Stock Advisor launched in February of 2002. I'll now hand the call back to Kris to open the call for Q&A. Last year, we did about $631 million. Yeah, thanks. [Operator instructions] Our first question comes from Amit Daryanani with Evercore. So it seems like -- help me understand why that isn't inflecting higher. As George noted, despite the continued macro uncertainty in Q1 as a result of COVID-19, we delivered revenue, operating margin and EPS above the high end of guidance. It is optimizing the run time environment for customers regardless of what version of Kubernetes they use which cloud provider they run on and whether they're using a traditional application or a cloud-native application. Ananda Baruah -- Loop Capital Markets -- Analyst. SolidFire, yes, I can confirm was part of the team impacted. And maybe help us understand if there's a relationship between public cloud services demand and the potential impact there on consumption-based subscription services, whether there's a complimentary relationship there or if that one impacts the other particularly? Thank you. Webcast. Even excluding these acquisitions, the growth of our public cloud services business accelerated to 120% year over year. From a margin perspective, I think you can assume that it's going to be typical software margins as it relates to our business as well. I think the APAC region is reflective of some of those economies starting to recover from the really hard times of COVID, but we're being cautious and it's early. So if there's a way to break that growth down between existing customers versus net new customers, that'd be really helpful. Thank you. So we're pleased. So just some high-level comments from you, George, on what's driving the conservatism because that sequential is obviously off a July base that reflects the demand environment. Q1 earnings clearly came in better than expected. Thank you for joining us today. Sep 16, 2020 NetApp 2020 Virtual Financial Analyst Day. So that's why we did focus on that in the commentary. The margin expansion was driven by continued leverage in our support model and exhibits the strong margin profile of a business with a software and recurring revenue model. In the prepared remarks, we wanted to make sure that when you compared the Q1 EPS number with the Q2 guide that you took into account the impact of the additional opex from the acquisitions as well as the 14th week. Importantly, solid execution by the sales team in a very difficult environment yielded Q1 billings of $1.15 billion, up 6% year over year. Kris Newton - VP, IR. Good afternoon. And how long you think it will be until those guys get productive? Keystone is selectively available to customers in some of our geographies. NetApp leverages our rich data-centric software innovation to help customers thrive in this hybrid cloud world. But I think that what we see as the pace for adoption is really a representation of customer spend, right, their propensity to spend. George Kurian — Chief Executive Officer and President. Mike Berry - … You can register from our investor relations website. One flash array replaces a few disk-based systems. Congrats on a solid quarter and good execution. In closing, I want to reiterate our confidence in our strategic roadmap and our commitment to continue to evolve NetApp into a cloud-led company, building on our rich data-centric software heritage. That's really helpful. What we see predominantly is that the world at large is operating in a subdued, mostly working-from-home model, especially in the IT buyers and the knowledge workers in our customer base. We are -- we run a disciplined P&L, and within that P&L, we have opportunities to deploy resources. I just wanted to ask -- maybe just push back a little bit on the decision still not to buy back stock. Next question comes from Simon Leopold with Raymond James. Shares of NetApp (NASDAQ:NTAP) moved higher by 11% in after-market trading after the company reported Q1 results.. Quarterly Results. I think we see larger enterprises increasingly doing two things. Is there a particular vertical? What they're focused on? One is and you'll see in the press release, we do include in the non-GAAP section some descriptions of how we come up with that revenue. Please proceed, Ms. Newton. Yeah and congrats on some exceptionally strong results, quite amazing. NetApp. So we're very, very pleased with the progress in our cloud business. Sure, Rod. I think that has been consistent across the peers in the industry, but I just want to get your take on -- you talked about the digital transformation. Maybe just comment on that, and then I have a follow-up. Your line is now open. Thanks a lot for taking my question guys. My comment there would be, if we do anything of significant size, you absolutely will see it in the financial statements, you'll see it in margin. Software maintenance and hardware maintenance revenue of $608 million was up 14% year over year and up 6% year over year when adjusted for the approximately $40 