Slide 1: Q3 FY24 Earnings Results
Q3 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: Today, the 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 4: 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 5: 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 1996 Today Data Siloes & Hybrid Hybrid Intelligence Unification Cloud Multiclouds NetApp becomes the first NetApp creates the first NetApp becomes the ONLY NetApp
Slide 6: NetApp is the Intelligent Data Infrastructure Company
NetApp is the INTELLIGENT DATA INFRASTRUCTURE COMPANY © 2024 NetApp, Inc. All rights reserved.
Slide 7: NetApp-enabled intelligent data infrastructure delivers several key benefits
NetApp-enabled intelligent data infrastructure delivers several key benefits ANY DATA, ACTIVE DATA ADAPTIVE ANY PLACE MANAGEMENT OPERATIONS Flexibility Security Performance Silo-free Compliance Efficiency Simplicity Sustainability Team Productivity INTELLIGENT DATA INFRASTRUCTURE 7 © 2024 NetApp, In
Slide 8: Each key benefit is delivered by a strategic focus area
Each key benefit is delivered by a strategic focus area UNIFIED DATA STORAGE INTEGRATED DATA SERVICES CLOUDOPS SOLUTIONS Single storage OS Built-in data security & Infrastructure Power any data type, protection optimization workload, and application Backup data while detecting AI-powered optimizatio
Slide 9: Be the budget maker
BE THE BUDGET MAKER BE THE Help your business tap into new customer value EXPERIENCE INNOVATOR Harness your data to deliver novel customer experiences GET THE MOST With intelligent OUT OF AI data infrastructure, Enable new levels of you can rise to every productivity and innovation that drive growth
Slide 10: NetApp makes data infrastructure intelligent to turn disruption into opportunities
NetApp makes data infrastructure intelligent to turn a world of disruption into opportunities for every customer 10 © 2024 NetApp, Inc. All rights reserved.
Slide 11: 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 12: Results highlights
Drove year over year revenue and billings* growth in Q3 of 5% and 7%, respectively Delivered company all-time highs for gross margin*, operating margin*, and EPS* for the 2 nd consecutive quarter Results highlights Grew all-flash array annualized revenue run rate by 21% year over year to a company r
Slide 13: Q3 FY24 summary
Q3 FY24 summary Q3 guidance Q3 actual (as of Nov 28, 2023) Revenue $1.51B – $1.67B $1.61B +5.2% y/y Billings* $1.69B +7.3% y/y Non-GAAP gross margin ~ 71% 72.7% +590 bps y/y Non-GAAP operating margin ~ 28% 30.2% +580 bps y/y Non-GAAP EPS $1.64 – $1.74 $1.94 +41.6% y/y Non-GAAP FCF margin 27.9% Capit
Slide 14: FY24 summary
FY24 summary Q1 Q2 Q3 YTD FY24 Revenue $1.43B $1.56B $1.61B $4.60B -10.1% y/y -6.1% y/y +5.2% y/y -3.8% y/y Billings* $1.30B $1.45B $1.69B $4.44B -16.7% y/y -9.2% y/y +7.3% y/y -6.2% y/y Non-GAAP gross margin 70.7% 72.0% 72.7% 71.8% + 400 bps y/y +580 bps y/y +590 bps y/y +520 bps y/y Non-GAAP opera
Slide 15: Revenues
Revenues 5% Y/Y $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 Services revenue Product revenue 15 © 2024 NetApp, Inc. All rights reserved.
Slide 16: Billings
Billings 7% Y/Y $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 Billings Billings is a Non-GAAP measure. Refer to appendix for additional details and a reconciliation between Non-GAAP and GAAP numbers. 16 © 2024 NetApp, Inc. All rights reserved.
