Third Quarter Fiscal 2018
Highlights
NetApp (NASDAQ:NTAP) today reported financial results for the third
quarter fiscal year 2018, ended January 26, 2018.
“NetApp again delivered strong results in the third quarter with
accelerating revenue and strong cash generation. It is rewarding to
see the results of our improved execution as we transform NetApp to
deliver sustained and profitable growth,” said George Kurian, chief
executive officer. “We saw a solid demand environment and customer
momentum, landing wins and footprint expansions with leading
organizations in all geographies. With our Data Fabric Strategy and
industry-leading solutions, we are winning new customers and
expanding our business opportunity.”
Third Quarter Fiscal 2018 Financial Results
- Net Revenues: $1.52 billion, increased 8%
year-over-year from $1.40 billion in the third quarter of fiscal
2017
- Net Income: GAAP net loss of $506 million*,
compared to GAAP net income of $146 million in the third quarter of
fiscal 2017; non-GAAP net income1 of $273 million, compared to
non-GAAP net income of $231 million in the third quarter of fiscal
2017
- Earnings per Share: GAAP net loss per share2
of $1.89*, compared to GAAP net income per share3 of $0.52 in the
third quarter of fiscal 2017; non-GAAP net income per share4 of
$0.99, compared to non-GAAP net income per share of $0.82 in the
third quarter of fiscal 2017
- Cash, Cash Equivalents and Investments: $5.6
billion at the end of the third quarter of fiscal 2018
- Cash from Operations: $420 million, compared
to $235 million in the third quarter of fiscal 2017
- Share Repurchase and Dividend: Returned $203
million to shareholders through share repurchases and a cash
dividend
*On December 22, 2017, The 2017 Tax Reform Reconciliation Act
was enacted into law. This tax reform legislation contains several
key tax provisions that affected the company, including a one-time
mandatory transition tax on accumulated foreign earnings and a
reduction of the U.S. corporate income tax rate to 21% effective
January 1, 2018, among others. GAAP net loss in the third quarter
of fiscal 2018 includes a resulting one-time charge of $856
million.
Fourth Quarter Fiscal 2018 Financial OutlookThe
Company provided the following financial guidance for the fourth
quarter of fiscal year 2018:
- Net revenues are expected to be in the range of $1.525 billion
to $1.675 billion
|
|
|
|
GAAP |
Non-GAAP |
- Earnings per share is expected to be in the range of:
|
$0.75–$0.83 |
$0.95–$1.03 |
Dividend
- Next cash dividend of $0.20 per share to be paid on April 25,
2018, to shareholders of record as of the close of business on
April 6, 2018
Third Quarter Fiscal 2018 Business
Highlights
New NetApp Product Updates and Offerings
- New NetApp™ AltaVault™
software updates provide customers with faster ingest performance,
multifactor authentication, increased security enhancements and
Microsoft Azure Archive Blob Storage tier support.
- NetApp introduces SnapMirror™ for SolidFire™ Element™
OS, which supports disparate system data movement from
Element OS systems to ONTAP™ 9.3 systems, allowing
companies to remain agile while still protecting their data.
- NetApp Cloud Volumes for AWS enables both
NFSv3 and NFSv4 with fully featured
Snapshot™ copies and is available in cloud-only
and hybrid cloud deployments, with integration into on-premises
systems and seamless data migration and synchronization between
on-premises and the cloud.
NetApp Enables Customers to Improve Their Business
Performance
- JFK Medical Center, part of the Hackensack
Meridian Health Network, leverages NetApp technology to increase
stability and reliability and achieve a higher performance level
for its critical infrastructure.
- Safelight leverages NetApp to transform the
delivery of its auto glass services, surpass competitors, and
expand its customer base during one of the worst recorded hurricane
seasons.
NetApp Strengthens Partnerships
- NetApp strengthens its 20-year partnership with
Fujitsu by introducing the NFLEX™
converged infrastructure, which combines Fujitsu’s server PRIMERGY
CX compute platform and NetApp ONTAP.
- NetApp announces support for VMware Cloud on
AWS to allow customers more flexibility when deploying
ONTAP Cloud to deliver seamlessly integrated
hybrid cloud architectures that extend on-premises vSphere
environments to a VMware SDDC running on AWS elastic bare-metal
infrastructure.
NetApp Strengthens Board and Leadership
Team
- NetApp strengthens its board of directors with two new members:
- Deborah Kerr, who brings insights into how
customers buy, deploy, manage, and use IT to NetApp; and
- Scott Schenkel, CFO of eBay, who brings
current C-level experience to NetApp’s board, with his
understanding of the technology landscape and market forces,
capital structure, and modern financial reporting
- NetApp appoints Brad Anderson as SVP and GM of
the NetApp Cloud Infrastructure business unit to help customers
build out their next-generation data centers.
Webcast and Conference Call InformationNetApp
will host a conference call to discuss these results today at 2:30
p.m. Pacific Time. To access the live webcast of this event, visit
the NetApp Investor Relations website at investors.netapp.com. In
addition, this press release, historical supplemental data tables,
and other information related to the call will be posted on the
Investor Relations website. An audio replay will also be available
on the website after 4:30 p.m. Pacific Time today.
About NetAppNetApp is the data authority for
hybrid cloud. We provide a full range of hybrid cloud data services
that simplify management of applications and data across cloud and
on-premises environments to accelerate digital transformation.
Together with our partners, we empower global organizations to
unleash the full potential of their data to expand customer
touchpoints, foster greater innovation and optimize their
operations. For more information, visit www.netapp.com.
