NTAP
$79.43
Netapp
$1.27
1.62%
Earnings Details
Quarter April 2021
Wednesday, June 2, 2021 4:01:00 PM
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Summary

Netapp Misses

Netapp (NTAP) reported Quarter April 2021 earnings of $1.13 per share on revenue of $1.6 billion. The consensus earnings estimate was $1.12 per share on revenue of $1.5 billion. The Earnings Whisper number was $1.21 per share. Revenue grew 11.0% on a year-over-year basis.

The company said it expects first quarter non-GAAP earnings of $0.89 to $0.97 per share on revenue of $1.37 billion to $1.47 billion. The current consensus earnings estimate is $0.87 per share on revenue of $1.37 billion for the quarter ending July 31, 2021. The company said it expects fiscal 2022 non-GAAP earnings of $4.45 to $4.65 per share on revenue of $6.09 billion to $6.15 billion. The current consensus earnings estimate is $4.51 per share on revenue of $5.95 billion for the year ending April 30, 2022.

NetApp Inc is a provider of storage systems and data management solutions that form the foundation for efficient and flexible IT infrastructures.

Results
Reported Earnings
$1.13
Earnings Whisper
$1.21
Consensus Estimate
$1.12
Reported Revenue
$1.56 Bil
Revenue Estimate
$1.50 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

NetApp Reports Fourth Quarter and Fiscal Year 2021 Results

Net revenues for the fourth quarter grew 11% year-over-year to $1.56 billion

  • NetApp public cloud services annualized revenue run rate (ARR)1 increased 171% year-over-year to $301 million
  • All-flash array annualized net revenue run rate2 increased 11% year-over-year to $2.9 billion
  • Billings3 increased 12% year-over-year to $1.74 billion in the fourth quarter
  • $559 million in cash provided by operations in the fourth quarter; $521 million in free cash flow3, an all-time high for the Company

SUNNYVALE, Calif.--(BUSINESS WIRE)--NetApp (NASDAQ: NTAP) today reported financial results for the fourth quarter and fiscal year 2021, which ended on April 30, 2021.

“We delivered fourth quarter results above expectations, capping off a solid year of growth. Our momentum underscores our value to customers in a hybrid, multi-cloud world. We are gaining share in key storage markets and our public cloud services are at a scale where they are positively impacting total company billings and revenue growth,” said George Kurian, chief executive officer. “Our focused execution last year has set us up well for FY22. I am excited about the year ahead and confident in our ability to grow revenue while delivering operating leverage as we support our customers on their cloud and digital transformation journeys.”

Fourth quarter of fiscal year 2021 financial results

  • Net revenues: $1.56 billion, compared to $1.40 billion in the fourth quarter of fiscal year 2020
  • Net income: GAAP net income of $334 million, compared to $196 million in the fourth quarter of fiscal year 2020; non-GAAP net income4 of $268 million, compared to $265 million in the fourth quarter of fiscal year 2020
  • Earnings per share: GAAP net income per share5 of $1.46, compared to $0.88 in the fourth quarter of fiscal year 2020; non-GAAP net income per share of $1.17, compared to $1.19 in the fourth quarter of fiscal year 2020
  • Cash, cash equivalents and investments: $4.60 billion at the end of the fourth quarter of fiscal year 2021
  • Cash provided by operations: $559 million, compared to $383 million in the fourth quarter of fiscal year 2020
  • Share repurchase and dividends: Returned $181 million to shareholders through share repurchases and cash dividends

Fiscal year 2021 financial results

  • Net revenues: $5.74 billion, compared to $5.41 billion in fiscal year 2020
  • Net income: GAAP net income of $730 million, compared to $819 million in fiscal year 2020; non-GAAP net income of $917 million, compared to $944 million in fiscal year 2020
  • Earnings per share: GAAP net income per share of $3.23, compared to $3.52 in fiscal year 2020; non-GAAP net income per share of $4.06, compared to $4.05 in fiscal year 2020
  • Cash provided by operations: $1.33 billion compared to $1.06 billion in fiscal year 2020
  • Share repurchase and dividends: Returned $552 million to shareholders through share repurchases and cash dividends

First quarter fiscal year 2022 financial outlook

The Company provided the following financial guidance for the first quarter of fiscal year 2022:

Net revenues are expected to be in the range of:

$1.37 billion to $1.47 billion

 

GAAP

Non-GAAP

Earnings per share is expected to be in the range of:

$0.69 - $0.77

$0.89 - $0.97

Full fiscal year 2022 financial outlook

The Company provided the following financial guidance for the full fiscal year 2022:

Net revenues are expected to grow in the range of:

6% to 7%

Public cloud ARR is expected to exit the fiscal year in the range of:

$425 million to $500 million

 

GAAP

Non-GAAP

Consolidated gross margins are expected to be:

66% - 67%

67% - 68%

Operating margins are expected to be:

16% - 17%

21% - 22%

Effective tax rate is expected to be:

~20%

~19%

Earnings per share is expected to be in the range of:

$3.48 - $3.68

$4.45 - $4.65

Dividend

The Company will increase the first quarter fiscal year 2022 dividend by 4% to $0.50 per share. The quarterly dividend will be paid on July 28, 2021, to shareholders of record as of the close of business on July 9, 2021.

Share repurchase program

The Company authorized an additional $500 million for the repurchase of shares of its common stock under its existing share repurchase program.

Fourth quarter fiscal year 2021 business highlights

Delivering industry-leading products

  • NetApp announced the general availability of NetApp Astra, a fully managed application-aware data management service built for Kubernetes workloads.
  • NetApp announced Spot Wave by NetApp. In addition, Spot Ocean by NetApp now supports Azure Kubernetes Service. Together, these products provide customers with leading solutions for simple, scalable, and efficient infrastructure for cloud-native applications.
  • NetApp introduced the Data Science Toolkit to simplify the performance of various data science tasks with NetApp storage.
  • NetApp now supports BeeGFS for Kubernetes, providing infrastructure options for AI initiatives that offer customers a new cloud-native era. The Company also introduced NetApp EF-Series integration with nVIDIA DGX A100 systems, NetApp EF600 all-flash arrays, and the BeeGFS parallel file system with state-of-the-art InfiniBand networking.
  • NetApp announced a FlexPod Cisco Validated Design (CVD), that enables customers and partners to confidently deploy a FlexPod solution with Citrix Virtual Apps and Desktops.

