NTAP - Earnings call 3 2024

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Operator

Good day, and welcome to the NetApp's Third Quarter of Fiscal Year 2024 Earnings Call. [Operator Instructions]. Please note, this event is being recorded. I would now like to turn the conference over to Kris Newton, Vice President, Investor Relations. Please go ahead.

Kris Newton

everyone. Hi, us. joining for Thanks me today Mike Kurian; CFO, CEO, are our Berry. George and With is and This for webcast being call live our at replay will website netapp.com. on available be

projections returns and future revenue, expectations including, we and forward-looking will fourth During for our regarding and profitability prospects, initiatives to year quarter strategies. today's outlook statements future and without call, fiscal and other financial growth our with guidance make shareholder the limitation, and respect our XXXX

various and uncertainties, to cause subject actual results materially. may are differ our statements These risks which to

please our file Form our and information, SEC statements forward-looking most time more and refer time the update XX-K Form XX-Q. For and to projections. We the we with including recent from disclaim documents on any website, our to to obligation

call, the will on George. are over estimates unless financial be to of turn the available Reconciliations all presented now non-GAAP call GAAP I'll measures indicated. otherwise non-GAAP to our website. During

George Kurian

driven of all-flash portfolio. operational EPS for our strength, quarter. the our consecutive product for 'XX consolidated Kris. joining delivered across Thanks, Thank an continued our the by all-time midpoint discipline, that coupled operating expanded with Revenue above highs, board company margin and of This yielded I'm for uncertain exceptional guidance the to margin, call. QX we momentum performance was despite gross Good report on us environment. pleased macro the afternoon, everyone. you FY second

improve date elements any delivers in delivered These laid control profitability. business, have is cloud approach year an strong and we supports support our for traditional operating or public within NetApp as-a-service plan 'XX, or on-premises procurement the to performance environments storage focused and based the to our actions enhance results long macro and data available and while economy in FY Entering models. comprehensive cloud more multiple our outlook system spans drive our managing to architecture further uncertain business on out a our that Only single a to application better build type, term. in for a a position raised CapEx the our

management provides hybrid and solutions data and against some high-performance organizations customers legacy common scalable, IT of operations, tools, priorities for services lower and simplify data Modernizing unique attacks consistent and capabilities integrated to resiliency ransomware its infrastructure, ability storage workloads. pipelines Our unified costs. proven of the address building improving face scale The unified data biggest architecture, today. the storage for our cloud AI

unify and customers, to for clearly driving positioning growth. our with to us deliver demand data is Our storage resonating long-term Silo-free healthy products approach services and well

from the go-to-market all-time to momentum We growth growth the of revenue our made for the robust by of industry-leading our of an growth all-flash of annualized rate hybrid year-over-year of introduced we to all-flash our Strong start demand drove $X.X XX% changes year-over-year at customer run of billion. the segment solutions all-flash revenue high products revenue XX%, results year. newly delivered quarter. and driven cloud X% the with product in and performance Turning

of segment our QX, cloud approximately revenue. In expanded all-flash XX% business to hybrid

wins to Series As a all-flash. Mike over gross product again all-flash continued the new revenue our The expect will customers competition. going forward our NetApp margin and shift detail, sustainable the exceeded step-up AFF we in delivering expectations, with baseline to C arrays, numerous

we disk installed legacy driving flash solutions drives displacing and environments, all-flash are with bases modernize share customers hard XXK hybrid As gains. competitors' our

SAN-optimized all-flash high-performance and of outperformed expectations. Our capacity-oriented ASA arrays newly also our families introduced

