NetApp: Fiscal 4Q10 Financial Results

NetApp, Inc. reported results for the fourth fiscal quarter and fiscal year 2010, which ended April 30, 2010.

Revenues for the fourth fiscal quarter of 2010 totaled $1.17 billion compared to revenues of $880 million for the same period one year ago.

For the fourth fiscal quarter, GAAP net income was $145 million, or $.40 per share compared to GAAP net income of $68 million, or $0.21 per share for the same period in the prior year. Non-GAAP net income for the fourth fiscal quarter was $183 million, or $0.50 per share, compared to non-GAAP net income of $103 million, or $0.31 per share for the same period a year ago.

For fiscal year 2010, GAAP and non-GAAP revenues totaled $3.93 billion, an increase of 15% compared to GAAP revenues of $3.41 billion and an increase of 11% compared to non-GAAP revenue of $3.54 billion for fiscal year 2009. For fiscal year 2010, GAAP net income was $400 million, or $1.13 per share, compared to GAAP net income of $65 million, or $0.19 per share for fiscal year 2009. Non-GAAP net income for fiscal year 2010 was $533 million, or $1.51 per share, compared to non-GAAP net income of $364 million, or $1.09 per share for fiscal year 2009.

"With 50% growth in product revenue this quarter, NetApp significantly outperformed the competition. With accelerating revenue growth every quarter, we culminated our fiscal year with record levels of revenue, earnings per share, and free cash flow," said Tom Georgens, president & CEO. "The server virtualization and cloud computing trends are driving significant business for us, as our competitive advantages in those areas lead more customers to choose NetApp storage efficiency solutions for larger and larger data center projects."

Outlook

• NetApp estimates revenue for the first quarter of fiscal year 2011 to be in the range of $1.10 billion to $1.14 billion.
• NetApp estimates share count for the first quarter of fiscal year 2011 to increase by about 6 million shares.
• NetApp estimates that the first quarter of fiscal year 2011 GAAP earnings per share will be approximately $0.31 to $0.35 per share. NetApp estimates that the first quarter fiscal year 2011 non-GAAP earnings per share will be approximately $0.43 to $0.47 per share.

Business Highlights
In the fourth quarter of fiscal year 2010, NetApp expanded key partnerships and introduced new solutions to enable customers’ virtualization and cloud-based infrastructures, as well as help service providers deliver compelling cloud services for enterprise information technology. NetApp also reached several significant milestones during the quarter related to the adoption and deployment of its storage solutions. In addition, several new customer deployments demonstrated how NetApp storage efficiency technologies can help customers reach never-before-seen levels of efficiency. Key business highlights included the following.

New Solutions and Expanded Partnerships

• New service provider solutions. NetApp unveiled new design guides and capabilities geared specifically for service providers that will help them deliver greater value to their cloud customers. NetApp service-oriented infrastructure, data protection as a service, backup and recovery as a service, and NetApp Open Management will help service providers differentiate their cloud services, accelerate their services’ time to market, and achieve industry-leading cost and service-level benefits.
• CA, Inc. and NetApp build solutions for cloud infrastructures. CA and NetApp extended their multiyear solutions partnership to develop management solutions for public and private cloud environments. The companies will integrate CA Spectrum Automation Manager, CA Spectrum Service Assurance, CA Spectrum Infrastructure Manager, and CA eHealth Performance Manager with NetApp’s storage management solutions, including NetApp Provisioning Manager and NetApp SANscreen.
• NetApp, Brocade, Emulex, and VMware expand options for FCoE and DCB customers. NetApp will resell a new Converged Network Adapter from Emulex, and is among the first storage vendors to support VMware vSphere 4 in a Fibre Channel over Ethernet (FCoE) host environment. NetApp also augmented its FCoE portfolio from Brocade and introduced a DCB-only version of the Brocade 8000. Now customers have even more options to build complete end-to-end FCoE infrastructures and unify their Ethernet and Fibre Channel architectures.

Milestones and Awards

• NetApp reaches milestone of 150,000 unified storage systems deployed. This historic milestone underscores NetApp’s long standing commitment and significant industry innovation in making unified storage a reality for customers. Customers worldwide are leveraging NetApp’s unified storage solutions to simplify operations, achieve business breakthroughs, increase productivity, and recognize significant cost savings.
• NetApp gains leadership in SAN market and reaches significant milestone with more than 30,000 deployments worldwide. NetApp has more than doubled its SAN business in just two years by providing customers with an impressive list of technologies and maximizing strong solution partnerships with companies such as Brocade, Cisco, Microsoft, and VMware. According to IDC’s Worldwide Quarterly Disk Storage Systems Tracker, Q3 2009, NetApp grew faster than the FC SAN market year over year.
• Customers help NetApp pass milestone of 5,000 V-Series units shipped. Customers made V-Series one of NetApp’s fastest growing products, with 70% year-over-year growth and more than 5,000 units shipped. More customers are turning to NetApp V-Series to unify their non NetApp storage environments and increase efficiency, reduce costs, and improve data protection.
• NetApp positioned in Leaders Quadrant in top analyst firm’s Magic Quadrant. Gartner, Inc. positioned NetApp in the Leaders Quadrant for Midrange and High-End NAS Solutions. NetApp NAS solutions are built on a unified storage platform, providing customers of all sizes with increased flexibility and performance along with industry-leading storage efficiency capabilities.
• NetApp ranked #2 on Best Workplaces in Canada list. NetApp was ranked #2 on the Best Workplaces in Canada list for 2010 and was also recognized as the top workplace in Canada in the Respect category. NetApp now ranks in the top 20 places to work in 9 different regions, including #7 in the United States.

Mergers and Acquisitions
NetApp acquires Bycast. On May 13, 2010, NetApp completed its acquisition of Bycast Inc., a privately held company headquartered in Vancouver, British Columbia, Canada, in an all-cash transaction. Bycast extends NetApp’s leadership position in unified storage by adding an object-based storage software offering.

Businesses Built on NetApp

• Weta Digital, a world leader in visual effects, relied on NetApp storage in the production of the record-breaking film Avatar. NetApp helped reduce Weta’s data management overhead by 95% and increase its storage price-to-performance ratio by 40%.
• J&B Group turned to NetApp for its storage to support its perishable foods production and distribution business. NetApp’s storage efficiency technology helped increase utilization to 67%, and storage requirements for VMware virtual servers dropped from 4.5TB to 1.5TB, a 66% reduction.
• The College of Saint Rose implemented NetApp and VMware virtualization solutions to tackle the challenges of data growth, availability, and reliability. NetApp thin provisioning and deduplication technologies helped improve the college’s storage efficiency, increasing utilization rates by up to 85% and deferring $134,000 in hardware costs each year.