NetApp Announces Results for First Quarter of Fiscal Year 2009

Q1 Revenues $869 Million, Up 26% Year over Year

Sunnyvale, Calif. - August 13, 2008 -- NetApp (NASDAQ: NTAP) today reported results for the first quarter of fiscal year 2009. Revenues for the first fiscal quarter of 2009 were $869 million, an increase of 26% compared to revenues of $689 million for the same period a year ago.

For the first fiscal quarter of 2009, GAAP net income was $38 million, or $0.11 per share1 compared to GAAP net income of $34 million, or $0.09 per share for the same period in the prior year. Non-GAAP2 net income for the first fiscal quarter of 2009 was $76 million, or $0.22 per share, compared to non-GAAP net income of $76 million, or $0.20 per share for the same period a year ago.

"Our new fiscal year got off to a good start, and our efforts to increase awareness and sales capacity in order to secure new customers are delivering results," said Dan Warmenhoven, chairman and CEO. "Despite economic uncertainty, customers have continued to expand and evolve their storage infrastructure and are looking to NetApp to help them reduce costs and enable new capabilities."

Outlook

  • NetApp estimates revenue for the second quarter of fiscal year 2009 to be between $910 million and $940 million.
  • NetApp estimates that the second quarter of fiscal year 2009 GAAP earnings per share will be approximately $0.16 to $0.19 per share. NetApp estimates second quarter fiscal year 2009 non-GAAP earnings per share to be approximately $0.27 to $0.30 per share.

Quarterly Highlights
In the first quarter of fiscal year 2009, NetApp launched new solutions that continue to help customers transform their data center architectures through higher efficiencies and asset utilization, greater power and space savings, innovative data management techniques, and the ability to reduce redundant data on primary storage with deduplication technology. Recognized by many industry awards, NetApp® solutions continue to be a leader in the storage market in quality and innovation. Industry analyst reports during the quarter confirmed that NetApp continues to grow much faster than the overall storage market.

During the first quarter, NetApp announced the new FAS3100 and V3100 storage system series, Storage Acceleration Appliance, and Performance Acceleration Module which enable customers to achieve such benefits as accelerated time to market, improved engineering productivity, and maximized return on their storage infrastructure.

NetApp also announced that the NetApp V-Series now allows customers who have EMC, Hitachi Data Systems, Hewlett Packard, or other storage systems to deploy NetApp deduplication technology to reduce redundant copies of data on these systems. NetApp deduplication has quickly become one of the fastest growing technologies in the company's history.

Also during the quarter, NetApp expanded its portfolio of storage and data management solutions for virtualized IT environments that include Microsoft® Windows® Server 2008, Microsoft SQL Server™ 2008, Exchange Server 2007, and Microsoft Hyper-V. NetApp also added the availability of the SANscreen® product suite, which was acquired in the acquisition of Onaro, to its global sales and channel partner programs.

NetApp continues to focus on expanding its worldwide channel strategy, programs, and best practices by rolling out the fiscal year 2009 VIP Program worldwide. This partner program demonstrates NetApp's commitment to building upon its strong relationships with partners by enhancing key initiatives such as services and technology specialization programs.

NetApp products and solutions continue to be rated highly by third parties. During the quarter, NetApp received the following awards: Diogenes Labs-Storage Magazine Quality Awards III (Storage), 2008 "Products of the Year" (eWeek Channel Insider), 2008 ServerWatch Product Excellence Awards (ServerWatch), 2008 Tomorrow's Technology Today Award (Info Security Products Guide), and 2008 Service and Support Professionals Association (SSPA) STAR Award.

NetApp continued to gain momentum in the storage software market. According to IDC's Worldwide Quarterly Storage Software Tracker Q1 2008,3 NetApp grew more than twice as fast as the storage software market year over year. Also according to IDC, NetApp maintained the number-two market share position in the storage replication software market and continued to close the gap on the market leader. NetApp gained share in the storage replication market and grew fastest among the top five vendors year over year.

NetApp gained share in the networked storage market (which includes FC SAN, NAS, and iSCSI) in first quarter of calendar year 2008 in both revenue and capacity shipped, as reported in IDC's Worldwide Quarterly Disk Storage Systems Tracker Q1 2008.4 According to IDC, NetApp share gains moved the company from the fourth position in the networked storage market to tying for the number-two slot, growing to a 12.0% share in the first quarter of calendar year 2008, up from a 10.1% share in fourth quarter of calendar year 2007.

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 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) 761-0748 in the United States and (617) 614-2706 outside the United States. The pass code for both numbers is 70851753.
  • 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 18417320. 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 2009, and statements regarding the performance of our product and service offerings, relative to our competitors' product and service offerings. 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 nondeferred 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, net gain or loss on investments, 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 first quarter of calendar year 2008.
4 IDC Worldwide Quarterly Disk Storage Systems Tracker first quarter of calendar year 2008.

NetApp, the NetApp logo, Go further, faster, and SANscreen are trademarks or registered trademarks of NetApp, Inc. in the United States and/or other countries. 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. These non-GAAP results of operations exclude amortization of intangible assets, stock-based compensation expenses, acquisition-related retention costs, net gain or loss on investments, 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