We billion are enormous about market. excited $XX potential in SAN the the nearly

leveraged landscape. redefine and numerous guarantees broad competitive and are legacy our across ASC data artificial QX, applications products industry-leading like as and their positioned well of C SAN all-flash modernize competitive infrastructures workloads the series a takeouts set deploy modern customers new availability to had Our by In efficiency to arrays intelligence. the we backed vertical and markets

protection strong block proactive solutions. their with for We demonstrating but Competitive products on see detect in first advanced designed the validated to continue cost Classified and program, the and keeps Solutions state-of-the-art of solutions. protection NetApp secured high take storage steps customers only to data. protected our to protect, the solutions ransomware is focus interest the recover and cybersecurity of from mitigate risk our ONTAP Commercial data NSA solution, help enterprise-class start We for the portfolio recovery, data and the data cybersecurity downtime. strength by of

deploying lakes To production take to capabilities, foundational looking data those model environments into training dozens and base with use modern AI quarter, help NVIDIA to unifying in deployments. operationalize models best organizations We the and including their in momentum own from cases large several generative to good range large data. saw in that pod of customer their wins with pod are augment We of customers advantage data super environments. in models AI

Our create and high-performance, data unified data AI. aggregate their for customers capture, allow scalable to systems pipelines intelligent that data storage prepare

management Gen and delivers workflows. require simplicity AI capabilities for enterprises security, the performance data that NetApp for their

is interest advance position Gen customers look the budget with also increase growing flexibility ongoing uncertain with environment. We development partnership our rate in an AI-driven industry leaders. higher for of and solutions Demand on-premises consumption to as macro to cloud continue and in options some

is this a universal mandate. not However,

range storage offerings meet requirements. data options, enabling are native customers to budget available widest our unified them providing as CapEx, as-a-service their solutions of cloud with buying Our and

delivered a for strong model on revenue with operating want premises. Keystone who Keystone, quarter our Storage-as-a-Service cloud-like a triple a solution digits QX offering growing customers is from ago. another great year

cloud, X% are to revenue deliver to segment leading who storage Public uniquely services. up the cloud ready partner hyperscalers cloud-native we $XXX move to with was million, customers For the year-over-year.

storage more of and growing are XX% up hyperscaler First services with the rapidly party year-over-year. ARR remain and marketplace priority these our than services

tightly to These highly offerings are aligned differentiated preference. buying and customer

customer portfolio. in and growth count, to continue capacity, and part the deepen this We with deliver revenue partnerships ARR our of hyperscaler

sharpen quarter, cloud last public to we action our As taking our to approach I business. are outlined

As of two small services a the this quarter. we part plan, exited in

our and to into and volumes complement cloud of Cloud core Instaclustr and began widen stand-alone work storage the functionality services and some also Insights our We extend hybrid integrating to the competitive of cloud in offerings moat. refocusing

million marketplace ARR be anticipate QX, non-renewed This revenue by headwinds approximately from growth should In will offset in $XX and and largely subscriptions. we create in minimal first-party impact services.

base a will We 'XX, fiscal our strong focus continue which grow. refining to year in building from

source integrated is ONTAP tools, us storage hyperscaler data a Our NetApp sets opportunity as for of Gen new emerging and the the open AWS's of natively Gen FSX offerings. in part position to address leading and services cloud. developer AI A models leveraging its and AI partnerships

gave high them customer and performance storage The scalable was train workloads. solution intensive file looking performance for for storage AI AIML with training. solution extensive a resilient model a to FSXN

we DevOps on As stronger quarter is allowing year were the storage, approach which despite business ongoing our summary, start In value to a fiscal a position fully environments the of points final focus the than the operational types, hybrid in modern removes activities. uncertainty, we macro year to managed their multi-cloud teams burdens, much service, FSXN spans entered market. price in and resonating 'XX the of at data unified data

all-flash cloud priorities, growing against services. top in are storage We successfully and our executing

opportunities well gains. growth like and AI new positioned TAM, drive an including share We to are block expanded with continued storage, market and

to by in to very positive to products. has will we outcomes profile, deliver moving maintain a discipline margin are profitability. higher ability that yielded the We growth all-flash our in And our record stockholders. supported pleased confident and very product customers and with operating continue for I'm momentum

our June we business model. Finally, where I will on of want strategy our XX, aware long-term Investor you an to update provide make Day, and

Now turn I'll call to the over Mike.