#DataDriven
“Safe Harbor” Statement Under U.S. Private Securities
Litigation Reform Act of 1995This press release contains
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements include,
but are not limited to, all of the statements made under the Fourth
Quarter Fiscal 2018 Financial Outlook section, statements about our
ability to deliver sustained and profitable growth as well as
statements about winning new customers and expanding our business
opportunity. All of these forward-looking statements involve risk
and uncertainty. Actual results may differ materially from these
statements for a variety of reasons, including, without limitation,
general global political, macroeconomic and market conditions,
changes in U.S. government spending, revenue seasonality and
matters specific to our business, such as our ability to expand our
total available market and grow our portfolio of products, customer
demand for and acceptance of our products and services, our ability
to successfully execute new business models, our ability to
successfully execute on our Data Fabric strategy to generate
profitable growth and stockholder return and our ability to manage
our gross profit margins. These and other equally important factors
are described in reports and documents we file from time to time
with the Securities and Exchange Commission, including the factors
described under the section titled “Risk Factors” in our most
recently submitted reports on Form 10-Q and 10-K. We disclaim any
obligation to update information contained in this press release
whether as a result of new information, future events, or
otherwise.
NetApp and the NetApp logo and the marks listed at
http://www.netapp.com/TM are trademarks of NetApp, Inc. Other
company and product names may be trademarks of their respective
owners.
Footnotes1Non-GAAP net income excludes, when
applicable, (a) amortization of intangible assets, (b)
stock-based compensation expenses, (c) litigation settlements,
(d) acquisition-related expenses, (e) restructuring charges, (f)
asset impairments, (g) gains/losses on the sale of properties, and
(h) our GAAP tax provision, but includes a non-GAAP tax provision
based upon our projected annual non-GAAP effective tax rate for the
first three quarters of the fiscal year and an actual non-GAAP tax
provision for the fourth quarter of the fiscal year. NetApp makes
additional adjustments to the non-GAAP tax provision for certain
tax matters as described below. A detailed reconciliation of our
non-GAAP to GAAP results can be found at
http://investors.netapp.com. NetApp’s management uses these
non-GAAP measures in making operating decisions because it believes
the measurements provide meaningful supplemental information
regarding NetApp’s ongoing operational performance. 2GAAP net loss
per share is calculated using the basic number of shares and
excludes common stock equivalents because the impact would be
anti-dilutive.3GAAP net income per share is calculated using the
diluted number of shares.4Non-GAAP net income per share is
calculated using the diluted number of shares for all periods.
NetApp Usage of Non-GAAP Financial Information
To supplement NetApp’s condensed consolidated financial
statement information presented in accordance with generally
accepted accounting principles in the United States (GAAP), NetApp
provides investors with certain non-GAAP measures, including, but
not limited to, historical non-GAAP operating results, non-GAAP net
income, non-GAAP effective tax rate and free cash flow, and
historical and projected non-GAAP earnings per diluted share.
NetApp believes that the presentation of non-GAAP net income,
non-GAAP effective tax rates, and non-GAAP earnings per share data
when shown in conjunction with the corresponding GAAP measures,
provides useful information to investors and management regarding
financial and business trends relating to its financial condition
and results of operations. NetApp believes that the presentation of
free cash flow, which it defines as the net cash provided by
operating activities less cash used to acquire property and
equipment, to be a liquidity measure that provides useful
information to management and investors because it reflects cash
that can be used to, among other things, invest in its business,
make strategic acquisitions, repurchase common stock, and pay
dividends on its common stock. As free cash flow is not a measure
of liquidity calculated in accordance with GAAP, free cash flow
should be considered in addition to, but not as a substitute for,
the analysis provided in the statement of cash flows.
NetApp’s management uses these non-GAAP measures in making
operating decisions because it believes the measurements provide
meaningful supplemental information regarding NetApp’s ongoing
operational performance. These non-GAAP financial measures are used
to: (1) measure company performance against historical results, (2)
facilitate comparisons to our competitors’ operating results and
(3) allow greater transparency with respect to information used by
management in financial and operational decision making.
NetApp excludes the following items from its non-GAAP measures
when applicable:A. Amortization of intangible assets. NetApp
records amortization of intangible assets that were acquired in
connection with its business combinations. The amortization of
intangible assets varies depending on the level of acquisition
activity. Management finds it useful to exclude these charges to
assess the appropriate level of various operating expenses to
assist in budgeting, planning and forecasting future periods and in
measuring operational performance.B. Stock-based compensation
expenses. NetApp excludes stock-based compensation expenses from
its non-GAAP measures primarily because they are non-cash expenses.
While management views stock-based compensation as a key element of
our employee retention and long-term incentives, we do not
view it as an expense to be used in evaluating operational
performance in any given period. C. Litigation settlements. NetApp
may periodically incur charges or benefits related to litigation
settlements. NetApp excludes these charges and benefits, when
significant, because it does not believe they are reflective of
ongoing business and operating results. D. Acquisition-related
expenses. NetApp excludes acquisition-related expenses, including
(a) due diligence, legal and other one-time integration charges and
(b) write down of assets acquired that NetApp does not intend to
use in its ongoing business, from its non-GAAP measures, primarily
because they are not related to our ongoing business or cost base
and, therefore, cannot be relied upon for future planning and
forecasting.E. Restructuring charges. These charges consist of
restructuring charges that are incurred based on the particular
facts and circumstances of restructuring decisions, including
employment and contractual settlement terms, and other related
charges, and can vary in size and frequency. We therefore exclude
them in our assessment of operational performance. F. Asset
impairments. These are non-cash charges to write down assets when
there is an indication that the asset has become impaired.
Management finds it useful to exclude these non-cash charges due to
the unpredictability of these events in its assessment of
operational performance.G. Gains/losses on the sale of properties.
These are gains/losses from the sale of our properties. Management
believes that these transactions do not reflect the results of our
underlying, on-going business and, therefore, cannot be relied upon
for future planning or forecasting.H. Income tax adjustments.
