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 NetApp Reports Fourth Quarter and Fiscal Year 2020 Results
   Wednesday, May 27, 2020 4:01:00 PM ET

Solid Margins, Cash Flow and Operating Leverage;

Net Revenues of $1.40 Billion for the Fourth Quarter and $5.41 Billion for Fiscal Year 2020 

  • NetApp™ cloud data services annualized recurring revenue of approximately $111 million, an increase of 113% year-over-year
  • All flash array annualized net revenue run rate of $2.6 billion
  • Consolidated GAAP gross margin of 66.9% in fiscal year 2020; non-GAAP gross margin of 67.9%
  • $1.06 billion in cash provided by operations in fiscal year 2020; $936 million in free cash flow
  • $1.85 billion returned to shareholders in share repurchases and cash dividend in fiscal year 2020


SUNNYVALE, Calif.--(BUSINESS WIRE)--NetApp (NASDAQ: NTAP) today reported financial results for the fourth quarter and fiscal year 2020, which ended on April 24, 2020.

“During this unprecedented situation, our priority has been supporting our employees, customers, partners, and communities. Despite the challenging environment, we delivered solid gross margin, cash flow and operating leverage in the fourth quarter. Our cloud business grew substantially and our new customer acquisition districts again performed well,” said George Kurian, chief executive officer. “The strength and resiliency of our business model enables us to continue to execute our strategy while navigating a range of potential demand environments. While we cannot predict when the world will return to normal, the enduring importance of data is clear. We are confident that the demand for our products and services will be strong as we emerge from this crisis.”

Fourth Quarter of Fiscal Year 2020 Financial Results

  • Net Revenues: $1.40 billion, compared to $1.59 billion in the fourth quarter of fiscal year 2019
  • Net Income: GAAP net income of $196 million, compared to GAAP net income of $396 million in the fourth quarter of fiscal year 2019; non-GAAP net income1 of $265 million, compared to non-GAAP net income of $305 million in the fourth quarter of fiscal year 2019
  • Earnings per Share: GAAP net income per share2 of $0.88 compared to GAAP net income per share of $1.59 in the fourth quarter of fiscal year 2019; non-GAAP net income per share of $1.19, compared to non-GAAP net income per share of $1.22 in the fourth quarter of fiscal year 2019
  • Cash, Cash Equivalents and Investments: $2.88 billion at the end of the fourth quarter of fiscal year 2020
  • Cash Provided by Operations: $383 million, compared to $399 million in the fourth quarter of fiscal year 2019
  • Share Repurchase and Dividend: Returned $266 million to shareholders through share repurchases and cash dividends

Fiscal Year 2020 Financial Results

  • Net Revenues: $5.41 billion, compared to $6.15 billion in fiscal year 2019
  • Net Income: GAAP net income of $819 million, compared to GAAP net income of $1.17 billion in fiscal year 2019; non-GAAP net income of $944 million, compared to non-GAAP net income of $1.17 billion in fiscal year 2019
  • Earnings per Share: GAAP net income per share of $3.52, compared to GAAP net income per share of $4.51 in fiscal year 2019; non-GAAP net income per share of $4.05, compared to non-GAAP net income per share of $4.52 in fiscal year 2019
  • Cash Provided by Operations: $1.06 billion compared to $1.34 billion in fiscal year 2019
  • Share Repurchase and Dividend: Returned $1.85 billion to shareholders through share repurchases and cash dividends

First Quarter of Fiscal Year 2021 Financial Outlook

The Company provided the following financial guidance for the first quarter of fiscal year 2021:

  • Net revenues are expected to be in the range of:

$1.090 billion to $1.240 billion

 

 

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

$0.18 - $0.26

 

$0.36 - $0.44

Dividend

Next cash dividend of $0.48 per share to be paid on July 29, 2020, to shareholders of record as of the close of business on July 10, 2020.

Fourth Quarter of Fiscal Year 2020 Business Highlights

Growing Partnerships and Innovations with Customers in Mind

  • NetApp is architecting application-integrated data management for Kubernetes with Project Astra. The company debuted this vision for an enterprise-class data service for stateful, cloud-native applications with any Kubernetes distribution on any cloud.
  • NetApp acquired Talon Storage, enhancing NetApp Cloud Volumes and Azure NetApp Files with NetApp Global File Cache for remote office and branch office workers.
  • NetApp announced an integrated solution for End User Computing (EUC) remote connected infrastructures with NetApp HCI, NVIDIA, and VMware.
  • NetApp launched a clustered architecture consisting of NetApp AFF storage systems and Fujitsu PRIMERGY servers optimized for artificial intelligence (AI) and enterprise machine learning (ML).
  • The new NetApp Active IQ™ web UI and mobile app were launched, helping to support customers in avoiding disruptions from unexpected growth.

NetApp Award-Winning Infrastructure

  • NetApp was named Google Cloud Technology Partner of the Year for Infrastructure3 for the second consecutive year. The award noted NetApp’s excellence with its data fabric vision.
  • IDC released two reports: One notes NetApp as a leader in scale-out, file-based storage with NetApp ONTAP™ AI,4 and the other recognizes NetApp as an industry leader5 that helps customers implement digital transformation in meaningful ways.