NetApp partnering for innovation

  • NetApp and NVIDIA announced a new integrated solution based on the field-proven NetApp ONTAP AI reference architecture.
  • Cisco and NetApp celebrated the 10-year anniversary of FlexPod and announced the next decade of collaboration with the tech preview of NetApp ONTAP integration with Cisco Intersight.
  • Ducati Corse announced that its NetApp sponsorship would continue for a fourth straight year. The sponsorship plays a critical role in helping the Ducati Corse division fully exploit data’s potential in the racing world.
  • NetApp and Aston Martin Cognizant Formula One Team announced a partnership, unlocking the very best of cloud by outfitting the team with world-class data and cloud services.

Leadership matters—driving inclusion at NetApp

NetApp announced that Carrie Palin, former senior vice president and chief marketing officer of Splunk, has joined as a member of the Board of Directors.

Webcast and conference call information

NetApp will host a conference call to discuss these results today at 2:00 p.m. Pacific Time. To access the live webcast of this event, go to 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 be available on the website after 4:00 p.m. Pacific Time today.

“Safe Harbor” statement under U.S. Private Securities Litigation Reform Act of 1995

This 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 in the First Quarter of Fiscal Year 2022 Financial Outlook section and the Full Fiscal Year 2022 Financial Outlook section and statements about our ability to gain share, scale our cloud business, grow revenue and deliver operating leverage. 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 (including the impact of the COVID-19 pandemic thereon), changes in U.S. government spending, revenue seasonality and matters specific to our business, such as the impact of the COVID-19 pandemic on the company’s business operations, financial performance and results of operations, 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 annual report on Form 10-K and quarterly report on Form 10-Q. We disclaim any obligation to update information contained in this press release whether as a result of new information, future events, or otherwise.

NetApp, the NetApp logo, and the marks listed at http://www.netapp.com/TM are trademarks of NetApp, Inc. All other marks are the property of their respective owners.

Footnotes

1Public cloud services annualized revenue run rate (ARR) is calculated as the annualized value of all public cloud services customer commitments as of the last day of the quarter, with the assumption that any commitment expiring during the next 12 months will be renewed with its existing terms.

2All Flash Array annualized net revenue run rate is determined by products and services revenue for the current quarter, multiplied by 4.

3Refer to the NetApp Usage of Non-GAAP Financial Information section below for an explanation of billings and free cash flow.

4Non-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 or derecognition of assets, (h) gains/losses on the sale of investments in equity securities, (i) debt extinguishment costs, (j) COVID-19 charges and (k) 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.

5GAAP net income per share and non-GAAP net income per share are calculated using the diluted number of shares.

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, free cash flow, billings, and historical and projected non-GAAP earnings per diluted share. NetApp also presents the hardware and software components of our GAAP product revenues. Because our revenue recognition policy under GAAP defines a configured storage system, inclusive of the operating system software essential to its functionality, as a single performance obligation, hardware and software components of our product revenues are considered non-GAAP measures. The hardware and software components of our product revenues are derived from an estimated fair value allocation of the transaction price of our contracts with customers, down to the level of the product hardware and software components. This allocation is primarily based on the contractual prices at which NetApp has historically billed customers for such respective components.

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 believes that the presentation of the software and hardware components of our product revenues is meaningful to investors and management as it illustrates the significance of the Company’s software and provides improved visibility into the value created by our software innovation and R&D investment.

NetApp approximates billings by adding net revenues as reported on our Condensed Consolidated Statements of Operations for the period to the change in total deferred revenue and financed unearned services revenue as reported on our Condensed Consolidated Statements of Cash Flows for the same period. Billings is a performance measure that NetApp believes provides useful information to management and investors because it represents the amounts under purchase orders received by us during a given period that have been billed.

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 or derecognition of assets. These are gains/losses from the sale of our properties and other transactions in which we transfer control of assets to a third party. 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. Gains/losses on the sale of investments in equity securities. These are gains/losses from the sale of our investment in certain equity securities. Typically, such investments are sold as a result of a change in control of the underlying businesses. 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.

I. Debt extinguishment costs. NetApp excludes certain non-recurring expenses incurred as a result of the early extinguishment of debt. Management believes such nonrecurring costs do not reflect the results of its underlying, on-going business and, therefore, cannot be relied upon for future planning or forecasting.

J. COVID-19 charges. NetApp has excluded certain non-recurring expenses incurred as a direct result of the COVID-19 pandemic. Management believes such nonrecurring costs do not reflect the results of its underlying, on-going business and, therefore, cannot be relied upon for future planning or forecasting.

K. 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, statute lapses 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 property 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.

About NetApp

NetApp is a global cloud-led, data-centric software company that empowers organizations to lead with data in the age of accelerated digital transformation. The Company provides systems, software, and cloud services that enable them to run their applications optimally from data center to cloud, whether they are developing in the cloud, moving to the cloud, or creating their own cloudlike experiences on premises. With solutions that perform across diverse environments, NetApp helps organizations build their own data fabric and securely deliver the right data, services, and applications to the right people—anytime, anywhere. Learn more at www.netapp.com or follow us on Twitter, LinkedIn, Facebook, and Instagram.

NETAPP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)

(Unaudited)

 

 

April 30,

2021

 

 

April 24,

2020

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash, cash equivalents and investments

 

$

4,596

 

 

$

2,882

 

Accounts receivable

 

 

945

 

 

 

973

 

Inventories

 

 

114

 

 

 

145

 

Other current assets

 

 

346

 

 

 

274

 

Total current assets

 

 

6,001

 

 

 

4,274

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

525

 

 

 

727

 

Goodwill and purchased intangible assets, net

 

 

2,140

 

 

 

1,822

 

Other non-current assets

 

 

694

 

 

 

699

 

Total assets

 

$

9,360

 

 

$

7,522

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

420

 

 

$

426

 

Accrued expenses

 

 

970

 

 

 

774

 

Commercial paper notes

 

 

 

 

 

522

 

Short-term deferred revenue and financed unearned services revenue

 

 

2,062

 

 

 

1,894

 

Total current liabilities

 

 

3,452

 

 

 

3,616

 

Long-term debt

 

 

2,632

 

 

 

1,146

 

Other long-term liabilities

 

 

650

 

 

 

714

 

Long-term deferred revenue and financed unearned services revenue

 

 

1,941

 

 

 

1,804

 

Total liabilities

 

 

8,675

 

 

 

7,280

 

 

 

 

 

 

 

 

 

 

Stockholders' equity

 

 

685

 

 

 

242

 

Total liabilities and stockholders' equity

 

$

9,360

 

 

$

7,522

 

NETAPP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share amounts)

(Unaudited)

 

 

Three Months Ended

 

 

Year Ended

 

 

 

April 30, 2021

 

 

April 24, 2020

 

 

April 30, 2021

 

 

