Shares in NetApp Inc. rose firmly in late trading after the enterprise storage company reported an earnings beat and an outlook on the higher side of expectations.

For its fiscal first quarter ended July 29, NetApp reported a profit before costs such as stock compensation of $1.20 a share, up from $1.15 a share in the same quarter last year. Revenue rose 9% from a year ago, to $1.59 billion. Analysts had expected an adjusted profit of $1.10 per share on revenue of $1.54 billion.

NetApp’s figures were strong across the board, with product revenue up 8% year-over-year, to $786 million, and billings up 13%, to $1.56 billion. NetApp’s Public Cloud annualized revenue run rate jumped 74% year-over-year, to $584 million, while the company’s all-flash annualized revenue run rate rose 7%, to $3 billion.

That’s a clear highlight, Moor Insights & Strategy analyst Steve McDowell told SiliconANGLE. “NetApp struggled for a long-time to find a way to extract revenue from cloud-based workloads, and it finally has,” he said. “Its public cloud storage offerings are the bright spot in its latest earnings. That tells me that customers are responding to what NetApp is selling. It has strong partnerships with both AWS and Azure, as well as major providers like VMware. This is working for NetApp.”

That said, McDowell remains cautious about NetApp’s mainstream storage products. “I don’t like that NetApp has shifted how it talks about its all-flash array business, detailing annual run rates instead of quarterly performance,” he said. “That doesn’t really tell us how the company performed in the prior quarter, and storage arrays typically aren’t something that directly generates recurring revenue, since NetApp counts the software subscriptions for its arrays separately. It makes me think that the rebound we saw in NetApp’s all-flash business last quarter was anomaly and things aren’t going as well as they could be.”

Highlights in the quarter included the launch of NetApp’s Spot Security service into general availability in July. The cloud cybersecurity service offers continuous assessment and analysis of an organization’s cloud security posture. The company also announced the general availability of Spot PC by NetApp and Ocean for Apache Spark on Google Cloud.

The quarter also saw NetApp complete its acquisition of Instaclustr. Announced back in April, the deal expanded on NetApp’s platform-as-a-service business, with Instaclustr becoming part of the company’s CloudOps portfolio.

“We delivered a great start to the [fiscal] year, fueled by broad-based demand across our portfolio and geographies, setting all-time Q1 company highs for billings, revenue, gross profit dollars, operating income and EPS,” George Kurian (pictured), chief executive officer of NetApp, said in a statement. “Our solutions are aligned with our customer’s top priorities helping them reduce cost, risk and complexity for their digital and cloud transformations.”

For its second fiscal quarter of 2023, NetApp expects an adjusted profit of $1.28 to $1.38 a share on revenue of $1.595 billion to $1.745 billion. Analysts had expected an adjusted profit of $1.31 on revenue of $1.65 billion.

For the company’s full fiscal year, forecast earnings are $5.40 to $5.60 a share. NetApp did not provide full-year revenue outlook, saying instead that it expected revenue growth of 6% to 8%, with Public Cloud ARR growing to $780 million to $820 million.

Investors liked the numbers, and NetApp’s share price rose more than 6% after the bell.

With reporting from Mike Wheatley

Photos: SiliconANGLE