Slide 17: Non-GAAP gross margin
Non-GAAP gross margin $1,167M $1,125M $1,062M $1,102M $1,091M $1,020M $1,012M 72.0% 72.7% 70.7% 69.0% 66.7% 66.3% 66.8% Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Q1 FY24 Q2 FY24 Q3 FY24 Non-GAAP gross margin dollars Non-GAAP gross margin Refer to appendix for a reconciliation between Non-GAAP and GAAP numbers
Slide 18: Segment revenue and gross margin
Segment revenue and gross margin Hybrid Cloud Public Cloud $1,521M $1,460M $1,430M $1,455M $1,376M $1,408M $151M $154M $154M $151M $150M $1,278M $142M $132M 73.4% 72.7% 69.7% 71.1% 68.3% 68.7% 69.4% 66.9% 65.6% 66.2% 65.6% 66.4% 66.1% 66.6% Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Q1 FY24 Q2 FY24 Q3 FY24 Q1
Slide 19: All flash array annualized revenue run rate
All flash array annualized revenue run rate 21% Y/Y $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 All flash annualized array revenue run rate 19 © 2024 NetApp, Inc. All rights reserved. AFA annualized net revenue run rate is determined by products
Slide 20: Public cloud ARR
Public cloud ARR 1% Y/Y $605M $620M $619M $609M $608M $584M $603M Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Q1 FY24 Q2 FY24 Q3 FY24 Public cloud ARR 20 © 2024 NetApp, Inc. All rights reserved. Public cloud annualized revenue run-rate is calculated as the annualized value of all Public Cloud customer commitmen
Slide 21: Non-GAAP operating expense
Non-GAAP operating expense $702M $709M $703M $706M $677M $682M $648M 49.1% 45.2% 44.1% 42.6% 42.5% 42.8% 42.5% Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Q1 FY24 Q2 FY24 Q3 FY24 Non-GAAP operating expense Non-GAAP operating expense as a percent of revenue Refer to appendix for a reconciliation between Non-GAAP
Slide 22: Non-GAAP operating profit
Non-GAAP operating profit $485M $414M $419M 30.2% $393M $360M $372M $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 Non-GAAP operating profit Non-GAAP operating margin Refer to appendix for a reconciliation between Non-GAAP and GAAP numbers 22 © 2024
Slide 23: Non-GAAP earnings per share
Non-GAAP earnings per share 42% Y/Y $1.94 $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 Non-GAAP earnings per share Refer to appendix for a reconciliation between Non-GAAP and GAAP numbers 23 © 2024 NetApp, Inc. All rights reserved.
Slide 24: Free cash flow
Free cash flow $448M $418M $319M $216M 29.2% $196M 27.9% 20.9% $137M 13.6% 12.4% $97M 8.2% 6.2% Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Q1 FY24 Q2 FY24 Q3 FY24 Free cash flow Free cash flow as a percent of revenue Refer to appendix for a reconciliation between Non-GAAP and GAAP numbers 24 © 2024 NetApp, Inc
Slide 25: Deferred revenue
Deferred revenue 2% Y/Y $4.2B $4.2B $4.3B $4.2B $4.1B $4.0B $4.1B Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Q1 FY24 Q2 FY24 Q3 FY24 Deferred revenue balance 25 © 2024 NetApp, Inc. All rights reserved.
Slide 26: Q4 FY24 Guidance
Q4 Guide Revenue $1.585B – $1.735B Gross margin* ~ 71% Operating margin* 27% – 28% $1.73 – $1.83 Q4 FY24 Guidance Earnings per share* as of Feb 29, 2024 Additional modeling points Product gross margin* ~ 60% Tax rate* ~ 20% *Gross margin, operating margin, EPS, product gross margin, and tax rate are
Slide 27: Updated FY24 Guidance
FY24 Guide Revenue $6.185B – $6.335B Gross margin* 71% – 72% Operating margin* ~27% $6.40 – $6.50 Updated FY24 Guidance Earnings per share* as of Feb 29, 2024 Additional modeling points Product gross margin* ~ 60% Operating cash flow At least $1.3B Net interest income ~ $40M Tax rate* ~ 20% Share co
Slide 28: Appendix: Supplementary Tables and Non-GAAP to GAAP Reconciliations & Explanations
Appendix: Supplementary Tables and Non-GAAP to GAAP Reconciliations & Explanations © 2024 NetApp, Inc. All rights reserved.