April 24, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product

 

$

840

 

 

$

793

 

 

$

2,991

 

 

$

2,995

 

Software support

 

 

343

 

 

 

267

 

 

 

1,281

 

 

 

1,034

 

Hardware support and other services

 

 

372

 

 

 

341

 

 

 

1,472

 

 

 

1,383

 

Net revenues

 

 

1,555

 

 

 

1,401

 

 

 

5,744

 

 

 

5,412

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of product

 

 

387

 

 

 

355

 

 

 

1,432

 

 

 

1,368

 

Cost of software support

 

 

28

 

 

 

15

 

 

 

95

 

 

 

48

 

Cost of hardware support and other services

 

 

105

 

 

 

90

 

 

 

402

 

 

 

373

 

Total cost of revenues

 

 

520

 

 

 

460

 

 

 

1,929

 

 

 

1,789

 

Gross profit

 

 

1,035

 

 

 

941

 

 

 

3,815

 

 

 

3,623

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

447

 

 

 

389

 

 

 

1,744

 

 

 

1,585

 

Research and development

 

 

221

 

 

 

212

 

 

 

881

 

 

 

847

 

General and administrative

 

 

66

 

 

 

63

 

 

 

257

 

 

 

263

 

Restructuring charges

 

 

 

 

 

 

 

 

42

 

 

 

21

 

Acquisition-related expense

 

 

2

 

 

 

 

 

 

16

 

 

 

 

Gain on sale or derecognition of assets

 

 

(156

)

 

 

 

 

 

(156

)

 

 

(38

)

Total operating expenses

 

 

580

 

 

 

664

 

 

 

2,784

 

 

 

2,678

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

 

455

 

 

 

277

 

 

 

1,031

 

 

 

945

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other expense, net

 

 

(19

)

 

 

(27

)

 

 

(69

)

 

 

(1

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 

436

 

 

 

250

 

 

 

962

 

 

 

944

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

 

102

 

 

 

54

 

 

 

232

 

 

 

125

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

334

 

 

$

196

 

 

$

730

 

 

$

819

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.50

 

 

$

0.89

 

 

$

3.29

 

 

$

3.56

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

$

1.46

 

 

$

0.88

 

 

$

3.23

 

 

$

3.52

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in net income per share calculations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

222

 

 

 

220

 

 

 

222

 

 

 

230

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

 

229

 

 

 

222

 

 

 

226

 

 

 

233

 

NETAPP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

 

 

Three Months Ended

 

 

Year Ended

 

 

 

April 30, 2021

 

 

April 24, 2020

 

 

April 30, 2021

 

 

April 24, 2020

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

334

 

 

$

196

 

 

$

730

 

 

$

819

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

48

 

 

 

47

 

 

 

207

 

 

 

193

 

Non-cash operating lease cost

 

 

14

 

 

 

12

 

 

 

52

 

 

 

51

 

Stock-based compensation

 

 

48

 

 

 

35

 

 

 

197

 

 

 

153

 

Deferred income taxes

 

 

(5

)

 

 

6

 

 

 

(6

)

 

 

(17

)

Gain on sale or derecognition of assets

 

 

(156

)

 

 

 

 

 

(156

)

 

 

(38

)

Other items, net

 

 

(11

)

 

 

17

 

 

 

24

 

 

 

1

 

Changes in assets and liabilities, net of acquisitions of businesses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(146

)

 

 

(156

)

 

 

62

 

 

 

238

 

Inventories

 

 

(8

)

 

 

(32

)

 

 

31

 

 

 

(14

)

Accounts payable

 

 

81

 

 

 

41

 

 

 

(11

)

 

 

(117

)

Accrued expenses

 

 

195

 

 

 

96

 

 

 

134

 

 

 

(177

)

Deferred revenue and financed unearned services revenue

 

 

183

 

 

 

147

 

 

 

193

 

 

 

54

 

Long-term taxes payable

 

 

(6

)

 

 

(30

)

 

 

(57

)

 

 

(163

)

Changes in other operating assets and liabilities, net

 

 

(12

)

 

 

4

 

 

 

(67

)

 

 

77

 

Net cash provided by operating activities

 

 

559

 

 

 

383

 

 

 

1,333

 

 

 

1,060

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Redemptions of investments, net

 

 

20

 

 

 

82

 

 

 

160

 

 

 

1,370

 

Purchases of property and equipment

 

 

(38

)

 

 

(24

)

 

 

(162

)

 

 

(124

)

Proceeds from sale of properties

 

 

365

 

 

 

 

 

 

371

 

 

 

96

 

Acquisitions of businesses, net of cash acquired

 

 

 

 

 

(17

)

 

 

(350

)

 

 

(73

)

Other investing activities, net

 

 

(6

)

 

 

1

 

 

 

2

 

 

 

 

Net cash provided by investing activities

 

 

341

 

 

 

42

 

 

 

21

 

 

 

1,269

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from issuance of common stock under employee stock award plans

 

 

6

 

 

 

 

 

 

98

 

 

 

102

 

Payments for taxes related to net share settlement of stock awards

 

 

(4

)

 

 

(2

)

 

 

(42

)

 

 

(79

)

Repurchase of common stock

 

 

(75

)

 

 

(161

)

 

 

(125

)

 

 

(1,411

)

(Repayments of) proceeds from commercial paper notes, original maturities of three months or less, net

 

 

 

 

 

(261

)

 

 

(420

)

 

 

172

 

Issuances of debt, net of issuance costs

 

 

 

 

 

101

 

 

 

2,057

 

 

 

111

 

Repayments and extinguishment of debt

 

 

 

 

 

(10

)

 

 

(689

)

 

 

(410

)

Dividends paid

 

 

(106

)

 

 

(105

)

 

 

(427

)

 

 

(439

)

Other financing activities, net

 

 

(1

)

 

 

(2

)

 

 

(8

)

 

 

(6

)

Net cash (used in) provided by financing activities

 

 

(180

)

 

 

(440

)

 

 

444

 

 

 

(1,960

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

 

1

 

 

 

(30

)

 

 

71

 

 

 

(34

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash, cash equivalents and restricted cash

 

 

721

 

 

 

(45

)

 

 

1,869

 

 

 

335

 

Cash, cash equivalents and restricted cash:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning of period

 

 

3,814

 

 

 

2,711

 

 

 

2,666

 

 

 

2,331

 

End of period

 

$

4,535

 

 

$

2,666

 

 

$

4,535

 

 

$

2,666

 

NETAPP, INC.

