not intend to use in its ongoing business, from its non-GAAP measures, primarily because they are not related to our ongoing business or cost base and, therefore, cannot be relied upon for future planning and forecasting.

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 or derecognition of assets. These are gains/losses from the sale of our properties and other transactions in which we transfer control of assets to a third party. 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. COVID-19 charges. NetApp has excluded certain non-recurring expenses incurred as a direct result of the COVID-19 pandemic. Management believes such nonrecurring costs do not reflect the results of its underlying, on-going business and, therefore, cannot be relied upon for future planning or forecasting.

I. 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, statute lapses 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 property 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 believes that non-GAAP measures have limitations in that they do not reflect all of the amounts associated with the Company’s results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate the Company’s results of operations in conjunction with the corresponding GAAP measures. NetApp management compensates for these limitations by analyzing current and projected results on a GAAP basis as well as a non-GAAP basis. The presentation of non-GAAP financial information is not meant to be considered in isolation or as a substitute for the directly comparable financial measures prepared in accordance with generally accepted accounting principles in the United States. The non-GAAP financial measures are meant to supplement, and be viewed in conjunction with, GAAP financial measures.

About NetApp

NetApp is the leader in cloud data services, empowering global organizations to change their world with data. Together with our partners, we are the only ones who can help you build your unique data fabric. Simplify hybrid multicloud and securely deliver the right data, services and applications to the right people at the right time. Learn more at www.netapp.com.

NETAPP, INC. 

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)

(Unaudited)

 

 

July 31,
2020

 

 

April 24,
2020

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash, cash equivalents and investments

 

$

3,773

 

 

$

2,882

 

Accounts receivable

 

 

604

 

 

 

973

 

Inventories

 

 

136

 

 

 

145

 

Other current assets

 

 

304

 

 

 

274

 

Total current assets

 

 

4,817

 

 

 

4,274

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

737

 

 

 

727

 

Goodwill and purchased intangible assets, net

 

 

2,178

 

 

 

1,822

 

Other non-current assets

 

 

684

 

 

 

699

 

Total assets

 

$

8,416

 

 

$

7,522

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

396

 

 

$

426

 

Accrued expenses

 

 

616

 

 

 

774

 

Commercial paper notes

 

 

150

 

 

 

522

 

Short-term deferred revenue and financed unearned services revenue

 

 

1,814

 

 

 

1,894

 

Total current liabilities

 

 

2,976

 

 

 

3,616

 

Long-term debt

 

 

2,630

 

 

 

1,146

 

Other long-term liabilities

 

 

720

 

 

 

714

 

Long-term deferred revenue and financed unearned services revenue

 

 

1,806

 

 

 

1,804

 

Total liabilities

 

 

8,132

 

 

 

7,280

 

 

 

 

 

 

 

 

 

 

Stockholders' equity

 

 

284

 

 

 

242

 

Total liabilities and stockholders' equity

 

$

8,416

 

 

$

7,522

 

NETAPP, INC. 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share amounts)

(Unaudited)

 

 

Three Months Ended

 

 

 

July 31,
2020

 

 

July 26,
2019

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

Product

 

$

627

 

 

$

644

 

Software maintenance

 

 

301

 

 

 

250

 

Hardware maintenance and other services

 

 

375

 

 

 

342

 

Net revenues

 

 

1,303

 

 

 

1,236

 

 

 

 

 

 

 

 

 

 

Cost of revenues:

 

 

 

 

 

 

 

 

Cost of product

 

 

316

 

 

 

312

 

Cost of software maintenance

 

 

15

 

 

 

10

 

Cost of hardware maintenance and other services

 

 

100

 

 

 

98

 

Total cost of revenues

 

 

431

 

 

 

420

 

Gross profit

 

 

872

 

 

 

816

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Sales and marketing

 

 

429

 

 

 

405

 

Research and development

 

 

233

 

 

 

215

 

General and administrative

 

 

61

 

 

 

71

 

Restructuring charges

 

 

5

 

 

 

21

 

Acquisition-related expense

 

 

8

 

 

 

 

Total operating expenses

 

 

736

 

 

 

712

 

 

 

 

 

 

 

 

 

 

Income from operations

 

 

136

 

 

 

104

 

 

 

 

 

 

 

 

 

 

Other income (expense), net

 

 

(32

)

 

 

15

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 

104

 

 

 

119

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

 

27

 

 

 

16

 

 

 

 

 

 

 

 

 

 

Net income

 

