Slide 1: Q2 FY25 Earnings Results
Q2 FY25 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 ret urns, and our future results, performance or achievements, financial and otherwise. These statements and projections reflect management's current expectati o
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: Across several eras in the age of data, NetApp has led in data infrastructure innovation
Across several eras in the age of data, NetApp has led in data infrastructure innovation Adoption Complexity Acceleration Simplification Data Siloes & Hybrid Hybrid Intelligence Unification Cloud Multiclouds NetApp delivers silo-free infrastructure, then harnesses observability and AI to enable NetA
Slide 5: Intelligent data infrastructure lets you turn 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 6: With intelligent data infrastructure, you can rise to every moment
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 7: Competitively positioned to drive growth in key markets
Competitively positioned to drive growth in key markets Flash Block Cloud AI + AFF Series ASA Series Optimized The right product Only natively Large portion of the performance and and strategy to integrated player, world’s unstructured design across all disrupt the mature addressing a broad enterpri
Slide 8: Increase productivity and minimize risk with 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 Comprehensive data management software delivering automation, efficiency, ONTAP ONTAP STORAGE S
Slide 9: Flexible unified storage for any app, any data, anywhere
Flexible unified storage for any app, any data, anywhere NetApp AFF Any unstructured file or object SMB NFS S3 workload Any block NVMe/FC NVMe/TCP workload FCP iSCSI Comprehensive data management software delivering automation, efficiency, ONTAP data protection, and security capabilities for file, b
Slide 10: Focused SAN storage for your block workloads
Focused SAN storage for your block workloads Dedicated block storage without the silos Simple Leverage a storage solution so simple that anyone NVMe/FC NVMe/TCP FCP iSCSI can deploy it, manage it, and upgrade it NetApp ASA NetApp is trusted and proven by over Powerful 20,000 customers for their SAN
Slide 11: Leading NAS & Object storage for unstructured data
Leading NAS & Object storage for unstructured data Massive scalability meets the most advanced integrated data management Scalable. Start small and grow to close to exabyte- scale clusters with multi-PB single namespaces. Comprehensive with fully integrated tiering, caching, replication, backup, and
Slide 12: Simple efficient secondary storage
Simple efficient secondary storage Cloud Volumes ONTAP Economical Tier 2/3 Optimize overall cost of storage over the data lifecycle with workloads automated tiering and economical backup Cold & tiered data Simple Flexibly adapt to evolving business needs with industry-leading Backup & hybrid flash s
Slide 13: Consume your data infrastructure on your terms
Consume your data infrastructure on your terms Ultimate flexibility, guaranteed As-A-Service Integrated Tech Refresh Traditional Purchase Public Cloud Consumption NetApp Keystone • Always available and • Choose from the three Storage Lifecycle Program • Procure services, not systems unchanged larges
Slide 14: 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 15: 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 16: It's always ONTAP, delivered how you need it, where you need it
It's always ONTAP, delivered how you need it, where you need it On-Premises/ Amazon FSx Google Cloud NetApp Cloud Azure NetApp Files Hybrid Cloud for NetApp ONTAP NetApp Volumes Volumes ONTAP The only common storage software provided as on-premises enterprise storage and as a native managed cloud st
Slide 17: NetApp continues its commitment to Sustainability and ESG
NetApp continues its commitment to Sustainability and ESG PRODUCTS SOCIAL IMPACT AFF A- NEW SUSTAINABLE SERIES PACKAGING launched high performing all-flash storage enabling storage 46% made from recycled content, recyclable curbside, consolidation and reduction in $3.5 and designed for space efficie
Slide 18: NetApp makes data infrastructure intelligent to turn a world of disruption into opportunities
NETAPP MAKES DATA INFRASTRUCTURE INTELLIGENT TO TURN A WORLD OF DISRUPTION INTO OPPORTUNITIES FOR EVERY CUSTOMER 18 © 2024 NetApp, Inc. All rights reserved.