million related to the extra week in the quarter. ET. Please be respectful of your peers and limit yourself to just one question so we can get to as many people as possible. The storage giant recorded its fourth quarter of declining revenues in a row as large enterprise customers slowed on-premises product purchases, public cloud revenue growth was anaemic, and sales force growth has yet to bear fruit. Thank you. I appreciate that perspective. Your line is now open. The debt raise further enhances our already strong liquidity position, while also providing financial flexibility from additional domestic cash balances during the current economic environment. Company Participants. Circling back to Mike's comments on disciplined use of cash with M&A. The power store product that they have brought to market is not being well received by customers, and we are displacing them in several accounts. And the fact that with strong growth rates in all-flash array, we move the penetration 1% at a time is just the dimension of the magnitude of our growing installed base. So what I'll tell you is we're not guiding a full year. As we've also said, we are skeptical about doing big, large transactions. Vice President-Corporate Communications & Investor Relations, NetApp, Inc. As we said, NetApp’s enterprise customers are cautious about moving to the public cloud. Due to the global pandemic, the macroeconomic and IT spending environments remain challenging, consistent with what we saw exiting Q4. These two recurring revenue lines comprised roughly 47% of total net revenue. Our strong business model enables us to navigate the market dynamics, while making the strategic investments necessary to position the company for long-term growth.”. Public cloud services delivered an impressive $178 million in ARR, growing 192% year over year and 60% sequentially. Our industry-leading storage operating system software, ONTAP, is key to our success in the cloud and on-premises. Analysts: Bala Reddy — Goldman Sachs — Analyst. I think those are far and few between. Yeah. Weighted average diluted shares outstanding were 222 million, down 21 million shares year over year, representing a 9% decrease. Contents: Prepared Remarks; Questions and Answers; Call Participants; Prepared Remarks: Operator Despite the uncertainties, one thing is clear, data is growing in scale and importance. Thank you. I'll just give you a quick summary. We continue to deliver heightened support for customers delivering vital public health and safety services, first responders and public sector institutions. A couple of pieces there. Your line is now open. Your line is now open. As promised, we will be very disciplined around our cost structure. Questions and Answers Kurian pointed out: “Buying cycles are longer and the amount of spend per transaction is smaller.”, He added: “Our largest customers who were most impacted by the macro were heavily all-flash customers… our biggest accounts underperformed or bought less impacted our all-flash business more substantially than it impacted pretty much every other product in the Company. Reconciliations of GAAP to non-GAAP estimates are posted on our website. I want to thank all of our employees for their hard work in the midst of this pandemic. We made some cost improvements in our cloud services portfolio in the storage platforms that allowed our customers to adopt cheaper and more cost-effective tiers. Your line is now open. Solidfire AFAs will get investment to increase operational simplicity and security plus additional software features. Returns as of 12/15/2020. At the end of Q1, 25% of our installed systems were all-flash, providing a healthy runway as customers continue to embrace the cloud connectivity and investment protection offered by our flash solutions. We believe this transition, coupled with solid execution, will drive significant long-term value for our shareholders. Thank you. Contents: Prepared Remarks; Questions and Answers; Call Participants; Prepared Remarks: Operator OK, thank you. NetApp, Inc. (NTAP) CEO George Kurian on Q2 2021 Results - Earnings Call Transcript SA Transcripts Tue, Dec. 01 NetApp, Inc. 2021 Q2 - Results - Earnings Call Presentation Your line is now open. We see the deployment of cloud together with on-premises as a needed catalog of IT services. Operating margin was 16.3%, up two points from Q1 of last year. During these uncertain economic times, customers are finding even greater value in our ability to help them take advantage of high-performance all-flash arrays, while reducing total cost of ownership, through automated tiering to our lower-cost cloud or object tier. The small, medium business we see an opportunity to address through the cloud in a very differentiated and economically scalable manner. Analysts predict NetApp will report earnings of $0.73 per share on revenue of $1.31 billion. Product revenue of $787 million, decreased approximately 19 per cent year-over-year.” He pointed out the all-flash array run rate was $2.3bn. No