NetApp’s non-GAAP tax provision is based upon a projected annual
non-GAAP effective tax rate for the first three quarters of the
fiscal year and an actual non-GAAP tax provision for the fourth
quarter of the fiscal year. The non-GAAP tax provision also
excludes, when applicable, (a) tax charges or benefits in the
current period that relate to one or more prior fiscal periods that
are a result of events such as changes in tax legislation,
authoritative guidance, income tax audit settlements and/or court
decisions, (b) tax charges or benefits that are attributable to
unusual or non-recurring book and/or tax accounting method changes,
(c) tax charges that are a result of a non-routine foreign cash
repatriation, (d) tax charges or benefits that are a result of
infrequent restructuring of the Company’s tax structure, (e) tax
charges or benefits that are a result of a change in valuation
allowance, and (f) tax charges resulting from the integration of
intellectual properties from acquisitions. Management believes that
the use of non-GAAP tax provisions provides a more meaningful
measure of the Company’s operational performance.
These non-GAAP measures are not in accordance with, or an
alternative for, measures prepared in accordance with GAAP, and may
be different from non-GAAP measures used by other companies. In
addition, these non-GAAP measures are not based on any
comprehensive set of accounting rules or principles. NetApp
believes that non-GAAP measures have limitations in that they do
not reflect all of the amounts associated with the Company’s
results of operations as determined in accordance with GAAP and
that these measures should only be used to evaluate the Company’s
results of operations in conjunction with the corresponding GAAP
measures. NetApp management compensates for these limitations by
analyzing current and projected results on a GAAP basis as well as
a non-GAAP basis. The presentation of non-GAAP financial
information is not meant to be considered in isolation or as a
substitute for the directly comparable financial measures prepared
in accordance with generally accepted accounting principles in the
United States. The non-GAAP financial measures are meant to
supplement, and be viewed in conjunction with, GAAP financial
measures.
NETAPP, INC. CONDENSED
CONSOLIDATED BALANCE SHEETS (In
millions)(Unaudited)
|
|
January 26,2018 |
|
|
April 28,2017 |
|
|
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash,
cash equivalents and investments |
|
$ |
5,619 |
|
|
$ |
4,921 |
|
Accounts
receivable |
|
|
754 |
|
|
|
731 |
|
Inventories |
|
|
98 |
|
|
|
163 |
|
Other
current assets |
|
|
295 |
|
|
|
383 |
|
Total
current assets |
|
|
6,766 |
|
|
|
6,198 |
|
|
|
|
|
|
|
|
|
|
Property and equipment,
net |
|
|
741 |
|
|
|
799 |
|
Goodwill and purchased
intangible assets, net |
|
|
1,845 |
|
|
|
1,815 |
|
Other non-current
assets |
|
|
435 |
|
|
|
681 |
|
Total assets |
|
$ |
9,787 |
|
|
$ |
9,493 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
|
Accounts
payable |
|
$ |
458 |
|
|
$ |
347 |
|
Accrued
expenses |
|
|
739 |
|
|
|
782 |
|
Commercial paper notes |
|
|
632 |
|
|
|
500 |
|
Current
portion of long-term debt |
|
|
— |
|
|
|
749 |
|
Short-term deferred revenue and financed unearned services
revenue |
|
|
1,719 |
|
|
|
1,744 |
|
Total
current liabilities |
|
|
3,548 |
|
|
|
4,122 |
|
Long-term debt |
|
|
1,540 |
|
|
|
744 |
|
Other long-term
liabilities |
|
|
973 |
|
|
|
249 |
|
Long-term deferred
revenue and financed unearned services revenue |
|
|
1,550 |
|
|
|
1,598 |
|
Total liabilities |
|
|
7,611 |
|
|
|
6,713 |
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity |
|
|
2,176 |
|
|
|
2,780 |
|
Total liabilities and stockholders' equity |
|
$ |
9,787 |
|
|
$ |
9,493 |
|
NETAPP, INC. CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (In
millions, except per share amounts)
(Unaudited)
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
January 26,2018 |
|
|
January 27,2017 |
|
|
January 26,2018 |
|
|
January 27,2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product |
|
$ |
920 |
|
|
$ |
784 |
|
|
$ |
2,450 |
|
|
$ |
2,154 |
|
Software
maintenance |
|
|
237 |
|
|
|
240 |
|
|
|
711 |
|
|
|
723 |
|
Hardware
maintenance and other services |
|
|
366 |
|
|
|
380 |
|
|
|
1,109 |
|
|
|
1,161 |
|
Net
revenues |
|
|
1,523 |
|
|
|
1,404 |
|
|
|
4,270 |
|
|
|
4,038 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
product |
|
|
468 |
|
|
|
435 |
|
|
|
1,238 |
