NetApp Announces Results for Third Quarter Fiscal Year 2008
Achieves Record Revenue, Income from
Operations, and Cash Flow from Operating Activities
Sunnyvale, Calif. - February 13, 2008
-- NetApp (NASDAQ: NTAP), the leader in advanced networked
storage solutions, today reported results for the third quarter of
fiscal year 2008. Revenues for the third fiscal quarter were $884.0
million, an increase of 21% compared to revenues of $729.3 million
for the same period a year ago and an increase of 12% compared to
$792.2 million in the prior quarter.
For the third fiscal quarter, GAAP net income was $101.8 million,
or $0.29 per share1 compared to GAAP net income of $66.5
million, or $0.17 per share for the same period in the prior year.
Non-GAAP2 net income for the third fiscal quarter was
$131.7 million, or $0.37 per share, compared to non-GAAP net income
of $111.1 million, or $0.29 per share for the same period a year
ago.
Revenues for the first nine months of the current fiscal year
totaled $2.4 billion, compared to revenues of $2.0 billion for the
first nine months of the prior fiscal year, an increase of 18% year
over year.
GAAP net income for the first nine months of the current fiscal
year totaled $219.9 million, or $0.60 per share, compared to GAAP
net income of $208.1 million, or $0.53 per share for the first nine
months of the prior fiscal year. Non-GAAP net income for the first
nine months of the current fiscal year totaled $324.1 million, or
$0.89 per share, compared to non-GAAP net income of $316.5 million,
or $0.81 per share for the first nine months of the prior fiscal
year.
"By providing customers with the best value in the industry, NetApp
again achieved record financial results this quarter," said Dan
Warmenhoven, chief executive officer. "Through our efforts to
increase our field coverage, expand our product portfolio and
diversify our revenue streams, NetApp continues to grow
significantly faster than the markets we serve."
Outlook
- NetApp expects revenue for the fourth quarter of fiscal year
2008 to be between $915.0 million and $945.0 million, with
year-over-year growth of approximately 14% to 18% and sequential
growth of approximately 3.5% to 7%.
- Including the effect of SFAS123(R) and with current information
and assumptions, the company estimates that the fourth quarter
fiscal year 2008 GAAP earnings per share will be approximately
$0.23 to $0.25 per share.
- NetApp expects fourth quarter fiscal year 2008 non-GAAP
earnings per share to be approximately $0.35 to $0.37 per
share.
Quarterly Highlights
During the third quarter of fiscal year 2008, NetApp broadened its
footprint in the high-end data center market with the introduction
of the new NetApp FAS6000 and V6000 series systems. The new
solutions help maximize application-level availability and high
storage utilization to reduce power, space, and cooling costs.
These features, coupled with the NetApp® unified storage
architecture, offer incredible business value for enterprise
customers.
NetApp also set a new standard for performance this quarter,
proving its systems provide greater value for customer's data
centers, by releasing the independently audited Storage Performance
Benchmark-1st (SPC-1)™ performance results. SPC-1 is a widely
recognized industry standard benchmark for storage system
performance. The SPC-1 results provided a head-to-head comparison
of the NetApp FAS3040 modular storage system and the EMC CLARiiON
CX3 Model 40 storage systems and tested both products on their
overall SAN performance with and without snapshots enabled. In both
cases, the NetApp FAS3040 outshined the EMC CLARiiON CX3-40, and
further validated NetApp as the high-performance leader for
real-world data center deployments featuring value-added data
management and data protection functionality.
During the quarter, NetApp won several awards for its product
innovations. In the United States, the NetApp FAS2020 was named
"Best Unified Storage Solution of the Year," marking the third time
in the last four years that NetApp has been honored by
InfoWorld with a Technology of the Year award. NetApp also
won seven recent awards in China for its FAS, NAS, and disaster
recovery solutions. The NetApp FAS2000 was named Product of the
Year by Dostor.com and Editor's Choice for 2007 by both
China Information World and China Partner World.
The NetApp FAS6080 was named Product of the Year by China
Computerworld and Editor's Choice by Smart Partner.
China Computerworld also awarded NetApp with Solution of
the Year for its disaster recovery offerings.
