8-K
0001002047false00010020472022-02-232022-02-23

 

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): February 23, 2022

 

 

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 February 23, 2022, NetApp, Inc. (“NetApp” or the “Company”) issued a press release reporting financial results for the third quarter ended January 28, 2022. 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 February 23, 2022, reporting earnings for the third quarter ended January 28, 2022

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:

February 23, 2022

By:

/s/ Elizabeth O'Callahan

 

 

 

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

 


EX-99.1

 

Exhibit 99.1

 

 

NetApp reports third quarter of fiscal year 2022 results

Net revenues for the third quarter grew 10% year-over-year to $1.61 billion

 

 

NetApp Public Cloud annualized revenue run rate (ARR)1 increased 98% year-over-year to $469 million
All-flash array annualized net revenue run rate2 reached an all-time high of $3.2 billion
Product revenue grew 9% year-over-year to $846 million, the fourth consecutive quarter of year-over-year growth
Billings3 were $1.76 billion, an increase of 10% year-over-year
Increased full fiscal year 2022 revenue and EPS guidance
$236 million returned to shareholders in share repurchases and cash dividends

 

SAN JOSE, Calif.—February 23, 2022—NetApp (NASDAQ: NTAP) today reported financial results for the third quarter of fiscal year 2022, which ended on January 28, 2022.

 

“Q3 results and positive growth outlook are powered by the alignment of our differentiated technology portfolio with customer priorities for cloud and digital transformation. We have a unique position in solving organizations’ most significant challenges in hybrid, multi-cloud IT,” said George Kurian, chief executive officer. “Our focused execution and effective management of temporary supply chain headwinds enable us to capture our expanding opportunity while investing for continued growth and delivering operating leverage.”

 

Third quarter of fiscal year 2022 financial results

 

Net revenues: $1.61 billion, compared to $1.47 billion in the third quarter of fiscal year 2021
o
Hybrid Cloud segment revenue: $1.50 billion, compared to $1.42 billion in the third quarter of fiscal year 2021
o
Public Cloud segment revenue: $110 million, compared to $55 million in the third quarter of fiscal year 2021
Net income: GAAP net income of $252 million, compared to $182 million in the third quarter of fiscal year 2021; non-GAAP net income4 of $330 million, compared to $250 million in the third quarter of fiscal year 2021
Earnings per share: GAAP net income per share5 of $1.10, compared to $0.80 in the third quarter of fiscal year 2021; non-GAAP net income per share of $1.44, compared to $1.10 in the third quarter of fiscal year 2021
Cash, cash equivalents and investments: $4.20 billion at the end of the third quarter of fiscal year 2022

 


 

Cash provided by operations: $260 million, compared to $373 million in the third quarter of fiscal year 2021
Share repurchase and dividends: Returned $236 million to shareholders through share repurchases and cash dividends

 

Fourth quarter of fiscal year 2022 financial outlook

 

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

Net revenues are expected to be in the range of:

$1.635 billion to $1.735 billion

 

GAAP

Non-GAAP

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

$0.90 - $1.00

$1.21 - $1.31

 

Full fiscal year 2022 financial outlook

 

The Company provided the following financial guidance update for the full fiscal year 2022:

Net revenues are expected to grow by:

~10%

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

$525 million to $545 million

 

GAAP

Non-GAAP

Consolidated gross margins are expected to be:

   ~66%

    ~67%

Operating margins are expected to be:

    18% - 19%

   23% - 24%

Effective tax rate is expected to be:

   ~18%

    ~18%

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

     $3.87 – $3.97

$5.07 - $5.17

 

Dividend

 

The next cash dividend of $0.50 per share is to be paid on April 27, 2022, to shareholders of record as of the close of business on April 8, 2022.

 

Third quarter of fiscal year 2022 business highlights

 

Leading product innovation

NetApp announced the completion of its acquisition of CloudCheckr™, a leading cloud optimization platform that provides cloud visibility and insights to help customers lower costs, maintain security and compliance, and optimize cloud resources.
NetApp introduced the AFF A900 system, the latest evolution of its all-flash storage array portfolio, powered by NetApp ONTAP™ Enterprise Edition.

