After more than 2 years of year on year quarterly revenue decline, NetApp have finally shown growth. In the quarter, closed January 2017, they finally posted YoY growth that has been alluding them for so long.
The interesting figure that stands out is the growth on flash storage array sales, which are contributing an annualized revenue of $1.4 billion and have increased by 160%. The battle lines on flash are drawn and it is clear that NetApp is starting to do well in this space.
Even though NetApp's press release detailed some SolidFire success stories, we couldn't find the figures broken down to see the revenue impact from SolidFire sales. Anecdotally, based on what we are hearing from NetApp partners in ASEAN, it is not proving easy for the sales team to make sales of the SolidFire technology. However, it is clear they have the revenue growth and cash flow to make SolidFire successful over time.
Our own opinion at DSA is that whether by coincidence or as a direct result, NetApp's turn around comes at a time of major disruption as Dell try to understand what they have inherited with EMC. Make no mistake, these results from NetApp are meaningful. Their Data Fabric strategy resonates well. Delivering the whole vision may never happen, but the strategy itself shapes a new way of thinking for NetApp, shaping a new level of openness to work with competition in a market that now demands this kind of willingness for vendors to integrate. The integration of ONTAP into public cloud providers is an acceptance that hardware vendors can no longer expect to own every TB of storage an enterprise needs.
These results suggest that NetApp are getting their flash and cloud strategy right, and given the wholesale changes that Dell and EMC are working through we can’t help thinking that NetApp has a chance to change the balance of power in the enterprise storage space. They are on the rise once again and now arguably the largest data and storage focused vendors around.
There are big challenges to come. As an example, APJ remains at 13% of their total sales and this region is arguably where the real growth is. In our opinion, further focus in Asia makes a lot of sense.
These financials show signs that NetApp has a chance to really deliver on its vision to "lead the next era of IT", an era which will be data driven and where storage and data focused companies have a chance to grow faster than perhaps at any time before.
Highlights of the financials and full press release follows:
Highlights of the financials and full press release follows:
NetApp reported financial results for the third quarter of fiscal year 2017, ended January 27, 2017.
Third Quarter Financial Results
Net revenues for the third quarter of fiscal year 2017 were $1.40 billion. GAAP net income for the third quarter of fiscal year 2017 was $146 million, or $0.52 per share, compared to GAAP net income of $153 million, or $0.52 per share, for the comparable period of the prior year. Non-GAAP net income for the third quarter of fiscal year 2017 was $231 million, or $0.82 per share, compared to non-GAAP net income of $206 million, or $0.70 per share, for the comparable period of the prior year.
Cash, Cash Equivalents and Investments
NetApp ended the third quarter of fiscal year 2017 with $4.6 billion in total cash, cash equivalents and investments. During the third quarter of fiscal year 2017, the Company generated $235 million in cash from operations and returned $336 million to shareholders through share repurchases and a cash dividend.
The Company announced the next cash dividend of $0.19 per share. The quarterly dividend will be paid on April 26, 2017 to shareholders of record as of the close of business on April 7, 2017.
“Q3 marked another quarter of strong execution by NetApp,” said George Kurian, chief executive officer. “The transformation of NetApp is yielding solid results and has changed the trajectory of our business. With our industry-leading portfolio of solutions and Data Fabric strategy, NetApp is well positioned to lead in the next era of IT.”
Q4 Fiscal Year 2017 Outlook
The Company provided the following financial guidance for the fourth quarter of fiscal year 2017:
Net revenues are expected to be in the range of $1.365 billion to $1.515 billion.
GAAP earnings per share is expected to be in the range of $0.60 to $0.65 per share.
Non-GAAP earnings per share is expected to be in the range of $0.79 to $0.84 per share.
NetApp Expands Cloud Data Management and All-Flash Offerings
NetApp Improves Control, Simplifies Movement of Data in the Hybrid Cloud. New Data Fabric solutions and services speed data access and visibility, enhance data protection and security, and help customers extract value from their data from anywhere in the hybrid cloud.
NetApp Expands All-Flash Portfolio with New Entry-Level Array. The NetAppTM All Flash FAS (AFF) A200 expands the market opportunity for the world’s fastest and most efficient cloud-connected enterprise storage portfolio. The entry-level system delivers enterprise-grade flash performance at a very attractive price point and is ideal for midsize businesses that are making the move to all flash.
Customers Team with NetApp to Accelerate Performance and Responsiveness
Carrenza Supports Rapidly Evolving Customer Application and Infrastructure Demands with NetApp SolidFire. Global cloud service company Carrenza leverages NetApp SolidFireTM all-flash storage to enable customers to scale and accelerate business performance, increase infrastructure agility and responsiveness, and reduce storage maintenance time and administration effort.
Cologne Broadcasting Center (CBC) Upgrades TV Production and Delivery Services with NetApp. A new production storage and disaster recovery infrastructure has improved CBC broadcast service offerings throughout Germany with solutions delivered by NetApp and partner Pixit Media.
Wirestorm Delivers DevOps in the Cloud with NetApp ONTAP Cloud for Amazon Web Services (AWS). To accelerate and automate its DevOps process, Wirestorm deployed NetApp ONTAPTM Cloud. This Data Fabric solution delivers everything that the company needs for DevOps in the cloud—without a single physical array—enabling Wirestorm to use only laptops. The framework that it created with NetApp has enabled Wirestorm to automate so efficiently that it can implement an end-to-end solution all the way to AWS in less than a minute.