Slide 1: Q1 FY25 Earnings Results
Q1 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 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: Across several eras, 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: 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: Silo buster: 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 8: 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 9: Any data, any workload, any place
Any data, any workload, any place Data delivered how you need it, where you need it File, AI / ML, Backup, Electronic Design Virtualization Object, Databases Kubernetes modern data Disaster Automation … (VM) Block lakes Recovery (EDA) Traditional or STaaS On-Premises Hybrid Cloud Public Cloud Edge A
Slide 10: Why we are winning in Flash
Why we are winning in Flash For lowest cost, For best price / For best performance secondary use cases performance on Tier 1 workloads HYBRID FLASH CAPACITY FLASH PERFORMANCE FLASH Unified FAS AFF C-Series AFF A-Series / file ASA C-Series ASA A-Series Block Delivering automation, efficiency, data pr
Slide 11: Why we are winning in Block
Why we are winning in Block Disrupting the market by providing all the features at the lowest price in the industry Primary use cases Modern, resilient and simple • Power and resiliency of a legacy frame array in a modern system • Resilient with a 6 9’s Data Availability Guarantee program Strong fou
Slide 12: Why we are winning in Cloud storage
Why we are winning in Cloud storage Primary use cases Everywhere Backup, Electronic AI / ML Disaster Design Modern Data • 89% of orgs have a multi-cloud strategy1 – and NetApp Recovery Automation Lakes is the only native solution that is everywhere (EDA) • Integrated data protection, cross-region di
Slide 13: Why we are winning in AI
Why we are winning in AI NetApp’s leadership in files, objects and cloud storage is an essential data foundation for AI • Gen AI operates on unstructured data – and a large portion of Primary use cases the world’s unstructured data is already stored in NetApp. Data Lake Model Training • AI is inhere
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: ESG highlights
ESG 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 CD
Slide 17: NetApp makes data infrastructure intelligent
NETAPP MAKES DATA INFRASTRUCTURE INTELLIGENT TO TURN A WORLD OF DISRUPTION INTO OPPORTUNITIES FOR EVERY CUSTOMER 17 © 2024 NetApp, Inc. All rights reserved.
Slide 18: Q1 FY25 highlights
Delivered Q1 year-over-year revenue and billings growth of 8% and 12% respectively* Grew all-flash annualized revenue run rate by 21% year-over-year to $3.4 billion Grew first party and marketplace cloud storage services revenue approximately 40% year-over-year Set Q1 records for operating margin at
Slide 19: Q1 FY25 summary
Q1 FY25 summary Q1 guidance Q1 actual (as of May 30, 2024) Revenue $1.455B – $1.605B $1.54B +7.6% y/y Billings1 $1.45B +11.5% y/y Non-GAAP gross margin ~ 72% 72.2% +150 bps y/y Non-GAAP operating margin ~ 25% 25.9% +430 bps y/y Non-GAAP EPS $1.40 – $1.50 $1.56 +35.7% y/y Non-GAAP FCF margin 19.5% Re
Slide 20: Revenues
Revenues $1.7B 8% Y/Y $1.6B $1.6B $1.5B $1.4B Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Q1 FY25 Services revenue Product revenue 20 © 2024 NetApp, Inc. All rights reserved.
Slide 21: Billings
Billings $1.7B $1.8B 12% Y/Y $1.5B $1.4B $1.3B Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Q1 FY25 Billings Billings is a Non-GAAP measure. Refer to appendix for additional details and a reconciliation between GAAP and Non-GAAP numbers. 21 © 2024 NetApp, Inc. All rights reserved.
Slide 22: Non-GAAP gross margin
Non-GAAP gross margin $1,167M $1,192M $1,125M $1,113M $1,012M 72.0% 72.7% 72.2% 70.7% 71.5% Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Q1 FY25 Non-GAAP gross profit Non-GAAP gross margin Refer to appendix for a reconciliation between GAAP and Non-GAAP numbers 22 © 2024 NetApp, Inc. All rights reserved.
Slide 23: Segment revenue and gross margin
Segment revenue and gross margin Hybrid Cloud Public Cloud $1,516M $1,455M $159M $1,408M $1,382M $154M $154M $151M $152M $1,278M 73.4% 71.1% 72.7% 72.4% 71.8% 71.1% 68.4% 66.9% 66.2% 65.6% Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Q1 FY25 Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Q1 FY25 Segment revenue Segment gross m
Slide 24: All flash array annualized revenue run rate
All flash array annualized revenue run rate 21% Y/Y $3.6B $3.4B $3.4B $3.2B $2.8B Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Q1 FY25 All flash annualized array revenue run rate 24 © 2024 NetApp, Inc. All rights reserved. AFA annualized net revenue run rate is determined by products and services revenue for the
Slide 25: Non-GAAP operating expense
Non-GAAP operating expense $703M $723M $714M $706M $682M 49.1% 46.3% 45.2% 43.3% 42.5% Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Q1 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 25 © 2024 NetApp, Inc.
Slide 26: Non-GAAP operating profit
Non-GAAP operating profit $485M $469M $419M 30.2% $399M 28.1% $309M 26.8% 25.9% 21.6% Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Q1 FY25 Non-GAAP operating profit Non-GAAP operating margin Refer to appendix for a reconciliation between GAAP and Non-GAAP numbers 26 © 2024 NetApp, Inc. All rights reserved.
Slide 27: Non-GAAP earnings per share
Non-GAAP earnings per share $1.94 $1.80 36% Y/Y $1.58 $1.56 $1.15 Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Q1 FY25 Non-GAAP earnings per share Refer to appendix for a reconciliation between GAAP and Non-GAAP numbers 27 © 2024 NetApp, Inc. All rights reserved.
