Network Appliance Announces Results for Second Quarter Fiscal Year 2007
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Sunnyvale, Calif. - November 15, 2006
-- Network Appliance, Inc. (NASDAQ: NTAP), the leader in
advanced networked storage solutions, today reported results for
the second quarter of fiscal year 2007. Revenues for the second
fiscal quarter were $652.5 million, an increase of 35% compared to
revenues of $483.1 million for the same period a year ago and an
increase of 5% compared to $621.3 million in the prior quarter.
For the second fiscal quarter, GAAP net income
was $86.9 million, or $0.22 per share1 compared to GAAP
net income of $70.7 million, or $0.18 per share for the same period
in the prior year. Non-GAAP2 net income for the second
fiscal quarter increased 38% to $108.9 million, or $0.28 per share,
compared to non-GAAP net income of $79.1 million, or $0.21 per
share for the same period a year ago.
Revenues for the first six months of the
current fiscal year totaled $1.27 billion, compared to revenues of
$931.5 million for the first six months of the prior year, an
increase of 37% year over year.
For the first six months of the current fiscal
year, GAAP net income increased 8% to $141.6 million, or $0.36 per
share, compared with GAAP net income of $130.8 million, or $0.34
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
$205.4 million, or $0.53 per share, compared to non-GAAP net income
of $141.3 million, or $0.37 per share for the first six months of
the prior fiscal year.
"NetApp continues to gain momentum in
enterprise data centers because we provide customers with the best
value in the storage industry," said Dan Warmenhoven, CEO. "Our
performance this quarter highlights our success around the world as
we increase our market share and expand our reach."
- Network Appliance estimates that sequential
growth in revenue for the third quarter of fiscal year 2007 will be
in the range of 7% to 8%, which translates to 30% to 31% growth
year over year.
- Including the implementation of SFAS123(R) and
with current information and assumptions, 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 about $0.28 per share.
- For the full fiscal year 2007, Network
Appliance estimates that revenues will finish in the range of 33%
to 34% higher than fiscal year 2006.
- Including the implementation of SFAS123(R) and
with current information and assumptions, the company expects GAAP
earnings per share for fiscal year 2007 to be in the target range
of $0.73 to $0.76 per share. Network Appliance estimates that
full-year non-GAAP earnings per share will finish between $1.10 to
$1.11 per share.
During the second quarter of fiscal year 2007, Network Appliance
demonstrated growth in several key areas including market share,
customer deployments, product lines, and functionality in archive
and compliance, VTL, data migration and data retention. The company
also continued its leadership position in the iSCSI and
network-attached storage markets and showed strong growth in the
Fibre Channel SAN market.
In the second quarter, NetApp outlined its
comprehensive strategy for a unified approach to both archive and
compliance, offering a product and service portfolio to help
customers solve their growing and changing data challenges. The
NetApp announcement challenged the industry's conventional approach
of forcing customers to deploy separate storage silos for their
backup, archive, compliance, and primary storage needs and urged
customers to save time, money, and manpower with a unified archive
and compliance solution. The NetApp approach offers solutions to
five standard storage needs to satisfy data management regulations
including data classification, data discovery, data migration, data
permanence, and data security and privacy.
corporate governance policies and a heightened emphasis on storage
efficiency demand that today's enterprise deploy archival solutions
that will easily scale and adapt with changing business needs.
E-mail leads the list of applications that are being archived in
data centers around the world. This quarter, a study commissioned
by NetApp and conducted by VeriTest found that Symantec®
Enterprise Vault™ software for e-mail archival environments
running on NetApp storage delivers customers up to twice the
performance of EMC Centera Gen4 storage. The VeriTest study
compared the performance of the NetApp® FAS3050 and
NearStore® R200 storage systems to that of EMC Centera Gen4
storage. The results are further proof that NetApp storage provides
customers with a fast, flexible, and cost-effective solution for
e-mail archival and various compliance needs.
