NetApp Announces Results for First Quarter of Fiscal Year 2010
Sunnyvale, Calif. - August 19, 2009 --
NetApp (NASDAQ: NTAP) today reported results for the first quarter
of fiscal year 2010, which ended July 31, 2009. Revenues for the
first fiscal quarter of 2010 were $838 million, down 4% compared to
revenues of $869 million for the same period a year ago.
For the first fiscal quarter of 2010, GAAP
net income was $52 million, or $0.15 per share1 compared
to GAAP net income of $35 million, or $0.10 per share for the same
period in the prior year. Non-GAAP2 net income for the
first fiscal quarter of 2010 was $76 million, or $0.22 per share,
compared to non-GAAP net income of $76 million, or $0.22 per share
for the same period a year ago.
"Given the economic backdrop, NetApp
performed well in the first quarter. With year over year revenue
growth roughly flat on a constant currency basis, our revenue
performance clearly outpaced the storage industry at large," said
Tom Georgens, president and chief executive officer. "Our operating
income and operating margin both increased year over year, and we
produced our highest gross margin percentage in over five
years."
"Today we are also announcing that Tom
Georgens, NetApp's president and chief operating officer, is
succeeding me as CEO in the culmination of a management succession
process. Over the past four years, he has proven his leadership
capabilities in both strategy development and day-to-day
operations," said Dan Warmenhoven, executive chairman. "His
appointment represents a continuity in leadership at NetApp. The
company is well positioned and I look forward to supporting Tom as
he leads NetApp to the next stages of growth."
Outlook
Given the reduced visibility caused by the recent changes in the
macroeconomic environment, NetApp will not be providing revenue
guidance for the second quarter of fiscal year 2010.
- NetApp estimates non-GAAP gross margins for the second quarter
of fiscal year 2010 to be between 62.5% and 63.0%.
- NetApp estimates non-GAAP operating expense levels for the
second quarter of fiscal year 2010 to be in a range of about $425
million.
- NetApp estimates non-GAAP other income for the second quarter
of fiscal year 2010 to remain at similar levels to those reported
in the first quarter of fiscal year 2010.
Quarterly Highlights
In the first quarter of fiscal year 2010, NetApp introduced several
new products, solutions, and partner program enhancements to help
customers transform their data center architectures to achieve
greater storage efficiency, power, and space savings through
innovative data management techniques. NetApp also received
numerous industry accolades, including seven global awards for
being one of the best places to work.
For the quarter, NetApp customers continue to
adopt deduplication at a rapid pace. With unique NetApp®
technology, customers are able to eliminate redundant data across
all tiers of storage, allowing them to combat data proliferation
while creating a more efficient storage infrastructure. More than
7,200 NetApp customers have activated deduplication on over 37,000
systems, representing 514PB in usable storage capacity.
During the quarter, NetApp introduced System
Manager to expand its manageability software offerings with a
solution that enables storage experts and non-storage experts to
easily leverage NetApp's proven storage efficiency technologies,
such as deduplication and thin provisioning, to achieve greater
cost savings and performance improvements. In addition, NetApp's
existing manageability products, which include Operations Manager,
Protection Manager, and Provisioning Manager, now support a wider
range of NetApp storage efficiency features. This enables customers
managing a large number of NetApp systems to automatically
configure and deploy different storage efficiency technologies
across their entire enterprise environment.
This quarter, NetApp announced the
availability of the first consolidated reference guide for a
2,000-seat pool of desktops (POD)-based architecture to help
customers deploy VMware® View on NetApp and Cisco Nexus
infrastructures. The guide provides customers with the framework to
deploy their own integrated desktop virtualization solutions
quickly and cost-effectively and to easily scale incrementally to
meet ever-changing business needs.