|
|
|
1,170 |
|
Cost of
software maintenance |
|
|
6 |
|
|
|
7 |
|
|
|
19 |
|
|
|
22 |
|
Cost of
hardware maintenance and other services |
|
|
108 |
|
|
|
111 |
|
|
|
336 |
|
|
|
369 |
|
Total
cost of revenues |
|
|
582 |
|
|
|
553 |
|
|
|
1,593 |
|
|
|
1,561 |
|
Gross profit |
|
|
941 |
|
|
|
851 |
|
|
|
2,677 |
|
|
|
2,477 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and
marketing |
|
|
423 |
|
|
|
381 |
|
|
|
1,268 |
|
|
|
1,228 |
|
Research
and development |
|
|
193 |
|
|
|
181 |
|
|
|
580 |
|
|
|
588 |
|
General
and administrative |
|
|
72 |
|
|
|
64 |
|
|
|
209 |
|
|
|
201 |
|
Restructuring charges |
|
|
— |
|
|
|
52 |
|
|
|
— |
|
|
|
52 |
|
Gain on
sale of properties |
|
|
(218 |
) |
|
|
(10 |
) |
|
|
(218 |
) |
|
|
(10 |
) |
Total
operating expenses |
|
|
470 |
|
|
|
668 |
|
|
|
1,839 |
|
|
|
2,059 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations |
|
|
471 |
|
|
|
183 |
|
|
|
838 |
|
|
|
418 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense),
net |
|
|
14 |
|
|
|
— |
|
|
|
25 |
|
|
|
(1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes |
|
|
485 |
|
|
|
183 |
|
|
|
863 |
|
|
|
417 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes |
|
|
991 |
|
|
|
37 |
|
|
|
1,058 |
|
|
|
98 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(506 |
) |
|
$ |
146 |
|
|
$ |
(195 |
) |
|
$ |
319 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per
share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(1.89 |
) |
|
$ |
0.53 |
|
|
$ |
(0.72 |
) |
|
$ |
1.15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
|
$ |
(1.89 |
) |
|
$ |
0.52 |
|
|
$ |
(0.72 |
) |
|
$ |
1.13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in net
income (loss) per share calculations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
268 |
|
|
|
274 |
|
|
|
269 |
|
|
|
277 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
|
|
268 |
|
|
|
281 |
|
|
|
269 |
|
|
|
282 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends declared
per share |
|
$ |
0.200 |
|
|
$ |
0.190 |
|
|
$ |
0.600 |
|
|
$ |
0.570 |
|
NETAPP, INC. CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (In
millions) (Unaudited)
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
January 26,2018 |
|
|
January 27,2017 |
|
|
January 26,2018 |
|
|
January 27,2017 |
|
Cash flows from
operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss) |
|
$ |
(506 |
) |
|
$ |
146 |
|
|
$ |
(195 |
) |
|
$ |
319 |
|
Adjustments to reconcile net income (loss) to net cash
provided by operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
48 |
|
|
|
56 |
|
|
|
150 |
|
|
|
173 |
|
Stock-based compensation |
|
|
38 |
|
|
|
46 |
|
|
|
125 |
|
|
|
149 |
|
Deferred
income taxes |
|
|
214 |
|
|
|
45 |
|
|
|
258 |
|
|
|
73 |
|
Gain on
sale of properties |
|
|
(218 |
) |
|
|
(10 |
) |
|
|
(218 |
) |
|
|
(10 |
) |
Other
items, net |
|
|
(3 |
) |
|
|
7 |
|
|
|
(8 |
) |
|
|
(8 |
) |
Changes
in assets and liabilities, net of acquisitions of businesses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
receivable |
|
|
(157 |
) |
|
|
(56 |
) |
|
|
(8 |
) |
|
|
208 |
|
Inventories |
|
|
10 |
|
|
|
(28 |
) |
|
|
65 |
|
|
|
(27 |
) |
Accounts
payable |
|
|
81 |
|
|
|
26 |
|
|
|
115 |
|
|
|
13 |
|
Accrued
expenses |
|
|
126 |
|
|
|
17 |
|
|
|
58 |
|
|
|
(121 |
) |
Deferred
revenue and financed unearned services revenue |
|
|
81 |
|
|
|
31 |
|
|
|
(102 |
) |
|
|
(148 |
) |
Long-term
taxes payable |
|
|
721 |
|
|
|
(9 |
) |
|
|
723 |
|
|
|
(16 |
) |
Changes
in other operating assets and liabilities, net |
|
|
(15 |
) |
|
|
(36 |
) |
|
|
21 |
|
|
|
16 |
|
Net cash provided by operating activities |
|
|
420 |
|
|
|
235 |
|
|
|
984 |
|
|
|
621 |
|
Cash flows from
investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redemptions (purchases) of investments, net |
|
|
(226 |
) |
|
|
(188 |
) |
|
|
(178 |
) |
|
|
2 |
|
Purchases
of property and equipment |
|
|
(32 |
) |
|
|
(45 |
) |
|
|
(97 |
) |
|
|
(137 |
) |
Proceeds
from sale of properties |
|
|
210 |
|
|
|
— |
|
|
|
210 |
|
|
|
— |
|
Acquisitions of businesses, net of cash acquired |
|
|
— |
|
|
|
— |
|
|
|
(75 |
) |
|
|
— |
|
Other
investing activities, net |
|
|
(6 |
) |
|
|
3 |
|
|
|
(1 |
) |
|
|
2 |
|
Net cash used in investing activities |
|
|
(54 |
) |
|
|
(230 |
) |
|
|
(141 |
) |
|
|
(133 |
) |
Cash flows from
financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds
from issuance of common stock under employee stock award
plans |
|
|
100 |
|
|
|
51 |
|
|
|
157 |