$

77

 

 

$

103

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

Basic

 

$

0.35

 

 

$

0.43

 

 

 

 

 

 

 

 

 

 

Diluted

 

$

0.35

 

 

$

0.42

 

 

 

 

 

 

 

 

 

 

Shares used in net income per share calculations:

 

 

 

 

 

 

 

 

Basic

 

 

221

 

 

 

239

 

 

 

 

 

 

 

 

 

 

Diluted

 

 

222

 

 

 

243

 

NETAPP, INC. 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

 

 

Three Months Ended

 

 

 

July 31,
2020

 

 

July 26,
2019

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

77

 

 

$

103

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

49

 

 

 

49

 

Non-cash operating lease cost

 

 

13

 

 

 

13

 

Stock-based compensation

 

 

54

 

 

 

42

 

Deferred income taxes

 

 

 

 

 

(7

)

Other items, net

 

 

25

 

 

 

(7

)

Changes in assets and liabilities, net of acquisitions of businesses:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

391

 

 

 

672

 

Inventories

 

 

9

 

 

 

15

 

Accounts payable

 

 

(29

)

 

 

(195

)

Accrued expenses

 

 

(186

)

 

 

(277

)

Deferred revenue and financed unearned services

revenue

 

 

(158

)

 

 

(154

)

Long-term taxes payable

 

 

6

 

 

 

(3

)

Changes in other operating assets and liabilities, net

 

 

(11

)

 

 

59

 

Net cash provided by operating activities

 

 

240

 

 

 

310

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Redemptions of investments, net

 

 

85

 

 

 

1,027

 

Purchases of property and equipment

 

 

(52

)

 

 

(32

)

Proceeds from sale of properties

 

 

6

 

 

 

 

Acquisitions of businesses, net of cash acquired

 

 

(350

)

 

 

(56

)

Other investing activities, net

 

 

 

 

 

(1

)

Net cash provided by (used in) investing activities

 

 

(311

)

 

 

938

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Proceeds from issuance of common stock under employee

stock award plans

 

 

48

 

 

 

54

 

Payments for taxes related to net share settlement of stock

awards

 

 

(33

)

 

 

(71

)

Repurchase of common stock

 

 

 

 

 

(250

)

Repayments of commercial paper notes, original maturities of three months or less, net

 

 

(370

)

 

 

(219

)

Issuance of debt, net of issuance costs

 

 

2,057

 

 

 

 

Repayments and extinguishment of debt

 

 

(589

)

 

 

 

Dividends paid

 

 

(107

)

 

 

(115

)

Other financing activities, net

 

 

(3

)

 

 

(2

)

Net cash provided by (used in) financing activities

 

 

1,003

 

 

 

(603

)

 

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

 

43

 

 

 

(3

)

 

 

 

 

 

 

 

 

 

Net increase in cash, cash equivalents and restricted cash

 

 

975

 

 

 

642

 

Cash, cash equivalents and restricted cash:

 

 

 

 

 

 

 

 

Beginning of period

 

 

2,666

 

 

 

2,331

 

End of period

 

$

3,641

 

 

$

2,973

 

NETAPP, INC.

 

SUPPLEMENTAL DATA

 

(In millions except net income per share, percentages, DSO, DPO and Inventory Turns)

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q1 FY'21

 

 

Q4 FY'20

 

 

Q1 FY'20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

Product

 

$

627

 

 

$

793

 

 

$

644

 

Software Maintenance

 

$

301

 

 

$

267

 

 

$

250

 

Hardware Maintenance & Other Services

 

$

375

 

 

$

341

 

 

$

342

 

Hardware Maintenance Support Contracts

 

$

307

 

 

$

279

 

 

$

284

 

Professional and Other Services

 

$

68

 

 

$

62

 

 

$

58

 

Net Revenues

 

$

1,303

 

 

$

1,401

 

 

$

1,236

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product Revenues

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

627

 

 

$

793

 

 

$

644

 

Software*

 

$

311

 

 

$

407

 

 

$

306

 

Hardware*

 

$

316

 

 

$

386

 

 

$

338

 

* Our revenue recognition policy under GAAP defines a configured storage system, inclusive of the operating system software essential to its functionality, as a single performance obligation. We have provided a breakdown of our GAAP product revenues into the software and hardware components to display the significance of software included in total product revenues.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Geographic Mix

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% of Q1 FY'21
Revenue

 

 

% of Q4 FY'20
Revenue

 

 

