8-K
false000100204700010020472021-11-302021-11-30

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 30, 2021

 

 

NetApp, Inc.

(Exact name of Registrant as Specified in Its Charter)

 

 

Delaware

0-27130

77-0307520

(State or Other Jurisdiction
of Incorporation)

(Commission File Number)

(IRS Employer
Identification No.)

 

 

 

 

 

3060 Olsen Drive

 

San Jose, California

 

95128

(Address of Principal Executive Offices)

 

(Zip Code)

 

Registrant’s Telephone Number, Including Area Code: (408) 822-6000

 

 

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:


Title of each class

 

Trading
Symbol(s)

 


Name of each exchange on which registered

Common Stock, $0.001 Par Value

 

NTAP

 

The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

 


Item 2.02 Results of Operations and Financial Condition.

On November 30, 2021, NetApp, Inc. (“NetApp” or the “Company”) issued a press release reporting financial results for the second quarter ended October 29, 2021. The press release is furnished herewith as Exhibit 99.1, and is incorporated herein by reference.

 

The information contained herein and in the accompanying exhibits shall not be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference in such filing. The information in this report, including the exhibits hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended.

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits.

 

Exhibit No.

Description

 

 

99.1

Press release, dated November 30, 2021, reporting earnings for the second quarter ended October 29, 2021

104

Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

 

NETAPP, INC.
(Registrant)

 

 

 

 

Date:

November 30, 2021

By:

/s/ Elizabeth O'Callahan

 

 

 

Elizabeth O'Callahan
Senior Vice President, General Counsel and Corporate Secretary

 


EX-99.1

 

Exhibit 99.1

 

 

NetApp reports second quarter of fiscal year 2022 results

Net revenues for the second quarter grew 11% year-over-year to $1.57 billion;

Expanded cloud partnerships and delivered substantial innovation across entire portfolio

 

NetApp Public Cloud annualized revenue run rate (ARR)1 increased 80% year-over-year to $388 million
All-flash array annualized net revenue run rate2 increased 22% year-over-year to $3.1 billion
Product revenue grew 9% year-over-year to $814 million
Billings3 increased 7% year-over-year to $1.55 billion
$298 million in cash provided by operations; $252 million in free cash flow3

 

SAN JOSE, Calif.—November 30, 2021—NetApp (NASDAQ: NTAP) today reported financial results for the second quarter of fiscal year 2022, which ended on October 29, 2021.

 

“We delivered another strong quarter, with results all at the high end or above our guidance. Our performance reflects a strong demand environment, a clear vision, and exceptional execution by the NetApp team and gives the confidence to raise our full year guidance for revenue, EPS and Public Cloud ARR,” said George Kurian, chief executive officer. “We are gaining share in the key markets of all-flash and object storage, while rapidly scaling our public cloud business. Our industry-leading innovation and unique and deep cloud partnerships position us well to capitalize on significant opportunity ahead.”

 

Second quarter of fiscal year 2022 financial results

Net revenues: $1.57 billion, compared to $1.42 billion in the second quarter of fiscal year 2021
o
Hybrid Cloud segment revenue: $1.48 billion, compared to $1.37 billion in the second quarter of fiscal year 2021
o
Public Cloud segment revenue: $87 million, compared to $47 million in the second quarter of fiscal year 2021
Net income: GAAP net income of $224 million, compared to $137 million in the second quarter of fiscal year 2021; non-GAAP net income4 of $292 million, compared to $236 million in the second quarter of fiscal year 2021
Earnings per share: GAAP net income per share5 of $0.98, compared to $0.61 in the second quarter of fiscal year 2021; non-GAAP net income per share of $1.28, compared to $1.05 in the second quarter of fiscal year 2021
Cash, cash equivalents and investments: $4.55 billion at the end of the second quarter of fiscal year 2022
Cash provided by operations: $298 million, compared to $161 million in the second quarter of fiscal year 2021

 


 

Share repurchase and dividends: Returned $237 million to shareholders through share repurchases and cash dividends

 