NetApp Provides Support for COVID-19 Crisis

  • NetApp helps customers respond to the surge in remote work and the strains being put on IT organizations with NetApp Active IQ, which give insight to where customers might be vulnerable to new security threats and makes sure that data and applications are available and performing optimally.
  • NetApp has teamed up with Core Scientific and NVIDIA to give COVID-19 researchers complimentary access to cloud connected storage systems and connect their data sets from anywhere and take advantage of powerful AI and genomic tools.
  • NetApp teams across the company engaged together to scale infrastructures to support thousands of healthcare customers prepare for COVID-19 and implement solutions to maximize their systems, on a global scale across hundreds of countries.
  • NetApp joined forces with 25 other Bay Area companies to give $22 million in funding to organizations helping on the frontlines of the COVID-19 crisis.

Board of Directors and Management Additions

  • NetApp appointed Mike Berry as executive vice president and CFO, reporting to CEO George Kurian.
  • NetApp appointed Deepak Ahuja to the board of directors, bringing the number of directors on the NetApp board to eight.

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 2021 Financial Outlook section, and statements about the strength and resiliency of our business model, the demand for our products and services, and our ability to execute our strategy. 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 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.

Footnotes

1Non-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) COVID-19 charges and (i) 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 income per share and non-GAAP net income per share are calculated using the diluted number of shares.

3Google Cloud 2019 Partner Awards, https://cloud.google.com/blog/topics/partners/announcing-the-winners-of-our-2019-partner-awards?linkId=85936877

4IDC, “IDC MarketScape: Worldwide Scale-Out File-Based Storage 2019 Vendor Assessment,” #US45355019e, December 2019.

5IDC, “A New NetApp Is on the Rise,” by Eric Burgener, #US45948920, February 2020.

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 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. 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.

I. 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 the leader in cloud data services, empowering global organizations to change their world with data. Together with our partners, we are the only ones who can help you build your unique data fabric. Simplify hybrid multicloud and securely deliver the right data, services and applications to the right people at the right time. Learn more at www.netapp.com .

NETAPP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)

(Unaudited)

 

 

April 24,
2020

 

 

April 26,
2019

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash, cash equivalents and investments

 

$

2,882

 

 

$

3,899

 

Accounts receivable

 

 

973

 

 

 

1,216

 

Inventories

 

 

145

 

 

 

131

 

Other current assets

 

 

274

 

 

 

364

 

Total current assets

 

 

4,274

 

 

 

5,610

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

727

 

 

 

759

 

Goodwill and purchased intangible assets, net

 

 

1,822

 

 

 

1,782

 

Other non-current assets

 

 

699

 

 

 

590

 

Total assets

 

$

7,522

 

 

$

8,741

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

426

 

 

$

542

 

Accrued expenses

 

 

774

 

 

 

851

 

Commercial paper notes

 

 

522

 

 

 

249

 

Current portion of long-term debt

 

 

—

 

 

 

400

 

Short-term deferred revenue and financed unearned services revenue

 

 

1,894

 

 

 

1,825

 

Total current liabilities

 

 

3,616

 

 

 

3,867

 

Long-term debt

 

 

1,146

 

 

 

1,144

 

Other long-term liabilities

 

 

714

 

 

 

797

 

Long-term deferred revenue and financed unearned services revenue

 

 

1,804

 

 

 

1,843

 

Total liabilities

 

 

7,280

 

 

 

7,651

 

 

 

 

 

 

 

 

 

 

Stockholders' equity

 

 

242

 

 

 

1,090

 

Total liabilities and stockholders' equity

 

$

7,522

 

 

$

8,741

 

NETAPP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share amounts)

(Unaudited)

 

 

Three Months Ended

 

 

Year Ended

 

 

 

April 24, 2020

 

 

April 26, 2019

 

 

April 24, 2020

 

 

April 26, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product

 

$

793

 

 

$

1,000

 

 

$

2,995

 

 

$

3,755

 

Software maintenance

 

 

267

 

 

 

242

 

 

 

1,034

 

 

 

946

 

Hardware maintenance and other services

 

 

341

 

 

 

350

 

 

 

1,383

 

 

 

1,445

 

Net revenues

 

 

1,401

 

 

 

1,592

 

 

 

5,412

 

 

 

6,146

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of product

 

 

355

 

 

 

457

 

 

 

1,368

 

 

 

1,752

 

Cost of software maintenance

 

 

15

 

 

 

10

 

 

 

48

 

 

 

35

 

Cost of hardware maintenance and other services

 

 

90

 

 

 

99

 

 

 

373

 

 

 

414

 

Total cost of revenues

 

 

460

 

 

 

566

 

 

 

1,789

 

 

 

2,201

 

Gross profit

 

 

941

 

 

 

1,026

 

 

 

3,623

 

 

 

3,945

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

389

 

 

 

439

 

 

 

1,585

 

 

 

1,657

 

Research and development

 

 

212

 

 

 

205

 

 

 

847

 

 

 

827

 

General and administrative

 

 

63

 

 

 

69

 

 

 

263

 

 

 

