UPDATED 21:01 EDT / NOVEMBER 30 2021

CLOUD

NetApp posts strong results as shift to hybrid cloud services bears fruit

NetApp’s corporate transformation from a storage maker to a provider of hybrid cloud data services and data management continues to make progress.

The company today reported fiscal second-quarter earnings of $1.28 per share, up 22% from a year ago and beating consensus estimates of $1.21. Revenues rose 10.6% from the same quarter last year, to $1.57 billion, and narrowly beat analysts’ expectations of $1.55 billion. Billings of $1.55 billion in the quarter rose 7%.

Significantly, annual recurring revenue in the company’s public cloud services line grew 80%, to $388 million, indicating an increasingly stable business. Product revenue grew 9%, to $814 million, assisted by a 22% growth in annualized net revenue run rate for its all-flash array, to $3.1 billion. “All-flash arrays now comprise 30% of NetApp’s installed systems,” said Chief Executive George Kurian (pictured). “I am confident that we once again gained share in the enterprise storage at all-flash array markets,” he said.

NetApp increased earlier guidance for the fiscal third-quarter of earnings per share of $1.21 to $1.31 on revenues of between $1.525 billion and 1.675 billion, which would represent growth of between 9% and 10%. Both are in line with analysts’ estimates.

It also said public cloud annual recurring revenue will be in the range of $510 million to $540 million. Investors appeared to like what they saw. They bid NetApp shares up a little over 1% after-hours.

“Our Q2 results reflect healthy momentum, a clear vision and exceptional momentum across our business,” Kurian said. The company is expecting strong growth in both its traditional storage and new cloud cost management segments.

“Cloud storage is a very rapidly growing, multibillion-dollar opportunity and we are positioned at the sweet spot of that alongside the biggest three cloud providers in the world,” he said. “Cloud compute and cost management is also a massive opportunity and Spot plus CloudCheckr gives us a differentiated data platform to go after those use cases.” Spot is a cloud cost-control business focused on spot instances that NetApp acquired last year and CloudCheckr is a recent acquisition that applies analytics improving the cost-efficiency of cloud infrastructure.

As has been a pattern in recent earnings announcements, NetApp said supply-chain uncertainties have made forecasting difficult and pressured sales. “We believe we can continue to manage through the supply chain headwinds and address the substantial customer demand,” Kurian said. “We have factored the uncertainty into our guidance for the quarter and full-year.”

Executives stressed that the company’s expansion beyond its traditional storage niche and cloud services is bearing fruit across the board. “We saw strong performance in all three pieces of our cloud portfolio: cloud volumes, cloud monitoring and dynamic optimization of compute and storage in the cloud,” Kurian said. Going forward, he added, “You should see a continued progression of our first-half trends with product and cloud services growing quickly and our services business growing a little bit slower than that.”

Photo: SiliconANGLE

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