Slide 19: Q2 FY25 highlights
Delivered Q2 year-over-year revenue and billings growth of 6% and 9%, respectively* Set Q2 records for operating margin at 29% and EPS at $1.87* Grew all-flash annualized revenue run rate by 19% year-over-year to an all-time high of $3.8 billion Grew first party and marketplace cloud storage service
Slide 20: Q2 FY25 summary
Q2 FY25 summary Q2 guidance Q2 actual (as of Aug 28, 2024) Revenue $1.565B – $1.715B $1.66B +6.1% y/y Billings1 $1.59B +9.1% y/y Non-GAAP gross margin 71% – 72% 72.0% +0 bps y/y Non-GAAP operating margin ~ 28% 28.6% +180 bps y/y Non-GAAP EPS $1.73 – $1.83 $1.87 +18.4% y/y Non-GAAP FCF margin 3.6% Re
Slide 21: YTD FY25 summary
YTD FY25 summary Q1 Q2 YTD Revenue $1.54B $1.66B $3.20B +7.6% y/y +6.1% y/y +6.8% y/y Billings1 $1.45B $1.59B $3.04B +11.5% y/y +9.1% y/y +10.2% y/y Non-GAAP gross margin 72.2% 72.0% 72.1% +150 bps y/y +0 bps y/y +70 bps y/y Non-GAAP operating margin 25.9% 28.6% 27.3% +430 bps y/y +180 bps y/y +300
Slide 22: Revenues
Revenues 6% Y/Y $1.7B $1.7B $1.6B $1.6B $1.5B $1.4B Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Q1 FY25 Q2 FY25 Services revenue Product revenue 22 © 2024 NetApp, Inc. All rights reserved.
Slide 23: Billings
Billings $1.8B 9% Y/Y $1.7B $1.6B $1.5B $1.4B $1.3B Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Q1 FY25 Q2 FY25 Billings Billings is a Non-GAAP measure. Refer to appendix for additional details and a reconciliation between GAAP and Non-GAAP numbers. 23 © 2024 NetApp, Inc. All rights reserved.
Slide 24: Non-GAAP gross margin
Non-GAAP gross margin $1,167M $1,192M $1,194M $1,125M $1,113M $1,012M 72.0% 72.7% 72.2% 72.0% 70.7% 71.5% Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Q1 FY25 Q2 FY25 Non-GAAP gross profit Non-GAAP gross margin Refer to appendix for a reconciliation between GAAP and Non-GAAP numbers 24 © 2024 NetApp, Inc. All ri
Slide 25: Segment revenue and gross margin
Segment revenue and gross margin Hybrid Cloud Public Cloud $1,516M $1,490M $1,455M $1,408M $1,382M $168M $1,278M $159M $154M $154M $151M $152M 73.8% 73.4% 71.1% 72.7% 72.4% 71.8% 71.8% 71.1% 68.4% 66.9% 66.2% 65.6% Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Q1 FY25 Q2 FY25 Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Q1 FY
Slide 26: All flash array annualized revenue run rate
All flash array annualized revenue run rate 19% Y/Y $3.8B $3.6B $3.4B $3.4B $3.2B $2.8B Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Q1 FY25 Q2 FY25 All flash annualized array revenue run rate 26 © 2024 NetApp, Inc. All rights reserved. AFA annualized net revenue run rate is determined by products and services r
Slide 27: Non-GAAP operating expense
Non-GAAP operating expense $703M $723M $714M $719M $706M $682M 49.1% 46.3% 45.2% 43.3% 43.4% 42.5% Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Q1 FY25 Q2 FY25 Non-GAAP operating expense Non-GAAP operating expense as a percent of revenue Refer to appendix for a reconciliation between GAAP and Non-GAAP numbers 27
Slide 28: Non-GAAP operating profit
Non-GAAP operating profit $485M $475M $469M $419M $399M 30.2% $309M 28.1% 28.6% 26.8% 25.9% 21.6% Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Q1 FY25 Q2 FY25 Non-GAAP operating profit Non-GAAP operating margin Refer to appendix for a reconciliation between GAAP and Non-GAAP numbers 28 © 2024 NetApp, Inc. All ri
Slide 29: Non-GAAP earnings per share
Non-GAAP earnings per share 18% Y/Y $1.94 $1.87 $1.80 $1.58 $1.56 $1.15 Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Q1 FY25 Q2 FY25 Non-GAAP earnings per share Refer to appendix for a reconciliation between GAAP and Non-GAAP numbers 29 © 2024 NetApp, Inc. All rights reserved.