278

 

Restructuring charges

 

 

—

 

 

 

16

 

 

 

21

 

 

 

35

 

Gain on sale or derecognition of assets

 

 

—

 

 

 

(73

)

 

 

(38

)

 

 

(73

)

Total operating expenses

 

 

664

 

 

 

656

 

 

 

2,678

 

 

 

2,724

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

 

277

 

 

 

370

 

 

 

945

 

 

 

1,221

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense), net

 

 

(27

)

 

 

14

 

 

 

(1

)

 

 

47

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 

250

 

 

 

384

 

 

 

944

 

 

 

1,268

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision (benefit) for income taxes

 

 

54

 

 

 

(12

)

 

 

125

 

 

 

99

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

196

 

 

$

396

 

 

$

819

 

 

$

1,169

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.89

 

 

$

1.62

 

 

$

3.56

 

 

$

4.60

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

$

0.88

 

 

$

1.59

 

 

$

3.52

 

 

$

4.51

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in net income per share calculations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

220

 

 

 

245

 

 

 

230

 

 

 

254

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

 

222

 

 

 

249

 

 

 

233

 

 

 

259

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends declared per share

 

$

0.48

 

 

$

0.40

 

 

$

1.92

 

 

$

1.60

 

NETAPP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

 

 

Three Months Ended

 

 

Year Ended

 

 

 

April 24, 2020

 

 

April 26, 2019

 

 

April 24, 2020

 

 

April 26, 2019

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

196

 

 

$

396

 

 

$

819

 

 

$

1,169

 

Adjustments to reconcile net income to net cash

provided by operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

47

 

 

 

48

 

 

 

193

 

 

 

197

 

Non-cash operating lease cost

 

 

12

 

 

 

—

 

 

 

51

 

 

 

—

 

Stock-based compensation

 

 

35

 

 

 

37

 

 

 

153

 

 

 

158

 

Deferred income taxes

 

 

6

 

 

 

18

 

 

 

(17

)

 

 

(3

)

Gain on sale or derecognition of assets

 

 

—

 

 

 

(73

)

 

 

(38

)

 

 

(73

)

Other items, net

 

 

17

 

 

 

(6

)

 

 

1

 

 

 

2

 

Changes in assets and liabilities, net of acquisitions of

businesses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(156

)

 

 

(350

)

 

 

238

 

 

 

(185

)

Inventories

 

 

(32

)

 

 

(31

)

 

 

(14

)

 

 

(9

)

Accounts payable

 

 

41

 

 

 

44

 

 

 

(117

)

 

 

(57

)

Accrued expenses

 

 

96

 

 

 

127

 

 

 

(177

)

 

 

42

 

Deferred revenue and financed unearned services

revenue

 

 

147

 

 

 

326

 

 

 

54

 

 

 

343

 

Long-term taxes payable

 

 

(30

)

 

 

(104

)

 

 

(163

)

 

 

(164

)

Changes in other operating assets and liabilities, net

 

 

4

 

 

 

(33

)

 

 

77

 

 

 

(79

)

Net cash provided by operating activities

 

 

383

 

 

 

399

 

 

 

1,060

 

 

 

1,341

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Redemptions of investments, net

 

 

82

 

 

 

215

 

 

 

1,370

 

 

 

876

 

Purchases of property and equipment

 

 

(24

)

 

 

(35

)

 

 

(124

)

 

 

(173

)

Proceeds from sale of properties

 

 

—

 

 

 

—

 

 

 

96

 

 

 

—

 

Acquisitions of businesses, net of cash acquired

 

 

(17

)

 

 

—

 

 

 

(73

)

 

 

(3

)

Other investing activities, net

 

 

1

 

 

 

3

 

 

 

—

 

 

 

4

 

Net cash provided by investing activities

 

 

42

 

 

 

183

 

 

 

1,269

 

 

 

704

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from issuance of common stock under employee stock award plans

 

 

—

 

 

 

3

 

 

 

102

 

 

 

121

 

Payments for taxes related to net share settlement of stock awards

 

 

(2

)

 

 

(4

)

 

 

(79

)

 

 

(96

)

Repurchase of common stock

 

 

(161

)

 

 

(500

)

 

 

(1,411

)

 

 

(2,111

)

Proceeds from (repayments of) commercial paper notes, net

 

 

(170

)

 

 

85

 

 

 

273

 

 

 

(136

)

Repayment of long-term debt

 

 

—

 

 

 

—

 

 

 

(400

)

 

 

—

 

Dividends paid

 

 

(105

)

 

 

(97

)

 

 

(439

)

 

 

(403

)

Other financing activities, net

 

 

(2

)

 

 

(1

)

 

 

(6

)

 

 

(6

)

Net cash used in financing activities

 

 

(440

)

 

 

(514

)

 

 

(1,960

)

 

 

(2,631

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

(30

)

 

 

(13

)

 

 

(34

)

 

 

(30

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

(45

)

 

 

55

 

 

 

335

 

 

 

(616

)

Cash, cash equivalents and restricted cash:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning of period

 

 

2,711

 

 

 

2,276

 

 

 

2,331

 

 

 

2,947

 

End of period

 

$

2,666

 

 

$

2,331

 

 

$

2,666

 

 

$

2,331

 

NETAPP, INC.

