Netapp, Inc. · NASDAQ:NTAP

Netapp — Q2 FY2022 Earnings Presentation

40 slides from Netapp's earnings presentation, Nov 30, 2021

  1. Slide 1: Q2 FY22 Earnings Results

    Q2 FY22 Earnings Results November 30, 2021 © 2021 NetApp, Inc. All rights reserved.

  2. 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, e

  3. Slide 3: We are a global cloud-led, data-centric software company

    We are a global cloud-led, data-centric software company that gives organizations everywhere the freedom to put data to work in the applications that elevate their business 3 © 2021 NetApp, Inc. All rights reserved.

  4. Slide 4: Our solutions address crucial workloads in the cloud and on premises

    Our solutions address crucial workloads in the cloud and on premises Cloud Compute Cloud Cloud services storage operations controls and analytics Bring the simplicity and flexibility Enterprise Data AI and of cloud to the enterprise data center workloads protection data lakes Bring enterprise data s

  5. Slide 5: Strategic approach with focused execution for growth

    Strategic approach with Building on a strong foundation focused execution for growth • Data-centric software specialist Technology and innovation leadership • Trusted by the world’s leading organizations • Unique partnerships with the biggest public clouds Aligned to customer • Differentiated data f

  6. Slide 6: Market leaders across diverse industries rely on NetApp

    Market leaders across diverse industries rely on NetApp X of the top 10 companies in their industries use NetApp 10 9 9 5 8 9 Aerospace Automotive Business Construction Consumer Financial and defense services product services 10 10 8 10 10 10 Healthcare Hi-tech Insurance Life science Manufacturers M

  7. Slide 7: Software leadership, trusted relationships, uniquely positioned

    Software Trusted Uniquely leadership relationships positioned Cloud-led, data-centric software Partnerships with the world’s Well positioned to capture company building on a rich leading enterprises transitions in large and legacy of software innovation and public clouds growing markets Focused Soft

  8. Slide 8: Results highlights

    • Delivered another strong quarter with results at the high end or above guidance, driven by broad- based customer demand • All flash array annualized revenue run rate reached a record high of $3.1 billion, an increase of 22% y/y • Advanced our cloud agenda significantly with Results highlights AWS

  9. Slide 9: Q2 FY22 summary

    Q2 FY22 summary Q2 guidance Q2 actual (as of Aug 25, 2021) Billings* $1.55B +6.5% y/y Revenue $1.49B – $1.59B $1.57B +10.6% y/y ✅ Non-GAAP gross margin ~ 68% 68.3% +140 bps y/y ✅ Non-GAAP operating margin ~23% 23.9% +330 bps y/y ✅ Non-GAAP EPS $1.14 – $1.24 $1.28 +21.9% y/y ✅ Non-GAAP FCF margin 16.

  10. Slide 10: FY22 summary

    FY22 summary Q1 Q2 1H FY22 Billings* $1.38B $1.55B $2.93B +20.2% y/y +6.5% y/y +12.5% y/y Revenue $1.46B $1.57B $3.02B +11.9% y/y +10.6% y/y +11.2% y/y Non-GAAP gross margin 69.3% 68.3% 68.8% +130 bps y/y +140 bps y/y +130 bps y/y Non-GAAP operating margin 23.0% 23.9% 23.5% +670 bps y/y +330 bps y/y

  11. Slide 11: Billings

    Billings 7% Y/Y $1.7B $1.6B $1.6B $1.5B $1.4B $1.1B Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 Q1 FY22 Q2 FY22 Billings Billings is a Non-GAAP measure. Refer to appendix for details and a reconciliation between Non-GAAP and GAAP numbers. 11 © 2021 NetApp, Inc. All rights reserved.

  12. Slide 12: Revenues

    Revenues 11% Y/Y $1.6B $1.6B $1.5B $1.5B $1.4B $1.3B Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 Q1 FY22 Q2 FY22 Services revenue Product revenue 12 © 2021 NetApp, Inc. All rights reserved.

  13. Slide 13: Non-GAAP gross margin

    Non-GAAP gross margin $1,046M $1,070M $990M $1,010M $948M $886M 69.3% 68.3% 68.0% 67.3% 67.3% 66.9% Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 Q1 FY22 Q2 FY22 Non-GAAP gross margin dollars Non-GAAP gross margin Refer to appendix for a reconciliation between Non-GAAP and GAAP numbers 13 © 2021 NetApp, Inc. All

  14. Slide 14: Segment revenue and gross margin

    Segment revenue and gross margin Hybrid Cloud Public Cloud $1,489M $1,479M $1,415M 71.2% 71.3% $1,369M $1,379M 70.9% $1,272M 69.1% $87M 69.2% 66.0% 68.2% 68.2% $79M 67.0% 67.3% 67.1% $66M 58.1% $55M $47M $31M Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 Q1 FY22 Q2 FY22 Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 Q1 FY22 Q2

  15. Slide 15: All flash array revenue run rate

    All flash array revenue run rate 22% Y/Y $3.1B $2.9B $2.8B $2.6B $2.5B $2.3B Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 Q1 FY22 Q2 FY22 All flash array revenue run rate 15 © 2021 NetApp, Inc. All rights reserved. AFA annualized net revenue run rate is determined by products and services revenue for the current