Third quarter of fiscal year 2022 financial outlook

The Company provided the following financial guidance for the third quarter of fiscal year 2022:

Net revenues are expected to be in the range of:

$1.525 billion to $1.675 billion

 

GAAP

Non-GAAP

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

$0.93 - $1.03

$1.21 - $1.31

 

Full fiscal year 2022 financial outlook

The Company provided an update to their financial guidance for the full fiscal year 2022:

Net revenues are expected to grow in the range of:

9% to 10%

Public Cloud ARR is expected to exit the fiscal year in the range of:

$510 million to $540 million

 

GAAP

Non-GAAP

Consolidated gross margins are expected to be:

~67%

~68%

Operating margins are expected to be:

18% - 19%

23% - 24%

Effective tax rate is expected to be:

~21%

~19%

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

$3.80 - $4.00

$4.90 - $5.10

 

Dividend

The next cash dividend of $0.50 per share is to be paid on January 26, 2022, to shareholders of record as of the close of business on January 7, 2022.

 

Second quarter of fiscal year 2022 business highlights

 

Expanding cloud partnerships

 

AWS and NetApp announced the general availability of Amazon FSx for NetApp ONTAP, a native AWS managed service that’s powered by NetApp ONTAP software and is available around the world.
Google Cloud announced that NetApp will serve as the primary data and storage vendor for its new Google Distributed Cloud Hosted offering and introduced the integration of Google Cloud VMware Engine with NetApp Cloud Volumes Service support for VM datastores, a fully managed service that helps organizations meet their need for virtual workload storage and disaster recovery.
NetApp and Google Cloud launched NetApp Cloud Volumes Service for Google Cloud in Salt Lake City and Tokyo, with available Cloud Volumes Service regions now totaling 19 as demand continues to increase.
NetApp announced expanded backup/restore and cross-region replication capabilities in Azure NetApp Files.

 


 

NetApp announced that whitelisting has been removed from Azure NetApp Files, enabling customers to directly consume Azure NetApp Files from the Azure portal, CLI, API, or with the software development kit (SDK).

 

Leading innovation

 

NetApp announced an agreement to acquire CloudCheckr to expand the Spot by NetApp cloud operations (CloudOps) portfolio, enabling organizations to better optimize and secure multi-cloud infrastructures. The CloudCheckr acquisition closed on November 5, 2021.
NetApp announced the latest release of NetApp ONTAP data management software, which offers autonomous ransomware protection against cyberattacks, increased performance for SAN and modern workloads with NVMe over TCP (NVMe/TCP) support, expanded object storage capabilities with NetAppSnapMirror, and simplified storage management.
NetApp introduced new digital wallet capabilities available in NetApp Cloud Managerfor greater mobility and more visibility into usage of data service licenses across a hybrid cloud, with prepayment of credits enabling streamlined deployment.
NetApp introduced enhancements to NetApp Cloud Backup and Cloud Data Sense services. Enhancements include greater data protection and governance for ONTAP environments, simplified deployment of NetApp Cloud Volumes ONTAP with new customer-ready templates, and fully embedded NetApp Active IQ in Cloud Manager.
NetApp announced Kubernetes enhancements and deeper ONTAP integrations with NetAppCloud Insights to support and manage Kubernetes workloads.
NetApp announced a new freemium service tier for Cloud Volumes ONTAP. This service tier gives customers access to a full-featured, perpetual license to use ONTAP in the cloud for workloads that need less than 500GB of storage.
NetApp previewed NetApp Astra Data Store, a Kubernetes-native shared file service for unified management of container-based storage and virtual machines (VMs) across a hybrid cloud.
Spot by NetApp launched Spot Elastigroup by NetApp for Azure Stateful Groups, allowing companies to use Azure’s Spot VM technology to save up to 90% of infrastructure costs while running stateful applications.
Spot by NetApp announced Spot Security, a new product to help safeguard cloud infrastructure with automated security monitoring, analysis, and remediation capabilities
NetApp introduced new Support and Professional Services offerings, including the extension of NetApp SupportEdge Advisor and SupportEdge Protect for cloud services, as well as NetApp Flex Professional Services (FlexPS), which offers on-demand support for customers transitioning to hybrid cloud.

