Slide 1: Q4 FY24 Earnings Results
Q4 FY24 EARNINGS RESULTS © 2024 NetApp, Inc. All rights reserved.
Slide 2: Safe harbor
Safe harbor • This presentation contains forward-looking statements and projections about our strategy, products and services, shareholder returns, and our future results, performance or achievements, financial and otherwise. These statements and projections reflect management's current expectations
Slide 3: NetApp is the Intelligent Data Infrastructure Company
NetApp is the INTELLIGENT DATA INFRASTRUCTURE COMPANY 3 © 2024 NetApp, Inc. All rights reserved.
Slide 4: NetApp has led in data infrastructure innovation across several eras
Across several eras in the age of data, NetApp has led in data infrastructure innovation m ple x ity and cost , co g amo unt of data Increasin Adoption Complexity Acceleration Simplification 1996 Today Data Siloes & Hybrid Hybrid Intelligence Unification Cloud Multiclouds NetApp becomes the first Ne
Slide 5: Disruptive forces that customers face are stronger than ever
Today, the disruptive forces that customers face are stronger than ever BUSINESS IT DISRUPTIONS SOCIETAL DISRUPTIONS DISRUPTIONS Customer Growing Economic shifts cyber attacks uncertainty Labor Modern apps Sustainability shortages & infrastructure pressure Advanced New approach Data ethics automatio
Slide 6: Intelligent data infrastructure turns disruption into opportunity
Intelligent data infrastructure lets you turn disruption into opportunity BUSINESS IT OPPORTUNITIES SOCIETAL OPPORTUNITIES OPPORTUNITIES Enhanced Data resilience Cost savings experiences Team High-performing apps & Greater sustainability productivity infrastructure Operations Flexible, silo-free Imp
Slide 7: Rise to every moment with intelligent data infrastructure
BE THE BE THE BE THE SILO BUDGET SUSTAINABILITY BUSTER HERO CHAMPION Deliver simplicity by managing Make your on-premises and cloud Power more sustainable complex workloads and infrastructure spend go further operations with energy-efficient eliminating infrastructure silos technologies, tiering, an
Slide 8: ONTAP: unified simplicity at scale
Increase productivity and minimize risk with unified simplicity at scale High-performance AI/ML/modern Dev/test or Virtual machines Databases Kubernetes Cloud storage file data lakes secondary ONLY NETAPP ONTAP Comprehensive data management software delivering automation, efficiency, ONTAP STORAGE S
Slide 9: Peace of mind, guaranteed
Peace of mind, guaranteed Continually evolve your storage environment with confidence Ransomware 6 Nines (99.9999%) Predictable Media Replacement Storage Efficiency Recovery Data Availability Support Pricing Assurance Guarantee Guarantee Guarantee OPTIONAL PROGRAM1 INCLUDED w/ ASA2 INCLUDED w/ Suppo
Slide 10: Your Artificial Intelligence solution: driven by NetApp
Your Artificial Intelligence solution: driven by NetApp Maximize the potential of AI and secure a competitive advantage with NetApp On-prem Hybrid INTELLIGENT & The data INTEGRATED infrastructure SCALABLE foundation for Public Clouds PERFORMANCE enterprise AI TRUSTED & SECURE AI SOLUTIONS NVIDIA-cer
Slide 11: Unified control across your hybrid multicloud
Unified control across your hybrid multicloud NetApp BlueXP Unified control of storage and services for all your data wherever it lives Powerful AIOps drives operational simplicity Flexible consumption of resources unlocks control, investment protection, and ROI Integrated services maximize data pro
Slide 12: ESG FY23 highlights
ESG FY23 highlights ENVIRONMENT SOCIAL GOVERNANCE Decreased Scope 1 and Scope 2 DEI&B objectives set with Enhanced execution support with emissions by 31% from our FY20 executive-level accountability tied new ESG Operating Committee baseline to compensation Cybersecurity and human capital Joined the
Slide 13: NetApp makes data infrastructure intelligent
NETAPP MAKES DATA INFRASTRUCTURE INTELLIGENT TO TURN A WORLD OF DISRUPTION INTO OPPORTUNITIES FOR EVERY CUSTOMER 13 © 2024 NetApp, Inc. All rights reserved.
