Network Appliance Announces Results for Second Quarter Fiscal Year 2006
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Sunnyvale, Calif. -- November 16, 2005
-- Network Appliance, Inc. (NASDAQ: NTAP), the leader in
advanced networked storage solutions, today reported results for
the second quarter of fiscal year 2006. Revenues for the second
fiscal quarter were $483.1 million, an increase of 29% compared to
revenues of $375.2 million for the same period a year ago and an
increase of 8% compared to $448.4 million in the prior quarter.
For the second fiscal quarter, GAAP net income
was $70.7 million, or $0.18 per share1 compared to GAAP
net income of $55.3 million, or $0.15 per share for the same period
in the prior year. Non-GAAP2 net income for the second
fiscal quarter was $79.1 million, or $0.21 per share, compared to
non-GAAP net income of $58.4 million, or $0.16 per share for the
same period a year ago.
Revenues for the first six months of the
current fiscal year totaled $931.5 million, compared to revenues of
$733.6 million for the first six months of the prior fiscal year,
an increase of 27% year over year.
For the first six months of the current fiscal
year, GAAP net income increased 28% to $130.8 million, or $0.34 per
share, compared with GAAP net income of $102.2 million, or $0.27
per share for the same period in the prior year. Non-GAAP net
income for the first six months of the current fiscal year totaled
$141.3 million, or $0.37 per share, compared to non-GAAP net income
of $108.2 million, or $0.29 per share for the first six months of
the prior fiscal year.
"We achieved significant growth in revenue and
profitability during the quarter driven by the compelling value
proposition of our new FAS3000 midrange product line," said Dan
Warmenhoven, CEO of Network Appliance. "NetApp provides customers
with the best storage utilization rates in the industry, allowing
them to decrease their total cost of ownership and increase their
return on investment."
- Network Appliance estimates that
year-over-year growth in revenue for the third quarter of fiscal
year 2006 will be in the range of 25% to 28%.
- The company expects third quarter GAAP
earnings per share to finish between $0.17 and $0.18 per share.
Network Appliance expects third quarter non-GAAP earnings per share
to be in the range of $0.20 to $0.21 per share.
- For the full fiscal year, Network Appliance
estimates that revenues will finish in the range of 26% to 28%
higher than fiscal year 2005.
- The company expects GAAP earnings per share
for fiscal year 2006 to be between $0.70 and $0.73 per share.
Network Appliance estimates full-year non-GAAP earnings per share
to be in the range of $0.77 to $0.80 per share.
During the second quarter of fiscal year 2006, Network Appliance
solidified its leadership in data security with the completion of
the Decru acquisition; demonstrated growth in iSCSI, NAS, and SAN;
and expanded its operations in Research Triangle Park, North
This quarter, NetApp maintained its position
as market leader in iSCSI, grew its capacity market share lead in
NAS, and grew the fastest among vendors tracked in the Fibre
Channel (FC) SAN arena. According to IDC's Worldwide Quarterly Disk
Storage Systems Tracker Q2 2005, NetApp demonstrated continued
leadership in its core NAS market, with a 44.6% capacity share, up
almost three (3) percentage points over Q1. NetApp also maintained
its strong lead in the iSCSI storage market, with number-one share
positions in capacity shipped (45.2%), revenue (41.6%), and units
(36%). NetApp was also the fastest growing of the vendors tracked
in iSCSI revenue, with a year-over-year growth rate of 120.9%.
Finally, of the vendors tracked, NetApp posted the strongest
year-over-year increase in FC SAN revenue, with a growth rate of
Also according to IDC, NetApp experienced the
fastest growth among the top five vendors in storage software with
49.4% year-over-year growth from Q2 2004 to Q2 2005 versus a market
growth rate of 11.8% for the same period. Total NetApp market share
in storage software grew from 5% in Q2 2004 to 6.6% in Q2 2005.
Additional details are available in IDC's Worldwide Quarterly
Storage Software Tracker Q2 2005.
