Sunnyvale, Calif.-May 25,
2011 - NetApp (NASDAQ: NTAP) today reported results for
the fourth quarter and fiscal year 2011, which ended April 29,
2011. Revenues for the fourth quarter of fiscal year 2011 totaled
$1.428 billion compared to revenues of $1.172 billion for the same
period one year ago.
For the fourth quarter of fiscal year 2011,
GAAP net income was $160.6 million, or $0.40 per share compared to GAAP net income of
$145.1 million, or $0.40 per share for the same period a year ago.
Non-GAAP net income for the fourth quarter of fiscal year 2011 was
$236.7 million, or $0.59 per share, compared to non-GAAP net income of $183.1
million, or $0.50 per share for the same period a year ago.
Revenues for fiscal year 2011 totaled $5.123
billion compared to revenues of $3.931 billion for fiscal year
2010. GAAP net income for fiscal year 2011 was $673.1 million, or
$1.71 per share, compared to GAAP net income of $400.4 million, or
$1.13 per share for fiscal year 2010. Non-GAAP net income for
fiscal year 2011 totaled $865.7 million, or $2.20 per share,
compared to non-GAAP net income of $533.0 million, or $1.51 per
share for fiscal year 2010.
"NetApp delivered 30% revenue growth, 38%
growth in cash from operations and over $1B in non-GAAP operating
profit during fiscal 2011. We achieved the largest market share
gains in our history and closed a record number of million dollar
deals, demonstrating our momentum in the market as enterprise
customers increasingly choose NetApp as their vendor of choice for
storage virtualization and cloud deployments," said Tom Georgens,
president and CEO. "Together with our partners we create unmatched
IT efficiency and flexibility with innovative solutions that solve
the biggest and hardest problems in accessing and protecting
In the fourth quarter of fiscal year 2011,
NetApp adopted mandatory new accounting standards related to
revenue recognition for transactions originating or materially
modified in fiscal year 2011. We implemented these standards
retrospectively to the beginning of fiscal year 2011; therefore the
full year and previously reported quarterly results for fiscal 2011
have been adjusted to reflect the adoption of these new standards.
An analysis of the impact of the new accounting standards can be
found on page 3 of the Supplemental Commentary and the adjusted
Statements of Operations for prior quarters can be found on page 14
of the Supplemental Commentary and on our website at investors.netapp.com.
- NetApp estimates revenue for the first quarter of fiscal year
2012 to be approximately $1.500 billion, plus or minus 3%, which
equates to approximately 2% to 8% sequential revenue growth and
approximately 26% to 34% year over year revenue growth.
- NetApp estimates that first quarter fiscal year 2012 GAAP
earnings per share will be approximately $0.31 to $0.36 per share.
NetApp estimates that first quarter fiscal year 2012 non-GAAP
earnings per share will be approximately $0.52 to $0.57 per
- NetApp estimates that share count for the first quarter of
fiscal year 2012 will increase to approximately 410 million shares,
including an estimated 16 million shares from the company's
outstanding convertible notes and 9 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.
- The above guidance reflects the new accounting standards
related to revenue recognition.
In its fourth quarter of fiscal year 2011, NetApp continued to
demonstrate its commitment to providing customers and partners with
the solutions and technologies that are foundational to their
success. During the quarter, NetApp entered into a definitive
agreement to purchase the Engenio external storage systems business
from LSI Corporation to enable NetApp to expand its addressable
market and generate greater revenue growth with a strategic storage
platform intended to capitalize on new high-growth opportunities
for big-bandwidth and high-performance applications. Additionally,
NetApp continues to enable enterprises to make the transition to a
flexible and shared IT infrastructure and once again received
numerous awards honoring its product innovation, executive
leadership, and culture. Highlights included the following:
NetApp to Address Emerging,
Fast-Growing Market Segments for Big-Bandwidth and High-Performance
- The purchase of the Engenio external storage systems business
provides NetApp with a storage platform that is complementary to
its existing NetApp® Data ONTAP® platform and is targeted
to address emerging customer needs around big-bandwidth and
high-performance applications such as full-motion video and digital
video surveillance. The purchase will help enable NetApp to
capitalize on the expected growth within this emerging market and
help it further diversify its channels to market through a proven,
mature OEM business.