 

SUPPLEMENTAL DATA

 

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

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q4 FY'20

 

 

Q3 FY'20

 

 

Q4 FY'19

 

 

FY 2020

 

 

FY 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product

 

$

793

 

 

$

787

 

 

$

1,000

 

 

$

2,995

 

 

$

3,755

 

Strategic*

 

$

544

 

 

$

483

 

 

$

623

 

 

$

1,806

 

 

$

2,100

 

Mature*

 

$

249

 

 

$

304

 

 

$

377

 

 

$

1,189

 

 

$

1,655

 

Software Maintenance

 

$

267

 

 

$

263

 

 

$

242

 

 

$

1,034

 

 

$

946

 

Hardware Maintenance & Other Services

 

$

341

 

 

$

354

 

 

$

350

 

 

$

1,383

 

 

$

1,445

 

Hardware Maintenance Support Contracts

 

$

279

 

 

$

293

 

 

$

284

 

 

$

1,142

 

 

$

1,182

 

Professional and Other Services

 

$

62

 

 

$

61

 

 

$

66

 

 

$

241

 

 

$

263

 

Net Revenues

 

$

1,401

 

 

$

1,404

 

 

$

1,592

 

 

$

5,412

 

 

$

6,146

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* In Q1 FY’20 we made changes to the products and solutions contained in each of the Strategic and Mature product groupings. Strategic now includes All-flash FAS products, including all related add-on hardware and OS software, private cloud solutions, enterprise software license agreements and other optional add-on software products. Mature now includes Hybrid FAS products, including all related add-on hardware and OS software, OEM products, and branded E-Series. Prior to this change, Hybrid FAS and branded E-Series were included in Strategic, while all add-on hardware and OS software were included in Mature. For comparability, Strategic and Mature revenues presented for the prior year period have been recast based on the revised groupings.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Geographic Mix

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% of Q4
FY'20
Revenue

 

 

% of Q3
FY'20
Revenue

 

 

% of Q4
FY'19
Revenue

 

 

% of FY
2020
Revenue

 

 

% of FY
2019
Revenue

 

Americas

 

 

54

%

 

 

50

%

 

 

57

%

 

 

53

%

 

 

56

%

Americas Commercial

 

 

43

%

 

 

39

%

 

 

45

%

 

 

41

%

 

 

44

%

U.S. Public Sector

 

 

11

%

 

 

11

%

 

 

11

%

 

 

12

%

 

 

12

%

EMEA

 

 

32

%

 

 

35

%

 

 

29

%

 

 

32

%

 

 

30

%

Asia Pacific

 

 

14

%

 

 

15

%

 

 

14

%

 

 

15

%

 

 

14

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pathways Mix

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% of Q4
FY'20
Revenue

 

 

% of Q3
FY'20
Revenue

 

 

% of Q4
FY'19
Revenue

 

 

% of FY
2020
Revenue

 

 

% of FY
2019
Revenue

 

Direct

 

 

23

%

 

 

21

%

 

 

24

%

 

 

21

%

 

 

24

%

Indirect

 

 

77

%

 

 

79

%

 

 

76

%

 

 

79

%

 

 

76

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Gross Margins

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q4 FY'20

 

 

Q3 FY'20

 

 

Q4 FY'19

 

 

FY 2020

 

 

FY 2019

 

Non-GAAP Gross Margin

 

 

68.0

%

 

 

67.8

%

 

 

65.2

%

 

 

67.9

%

 

 

65.0

%

Product

 

 

56.4

%

 

 

55.4

%

 

 

55.3

%

 

 

55.7

%

 

 

54.4

%

Software Maintenance

 

 

94.4

%

 

 

95.4

%

 

 

95.9

%

 

 

95.4

%

 

 

96.3

%

Hardware Maintenance & Other Services

 

 

74.5

%

 

 

74.9

%

 

 

72.3

%

 

 

73.8

%

 

 

72.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q4 FY'20

 

 

Q3 FY'20

 

 

Q4 FY'19

 

 

FY 2020

 

 

FY 2019

 

Non-GAAP Income from Operations

 

$

324

 

 

$

312

 

 

$

358

 

 

$

1,123

 

 

$

1,387

 

% of Net Revenues

 

 

23.1

%

 

 

22.2

%

 

 

22.5

%

 

 

20.8

%

 

 

22.6

%

Non-GAAP Income before Income Taxes

 

$

307

 

 

$

320

 

 

$

372

 

 

$

1,132

 

 

$

1,434

 

Non-GAAP Effective Tax Rate

 

 

13.7

%

 

 

17.2

%

 

 

18.1

%

 

 

16.6

%

 

 

18.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Net Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q4 FY'20

 

 

Q3 FY'20

 

 

Q4 FY'19

 

 

FY 2020

 

 

FY 2019

 

Non-GAAP Net Income

 

$

265

 

 

$

265

 

 

$

305

 

 

$

944

 

 

$

1,171

 

Non-GAAP Weighted Average Common Shares Outstanding, Diluted

 