 

SUPPLEMENTAL DATA

 

(In millions except net income per share, percentages, DSO, DPO and Inventory Turns)

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q4'FY21

 

 

Q3'FY21

 

 

Q4'FY20

 

 

FY2021

 

 

FY2020

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product

 

$

840

 

 

$

775

 

 

$

793

 

 

$

2,991

 

 

$

2,995

 

Hardware

 

$

360

 

 

$

347

 

 

$

386

 

 

$

1,355

 

 

$

1,541

 

Software

 

$

480

 

 

$

428

 

 

$

407

 

 

$

1,636

 

 

$

1,454

 

Software Support

 

$

343

 

 

$

334

 

 

$

267

 

 

$

1,281

 

 

$

1,034

 

Hardware Support & Other Services

 

$

372

 

 

$

361

 

 

$

341

 

 

$

1,472

 

 

$

1,383

 

Hardware Support Contracts

 

$

299

 

 

$

293

 

 

$

279

 

 

$

1,195

 

 

$

1,142

 

Professional and Other Services

 

$

73

 

 

$

68

 

 

$

62

 

 

$

277

 

 

$

241

 

Net Revenues

 

$

1,555

 

 

$

1,470

 

 

$

1,401

 

 

$

5,744

 

 

$

5,412

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

840

 

 

$

775

 

 

$

793

 

 

$

2,991

 

 

$

2,995

 

Software*

 

$

480

 

 

$

428

 

 

$

407

 

 

$

1,636

 

 

$

1,454

 

Hardware*

 

$

360

 

 

$

347

 

 

$

386

 

 

$

1,355

 

 

$

1,541

 

* Our revenue recognition policy under GAAP defines a configured storage system, inclusive of the operating system software essential to its functionality, as a single performance obligation. We have provided a breakdown of our GAAP product revenues into the software and hardware components to display the significance of software included in total product revenues.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q4'FY21

 

 

Q3'FY21

 

 

Q4'FY20

 

 

FY2021

 

 

FY2020

 

Software and recurring support and cloud revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product - Software

 

$

480

 

 

$

428

 

 

$

407

 

 

$

1,636

 

 

$

1,454

 

Software Support

 

$

343

 

 

$

334

 

 

$

267

 

 

$

1,281

 

 

$

1,034

 

Hardware Support Contracts

 

$

299

 

 

$

293

 

 

$

279

 

 

$

1,195

 

 

$

1,142

 

Software and recurring support and cloud revenue*

 

$

1,121

 

 

$

1,055

 

 

$

953

 

 

$

4,111

 

 

$

3,630

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Software and recurring support and cloud revenue as a percentage of net revenues

 

 

72

%

 

 

72

%

 

 

68

%

 

 

72

%

 

 

67

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cloud revenue is included in software support revenues

 

*Software and recurring support and cloud revenue is a non-GAAP measure because it includes the software component of our product revenues, but not the hardware component.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Geographic Mix

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% of Q4 FY'21 Revenue

 

 

% of Q3 FY'21 Revenue

 

 

% of Q4 FY'20 Revenue

 

 

% of FY 2021 Revenue

 

 

% of FY 2020 Revenue

 

Americas

 

 

53

%

 

 

53

%

 

 

54

%

 

 

54

%

 

 

53

%

Americas Commercial

 

 

44

%

 

 

43

%

 

 

43

%

 

 

43

%

 

 

41

%

U.S. Public Sector

 

 

9

%

 

 

10

%

 

 

11

%

 

 

11

%

 

 

12

%

EMEA

 

 

32

%

 

 

32

%

 

 

32

%

 

 

31

%

 

 

32

%

Asia Pacific

 

 

15

%

 

 

15

%

 

 

14

%

 

 

15

%

 

 

15

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pathways Mix

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% of Q4 FY'21 Revenue

 

 

% of Q3 FY'21 Revenue

 

 

% of Q4 FY'20 Revenue

 

 

% of FY 2021 Revenue

 

 

% of FY 2020 Revenue

 

Direct

 

 

23

%

 

 

24

%

 

 

23

%

 

 

23

%

 

 

21

%

Indirect

 

 

77

%

 

 

76

%

 

 

77

%

 

 

77

%

 

 

79

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Gross Margins

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q4'FY21

 

 

Q3'FY21

 

 

Q4'FY20

 

 

FY2021

 

 

FY2020

 

Non-GAAP Gross Margin

 

 

67.3

%

 

 

67.3

%

 

 

68.0

%

 

 

67.4

%

 

 

67.9

%

Product

 

 

54.3

%

 

 

53.4

%

 

 

56.4

%

 

 

53.1

%

 

 

55.7

%

Software Support

 

 

93.3

%

 

 

93.1

%

 

 

94.4

%

 

 

93.8

%

 

 

95.4

%

Hardware Support & Other Services

 

 

72.6

%

 

 

73.4

%

 

 

74.5

%

 

 

73.4

%

 

 

73.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Income from Operations, Income before Income Taxes & Effective Tax Rate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q4'FY21

 

 

Q3'FY21

 

 

Q4'FY20

 

 

FY2021

 

 

FY2020

 

Non-GAAP Income from Operations

 

$

358

 

 

$

322

 

 

$

324

 

 

$

1,184

 

 

$

1,123

 

% of Net Revenues

 

 

23.0

%

 

 

21.9

%

 

 

23.1

%

 

 

20.6

%

 

 

20.8

%

Non-GAAP Income before Income Taxes

 

$

339

 

 

$

311

 

 

$

307

 

 

$

1,123

 

 

$

1,132

 

Non-GAAP Effective Tax Rate

 

 

20.9

%

 

 

19.6

%

 

 

13.7

%

 

 

18.3

%

 

 

16.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Net Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q4'FY21

 

 

Q3'FY21

 

 

Q4'FY20

 

 

FY2021

 

 

FY2020

 

Non-GAAP Net Income

 

$

268

 

 

$

250

 

 

$

265

 

 

$

917

 

 

$

944

 

Non-GAAP Weighted Average Common Shares Outstanding, Diluted

 

 

229

 

 

 

227

 

 

 

222

 

 

 

226

 

 

 

233

 

Non-GAAP Net Income per Share, Diluted

 

$

1.17

 

 

$

1.10

 

 

$

1.19

 

 

$

4.06

 

 

$

4.05

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Select Balance Sheet Items

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q4'FY21

 

 

Q3'FY21

 

 

Q4'FY20

 

 

 

 

 

 

 

 

 

Deferred Revenue and Financed Unearned Services Revenue

 

$

4,003

 

 

$

3,828

 

 

$

3,698

 

 

 

 

 

 

 

 

 

DSO (days)

 

 

55

 

 

 

49

 

 

 

63

 

 

 

 

 

 

 

 

 

DPO (days)

 

 

74

 

 

 

62

 

 

 

84

 

 

 

 

 

 

 

 

 

Inventory Turns

 

 

18

 

 

 

19

 

 

 

13

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Days sales outstanding (DSO) is defined as accounts receivable divided by net 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.

