Network Appliance Announces Results for Third Quarter Fiscal Year 2007
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Sunnyvale, Calif. - February 14, 2007
-- Network Appliance, Inc. (NASDAQ: NTAP), the leader in
advanced networked storage solutions, today reported results for
the third quarter of fiscal year 2007. Revenues for the third
fiscal quarter were $729.3 million, an increase of 36% compared to
revenues of $537.0 million for the same period a year ago and an
increase of 12% compared to $652.5 million in the prior
For the third fiscal quarter, GAAP net income
was $66.5 million, or $0.17 per share1 compared to GAAP
net income of $76.4 million, or $0.20 per share for the same period
in the prior year. Non-GAAP2 net income for the third
fiscal quarter increased 31% to $111.1 million, or $0.29 per share,
compared to non-GAAP net income of $84.7 million, or $0.22 per
share for the same period a year ago.
Revenues for the first nine months of the
current fiscal year totaled $2.0 billion, compared to revenues of
$1.47 billion for the first nine months of the prior year, an
increase of 36% year over year.
For the first nine months of the current
fiscal year, GAAP net income totaled $208.1 million, or $0.53 per
share, compared with GAAP net income of $207.2 million, or $0.54
per share for the same period in the prior year. Non-GAAP net
income for the first nine months of the current fiscal year totaled
$316.5 million, or $0.81 per share, compared to non-GAAP net income
of $226 million, or $0.58 per share for the first nine months of
the prior fiscal year.
"Our third quarter performance again
demonstrates that customers increasingly understand the NetApp data
management value proposition," said Dan Warmenhoven, chief
executive officer. "With revenues up 36% over Q3 of last year, and
100 petabytes of storage shipped during the quarter, NetApp is
quickly becoming the vendor of choice for enterprise customers'
storage and data management needs."
- Network Appliance estimates that sequential
growth in revenue for the fourth quarter of fiscal year 2007 will
be in the range of 8% to 10%, which translates to 32% to 34% growth
year over year.
- Including the implementation of SFAS123(R) and
with current information and assumptions, the company expects
fourth quarter GAAP earnings per share to finish between $0.19 and
$0.20 per share. Network Appliance expects fourth quarter non-GAAP
earnings to round to $0.30 per share.
- For the full fiscal year 2007, Network
Appliance estimates that revenues will finish in the range of 35%
to 36% 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 about $0.73 per
share. Network Appliance estimates full-year non-GAAP earnings per
share will finish between $1.11 to $1.12 per share.
During the third quarter of fiscal year 2007, Network Appliance
continued to enhance its data management and data protection
portfolios with a key acquisition and several product
announcements. It also extended its data center portfolio with
several additions including new midrange platforms, broader Fibre
Channel (FC) storage area network (SAN) capabilities and
significant enhancements in the NetApp® Manageability Software
Family. The company also continued to gain momentum in the storage
area network (SAN) market while maintaining strong leadership in
both the network-attached storage (NAS) and iSCSI markets.
This quarter, NetApp completed the acquisition
of Topio, a privately held Santa Clara, California-based company
with R&D in Haifa, Israel. The acquisition continues to expand
the NetApp data protection portfolio by adding heterogeneous
disaster recovery capabilities to existing heterogeneous
disk-to-disk backup solutions from NetApp. In addition to
delivering a broader range of data protection, data migration, and
data cloning capabilities, this acquisition expands the NetApp
heterogeneous data protection portfolio by simplifying the
replication of data from other storage arrays to NetApp storage
Also during the third quarter, NetApp extended
its data center portfolio with the addition of its
highest-performing midrange platforms, the FAS3070 and V3070
series; broader FC SAN capabilities; significant enhancements and
introductions in the NetApp Manageability Software Family; and new
professional services, all aimed at making enterprise data center
management easier for customers who demand high-performance SAN
solutions and increased application uptime to meet their business
From a market perspective, according to IDC's
Worldwide Quarterly Disk Storage Systems Tracker Q3
20063, NetApp gained share in both capacity shipped and
revenue for the FC SAN market. NetApp also continued to grow faster
than the market in FC SAN in both revenue and capacity, year over
year. For capacity shipped, NetApp grew at 210.2%, while the market
grew at 46.3%. In terms of revenue, NetApp grew faster than the
market for the 11th consecutive quarter at 62.1%, while the market
grew at 14.1%. Sequentially, NetApp grew at 16.0%, while the market
grew at 6.4%.
NetApp also demonstrated continued leadership
in the NAS and iSCSI storage markets in the third quarter,
according to IDC. NetApp maintained the number-one market share
position in capacity shipped for NAS (42.0%) and in iSCSI for both
capacity shipped (32.6%) and revenue (21.5%).
In IDC's calculations of the network storage
market (which includes SAN, NAS, and iSCSI), NetApp grew faster
than the market, year over year, in both capacity shipped and
revenue. For capacity shipped, NetApp grew at 106.8%, while the
market grew at 62.6%. In terms of revenue, NetApp grew 18.9%, while
the market grew at 17.2%.
Also this quarter, NetApp continued its
midrange leadership with the news that it has been positioned by
Gartner, Inc., in the "Leaders" quadrant for midrange enterprise
disk arrays in its research note, "Magic Quadrant for Midrange
Enterprise Disk Array, 2H06"4 .
On the partner front, NetApp announced general
availability of two software products in support of Microsoft®
Exchange Server 2007. NetApp SnapManager® 4.0 for Exchange
Server and NetApp Single Mailbox Recovery 4.2, a near-instantaneous
backup and recovery software solution for Exchange Server 2007,
provide customers with enterprise-class backup, recovery, and
restoration solutions. With the availability of these products,
NetApp is helping Exchange Server 2007 customers achieve
near-instantaneous, granular recovery of Exchange Server data
without a prohibitive-and expensive-increase in storage capacity
In corporate news, NetApp was named by FORTUNE
magazine as one of the "100 Best Companies to Work For" for the
fifth consecutive year. This year, NetApp ranked in the top 10 of
the list, at number six, reflecting the company's emphasis on
attracting and retaining the best talent in the industry and
continuing to demonstrate the values of what NetApp CEO Dan
Warmenhoven calls a "model company." Also this quarter, NetApp was
named to Forbes magazine's "400 Best Big Companies in America" list
This quarter, Dave Hitz, EVP and cofounder of
Network Appliance, was inducted into the CRN Industry Hall of Fame
for developing a disruptive technology that altered the landscape
of the storage industry.
And finally, NetApp was honored as the 2006
Entrepreneurial Company of the Year by the Peninsula Chapter of the
Stanford Business School Alumni Association.
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, February
14, 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
Website at that location.
- The conference call will also be available
live in a listen-only format at (866) 543-6411 in the United States
and (617) 213-8900 outside the United States. The passcode for both
numbers is 25453306.
- 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,
using replay code 86129226. 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
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
fourth 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; statements regarding anticipated benefits from
partner offerings; and statements regarding anticipated benefits
from our acquisition of Topio.
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; 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 expenses, other
acquisition-related cost, 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 taxes.
3 IDC's Worldwide Quarterly Disk Storage Systems Tracker Q3
4 Gartner, Inc. "Magic Quadrant for Midrange Enterprise Disk
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, other acquisition-related cost, 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 financial measures.
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