Slide 14: Q4 & FY24 Results highlights
Delivered Q4 year over year revenue and billings growth of 6% and 8% respectively* Grew all-flash annualized revenue run rate by 17% to an all-time high of $3.6 billion TCV Sales of Keystone more than doubled year over year to almost $150 million in FY’24** Set company records for gross margin, oper
Slide 15: Q4 FY24 summary
Q4 FY24 summary Q4 guidance Q4 actual (as of Feb 29, 2024) Revenue $1.585B – $1.735B $1.67B +5.5% y/y Billings* $1.81B +8.4% y/y Non-GAAP gross margin ~ 71% 71.5% +250 bps y/y Non-GAAP operating margin 27% – 28% 28.1% +190 bps y/y Non-GAAP EPS $1.73 – $1.83 $1.80 +16.9% y/y Non-GAAP FCF margin 34.0%
Slide 16: FY24 summary
FY24 summary FY24 guidance FY24 actual (as of Feb 29, 2024) Revenue $6.185B – $6.335B $6.27B -1.5% y/y Billings* $6.25B -2.4% y/y Non-GAAP gross margin 71% – 72% 71.7% +450 bps y/y Non-GAAP operating margin ~27% 26.8% +260 bps y/y Non-GAAP EPS $6.40 – $6.50 $6.46 +15.6% y/y Non-GAAP FCF margin 24.4%
Slide 17: FY24 by quarter
FY24 by quarter Q1 Q2 Q3 Q4 FY24 Revenue $1.43B $1.56B $1.61B $1.67B $6.27B -10.1% y/y -6.1% y/y +5.2% y/y +5.5% y/y -1.5% y/y Billings* $1.30B $1.45B $1.69B $1.81B $6.25B -16.7% y/y -9.2% y/y +7.3% y/y +8.4% y/y -2.4% y/y Non-GAAP gross margin 70.7% 72.0% 72.7% 71.5% 71.7% + 400 bps y/y +580 bps y/
Slide 18: Revenues
Revenues 6% Y/Y $1.7B $1.7B $1.6B $1.6B $1.6B $1.6B $1.5B $1.4B Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Services revenue Product revenue 18 © 2024 NetApp, Inc. All rights reserved.
Slide 19: Billings
Billings 8% Y/Y $1.8B $1.7B $1.7B $1.6B $1.6B $1.6B $1.5B $1.3B Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Billings Billings is a Non-GAAP measure. Refer to appendix for additional details and a reconciliation between Non-GAAP and GAAP numbers. 19 © 2024 NetApp, Inc. All rights
Slide 20: Non-GAAP gross margin
Non-GAAP gross margin $1,167M $1,192M $1,125M $1,062M $1,102M $1,091M $1,020M $1,012M 72.0% 72.7% 70.7% 71.5% 69.0% 66.7% 66.3% 66.8% Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Non-GAAP gross profit Non-GAAP gross margin Refer to appendix for a reconciliation between Non-GAAP an
Slide 21: Segment revenue and gross margin
Segment revenue and gross margin Hybrid Cloud Public Cloud $1,521M $1,516M $1,460M $1,430M $1,455M $1,376M $1,408M $151M $154M $154M $151M $152M $150M $1,278M $142M $132M 73.4% 72.7% 71.8% 69.7% 71.1% 68.3% 68.7% 68.4% 69.4% 66.9% 66.2% 65.6% 65.6% 66.4% 66.1% 66.6% Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Q
Slide 22: All flash array annualized revenue run rate
All flash array annualized revenue run rate 17% Y/Y $3.6B $3.4B $3.2B $3.1B $3.1B $3.0B $2.8B $2.8B Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 All flash annualized array revenue run rate 22 © 2024 NetApp, Inc. All rights reserved. AFA annualized net revenue run rate is determine