 

Inventory turns is defined as annualized cost of revenues divided by net inventories.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Select Cash Flow Statement Items

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q4'FY21

 

 

Q3'FY21

 

 

Q4'FY20

 

 

FY2021

 

 

FY2020

 

Net Cash Provided by Operating Activities

 

$

559

 

 

$

373

 

 

$

383

 

 

$

1,333

 

 

$

1,060

 

Purchases of Property and Equipment

 

$

38

 

 

$

32

 

 

$

24

 

 

$

162

 

 

$

124

 

Free Cash Flow

 

$

521

 

 

$

341

 

 

$

359

 

 

$

1,171

 

 

$

936

 

Free Cash Flow as % of Net Revenues

 

 

33.5

%

 

 

23.2

%

 

 

25.6

%

 

 

20.4

%

 

 

17.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Free cash flow is a non-GAAP measure and is defined as net cash provided by operating activities less purchases of property and equipment.

 

NETAPP, INC.

 

RECONCILIATION OF NON-GAAP TO GAAP

 

INCOME STATEMENT INFORMATION

 

(In millions, except net income per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q4'FY21

 

 

Q3'FY21

 

 

Q4'FY20

 

 

FY2021

 

 

FY2020

 

NET INCOME

 

$

334

 

 

$

182

 

 

$

196

 

 

$

730

 

 

$

819

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

 

9

 

 

 

15

 

 

 

9

 

 

 

49

 

 

 

39

 

Stock-based compensation

 

 

48

 

 

 

46

 

 

 

35

 

 

 

197

 

 

 

153

 

Asset impairment

 

 

 

 

 

 

 

 

10

 

 

 

 

 

 

10

 

Litigation settlements

 

 

 

 

 

 

 

 

 

 

 

5

 

 

 

 

COVID-19 charges

 

 

 

 

 

 

 

 

3

 

 

 

 

 

 

3

 

Restructuring charges

 

 

 

 

 

 

 

 

 

 

 

42

 

 

 

21

 

Acquisition-related expense

 

 

2

 

 

 

3

 

 

 

 

 

 

16

 

 

 

 

Gain on sale or derecognition of assets

 

 

(156

)

 

 

 

 

 

 

 

 

(156

)

 

 

(38

)

Gain on sale of equity investment

 

 

 

 

 

 

 

 

 

 

 

(6

)

 

 

 

Debt extinguishment costs

 

 

 

 

 

 

 

 

 

 

 

14

 

 

 

 

Income tax effects

 

 

18

 

 

 

(13

)

 

 

12

 

 

 

(20

)

 

 

(13

)

Income tax expenses from integration of acquired companies

 

 

13

 

 

 

17

 

 

 

 

 

 

46

 

 

 

 

Resolution of income tax matters

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(50

)

NON-GAAP NET INCOME

 

$

268

 

 

$

250

 

 

$

265

 

 

$

917

 

 

$

944

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COST OF REVENUES

 

$

520

 

 

$

495

 

 

$

460

 

 

$

1,929

 

 

$

1,789

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

 

(7

)

 

 

(12

)

 

 

(9

)

 

 

(41

)

 

 

(39

)

Stock-based compensation

 

 

(4

)

 

 

(3

)

 

 

(3

)

 

 

(14

)

 

 

(13

)

NON-GAAP COST OF REVENUES

 

$

509

 

 

$

480

 

 

$

448

 

 

$

1,874

 

 

$

1,737

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COST OF PRODUCT REVENUES

 

$

387

 

 

$

369

 

 

$

355

 

 

$

1,432

 

 

$

1,368

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

 

(2

)

 

 

(7

)

 

 

(9

)

 

 

(26

)

 

 

(39

)

Stock-based compensation

 

 

(1

)

 

 

(1

)

 

 

 

 

 

(4

)

 

 

(3

)

NON-GAAP COST OF PRODUCT REVENUES

 

$

384

 

 

$

361

 

 

$

346

 

 

$

1,402

 

 

$

1,326

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COST OF SOFTWARE SUPPORT REVENUES

 

$

28

 

 

$

28

 

 

$

15

 

 

$

95

 

 

$

48

 

Adjustment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

 

(5

)

 

 

(5

)

 

 

 

 

 

(15

)

 

 

 

NON-GAAP COST OF SOFTWARE SUPPORT REVENUES

 

$

23

 

 

$

23

 

 

$

15

 

 

$

80

 

 

$

48

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COST OF HARDWARE SUPPORT AND OTHER SERVICES REVENUES

 

$

105

 

 

$

98

 

 

$

90

 

 

$

402

 

 

$

373

 

Adjustment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

(3

)

 

 

(2

)

 

 

(3

)

 

 

(10

)

 

 

(10

)

NON-GAAP COST OF HARDWARE SUPPORT AND OTHER SERVICES REVENUES

 

$

102

 

 

$

96

 

 

$

87

 

 

$

392

 

 

$

363

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GROSS PROFIT

 

$

1,035

 

 

$

975

 

 

$

941

 

 

$

3,815

 

 

$

3,623

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

 

7

 

 

 

12

 

 

 

9

 

 

 

41

 

 

 

39

 

Stock-based compensation

 

 

4

 

 

 

3

 

 

 

3

 

 

 

14

 

 

 

13

 

NON-GAAP GROSS PROFIT

 

$

1,046

 

 

$

990

 

 

$

953

 

 

$

3,870

 

 

$

3,675

 

NETAPP, INC.