|
|
|
112 |
|
Payments
for taxes related to net share settlement of stock
awards |
|
|
(7 |
) |
|
|
(6 |
) |
|
|
(67 |
) |
|
|
(42 |
) |
Repurchase of common stock |
|
|
(150 |
) |
|
|
(284 |
) |
|
|
(450 |
) |
|
|
(576 |
) |
Proceeds
from (repayments of) commercial paper notes, net |
|
|
(86 |
) |
|
|
392 |
|
|
|
132 |
|
|
|
392 |
|
Issuance
of long-term debt, net |
|
|
— |
|
|
|
— |
|
|
|
795 |
|
|
|
— |
|
Repayment
of short-term loan |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(850 |
) |
Repayment
of long-term debt |
|
|
(750 |
) |
|
|
— |
|
|
|
(750 |
) |
|
|
— |
|
Dividends
paid |
|
|
(53 |
) |
|
|
(52 |
) |
|
|
(161 |
) |
|
|
(157 |
) |
Other
financing activities, net |
|
|
(5 |
) |
|
|
(4 |
) |
|
|
(6 |
) |
|
|
(7 |
) |
Net cash provided by (used in) financing
activities |
|
|
(951 |
) |
|
|
97 |
|
|
|
(350 |
) |
|
|
(1,128 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of
exchange rate changes on cash and cash equivalents |
|
|
24 |
|
|
|
(2 |
) |
|
|
37 |
|
|
|
(15 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase
(decrease) in cash and cash equivalents |
|
|
(561 |
) |
|
|
100 |
|
|
|
530 |
|
|
|
(655 |
) |
Cash and cash
equivalents: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
of period |
|
|
3,535 |
|
|
|
2,113 |
|
|
|
2,444 |
|
|
|
2,868 |
|
End of
period |
|
$ |
2,974 |
|
|
$ |
2,213 |
|
|
$ |
2,974 |
|
|
$ |
2,213 |
|
NETAPP, INC. |
|
SUPPLEMENTAL DATA |
|
(In millions except net income per share,
percentages, DSO, DIO, DPO, CCC and Inventory Turns) |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q3 FY'18 |
|
|
Q2 FY'18 |
|
|
Q3 FY'17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
Product |
|
$ |
920 |
|
|
$ |
807 |
|
|
$ |
784 |
|
Strategic |
|
$ |
647 |
|
|
$ |
557 |
|
|
$ |
512 |
|
Mature |
|
$ |
273 |
|
|
$ |
250 |
|
|
$ |
272 |
|
Software
Maintenance |
|
$ |
237 |
|
|
$ |
240 |
|
|
$ |
240 |
|
Hardware Maintenance
and Other Services |
|
$ |
366 |
|
|
$ |
375 |
|
|
$ |
380 |
|
Hardware
Maintenance Support Contracts |
|
$ |
299 |
|
|
$ |
306 |
|
|
$ |
313 |
|
Professional and Other Services |
|
$ |
67 |
|
|
$ |
69 |
|
|
$ |
67 |
|
Net Revenues |
|
$ |
1,523 |
|
|
$ |
1,422 |
|
|
$ |
1,404 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Geographic Mix |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of Q3 FY'18 Revenue |
|
|
% of Q2 FY'18 Revenue |
|
|
% of Q3 FY'17 Revenue |
|
Americas |
|
|
54 |
% |
|
|
56 |
% |
|
|
55 |
% |
Americas
Commercial |
|
|
44 |
% |
|
|
40 |
% |
|
|
44 |
% |
U.S.
Public Sector |
|
|
10 |
% |
|
|
16 |
% |
|
|
10 |
% |
EMEA |
|
|
32 |
% |
|
|
30 |
% |
|
|
33 |
% |
Asia Pacific |
|
|
14 |
% |
|
|
14 |
% |
|
|
13 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pathways Mix |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of Q3 FY'18 Revenue |
|
|
% of Q2 FY'18 Revenue |
|
|
% of Q3 FY'17 Revenue |
|
Direct |
|
|
22 |
% |
|
|
22 |
% |
|
|
21 |
% |
Indirect |
|
|
78 |
% |
|
|
78 |
% |
|
|
79 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Gross Margins |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q3 FY'18 |
|
|
Q2 FY'18 |
|
|
Q3 FY'17 |
|
Non-GAAP Gross
Margin |
|
|
62.6 |
% |
|
|
64.3 |
% |
|
|
61.5 |
% |
Product |
|
|
50.2 |
% |
|
|
51.8 |
% |
|
|
45.7 |
% |
Software
Maintenance |
|
|
97.5 |
% |
|
|
97.5 |
% |
|
|
97.1 |
% |
Hardware
Maintenance and Other Services |
|
|
71.3 |
% |
|
|
69.9 |
% |
|
|
71.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Income from Operations, Income before Income Taxes
& Effective Tax Rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q3 FY'18 |
|
|
Q2 FY'18 |
|
|
Q3 FY'17 |
|
Non-GAAP Income from
Operations |
|
$ |
310 |
|
|
$ |
272 |
|
|
$ |
284 |
|
% of Net
Revenues |
|
|
20.4 |
% |
|
|
19.1 |
% |
|
|
20.2 |
% |
Non-GAAP Income before
Income Taxes |
|
$ |
324 |
|
|
$ |
278 |
|
|
$ |
284 |
|
Non-GAAP Effective Tax
Rate |
|
|
15.7 |
% |
|
|
19.4 |
% |
|
|
18.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Net Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q3 FY'18 |
|
|
Q2 FY'18 |
|
|
Q3 FY'17 |
|
Non-GAAP Net
Income |
|
$ |
273 |
|
|
$ |
223 |
|
|
$ |
231 |
|
Non-GAAP Weighted
Average Common Shares Outstanding, Diluted |
|
|
276 |
|
|
|
275 |
|
|
|
281 |
|
Non-GAAP Income per
Share, Diluted |
|
$ |
0.99 |
|
|
$ |
0.81 |
|
|
$ |
0.82 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Select Balance Sheet Items |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q3 FY'18 |
|
|
Q2 FY'18 |
|
|
Q3 FY'17 |
|
Deferred Revenue and
