Network Appliance Announces Results for Fourth Quarter and Fiscal Year 2005
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Sunnyvale, Calif. - May 24, 2005 -
Network Appliance, Inc. (NASDAQ: NTAP), the leader in advanced
networked storage solutions, today reported results for the fourth
quarter and fiscal year 2005. Revenues for the fourth fiscal
quarter were $451.8 million, an increase of 34% compared to
revenues of $337.0 million for the same period a year ago and a
9.5% increase compared to $412.7 million in the prior quarter.
For the fourth fiscal quarter, GAAP net income
increased 74% to $63.4 million, or $0.16 per share1
compared to GAAP net income of $36.4 million, or $0.10 per share
for the same period in the prior year. Pro forma2 net
income for the fourth fiscal quarter increased 53% to $66.6
million, or $0.17 per share, compared to pro forma net income of
$43.5 million, or $0.12 per share for the same period a year
Revenues for fiscal year 2005 totaled $1.6
billion, an increase of 37% compared to revenues of $1.17 billion
for fiscal year 2004.
For fiscal year 2005, GAAP net income increased 48% to $225.8
million, or $0.59 per share, compared to GAAP net income of $152.1
million, or $0.42 per share for fiscal year 2004. Pro forma net
income for fiscal year 2005 increased 63% to $237.7 million, or
$0.62 per share, compared to pro forma net income of $146.0
million, or $0.40 per share for fiscal year 2004.
"Fiscal 2005 was an outstanding year for
Network Appliance. We achieved strong gains in revenue, captured
additional market share, expanded gross margins, and broadened our
offering of the most innovative products targeted at the areas of
fastest growth in storage," said Dan Warmenhoven, CEO of Network
Appliance. "Our continued investments in our business, combined
with expanded partnerships with strategic vendors such as IBM,
Microsoft, SAP, and VERITAS, lay the foundation for providing even
greater value to our customers."
- Network Appliance estimates that revenue for
the first quarter of fiscal year 2006 will grow sequentially by 3%
to 6%. This projection reflects year-over-year growth rates of 30%
- The company expects first quarter pro forma
earnings per share to finish at $0.17 to $0.18 per share. First
quarter GAAP earnings per share are projected to finish at $0.16 to
$0.17 per share.
- For the full fiscal year, Network Appliance
estimates that revenues will finish 32% to 35% higher than fiscal
- Network Appliance estimates full-year pro
forma earnings per share to finish at $0.76 to $0.80 per share.
GAAP earnings per share are projected for fiscal year 2006 at $0.73
to $0.77 per share.
During the fourth quarter of fiscal year 2005, Network Appliance
reinforced its leadership position through a strategic original
equipment manufacturing (OEM) relationship with IBM, increased
growth in storage software and SAN, and continued leadership in the
iSCSI and network-attached storage (NAS) markets.
This quarter, NetApp and IBM entered into an
OEM agreement that will enable IBM to sell IBM-branded solutions
based on Network Appliance™ unified and open network attached
storage NAS and iSCSI/IP SAN solutions, including NearStore®
and NetApp V-Series systems, as well as associated software
offerings. For more information, please see our April 6, 2005 press
release posted on the NetApp Web site.
Also this quarter, NetApp acquired Alacritus,
a privately held company based in Pleasanton, California. The
acquisition will extend the company's ability to provide a robust
data protection solution to NetApp customers and help accelerate
customer transitions to disk-based backup. Alacritus is best known
for its Virtual Tape Library (VTL) software product, which makes
disks emulate tape to provide high performance for large-scale
backup environments without disrupting established tape backup
workflow and processes.
On the product front, NetApp announced the
latest addition to its data management and virtualization
portfolio, the NetApp V-Series family which unifies SAN, IP SAN,
and NAS under a common architecture. V-Series systems enable
customers to extend the complete suite of groundbreaking dynamic
virtualization capabilities delivered in NetApp Data ONTAP™
7G software to third-party storage products from HDS, HP, IBM, and
Sun. The unique virtualization capabilities of V-Series systems
translate directly into customer cost savings and a more
intelligent, fluid approach to storage asset utilization that
accommodates shifting business demands. V-Series systems facilitate
a single, powerful, flexible management paradigm that replaces the
cumbersome management procedures of conventional arrays.
VERITAS Software Corporation and NetApp
announced the availability of new integrated disk-based data
protection and data management solutions for multi-vendor
environments. The two companies integrated the latest version of
VERITAS NetBackup™ software with NetApp NearStore storage
systems and SnapVault software to help customers significantly
reduce their backup and restore times with disk-based protection,
while still retaining data on tape for long-term archival and
disaster recovery - all through a common management console.