 

NetApp recognition and awards

 

NetApp was named a leader in the 2021 Gartner Magic Quadrant for Primary Storage.6 NetApp was also among this year’s top vendor solutions evaluated in the 2021 Gartner Critical Capabilities for Primary Storage7 across all use cases. In the Cloud IT Operations use case, the NetApp AFF A-Series family received the highest scores.
NetApp AI won a 2021 Stratus Award for artificial intelligence from the Business Intelligence Group.

 

Webcast and conference call information

 


 

NetApp will host a conference call to discuss these results today at 2:30 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 4:30 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 Third Quarter of Fiscal Year 2022 Financial Outlook section and Full Fiscal Year 2022 Financial Outlook section and statements about our ability to gain share in key markets while scaling our public cloud business, and our ability to capitalize on significant opportunity ahead. Actual results may differ materially from these statements for a variety of reasons, including, without limitation, customer demand for and acceptance of our products and services, our ability to successfully execute on our data fabric strategy to generate profitable growth and stockholder return, our ability to successfully execute new business models, general global political, macroeconomic and market conditions, changes in U.S. government spending, revenue seasonality, our ability to manage our gross profit margins, the impact of the COVID-19 pandemic on our business operations, including supply chain disruptions, our financial performance and results of operations, and our ability to expand our total available market and grow our portfolio of products. 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, the NetApp logo, and the marks listed at http://www.netapp.com/TM are trademarks of NetApp, Inc. All other marks are the property of their respective owners.

 

Footnotes

1Public Cloud annualized revenue run rate (ARR) is calculated as the annualized value of all Public Cloud customer commitments with the assumption that any commitment expiring during the next 12 months will be renewed with its existing terms.

2All-flash array annualized net revenue run rate is determined by products and services revenue for the current quarter, multiplied by 4.

3Refer to the NetApp Usage of Non-GAAP Financial Information section below for an explanation of billings and free cash flow.

 


 

4Non-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) gains/losses on the sale of investments in equity securities, (i) debt extinguishment costs, (j) COVID-19 charges and (k) 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.

5GAAP net income per share and non-GAAP net income per share are calculated using the diluted number of shares.

6Gartner, “Magic Quadrant for Primary Storage, 2021,” Jeff Vogel, Roger W. Cox, Joseph Unsworth, Santhosh Rao, October 11, 2021.

7Gartner, “Critical Capabilities for Primary Storage, 2021,” Santhosh Rao, Roger W. Cox, Joseph Unsworth, Jeff Vogel, October 11, 2021.

 

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 approximates 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 the amount can fluctuate based on variables unrelated to the performance of the underlying business. 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, are less useful 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, are less useful for future planning and forecasting.

H. Gains/losses on the sale of investments in equity securities. These are gains/losses from the sale of our investment in certain equity securities. Typically, such investments are sold as a result of a change in control of the underlying businesses. Management believes that these transactions do not reflect the results of our underlying, on-going business and, therefore, are less useful for future planning and forecasting.

I. Debt extinguishment costs. NetApp excludes certain non-recurring expenses incurred as a result of the early extinguishment of debt. Management believes such nonrecurring costs do not reflect the results of its underlying, on-going business and, therefore, are less useful for future planning and forecasting.

J. 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, are less useful for future planning and forecasting.

K. 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

In a world full of generalists, NetApp is a specialist. We’re focused on one thing, helping your business get the most out of your data. NetApp brings the enterprise-grade data services you rely on into the cloud, and the simple flexibility of cloud into the data center. Our industry-leading solutions work across diverse customer environments and the world’s biggest public clouds. As a cloud-led, data-centric software company, only NetApp can help build your unique data fabric, simplify and connect your cloud, and securely deliver the right data, services, and applications to the right people—anytime, anywhere.