  16. Slide 16: Public cloud ARR

    Public cloud ARR 80% Y/Y $388M $337M $301M $237M $216M $178M Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 Q1 FY22 Q2 FY22 Public cloud ARR 16 © 2021 NetApp, Inc. All rights reserved. Public cloud annualized revenue run-rate is calculated as the annualized value of all Public Cloud customer commitments with the a

  17. Slide 17: Non-GAAP operating expense

    Non-GAAP operating expense $688M $696M $673M $668M $674M $657M 51.7% 46.4% 46.2% 45.4% 44.2% 44.4% Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 Q1 FY22 Q2 FY22 Non-GAAP operating expense Non-GAAP operating expense as a percent of revenue Refer to appendix for a reconciliation between Non-GAAP and GAAP numbers 17

  18. Slide 18: Non-GAAP operating profit

    Non-GAAP operating profit $374M $358M $336M $322M $291M 23.9% 23.0% 23.0% 21.9% 20.6% $213M 16.3% Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 Q1 FY22 Q2 FY22 Non-GAAP operating profit Non-GAAP operating margin Refer to appendix for a reconciliation between Non-GAAP and GAAP numbers 18 © 2021 NetApp, Inc. All ri

  19. Slide 19: Non-GAAP earnings per share

    Non-GAAP earnings per share 22% Y/Y $1.28 $1.17 $1.15 $1.10 $1.05 $0.73 Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 Q1 FY22 Q2 FY22 Non-GAAP earnings per share Refer to appendix for a reconciliation between Non-GAAP and GAAP numbers 19 © 2021 NetApp, Inc. All rights reserved.

  20. Slide 20: Non-GAAP free cash flow

    Non-GAAP free cash flow $521M $341M 33.5% $252M $188M $191M 23.2% 14.4% 16.1% $121M 13.1% 8.5% Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 Q1 FY22 Q2 FY22 Free cash flow Free cash flow as a percent of revenue Refer to appendix for a reconciliation between Non-GAAP and GAAP numbers 20 © 2021 NetApp, Inc. All rig

  21. Slide 21: Deferred revenue

    Deferred revenue $4.0B $3.9B $3.8B $3.9B $3.6B $3.7B 8.2% 7.8% 7.1% 5.9% 5.3% 3.1% Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 Q1 FY22 Q2 FY22 Deferred revenue balance Deferred revenue y/y growth 21 © 2021 NetApp, Inc. All rights reserved.

  22. Slide 22: Q3 FY22 Guidance

    Q3 Guide Revenue $1.525B – $1.675B Non-GAAP gross margin 67% – 68% Non-GAAP operating margin ~ 23% Q3 FY22 Guidance Earnings per share* $1.21 – $1.31 as of Nov 30, 2021 Additional modeling points Operating expenses* $705M – $715M Other income & expense ~ ($15M) Non-GAAP tax rate ~ 19% *Earnings per

  23. Slide 23: Updated FY22 Guidance

    FY22 Guide Revenue + 9% – 10% y/y Non-GAAP gross margin ~ 68% Non-GAAP operating margin 23% – 24% Updated FY22 Guidance Earnings per share* $4.90 – $5.10 as of Nov 30, 2021 Additional modeling points Public Cloud ARR $510M – $540M Operating expenses* $2.795B – $2.815B Other income & expense ~ ($60M)

  24. Slide 24: NetApp unlocks the best of cloud

    NetApp unlocks the best of cloud © 2021 NetApp, Inc. All rights reserved.

  25. Slide 25: Appendix: Supplementary Tables and Non-GAAP to GAAP Reconciliations

    Appendix: Supplementary Tables and Non-GAAP to GAAP Reconciliations & Explanations © 2021 NetApp, Inc. All rights reserved.

  26. Slide 26: 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 First Six Q1 FY'21 Q2 FY'21 Q3 FY'21 Q4 FY'21 Q1 FY'22 Q2 FY'22 Months of FY'21 Months of FY'22 Revenues by Segment Product $ 627 $ 749 $ 775 $ 840 $ 730 $ 814 $ 1,376 $

  27. Slide 27: Dollar-based net revenue retention rate for cloud services (Non-GAAP)

    Dollar-based net revenue retention rate for cloud services (Non-GAAP) Dollar-based net revenue retention rate (DBNRR) for cloud services is a Non-GAAP metric calculated by dividing the approximate total revenue from our cloud customer base at the end of a period (“Cloud Current Period revenue”) by t

  28. Slide 28: 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 First Six Q1 FY'21 Q2 FY'21 Q3 FY'21 Q4 FY'21 Q1 FY'22 Q2 FY'22 Months of FY'21 Months of FY'22 Net revenues $ 1,303 $ 1,416 $ 1,470 $ 1,555 $ 1,458 $ 1,566 $ 2,719 $ 3