Financed Unearned Services Revenue |
|
$ |
3,269 |
|
|
$ |
3,167 |
|
|
$ |
3,234 |
|
DSO (days) |
|
|
45 |
|
|
|
37 |
|
|
|
39 |
|
DIO (days) |
|
|
15 |
|
|
|
19 |
|
|
|
21 |
|
DPO (days) |
|
|
72 |
|
|
|
66 |
|
|
|
42 |
|
CCC (days) |
|
|
(11 |
) |
|
|
(10 |
) |
|
|
17 |
|
Inventory Turns |
|
|
24 |
|
|
|
19 |
|
|
|
18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Days sales outstanding (DSO) is defined as accounts receivable
divided by net revenues, multiplied by the number of days in the
quarter. |
|
Days inventory outstanding (DIO) is defined as net inventories
divided by cost of revenues, multiplied by the number of days in
the quarter. |
|
Days payables outstanding (DPO) is defined as accounts payable
divided by cost of revenues, multiplied by the number of days in
the quarter. |
|
Cash conversion cycle (CCC) is defined as DSO plus DIO minus
DPO. |
|
Inventory turns is defined as annualized cost of revenues
divided by net inventories. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Select Cash Flow Statement Items |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q3 FY'18 |
|
|
Q2 FY'18 |
|
|
Q3 FY'17 |
|
Net Cash Provided by
Operating Activities |
|
$ |
420 |
|
|
$ |
314 |
|
|
$ |
235 |
|
Purchases of Property
and Equipment |
|
$ |
32 |
|
|
$ |
29 |
|
|
$ |
45 |
|
Free Cash Flow |
|
$ |
388 |
|
|
$ |
285 |
|
|
$ |
190 |
|
Free Cash Flow as a %
of Net Revenues |
|
|
25.5 |
% |
|
|
20.0 |
% |
|
|
13.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Free cash flow is a non-GAAP measure and is defined as net
cash provided by operating activities less purchases of property
and equipment. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Some items may not add or recalculate due to rounding. |
|
NETAPP, INC. |
|
RECONCILIATION OF NON-GAAP TO
GAAP |
|
INCOME STATEMENT INFORMATION |
|
(In millions, except net income per share
amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q3'FY18 |
|
|
Q2'FY18 |
|
|
Q3'FY17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME
(LOSS) |
|
$ |
(506 |
) |
|
$ |
175 |
|
|
$ |
146 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets |
|
|
14 |
|
|
|
14 |
|
|
|
13 |
|
Stock-based compensation |
|
|
38 |
|
|
|
39 |
|
|
|
46 |
|
Litigation settlements |
|
|
5 |
|
|
|
— |
|
|
|
— |
|
Restructuring charges |
|
|
— |
|
|
|
— |
|
|
|
52 |
|
Gain on
sale of properties |
|
|
(218 |
) |
|
|
— |
|
|
|
(10 |
) |
Income
tax effect of non-GAAP adjustments |
|
|
84 |
|
|
|
(5 |
) |
|
|
(16 |
) |
Tax
reform |
|
|
856 |
|
|
|
— |
|
|
|
— |
|
NON-GAAP NET
INCOME |
|
$ |
273 |
|
|
$ |
223 |
|
|
$ |
231 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COST OF
REVENUES |
|
$ |
582 |
|
|
$ |
520 |
|
|
$ |
553 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets |
|
|
(10 |
) |
|
|
(9 |
) |
|
|
(8 |
) |
Stock-based compensation |
|
|
(3 |
) |
|
|
(3 |
) |
|
|
(4 |
) |
NON-GAAP COST
OF REVENUES |
|
$ |
569 |
|
|
$ |
508 |
|
|
$ |
541 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COST OF PRODUCT
REVENUES |
|
$ |
468 |
|
|
$ |
399 |
|
|
$ |
435 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets |
|
|
(10 |
) |
|
|
(9 |
) |
|
|
(8 |
) |
Stock-based compensation |
|
|
— |
|
|
|
(1 |
) |
|
|
(1 |
) |
NON-GAAP COST
OF PRODUCT REVENUES |
|
$ |
458 |
|
|
$ |
389 |
|
|
$ |
426 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COST OF
HARDWARE MAINTENANCE AND OTHER SERVICES REVENUES |
|
$ |
108 |
|
|
$ |
115 |
|
|
$ |
111 |
|
Adjustment: |
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation |
|
|
(3 |
) |
|
|
(2 |
) |
|
|
(3 |
) |
NON-GAAP COST
OF HARDWARE MAINTENANCE AND OTHER SERVICES REVENUES |
|
$ |
105 |
|
|
$ |
113 |
|
|
$ |
108 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS
PROFIT |
|
$ |
941 |
|
|
$ |
902 |
|
|
$ |
851 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets |
|
|
10 |
|
|
|
9 |
|
|
|
8 |
|
Stock-based compensation |
|
|
3 |
|
|
|
3 |
|
|
|
4 |
|
NON-GAAP GROSS
PROFIT |
|
$ |
954 |
|
|
$ |
914 |
|
|
$ |
863 |
|
NETAPP, INC. |
|
RECONCILIATION OF NON-GAAP TO
GAAP |
|
INCOME STATEMENT INFORMATION |
|
(In millions, except net income per share
amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q3'FY18 |
|
|
Q2'FY18 |
|
|
Q3'FY17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SALES AND
MARKETING EXPENSES |
|
$ |
423 |
|
|
$ |
420 |
|
|
$ |
381 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets |
|
|
(4 |
) |
|
|
(5 |
) |
|
|
(5 |
) |
Stock-based compensation |
|
|
(16 |
) |
|
|