Michael Berry

afternoon, good and George, you, Thank everyone.

are unless I otherwise noted. reminder, discuss will all As non-GAAP, today a numbers

net record-setting gross Our including income gross all-time delivered strong highs profitability across focus results, operating key and execution and margin, EPS. product again consolidated margin, reaching measures, margin,

financial I walk you through me the quarter. details, discuss the the themes for key Before let

As we of products to see fiscal the George results we from implemented go-to-market and changes positive the noted, at new our year. start the continue all-flash

leverage and gross both came discipline, in all-time flow margin for EPS coupled in line drove consolidated margin of drove from both and were for of our top discipline both the margin margin QX our million, records operating The operating portfolio, XX% at quarter. $XXX setting QX industry-leading gross operating and also momentum highs XX% of of free Gross cash growth company consecutive flash $XXX quarter. second at $X.XX, product cash million. and the was quarter. operational and second consecutive XX% flow bottom with the

tracking cash flow for with $X.X least year expect net billion, relatively in operating the at to be income. We line full

are in priorities strong flash and growing of paying our The first-party clearly winning off. execution cloud services of

the ranges, raising year quarter, second EPS or met once that results guidance. record-setting of execution are strong profitability and for beat while our guidance driving our measures we again our revenue full Given consecutive

and Looking ahead, more growth our confident in we profitability. revenue even are long-term to position drive

X% Now to billion increased $X.X increased the to $XXX families. product year-over-year our increased cloud grew Hybrid revenue quarter. and billion, year-over-year X% momentum the to driven Support million. array X% and QX revenue million. increased X% to year-over-year by all-flash to XX% of product revenue $X.X details $XXX billings in year-over-year $X.X billion year-over-year revenue to

million. are grew part cloud to with focus. customer of the majority of of the a team go-to-market pleased renewals responsibility implemented our revenue for year-over-year We our success as the to $XXX the success moving Public X%

marketplace and services. storage Growth As offset cloud subscription in by driven first services party our was declines expected, by

dollars. million Now our increased XX% high to discipline basis products remains driven gross of expected. increased Operating $XXX better-than-expected for growth profit to pricing margin operating QX our a of profit all-flash XX%. product of points $X.X the margin XXX what mix Gross higher expenses results. by X% slightly XX% dollars environment. cost-sensitive by strong gross from than as primarily year-over-year consolidated year-over-year end shift gross was billion guide, product and in declined was of margin QX QX and driven

year million management, result a operating the increased second basis profit leverage points XX%, record to a year-over-year QX disciplined and consecutive for to $XXX XX% a dollars margin and operating quarter. XXX operating from increased of ago As

to of EPS grew XX% high a year-over-year record $X.XX.

than and rate lower turns billion of an cash profitability. rate. by billings record and XX% cash was up our of been up expected due rate increased a would XX%, year-over-year, flow still have flow tax XX, DSL operating a QX flow operating of $XXX tax XX% $X.X high year-over-year, to free for expectations. $X.XX. with was XX.X%, inventory million Our of Year-to-date was full year XX% were Normalizing both of adjustment tax driven year-over-year. and consistent was cash solid XX% EPS

$XXX generated and net cash in free million cash. flow to returned XXX% dividends, Year-to-date, million we more $XXX cash ending to share million have stockholders quarter $XXX the stockholders. with than quarter, through the approximately repurchases During in and we returned

the of quarter in billion, of as Our revenue year-over-year. with We $X.X QX approximately was X% end investments. ended $X.X healthy. short-term balance and the sheet remains Total deferred down billion cash

few Before to I QX to a product going and expectations moving like margin guidance, fiscal minutes gross our discussing forward. would 'XX spend

We partially all-flash products these higher-margin industry mix from have on NAND suppliers, price increases from seen and the the going price shift participants. forward. will The increases all our impact to these increases will offset headwinds

pricing this said, quarter, reiterate As from a XX% new to gross to That expand want I gross norm product being result the margin expect XX%. to XX% approximately of our sure to to all-flash, and note, fluctuate point. margin environment given we commodity prices, make of from product will product our to to in any historical shift this mix, Please cause the upper baseline.

