NetApp: Fiscal 4Q19 Financial Results

• Net revenue of $1.59 billion for 4FQ19 and $6.15 billion for FY19
• Net revenues for FY19 grew 4% Y/Y
• Product revenue for FY19 grew 7% Y/Y
• AFA revenue for FY19 grew 25% Y/Y
• $2.51 billion returned to shareholders in share repurchases and cash dividends in FY19
• 1FQ20 dividend to increase by 20% to $0.48 per share

NetApp, Inc. reported financial results for the fourth quarter and fiscal year 2019, which ended April 26, 2019.

“Despite the modest shortfall relative to our fiscal year 2019 expectations, we made significant progress in the strategic markets of all-flash, private cloud, and cloud data services. Our Data Fabric strategy clearly differentiates us from our competitors,” said George Kurian, CEO. “Enterprises are choosing NetApp to be a strategic partner in their digital transformations. Our opportunity is large and growing, and we are moving quickly to improve our execution.”

4Q19 Financial Results
• Net Revenue: $1.59 billion, compared to $1.64 billion in 4Q18
• Net Income: GAAP net income of $396 million, compared to GAAP net income of $290 million in 4Q18; non-GAAP net income of $305 million, compared to non-GAAP net income of $307 million in 4Q18
• Earnings per Share: GAAP net income per share of $1.59 compared to GAAP net income per share of $1.06 in 4Q18; non-GAAP net income per share of $1.22, compared to non-GAAP net income per share of $1.12 in 4Q18
• Cash, Cash Equivalents and Investments: $3.9 billion at the end of FY19
• Cash from Operations: $399 million, compared to $494 million in 4Q18
• Share Repurchase and Dividend: Returned $597 million to shareholders through share repurchases and cash dividends

FY19 Financial Results
• Net Revenues: $6.15 billion, increased 4% Y/Y from $5.92 billion in FY18
• Net Income: GAAP net income of $1.17 billion, compared to GAAP net income of $116 million in FY18; non-GAAP net income of $1.17 billion, compared to non-GAAP net income of $983 million in FY18
• Earnings per Share: GAAP net income per share of $4.51, compared to GAAP net income per share of $0.42 in FY18; non-GAAP net income per share of $4.52, compared to non-GAAP net income per share of $3.56 in FY18
• Cash from Operations: $1.34 billion, compared to $1.48 billion in FY18
• Share Repurchase and Dividend: Returned $2.51 billion to shareholders through share repurchases and cash dividends
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1FQ20 Financial Outlook

• Net revenues expected to be in the range of $1.315 billion to $1.465 billion
• GAAP earnings per share expected to be in the range of $0.56-$0.64
• Non-GAAP earnings per share expected to be in the range of $0.78-$0.86

FY20 Financial Outlook

• Net revenues expected to grow at the low-end of mid-single-digit range
• GAAP consolidated gross margins expected to be 63%-64%
• Non-GAAP consolidated gross margins expected to be 64%-65%
• Operating margins expected to be in the range of 20%-21%

Effective tax rate expected to be approximately 19.5% on both a GAAP and non-GAAP basis

Dividend
The company will increase the 1FQ20 dividend by 20% to $0.48 per share. The quarterly dividend will be paid on July 24, 2019, to shareholders of record as of the close of business on July 5, 2019.

4FQ19 Business Highlights
New Products Enable Digital Transformation
• The company announced a variety of new and updated offerings that give customers more flexibility across hybrid multicloud environments for a range of use cases, including FlexPod AI platform; FlexPod for MEDITECH software; NetApp Service Level Manager; and the FlexCache.
• OnCommand Workflow Automation 5.0 makes it easier for customers to automate, monitor, and maintain storage workflows. Changes in the web UI deliver a consistent user experience across OnCommand System Manager, Unified Manager, and Workflow Automation, resulting in improved simplicity and efficiency.
Industry-Leading Strategic Partnerships
• Intel Optane DC Persistent Memory and NetApp Memory Accelerated Data extended their partnership to help customers realize the promise of solutions that offer shorter time to results with their data.
• The firm partnered with H2O.ai and integrated NetApp Cloud Volumes Service, a cloud-native file storage service. H2O Driverless AI provides a platform for customers to collaborate, scale, and deploy AI solutions more quickly.
• Texas-based Soccour Solutions received HCI Champion Partner status after it embraced NetApp HCI as part of its customer offerings.
Industry Recognition
• NetApp was named 2018 Google Cloud Technology Partner of the Year for Infrastructure at the Google Cloud Next 2019 Partner Summit.
• It was awarded Brand of the Year by Think Global Awards, which recognizes achievements in promoting an awareness of thinking globally for individuals, communities, start-ups, SMBs, global brands, and large-scale international organizations.