% of Q1 FY'20
Revenue

 

Americas

 

 

54

%

 

 

54

%

 

 

51

%

Americas Commercial

 

 

43

%

 

 

43

%

 

 

38

%

U.S. Public Sector

 

 

12

%

 

 

11

%

 

 

13

%

EMEA

 

 

29

%

 

 

32

%

 

 

33

%

Asia Pacific

 

 

16

%

 

 

14

%

 

 

16

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pathways Mix

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% of Q1 FY'21
Revenue

 

 

% of Q4 FY'20
Revenue

 

 

% of Q1 FY'20
Revenue

 

Direct

 

 

22

%

 

 

23

%

 

 

19

%

Indirect

 

 

78

%

 

 

77

%

 

 

81

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Gross Margins

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q1 FY'21

 

 

Q4 FY'20

 

 

Q1 FY'20

 

Non-GAAP Gross Margin

 

 

68.0

%

 

 

68.0

%

 

 

67.2

%

Product

 

 

51.4

%

 

 

56.4

%

 

 

53.4

%

Software Maintenance

 

 

95.0

%

 

 

94.4

%

 

 

96.0

%

Hardware Maintenance & Other Services

 

 

74.1

%

 

 

74.5

%

 

 

71.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Income from Operations, Income before Income Taxes & Effective Tax Rate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q1 FY'21

 

 

Q4 FY'20

 

 

Q1 FY'20

 

Non-GAAP Income from Operations

 

$

213

 

 

$

324

 

 

$

178

 

% of Net Revenues

 

 

16.3

%

 

 

23.1

%

 

 

14.4

%

Non-GAAP Income before Income Taxes

 

$

195

 

 

$

307

 

 

$

193

 

Non-GAAP Effective Tax Rate

 

 

16.4

%

 

 

13.7

%

 

 

18.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Net Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q1 FY'21

 

 

Q4 FY'20

 

 

Q1 FY'20

 

Non-GAAP Net Income

 

$

163

 

 

$

265

 

 

$

157

 

Non-GAAP Weighted Average Common Shares Outstanding, Diluted

 

 

222

 

 

 

222

 

 

 

243

 

Non-GAAP Net Income per Share, Diluted

 

$

0.73

 

 

$

1.19

 

 

$

0.65

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Select Balance Sheet Items

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q1 FY'21

 

 

Q4 FY'20

 

 

Q1 FY'20

 

Deferred Revenue and Financed Unearned Services Revenue

 

$

3,620

 

 

$

3,698

 

 

$

3,510

 

DSO (days)

 

 

45

 

 

 

63

 

 

 

40

 

DPO (days)

 

 

90

 

 

 

84

 

 

 

75

 

Inventory Turns

 

 

13

 

 

 

13

 

 

 

14

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Days sales outstanding (DSO) is defined as accounts receivable divided by net 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.

 

Inventory turns is defined as annualized cost of revenues divided by net inventories.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Select Cash Flow Statement Items

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q1 FY'21

 

 

Q4 FY'20

 

 

Q1 FY'20

 

Net Cash Provided by Operating Activities

 

$

240

 

 

$

383

 

 

$

310

 

Purchases of Property and Equipment

 

$

52

 

 

$

24

 

 

$

32

 

Free Cash Flow

 

$

188

 

 

$

359

 

 

$

278

 

Free Cash Flow as % of Net Revenues

 

 

14.4

%

 

 

25.6

%

 

 

22.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

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 per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q1'FY21

 

Q4'FY20

 

Q1'FY20

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME

 

$

77

 

$

196

 

$

103

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

 

10

 

 

9

 

 

11

 

Stock-based compensation

 

 

54

 

 

35

 

 

42

 

Asset impairment

 

 

 

 

10

 

 

 

COVID-19 charges

 

 

 

 

3

 

 

 

Restructuring charges

 

 

5

 

 

 

 

21

 

Acquisition-related expense

 

 

8

 

 

 

 

 

Debt extinguishment costs

 

 

14

 

 

 

 

 

Income tax effects

 

 

(16

)

 

12

 

 

(20

)

Income tax expenses from integration of acquired companies

 

 

11

 

 

 

 

 

NON-GAAP NET INCOME

 

$

163

 

$

265

 

$

157

 

 

 

 

 

 

 

 

 

 

 

 

COST OF REVENUES

 

$

431

 

$

460

 

$

420

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

 

(10

)

 

(9

)

 

(11

)

Stock-based compensation

 

 