 

RECONCILIATION OF NON-GAAP TO GAAP

 

INCOME STATEMENT INFORMATION

 

(In millions, except net income per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q4'FY21

 

 

Q3'FY21

 

 

Q4'FY20

 

 

FY2021

 

 

FY2020

 

SALES AND MARKETING EXPENSES

 

$

447

 

 

$

436

 

 

$

389

 

 

$

1,744

 

 

$

1,585

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

 

(2

)

 

 

(3

)

 

 

 

 

 

(8

)

 

 

 

Stock-based compensation

 

 

(22

)

 

 

(21

)

 

 

(16

)

 

 

(92

)

 

 

(66

)

COVID-19 charges

 

 

 

 

 

 

 

 

(3

)

 

 

 

 

 

(3

)

NON-GAAP SALES AND MARKETING EXPENSES

 

$

423

 

 

$

412

 

 

$

370

 

 

$

1,644

 

 

$

1,516

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RESEARCH AND DEVELOPMENT EXPENSES

 

$

221

 

 

$

215

 

 

$

212

 

 

$

881

 

 

$

847

 

Adjustment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

(15

)

 

 

(15

)

 

 

(12

)

 

 

(64

)

 

 

(53

)

NON-GAAP RESEARCH AND DEVELOPMENT EXPENSES

 

$

206

 

 

$

200

 

 

$

200

 

 

$

817

 

 

$

794

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GENERAL AND ADMINISTRATIVE EXPENSES

 

$

66

 

 

$

63

 

 

$

63

 

 

$

257

 

 

$

263

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

(7

)

 

 

(7

)

 

 

(4

)

 

 

(27

)

 

 

(21

)

Litigation settlements

 

 

 

 

 

 

 

 

 

 

 

(5

)

 

 

 

NON-GAAP GENERAL AND ADMINISTRATIVE EXPENSES

 

$

59

 

 

$

56

 

 

$

59

 

 

$

225

 

 

$

242

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RESTRUCTURING CHARGES

 

$

 

 

$

 

 

$

 

 

$

42

 

 

$

21

 

Adjustment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restructuring charges

 

 

 

 

 

 

 

 

 

 

 

(42

)

 

 

(21

)

NON-GAAP RESTRUCTURING CHARGES

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAIN ON SALE OR DERECOGNITION OF ASSETS

 

$

(156

)

 

$

 

 

$

 

 

$

(156

)

 

$

(38

)

Adjustment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain on sale or derecognition of assets

 

 

156

 

 

 

 

 

 

 

 

 

156

 

 

 

38

 

NON-GAAP GAIN ON SALE OR DERECOGNITION OF ASSETS

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ACQUISITION-RELATED EXPENSE

 

$

2

 

 

$

3

 

 

$

 

 

$

16

 

 

$

 

Adjustment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition-related expense

 

 

(2

)

 

 

(3

)

 

 

 

 

 

(16

)

 

 

 

NON-GAAP ACQUISITION-RELATED EXPENSE

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

$

580

 

 

$

717

 

 

$

664

 

 

$

2,784

 

 

$

2,678

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

 

(2

)

 

 

(3

)

 

 

 

 

 

(8

)

 

 

 

Stock-based compensation

 

 

(44

)

 

 

(43

)

 

 

(32

)

 

 

(183

)

 

 

(140

)

Litigation settlements

 

 

 

 

 

 

 

 

 

 

 

(5

)

 

 

 

COVID-19 charges

 

 

 

 

 

 

 

 

(3

)

 

 

 

 

 

(3

)

Restructuring charges

 

 

 

 

 

 

 

 

 

 

 

(42

)

 

 

(21

)

Acquisition-related expense

 

 

(2

)

 

 

(3

)

 

 

 

 

 

(16

)

 

 

 

Gain on sale or derecognition of assets

 

 

156

 

 

 

 

 

 

 

 

 

156

 

 

 

38

 

NON-GAAP OPERATING EXPENSES

 

$

688

 

 

$

668

 

 

$

629

 

 

$

2,686

 

 

$

2,552

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NETAPP, INC.

 

RECONCILIATION OF NON-GAAP TO GAAP

 

INCOME STATEMENT INFORMATION

 

(In millions, except net income per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q4'FY21

 

 

Q3'FY21

 

 

Q4'FY20

 

 

FY2021

 

 

FY2020

 

INCOME FROM OPERATIONS

 

$

455

 

 

$

258

 

 

$

277

 

 

$

1,031

 

 

$

945

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

 

9

 

 

 

15

 

 

 

9

 

 

 

49

 

 

 

39

 

Stock-based compensation

 

 

48

 

 

 

46

 

 

 

35

 

 

 

197

 

 

 

153

 

Litigation settlements

 

 

 

 

 

 

 

 

 

 

 

5

 

 

 

 

COVID-19 charges

 

 

 

 

 

 

 

 

3

 

 

 

 

 

 

3

 

Restructuring charges

 

 

 

 

 

 

 

 

 

 

 

42

 

 

 

21

 

Acquisition-related expense

 

 

2

 

 

 

3

 

 

 

 

 

 

16

 

 

 

 

Gain on sale or derecognition of assets

 

 

(156

)

 

 

 

 

 

 

 

 

(156

)

 

 

(38

)

NON-GAAP INCOME FROM OPERATIONS

 

$

358

 

 

$

322

 

 

$

324

 

 

$

1,184

 

 

$

1,123

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSE), NET

 

$

(19

)

 

$

(11

)

 

$

(27

)

 

$

(69

)

 

$

(1

)

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset impairment

 

 

 

 

 

 

 

 

10

 

 

 

 

 

 

10

 

Debt extinguishment costs

 

 

 

 

 

 

 

 

 

 

 

14

 

 

 

 

Gain on sale of equity investment

 

 

 

 

 

 

 

 

 

 

 

(6

)

 

 

 

NON-GAAP OTHER INCOME (EXPENSE), NET

 

$

(19

)

 

$

(11

)

 

$

(17

)

 

$

(61

)

 

$

9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME BEFORE INCOME TAXES

 

$

436

 

 

$

247

 

 

$

250

 

 

$

962

 

 

$

944

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

 

9

 

 

 

15

 

 

 

9

 

 

 

49

 

 

 

39

 

Stock-based compensation

 

 

48

 

 

 

46

 

 

 

35

 

 

 

197

 

 

 

153

 

Asset impairment

 

 

 

 

 

 

 

 

10

 

 

 

 

 

 

10

 

Litigation settlements

 

 

 

 

 

 

 

 

 

 

 

5

 

 

 

 

COVID-19 charges

 

 

 

 

 

 

 

 

3

 

 

 

 

 

 

3

 

Restructuring charges

 

 

 

 

 

 

 

 

 

 

 

42

 

 

 

21

 

Acquisition-related expense

 

 

2

 

 

 

3

 

 

 

 

 

 

16

 

 

 

 

Gain on sale or derecognition of assets

 

 

(156

)

 

 

 

 

 

 

 

 

(156

)

 

 

(38

)

Debt extinguishment costs

 

 

 

 

 

 

 

 

 

 

 

14

 

 

 

 

Gain on sale of equity investment

 

 

 

 

 

 

 

 

 

 

 

(6

)

 

 

 

NON-GAAP INCOME BEFORE INCOME TAXES

 

$

339

 

 

$

311

 

 

$

307

 

 

$

1,123

 

 

$

1,132

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PROVISION FOR INCOME TAXES

 

$

102

 

 

$

65

 