the with upper XX% commodity to our costs, shift to by portfolio. to all-flash the to expand product fully the level in margins driven Even XX% gross our expect we increase

turn guidance. let's to Now

discipline. pleased of the As are results continued George with operational focus our we noted, and

and of $X.XX QX, revenue better-than-expected again results the for our midpoint. a at outlook $X.XXX we raising billion $X.XXX fiscal to billion billion improved Given range our to our 'XX are guidance or

and strength marketplace products continued first-party hyperscaler and see to services. expect We in all-flash

of shift 'XX margin by gross to XX%. favorable range approximately expected expected $XX consolidated is the XX% approximately share products. to the to driven income Fiscal of million the the be of count approximately EPS range mix all-flash to margin be gross Product million continued XX% and is Operating with margin to shares. interest be assumption is $X.XX, $X.XX and of XX% of net in to XXX be to expected in

tax to year full is Our rate be XX%. projected

be $X.X flow at year expect full billion. to for cash operating We least the

of between billion In range at of billion, QX, an to $X.XXX which increase billion expect we midpoint and the revenue $X.XX year-over-year. $X.XXX implies X%

in mainly consolidated XX%. to XX% due Implied and higher the increase to this expenses to of investment to We compensation, product expect gross expect items. to guidance, key and Operating margin QX to from programs XX% road approximately gross timing be map margin margin roughly drive range we of is XX%. be marketing product to be operating QX projected in incentive the targeted

which is to range. inventory is of in I thank to our is rate balance be note investment demand and Xx our to stockholders will expected please expected and tax $X.XX employees their purchase our QX XXx 'XX in updated forecast partners, turns to and Our included will that impact flow and NAND the and customers, In our NetApp. $X.XX. in to in for EPS in commitments be unwavering to XX% result want Also, cash in be closing, the sheet commitment for range for cash flow fiscal

services. value and that elements and continue within realize our solid manage line control our the results from top We to to products demonstrate customers our our prove the ability

is IT Kris value stockholders. sustainable the call remain our I'll turn and Our now well priority Kris? open investments the committed to over to to for delivering we portfolio innovative Q&A. aligned long-term to

Kris Newton

let's Q&A. Operator, Mike. begin the Thanks,

Operator

[Operator Meta from question first Stanley. Instructions]. Marshall Today's comes Morgan with

Meta Marshall

what maybe Great. stages seeing Thank what as congrats maybe just a then competitive kind various you solutions. and I of AI when in on -- into investments of of just terms And around people get of side. on just environment of the versus AI? question, sense just you're the just follow-up thinking of terms the the seeing guess around in George, you're innovative of of seeing the could you making a kind I timing a if went you're guess quarter. lot detail AI you

George Kurian

Thank your for you question.

of I in think early AI phases the Gen opportunity. the we're

of As have AI AI. in a use in the been examples proven time predictive you seen know, long cases we have market for lot and a of

foundational business. more We relevant unifying mean early and And I by AI. with collecting are so starting that that starting see data, and to the to their phases data to is their the is own models customers what of their generative augment it

We expect training and from to that we months think year. that head into as becomes year, models the relevant production a we to or and movement continue deployment of next for inferencing, several the more

flash in With work companies genomic world's speed the we've NetApp, one of strong supercomputer NVIDIA quarter and genomics that a of analysis in regard we business. seen, really largest on our and deals and several one gas built had the the the company largest to QX, And up AI NetApp. oil with have to world's X-figure their relying technology

also One some the of largest their source to technology model enable using access open world's of models. one is the providers media companies the AI train largest their world's where us generative public And using and to their drive phases in examples NetApp's we of is to cloud the cloud work. customers have of early

examples different So we've success. many got real of

allow we've a certification, you capabilities if scale data hybrid and you for build that is data draw that and performance, the super our back cloud data do into connect be think deploy your management pipeline mission-critical from versioning, I that able can the many training. security we to model and out production strength part and had to data years for pipelines things fact like

feel really strength good Gen So early about market. the I AI, expand AI we our to there. are our It's doing opportunity in the and work around

