NetApp reports fiscal year 2014 first quarter results

By Phumeza Tontsi for NetApp
Sunnyvale, Calif, 16 Aug 2013

* Revenue of $1.516 billion, up 5% year-over-year.
* Non-GAAP EPS of $0.53, up 26% year-over-year.
* Cash from operations of $286 million, up 25% year-over-year.
* $900 million returned to shareholders in share repurchases and cash dividends.

NetApp (NASDAQ: NTAP) today reported financial results for the first quarter of fiscal year 2014, ended 26 July 2013.

First quarter financial results

Total revenue for the first quarter of fiscal year 2014 was $1.516 billion, an increase of 5% from the comparable period of the prior year.

GAAP net income for the first quarter of fiscal year 2014 was $82 million, or $0.23 per share (1), compared to GAAP net income of $64 million, or $0.17 per share, for the comparable period of the prior year.

NetApp unveils clustered Data ONTAP innovations that pave the way for software-defined storage

Non-GAAP net income for the first quarter of fiscal year 2014 was $192 million, or $0.53 per share (2), compared to non-GAAP net income of $156 million, or $0.42 per share, for the first quarter of fiscal 2013.

Cash, cash equivalents, investments

NetApp ended the first quarter of 2014 with $5.084 billion of total cash, cash equivalents and investments, and during the quarter, generated approximately $286 million in cash from operations. The company returned $900 million to shareholders during the quarter through share repurchases and a cash dividend. The next dividend in the amount of $0.15 per share will be paid on 25 October 2013 to shareholders on record as of the close of business on 21 October 2013.

"NetApp delivered solid results and innovation with the latest release to our clustered Data ONTAP operating system," said Tom Georgens, president and CEO. "Despite an uneven macro environment, our branded business was strong, with 9% year-over-year growth. This is evidence of the tremendous value we are delivering to customers today and their confidence in our long-term strategy to enable them to navigate the future."

Q2 fiscal year 2014 outlook

The company provided the following financial guidance for the second quarter of fiscal year 2014:
* Total revenue is expected to be in the range of $1.560 billion to $1.660 billion.
* GAAP earnings per share is expected to be in the range of $0.41 to $0.46 per share.
* Non-GAAP earnings per share is expected to be in the range of $0.60 to $0.65 per share.
* Diluted shares (3) outstanding of approximately 351 million shares.

Business highlights

In its first quarter of fiscal year 2014, NetApp delivered technology innovation focused on helping customers capitalise on cloud and mobility trends, while also strengthening its strategic relationships with industry-leading partners.

Highlights include:

* NetApp introduces Data ONTAP 8.2. New enhancements to clustered Data ONTAP 8.2 provide organisations and cloud service providers the capability to rapidly and cost-effectively deliver new services and capacity with maximum application uptime. Clustered Data ONTAP delivers native multi-tenant, policy-based storage services via programmable APIs and application integrations that are core tenants of a software-defined storage environment.

* NetApp Connect delivers mobile access with enterprise level data protection. By keeping all data securely behind the corporate firewall, NetApp Connect offers mobile access to corporate data while maintaining the tight security and control that enterprise IT requires for keeping its data and business protected.

* NetApp and Cisco expand the FlexPod platform. In a continuing effort to make data centre infrastructures more responsive to applications' dynamic needs, Cisco and NetApp broadened the FlexPod portfolio with a new offering called FlexPod Select and introduced new validated designs across the entire suite. FlexPod Select components include NetApp E-Series and FAS storage systems.

* NetApp teams up with Microsoft to accelerate cloud deployments. NetApp will invest $15 million in new ecosystem sales collaboration and continued technology integration with Microsoft to accelerate the adoption of enterprise cloud deployments.

* Clustered Data ONTAP integrates with Citrix Technologies. New solution integrations from NetApp and Citrix combine the benefits of clustered Data ONTAP with Citrix technologies for desktop and application virtualisation, mobile collaboration, and cloud services.