 


 

NetApp announced that ONTAP is the first enterprise storage and data management platform to achieve Commercial Solutions for Classified (CSfC) Program validation for a Data-at-Rest (DAR) capability package.
NetApp announced that NetApp StorageGRID™ technology became the only object storage solution to earn NF203 Digital Safe and ISO 25051 certifications.
NetApp introduced anotherSpot by NetApp service, Ocean for Apache Spark. Data infrastructure teams get the power and flexibility of Apache Spark on Kubernetes without the complexity of managing and tuning infrastructure and workloads.
NetApp extended the Ocean suite with a private preview of Ocean CD, which makes it easy to execute deployments quickly and reliably with integrated and automated continuous verification.
NetApp announced CloudCheckr Well-Architected Readiness Advisor, which helps managed service providers (MSPs) streamline the delivery of AWS Well-Architected Reviews and helps AWS customers maintain compliance with the AWS Well-Architected Framework.
NetAppCloud Backup now supports tiering backups to Amazon S3 Glacier, Glacier Deep Archive, Google Cloud Storage Archive, and Azure Archive Storage, making storing backups in the cloud more cost effective.
NetApp enhanced Cloud Backup with Kubernetes-aware backup support to protect the data, settings, and metadata in Kubernetes persistent volumes, making data easily accessible and restorable at a granular level.

 

Customer and partnership expansions

NetApp extended its collaboration with Ducati, committing to an additional 2 years of support to help advance Ducati’s performance in the MotoGP World Championship.
Kyndryl and NetApp announced a strategic partnership to deliver critical enterprise data infrastructure to BMW Group.

 

NetApp awards and recognition

AWS named NetApp its 2021 AWS Independent Software Vendor (ISV) Design Partner of the Year–U.S. This award recognizes NetApp’s work in helping customers enable innovation and build solutions that facilitate digital and cloud transformation on the AWS Cloud.
NetApp was named as a leader and out-performer in three GigaOm Radar Reports: GigaOm Radar for Cloud File Systems, GigaOm Radar for Enterprise Scale-Out File Systems, and GigaOm Radar for Primary Storage for Large Enterprises.
NetApp was named in the CRN 2021 Tech Innovator Awards as a finalist for cloud tools and management, as well as a finalist for container technology.
NetApp was named on the list of Best Places to Work for LGBTQ+ Equality 2022 by the Human Rights Campaign Foundation’s Corporate Equality Index.

 

Executive leadership announcements

NetApp announced the appointment of Harv Bhela, chief product officer, to its leadership team to accelerate the ongoing transformation of the company into a multicloud, storage, and data services leader.
NetApp announced the appointment of Elizabeth O’Callahan as chief legal officer (CLO) and general counsel.

 

 


 

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 Fourth Quarter of Fiscal Year 2022 Financial Outlook section and Full Fiscal Year 2022 Financial Outlook section and statements about our positive growth outlook due to the alignment of our differentiated technology portfolio with customer priorities, and our ability to execute and manage supply chain headwinds and capture our expanding opportunity while investing for continued growth and delivering operating leverage. 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.

 

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.

 

 

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)

 

 

 

January 28,
 2022

 

 

April 30,
 2021

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash, cash equivalents and investments

 

$

4,201

 

 

$

4,596

 

Accounts receivable

 

 

799

 

 

 

945

 

Inventories

 

 

167

 

 

 

114

 

Other current assets

 

 

346

 

 

 

346

 

Total current assets

 

 

5,513

 

 

 

6,001

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

575

 

 

 

525

 

Goodwill and purchased intangible assets, net

 

 

2,480

 

 

 

2,140

 

Other non-current assets

 

 

932

 

 

 

694

 

Total assets

 

$

9,500

 

 

$

9,360

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

432

 

 

$

420

 

Accrued expenses

 

 

807

 

 

 

970

 

Current portion of long-term debt

 

 

250

 

 

 

 

Short-term deferred revenue and financed unearned services revenue

 

 

2,063

 

 

 

2,062

 

Total current liabilities

 

 

3,552

 

 

 

3,452

 

Long-term debt

 

 

2,385

 

 

 

2,632

 

Other long-term liabilities

 

 

775

 

 

 

650

 

Long-term deferred revenue and financed unearned services revenue

 

 

1,906

 

 

 

1,941

 

Total liabilities

 

 

8,618

 

 

 

8,675

 

 

 

 

 

 

 

 

Stockholders' equity

 

 

882

 

 

 

685

 

Total liabilities and stockholders' equity

 

$

9,500

 

 

$

9,360

 

 

 


 

NETAPP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share amounts)

(Unaudited)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

January 28,
 2022

 

 

January 29,
 2021

 

 

January 28,
 2022

 

 

January 29,
 2021

 

Net revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Product

 

$

846

 

 

$

775

 

 

$

2,390

 

 

$

2,151

 

Services

 

 

768

 

 

 

695

 

 

 

2,248

 

 

 

2,038

 

Net revenues

 

 

1,614

 

 

 

1,470

 

 

 

4,638

 

 

 

4,189

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of product

 

 

407

 

 

 

369

 

 

 

1,108

 

 

 

1,045

 

Cost of services

 

 

134

 

 

 

126

 

 

 

399

 

 

 

364

 

Total cost of revenues

 

 

541

 