Slide 23: Public cloud ARR
Public cloud ARR 2% Y/Y $620M $619M $630M $603M $605M $609M $608M $584M Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Public cloud ARR 23 © 2024 NetApp, Inc. All rights reserved. Public cloud annualized revenue run-rate is calculated as the annualized value of all Public Cloud cust
Slide 24: Non-GAAP operating expense
Non-GAAP operating expense $702M $703M $706M $723M $709M $677M $682M $648M 49.1% 45.2% 44.1% 42.8% 43.3% 42.6% 42.5% 42.5% Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Non-GAAP operating expense Non-GAAP operating expense as a percent of revenue Refer to appendix for a reconciliat
Slide 25: Non-GAAP operating profit
Non-GAAP operating profit $485M $469M $414M $419M 30.2% $393M $360M $372M 28.1% $309M 26.8% 26.2% 24.4% 23.6% 22.6% 21.6% Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Non-GAAP operating profit Non-GAAP operating margin Refer to appendix for a reconciliation between Non-GAAP and GA
Slide 26: Non-GAAP earnings per share
Non-GAAP earnings per share 17% Y/Y $1.94 $1.80 $1.54 $1.58 $1.48 $1.37 $1.20 $1.15 Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Non-GAAP earnings per share Refer to appendix for a reconciliation between Non-GAAP and GAAP numbers 26 © 2024 NetApp, Inc. All rights reserved.
Slide 27: Free cash flow
Free cash flow $567M $448M $418M $319M 34.0% 29.2% 27.9% $216M 20.9% $196M $97M 13.6% $137M 12.4% 8.2% 6.2% Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Free cash flow Free cash flow as a percent of revenue Refer to appendix for a reconciliation between Non-GAAP and GAAP numbers 2
Slide 28: Deferred revenue
Deferred revenue 2% Y/Y $4.2B $4.2B $4.3B $4.2B $4.2B $4.1B $4.0B $4.1B Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Deferred revenue balance 28 © 2024 NetApp, Inc. All rights reserved.
Slide 29: Q1 FY25 Guidance
Q1 Guide Q4 FY24 Guidance $1.455B – $1.605B Revenue as of Feb 29, 2024 Gross margin* ~ 72% Operating margin* ~ 25% Q1 FY25 GUIDANCE Earnings per share* $1.40 – $1.50 AS OF MAY 30, 2024 *Gross margin, operating margin, and EPS are Non-GAAP numbers. Refer to appendix for additional 29 © 2024 NetApp, I
Slide 30: FY25 Guidance
FY25 Guide Revenue $6.45B – $6.65B Updated FY24 Guidance Gross margin* 71% – 72% as of Feb 29, 2024 Operating margin* 27% – 28% Earnings per share* $6.80 – $7.00 FY25 GUIDANCE AS OF MAY 30, 2024 Additional modeling points Net interest income** ~ $30M Tax rate* 21% – 22% Share count 1% – 2% reduction
Slide 31: Appendix: Supplementary Tables and Non-GAAP to GAAP Reconciliations
Appendix: Supplementary Tables and Non-GAAP to GAAP Reconciliations & Explanations © 2024 NetApp, Inc. All rights reserved.