(4

)

 

(3

)

 

(3

)

NON-GAAP COST OF REVENUES

 

$

417

 

$

448

 

$

406

 

 

 

 

 

 

 

 

 

 

 

 

COST OF PRODUCT REVENUES

 

$

316

 

$

355

 

$

312

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

 

(10

)

 

(9

)

 

(11

)

Stock-based compensation

 

 

(1

)

 

 

(1

)

NON-GAAP COST OF PRODUCT REVENUES

 

$

305

 

$

346

 

$

300

 

 

 

 

 

 

 

 

 

 

 

 

COST OF HARDWARE MAINTENANCE AND OTHER SERVICES REVENUES

 

$

100

 

$

90

 

$

98

 

Adjustment:

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

(3

)

 

(3

)

 

(2

)

NON-GAAP COST OF HARDWARE MAINTENANCE AND OTHER SERVICES REVENUES

 

$

97

 

$

87

 

$

96

 

 

 

 

 

 

 

 

 

 

 

 

GROSS PROFIT

 

$

872

 

$

941

 

$

816

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

 

10

 

 

9

 

 

11

 

Stock-based compensation

 

 

4

 

 

3

 

 

3

 

NON-GAAP GROSS PROFIT

 

$

886

 

$

953

 

$

830

 

NETAPP, INC.

 

RECONCILIATION OF NON-GAAP TO GAAP

 

INCOME STATEMENT INFORMATION

 

(In millions, except net income per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q1'FY21

 

Q4'FY20

 

Q1'FY20

 

 

 

 

 

 

 

 

 

 

 

 

SALES AND MARKETING EXPENSES

 

$

429

 

$

389

 

$

405

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

(25

)

 

(16

)

 

(18

)

COVID-19 charges

 

 

 

 

(3

)

 

 

NON-GAAP SALES AND MARKETING EXPENSES

 

$

404

 

$

370

 

$

387

 

 

 

 

 

 

 

 

 

 

 

 

RESEARCH AND DEVELOPMENT EXPENSES

 

$

233

 

$

212

 

$

215

 

Adjustment:

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

(19

)

 

(12

)

 

(15

)

NON-GAAP RESEARCH AND DEVELOPMENT EXPENSES

 

$

214

 

$

200

 

$

200

 

 

 

 

 

 

 

 

 

 

 

 

GENERAL AND ADMINISTRATIVE EXPENSES

 

$

61

 

$

63

 

$

71

 

Adjustment:

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

(6

)

 

(4

)

 

(6

)

NON-GAAP GENERAL AND ADMINISTRATIVE EXPENSES

 

$

55

 

$

59

 

$

65

 

 

 

 

 

 

 

 

 

 

 

 

RESTRUCTURING CHARGES

 

$

5

 

$

 

$

21

 

Adjustment:

 

 

 

 

 

 

 

 

 

 

Restructuring charges

 

 

(5

)

 

 

 

(21

)

NON-GAAP RESTRUCTURING CHARGES

 

$

 

$

 

$

 

 

 

 

 

 

 

 

 

 

 

 

ACQUISITION-RELATED EXPENSE

 

$

8

 

$

 

$

 

Adjustment:

 

 

 

 

 

 

 

 

 

 

Acquisition-related expense

 

 

(8

)

 

 

 

 

NON-GAAP ACQUISITION-RELATED EXPENSE

 

$

 

$

 

$

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

$

736

 

$

664

 

$

712

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

(50

)

 

(32

)

 

(39

)

COVID-19 charges

 

 

 

 

(3

)

 

 

Restructuring charges

 

 

(5

)

 

 

 

(21

)

Acquisition-related expense

 

 

(8

)

 

 

 

 

NON-GAAP OPERATING EXPENSES

 

$

673

 

$

629

 

$

652

 

 

 

 

 

 

 

 

 

 

 

 

NETAPP, INC.