NetApp also unveiled new program enhancements
for its reseller partners. The NetApp Partner Program, formerly
known as the VIP Program, continues to build on the channel program
initiatives for which NetApp has become known over the years, with
new investments in infrastructure and enablement tools to help make
doing business with NetApp easier for partners. In addition, the
NetApp Partner Program now officially encompasses all indirect
selling partner types, including NetApp's OEM partners, to align
all indirect efforts under one global program. The new program
enhancements include NetApp Field Portal, Campaign Express, and the
NetApp GetSuccessful™ Partner Enablement Program.
Separately, NetApp also offered channel
resellers specialized training and accreditation for
Microsoft® virtualization environments by expanding its
Virtualization Specialization Program to include Windows®
Server 2008 R2 Hyper-V™ technology. Now NetApp resellers can
provide their customers with greater value and expertise with
Hyper-V and NetApp solutions.
Finally, in addition to NetApp's various
solution and partner announcements during the quarter, the company
received the following awards and industry recognition:
- Microsoft 2009 Storage Solutions Partner of the
Year: NetApp was named the Microsoft 2009 Partner of the
Year in the Advanced Infrastructure, Storage Solutions category.
This award reflects NetApp's long-standing partnership with
Microsoft and its commitment to and success helping Microsoft
customers do more with less in Microsoft Exchange, SharePoint®
Server, SQL Server®, and Hyper-V environments.
- Best Companies to Work for Awards: In addition
to NetApp U.S. being named number one in FORTUNE magazine's 2009
"Best Companies to Work For" list in January 2009, the company also
ranked in the top 15 in the following regional and global areas:
- D.C. Area: Number two in the Best Place to
Work in the D.C. Area by the Washington Business
Journal
- Australia: Number two in the "2009 Best
Companies" list compiled by the Great Place to Work® Institute
Australia
- United Kingdom: Number four in the UK's "50
Best Workplaces"
- India: Number nine in India's "Best Companies
to Work For"
- Germany: Number nine in the "Best Workplaces
in Germany" by the Great Place to Work Institute Germany
- Europe: Number 11 in the "50 Best Large
Workplaces in Europe"
- Netherlands: Number 11 in the "25 Best Places
to Work" by the Great Place to Work Institute Netherlands
- CIO 100 Award Honorees: IDG's CIO magazine
awarded NetApp a 2009 CIO 100 award, which recognizes organizations
around the world that exemplify the highest level of operational
and strategic excellence in information technology.
- 2009 Uptime Institute Global Green 100 List:
NetApp was named to the Global Green 100 List for 2009 by the
Uptime Institute in recognition of its integral commitment to and
progress toward reducing its energy consumption and carbon
footprint.
- Service Capability & Performance (SCP)
Standards: NetApp's Technical Support Center achieved
certification under the prestigious Service Capability &
Performance Standards after an extensive audit of its Research
Triangle Park, North Carolina, support center.
Webcast and Conference Call
Information
The NetApp quarterly results conference call will be broadcast live
on the Internet at http://investors.netapp.com on
Wednesday, August 19, 2009, at 2:00 p.m. Pacific Time. This press
release and any other information related to the call will also be
posted on the Web site at that location.
The conference call will also be available
live in a listen-only format at (866) 272-9941 in the United States
and (617) 213-8895 outside the United States. The pass code for
both numbers is 36316245.
A replay will be available for 72 hours
following the completion of the live call by dialing (888) 286-8010
in the United States and (617) 801-6888 outside the United States,
using replay code 96418102. The Webcast replay will be posted on
our Web site for at least one year.
About NetApp
NetApp creates innovative storage and data management solutions
that accelerate business breakthroughs and deliver outstanding cost
efficiency. Discover NetApp's passion for helping companies around
the world go further, faster at www.netapp.com.
"Safe Harbor" Statement Under U.S.