NetApp Enables Transition to a Shared
- NetApp helps Suncorp Group spark innovation on shared
IT infrastructure. The Suncorp Group, a provider of
diversified financial services and one of Australia's largest
companies, recently made a strategic bet on storage to fuel its
growth and transformation as a company. With NetApp as its storage
foundation, Suncorp migrated 80% of its entire IT environment to a
shared infrastructure, creating a culture of innovation throughout
the company and enabling it to scale rapidly.
- NetApp enables leading service providers to deliver
innovative cloud services. Expanding on its strategy to
broaden and leverage its diverse pathways to reach customers,
NetApp is collaborating with many of its leading service provider
partners to deliver a wide range of innovative cloud services that
help customers make the transition to a flexible and efficient
shared IT infrastructure. These service providers are part of the
industry's first NetApp Partner Program for Service Providers,
which helps partners increase their business and take advantage of
the market shift to cloud services.
Milestones and Awards
- NetApp named one of the Best Places to Work around the
globe. NetApp continued to gain recognition as a "best
place to work," ranking as the #2 best company to work for in
Canada for a second consecutive year and #8 in Japan in the "Fewer
than 250 Employees" category. Both honors are a testament to
NetApp's model company approach, strong culture, and talented
- NetApp gains impressive channel leadership
recognition. NetApp was named a 2011 CRN Channel Champion
in the Enterprise Network Storage category, amplifying the
company's focus on enabling its partners' success. Additionally,
Julie Parrish, senior vice president of Global Partner Sales; Todd
Palmer, vice president of Americas Channels; and David Drahozal,
director of Channel Sales for U.S. Public Sector, were named
Channel Chiefs by Everything Channel's CRN.
- NetApp positioned in Leaders quadrant.
Gartner, Inc. placed NetApp in the Leaders quadrant for midrange
and high-end NAS solutions. 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 fourth quarter and fiscal year 2011 results conference
call will be broadcast live on the Internet at investors.netapp.com on
Wednesday, May 25, 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 be available after 4:00 p.m. Pacific time on our Web site.
NetApp uses a hybrid format for disclosing
key financial information associated with our quarterly results.
Concurrent with the press release, NetApp posts a supplemental
commentary with financial information and statistics to our Web
site at investors.netapp.com.
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/uk/.
NetApp, the NetApp logo, Go further, faster,
and Data ONTAP are trademarks of NetApp, Inc. All other marks are
the property of their respective owners and should be treated as
"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 first quarter of fiscal year 2012, as well as
expectations regarding our recent acquisition of the Engenio
external storage systems business, 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; our ability to
effectively integrate the recently acquired Engenio external
storage systems business and achieve our anticipated results for
such business; our ability to increase revenue and manage our
operating costs; our ability to accurately forecast demand for our
products; increased competition risks associated with the
anticipated growth in networked storage market; our reliance on a
limited number of suppliers; general economic and market
conditions, including our stock price; 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.
Adoption of New Accounting
In the fourth quarter of fiscal year 2011, NetApp adopted
Accounting Standards Update ( "ASU") No. 2009-13, and ASU No.
2009-14 related to revenue recognition for transactions originating
or materially modified in fiscal year 2011. We implemented these
standards retrospectively to the beginning of fiscal year 2011;
therefore the full year and previously reported fiscal 2011
quarterly results have been adjusted to reflect the adoption of
these new standards.
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 NAS Solutions" by Pushan Rinnen, Roger W.
Cox, and Robert E. Passmore, Gartner, Inc.