Slide 28: Free cash flow
Free cash flow $567M $448M $418M $300M 34.0% 29.2% 27.9% 19.5% $97M 6.2% Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Q1 FY25 Free cash flow Free cash flow as a percent of revenue Refer to appendix for a reconciliation between GAAP and Non-GAAP numbers 28 © 2024 NetApp, Inc. All rights reserved.
Slide 29: Deferred revenue
Deferred revenue 0% Y/Y $4.2B $4.1B $4.2B $4.2B $4.0B Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Q1 FY25 Deferred revenue balance 29 © 2024 NetApp, Inc. All rights reserved.
Slide 30: Q2 Guide
Q2 Guide Q4 FY24 Guidance $1.565B – $1.715B Revenue as of Feb 29, 2024 Gross margin* 71% – 72% Operating margin* ~ 28% Q2 FY25 GUIDANCE Earnings per share* $1.73 – $1.83 AS OF AUGUST 28, 2024 Additional modeling points Net interest income** ~ $15M Tax rate* 20% – 21% *Gross margin, operating margin,
Slide 31: FY25 Guide
FY25 Guide Updated FY24 Guidance Revenue $6.48B – $6.68B as of Feb 29, 2024 Gross margin* 71% – 72% Operating margin* 27% – 28% UPDATED FY25 GUIDANCE Earnings per share* $7.00 – $7.20 AS OF AUGUST 28, 2024 Additional modeling points Net interest income** ~ $50M Tax rate* 20% – 21% *Gross margin, ope
Slide 32: Appendix: Supplementary Tables and GAAP to Non-GAAP Reconciliations
Appendix: Supplementary Tables and GAAP to Non- GAAP Reconciliations & Explanations © 2024 NetApp, Inc. All rights reserved.
Slide 33: Supplemental revenue and gross margin data
Supplemental revenue and gross margin data RECONCILIATION OF SEGMENTS GROSS PROFIT TO TOTAL GROSS PROFIT ($ in millions) Q1'FY24 Q2'FY24 Q3'FY24 Q4'FY24 Q1'FY25 Revenues by Segment Product $ 590 $ 706 $ 747 $ 806 $ 669 Support 611 623 631 623 631 Professional and Other Services 77 79 77 87 82 Hybrid
Slide 34: 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'FY24 Q2'FY24 Q3'FY24 Q4'FY24 Q1'FY25 Net revenues $ 1,432 $ 1,562 $ 1,606 $ 1,668 $ 1,541 Change in deferred revenue and financed unearned services revenue* (133) (108) 81 146
Slide 35: 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) Q1'FY24 Q2'FY24 Q3'FY24 Q4'FY24 Q1'FY25 NET REVENUES $ 1,432 $ 1,562 $ 1,606 $ 1,668 $ 1,541 GROSS PROFIT $ 996 $ 1,110 $ 1,151 $ 1,176 $ 1,098 Adjustment
Slide 36: 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) Q1'FY24 Q2'FY24 Q3'FY24 Q4'FY24 Q1'FY25 OPERATING EXPENSES $ 818 $ 806 $ 785 $ 810 $ 816 Adjustments: Amortization of intangible assets (6) (6) (5) (6) (6) Stock-based compensa
Slide 37: 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) Q1'FY24 Q2'FY24 Q3'FY24 Q4'FY24 Q1'FY25 INCOME FROM OPERATIONS $ 178 $ 304 $ 366 $ 366 $ 282 Adjustments: Amortization of intangible assets 15 14 14 14 14 Stock-based compensation
Slide 38: 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 Q1'FY24 Q2'FY24 Q3'FY24 Q4'FY24 Q1'FY25 NET INCOME PER SHARE $ 0.69 $ 1.10 $ 1.48 $ 1.37 $ 1.17 Adjustments: Amortization of intangible assets 0.07 0.07 0.07 0.07 0.07 Stock-based compensa
Slide 39: 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'FY24 Q2'FY24 Q3'FY24 Q4'FY24 Q1'FY25 Net cash provided by (used in) operating activi
Slide 40: 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 41: 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 42: 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 43: 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 $5.17 - $5.37 Adjustments: Amortization of intangible assets $0.26 Stock-based compensation expense $
Slide 44: Reconciliation of GAAP guidance to Non-GAAP - first quarter fiscal 2025
Reconciliation of GAAP guidance to Non-GAAP - first quarter fiscal 2025 NETAPP, INC. RECONCILIATION OF GAAP GUIDANCE TO NON-GAAP FIRST QUARTER FISCAL 2025 (Unaudited) First Quarter Fiscal 2025 Gross Margin - GAAP Guidance ~71% Adjustment: Cost of revenues adjustments 1% Gross Margin - Non-GAAP Guida
Slide 45: Reconciliation of GAAP guidance to Non-GAAP - first quarter fiscal 2025, continued
Reconciliation of GAAP guidance to Non-GAAP - first quarter fiscal 2025, continued NETAPP, INC. RECONCILIATION OF GAAP GUIDANCE TO NON-GAAP FIRST QUARTER FISCAL 2025 (Unaudited) First Quarter Fiscal 2025 Net Income Per Share - GAAP Guidance $0.98 - $1.08 Adjustments: Amortization of intangible asset
Slide 46: © 2024 NetApp, Inc. All rights reserved.
46 © 2024 NetApp, Inc. All rights reserved.