Private Securities Litigation Reform Act of 1995
This press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
These statements include all of the statements under the Outlook
section relating to our forecasted operating results and metrics
for the second quarter of fiscal year 2010 and the benefits that we
expect our customers to realize from using our products. These
forward-looking statements involve risks and uncertainties, and
actual results could vary. Important factors that could cause
actual results to differ materially from those in the
forward-looking statements include the material and adverse global
economic and market conditions that currently exist and that are
expected to persist throughout calendar 2009; our ability to build
non-deferred backlog to levels consistent with our past results and
to increase our revenue over the next several quarters; risks
associated with the anticipated growth in network storage and
content delivery markets; our ability to deliver new product
architectures and enterprise service offerings; competition risks,
including our ability to design products and services that compete
effectively from a price and performance perspective; risks with
new product introductions; our reliance on a limited number of
suppliers; our ability to accurately forecast demand for our
products and successfully manage our relationships with our
contract manufacturers; our ability to expand our direct sales
operations and reseller distribution channels; our ability to
develop, maintain, and strengthen our relationships and product
offerings with strategic partners; risks associated with
international operations; our ability to successfully acquire and
integrate complementary businesses and technologies; foreign
currency exchange rate fluctuations; and other important factors as
described in NetApp reports and documents filed from time to time
with the Securities and Exchange Commission (SEC), including the
factors described under the sections captioned "Risk Factors" in
our most recently submitted 10-K. We disclaim any obligation to
update information contained in these forward-looking statements
whether as a result of new information, future events, or
otherwise.
1 Earnings per share is calculated
using the diluted number of shares for all periods presented.
2 Non-GAAP results of operations exclude the GSA
settlement, amortization of intangible assets, stock-based
compensation expenses, merger termination proceeds (net of related
expenses), restructuring and other charges, non-cash interest
expense associated with the adoption of FSP APB 14-1, net loss on
investments, and our GAAP tax provision, including discrete items,
but includes a proforma tax provision based upon our projected
annual proforma effective tax rate.
NetApp, the NetApp logo Go further, faster,
and GetSuccessful are trademarks or registered trademarks of
NetApp, Inc. in the United States and/or other countries. VMware is
a registered trademark of VMware, Inc. Microsoft, Windows,
SharePoint, and SQL Server are registered trademarks and Hyper-V is
a trademark of Microsoft Corporation. All other brands or products
are trademarks or registered trademarks of their respective holders
and should be treated as such.
NetApp Usage of Non-GAAP
Financials
The Company refers to the non-GAAP financial measures cited above
in making operating decisions because they provide meaningful
supplemental information regarding the Company's operational
performance. Non-GAAP results of operations exclude the GSA
settlement, amortization of intangible assets, stock-based
compensation expenses, merger termination proceeds (net of related
expenses), restructuring and other charges, non-cash interest
expense associated with the adoption of FSP APB 14-1, net loss on
investments, and our GAAP tax provision, including discrete items,
but includes a proforma tax provision based upon our projected
annual proforma effective tax rate. We have excluded these items in
order to enhance investors' understanding of our ongoing
operations. The use of these non-GAAP financial measures has
material limitations because they should not be used to evaluate
our company without reference to their corresponding GAAP financial
measures. As such, we compensate for these material limitations by
using these non-GAAP financial measures in conjunction with GAAP
financial measures.
These non-GAAP financial measures facilitate
management's internal comparisons to the Company's historical
operating results and comparisons to competitors' operating
results. We include these non-GAAP financial measures in our
earnings announcement because we believe they are useful to
investors in allowing for greater transparency with respect to
supplemental information used by management in its financial and
operational decision making, such as employee compensation
planning. In addition, we have historically reported similar
non-GAAP financial measures to our investors and believe that the
inclusion of comparative numbers provides consistency in our
financial reporting at this time.
NetApp Use of Corporate Web
Site
In accordance with SEC guidance published on August 22, 2008
(Release No. 34-58288), NetApp will begin to disseminate
material information about the company through its corporate Web
site within the next several fiscal quarters. NetApp intends to
designate a separate portion of its corporate Web site for purposes
of these disclosures and will include a prominent link on its Web
site to allow visitors to locate this material information, which
will be routinely updated. The Web site will supplement, rather
than replace, NetApp's current existing channels of information
distribution.
Media Contact:
Rachel York
Max Australia
+61 2 9954 3492
rachel.york@maxaustralia.com.au