 

RECONCILIATION OF NON-GAAP TO GAAP

 

INCOME STATEMENT INFORMATION

 

(In millions, except net income per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q1'FY21

 

Q4'FY20

 

Q1'FY20

 

 

 

 

 

 

 

 

 

 

 

 

INCOME FROM OPERATIONS

 

$

136

 

$

277

 

$

104

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

 

10

 

 

9

 

 

11

 

Stock-based compensation

 

 

54

 

 

35

 

 

42

 

COVID-19 charges

 

 

 

 

3

 

 

 

Restructuring charges

 

 

5

 

 

 

 

21

 

Acquisition-related expense

 

 

8

 

 

 

 

 

NON-GAAP INCOME FROM OPERATIONS

 

$

213

 

$

324

 

$

178

 

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSE), NET

 

$

(32

)

$

(27

)

$

15

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

Debt extinguishment costs

 

 

14

 

 

 

 

 

Asset impairment

 

 

 

 

10

 

 

 

NON-GAAP OTHER INCOME (EXPENSE), NET

 

$

(18

)

$

(17

)

$

15

 

 

 

 

 

 

 

 

 

 

 

 

INCOME BEFORE INCOME TAXES

 

$

104

 

$

250

 

$

119

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

 

10

 

 

9

 

 

11

 

Stock-based compensation

 

 

54

 

 

35

 

 

42

 

Asset impairment

 

 

 

 

10

 

 

 

COVID-19 charges

 

 

 

 

3

 

 

 

Restructuring charges

 

 

5

 

 

 

21

 

Acquisition-related expense

 

 

8

 

 

 

 

Debt extinguishment costs

 

 

14

 

 

 

 

NON-GAAP INCOME BEFORE INCOME TAXES

 

$

195

 

$

307

 

$

193

 

 

 

 

 

 

 

 

 

 

 

 

PROVISION FOR INCOME TAXES

 

$

27

 

$

54

 

$

16

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

Income tax effects

 

 

16

 

 

(12

)

 

20

 

Income tax expenses from integration of acquired companies

 

 

(11

)

 

 

 

 

 

NON-GAAP PROVISION FOR INCOME TAXES

 

$

32

 

$

42

 

$

36

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME PER SHARE

 

$

0.35

 

$

0.88

 

$

0.42

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

 

0.05

 

 

0.04

 

 

0.05

 

Stock-based compensation

 

 

0.24

 

 

0.16

 

 

0.17

 

Asset impairment

 

 

 

 

0.05

 

 

 

COVID-19 charges

 

 

 

 

0.01

 

 

 

Restructuring charges

 

 

0.02

 

 

 

0.09

 

Acquisition-related expense

 

 

0.04

 

 

 

 

Debt extinguishment costs

 

 

0.06

 

 

 

 

Income tax effects

 

 

(0.07

)

 

0.05

 

 

(0.08

)

Income tax expenses from integration of acquired companies

 

 

0.05

 

 

 

 

 

NON-GAAP NET INCOME PER SHARE

 

$

0.73

 

$

1.19

 

$

0.65

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RECONCILIATION OF NON-GAAP TO GAAP

 

GROSS MARGIN

 

($ in millions)

 

 

 

 

 

 

 

Q1'FY21

 

Q4'FY20

 

Q1'FY20

 

 

 

 

 

 

 

 

 

 

 

 

Gross margin-GAAP

 

 

66.9

%

 

67.2

%

 

66.0

%

Cost of revenues adjustments

 

 

1.1

%

 

0.9

%

 

1.1

%

Gross margin-Non-GAAP

 

 

68.0

%

 

68.0

%

 

67.2

%

 

 

 

 

 

 

 

 

 

 

 

GAAP cost of revenues

 

$

431

 

$

460

 

$

420

 

Cost of revenues adjustments:

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

 

(10

)

 

(9

)

 

(11

)

Stock-based compensation

 

 

(4

)

 

(3

)

 

(3

)

Non-GAAP cost of revenues

 

$

417

 

$

448

 

$

406

 

 

 

 

 

 

 

 

 

 

 

 

Net revenues

 

$

1,303

 

$

1,401

 

$

1,236

 

RECONCILIATION OF NON-GAAP TO GAAP

 

PRODUCT GROSS MARGIN

 

($ in millions)

 

 

 

 

 

 

 

Q1'FY21

 

Q4'FY20

 

Q1'FY20

 

 

 

 

 

 

 

 

 

 

 

 

Product gross margin-GAAP

 

 

49.6

%

 

55.2

%

 

51.6

%

Cost of product revenues adjustments

 

 

1.8

%

 

1.1

%

 

1.9

%

Product gross margin-Non-GAAP

 

 

51.4

%

 

56.4

%

 

53.4

%

 

 

 

 

 

 

 

 

 

 

 

GAAP cost of product revenues

 

$

316

 

$

355

 

$

312

 

Cost of product revenues adjustments:

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

 

(10

)

 

(9

)

 

(11

)

Stock-based compensation

 

 

(1

)

 

 

(1

)