 


 

 

 

NETAPP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)

(Unaudited)

 

 

 

October 29,
 2021

 

 

April 30,
 2021

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash, cash equivalents and investments

 

$

4,548

 

 

$

4,596

 

Accounts receivable

 

 

647

 

 

 

945

 

Inventories

 

 

155

 

 

 

114

 

Other current assets

 

 

319

 

 

 

346

 

Total current assets

 

 

5,669

 

 

 

6,001

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

549

 

 

 

525

 

Goodwill and purchased intangible assets, net

 

 

2,137

 

 

 

2,140

 

Other non-current assets

 

 

867

 

 

 

694

 

Total assets

 

$

9,222

 

 

$

9,360

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

432

 

 

$

420

 

Accrued expenses

 

 

796

 

 

 

970

 

Short-term deferred revenue and financed unearned services revenue

 

 

1,967

 

 

 

2,062

 

Total current liabilities

 

 

3,195

 

 

 

3,452

 

Long-term debt

 

 

2,634

 

 

 

2,632

 

Other long-term liabilities

 

 

735

 

 

 

650

 

Long-term deferred revenue and financed unearned services revenue

 

 

1,899

 

 

 

1,941

 

Total liabilities

 

 

8,463

 

 

 

8,675

 

 

 

 

 

 

 

 

Stockholders' equity

 

 

759

 

 

 

685

 

Total liabilities and stockholders' equity

 

$

9,222

 

 

$

9,360

 

 

 


 

NETAPP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share amounts)

(Unaudited)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

October 29,
 2021

 

 

October 30,
 2020

 

 

October 29,
 2021

 

 

October 30,
 2020

 

Net revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Product

 

$

814

 

 

$

749

 

 

$

1,544

 

 

$

1,376

 

Services

 

 

752

 

 

 

667

 

 

 

1,480

 

 

 

1,343

 

Net revenues

 

 

1,566

 

 

 

1,416

 

 

 

3,024

 

 

 

2,719

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of product

 

 

372

 

 

 

360

 

 

 

701

 

 

 

676

 

Cost of services

 

 

135

 

 

 

123

 

 

 

265

 

 

 

238

 

Total cost of revenues

 

 

507

 

 

 

483

 

 

 

966

 

 

 

914

 

Gross profit

 

 

1,059

 

 

 

933

 

 

 

2,058

 

 

 

1,805

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

465

 

 

 

432

 

 

 

916

 

 

 

861

 

Research and development

 

 

216

 

 

 

212

 

 

 

426

 

 

 

445

 

General and administrative

 

 

76

 

 

 

67

 

 

 

142

 

 

 

128

 

Restructuring charges

 

 

7

 

 

 

37

 

 

 

29

 

 

 

42

 

Acquisition-related expense

 

 

1

 

 

 

3

 

 

 

2

 

 

 

11

 

Total operating expenses

 

 

765

 

 

 

751

 

 

 

1,515

 

 

 

1,487

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

 

294

 

 

 

182

 

 

 

543

 

 

 

318

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other expense, net

 

 

(14

)

 

 

(7

)

 

 

(26

)

 

 

(39

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 

280

 

 

 

175

 

 

 

517

 

 

 

279

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

 

56

 

 

 

38

 

 

 

91

 

 

 

65

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

224

 

 

$

137

 

 

$

426

 

 

$

214

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.00

 

 

$

0.62

 

 

$

1.91

 

 

$

0.96

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

$

0.98

 

 

$

0.61

 

 

$

1.86

 

 

$

0.96

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in net income per share calculations:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

223

 

 

 

222

 

 

 

223

 

 

 

222

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

 

229

 

 

 

224

 

 

 

229

 

 

 

223

 

 

 


 

NETAPP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

October 29,
 2021

 

 

October 30,
 2020

 

 

October 29,
 2021

 

 

October 30,
 2020

 

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

224

 

 

$

137

 

 

$

426

 

 

$

214

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

46

 

 

 

56

 

 

 

92

 

 

 

105

 

 

Non-cash operating lease cost

 

 

15

 

 

 

13

 

 

 

28

 

 

 

26

 

 

Stock-based compensation

 

 

62

 

 

 

49

 

 

 

115

 

 

 

103

 

 