 

222

 

 

 

229

 

 

 

249

 

 

 

233

 

 

 

259

 

Non-GAAP Net Income per Share, Diluted

 

$

1.19

 

 

$

1.16

 

 

$

1.22

 

 

$

4.05

 

 

$

4.52

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Select Balance Sheet Items

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q4 FY'20

 

 

Q3 FY'20

 

 

Q4 FY'19

 

 

 

 

 

 

 

 

 

Deferred Revenue and Financed Unearned Services Revenue

 

$

3,698

 

 

$

3,573

 

 

$

3,668

 

 

 

 

 

 

 

 

 

DSO (days)

 

 

63

 

 

 

53

 

 

 

70

 

 

 

 

 

 

 

 

 

DIO (days)

 

 

29

 

 

 

22

 

 

 

21

 

 

 

 

 

 

 

 

 

DPO (days)

 

 

84

 

 

 

75

 

 

 

87

 

 

 

 

 

 

 

 

 

CCC (days)

 

 

8

 

 

 

1

 

 

 

3

 

 

 

 

 

 

 

 

 

Inventory Turns

 

 

13

 

 

 

16

 

 

 

17

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q4 FY'20

 

 

Q3 FY'20

 

 

Q4 FY'19

 

 

FY 2020

 

 

FY 2019

 

Net Cash Provided by Operating Activities

 

$

383

 

 

$

420

 

 

$

399

 

 

$

1,060

 

 

$

1,341

 

Purchases of Property and Equipment

 

$

24

 

 

$

32

 

 

$

35

 

 

$

124

 

 

$

173

 

Free Cash Flow

 

$

359

 

 

$

388

 

 

$

364

 

 

$

936

 

 

$

1,168

 

Free Cash Flow as % of Net Revenues

 

 

25.6

%

 

 

27.6

%

 

 

22.9

%

 

 

17.3

%

 

 

19.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q4'FY20

 

 

Q3'FY20

 

 

Q4'FY19

 

 

FY2020

 

 

FY2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME

 

$

196

 

 

$

277

 

 

$

396

 

 

$

819

 

 

$

1,169

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

 

9

 

 

 

8

 

 

 

8

 

 

 

39

 

 

 

46

 

Stock-based compensation

 

 

35

 

 

 

36

 

 

 

37

 

 

 

153

 

 

 

158

 

Asset impairment

 

 

10

 

 

 

—

 

 

 

—

 

 

 

10

 

 

 

—

 

COVID-19 charges

 

 

3

 

 

 

—

 

 

 

—

 

 

 

3

 

 

 

—

 

Restructuring charges

 

 

—

 

 

 

—

 

 

 

16

 

 

 

21

 

 

 

35

 

Gain on sale or derecognition of assets

 

 

—

 

 

 

—

 

 

 

(73

)

 

 

(38

)

 

 

(73

)

Income tax effects

 

 

12

 

 

 

(6

)

 

 

(31

)

 

 

(13

)

 

 

(82

)

Resolution of income tax matters

 

 

—

 

 

 

(50

)

 

 

(48

)

 

 

(50

)

 

 

(48

)

Income tax benefit of ASC 606 adoption

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(34

)

NON-GAAP NET INCOME

 

$

265

 

 

$

265

 

 

$

305

 

 

$

944

 

 

$

1,171

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COST OF REVENUES

 

$

460

 

 

$

463

 

 

$

566

 

 

$

1,789

 

 

$

2,201

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

 

(9

)

 

 

(8

)

 

 

(8

)

 

 

(39

)

 

 

(36

)

Stock-based compensation

 

 

(3

)

 

 

(3

)

 

 

(4

)

 

 

(13

)

 

 

(14

)

NON-GAAP COST OF REVENUES

 

$

448

 

 

$

452

 

 

$

554

 

 

$

1,737

 

 

$

2,151

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COST OF PRODUCT REVENUES

 

$

355

 

 

$

360

 

 

$

457

 

 

$

1,368

 

 

$

1,752

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

 

(9

)

 

 

(8

)

 

 

(8

)

 

 

(39

)

 

 

(36

)

Stock-based compensation

 

 

—

 

 

 

(1

)

 

 

(2

)

 

 

(3

)

 

 

(4

)

NON-GAAP COST OF PRODUCT REVENUES

 

$

346

 

 

$

351

 

 

$

447

 

 

$

1,326

 

 

$

1,712

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COST OF HARDWARE MAINTENANCE AND OTHER SERVICES REVENUES

 

$

90

 

 

$

91

 

 

$

99

 

 

$

373

 

 

$

414

 

Adjustment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

(3

)

 

 

(2

)

 

 

(2

)

 

 

(10

)

 

 

(10

)

NON-GAAP COST OF HARDWARE MAINTENANCE AND OTHER SERVICES REVENUES

 

$

87

 

 

$

89

 

 

$

97

 

 

$

363

 

 

$

404

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GROSS PROFIT

 

$

941

 

 

$

941

 

 

$

1,026

 

 

$

3,623

 

 

$

3,945

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

 

9

 

 

 

8

 

 

 

8

 

 

 

39

 

 

 

36

 

Stock-based compensation

 

 

3

 

 

 

3

 

 

 

4

 

 

 

13

 

 

 

14

 

NON-GAAP GROSS PROFIT

 

$

953

 

 

$

952

 

 

$

1,038

 

 

$

3,675

 

 

$

3,995

 

NETAPP, INC.