Slide 29: Supplemental revenue and gross margin data
Supplemental revenue and gross margin data RECONCILIATION OF SEGMENTS GROSS PROFIT TO TOTAL GROSS PROFIT ($ in millions) First Nine Months First Nine Months Q1 FY'23 Q2 FY'23 Q3 FY'23 Q4 FY'23 Q1'FY24 Q2'FY24 Q3'FY24 of FY'23 of FY'24 Revenues by Segment Product $ 786 $ 837 $ 682 $ 744 $ 590 $ 706 $
Slide 30: 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 Nine Months First Nine Months Q1 FY'23 Q2 FY'23 Q3 FY'23 Q4 FY'23 Q1'FY24 Q2'FY24 Q3'FY24 of FY'23 of FY'24 Net revenues $ 1,592 $ 1,663 $ 1,526 $ 1,581 $ 1,432 $ 1,562 $ 1
Slide 31: 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) First Nine Months First Nine Months Q1 FY'23 Q2 FY'23 Q3 FY'23 Q4 FY'23 Q1'FY24 Q2'FY24 Q3'FY24 of FY'23 of FY'24 NET REVENUES $ 1,592 $ 1,663 $ 1,526 $ 1
Slide 32: 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) First Nine Months First Nine Months Q1 FY'23 Q2 FY'23 Q3 FY'23 Q4 FY'23 Q1'FY24 Q2'FY24 Q3'FY24 of FY'23 of FY'24 OPERATING EXPENSES $ 791 $ 805 $ 829 $ 766 $ 818 $ 806 $ 785 $
Slide 33: 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) First Nine Months First Nine Months Q1 FY'23 Q2 FY'23 Q3 FY'23 Q4 FY'23 Q1'FY24 Q2'FY24 Q3'FY24 of FY'23 of FY'24 INCOME FROM OPERATIONS $ 255 $ 282 $ 172 $ 309 $ 178 $ 304 $ 366 $
Slide 34: 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 First Nine Months First Nine Months Q1 FY'23 Q2 FY'23 Q3 FY'23 Q4 FY'23 Q1'FY24 Q2'FY24 Q3'FY24 of FY'23 of FY'24 NET INCOME PER SHARE $ 0.96 $ 3.41 $ 0.30 $ 1.13 $ 0.69 $ 1.10 $ 1.48 $ 4.
Slide 35: 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) First Nine Months First Nine Months Q1 FY'23 Q2 FY'23 Q3 FY'23 Q4 FY'23 Q1'FY24 Q2'FY24
Slide 36: 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 37: 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 38: 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 39: 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 40: Reconciliation of Non-GAAP guidance to GAAP - third quarter fiscal 2024
Reconciliation of Non-GAAP guidance to GAAP - third quarter fiscal 2024 NETAPP, INC. RECONCILIATION OF NON-GAAP GUIDANCE TO GAAP THIRD QUARTER FISCAL 2024 (Unaudited) THIRD Quarter Fiscal 2024 Gross Margin - Non-GAAP Guidance ~71% Adjustment: Cost of revenues adjustments (1)% Gross Margin - GAAP Gui
Slide 41: Reconciliation of Non-GAAP guidance to GAAP - third quarter fiscal 2024, continued
Reconciliation of Non-GAAP guidance to GAAP - third quarter fiscal 2024, continued © 2024 NetApp, Inc. All rights reserved.
Slide 42: © 2024 NetApp, Inc. All rights reserved.
42 © 2024 NetApp, Inc. All rights reserved.