NetBackup 6.0 integration with NetApp storage provides cost savings
when using NearStore single-instance storage capabilities to
eliminate redundant heterogeneous backup data. Customers can now
store hundreds of backups online with minimal storage.
NetApp and VERITAS have also collaborated to
integrate VERITAS Enterprise Vault™ 6.0 software with NetApp
NearStore and SnapLock™ products. These integrated products
offer powerful solutions to help mutual customers cope with growing
compliance and regulatory requirements by delivering solutions that
allow them to transparently archive data and quickly retrieve
specific information as needed.
NetApp demonstrated the strongest growth in
storage software according to Gartner's report "Market Share:
Storage Management Software, Worldwide, 2004." 3 The
total market for new license revenue in 2003 to 2004 grew at a rate
of 12.3%, with Network Appliance beating the market with a growth
rate of 73.5% for the same period. NetApp showed the strongest
market share growth among the top 10 vendors of storage software
and has moved into the top five vendors for marketshare in 2004.
For the second year in a row, this was the fastest growth rate
among the top 10 vendors in the space and for the first year places
NetApp in the top five with a total overall market share of
NetApp maintained its leadership position in
both the NAS and iSCSI storage markets for calendar year 2004
(CY2004). According to IDC's Worldwide Quarterly Disk Storage
Systems Tracker Q4 2004,4 NetApp demonstrated continued
leadership in its core NAS market, with a 36.9% revenue share and
maintained its strong lead in the iSCSI storage market, with a 43%
revenue share for CY2004. In addition, NetApp remained the leader
in the IP storage market (NAS and iSCSI), posting a 37.3% market
share in CY2004. Also according to IDC, the company grew revenue in
the open systems networked storage market, with 29.7%
year-over-year (fourth quarter 2003 to fourth quarter 2004) growth,
versus overall market growth of 11.6%. NetApp grew revenue in the
open SAN market at 98.9%, versus the market growth of 9.2%,
year-over-year (fourth quarter 2003 to fourth quarter 2004).
On the partner front, NetApp announced support
of Microsoft® Windows® iSCSI Initiator 2.0. Support of
the initiator demonstrates the rapid integration of NetApp storage
solutions with the latest Microsoft Windows storage technologies.
NetApp is among the first to support Microsoft's latest version of
its iSCSI initiator, which underscores a continued vision by both
companies to embrace the iSCSI protocol for the benefit of
enterprise customers. NetApp also unveiled several new solution
enhancements and partner offerings with Asigra, Filenet, Maranti,
Microsoft, Mobius, and Sun Microsystems to address a variety of
data concerns, including simplifying SQL Server integration,
content management, compliance, data backup and recovery, data
management, security, and other business-critical initiatives
facing enterprise customers.
Conference Call Information
- The NetApp fourth quarter and fiscal year end
results conference call will be broadcast live via the Internet at
http://investors.netapp.com/ on Tuesday, May 24,
2005, at 2:00 p.m. Pacific Time. This press release and any other
information related to the call will also be posted to the Web site
at that location. The conference call will also be available live
in a listen-only format at (866) 800-8652 in the United States and
(617) 614-2705 outside the United States. The passcode for both
numbers is 90731703.
- A replay will be available for 72 hours
following completion of the live call by dialing (888) 286-8010 in
the United States and (617) 801-6888 outside the United States,
with replay code 79132069.
About Network Appliance
Network Appliance is a world leader in unified storage solutions
for today's data-intensive enterprise. Since its inception in 1992,
Network Appliance has delivered technology, product, and partner
firsts that simplify data management. Information about Network
Appliance solutions and services is available at
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"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. These forward-looking statements involve risks and
uncertainties, and actual results could vary. Factors that could
impact our ability to achieve our goals include general economic
and industry conditions, including expenditure trends for
storage-related products; our ability to deliver new product
architectures and enterprise service offerings, and our ability to
design products and services that compete effectively from a price
and performance perspective; and other important factors as
described in Network Appliance, Inc.'s reports and documents filed
from time to time with the Securities and Exchange Commission,
including our most recently submitted 10-K and 10-Q.
Network Appliance Usage of Pro Forma
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. In addition, 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.
1Earnings per share represent
the diluted number of shares for all periods presented.
2Pro forma results for all periods presented and the
projections in the Outlook section exclude amortization of
intangible assets, in process research and development, stock
compensation, restructuring charges (recoveries), net gain on
investments and the related effects on income taxes, as well as an
income tax benefit from a nonrecurring foreign tax
3 Gartner Dataquest, "Market Share: Storage Management
Software, Worldwide, 2004," Carolyn DiCenzo, April 19,
4 IDC, Worldwide Quarterly Disk Storage Systems Tracker Q4
2004, March 2004
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