Slide 30: Free cash flow
Free cash flow $567M $448M $418M $300M 34.0% 29.2% 27.9% $97M 19.5% $60M 6.2% 3.6% Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Q1 FY25 Q2 FY25 Free cash flow Free cash flow as a percent of revenue Refer to appendix for a reconciliation between GAAP and Non-GAAP numbers 30 © 2024 NetApp, Inc. All rights reserved
Slide 31: Deferred revenue
Deferred revenue 2% Y/Y $4.2B $4.1B $4.2B $4.2B $4.1B $4.0B Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Q1 FY25 Q2 FY25 Deferred revenue balance 31 © 2024 NetApp, Inc. All rights reserved.
Slide 32: Q3 FY25 Guidance
Q3 Guide Q4 FY24 Guidance Revenue $1.61B – $1.76B as of Feb 29, 2024 Gross margin* 71% – 72% Operating margin* ~ 29% Q3 FY25 GUIDANCE Earnings per share* $1.85 – $1.95 AS OF NOVEMBER 21, 2024 Additional modeling points Net interest income** ~ $10M Tax rate* 20% – 21% *Gross margin, operating margin,
Slide 33: Updated FY25 Guidance
FY25 Guide Updated FY24 Guidance Revenue $6.54B – $6.74B as of Feb 29, 2024 Gross margin* 71% – 72% Operating margin* 28% – 28.5% UPDATED FY25 GUIDANCE Earnings per share* $7.20 – $7.40 AS OF NOVEMBER 21, 2024 Additional modeling points Net interest income** ~ $55M Tax rate* 20% – 21% *Gross margin,
Slide 34: Appendix: Supplementary Tables and GAAP to Non-GAAP Reconciliations & Explanations
Appendix: Supplementary Tables and GAAP to Non- GAAP Reconciliations & Explanations © 2024 NetApp, Inc. All rights reserved.
Slide 35: Supplemental revenue and gross margin data
Supplemental revenue and gross margin data RECONCILIATION OF SEGMENTS GROSS PROFIT TO TOTAL GROSS PROFIT ($ in millions) First Six Months First Six Months Q1'FY24 Q2'FY24 Q3'FY24 Q4'FY24 Q1'FY25 Q2'FY25 of FY'24 of FY'25 Revenues by Segment Product $ 590 $ 706 $ 747 $ 806 $ 669 $ 768 $ 1,296 $ 1,437
Slide 36: 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) First Six Months First Six Months Q1'FY24 Q2'FY24 Q3'FY24 Q4'FY24 Q1'FY25 Q2'FY25 of FY'24 of FY'25 Net revenues $ 1,432 $ 1,562 $ 1,606 $ 1,668 $ 1,541 $ 1,658 $ 2,994 $ 3,199 C
Slide 37: Reconciliation of GAAP to Non-GAAP gross profit and gross margin
Reconciliation of GAAP to Non-GAAP gross profit and gross margin RECONCILIATION OF GAAP TO NON-GAAP GROSS PROFIT AND GROSS MARGIN ($ in millions) First Six Months First Six Months Q1'FY24 Q2'FY24 Q3'FY24 Q4'FY24 FY2024 Q1'FY25 Q2'FY25 of FY'24 of FY'25 NET REVENUES $ 1,432 $ 1,562 $ 1,606 $ 1,668 $
Slide 38: Reconciliation of GAAP to Non-GAAP operating expenses
Reconciliation of GAAP to Non-GAAP operating expenses RECONCILIATION OF GAAP TO NON-GAAP OPERATING EXPENSES ($ in millions) First Six Months First Six Months Q1'FY24 Q2'FY24 Q3'FY24 Q4'FY24 Q1'FY25 Q2'FY25 of FY'24 of FY'25 OPERATING EXPENSES $ 818 $ 806 $ 785 $ 810 $ 816 $ 832 $ 1,624 $ 1,648 Adjus
Slide 39: Reconciliation of GAAP to Non-GAAP operating margin
Reconciliation of GAAP to Non-GAAP operating margin RECONCILIATION OF GAAP TO NON-GAAP OPERATING MARGIN ($ in millions) First Six Months First Six Months Q1'FY24 Q2'FY24 Q3'FY24 Q4'FY24 Q1'FY25 Q2'FY25 of FY'24 of FY'25 INCOME FROM OPERATIONS $ 178 $ 304 $ 366 $ 366 $ 282 $ 345 $ 482 $ 627 Adjustmen
