NetApp: Fiscal 2Q11 Financial Results

NetApp, Inc. reported results for the second quarter of fiscal year 2011, which ended October 29, 2010.

Revenues for the second fiscal quarter of 2011 totaled $1.207 billion compared to revenues of $910 million for the same period a year ago, an increase of 33% year over year.

For the second quarter of fiscal year 2011, GAAP net income was $165 million or $0.42 per share compared to GAAP net income of $96 million, or $0.27 per share for the same period a year ago. Non-GAAP net income for the second quarter of fiscal year 2011 was $203 million, or $0.52 per share, compared to non-GAAP net income of $130 million, or $0.37 per share for the same period a year ago.

Revenues for the first six months of fiscal year 2011 totaled $2.345 billion compared to revenues of $1.748 billion for the first six months of the prior fiscal year, an increase of 34% year over year.

GAAP net income for the first six months of fiscal year 2011 totaled $306 million, or $0.80 per share, compared to GAAP net income of $147 million, or $0.43 per share for the first six months of the prior fiscal year. Non-GAAP net income for the first six months of fiscal year 2011 totaled $385 million, or $1.01 per share, compared to non-GAAP net income of $206 million, or $0.60 per share for the first six months of the prior fiscal year.

"NetApp produced 49% year over year growth in product revenue and our highest non-GAAP operating margin in over a decade, while simultaneously investing aggressively in our future," said Tom Georgens, president and CEO of NetApp. "Last week, the NetApp team delivered the most comprehensive product launch in our history. By offering customers a more flexible and efficient alternative to traditional storage, NetApp further strengthened our leadership position as the platform of choice for the next generation of IT infrastructure."

Outlook

• NetApp estimates revenue for the third quarter of fiscal year 2011 to be in the range of $1.240 billion to $1.290 billion, which equates to approximately 3% to 7% sequential revenue growth and approximately 23% to 28% year over year revenue growth.
• NetApp estimates that third quarter fiscal year 2011 GAAP earnings per share will be approximately $0.39 to $0.41 per share. NetApp estimates that the third quarter fiscal year 2011 non-GAAP earnings per share will be approximately $0.48 to $0.50 per share.
• NetApp estimates share count for the third quarter of fiscal year 2011 will increase to approximately 408 million shares, including an estimated 16.9 million shares from the Company’s outstanding convertible notes(3) and 9.9 million shares from outstanding warrants. Share count does not include the Company’s outstanding note hedges that are expected to offset 80% of the dilution from the convertible notes at maturity or conversion, which would equate to an offset of approximately 13.5 million shares if the conversion or maturity occurred in the third quarter.

Business Highlights
In the second quarter of fiscal year 2011, NetApp introduced new solutions and expanded support and integration with key partners such as VMware to help customers accelerate their move to a more integrated, efficient, and flexible shared IT infrastructure. In addition, NetApp achieved several milestones and was honored as a best place to work and one of the most trusted and strategic IT vendors in the industry. Key business highlights included the following:

NetApp and Partners Deliver Flexible and Efficient IT

• NetApp and VMware improve IT efficiency. NetApp made several announcements with VMware to enable customers to achieve greater efficiency in their virtual environments. NetApp integrated its unified storage technologies with VMware View to help customers enhance storage efficiency and virtual desktop scalability, as well as improve performance levels. NetApp also announced support for VMware vCloud Director software to improve IT flexibility and efficiency and help enterprise customers and service providers to easily and cost-effectively evolve to a cloud service model. In addition, NetApp and VMware unveiled a new solution for midsize enterprises to consolidate and virtualize their Windows environments to deliver enterprise-class IT as a service.
• Fujitsu and NetApp help customers gain greater IT value and efficiency. Fujitsu and NetApp extended their strong, long-standing global partnership to offer a shared portfolio of products to meet the integrated storage needs of their customers. Fujitsu will expand its resale of NetApp unified storage systems to more markets worldwide. In addition, NetApp will resell the Fujitsu ETERNUS CS800 S2 Data Protection Appliance in 22 countries across EMEA.
• NetApp strengthens integration with Symantec to boost customers’ IT efficiency. NetApp integrated its unified storage systems with the Symantec Thin Reclamation API to help SAN customers automatically reclaim storage space and improve overall storage efficiency. Customers can improve planning and reduce their overall IT footprint and management costs.
• NetApp helps EMC and HP customers achieve greater efficiency. NetApp introduced its Zero Investment Promise (ZIP) for Database Promotion to assist EMC and HP customers in achieving greater storage efficiencies in their database environments. The promotion enables EMC and HP customers to reduce storage requirements, improve utilization, and decrease operating costs by engaging in a 90-day, risk-free, zero-investment trial of NetApp V-Series for their database storage infrastructures.

Milestones and Awards

• NetApp customers deploy thousands of systems with Data ONTAP 8. To help transition to a shared IT infrastructure, customers accelerated their adoption of NetApp Data ONTAP 8 by deploying thousands of systems to build flexible, scalable, and efficient shared storage environments that are designed to address today’s business challenges and the future requirements of their businesses.
• NetApp ranked #1 hardware vendor and #2 overall IT vendor. NetApp was ranked as the #1 hardware vendor and #2 (tied with Cisco) overall IT vendor in the 2010 CIO Insight Vendor Value Ratings survey.
• NetApp positioned in Leaders quadrant. Gartner, Inc. positioned NetApp in the Leaders quadrant for Storage Resource Management and SAN Management Software. Gartner asserted that vendors in the Leaders quadrant "have the highest combined measures of Ability to Execute and Completeness of Vision."
• NetApp ranked #1 best place to work. NetApp was ranked #1 on the Triangle Business Journal’s annual ‘Best Places to Work’ in Research Triangle Park (RTP) list for 2010. NetApp received this honor for the Giant Businesses category, which includes companies of 1,000 employees or more; it marks the sixth time that NetApp has made this distinguished list and the second time it has been ranked #1.