 

RECONCILIATION OF NON-GAAP TO GAAP

 

INCOME STATEMENT INFORMATION

 

(In millions, except net income per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q4'FY20

 

 

Q3'FY20

 

 

Q4'FY19

 

 

FY2020

 

 

FY2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SALES AND MARKETING EXPENSES

 

$

389

 

 

$

402

 

 

$

439

 

 

$

1,585

 

 

$

1,657

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(10

)

Stock-based compensation

 

 

(16

)

 

 

(15

)

 

 

(15

)

 

 

(66

)

 

 

(67

)

COVID-19 charges

 

 

(3

)

 

 

—

 

 

 

—

 

 

 

(3

)

 

 

—

 

NON-GAAP SALES AND MARKETING EXPENSES

 

$

370

 

 

$

387

 

 

$

424

 

 

$

1,516

 

 

$

1,580

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RESEARCH AND DEVELOPMENT EXPENSES

 

$

212

 

 

$

211

 

 

$

205

 

 

$

847

 

 

$

827

 

Adjustment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

(12

)

 

 

(13

)

 

 

(11

)

 

 

(53

)

 

 

(48

)

NON-GAAP RESEARCH AND DEVELOPMENT EXPENSES

 

$

200

 

 

$

198

 

 

$

194

 

 

$

794

 

 

$

779

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GENERAL AND ADMINISTRATIVE EXPENSES

 

$

63

 

 

$

60

 

 

$

69

 

 

$

263

 

 

$

278

 

Adjustment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

(4

)

 

 

(5

)

 

 

(7

)

 

 

(21

)

 

 

(29

)

NON-GAAP GENERAL AND ADMINISTRATIVE EXPENSES

 

$

59

 

 

$

55

 

 

$

62

 

 

$

242

 

 

$

249

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RESTRUCTURING CHARGES

 

$

—

 

 

$

—

 

 

$

16

 

 

$

21

 

 

$

35

 

Adjustment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restructuring charges

 

 

—

 

 

 

—

 

 

 

(16

)

 

 

(21

)

 

 

(35

)

NON-GAAP RESTRUCTURING CHARGES

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAIN ON SALE OR DERECOGNITION OF ASSETS

 

$

—

 

 

$

—

 

 

$

(73

)

 

$

(38

)

 

$

(73

)

Adjustment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain on sale or derecognition of assets

 

 

—

 

 

 

—

 

 

 

73

 

 

 

38

 

 

 

73

 

NON-GAAP GAIN ON SALE OR DERECOGNITION OF ASSETS

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

$

664

 

 

$

673

 

 

$

656

 

 

$

2,678

 

 

$

2,724

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(10

)

Stock-based compensation

 

 

(32

)

 

 

(33

)

 

 

(33

)

 

 

(140

)

 

 

(144

)

COVID-19 charges

 

 

(3

)

 

 

—

 

 

 

—

 

 

 

(3

)

 

 

—

 

Restructuring charges

 

 

—

 

 

 

—

 

 

 

(16

)

 

 

(21

)

 

 

(35

)

Gain on sale or derecognition of assets

 

 

—

 

 

 

—

 

 

 

73

 

 

 

38

 

 

 

73

 

NON-GAAP OPERATING EXPENSES

 

$

629

 

 

$

640

 

 

$

680

 

 

$

2,552

 

 

$

2,608

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NETAPP, INC.

 

RECONCILIATION OF NON-GAAP TO GAAP

 

INCOME STATEMENT INFORMATION

 

(In millions, except net income per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q4'FY20

 

 

Q3'FY20

 

 

Q4'FY19

 

 

FY2020

 

 

FY2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME FROM OPERATIONS

 

$

277

 

 

$

268

 

 

$

370

 

 

$

945

 

 

$

1,221

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

 

9

 

 

 

8

 

 

 

8

 

 

 

39

 

 

 

46

 

Stock-based compensation

 

 

35

 

 

 

36

 

 

 

37

 

 

 

153

 

 

 

158

 

COVID-19 charges

 

 

3

 

 

 

—

 

 

 

—

 

 

 

3

 

 

 

—

 

Restructuring charges

 

 

—

 

 

 

—

 

 

 

16

 

 

 

21

 

 

 

35

 

Gain on sale or derecognition of assets

 

 

—

 

 

 

—

 

 

 

(73

)

 

 

(38

)

 

 

(73

)

NON-GAAP INCOME FROM OPERATIONS

 

$

324

 

 

$

312

 

 

$

358

 

 

$

1,123

 

 

$

1,387

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSE), NET

 

$

(27

)

 

$

8

 

 

$

14

 

 

$

(1

)

 

$

40

 

Adjustment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset impairment

 

 

10

 

 

 

—

 

 

 

—

 

 

 

10

 

 

 

—

 

NON-GAAP OTHER INCOME (EXPENSE), NET

 

