Sunnyvale, Calif.-February 16,
2011-NetApp (NASDAQ: NTAP) today reported results for the
third quarter of fiscal year 2011, which ended January 28, 2011.
Revenues for the third quarter of fiscal year 2011 totaled $1.268
billion compared to revenues of $1.012 billion for the same period
a year ago, an increase of 25% year over year.
For the third quarter of fiscal year 2011,
GAAP net income was $172 million, or $0.42 per share, compared to GAAP net income of
$108 million, or $0.30 per share, for the same period a year ago.
Non-GAAP net income for the third quarter of fiscal year 2011 was
$211 million, or $0.52 per share, compared to non-GAAP net income of $144 million,
or $0.40 per share for the same period a year ago.
Revenues for the first nine months of fiscal
year 2011 totaled $3.613 billion compared to revenues of $2.760
billion for the first nine months of the prior fiscal year, an
increase of 31% year over year.
GAAP net income for the first nine months of
fiscal year 2011 totaled $479 million, or $1.23 per share, compared
to GAAP net income of $255 million, or $0.73 per share for the
first nine months of the prior fiscal year. Non-GAAP net income for
the first nine months of fiscal year 2011 totaled $596 million, or
$1.53 per share, compared to non-GAAP net income of $350 million,
or $1.00 per share for the first nine months of the prior fiscal
"NetApp demonstrated momentum in the market
again this quarter, with product revenue growth of 32% year over
year, strong gross margins, and continued market share gains. As
customers move toward the next generation IT infrastructure,
NetApp's innovation leadership is enabling compelling business
outcomes for our customers and propelling our rapid growth," said
Tom Georgens, president and CEO. "Our recent product launch further
enhanced our competitive position and significantly surpassed our
expectations. We have experienced the fastest uptake for a new
product in the history of the company and as a result, demand has
exceeded the available supply of our new FAS3200 systems. We pride
ourselves on our ability to execute this business with precision,
even in the face of exceptionally rapid growth. We are committed to
catching up to the demand as quickly as possible."
- NetApp estimates revenue for the fourth quarter of fiscal year
2011 to be approximately $1.380 billion, plus or minus 2%, which
equates to approximately 7% to 11% sequential revenue growth and
approximately 15% to 20% year over year revenue growth.
- NetApp estimates that fourth quarter fiscal year 2011 GAAP
earnings per share will be approximately $0.38 to $0.42 per share.
NetApp estimates that the fourth quarter fiscal year 2011 non-GAAP
earnings per share will be approximately $0.49 to $0.53 per
- NetApp estimates that share count for the fourth quarter of
fiscal year 2011 will increase to approximately 414 million shares,
including an estimated 18 million shares from the company's
outstanding convertible notes and 12 million shares from outstanding warrants.
Share count does not include the company's outstanding note hedges
that are expected to offset 80% of the dilution from the
convertible notes at maturity or conversion, which would equate to
an offset of approximately 14 million shares if the conversion or
maturity occurred in the third quarter.
In the third quarter of fiscal year 2011, NetApp announced its
biggest product launch in the company's history, aimed at enabling
customers to address today's evolving business requirements by
moving to a flexible and efficient shared IT infrastructure.
Additionally, NetApp and its executives received several noteworthy
industry honors and the company once again was named one of the
best places to work in the country. Key business highlights include
NetApp Paves the Way for Customers to
Make the Transition to a Shared IT Infrastructure and Capitalize on
New Growth Opportunities
- NetApp delivers the foundation for flexible and efficient
shared IT infrastructures. With the biggest product launch in its
history, NetApp unveiled enhancements to the NetApp Data
ONTAP® operating system that enable greater flexibility,
efficiency, scalability, and performance. NetApp also introduced
the NetApp FAS/V6200 series of high-end storage systems and
FAS/V3200 series of midrange storage systems, both built on unified
architectures and able to help customers respond to the rapid
growth and pace of business. Additional launch components included
the OnCommand™ Management Software Suite, a SAS disk shelf,
and new solid-state drives.
- NetApp, Cisco, and VMware enable customer transformation to a
virtualized, shared IT infrastructure. Highlighting their ongoing
collaboration, NetApp, Cisco, and VMware unveiled FlexPod™
for VMware, a unified, pretested, and validated shared
infrastructure that can scale easily, be optimized for a variety of
mixed application workloads, or be configured for virtual desktop
or server infrastructure, secure multi-tenancy, or cloud
environments. The three companies are working closely with leading
channel partners to help customers take advantage of FlexPod for
VMware to transform to a more efficient and flexible data center
- NetApp acquired Akorri Networks, Inc., a privately held company
headquartered in Littleton, Massachusetts. Akorri's technology will
enable NetApp to provide customers with comprehensive tools to
automate and analyze their shared IT infrastructures, efficiently
deliver on service levels, and respond to rapidly changing business
Milestones and Awards
- NetApp named one of the Best Places to Work. NetApp was ranked
#5 on FORTUNE magazine's "100 Best Companies to Work For"
list for 2011, marking its third consecutive year in the top 10 and
the fifth consecutive year in the top 15. NetApp also ranked #2 on
Crain's New York Business's annual "Best Places to Work in
New York City" list for 2010. Both honors are a testament to
NetApp's model company approach, strong culture, and talented
- NetApp executives among most influential. Tom Georgens,
president and CEO, and Julie Parrish, vice president of Global
Partner Sales, were named two of the Top 100 Most Influential
Executives in the industry by Everything Channel's CRN magazine.