Deferred income taxes

 

 

(17

)

 

 

 

 

 

(32

)

 

 

 

 

Other items, net

 

 

(16

)

 

 

3

 

 

 

(12

)

 

 

28

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable

 

 

5

 

 

 

(194

)

 

 

292

 

 

 

197

 

 

Inventories

 

 

(47

)

 

 

20

 

 

 

(41

)

 

 

29

 

 

Accounts payable

 

 

62

 

 

 

(30

)

 

 

11

 

 

 

(59

)

 

Accrued expenses

 

 

36

 

 

 

117

 

 

 

(206

)

 

 

(69

)

 

Deferred revenue and financed unearned services
  revenue

 

 

(15

)

 

 

40

 

 

 

(97

)

 

 

(118

)

 

Long-term taxes payable

 

 

(57

)

 

 

(52

)

 

 

(65

)

 

 

(46

)

 

Changes in other operating assets and liabilities, net

 

 

 

 

 

2

 

 

 

29

 

 

 

(9

)

 

Net cash provided by operating activities

 

 

298

 

 

 

161

 

 

 

540

 

 

 

401

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Redemptions of investments, net

 

 

15

 

 

 

22

 

 

 

26

 

 

 

107

 

 

Purchases of property and equipment

 

 

(46

)

 

 

(40

)

 

 

(97

)

 

 

(92

)

 

Proceeds from sale of properties

 

 

 

 

 

 

 

 

 

 

 

6

 

 

Acquisitions of businesses, net of cash acquired

 

 

 

 

 

 

 

 

(14

)

 

 

(350

)

 

Other investing activities, net

 

 

 

 

 

8

 

 

 

 

 

 

8

 

 

Net cash used in investing activities

 

 

(31

)

 

 

(10

)

 

 

(85

)

 

 

(321

)

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from issuance of common stock under employee
  stock award plans

 

 

 

 

 

1

 

 

 

53

 

 

 

49

 

 

Payments for taxes related to net share settlement of stock
  awards

 

 

(6

)

 

 

(1

)

 

 

(63

)

 

 

(34

)

 

Repurchase of common stock

 

 

(125

)

 

 

 

 

 

(225

)

 

 

 

 

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

 

 

 

 

 

(50

)

 

 

 

 

 

(420

)

 

Issuance of debt, net of issuance costs

 

 

 

 

 

 

 

 

 

 

 

2,057

 

 

Repayments and extinguishment of debt

 

 

 

 

 

(100

)

 

 

 

 

 

(689

)

 

Dividends paid

 

 

(112

)

 

 

(107

)

 

 

(224

)

 

 

(214

)

 

Other financing activities, net

 

 

 

 

 

 

 

 

(2

)

 

 

(3

)

 

Net cash (used in) provided by financing activities

 

 

(243

)

 

 

(257

)

 

 

(461

)

 

 

746

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

(8

)

 

 

1

 

 

 

(13

)

 

 

44

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net change in cash, cash equivalents and restricted cash

 

 

16

 

 

 

(105

)

 

 

(19

)

 

 

870

 

 

Cash, cash equivalents and restricted cash:

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning of period

 

 

4,500

 

 

 

3,641

 

 

 

4,535

 

 

 

2,666

 

 

End of period

 

$

4,516

 

 

$

3,536

 

 

$

4,516

 

 

$

3,536

 

 

 

 


 

 

 

NETAPP, INC.

 

SUPPLEMENTAL DATA

 

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

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

     In the first quarter of fiscal year 2022, the Company introduced two segments for financial reporting purposes: Hybrid Cloud and Public Cloud. Prior period disclosures have been revised for comparability.