$

(17

)

 

$

8

 

 

$

14

 

 

$

9

 

 

$

40

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME BEFORE INCOME TAXES

 

$

250

 

 

$

276

 

 

$

384

 

 

$

944

 

 

$

1,268

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

 

9

 

 

 

8

 

 

 

8

 

 

 

39

 

 

 

46

 

Stock-based compensation

 

 

35

 

 

 

36

 

 

 

37

 

 

 

153

 

 

 

158

 

Asset impairment

 

 

10

 

 

 

—

 

 

 

—

 

 

 

10

 

 

 

—

 

COVID-19 charges

 

 

3

 

 

 

—

 

 

 

—

 

 

 

3

 

 

 

—

 

Restructuring charges

 

 

—

 

 

 

—

 

 

 

16

 

 

 

21

 

 

 

35

 

Gain on sale or derecognition of assets

 

 

—

 

 

 

—

 

 

 

(73

)

 

 

(38

)

 

 

(73

)

NON-GAAP INCOME BEFORE INCOME TAXES

 

$

307

 

 

$

320

 

 

$

372

 

 

$

1,132

 

 

$

1,434

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PROVISION (BENEFIT) FOR INCOME TAXES

 

$

54

 

 

$

(1

)

 

$

(12

)

 

$

125

 

 

$

99

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax effects

 

 

(12

)

 

 

6

 

 

 

31

 

 

 

13

 

 

 

82

 

Resolution of income tax matters

 

 

—

 

 

 

50

 

 

 

48

 

 

 

50

 

 

 

48

 

Income tax benefit of ASC 606 adoption

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

34

 

NON-GAAP PROVISION FOR INCOME TAXES

 

$

42

 

 

$

55

 

 

$

67

 

 

$

188

 

 

$

263

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME PER SHARE

 

$

0.88

 

 

$

1.21

 

 

$

1.59

 

 

$

3.52

 

 

$

4.51

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

 

0.04

 

 

 

0.03

 

 

 

0.03

 

 

 

0.17

 

 

 

0.18

 

Stock-based compensation

 

 

0.16

 

 

 

0.16

 

 

 

0.15

 

 

 

0.66

 

 

 

0.61

 

Asset impairment

 

 

0.05

 

 

 

—

 

 

 

—

 

 

 

0.04

 

 

 

—

 

COVID-19 charges

 

 

0.01

 

 

 

—

 

 

 

—

 

 

 

0.01

 

 

 

—

 

Restructuring charges

 

 

—

 

 

 

—

 

 

 

0.06

 

 

 

0.09

 

 

 

0.14

 

Gain on sale or derecognition of assets

 

 

—

 

 

 

—

 

 

 

(0.29

)

 

 

(0.16

)

 

 

(0.28

)

Income tax effects

 

 

0.05

 

 

 

(0.03

)

 

 

(0.12

)

 

 

(0.06

)

 

 

(0.32

)

Resolution of income tax matters

 

 

—

 

 

 

(0.22

)

 

 

(0.19

)

 

 

(0.21

)

 

 

(0.19

)

Income tax benefit of ASC 606 adoption

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(0.13

)

NON-GAAP NET INCOME PER SHARE

 

$

1.19

 

 

$

1.16

 

 

$

1.22

 

 

$

4.05

 

 

$

4.52

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RECONCILIATION OF NON-GAAP TO GAAP

 

GROSS MARGIN

 

($ in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q4'FY20

 

 

Q3'FY20

 

 

Q4'FY19

 

 

FY2020

 

 

FY2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross margin-GAAP

 

 

67.2

%

 

 

67.0

%

 

 

64.4

%

 

 

66.9

%

 

 

64.2

%

Cost of revenues adjustments

 

 

0.9

%

 

 

0.8

%

 

 

0.8

%

 

 

1.0

%

 

 

0.8

%

Gross margin-Non-GAAP

 

 

68.0

%

 

 

67.8

%

 

 

65.2

%

 

 

67.9

%

 

 

65.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP cost of revenues

 

$

460

 

 

$

463

 

 

$

566

 

 

$

1,789

 

 

$

2,201

 

Cost of revenues adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

 

(9

)

 

 

(8

)

 

 

(8

)

 

 

(39

)

 

 

(36

)

Stock-based compensation

 

 

(3

)

 

 

(3

)

 

 

(4

)

 

 

(13

)

 

 

(14

)

Non-GAAP cost of revenues

 

$

448

 

 

$

452

 

 

$

554

 

 

$

1,737

 

 

$

2,151

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenues

 

$

1,401

 

 

$

1,404

 

 

$

1,592

 

 

$

5,412

 

 

$

6,146

 

RECONCILIATION OF NON-GAAP TO GAAP

 

PRODUCT GROSS MARGIN

 

($ in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q4'FY20

 

 

Q3'FY20

 

 

Q4'FY19

 

 

FY2020

 

 

FY2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product gross margin-GAAP

 

 

55.2

%

 

 

54.3

%

 

 

54.3

%

 

 

54.3

%

 

 

53.3

%

Cost of product revenues adjustments

 

 

1.1

%

 

 

1.1

%

 