Georgens was included on the 25 Most Innovative Executives list for
his leadership and focus on storage technology innovation and
unparalleled channel commitment. Parrish was included on the Top 25
Channel Sales Leaders list for her role in increasing NetApp's
global sales through its partner ecosystem.
- NetApp positioned in Leaders quadrant. Gartner, Inc., placed
NetApp in the Leaders quadrant for midrange and high-end modular
disk arrays. Gartner asserted that vendors in the Leaders quadrant
"have the highest scores in their ability to execute and
completeness of vision."
Webcast and Conference Call
The NetApp third quarter fiscal year 2011 results conference call
will be broadcast live on the Internet at investors.netapp.com on
Wednesday, February 16, 2011, 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. An audio replay Webcast
will also be available after 4:00 p.m. Pacific time on our Web
NetApp uses a hybrid format for disclosing
key financial information associated with our quarterly results.
Concurrent with the press release, NetApp posts a separate document
with financial commentary and statistics. This supplemental
commentary is available prior to the conference call in order to
provide the investment community with additional time to analyze
our results. The supplemental commentary will be posted to our Web
site at investors.netapp.com and will not
be read during the earnings call.
NetApp creates innovative storage and data management solutions
that deliver outstanding cost efficiency and accelerate business
breakthroughs. Discover our passion for helping companies around
the world go further, faster at www.netapp.com/it.
NetApp, the NetApp logo, Go further, faster,
Data ONTAP, FlexPod, and OnCommand 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.
"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, share count,
and metrics for the fourth quarter of fiscal year 2011;
expectations regarding our recent new product introductions and
acquisitions, and our partnerships and strategic alliances; and the
benefits that we expect our customers to realize from using our
products and from our strategic alliances and partnerships. 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, but are not limited to,
customer demand for our products and services including our recent
new product introductions; our ability to increase revenue and
manage our operating costs; our reliance on a limited number of
suppliers; our ability to accurately forecast demand for our
products; increased competition risks associated with the
anticipated growth in networked storage market; general economic
and market conditions; our ability to deliver new product
architectures and enterprise service offerings; our ability to
design products and services that compete effectively from a price
and performance perspective; 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 Annual and Quarterly Reports on Forms
10-K and 10-Q, respectively. We disclaim any obligation to update
information contained in these forward-looking statements whether
as a result of new information, future events, or otherwise.
NetApp Usage of Non-GAAP
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 ongoing
operational performance. Non-GAAP net income excludes the
amortization of intangible assets, stock-based compensation
expenses, acquisition related income and expenses, restructuring
and other charges, asset impairments, non-cash interest expense
associated with our convertible debt, net losses or gains on
investments, and our GAAP tax provision, but includes a non-GAAP
tax provision based upon our projected annual non-GAAP effective
tax rate for the first three quarters of the fiscal year and an
actual non-GAAP tax provision for the fourth quarter of the fiscal
year. 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 are used
to: (1) measure company performance against historical results, (2)
facilitate comparisons to our competitors' operating results, and
(3) allow greater transparency with respect to information used by
management in financial and operational decision making. In
addition, these non-GAAP financial measures are used to measure
company performance for the purposes of determining employee
incentive plan compensation. 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.
GAAP earnings per share is calculated using the diluted number of
shares for all periods presented.
 Non-GAAP net income
excludes the amortization of intangible assets, stock-based
compensation expenses, acquisition related income and expenses,
restructuring and other charges, asset impairments, non-cash
interest expense associated with our convertible debt, net losses
or gains on investments, and our GAAP tax provision, but includes a
non-GAAP tax provision based upon our projected annual non-GAAP
effective tax rate for the first three quarters of the fiscal year
and an actual non-GAAP tax provision for the fourth quarter of the
fiscal year. Non-GAAP earnings per share is calculated using the
diluted number of shares for all periods presented.
 80% hedged on maturity
or conversion of the convertible notes.
 "Magic Quadrant for
Midrange and High-End Modular Disk Arrays" by Roger Cox, Stan
Zaffos, Pushan Rinnen, and Jimmie Chang, November 2010.