Slide 32: Supplemental revenue and gross margin data
Supplemental revenue and gross margin data RECONCILIATION OF SEGMENTS GROSS PROFIT TO TOTAL GROSS PROFIT ($ in millions) Q1 FY'23 Q2 FY'23 Q3 FY'23 Q4 FY'23 Q1'FY24 Q2'FY24 Q3'FY24 Q4'FY24 FY'23 FY'24 Revenues by Segment Product $ 786 $ 837 $ 682 $ 744 $ 590 $ 706 $ 747 $ 806 $ 3,049 $ 2,849 Support
Slide 33: Reconciliation of net revenues to billings (Non-GAAP)
Reconciliation of net revenues to billings (Non-GAAP) RECONCILIATION OF NET REVENUES TO BILLINGS (NON-GAAP) (In millions) Q1 FY'23 Q2 FY'23 Q3 FY'23 Q4 FY'23 Q1'FY24 Q2'FY24 Q3'FY24 Q4'FY24 FY'23 FY'24 Net revenues $ 1,592 $ 1,663 $ 1,526 $ 1,581 $ 1,432 $ 1,562 $ 1,606 $ 1,668 $ 6,362 $ 6,268 Chang
Slide 34: Reconciliation of Non-GAAP to GAAP gross profit and gross margin
Reconciliation of Non-GAAP to GAAP gross profit and gross margin RECONCILIATION OF NON-GAAP TO GAAP GROSS PROFIT AND GROSS MARGIN ($ in millions) Q1 FY'23 Q2 FY'23 Q3 FY'23 Q4 FY'23 Q1'FY24 Q2'FY24 Q3'FY24 Q4'FY24 FY'23 FY'24 NET REVENUES $ 1,592 $ 1,663 $ 1,526 $ 1,581 $ 1,432 $ 1,562 $ 1,606 $ 1,6
Slide 35: Reconciliation of Non-GAAP to GAAP operating expenses
Reconciliation of Non-GAAP to GAAP operating expenses RECONCILIATION OF NON-GAAP TO GAAP OPERATING EXPENSES ($ in millions) Q1 FY'23 Q2 FY'23 Q3 FY'23 Q4 FY'23 Q1'FY24 Q2'FY24 Q3'FY24 Q4'FY24 FY'23 FY'24 OPERATING EXPENSES $ 791 $ 805 $ 829 $ 766 $ 818 $ 806 $ 785 $ 810 $ 3,191 $ 3,219 Adjustments:
Slide 36: Reconciliation of Non-GAAP to GAAP operating margin
Reconciliation of Non-GAAP to GAAP operating margin RECONCILIATION OF NON-GAAP TO GAAP OPERATING MARGIN ($ in millions) Q1 FY'23 Q2 FY'23 Q3 FY'23 Q4 FY'23 Q1'FY24 Q2'FY24 Q3'FY24 Q4'FY24 FY'23 FY'24 INCOME FROM OPERATIONS $ 255 $ 282 $ 172 $ 309 $ 178 $ 304 $ 366 $ 366 $ 1,018 $ 1,214 Adjustments:
Slide 37: Reconciliation of Non-GAAP to GAAP net income per share
Reconciliation of Non-GAAP to GAAP net income per share RECONCILIATION OF NON-GAAP TO GAAP NET INCOME PER SHARE Q1 FY'23 Q2 FY'23 Q3 FY'23 Q4 FY'23 Q1'FY24 Q2'FY24 Q3'FY24 Q4'FY24 FY'23 FY'24 NET INCOME PER SHARE $ 0.96 $ 3.41 $ 0.30 $ 1.13 $ 0.69 $ 1.10 $ 1.48 $ 1.37 $ 5.79 $ 4.65 Adjustments: Amor
Slide 38: Reconciliation of operating cash flow to free cash flow
Reconciliation of net cash provided by (used in) operating activities to free cash flow (Non-GAAP) RECONCILIATION OF NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES TO FREE CASH FLOW (NON-GAAP) (In millions) Q1 FY'23 Q2 FY'23 Q3 FY'23 Q4 FY'23 Q1'FY24 Q2'FY24 Q3'FY24 Q4'FY24 FY'23 FY'24 Net cash
Slide 39: Reconciliation of Non-GAAP guidance to GAAP - first quarter fiscal 2025
Reconciliation of Non-GAAP guidance to GAAP - first quarter fiscal 2025 NETAPP, INC. RECONCILIATION OF NON-GAAP GUIDANCE TO GAAP FIRST QUARTER FISCAL 2025 (Unaudited) First Quarter Fiscal 2025 Gross Margin - Non-GAAP Guidance ~72% Adjustment: Cost of revenues adjustments (1)% Gross Margin - GAAP Gui
