NetApp: Fiscal 1Q23 Financial Results

1FQ23 highlights:
• Record for billings, revenue, gross profit dollars, operating income, and EPS
• Net revenues grew 9% Y/Y to $1.59 billion, 13% in constant currency
• Product revenue grew 8% Y/Y to $786 million, the 6th consecutive quarter of Y/Y growth
• Billings were $1.56 billion, an increase of 13% Y/Y, 18% in constant currency
• NetApp Public Cloud annualized revenue run rate (ARR) increased 73% Y/Y to $584 million
• AFA ARR4 increased 7% Y/Y to $3.0 billion
• $460 million returned to shareholders in share repurchases and cash dividends

NetApp Inc. reported financial results for the first quarter of fiscal year 2023, which ended on July 29, 2022.

“We delivered a great start to the year, fueled by broad-based demand across our portfolio and geographies, setting all-time 1Q company highs for billings, revenue, gross profit dollars, operating income and EPS,” said CEO George Kurian. “Our solutions are aligned with our customer’s top priorities helping them reduce cost, risk and complexity for their digital and cloud transformations. This is evidenced by the strong growth of our revenue, billings and profitability.”

1FQ23 financial results
• Net revenues: $1.59 billion, compared to $1.46 billion in 1FQ22

• Hybrid cloud segment revenue: $1.46 billion, compared to $1.38 billion in 1FQ22
• Public cloud segment revenue: $132 million, compared to $79 million in 1FQ22

• Net income: GAAP net income of $214 million, compared to $202 million in 1FQ22; non-GAAP net income of $269 million, compared to $263 million in 1FQ22
• Earnings per share: GAAP net income per share6 of $0.96, compared to $0.88 in 1FQ22; non-GAAP net income per share of $1.20, compared to $1.15 in 1FQ22
• Cash, cash equivalents and investments: $3.44 billion at the end of 1FQ23
• Cash provided by operations: $281 million, compared to $242 million in 1FQ22
• Share repurchase and dividends: Returned $460 million to shareholders through share repurchases and cash dividends

Financial guidance for 2FQ23:

• Net revenues expected in the range of $1.595 billion to $1.745 billion
• Earnings per share is to be in the range of $0.93-$1.03 (GAAP) and $1.28-$1.38 (non GAAP)

FY23 outlook

• Net revenues expected to grow in the range of 6% to 8%
• Public cloud ARR is expected to exit the fiscal year in the range of $780 million to $820 million
• Consolidated gross margins in the range of 65%-66% (GAAP) and 66%-67% (non-GAAP)
• Operating margins in the range of 18%-19% (GAAP) and 23%-24% (non-GAAP)
• Earnings per share in the range of $4.09-$4.29 (GAAP) and $5.40-$5.60 (non-GAAP)

Dividend
The next cash dividend of $0.50 per share is to be paid on October 26, 2022, to shareholders of record as of the close of business on October 7, 2022.