NetApp: Fiscal 4Q09 Financial Results
Lower sales (-6%) and profit (-16%)
This is a Press Release edited by StorageNewsletter.com on May 21, 2009 at 3:48 pm| (in US$ millions) | 4Q08 | 4Q09 | FY08 | FY09 |
| Revenues | 937.7 | 879.6 | 3,303.2 | 3,406.4 |
| Growth | -6% | +3% | ||
| Net income (loss) | 89.8 | 75.1 | 309.7 | 86.5 |
NetApp reported results for the fourth fiscal quarter and fiscal year 2009. Revenues for the fourth fiscal quarter of 2009 totaled $880 million compared to revenues of $938 million for the same period a year ago.
For the fourth fiscal quarter, GAAP net income was $75 million, or $0.23 per share compared to GAAP net income of $90 million, or $0.26 per share for the same period in the prior year. Non-GAAP2 net income for the fourth fiscal quarter was $103 million, or $0.31 per share, compared to non-GAAP net income of $131 million, or $0.38 per share for the same period a year ago.
For fiscal year 2009, GAAP revenues totaled $3.4 billion, an increase of 3% compared to GAAP revenues of $3.3 billion for fiscal year 2008. Non-GAAP revenues for fiscal year 2009, excluding the impact of the $129 million GSA settlement, were $3.5 billion. For fiscal year 2009, GAAP net income was $87 million, or $0.26 per share, compared to GAAP net income of $310 million, or $0.86 per share for fiscal year 2008. Non-GAAP net income for fiscal year 2009 was $364 million, or $1.09 per share, compared to non-GAAP net income of $455 million, or $1.26 per share for fiscal year 2008.
“The NetApp team performed admirably to close a challenging fiscal year 2009,” said Dan Warmenhoven, chairman and CEO. “With revenues up and expenses well contained, NetApp has delivered three consecutive quarters of increasing operating margins. Storage efficiency and storage for virtual server environments continue to be the primary demand drivers during this difficult economic period. Customers are increasingly turning to NetApp for help solving their storage and data management challenges in the face of shrinking budgets.”
Outlook
- Given the reduced visibility caused by the recent changes in the macroeconomic environment, NetApp will not be providing revenue guidance for the first quarter of fiscal year 2010.
- NetApp estimates non-GAAP gross margins for the first quarter of fiscal year 2010 to be around 61%.
- NetApp estimates non-GAAP operating expenses for the first quarter of fiscal year 2010 to increase by about $10 million to $15 million from the $426 million reported in the fourth quarter of fiscal year 2009.
- NetApp estimates non-GAAP operating expense levels for the second and third quarters of fiscal year 2010 to average approximately $405 to $410 million.
Quarterly Highlights
In the fourth quarter of fiscal year 2009, NetApp introduced several new solutions to help customers transform their data center architectures through greater storage efficiency, greater power and space savings, and innovative data management techniques. The company also received industry recognition for its market leadership, product performance, and channel success.
This quarter, NetApp and Cisco announced that they are teaming up to provide customers with unified, dynamic data center solutions that are based on the Cisco Unified Computing System and NetApp unified storage architecture.
NetApp announced new storage and data management advances for VMware View to help customers deploy and operate virtual desktop environments faster and more efficiently, including NetApp’s new Rapid Cloning Utility 2.0, which simplifies the way administrators clone VMware virtual machines and datastores. NetApp also announced the integration and certification of its storage platforms with VMware vSphere 4, which provides a path to virtualized data centers and cloud computing.
During the quarter, NetApp extended its virtualization guarantee to include EMC, IBM, HP, and HDS storage systems by offering a guarantee that customers will decrease their non-NetApp primary storage capacity for virtual server environments by 35% using NetApp V-Series and deduplication technology. NetApp deduplication has been delivered to more than 5,000 customers worldwide, comprising more than 30,000 systems containing 385PB of storage capacity.
NetApp unveiled V-Series support for Texas Memory Systems’ RamSan-500 solid-state disk (SSD) array. NetApp V-Series and Texas Memory Systems combine the full benefits of the NetApp Data ONTAP operating system with SSD storage to improve application performance and offer advanced features such as thin provisioning, Snapshot copies, and deduplication to improve storage efficiency and management.
Also this quarter, NetApp introduced new functionalities for NetApp MetroCluster that offer customers continuous data availability in virtualized environments, the ability to perform nondisruptive software and hardware upgrades, and integration with NetApp deduplication technology for enhanced storage efficiency.