matter where a customer is on their hybrid cloud journey, NetApp can help them achieve their goals. And so we do see this idea of customers -- our customers digitizing their businesses for both internal collaboration as well as customer interaction becoming a priority. We expect Q2 net revenues to range between $1.225 billion and $1.375 billion which at the midpoint implies a 5% decline in revenues year over year and includes one point of currency tailwind. And so you'll see us continue to focus there. Thank you for joining us. By charting the quarterly revenues against fiscal years we can see the revenue decline more clearly. From a segment perspective, clearly, the larger enterprises where we have strong footprint were the sources of our growth. Is -- what's going to drive a broadening or an accelerated inflection in all-flash in your opinion or maybe also in that context, how much is your installed base growing? Kurian said: “We are on track to increase sales capacity by approximately 200 primary sales resources by the end of Q1 fiscal year ’21, without adding to the total operating expenses for the Company. Historical Supplemental Commentary ... NetApp INSIGHT 2020 Digital Event. It's obviously really impressive. NetApp is uniquely positioned to help customers unlock the best of cloud for their digital transformation. ET. So, both of those have been contributing factors to the year-on-year declines in the all-flash category.”, Kurian said NetApp is “focusing our compensation plans and our sales objectives on returning to growth in the all-flash category. Next question comes from Eric Martinuzzi with Lake Street. And our acquisitions are allowing us access to net new customers and new wallet, the compute wallet, the desktop-as-a-service wallet in customers. Do the numbers hold clues to … One big customer prompts Dell EMC PowerProtect systems to work with Actifio, BackBlaze reports unexpectedly high failure rate for one of Seagate’s 12TB drives, Quantum gains media asset management chops with tuck-in acquisition, Lustre and S3 join Atempo’s Miria data moving party, Your occasional storage digest with DataStax, StorOne, NAND prices and more, Dell launches pay as you go Azure Stack HCI, DDN reveals VMstore and Intelliflash updates for 2021, Kubernetes data protector Trilio raises $15m in dash for growth. As a reminder, the maintenance revenue benefit in Q1 from the extra week will not repeat in Q2. Thanks. Shannon Cross -- Cross Research -- Analyst. We bring enterprise-grade data services to the cloud and the simplicity and the flexibility of the cloud to the enterprise data center. Thank you. I don't know if you'd be willing to tell us what you think the trajectory there is just so we can kind of get our heads around that? Thank you. And what could we learn about margins between -- within those two buckets within product? We meet customers across the board. Earnings per share fell 3.67% over the past year … Hardware product revenue of $316 million decreased 7% year over year as spinning disk solutions continued to decline. At this time, all participants are another and only mode. The July quarter did not include any transactional revenue from the extra week. They are challenged. Simon Leopold — Raymond James — Analyst Thank you. NetApp has excellent solutions for customers who are building applications using containers and Kubernetes. The software and hardware components will move around a little bit. I think if you were to try to take an expectation, I would say that, listen, over several quarters, we increased the percentage of our installed base 1% to 2% sequentially, right? That is pretty much the majority of the gap that you're seeing on a sequential basis. The improvements we made to sales coverage in FY '20 and the tighter focus on execution are starting to pay off. EPS of $0.73 was up 12% year over year. NetApp reported a profit of $0.65 per share when it … NetApp (NASDAQ:NTAP) Q4 2020 Earnings Call Dec 01, 2020, 5:00 p.m. I guess just a question on your cloud services ARR metrics that you guys gave out. This is similar to what hyperscalers do periodically. Please also refer to the documents we file from time to time with the SEC and available on our website, specifically our most recent Form 10-K for fiscal year 2020 including the management's discussion and analysis of financial condition and results of operations and risk factors sections and our current reports on Form 8-K. During the call, all financial measures presented will be non-GAAP, unless otherwise indicated. However, given the uncertainty in the macro environment, we are cautiously assuming that a combination of these factors will persist throughout the remainder of fiscal '21. So Katy, it's Mike. We will continue to highlight and invest in this innovation engine. It's Mike. Steve, it's Mike. I want to ask just a couple of clarifying questions about your guidance commentary from earlier in the Q&A. We will tell you more about the long-term expectations of our cloud business at our