* Microsoft's Server Platform Partner of the Year. NetApp was named Microsoft's Server Platform Partner of the Year for innovative storage solutions that enable non-disruptive operations and deliver optimal operational efficiency for virtualised environments and file services.

Editor's note

Financial information previously found in the Supplemental Commentary document will now be included in the accompanying Supplemental Data tables of the quarterly financial press release.

In addition, historical supplemental data tables, providing historical multi-period financial information, will be available on NetApp's investor relations Web site at investors.netapp.com.

Webcast and conference call information

NetApp will host a conference call to discuss these results today at 2:30pm Pacific time. To access the live Webcast of this event, visit the NetApp Investor Relations Web site at investors.netapp.com. In addition, this press release and any other information related to the call will be posted on the Investor Relations Web site. An audio replay will also be available after 4:30pm Pacific time today, on the Web site.

NetApp

NetApp creates innovative storage and data management solutions that deliver outstanding cost-efficiency and accelerate business breakthroughs. NetApp's commitment to living its core values and consistently being recognised as a great place to work around the world are fundamental to the company's long-term growth and success, as well as the success of NetApp's pathway partners and customers. Discover the company's passion for helping companies around the world go further, faster at www.netapp.com.

Safe harbour statement under US 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 the financial guidance for the second quarter of fiscal year 2014, the benefits to us and our customers of our products and services, and the expected benefits of partnerships and alliances. All of these forward-looking statements involve risk and uncertainty. Actual results may differ materially from these statements for a variety of reasons, including, without limitation, general economic and market conditions, revenue seasonality, our stock price and matters specific to our business, such as customer demand for and acceptance of our products and services. These and other equally important factors are described in reports and documents we file from time to time with the Securities and Exchange Commission (SEC), including the factors described under the sections titled "Risk Factors" in our most recently submitted Annual and Quarterly Reports on Forms 10-K and 10-Q, respectively. We disclaim any obligation to update information contained in these forward-looking statements whether as a result of new information, future events, or otherwise.

NetApp, the NetApp logo, Go further, faster, Data ONTAP and FlexPod are trademarks or registered trademarks of NetApp, Inc. All other marks are the property of their respective owners.

1 GAAP earnings per share is calculated using the diluted number of shares for all periods presented.

2 Non-GAAP net income excludes the amortisation of intangible assets, stock-based compensation, acquisition-related income and expenses, restructuring and other charges, asset impairments, non-cash interest expense associated with our debt, net losses or gains on investments, and our GAAP tax provision, but includes a non-GAAP tax provision based upon our projected annual non-GAAP effective tax rate for the first three quarters of the fiscal year and an actual non-GAAP tax provision for the fourth quarter of the fiscal year. Non-GAAP earnings per share is calculated using the diluted number of shares for all periods presented. A detailed reconciliation of our non-GAAP to GAAP results can be found at http://investors.netapp.com.

3 Dilutive share count includes the estimated impact of our warrants, calculated based upon our average stock price of $41.56 for the first 10 trading days of our second quarter. Please refer to the table on our investor relations Web site which shows the impact on diluted share count for a range of stock prices.

NetApp usage of non-GAAP financials

The company refers to the non-GAAP financial measures in making operating decisions because they provide meaningful supplemental information regarding the company's ongoing operational performance. Non-GAAP net income excludes the amortisation of intangible assets, stock-based compensation, acquisition-related income and expenses, restructuring and other charges, asset impairments, non-cash interest expense associated with our debt, net losses or gains on investments, and our GAAP tax provision, but includes a non-GAAP tax provision based upon our projected annual non-GAAP effective tax rate for the first three quarters of the fiscal year and an actual non-GAAP tax provision for the fourth quarter of the fiscal year. 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 are used to: (1) measure company performance against historical results, (2) facilitate comparisons to our competitors' operating results, and (3) allow greater transparency with respect to information used by management in financial and operational decision-making. In addition, these non-GAAP financial measures are used to measure company performance for the purposes of determining employee incentive plan compensation. 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.

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NetApp reports fiscal year 2014 first quarter results

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