 

1.0

%

 

 

1.4

%

 

 

1.1

%

Product gross margin-Non-GAAP

 

 

56.4

%

 

 

55.4

%

 

 

55.3

%

 

 

55.7

%

 

 

54.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP cost of product revenues

 

$

355

 

 

$

360

 

 

$

457

 

 

$

1,368

 

 

$

1,752

 

Cost of product revenues adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

 

(9

)

 

 

(8

)

 

 

(8

)

 

 

(39

)

 

 

(36

)

Stock-based compensation

 

 

—

 

 

 

(1

)

 

 

(2

)

 

 

(3

)

 

 

(4

)

Non-GAAP cost of product revenues

 

$

346

 

 

$

351

 

 

$

447

 

 

$

1,326

 

 

$

1,712

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product revenues

 

$

793

 

 

$

787

 

 

$

1,000

 

 

$

2,995

 

 

$

3,755

 

RECONCILIATION OF NON-GAAP TO GAAP

 

HARDWARE MAINTENANCE AND OTHER SERVICES GROSS MARGIN

 

($ in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q4'FY20

 

 

Q3'FY20

 

 

Q4'FY19

 

 

FY2020

 

 

FY2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hardware maintenance and other services gross margin-GAAP

 

 

73.6

%

 

 

74.3

%

 

 

71.7

%

 

 

73.0

%

 

 

71.3

%

Cost of hardware maintenance and other services revenues adjustment

 

 

0.9

%

 

 

0.6

%

 

 

0.6

%

 

 

0.7

%

 

 

0.7

%

Hardware maintenance and other services gross margin-Non-GAAP

 

 

74.5

%

 

 

74.9

%

 

 

72.3

%

 

 

73.8

%

 

 

72.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP cost of hardware maintenance and other services revenues

 

$

90

 

 

$

91

 

 

$

99

 

 

$

373

 

 

$

414

 

Cost of hardware maintenance and other services revenues adjustment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

(3

)

 

 

(2

)

 

 

(2

)

 

 

(10

)

 

 

(10

)

Non-GAAP cost of hardware maintenance and other services revenues

 

$

87

 

 

$

89

 

 

$

97

 

 

$

363

 

 

$

404

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hardware maintenance and other services revenues

 

$

341

 

 

$

354

 

 

$

350

 

 

$

1,383

 

 

$

1,445

 

RECONCILIATION OF NON-GAAP TO GAAP

 

EFFECTIVE TAX RATE

 

 

 

 

 

 

 

 

 

 

 

 

 

Q4'FY20

 

 

Q3'FY20

 

 

Q4'FY19

 

 

FY2020

 

 

FY2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP effective tax rate

 

 

21.6

%

 

 

(0.4

)%

 

 

(3.1

)%

 

 

13.2

%

 

 

7.8

%

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax effects

 

 

(7.9

)%

 

 

2.0

%

 

 

8.3

%

 

 

(1.1

)%

 

 

4.9

%

Resolution of income tax matters

 

 

—

%

 

 

15.6

%

 

 

12.9

%

 

 

4.4

%

 

 

3.3

%

Income tax benefit of ASC 606 adoption

 

 

—

%

 

 

—

%

 

 

—

%

 

 

—

%

 

 

2.4

%

Non-GAAP effective tax rate

 

 

13.7

%

 

 

17.2

%

 

 

18.1

%

 

 

16.6

%

 

 

18.4

%

RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES

 

TO FREE CASH FLOW (NON-GAAP)

 

(In millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q4'FY20

 

 

Q3'FY20

 

 

Q4'FY19

 

 

FY2020

 

 

FY2019

 

Net cash provided by operating activities

 

$

383

 

 

$

420

 

 

$

399

 

 

$

1,060

 

 

$

1,341

 

Purchases of property and equipment

 

 

(24

)

 

 

(32

)

 

 

(35

)

 

 

(124

)

 

 

(173

)

Free cash flow

 

$

359

 

 

$

388

 

 

$

364

 

 

$

936

 

 

$

1,168

 

Some items may not add or recalculate due to rounding.

NETAPP, INC.

 

RECONCILIATION OF NON-GAAP GUIDANCE TO GAAP

 

EXPRESSED AS EARNINGS PER SHARE

 

FIRST QUARTER FISCAL 2021

 

 

 

 

 

 

 

 

First Quarter

 

 

 

Fiscal 2021

 

 

 

 

 

 

Non-GAAP Guidance - Net Income Per Share

 

$0.36 - $0.44

 

 

 

 

 

 

Adjustments of Specific Items to Net Income

 

 

 

 

Per Share for the First Quarter Fiscal 2021:

 

 

 

 

Amortization of intangible assets

 

 

(0.04

)

Stock-based compensation expense

 

 

(0.18

)

Income tax effects

 

 

0.04

 

Total Adjustments

 

 

(0.18

)

 

 

 

 

 

GAAP Guidance - Net Income Per Share

 

$0.18 - $0.26

 

Some items may not add or recalculate due to rounding.

(Press)
Amelia Vierra
1 408 822 6403
amelia.vierra@netapp.com

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

Source: NetApp



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