virtual analyst day. In Q1, roughly half of the new-to-NetApp customers came in through our cloud business. Do the numbers hold … Thank you. Hi. We're giving you the best outlook we see, and we're being cautious, right? Your line is now open. George Iwanyc -- Oppenheimer and Company -- Analyst. And then, yes, certainly, from a year-over-year perspective as it relates to opex, it has obviously a lot to do with our -- the revenue guide and where we are as well as us wanting to make sure that we continue to invest in the growth areas. At NetApp, we work hard to be the best partner to our customers, a value that is even more important during these particularly challenging times. So I think that we are a disciplined acquirer, both for strategic, cultural and economic fit. Your line is now open. What I would say is we told you last quarter that we are not going to discuss ELAs. With our Data Fabric strategy, we help customers tackle the challenges of hybrid cloud. The Q4 revenue outlook is $1.53bn at mid-point – a 3.8 per cent decline. And you've heard the commentary from several players in the IT industry which is similar to what we see. Amit Daryanani -- Evercore ISI -- Analyst. I'll pass it over to George for some final comments. I'll stick to one as well and also congratulations on the results. Sep 16, 2020 Event Content. Is this leveraging Kubernetes or is that by adding an additional software that Spot has layered on top of Kubernetes? In addition to extending our value proposition to cover more of customers' cloud spend, these acquisitions bring strong talent with cloud DNA to our marketing, sales and engineering teams. And if I take the deals out, I think it's up mid-20% sequentially, 120% growth year over year. Gross margin of 68% was up nearly one point year over year. So as we talked about on the last call, when we decided to put the share buyback on hold, it was really -- we needed to be able to see a lot more firmly the economic recovery, the time line as well as the depth. Also, as we discussed in the last call, we also want to make sure that we are looking very hard at share buybacks versus growing the business through again, disciplined M&A, and that will also play into it as well, Steven. Our hyperscalers are helping us scale. Great. Cloud providers recognize this, and this is why they are choosing to partner with us. We realigned about 5.5% of our workforce, and those were in parts of the business -- in all the functions of the business, but in those parts of the business that were not particularly aligned to our go-forward priorities. With regards to the October quarter, I'll just say, at a high level, we see the October quarter relatively the same from a macro perspective and a demand perspective that we see in the current quarter. Next question comes from Mehdi Hosseini with SIG. One is exploiting data to understand and serve their customers better, depth in enduring generational trend. This call is being webcast live and will be available for replay on our website at netapp.com. I wanted to start off back to the CDS run rate, and just ask, maybe, George, could you just comment a little bit on Azure Netapp Files? No matter where a customer is on their hybrid cloud journey, NetApp can help them achieve their goals. Yeah. We will have higher variable pay last year. And they are driving increased interest in NetApp. One of the key features of ONTAP is FabricPool which allows customers to create policies for the automatic tiering of infrequently accessed data to a more cost-effective tier, such as Azure, AWS, Google or any S3 target including our object storage solution StorageGRID. There was just a good number of moving parts there. The next question comes from Jim Suva with Citigroup. And I thought -- kind of when we started this journey, I thought that the addressable market of that was quite a bit larger. To provide improved visibility into the value created by our high-margin software franchise, we are now breaking out product revenues between software and hardware. So these workloads are incredibly sticky once they're deployed in the cloud, but they require planning and deliberation before you do that. If -- when you back out the $40 million from the extra week, that lowers the percentage of gross margin dollars coming from services. Thank you. And our final question comes from Nik Todorov with Longbow Research. This compares to earnings of $1.04 per share a year ago. If I adjust for the $40 million of extra revenue in the first quarter and then a bit of a currency tailwind in the second quarter, you're looking at normalized sequential growth of maybe low single digits versus normal seasonality in an October quarter of plus 5%. We're off to a good start, and we're excited at the momentum that those sectors add to our business. Market data powered by FactSet and Web Financial Group. Event Content. Clearly, in the COVID time, that is not something we want to do. Image source: The Motley Fool. 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