  29. Slide 29: 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 Six First Six Q1 FY'21 Q2 FY'21 Q3 FY'21 Q4 FY'21 Q1 FY'22 Q2 FY'22 Months of FY'21 Months of FY'22 NET REVENUES $ 1,303 $ 1,416 $ 1,470 $ 1,555 $ 1

  30. Slide 30: 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 Six First Six Q1 FY'21 Q2 FY'21 Q3 FY'21 Q4 FY'21 Q1 FY'22 Q2 FY'22 Months of FY'21 Months of FY'22 OPERATING EXPENSES $ 736 $ 751 $ 717 $ 580 $ 750 $ 765 $ 1,487 $ 1,515

  31. Slide 31: Reconciliation of Non-GAAP to GAAP income from operations

    Reconciliation of Non-GAAP to GAAP income from operations RECONCILIATION OF NON-GAAP TO GAAP INCOME FROM OPERATIONS ($ in millions) First Six First Six Q1 FY'21 Q2 FY'21 Q3 FY'21 Q4 FY'21 Q1 FY'22 Q2 FY'22 Months of FY'21 Months of FY'22 INCOME FROM OPERATIONS $ 136 $ 182 $ 258 $ 455 $ 249 $ 294 $ 3

  32. Slide 32: 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 Six First Six Q1 FY'21 Q2 FY'21 Q3 FY'21 Q4 FY'21 Q1 FY'22 Q2 FY'22 Months of FY'21 Months of FY'22 NET INCOME PER SHARE $ 0.35 $ 0.61 $ 0.80 $ 1.46 $ 0.88 $ 0.98 $ 0.96 $ 1.86 Adjus

  33. Slide 33: 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 Six First Six Q1 FY'21 Q2 FY'21 Q3 FY'21 Q4 FY'21 Q1 FY'22 Q2 FY'22 Months of FY'2

  34. Slide 34: Reconciliation of Non-GAAP guidance to GAAP - third quarter fiscal 2022

    Reconciliation of Non-GAAP guidance to GAAP - third quarter fiscal 2022 NETAPP, INC. RECONCILIATION OF NON-GAAP GUIDANCE TO GAAP THIRD QUARTER FISCAL 2022 (Unaudited) Third Quarter Fiscal 2022 Gross Margin - Non-GAAP Guidance 67% - 68% Adjustment: Cost of revenues adjustments (1)% Gross Margin - GAA

  35. Slide 35: Reconciliation of Non-GAAP guidance to GAAP - third quarter fiscal 2022, continued

    Reconciliation of Non-GAAP guidance to GAAP - third quarter fiscal 2022, continued NETAPP, INC. RECONCILIATION OF NON-GAAP GUIDANCE TO GAAP THIRD QUARTER FISCAL 2022 (Unaudited) Third Quarter Fiscal 2022 Net Income Per Share - Non-GAAP Guidance $1.21 - $1.31 Adjustments: Amortization of intangible a

  36. Slide 36: Reconciliation of Non-GAAP guidance to GAAP – fiscal 2022

    Reconciliation of Non-GAAP guidance to GAAP – fiscal 2022 NETAPP, INC. RECONCILIATION OF NON-GAAP GUIDANCE TO GAAP FISCAL 2022 (Unaudited) Fiscal 2022 Gross Margin - Non-GAAP Guidance ~68% Adjustment: Cost of revenues adjustments (1)% Gross Margin - GAAP Guidance ~67% Fiscal 2022 (In millions) Opera

  37. Slide 37: Reconciliation of Non-GAAP guidance to GAAP – fiscal 2022, continued

    Reconciliation of Non-GAAP guidance to GAAP – fiscal 2022, continued NETAPP, INC. RECONCILIATION OF NON-GAAP GUIDANCE TO GAAP FISCAL 2022 (Unaudited) Fiscal 2022 Net Income Per Share - Non-GAAP Guidance $4.90 - $5.10 Adjustments: Amortization of intangible assets ($0.17) Stock-based compensation exp

  38. Slide 38: Reconciliation of Non-GAAP guidance to GAAP - second quarter fiscal 2022

    Reconciliation of Non-GAAP guidance to GAAP - second quarter fiscal 2022 NETAPP, INC. RECONCILIATION OF NON-GAAP GUIDANCE TO GAAP SECOND QUARTER FISCAL 2022 (Unaudited) Second Quarter Fiscal 2022 Gross Margin - Non-GAAP Guidance ~68% Adjustment: Cost of revenues adjustments (1)% Gross Margin - GAAP

  39. Slide 39: Reconciliation of Non-GAAP guidance to GAAP - second quarter fiscal 2022, continued

    Reconciliation of Non-GAAP guidance to GAAP - second quarter fiscal 2022, continued NETAPP, INC. RECONCILIATION OF NON-GAAP GUIDANCE TO GAAP SECOND QUARTER FISCAL 2021 (Unaudited) Second Quarter Fiscal 2022 Net Income Per Share - Non-GAAP Guidance $1.14 - $1.24 Adjustments: Amortization of intangibl

  40. Slide 40: NetApp unlocks the best of cloud

    NetApp unlocks the best of cloud © 2021 NetApp, Inc. All rights reserved.

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