Non-GAAP cost of product revenues

 

$

305

 

$

346

 

$

300

 

 

 

 

 

 

 

 

 

 

 

 

Product revenues

 

$

627

 

$

793

 

$

644

 

RECONCILIATION OF NON-GAAP TO GAAP

 

HARDWARE MAINTENANCE AND OTHER SERVICES GROSS MARGIN

 

($ in millions)

 

 

 

 

 

 

 

Q1'FY21

 

Q4'FY20

 

Q1'FY20

 

 

 

 

 

 

 

 

 

 

 

 

Hardware maintenance and other services gross margin-GAAP

 

 

73.3

%

 

73.6

%

 

71.3

%

Cost of hardware maintenance and other services revenues adjustment

 

 

0.8

%

 

0.9

%

 

0.6

%

Hardware maintenance and other services gross margin-Non-GAAP

 

 

74.1

%

 

74.5

%

 

71.9

%

 

 

 

 

 

 

 

 

 

 

 

GAAP cost of hardware maintenance and other services revenues

 

$

100

 

$

90

 

$

98

 

Cost of hardware maintenance and other services revenues adjustment:

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

(3

)

 

(3

)

 

(2

)

Non-GAAP cost of hardware maintenance and other services revenues

 

$

97

 

$

87

 

$

96

 

 

 

 

 

 

 

 

 

 

 

 

Hardware maintenance and other services revenues

 

$

375

 

$

341

 

$

342

 

 

 

 

 

 

 

 

 

 

 

 

RECONCILIATION OF NON-GAAP TO GAAP

 

EFFECTIVE TAX RATE

 

 

 

 

 

 

 

Q1'FY21

 

Q4'FY20

 

Q1'FY20

 

 

 

 

 

 

 

 

 

 

 

 

GAAP effective tax rate

 

 

26.0

%

 

21.6

%

 

13.4

%

Adjustments:

 

 

 

 

 

 

 

 

 

 

Income tax effects

 

 

1.0

%

 

(7.9

)%

 

5.3

%

Income tax expenses from integration of acquired companies

 

 

(10.6

)%

 

%

 

%

Non-GAAP effective tax rate

 

 

16.4

%

 

13.7

%

 

18.7

%

RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES

 

TO FREE CASH FLOW (NON-GAAP)

 

(In millions)

 

 

 

 

 

 

 

Q1'FY21

 

Q4'FY20

 

Q1'FY20

 

Net cash provided by operating activities

 

$

240

 

$

383

 

$

310

 

Purchases of property and equipment

 

 

(52

)

 

(24

)

 

(32

)

Free cash flow

 

$

188

 

$

359

 

$

278

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RECONCILIATION OF NET REVENUES

 

TO BILLINGS (NON-GAAP)

 

(In millions)

 

 

 

 

 

 

 

Q1'FY21

 

Q4'FY20

 

Q1'FY20

 

Net revenues

 

$

1,303

 

$

1,401

 

$

1,236

 

Change in deferred revenue and financed unearned services revenue*

 

 

(158

)

 

147

 

 

(154

)

Billings

 

$

1,145

 

$

1,548

 

$

1,082

 

* As reported on our Condensed Consolidated Statements of Cash Flows

 

 

 

 

 

 

 

 

 

 

NETAPP, INC.

 

RECONCILIATION OF NON-GAAP GUIDANCE TO GAAP

 

EXPRESSED AS EARNINGS PER SHARE

 

SECOND QUARTER FISCAL 2021

 

 

 

 

 

 

 

 

Second Quarter

 

 

 

Fiscal 2021

 

 

 

 

 

 

Non-GAAP Guidance - Net Income Per Share

 

$0.66 - $0.74

 

 

 

 

 

 

Adjustments of Specific Items to Net Income

 

 

 

 

Per Share for the Second Quarter Fiscal 2021:

 

 

 

 

Amortization of intangible assets

 

 

(0.07

)

Stock-based compensation expense

 

 

(0.20

)

Restructuring charges

 

 

(0.17

)

Income tax effects

 

 

0.06

 

Total Adjustments

 

 

(0.38

)

 

 

 

 

 

GAAP Guidance - Net Income Per Share

 

$0.28 - $0.36

 

Some items may not add or recalculate due to rounding.

 

(Press)
Amelia Vierra
1 408 822 6403
amelia.vierra@netapp.com

(Investors)
Lance Berger
1 408 822 6628
lance.berger@netapp.com

Source: NetApp