(16 |
) |
|
|
(20 |
) |
NON-GAAP SALES
AND MARKETING EXPENSES |
|
$ |
403 |
|
|
$ |
399 |
|
|
$ |
356 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RESEARCH AND
DEVELOPMENT EXPENSES |
|
$ |
193 |
|
|
$ |
194 |
|
|
$ |
181 |
|
Adjustment: |
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation |
|
|
(11 |
) |
|
|
(12 |
) |
|
|
(14 |
) |
NON-GAAP
RESEARCH AND DEVELOPMENT EXPENSES |
|
$ |
182 |
|
|
$ |
182 |
|
|
$ |
167 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GENERAL AND
ADMINISTRATIVE EXPENSES |
|
$ |
72 |
|
|
$ |
69 |
|
|
$ |
64 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation |
|
|
(8 |
) |
|
|
(8 |
) |
|
|
(8 |
) |
Litigation settlements |
|
|
(5 |
) |
|
|
- |
|
|
|
- |
|
NON-GAAP
GENERAL AND ADMINISTRATIVE EXPENSES |
|
$ |
59 |
|
|
$ |
61 |
|
|
$ |
56 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RESTRUCTURING
CHARGES |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
52 |
|
Adjustment: |
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring charges |
|
|
— |
|
|
|
— |
|
|
|
(52 |
) |
NON-GAAP
RESTRUCTURING CHARGES |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAIN ON SALE OF
PROPERTIES |
|
$ |
(218 |
) |
|
$ |
— |
|
|
$ |
(10 |
) |
Adjustment: |
|
|
|
|
|
|
|
|
|
|
|
|
Gain on
sale of properties |
|
|
218 |
|
|
|
— |
|
|
|
10 |
|
NON-GAAP GAIN
ON SALE OF PROPERTIES |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES |
|
$ |
470 |
|
|
$ |
683 |
|
|
$ |
668 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets |
|
|
(4 |
) |
|
|
(5 |
) |
|
|
(5 |
) |
Stock-based compensation |
|
|
(35 |
) |
|
|
(36 |
) |
|
|
(42 |
) |
Litigation settlements |
|
|
(5 |
) |
|
|
— |
|
|
|
— |
|
Restructuring charges |
|
|
— |
|
|
|
— |
|
|
|
(52 |
) |
Gain on
sale of properties |
|
|
218 |
|
|
|
— |
|
|
|
10 |
|
NON-GAAP
OPERATING EXPENSES |
|
$ |
644 |
|
|
$ |
642 |
|
|
$ |
579 |
|
NETAPP, INC. |
|
RECONCILIATION OF NON-GAAP TO
GAAP |
|
INCOME STATEMENT INFORMATION |
|
(In millions, except net income per share
amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q3'FY18 |
|
|
Q2'FY18 |
|
|
Q3'FY17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME FROM
OPERATIONS |
|
$ |
471 |
|
|
$ |
219 |
|
|
$ |
183 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets |
|
|
14 |
|
|
|
14 |
|
|
|
13 |
|
Stock-based compensation |
|
|
38 |
|
|
|
39 |
|
|
|
46 |
|
Litigation settlements |
|
|
5 |
|
|
|
— |
|
|
|
— |
|
Restructuring charges |
|
|
— |
|
|
|
— |
|
|
|
52 |
|
Gain on
sale of properties |
|
|
(218 |
) |
|
|
— |
|
|
|
(10 |
) |
NON-GAAP INCOME
FROM OPERATIONS |
|
$ |
310 |
|
|
$ |
272 |
|
|
$ |
284 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE
INCOME TAXES |
|
$ |
485 |
|
|
$ |
225 |
|
|
$ |
183 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets |
|
|
14 |
|
|
|
14 |
|
|
|
13 |
|
Stock-based compensation |
|
|
38 |
|
|
|
39 |
|
|
|
46 |
|
Litigation settlements |
|
|
5 |
|
|
|
— |
|
|
|
— |
|
Restructuring charges |
|
|
— |
|
|
|
— |
|
|
|
52 |
|
Gain on
sale of properties |
|
|
(218 |
) |
|
|
— |
|
|
|
(10 |
) |
NON-GAAP INCOME
BEFORE INCOME TAXES |
|
$ |
324 |
|
|
$ |
278 |
|
|
$ |
284 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PROVISION FOR
INCOME TAXES |
|
$ |
991 |
|
|
$ |
50 |
|
|
$ |
37 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
Income
tax effect of non-GAAP adjustments |
|
|
(84 |
) |
|
|
5 |
|
|
|
16 |
|
Tax
reform |
|
|
(856 |
) |
|
|
— |
|
|
|
— |
|
NON-GAAP
PROVISION FOR INCOME TAXES |
|
$ |
51 |
|
|
$ |
55 |
|
|
$ |
53 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME
(LOSS) PER SHARE |
|
$ |
(1.89 |
) |
|
$ |
0.64 |
|
|
$ |
0.52 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets |
|
|
0.05 |
|
|
|
0.05 |
|
|
|
0.05 |
|
Stock-based compensation |
|
|
0.14 |
|
|
|
0.14 |
|
|
|
0.16 |
|
Litigation settlements |
|
|
0.02 |
|
|
|
— |
|
|
|
— |
|
Restructuring charges |
|
|
— |
|
|
|
— |
|
|
|
0.19 |
|
Gain on
sale of properties |
|
|
(0.81 |
) |
|
|
— |
|
|
|
(0.04 |
) |
Income
tax effect of non-GAAP adjustments |
|
|
0.31 |
|
|
|
(0.02 |
) |
|
|
(0.06 |
) |
Tax
reform |
|
|
3.19 |
|
|
|
— |
|
|
|
— |
|
NON-GAAP NET
INCOME PER SHARE |
|
$ |
0.99 |
|
|
$ |
0.81 |
|
|
$ |
0.82 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In
Q3'FY18, our GAAP net loss per share was calculated using basic
shares of 268 million, as the impact of common stock equivalents
would have been anti-dilutive. Additionally, each adjustment
presented in the reconciliation was computed using basic shares.