During the quarter, NetApp completed the
acquisition of Decru, a privately held company based in Redwood
City, California. The acquisition of Decru allows NetApp to offer
the strongest security option in the industry. Decru is a clear
market leader in storage security, helping enterprise and
government customers address requirements including regulatory
compliance, privacy, secure consolidation, and outsourcing. Decru
DataFort™ appliances protect the core of the storage network
by seamlessly inserting a layer of data encryption, authentication,
key management, and compartmentalization.
The first new products from Decru since the
completion of the acquisition occurred during the quarter with the
unveiling of next-generation storage security platforms. The new
10-port and SCSI models of Decru DataFort appliances, DataFort
FC1020 and DataFort S115, deliver increased enterprise-class
scalability native support for legacy tape environments, simplified
management, and greater price/performance.
Also this quarter, NetApp announced that it
plans to join IBM as one of 10 founding members in a new
open-source community, initially working under the project name
Aperi, to give customers more choices for deploying
open-standards-based storage infrastructure software. The
organization plans to develop a common storage software management
platform that will give customers greater flexibility in the way
they manage their storage environments.
Earlier this quarter, NetApp introduced
NetApp® SnapManager® for Oracle® Database
environments, which leverages the unique power of NetApp
Snapshot™ technology and is a tightly integrated disk-based
backup and granular recovery solution for Oracle customers using
Oracle Automatic Storage Management technology. The solution
provides customers with continuous uptime for online backups.
NetApp SnapManager turns a multi-step backup and restore process
into two simple commands from a single host machine.
On the partner front, NetApp unveiled several
new solution enhancements and partner offerings with Bus-Tech Inc.,
Cisco, NeoPath Networks, Network Intelligence, NuView, Oracle, SAP,
and Symantec to address a variety of data concerns, including
management and monitoring of enterprise grid environments, data
replication, enterprise compliance, ILM management, data analysis,
file storage management and utilization, mainframe tape
replacement, storage virtualization, and consolidation of remote
office/branch office (ROBO) data.
Also this quarter, NetApp and Kazeon, a
leading provider of information classification and management
solutions for the enterprise, signed an OEM, development, and
marketing agreement to integrate the intelligent data
classification and search capabilities of Kazeon's Information
Server with Network Appliance™ storage systems. Additionally,
NetApp will resell Kazeon's Information Server as part of a jointly
In corporate news, NetApp expanded to a new
facility in Research Triangle Park, North Carolina. The company
currently employs 360 employees in the Kit Creek Road facility and
operates a 24x7 global service and support center in addition to a
state-of-the-art data center with a capacity of multiple
Conference Call and Webcast Information
- The NetApp quarterly results conference call
will be broadcast live via the Internet at
http://investors.netapp.com on Wednesday, November
16, 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 (800) 299-7089 in the
United States and (617) 801-9714 outside the United States. The
passcode for both numbers is 19259021.
- A replay will be available for seven days
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 51378149. The Webcast replay will be posted on our
Web site for at least one year.
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 relating to our forecasted operating results and metrics
for the third quarter of fiscal 2006 and for all of fiscal 2006,
statements regarding the anticipated benefits our FAS3000 product
line, Decru network storage platforms, the Aperi open source
community, our partner offerings and solution enhancements and our
OEM, development and marketing agreement with Kazeon. 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 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; 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 with strategic partners; our ability to successfully
acquire and integrate complementary businesses and technologies;
foreign currency exchange rate fluctuations; 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 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 represent
the diluted number of shares for all periods presented.
2 Non-GAAP results of operations exclude amortization of
intangible assets, in process research and development, stock
compensation, restructuring charges/recoveries, net gain/loss on
investments and the related effects on income taxes, as well as
certain discrete GAAP provision for income tax matters recognized
ratably for non-GAAP purposes.
NetApp and SnapManager are registered
trademarks and Network Appliance and Snapshot are trademarks of
Network Appliance Inc. in the United States and other countries.
Decru DataFort is a trademark of Decru Inc., a Network Appliance
company, in the United States and other countries. Oracle is a
registered trademark of Oracle Corporation. All other trademarks
belong to their respective owners and should be treated as
Network Appliance 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 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.
Network Appliance, Inc.
Ph: (408) 822-3974
Network Appliance, Inc.
Ph: (408) 822-6909
Network Appliance, Inc.
Ph: (408) 822-6428