Network Appliance Announces Results for First Quarter Fiscal Year 2008
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Sunnyvale, Calif. - August 15, 2007 --
Network Appliance, Inc. (NASDAQ: NTAP), the leader in advanced
networked storage solutions, today reported results for the first
quarter and fiscal year 2008. Revenues for the first fiscal quarter
were $689.2 million, an increase of 11% compared to revenues of
$621.3 million for the same period a year ago and a decrease of 14%
compared to $801.2 million in the prior quarter.
For the first fiscal quarter, GAAP net income
was $34.3 million, or $0.09 per share1 compared to GAAP
net income of $54.7 million, or $0.14 per share for the same period
in the prior year. Non-GAAP2 net income for the first
fiscal quarter was $76.0 million, or $0.20 per share, compared to
non-GAAP net income of $96.6 million, or $0.25 per share for the
same period a year ago.
"We are clearly disappointed with our revenue
growth this quarter, yet confident about our underlying business
strength and continued health," said Dan Warmenhoven, chief
executive officer. "Our bookings growth and cash flow are both very
encouraging, and we are optimistic about getting back on track for
higher growth in revenue and profits going forward."
- Network Appliance ( "NetApp") expects revenue
for the second quarter fiscal year 2008 to be between $752 million
and $768 million, with year-over-year growth of 15% to 18% and
sequential growth of 9% to 11%.
- Including the implementation of SFAS123(R) and
with current information and assumptions, the company estimates
that the second quarter fiscal year 2008 GAAP earnings per share
will be approximately $0.16 to $0.18 per share.
- Network Appliance expects second quarter
fiscal year 2008 non-GAAP earnings per share to be approximately
$0.24 to $0.26 per share.
During the first quarter of fiscal year 2008, NetApp®
continued to offer customer solutions to reduce power and manage
costs and complexity in the data center through several new product
announcements, membership in The Green Grid, and solution
enhancements with key partners. The company also continued to gain
momentum in all of its key storage markets, including software,
services, Fibre Channel (FC) storage area network (SAN),
network-attached storage (NAS), and iSCSI.
This quarter NetApp set a new industry
standard for deduplication technology by offering NetApp advanced
single-instance storage (A-SIS) deduplication for NetApp
NearStore® and FAS storage systems. This technology helps
customers achieve the cost benefits of deduplication across a wide
variety of environments, including backup, archival, compliance
storage, and primary data sets as diverse as home directories and
genomic data. The introduction of NetApp A-SIS deduplication
provides customers with the ability to reduce capital expenditures
and management costs by dramatically reducing the amount of storage
they need to purchase and manage. The reduction in quantity of
physical storage translates into savings in power and cooling costs
and data center real estate costs.
Strengthening customer data manageability,
NetApp also enhanced both SnapDrive®, for server storage
management, and Virtual File Manager™ Enterprise Edition
(VFM®-EE), for file data management, which customers leverage
for increased productivity and flexibility by allowing application
administrators to manage their data and react quickly to changing
From a market perspective, according to IDC's
Worldwide Quarterly Disk Storage Systems Tracker Q1
20073, NetApp gained revenue share in networked storage,
growing to a 10.5% share in Q1 2007, up from a 9.3% share at
year-end 2006. NetApp also gained capacity share in networked
storage, growing to 20.4% from 17.5% in the same period.
In Fibre Channel (FC) SAN, NetApp continues to
grow faster than the market in both revenue and capacity, both
sequentially and year over year. Sequentially, the FC SAN market
revenue dropped 10.4%, while NetApp grew 12.6%. Year over year, the
FC SAN market revenue grew 12.6%, while NetApp grew 103.0%. NetApp
dramatically outpaced the FC SAN market in terms of capacity,
growing at 263.7% year over year, compared to market growth of
57.1% during that period.
In its core NAS market, NetApp grew faster
than the market sequentially in terms of both revenue and capacity.
Sequentially, the NAS market revenue dropped 8.0%, while NetApp
grew 10.7%. NetApp continues to lead the NAS market in terms of
capacity, with a 39.3% share in Q1 2007, up from a 32.4% share in
NetApp demonstrated continued leadership in
the iSCSI market in terms of revenue and capacity, with first-place
market share for Q1 2007 in capacity shipped (33.3%) and in revenue
(24.3%). In Q1 2006, the iSCSI market revenue grew 8.6%
sequentially, while NetApp grew 14.9%.
In the storage software market, NetApp grew 10
times faster than the overall storage software market from Q4'06 to
Q1'07 and maintained or gained share in each submarket segment in
which it provides offerings. According to IDC's Worldwide Quarterly
Storage Software Tracker Q1 20074, NetApp also
maintained the number two market share position in the storage
replication software market, closing the gap on the market
NetApp continued its leadership in storage
services with a position in the Leaders quadrant of the Gartner
Magic Quadrant for Storage Services, Q2'075 report.
In corporate news, NetApp was honored by the
Boston Business Journal as a "Best Place to Work" in the Boston
area for 2007. The NetApp New England office ranked number six in
the mid-size company category, which included companies with 101 to
500 employees. NetApp was also recognized by Indiatimes Infotech, a
leading technology media Website in India, as one of the "Best Tech
Companies to Work For" in India for 2007.
In other corporate news, NetApp received a
second Job Development Investment Grant (JDIG) from the State of
North Carolina to expand its operations in Research Triangle
Webcast and Conference Call
- The NetApp quarterly results conference call
will be broadcast live via the Internet at
http://investors.netapp.com on Wednesday, August 15,
2007, at 2:00 p.m. Pacific time. This press release and any other
information related to the call will also be posted on the Website
at that location.
- The conference call will also be available
live in a listen-only format at (866) 510-0707 in the United States
and (617) 597-5376 outside the United States. The pass code for
both numbers is 35531174.
- 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 65528258. The Webcast replay will be posted on
our Website 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 second quarter of fiscal
2008 and statements regarding the anticipated benefits of our
products, technologies, and services relative to the offerings of
our competitors. 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 our ability to build
non-deferred backlog to levels consistent with our past results and
to increase our revenue over the next several quarters; 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, acquisition-related
retention costs, gain on sale of investment, restructuring
charges/recoveries, prior acquisition-related costs, and the
related effects on income taxes as well as certain discrete GAAP
provisions for income tax matters recognized ratably for non-GAAP
3 IDC's Worldwide Quarterly Disk Storage Systems Tracker, Q1
4 IDC's Worldwide Quarterly Storage Software Tracker, Q1
5 Gartner Inc., Magic Quadrant for Storage Services, Q2'07.
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 results of operations exclude
amortization of intangible assets, stock-based compensation
expenses, acquisition-related retention costs, gain on sale of
investment, restructuring charges/recoveries, prior
acquisition-related costs, and the related effects on income taxes
as well as certain discrete GAAP provisions 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: (919) 476-5750
Network Appliance, Inc.
Ph: (408) 822-6428