Also on the product front, NetApp introduced
three Virtual Tape Library (VTL) solutions designed for demanding
data center backup environments. NearStore VTL300, VTL700, and
VTL1400 provide customers with the ability to substantially
increase backup and recovery service levels by doubling to tripling
the amount of backup data that can be stored on disk while also
increasing VTL write performance by over 50% compared to the
industry-leading performance of existing NetApp VTL systems.
market perspective, according to IDC's Worldwide Quarterly Disk
Storage Systems Tracker Q2 20063, NetApp led the
networked storage market in capacity share, growing to 21%, which
is a statistical tie with EMC. NetApp also grew faster than the
market in capacity shipped in networked storage, growing at 111%
year over year while the market grew at 59%. In terms of revenue,
NetApp grew faster than the market from Q2 2005 to Q2 2006 at 21%,
while the market grew at 11%.
NetApp demonstrated continued leadership in
the iSCSI market in terms of revenue and capacity in both Q2 2006
and the first half of 2006, with first-place market share for Q2
2006 in capacity shipped (44%) and in revenue (28%).
In its core NAS market, NetApp was number one
in Q2 2006 for capacity shipped, with 47% market share. Year over
year, the NAS market grew 77% in terms of capacity shipped while
NetApp grew 85%. Sequentially, the NAS market grew at 11.3% while
NetApp grew at 13.5%.
Of all the vendors tracked by IDC in Fibre
Channel (FC) SAN, NetApp continues to grow faster than the market
in both revenue and capacity, sequentially and year over year. For
capacity shipped, NetApp grew at 240% year over year while the
market grew at 47%. In terms of revenue, NetApp grew at 66% year
over year while the market grew at 8%.
In the SAN market, NetApp announced a new
milestone this quarter with 10,000 production deployments of NetApp
storage area network (SAN) solutions, including 3,000 FC SANs and
7,000 IP SANs. The NetApp SAN growth is the result of the company's
innovative solutions which enable the easiest provisioning and
management, affordable business continuity, and nondisruptive
backups with instant data recovery in all data center
environments-central, departmental, and distributed.
On the partner front, NetApp joined the
Microsoft Technology Center (MTC) Alliance Member Program. As part
of this program, NetApp storage has been installed in Microsoft
Technology Centers worldwide.
Additionally, NetApp announced that more than
5,000 enterprises worldwide use the Oracle® on NetApp solution
to help simplify the management of their backup/recovery,
archiving, data protection, compliance, and primary storage
In corporate news, Dan Warmenhoven received a
CEO Ambassador Award from Boardroom Bound, a nonprofit organization
that helps corporations identify and prequalify women and minority
director candidates for corporate board service. Warmenhoven was
honored for instilling the value of diversity at NetApp and on the
company's board. NetApp was also honored for the third year in a
row by the Triangle Business Journal as a "Best Place to Work" in
Research Triangle Park (RTP) for 2006. NetApp earned first place
honors in the large company category, which included companies with
150 employees or more. NetApp employees based in RTP who responded
to a survey from the publication gave the company high marks for
its team-oriented work environment, exceptional people practices,
strong executive leadership, and effective manager
Webcast and Conference Call Information
- The NetApp quarterly results conference call
will be broadcast live via the Internet at
http://investors.netapp.com on Wednesday, November
15, 2006, 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) 260-8140 in the United States
and (617) 614-3672 outside the United States. The passcode for both
numbers is 51700684.
- 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,
with replay code 38201788. 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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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 2007 and for all of fiscal 2007; statements
regarding our optimism for our 2007 fiscal year generally; statements
regarding the anticipated benefits of our products, technologies,
and services relative to the offerings of our competitors; and
statements regarding anticipated benefits from partner
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; 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 Network Appliance, Inc. 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 represents
the diluted number of shares for all periods presented.
2 Non-GAAP results of operations exclude amortization of
intangible assets, stock-based compensation, in process research
and development, restructuring charges/recoveries, gain/loss
on sale of assets and investments, specified
nonrecurring discrete events, and the related effects on income
3 IDC's Worldwide Quarterly Disk Storage Systems Tracker Q2
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. These non-GAAP financial measures 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. 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
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