 

$

54

 

 

$

232

 

 

$

125

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax effects

 

 

(18

)

 

 

13

 

 

 

(12

)

 

 

20

 

 

 

13

 

Income tax expenses from integration of acquired companies

 

 

(13

)

 

 

(17

)

 

 

 

 

 

(46

)

 

 

 

Resolution of income tax matters

 

 

 

 

 

 

 

 

 

 

 

 

 

 

50

 

NON-GAAP PROVISION FOR INCOME TAXES

 

$

71

 

 

$

61

 

 

$

42

 

 

$

206

 

 

$

188

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME PER SHARE

 

$

1.46

 

 

$

0.80

 

 

$

0.88

 

 

$

3.23

 

 

$

3.52

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

 

0.04

 

 

 

0.07

 

 

 

0.04

 

 

 

0.22

 

 

 

0.17

 

Stock-based compensation

 

 

0.21

 

 

 

0.20

 

 

 

0.16

 

 

 

0.87

 

 

 

0.66

 

Asset impairment

 

 

 

 

 

 

 

 

0.05

 

 

 

 

 

 

0.04

 

Litigation settlements

 

 

 

 

 

 

 

 

 

 

 

0.02

 

 

 

 

COVID-19 charges

 

 

 

 

 

 

 

 

0.01

 

 

 

 

 

 

0.01

 

Restructuring charges

 

 

 

 

 

 

 

 

 

 

 

0.19

 

 

 

0.09

 

Acquisition-related expense

 

 

0.01

 

 

 

0.01

 

 

 

 

 

 

0.07

 

 

 

 

Gain on sale or derecognition of assets

 

 

(0.68

)

 

 

 

 

 

 

 

 

(0.69

)

 

 

(0.16

)

Debt extinguishment costs

 

 

 

 

 

 

 

 

 

0.06

 

 

 

 

Gain on sale of equity investment

 

 

 

 

 

 

 

 

 

 

(0.03

)

 

 

 

Income tax effects

 

 

0.08

 

 

 

(0.06

)

 

 

0.05

 

 

 

(0.09

)

 

 

(0.06

)

Income tax expenses from integration of acquired companies

 

 

0.06

 

 

 

0.07

 

 

 

 

 

 

0.20

 

 

 

 

Resolution of income tax matters

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(0.21

)

NON-GAAP NET INCOME PER SHARE

 

$

1.17

 

 

$

1.10

 

 

$

1.19

 

 

$

4.06

 

 

$

4.05

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RECONCILIATION OF NON-GAAP TO GAAP

 

GROSS MARGIN

 

($ in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q4'FY21

 

 

Q3'FY21

 

 

Q4'FY20

 

 

FY2021

 

 

FY2020

 

Gross margin-GAAP

 

 

66.6

%

 

 

66.3

%

 

 

67.2

%

 

 

66.4

%

 

 

66.9

%

Cost of revenues adjustments

 

 

0.7

%

 

 

1.0

%

 

 

0.9

%

 

 

1.0

%

 

 

1.0

%

Gross margin-Non-GAAP

 

 

67.3

%

 

 

67.3

%

 

 

68.0

%

 

 

67.4

%

 

 

67.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP cost of revenues

 

$

520

 

 

$

495

 

 

$

460

 

 

$

1,929

 

 

$

1,789

 

Cost of revenues adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

 

(7

)

 

 

(12

)

 

 

(9

)

 

 

(41

)

 

 

(39

)

Stock-based compensation

 

 

(4

)

 

 

(3

)

 

 

(3

)

 

 

(14

)

 

 

(13

)

Non-GAAP cost of revenues

 

$

509

 

 

$

480

 

 

$

448

 

 

$

1,874

 

 

$

1,737

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenues

 

$

1,555

 

 

$

1,470

 

 

$

1,401

 

 

$

5,744

 

 

$

5,412

 

RECONCILIATION OF NON-GAAP TO GAAP

 

PRODUCT GROSS MARGIN

 

($ in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q4'FY21

 

 

Q3'FY21

 

 

Q4'FY20

 

 

FY2021

 

 

FY2020

 

Product gross margin-GAAP

 

 

53.9

%

 

 

52.4

%

 

 

55.2

%

 

 

52.1

%

 

 

54.3

%

Cost of product revenues adjustments

 

 

0.4

%

 

 

1.0

%

 

 

1.1

%

 

 

1.0

%

 

 

1.4

%

Product gross margin-Non-GAAP

 

 

54.3

%

 

 

53.4

%

 

 

56.4

%

 

 

53.1

%

 

 

55.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP cost of product revenues

 

$

387

 

 

$

369

 

 

$

355

 

 

$

1,432

 

 

$

1,368

 

Cost of product revenues adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

 

(2

)

 

 

(7

)

 

 

(9

)

 

 

(26

)

 

 

(39

)

Stock-based compensation

 

 

(1

)

 

 

(1

)

 

 

 

 

 

(4

)

 

 

(3

)

Non-GAAP cost of product revenues

 

$

384

 

 

$

361

 

 

$

346

 

 

$

1,402

 

 

$

1,326

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product revenues

 

$

840

 

 

$

775

 

 

$

793

 

 

$

2,991

 

 

$

2,995

 

RECONCILIATION OF NON-GAAP TO GAAP

 

SOFTWARE SUPPORT GROSS MARGIN

 

($ in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q4'FY21

 

 

Q3'FY21

 

 

Q4'FY20

 

 

FY2021

 

 

FY2020

 

Software support gross margin-GAAP

 

 

91.8

%

 

 

91.6

%

 

 

94.4

%

 

 

92.6

%

 

 

95.4

%

Cost of software support revenues adjustment

 

 

1.5

%

 

 

1.5

%

 

 

%

 

 

1.2

%

 

 

%

Software support gross margin-Non-GAAP

 

 

93.3

%

 

 

93.1

%

 

 

94.4

%

 

 

93.8

%

 

 

95.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP cost of software support revenues

 

$

28

 

 

$

28

 

 

$

15

 

 

$

95

 

 

$

48

 

Cost of software support revenues adjustment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

 

(5

)

 

 

(5

)

 

 

 

 

 

(15

)

 

 

 

Non-GAAP cost of software support revenues

 

$

23

 

 

$

23

 

 

$

15

 

 

$

80

 

 

$

48

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Software support revenues

 

$

343

 

 

$

334

 

 

$

267

 

 

$

1,281

 

 

$

1,034

 

RECONCILIATION OF NON-GAAP TO GAAP

 

HARDWARE SUPPORT AND OTHER SERVICES GROSS MARGIN

 