 

 

 

 

 

 

 

 

 

 

 

Revenues by Segment

 

 

 

 

 

 

 

 

 

 

 

Q2'FY22

 

 

Q1'FY22

 

 

Q2'FY21

 

Product

 

$

814

 

 

$

730

 

 

$

749

 

Support

 

 

590

 

 

 

578

 

 

 

553

 

Professional and Other Services

 

 

75

 

 

 

71

 

 

 

67

 

   Hybrid Cloud Segment Net Revenues

 

 

1,479

 

 

 

1,379

 

 

 

1,369

 

   Public Cloud Segment Net Revenues

 

 

87

 

 

 

79

 

 

 

47

 

       Net Revenues

 

$

1,566

 

 

$

1,458

 

 

$

1,416

 

 

 

 

 

 

 

 

 

 

 

   Gross Profit by Segment

 

 

 

 

 

 

 

 

 

 

 

 Q2'FY22

 

 

 Q1'FY22

 

 

 Q2'FY21

 

Product

 

$

445

 

 

$

404

 

 

$

397

 

Support

 

 

542

 

 

 

530

 

 

 

503

 

Professional and Other Services

 

 

21

 

 

 

20

 

 

 

17

 

   Hybrid Cloud Segment Gross Profit

 

 

1,008

 

 

 

954

 

 

 

917

 

   Public Cloud Segment Gross Profit

 

 

62

 

 

 

56

 

 

 

31

 

       Total Segments Gross Profit

 

 

1,070

 

 

 

1,010

 

 

 

948

 

 

 

 

 

 

 

 

 

 

 

Amortization of Intangible Assets

 

 

(7

)

 

 

(7

)

 

 

(12

)

Stock-based Compensation

 

 

(4

)

 

 

(4

)

 

 

(3

)

      Unallocated Cost of Revenues

 

 

(11

)

 

 

(11

)

 

 

(15

)

 

 

 

 

 

 

 

 

 

 

           Gross Profit

 

$

1,059

 

 

$

999

 

 

$

933

 

 

 

 

 

 

 

 

 

 

 

   Gross Margin by Segment

 

 

 

 

 

 

 

 

 

 

 

 Q2'FY22

 

 

 Q1'FY22

 

 

 Q2'FY21

 

Product

 

 

54.7

%

 

 

55.3

%

 

 

53.0

%

Support

 

 

91.9

%

 

 

91.7

%

 

 

91.0

%

Professional and Other Services

 

 

28.0

%

 

 

28.2

%

 

 

25.4

%

Hybrid Cloud Segment Gross Margin

 

 

68.2

%

 

 

69.2

%

 

 

67.0

%

Public Cloud Segment Gross Margin

 

 

71.3

%

 

 

70.9

%

 

 

66.0

%

 

 

 

 

 

 

 

 

 

 

    Product Revenues

 

 

 

 

 

 

 

 

 

 

 

 Q2'FY22

 

 

 Q1'FY22

 

 

 Q2'FY21

 

Total

 

$

814

 

 

$

730

 

 

$

749

 

Software*

 

$

475

 

 

$

414

 

 

$

417

 

Hardware*

 

$

339

 

 

$

316

 

 

$

332

 

 

 

 

 

 

 

 

 

 

 

* 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.

 

 

 

 

 

 

 

 

 

 

 

Software and recurring support and public cloud revenue

 

 

 

 

 

 

 

 

 

 

 

Q2'FY22

 

 

Q1'FY22

 

 

Q2'FY21

 

Product - Software

 

$

475

 

 

$

414

 

 

$

417

 

Support

 

 

590

 

 

 

578

 

 

 

553

 

Public Cloud

 

 

87

 

 

 

79

 

 

 

47

 

Software and recurring support and public cloud revenue*

 

$

1,152

 

 

$

1,071

 

 

$

1,017

 

 

 

 

 

 

 

 

 

 

 

 

 


 

Software and recurring support and public cloud revenue as a percentage of net revenues

 

 

74

%

 

 

73

%

 

 

72

%

 

 

 

 

 

 

 

 

 

 

*Software and recurring support and public cloud revenue is a non-GAAP measure because it includes the software component of our product revenues, but not the hardware component.

 

 

 

 

 

 

 

 

 

 

 

Geographic Mix

 

 

 

 

 

 

 

 

 

 

 

 % of Q2 FY'22

 

 

 % of Q1 FY'22

 

 

 % of Q2 FY'21

 

 

 

 Revenue

 

 

 Revenue