During the quarter, NetApp
received the following third party recognitions:
- Magic Quadrant for Midrange and High-End NAS Solutions – Gartner, Inc. positioned NetApp in the Leaders quadrant for Midrange and High-End NAS Solutions.
- Network World’s 2009 Best of the Tests Awards – Citing consistently higher performance, a mix of NAS and SAN features, high availability, and NetApp Snapshot capabilities, Network World’s Lab Alliance members named the FAS2050 the best of the 12 systems they tested during year-long trials.
- 2009 Everything Channel Five-Star Partner Program Guide Certification – NetApp was recognized as one of North America’s top information technology (IT) vendors for its VIP Partner Program and US Public Sector VIP Partner Program.
- 2009 CRN Channel Champion – NetApp was named a 2009 CRN Channel Champion in the category of Network Storage.
- 2009 Channel Chiefs by the Everything Channel’s CRN – NetApp executives Julie Parrish, vice president of Worldwide Channel Sales, and Todd Palmer, vice president of Americas Channel Sales, were named 2009 Channel Chiefs by the Everything Channel’s CRN.
- Best Workplaces in France – NetApp ranked number 14 on a list of the Best Workplaces in France published by Réussir/L’Express, based on a survey by the Great Place to Work Institute France.
Comments
Here are some abstracts of the conference call transcript:
Steven Gomo, CFO:
"As a result, current period purchases of systems slowed, with product revenue down 4% sequentially and down 20% year-over-year to $506.0 million.
"Add-on software, which is a subset of product revenue, was 18% of total revenue. However, revenue from software maintenance and entitlements, which is a deferred revenue element, was at a record high of $165.0 million, or 19% of total revenue.
"Software E&M was up 5% sequentially and 21% year-over-year. Total software, the combination of add-on software and software E&M, was 36% of total revenue compared to 37% in Q3 and 38% in Q4 of last year.
"Revenue from services was also a record $210.0 million and 24% of total revenue, up almost 11% sequentially and up 22% over Q4 last year. Services revenues are comprised primarily of hardware maintenance, support, and professional services.
"Revenue from service maintenance contracts was another deferred
revenue element and was almost 60% of our services revenue category
this quarter. In Q4 it increased 9% sequentially and 25%
year-over-year. Professional services increased 14% sequentially and
14% over last year."
Thomas Georgens, president and COO:
"Our indirect channel was 68% of the total, down 1% year-over-year. Arrow and Avnet each contributed about 10% of revenue, totaling almost 21%. Our IBM OEM business was up 22% year-over-year, contributing 4% of revenue.
"From a geographic prospective the mix was almost identical to Q4 of
last year. EMEA revenues were down 3% from last year and contributed
36% of the total. Asia/Pac was down 8% from last year and was 10% of
the total, while the Americas contributed 54% with revenues down 8%
from last year. Within the Americas the federal team contributed 12% of
total revenue, up 2% year-over-year and up a strong 23% sequentially.
"Our mid-range FAS3000 series units were stronger, as a recently refreshed product line gave greater acceptance. 3000 units were about flat year-over-year and up 11% sequentially and contributed 60% of storage systems revenue this quarter.
"The high-end FAS6000 systems were flat sequentially, both in units and revenue, although down 30% year-over-year in units shipped, which seems typical of other high-end storage systems in this environment.
"NetApp NAS now supports about 25% of our VMware deployments and this segment of the business has doubled over last year.
"Orders for the Fibre Channel SAN or an iSCSI component totaled 45%
of our booking this quarter with 32% including Fibre Channel and 19%
including iSCSI. 6% of those orders had overlap including both
protocols.
"Our SANscreen product continues to exceed our expectations, achieving over 140% of its bookings goal in its first full year as part of the NetApp product family.
"Our V-series platform had its fourth record quarter in a row as our sales force increasingly uses it to break into new accounts especially to deploy the solution in front of their existing conventional EMC, HP, and Hitachi infrastructures to achieve functionality and efficiencies not available from those legacy architectures.
"There is a remarkable 71% dedupe attach rate to our v-series
products as customers can instantly recoup their investments in a
V-series through storage reclamation.
"Our storage efficiency technologies, such as deduplication with over
37,000 licenses downloaded, as well as thin provisioning and virtual
cloning, all dramatically reduce the cost of storage."
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