Slide 40: Reconciliation of GAAP to Non-GAAP net income per share
Reconciliation of GAAP to Non-GAAP net income per share RECONCILIATION OF GAAP TO NON-GAAP NET INCOME PER SHARE First Six Months First Six Months Q1'FY24 Q2'FY24 Q3'FY24 Q4'FY24 Q1'FY25 Q2'FY25 of FY'24 of FY'25 NET INCOME PER SHARE $ 0.69 $ 1.10 $ 1.48 $ 1.37 $ 1.17 $ 1.42 $ 1.79 $ 2.59 Adjustments
Slide 41: Reconciliation of operating cash flow to free cash flow (Non-GAAP)
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) First Six Months First Six Months Q1'FY24 Q2'FY24 Q3'FY24 Q4'FY24 Q1'FY25 Q2'FY25 of FY
Slide 42: Reconciliation of GAAP guidance to Non-GAAP - third quarter fiscal 2025
Reconciliation of GAAP guidance to Non-GAAP - third quarter fiscal 2025 NETAPP, INC. RECONCILIATION OF GAAP GUIDANCE TO NON-GAAP THIRD QUARTER FISCAL 2025 (Unaudited) Third Quarter Fiscal 2025 Gross Margin - GAAP Guidance 70% - 71% Adjustment: Cost of revenues adjustments 1% Gross Margin - Non-GAAP
Slide 43: Reconciliation of GAAP guidance to Non-GAAP - third quarter fiscal 2025, continued
Reconciliation of GAAP guidance to Non-GAAP - third quarter fiscal 2025, continued NETAPP, INC. RECONCILIATION OF GAAP GUIDANCE TO NON-GAAP THIRD QUARTER FISCAL 2025 (Unaudited) Third Quarter Fiscal 2025 Net Income Per Share - GAAP Guidance $1.41 - $1.51 Adjustments: Amortization of intangible asset
Slide 44: Reconciliation of GAAP guidance to Non-GAAP – fiscal 2025
Reconciliation of GAAP guidance to Non-GAAP – fiscal 2025 NETAPP, INC. RECONCILIATION OF GAAP GUIDANCE TO NON-GAAP FISCAL 2025 (Unaudited) Fiscal 2025 Gross Margin - GAAP Guidance 70% - 71% Adjustment: Cost of revenues adjustments 1% Gross Margin - Non-GAAP Guidance 71% - 72% Fiscal 2025 Operating M
Slide 45: Reconciliation of GAAP guidance to Non-GAAP – fiscal 2025, continued
Reconciliation of GAAP guidance to Non-GAAP – fiscal 2025, continued NETAPP, INC. RECONCILIATION OF GAAP GUIDANCE TO NON-GAAP FISCAL 2025 (Unaudited) Fiscal 2025 Net Income Per Share - GAAP Guidance $5.48 - $5.68 Adjustments: Amortization of intangible assets $0.26 Stock-based compensation expense $
Slide 46: Reconciliation of GAAP guidance to Non-GAAP - second quarter fiscal 2025
Reconciliation of GAAP guidance to Non-GAAP - second quarter fiscal 2025 NETAPP, INC. RECONCILIATION OF GAAP GUIDANCE TO NON-GAAP SECOND QUARTER FISCAL 2025 (Unaudited) Second Quarter Fiscal 2025 Gross Margin - GAAP Guidance 70% - 71% Adjustment: Cost of revenues adjustments 1% Gross Margin - Non-GA
Slide 47: Reconciliation of GAAP guidance to Non-GAAP - second quarter fiscal 2025, continued
Reconciliation of GAAP guidance to Non-GAAP - second quarter fiscal 2025, continued NETAPP, INC. RECONCILIATION OF GAAP GUIDANCE TO NON-GAAP SECOND QUARTER FISCAL 2025 (Unaudited) Second Quarter Fiscal 2025 Net Income Per Share - GAAP Guidance $1.27 - $1.37 Adjustments: Amortization of intangible as
Slide 48: © 2024 NetApp, Inc. All rights reserved.
48 © 2024 NetApp, Inc. All rights reserved.