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NetApp: Fiscal 1Q14 Financial Results

Revenue up 5% Y/Y but down 11% Q/Q

This is a Press Release edited by StorageNewsletter.com on August 16, 2013 at 2:53 pm
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 (in $ million) 1Q13 1Q14
 Revenue 1,445 1,516
 Growth      5%
 Net income (loss)
  63.8 81.6

NetApp, Inc. reported financial results for the first quarter of fiscal year 2014 ended July 26, 2013.

  • Revenues of $1.516 billion, up 5% year-over-year
  • Non-GAAP EPS of $0.53, up 26% year-over-year
  • Cash from Operations of $286 million, up 25% year-over-year
  • $900 million returned to shareholders in share repurchases and cash dividends

First Quarter Financial Results
Total revenues for the first quarter of fiscal year 2014 were $1.516 billion, an increase of 5% from the comparable period of the prior year. GAAP net income for the first quarter of fiscal year 2014 was $82 million, or $0.23 per share,1 compared to GAAP net income of $64 million, or $0.17 per share, for the comparable period of the prior year. Non-GAAP net income for the first quarter of fiscal year 2014 was $192 million, or $0.53 per share,compared to non-GAAP net income of $156 million, or $0.42 per share, for the first quarter of fiscal 2013.

netapp_1q14_540

Cash, Cash Equivalents and Investments
NetApp ended the first quarter of 2014 with  and during the quarter generated approximately $286 million in cash from operations. The company returned $900 million to shareholders during the quarter through share repurchases and a cash dividend. The next dividend in the amount of $0.15 per share will be paid on October 25, 2013 to shareholders of record as of the close of business on October 21, 2013.

"NetApp delivered solid results and innovation with the latest release to our clustered Data ONTAP OS," said Tom Georgens, president and CEO. "Despite an uneven macro environment, our branded business was strong, with 9% year-over-year growth. This is evidence of the tremendous value we are delivering to customers today and their confidence in our long-term strategy to enable them to navigate the future."

Q2 Fiscal Year 2014 Outlook
The company provided the following financial guidance for the second quarter of fiscal year 2014:

  • Total revenue is expected to be in the range of $1.560 billion to $1.660 billion
  • GAAP earnings per share is expected to be in the range of $0.41 to $0.46 per share
  • Non-GAAP earnings per share is expected to be in the range of $0.60 to $0.65 per share
  • Diluted shares outstanding of approximately 351 million shares

Business Highlights in 1Q14

  • NetApp Introduces Data ONTAP 8.2. New enhancements to clustered Data ONTAP 8.2 provide organizations and cloud service providers the capability to deliver new services and capacity with maximum application uptime. Clustered Data ONTAP delivers native multi-tenant, policy-based storage services via programmable APIs and application integrations that are core tenants of a software-defined storage environment.
  • NetApp Connect Delivers Mobile Access with Enterprise Data Protection. By keeping all data securely behind the corporate firewall, it offers mobile access to corporate data while maintaining the security and control that enterprise IT requires for keeping its data and business protected.
  • NetApp and Cisco Expand the FlexPodPlatform. In a continuing effort to make data center infrastructures more responsive to applications’ dynamic needs, Cisco and NetApp broadened FlexPod portfolio with a new offering called FlexPod Select and introduced new validated designs across the entire suite. Components include E-Series and FAS storage systems.
  • NetApp Teams up with Microsoft to Accelerate Coud Deployments. NetApp will invest $15 million in new ecosystem sales collaboration and continued technology integration with Microsoft to accelerate the adoption of enterprise cloud deployments.
  • Clustered Data ONTAP integrates with Citrix Technologies. New solution integrations from NetApp and Citrix combine the benefits of clustered Data ONTAP with Citrix technologies for desktop and application virtualization, mobile collaboration, and cloud services.
  • Microsoft’s Server Platform Partner of the Year. NetApp was named Microsoft’s Server Platform Partner of the Year for innovative storage solutions that enable nondisruptive operations and deliver operational efficiency for virtualized environments and file services.

Comments

Abstracts the earnings call transcript:

Nick Noviello, CFO:

"As we anticipated, year-over-year branded revenue growth was very strong, partially offset by further reductions in OEM revenue. Branded revenue was $1.35 billion, up 9% year-over-year, representing the largest increase in branded business in 7 quarters. OEM revenue continued to decline, down 20% on a year-over-year basis. Consistent with our expectations, we anticipate that OEM revenue will continue to decline on a year-over-year basis in Q2 and then normalize to the level we expected when we acquired Engenio.
"Indirect revenues remained strong, with 80% of Q1 revenue coming through the channels and OEMs. Arrow and Avnet contributed 21% and 16% of our total revenue, respectively. From a geographic perspective, Americas grew 7%, EMEA grew 2% and AsiaPac grew 3% on a year-over-year basis."
Tom Georgens, president and CEO:

"Over 60% of FAS systems are shipped with Flash Cache and/or Flash Pool. Flash Pool sales increased almost 50% from Q1 last year.
"On the all-flash array front, we have now shipped over 300 units of our recently announced EF540. The majority of EF540 units are in database acceleration deployments.
"This quarter, every FAS platform showed year-over-year growth in both units and dollars. Of particular note was the FAS6000 family, units of which grew 28% from Q1 a year ago. Additionally, we saw capacity shipments grow 16% year-over-year.
"FlexPod systems sold increased 30% year-over-year and the number of new FlexPod customers is up 22% from Q1 a year ago."

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