($ in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q4'FY21

 

 

Q3'FY21

 

 

Q4'FY20

 

 

FY2021

 

 

FY2020

 

Hardware support and other services gross margin-GAAP

 

 

71.8

%

 

 

72.9

%

 

 

73.6

%

 

 

72.7

%

 

 

73.0

%

Cost of hardware support and other services revenues adjustment

 

 

0.8

%

 

 

0.6

%

 

 

0.9

%

 

 

0.7

%

 

 

0.7

%

Hardware support and other services gross margin-Non-GAAP

 

 

72.6

%

 

 

73.4

%

 

 

74.5

%

 

 

73.4

%

 

 

73.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP cost of hardware support and other services revenues

 

$

105

 

 

$

98

 

 

$

90

 

 

$

402

 

 

$

373

 

Cost of hardware support and other services revenues adjustment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

(3

)

 

 

(2

)

 

 

(3

)

 

 

(10

)

 

 

(10

)

Non-GAAP cost of hardware support and other services revenues

 

$

102

 

 

$

96

 

 

$

87

 

 

$

392

 

 

$

363

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hardware support and other services revenues

 

$

372

 

 

$

361

 

 

$

341

 

 

$

1,472

 

 

$

1,383

 

RECONCILIATION OF NON-GAAP TO GAAP

 

EFFECTIVE TAX RATE

 

 

 

 

 

 

 

 

 

 

 

 

 

Q4'FY21

 

 

Q3'FY21

 

 

Q4'FY20

 

 

FY2021

 

 

FY2020

 

GAAP effective tax rate

 

 

23.4

%

 

 

26.3

%

 

 

21.6

%

 

 

24.1

%

 

 

13.2

%

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax effects

 

 

0.5

%

 

 

0.2

%

 

 

(7.9

)%

 

 

(1.0

)%

 

 

(1.1

)%

Income tax expenses from integration of acquired companies

 

 

(3.0

)%

 

 

(6.9

)%

 

 

%

 

 

(4.8

)%

 

 

%

Resolution of income tax matters

 

 

%

 

 

%

 

 

%

 

 

%

 

 

4.4

%

Non-GAAP effective tax rate

 

 

20.9

%

 

 

19.6

%

 

 

13.7

%

 

 

18.3

%

 

 

16.6

%

RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES

 

TO FREE CASH FLOW (NON-GAAP)

 

(In millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q4'FY21

 

 

Q3'FY21

 

 

Q4'FY20

 

 

FY2021

 

 

FY2020

 

Net cash provided by operating activities

 

$

559

 

 

$

373

 

 

$

383

 

 

$

1,333

 

 

$

1,060

 

Purchases of property and equipment

 

 

(38

)

 

 

(32

)

 

 

(24

)

 

 

(162

)

 

 

(124

)

Free cash flow

 

$

521

 

 

$

341

 

 

$

359

 

 

$

1,171

 

 

$

936

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RECONCILIATION OF NET REVENUES

 

TO BILLINGS (NON-GAAP)

 

(In millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q4'FY21

 

 

Q3'FY21

 

 

Q4'FY20

 

 

FY2021

 

 

FY2020

 

Net revenues

 

$

1,555

 

 

$

1,470

 

 

$

1,401

 

 

$

5,744

 

 

$

5,412

 

Change in deferred revenue and financed unearned services revenue*

 

 

183

 

 

 

128

 

 

 

147

 

 

 

193

 

 

 

54

 

Billings

 

$

1,738

 

 

$

1,598

 

 

$

1,548

 

 

$

5,937

 

 

$

5,466

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* As reported on our Condensed Consolidated Statements of Cash Flows

 

NETAPP, INC.

RECONCILIATION OF NON-GAAP GUIDANCE TO GAAP

EXPRESSED AS EARNINGS PER SHARE

FIRST QUARTER FISCAL 2022

 

 

 

 

 

First Quarter

 

 

Fiscal 2022

 

 

 

Non-GAAP Guidance - Net Income Per Share

 

$0.89 - $0.97

 

 

 

Adjustments of Specific Items to Net Income

 

 

Per Share for the First Quarter Fiscal 2022:

 

 

Amortization of intangible assets

 

($0.04)

Stock-based compensation expense

 

($0.20)

Income tax effects

 

$0.04

Total Adjustments

 

($0.20)

 

 

 

GAAP Guidance - Net Income Per Share

 

$0.69 - $0.77

Some items may not add or recalculate due to rounding.

NETAPP, INC.

 

RECONCILIATION OF NON-GAAP GUIDANCE TO GAAP

 

FISCAL 2022

 

(Unaudited)

 

 

 

 

 

 

 

 

GROSS MARGIN

 

 

 

 

 

 

Gross Margin - Non-GAAP Guidance

 

67% - 68%

 

Adjustment:

 

 

 

 

Cost of revenues adjustments

 

(1)%

 

Gross Margin - GAAP Guidance

 

66% - 67%

 

 

 

 

 

 

 

 

OPERATING MARGIN

 

 

 

 

 

 

Operating Margin - Non-GAAP Guidance

 

21% - 22%

 

Adjustments:

 

 

 

 

Amortization of intangible assets

 

(1)%

 

Stock-based compensation expense

 

(4)%

 

Operating Margin - GAAP Guidance

 

16% - 17%

 

 

 

 

 

 

 

 

EFFECTIVE TAX RATE

 

 

 

 

 

 

Effective Tax Rate - Non-GAAP Guidance

 

~ 19%

 

Adjustment:

 

 

 

 

Income tax effects

 

1%

 

Effective Tax Rate - GAAP Guidance

 

~ 20%

 

Some items may not add or recalculate due to rounding.

NETAPP, INC.

RECONCILIATION OF NON-GAAP GUIDANCE TO GAAP

EXPRESSED AS EARNINGS PER SHARE

FISCAL 2022

 

 

 

 

 

 

 

 

Fiscal 2022

 

 

 

Non-GAAP Guidance - Net Income Per Share

 

$4.45 - $4.65

 

 

 

Adjustments of Specific Items to Net Income

 

 

Per Share for Fiscal 2022:

 

 

Amortization of intangible assets

 

($0.16)

Stock-based compensation expense

 

($0.98)

Income tax effects

 

$0.17

Total Adjustments

 

($0.97)

 

 

 

GAAP Guidance - Net Income Per Share

 

$3.48 - $3.68

Some items may not add or recalculate due to rounding.

 

(Press)
Chris Drago
1 831 900 8889
chris.drago@netapp.com

(Investors)
Lance Berger
1 408 822 6628
lance.berger@netapp.com

Source: NetApp, Inc.