However, because we reported net income on a non-GAAP basis,
non-GAAP net income per share was computed using diluted shares of
276 million. As a result of the difference in the number of shares,
the summation of GAAP net loss per share and the adjustments does
not equal non-GAAP net income per share. |
|
RECONCILIATION OF NON-GAAP TO
GAAP |
|
GROSS MARGIN |
|
($ in millions) |
|
|
|
|
|
|
|
Q3'FY18 |
|
|
Q2'FY18 |
|
|
Q3'FY17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin-GAAP |
|
|
61.8 |
% |
|
|
63.4 |
% |
|
|
60.6 |
% |
Cost of
revenues adjustments |
|
|
0.9 |
% |
|
|
0.8 |
% |
|
|
0.9 |
% |
Gross
margin-Non-GAAP |
|
|
62.6 |
% |
|
|
64.3 |
% |
|
|
61.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP cost of
revenues |
|
$ |
582 |
|
|
$ |
520 |
|
|
$ |
553 |
|
Cost of revenues
adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets |
|
|
(10 |
) |
|
|
(9 |
) |
|
|
(8 |
) |
Stock-based compensation |
|
|
(3 |
) |
|
|
(3 |
) |
|
|
(4 |
) |
Non-GAAP cost of
revenues |
|
$ |
569 |
|
|
$ |
508 |
|
|
$ |
541 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues |
|
$ |
1,523 |
|
|
$ |
1,422 |
|
|
$ |
1,404 |
|
RECONCILIATION OF NON-GAAP TO
GAAP |
|
PRODUCT GROSS MARGIN |
|
($ in millions) |
|
|
|
|
|
|
|
Q3'FY18 |
|
|
Q2'FY18 |
|
|
Q3'FY17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product gross
margin-GAAP |
|
|
49.1 |
% |
|
|
50.6 |
% |
|
|
44.5 |
% |
Cost of
product revenues adjustments |
|
|
1.1 |
% |
|
|
1.2 |
% |
|
|
1.1 |
% |
Product gross
margin-Non-GAAP |
|
|
50.2 |
% |
|
|
51.8 |
% |
|
|
45.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP cost of product
revenues |
|
$ |
468 |
|
|
$ |
399 |
|
|
$ |
435 |
|
Cost of product
revenues adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets |
|
|
(10 |
) |
|
|
(9 |
) |
|
|
(8 |
) |
Stock-based compensation |
|
|
— |
|
|
|
(1 |
) |
|
|
(1 |
) |
Non-GAAP cost of
product revenues |
|
$ |
458 |
|
|
$ |
389 |
|
|
$ |
426 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product revenues |
|
$ |
920 |
|
|
$ |
807 |
|
|
$ |
784 |
|
RECONCILIATION OF NON-GAAP TO
GAAP |
|
HARDWARE MAINTENANCE AND OTHER SERVICES GROSS
MARGIN |
|
($ in millions) |
|
|
|
|
|
|
|
Q3'FY18 |
|
|
Q2'FY18 |
|
|
Q3'FY17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hardware
maintenance and other services gross margin-GAAP |
|
|
70.5 |
% |
|
|
69.3 |
% |
|
|
70.8 |
% |
Cost of
hardware maintenance and other services revenues adjustment |
|
|
0.8 |
% |
|
|
0.5 |
% |
|
|
0.8 |
% |
Hardware
maintenance and other services gross margin-Non-GAAP |
|
|
71.3 |
% |
|
|
69.9 |
% |
|
|
71.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP cost of hardware
maintenance and other services revenues |
|
$ |
108 |
|
|
$ |
115 |
|
|
$ |
111 |
|
Cost of hardware
maintenance and other services revenues adjustment: |
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation |
|
|
(3 |
) |
|
|
(2 |
) |
|
|
(3 |
) |
Non-GAAP cost of
hardware maintenance and other services revenues |
|
$ |
105 |
|
|
$ |
113 |
|
|
$ |
108 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hardware maintenance
and other services revenues |
|
$ |
366 |
|
|
$ |
375 |
|
|
$ |
380 |
|
RECONCILIATION OF NON-GAAP TO
GAAP |
|
EFFECTIVE TAX RATE |
|
|
|
|
|
|
|
Q3'FY18 |
|
|
Q2'FY18 |
|
|
Q3'FY17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP effective
tax rate |
|
|
204.3 |
% |
|
|
22.2 |
% |
|
|
20.2 |
% |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
Tax
effect of non-GAAP adjustments |
|
|
(12.1 |
)% |
|
|
(2.8 |
)% |
|
|
(1.6 |
)% |
Tax
reform |
|
|
(176.5 |
)% |
|
|
— |
% |
|
|
— |
% |
Non-GAAP
effective tax rate |
|
|
15.7 |
% |
|
|
19.4 |
% |
|
|
18.6 |
% |
RECONCILIATION OF NET CASH PROVIDED BY
OPERATING ACTIVITIES |
|
TO FREE CASH FLOW (NON-GAAP) |
|
(In millions) |
|
|
|
|
|
|
|
Q3'FY18 |
|
|
Q2'FY18 |
|
|
Q3'FY17 |
|
Net cash provided by
operating activities |
|
$ |
420 |
|
|
$ |
314 |
|
|
$ |
235 |
|
Purchases of property
and equipment |
|
|
(32 |
) |
|
|
(29 |
) |
|
|
(45 |
) |
Free cash
flow |
|
$ |
388 |
|
|
$ |
285 |
|
|
$ |
190 |
|
Some items may not add or recalculate due to rounding.
NETAPP, INC. |
|
RECONCILIATION OF NON-GAAP GUIDANCE TO
GAAP |
|
EXPRESSED AS EARNINGS PER SHARE |
|
FOURTH QUARTER FISCAL 2018 |
|
|
|
|
|
|
|
|
Fourth Quarter |
|
|
|
Fiscal 2018 |
|
|
|
|
|
|
Non-GAAP Guidance - Net
Income Per Share |
|
$0.95 - $1.03 |
|
|
|
|
|
|
Adjustments of Specific
Items to Net Income |
|
|
|
|
Per Share
for the Fourth Quarter Fiscal 2018: |
|
|
|
|
Amortization of intangible assets |
|
|
(0.05 |
) |
Stock-based compensation expense |
|
|
(0.13 |
) |
Income
tax effect of non-GAAP adjustments |
|
|
(0.02 |
) |
Total Adjustments |
|
|
(0.20 |
) |
|
|
|
|
|
GAAP Guidance - Net
Income Per Share |
|
$0.75 - 0.83 |
|
Press Contact:Madge MillerNetApp1 408 419
5263madge.miller@netapp.com
Investor Contact:Kris NewtonNetApp1 408 822
3312kris.newton@netapp.com
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