Slide 40: Reconciliation of Non-GAAP guidance to GAAP - first quarter fiscal 2025, continued
Reconciliation of Non-GAAP guidance to GAAP - first quarter fiscal 2025, continued NETAPP, INC. RECONCILIATION OF NON-GAAP GUIDANCE TO GAAP FIRST QUARTER FISCAL 2025 (Unaudited) First Quarter Fiscal 2025 Net Income Per Share - Non-GAAP Guidance $1.40 - $1.50 Adjustments: Amortization of intangible a
Slide 41: Reconciliation of Non-GAAP guidance to GAAP – fiscal 2025
Reconciliation of Non-GAAP guidance to GAAP – fiscal 2025 NETAPP, INC. RECONCILIATION OF NON-GAAP GUIDANCE TO GAAP FISCAL 2025 (Unaudited) Fiscal 2025 Gross Margin - Non-GAAP Guidance 71% - 72% Adjustment: Cost of revenues adjustments (1)% Gross Margin - GAAP Guidance 70% - 71% Fiscal 2025 Operating
Slide 42: Reconciliation of Non-GAAP guidance to GAAP – fiscal 2025, continued
Reconciliation of Non-GAAP guidance to GAAP – fiscal 2025, continued NETAPP, INC. RECONCILIATION OF NON-GAAP GUIDANCE TO GAAP FISCAL 2025 (Unaudited) Fiscal 2025 Net Income Per Share - Non-GAAP Guidance $6.80 - $7.00 Adjustments: Amortization of intangible assets ($0.26) Stock-based compensation exp
Slide 43: Reconciliation of Non-GAAP guidance to GAAP - fourth quarter fiscal 2024
Reconciliation of Non-GAAP guidance to GAAP - fourth quarter fiscal 2024 NETAPP, INC. RECONCILIATION OF NON-GAAP GUIDANCE TO GAAP FOURTH QUARTER FISCAL 2024 (Unaudited) Fourth Quarter Fiscal 2024 Gross Margin - Non-GAAP Guidance ~71% Adjustment: Cost of revenues adjustments (1)% Gross Margin - GAAP
Slide 44: Reconciliation of Non-GAAP guidance to GAAP - fourth quarter fiscal 2024, continued
Reconciliation of Non-GAAP guidance to GAAP - fourth quarter fiscal 2024, continued NETAPP, INC. RECONCILIATION OF NON-GAAP GUIDANCE TO GAAP FOURTH QUARTER FISCAL 2024 (Unaudited) Fourth Quarter Fiscal 2024 Net Income Per Share - Non-GAAP Guidance $1.73 - $1.83 Adjustments: Amortization of intangibl
Slide 45: Reconciliation of Non-GAAP guidance to GAAP – fiscal 2024
Reconciliation of Non-GAAP guidance to GAAP – fiscal 2024 NETAPP, INC. RECONCILIATION OF NON-GAAP GUIDANCE TO GAAP FISCAL 2024 (Unaudited) Fiscal 2024 Gross Margin - Non-GAAP Guidance 71% - 72% Adjustment: Cost of revenues adjustments (1)% Gross Margin - GAAP Guidance 70% - 71% Fiscal 2024 Product M
Slide 46: Reconciliation of Non-GAAP guidance to GAAP – fiscal 2024, continued
Reconciliation of Non-GAAP guidance to GAAP – fiscal 2024, continued NETAPP, INC. RECONCILIATION OF NON-GAAP GUIDANCE TO GAAP FISCAL 2024 (Unaudited) Fiscal 2024 Net Income Per Share - Non-GAAP Guidance $6.40 - $6.50 Adjustments: Amortization of intangible assets ($0.27) Stock-based compensation exp
Slide 47: The Intelligent Data Infrastructure Company
THE INTELLIGENT DATA INFRASTRUCTURE COMPANY 47 © 2024 NetApp, Inc. All rights reserved.