 

 

495

 

 

 

1,507

 

 

 

1,409

 

Gross profit

 

 

1,073

 

 

 

975

 

 

 

3,131

 

 

 

2,780

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

461

 

 

 

436

 

 

 

1,377

 

 

 

1,297

 

Research and development

 

 

220

 

 

 

215

 

 

 

646

 

 

 

660

 

General and administrative

 

 

65

 

 

 

63

 

 

 

207

 

 

 

191

 

Restructuring charges

 

 

 

 

 

 

 

 

29

 

 

 

42

 

Acquisition-related expense

 

 

6

 

 

 

3

 

 

 

8

 

 

 

14

 

Total operating expenses

 

 

752

 

 

 

717

 

 

 

2,267

 

 

 

2,204

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

 

321

 

 

 

258

 

 

 

864

 

 

 

576

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other expense, net

 

 

(15

)

 

 

(11

)

 

 

(41

)

 

 

(50

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 

306

 

 

 

247

 

 

 

823

 

 

 

526

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

 

54

 

 

 

65

 

 

 

145

 

 

 

130

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

252

 

 

$

182

 

 

$

678

 

 

$

396

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.13

 

 

$

0.82

 

 

$

3.04

 

 

$

1.78

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

$

1.10

 

 

$

0.80

 

 

$

2.96

 

 

$

1.76

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in net income per share calculations:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

223

 

 

 

223

 

 

 

223

 

 

 

222

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

 

229

 

 

 

227

 

 

 

229

 

 

 

225

 

 

 


 

NETAPP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

January 28,
 2022

 

 

January 29,
 2021

 

 

January 28,
 2022

 

 

January 29,
 2021

 

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

252

 

 

$

182

 

 

$

678

 

 

$

396

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

51

 

 

 

54

 

 

 

143

 

 

 

159

 

 

Non-cash operating lease cost

 

 

12

 

 

 

12

 

 

 

40

 

 

 

38

 

 

Stock-based compensation

 

 

64

 

 

 

46

 

 

 

179

 

 

 

149

 

 

Deferred income taxes

 

 

(34

)

 

 

(1

)

 

 

(66

)

 

 

(1

)

 

Other items, net

 

 

(23

)

 

 

7

 

 

 

(35

)

 

 

35

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(155

)

 

 

11

 

 

 

137

 

 

 

208

 

 

Inventories

 

 

(12

)

 

 

10

 

 

 

(53

)

 

 

39

 

 

Accounts payable

 

 

(1

)

 

 

(33

)

 

 

10

 

 

 

(92

)

 

Accrued expenses

 

 

(1

)

 

 

8

 

 

 

(207

)

 

 

(61

)

 

Deferred revenue and financed unearned services
  revenue

 

 

143

 

 

 

128

 

 

 

46

 

 

 

10

 

 

Long-term taxes payable

 

 

(1

)

 

 

(5

)

 

 

(66

)

 

 

(51

)

 

Changes in other operating assets and liabilities, net

 

 

(35

)

 

 

(46

)

 

 

(6

)

 

 

(55

)

 

Net cash provided by operating activities

 

 

260

 

 

 

373

 

 

 

800

 

 

 

774

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Redemptions of investments, net

 

 

10

 

 

 

33

 

 

 

36

 

 

 

140

 

 

Purchases of property and equipment

 

 

(61

)

 

 

(32

)

 

 

(158

)

 

 

(124

)

 

Proceeds from sale of properties

 

 

 

 

 

 

 

 

 

 

 

6

 

 

Acquisitions of businesses, net of cash acquired

 

 

(345

)

 

 

 

 

 

(359

)

 

 

(350

)

 

Other investing activities, net

 

 

 

 

 

 

 

 

 

 

 

8

 

 

Net cash (used in) provided by investing activities

 

 

(396

)

 

 

1

 

 

 

(481

)

 

 

(320

)

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from issuance of common stock under employee
  stock award plans

 

 

52

 

 

 

43

 

 

 

105

 

 

 

92

 

 

Payments for taxes related to net share settlement of stock
  awards

 

 

(6

)

 

 

(4

)

 

 

(69

)

 

 

(38

)

 

Repurchase of common stock

 

 

(125

)

 

 

(50

)

 

 

(350

)

 

 

(50

)

 

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

 

 

 

 

 

 

 

 

 

 

 

(420

)

 

Issuance of debt, net of issuance costs

 

 

 

 

 

 

 

 

 

 

 

2,057

 

 

Repayments and extinguishment of debt

 

 

 

 

 

 

 

 

 

 

 

(689

)

 

Dividends paid

 

 

(111

)

 

 

(107

)

 

 

(335

)

 

 

(321

)

 

Other financing activities, net

 

 

 