From a market perspective, NetApp gained share in both the storage
software and hardware markets, as reported in IDC's Worldwide
Quarterly Storage Software Tracker Q3 20073 and
Worldwide Quarterly Disk Storage Systems Tracker Q3
2007.4 In the overall storage software market, NetApp
grew the fastest among the top five leading storage software
providers both sequentially (Q2'07 through Q3'07) and year over
year (Q3'06 through Q3'07). This marks the ninth consecutive
quarter that NetApp has outpaced the storage software market.
NetApp also grew faster than the networked storage market (which
includes SAN, NAS, and iSCSI) both sequentially and year over year,
in both capacity shipped and revenue. NetApp grew FC SAN revenue at
more than four times the rate of the overall FC SAN market and grew
FC SAN capacity at twice the rate of the overall market. This marks
the 15th consecutive quarter that NetApp FC SAN revenue and
capacity grew faster than the market. Demonstrating this market
traction, NetApp in the third quarter reached a significant company
milestone by achieving 15,000 production deployments of NetApp SAN
solutions.
IDC also found that NetApp continued its leadership in the NAS and
iSCSI storage markets in the third quarter. NetApp maintained the
number-one market share positions in capacity shipped for NAS
(38.7%) and in iSCSI for both capacity shipped (28.3%) and revenue
(20.5%).
Also this quarter, NetApp continued its midrange leadership with
the news that it has been positioned by Gartner, Inc., in the
"Leaders" quadrant for midrange enterprise disk arrays in its
research note, "Magic Quadrant for Midrange Enterprise Disk Array,
2H07."5
NetApp also was named by FORTUNE magazine as one of the
"100 Best Companies to Work For" for the sixth consecutive year.
This year, NetApp ranked number 14 on the list as a result of its
ability to deliver world-class solutions, while providing employees
with a workplace environment that encourages creativity,
innovation, team building, and leadership.
And finally, NetApp was honored this quarter by the California
Integrated Waste Management Board's Waste Reduction Awards Program
(WRAP) for its outstanding actions to reduce waste locally and
minimize its global impact on the environment.
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, February 13, 2008, 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) 314-4483 in the United States and (617)
213-8049 outside the United States. The pass code for both numbers
is 69226880.
- 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 76754186. The Webcast replay will be posted on our Web site
for at least one year.
About NetApp
NetApp is a leading provider of innovative data management
solutions that simplify the complexity of storing, managing,
protecting, and retaining enterprise data. Market leaders around
the world choose NetApp to help them reduce cost, minimize risk,
and adapt to change. For solutions that deliver unmatched
simplicity and value, visit us on the web 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 fourth quarter of fiscal year 2008; statements regarding
our growth opportunities; and statements regarding the anticipated
benefits of our products, technologies, and services relative to
the offerings of our competitors. 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 our
ability to build non-deferred backlog to levels consistent with our
past results and to increase our revenue over the next several
quarters; general economic and industry conditions, including
expenditure trends for storage-related products; 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, including the factors
described under the sections captioned "Risk Factors" in our most
recently submitted 10-K and 10-Q. 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 amortization of
intangible assets, stock-based compensation expenses,
acquisition-related retention costs, gain on sale of investment,
restructuring charges/recoveries, prior acquisition-related costs,
and the related effects on income taxes as well as certain discrete
GAAP provisions for income tax matters recognized ratably for
non-GAAP purposes.
3 IDC Worldwide Quarterly Storage Software Tracker Q3
2007.
4 IDC Worldwide Quarterly Disk Storage Systems Tracker
Q3 2007.
5 Magic Quadrant for Midrange Enterprise Disk Arrays,
2H07, by Stanley Zaffos, Roger W. Cox, and Pushan Rinnen, January
2008.
Network Appliance 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. These non-GAAP results of operations exclude
amortization of intangible assets, stock-based compensation
expenses, acquisition-related retention costs, gain on sale of
investment, restructuring charges/recoveries, prior
acquisition-related costs, and the related effects on income taxes
as well as certain discrete GAAP provisions for income tax matters
recognized ratably for non-GAAP purposes. 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.
Press Contact:
NetApp
Jodi Baumann
Ph: (408) 822-3974
Jodi.Baumann@netapp.com
Investor Contacts:
NetApp
Tara Dhillon
Ph: (408) 822-6909
tara@netapp.com
NetApp
Billie Fagenstrom
Ph: (408) 822-6428
billief@netapp.com