 

 

(4

)

 

 

(2

)

 

 

(7

)

 

Net cash (used in) provided by financing activities

 

 

(190

)

 

 

(122

)

 

 

(651

)

 

 

624

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

(13

)

 

 

26

 

 

 

(26

)

 

 

70

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net change in cash, cash equivalents and restricted cash

 

 

(339

)

 

 

278

 

 

 

(358

)

 

 

1,148

 

 

Cash, cash equivalents and restricted cash:

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning of period

 

 

4,516

 

 

 

3,536

 

 

 

4,535

 

 

 

2,666

 

 

End of period

 

$

4,177

 

 

$

3,814

 

 

$

4,177

 

 

$

3,814

 

 

 

 


 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

Q3'FY22

 

 

Q2'FY22

 

 

Q3'FY21

 

Product

 

$

846

 

 

$

814

 

 

$

775

 

Support

 

 

586

 

 

 

590

 

 

 

571

 

Professional and Other Services

 

 

72

 

 

 

75

 

 

 

69

 

Hybrid Cloud Segment Net Revenues

 

 

1,504

 

 

 

1,479

 

 

 

1,415

 

Public Cloud Segment Net Revenues

 

 

110

 

 

 

87

 

 

 

55

 

Net Revenues

 

$

1,614

 

 

$

1,566

 

 

$

1,470

 

 

 

 

 

 

 

 

 

 

 

Gross Profit by Segment

 

 

 

 

 

 

 

 

 

 

 

Q3'FY22

 

 

Q2'FY22

 

 

Q3'FY21

 

Product

 

$

442

 

 

$

445

 

 

$

414

 

Support

 

 

541

 

 

 

542

 

 

 

522

 

Professional and Other Services

 

 

26

 

 

 

21

 

 

 

16

 

Hybrid Cloud Segment Gross Profit

 

 

1,009

 

 

 

1,008

 

 

 

952

 

Public Cloud Segment Gross Profit

 

 

78

 

 

 

62

 

 

 

38

 

Total Segments Gross Profit

 

 

1,087

 

 

 

1,070

 

 

 

990

 

 

 

 

 

 

 

 

 

 

 

Amortization of Intangible Assets

 

 

(9

)

 

 

(7

)

 

 

(12

)

Stock-based Compensation

 

 

(5

)

 

 

(4

)

 

 

(3

)

Unallocated Cost of Revenues

 

 

(14

)

 

 

(11

)

 

 

(15

)

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

$

1,073

 

 

$

1,059

 

 

$

975

 

 

 

 

 

 

 

 

 

 

 

Gross Margin by Segment

 

 

 

 

 

 

 

 

 

 

 

Q3'FY22

 

 

Q2'FY22

 

 

Q3'FY21

 

Product

 

 

52.2

%

 

 

54.7

%

 

 

53.4

%

Support

 

 

92.3

%

 

 

91.9

%

 

 

91.4

%

Professional and Other Services

 

 

36.1

%

 

 

28.0

%

 

 

23.2

%

Hybrid Cloud Segment Gross Margin

 

 

67.1

%

 

 

68.2

%

 

 

67.3

%

Public Cloud Segment Gross Margin

 

 

70.9

%

 

 

71.3

%

 

 

69.1

%

 

 

 

 

 

 

 

 

 

 

Product Revenues

 

 

 

 

 

 

 

 

 

 

 

Q3'FY22

 

 

Q2'FY22

 

 

Q3'FY21

 

Total

 

$

846

 

 

$

814

 

 

$

775

 

Software*

 

$

507

 

 

$

475

 

 

$

428

 

Hardware*

 

$

339

 

 

$

339

 

 

$

347

 

 

 

 

 

 

 

 

 

 

 

Software and recurring support and public cloud revenue

 

 

 

 

 

 

 

 

 

 

 

Q3'FY22

 

 

Q2'FY22

 

 

Q3'FY21

 

Product - Software

 

$

507

 

 

$

475

 

 

$

428

 

Support

 

 

586

 

 

 

590

 

 

 

572

 

Public Cloud

 

 

110

 

 

 

87

 

 

 

55

 

Software and recurring support and public cloud revenue*

 

$

1,203

 

 

$

1,152

 

 

$

1,055

 

 

 

 

 

 

 

 

 

 

 

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

 

 

75

%

 

 

74

%

 

 

72

%

 

 

 

 

 

 

 

 

 

 

 

 


 

* 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, which are considered non-GAAP measures, to display the significance of software included in total product revenues. 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 Q3 FY'22

 

 

% of Q2 FY'22

 

 

% of Q3 FY'21

 

 

 

Revenue

 

 

Revenue

 

 

Revenue

 

Americas

 

 

56

%

 

 

55

%