Operator

Sankar next The Cowen. Krish from with question TD is

Unknown Analyst

still think services for underappreciate an Eddie Congrats This beneficiary. here. is AI is how execution people George, great I on many the Krish. file

touch file AWS can versus up what kind of services, have set example, that of you be FSX are talk FSX, services would options, For ANF within on is have it you what including do great. for? please. and big developers differentiates file if another question, how cloud, plenty customers And about and cases attract, maybe an public if I so you SageMaker NetApp's can FSX account, used use what other

George Kurian

ways. a help those in vast NetApp all, percentage a you in majority I huge think the Generative systems. images generative really has and that on on and of First as variety And them the unstructured objects of documents and operates know, AI We the our data unstructured of stored is data sets. value in videos enterprises environment from of AI of data team data very that AI. and public help building into different few data training and their quickly if wants way to a and public cloud the easily public some them securely their science building start the can your you that's use is One models, the cloud. we and take in cloud enterprise it

we then the to solutions source super SSX very have high-performance that the trained enterprise Second, world's And largest production. the NVIDIA, it is providers wants we Amazon to part like solutions you environment, in on using itself, build referred one if performance on us, training. call, and high with the know, do a quickly scale-out that open as the example, our for that then allows to where with of we enterprise model one to scale-out production certifications is model into the them train third scale have deploy models the

about We've So to very, had in opportunity we we opportunity several this expanding our confident the very expand and in of space. investing are wins feel good front us.

Unknown Analyst

for hybrids? guys the NAND low because Thank today, in prices, more very historically Mike all-flash prices And about increase That's purchases our do time. helpful, That's you. aggressively system example, me. when like memory George. bill very not one of customer for you change percentage will charge increase Can in Or please a they is reduce small how usually of to behavior a NAND of refresh you of price periods where arrays short has XX% a changed and pricing, quickly. meaningfully go materials for it the customers. of net

Michael Berry

that What is on of budget and there things. customers based dollars, way a in lot purchased. say we'd a there. couple that's was the Remember, they Eddie, Yes. questions of

terms flash for last the in a really that as than affordable, much environmentals better them. you think in We all NAND make decision that economics we energy declining more year anything well that, much and benefits they as as seen did. More has economic SSD as like haven't that prices of now technology anything, made around get the

decisions So don't are the that's really much again, making. seen. really change that term short-term we've because, are Short market changes long-term change these the that other -- companies

George Kurian

are add bill just our are of XX%. And than materials to anybody SSDs materials. of bill that, else's probably or They XX% not to less of

Operator

Samik from The Chatterjee next with JPMorgan. comes question

Joseph Cardoso

on Joe for This Cardoso is Samik.

So first and even with see new outperforming the products Series they have your each to you It be C introduced continue you seems and other one flash in strong like the momentum for me. that appear guys expectation quarter. to

So down, just XQ through that curious It like if seeing for you date. of products to then how momentum still that any very and but do a slowing those tracked you innings talk signs into And the could have sound expect much doesn't XQ confirm to just And you're cycles momentum I in product can these you we're follow-up. your early customers? have with of that.

George Kurian

three Yes. Maybe I can address that ways. in

transition. I both there. advantages new hybrid XX-K we Series is we drive think that. see are traditional not stages and modernize to the as early the multiyear of strong as systems to deploy the use end flash do That's in product seeing cloud environments, see The private that. you any case. And is transition well C can We're a cycle first

them have our customers in On a of vehicle as some -- of cloud to path give the the changes have, side, in that vendors renewed the to think future. software technology private the licensing interest I give some a

family. to thousands had is The we've has had innings are then we've of expansion rapid package opportunity the tens second the in the pleased early which And block And space, a third growth of storage workloads, AI. set course, using long block solution on use of of history we area, solely focused technology customers our with serve out been both those market. block in that's of the bringing is the is NetApp cases. ASA and and a for product

of good and really focus we've raised and the with really, them feel externally. a targets I we've set time we've execution. And Every been them internally, set

forward. to stay got we We're our disciplined momentum. focused strong in so going and execution And going

Joseph Cardoso

based uneven and appreciate I storage in appetite color the more are feels The as just as macro is seeing. customers our else But felt George. basis And from as being seeing then know checks due on as more maturity customers. I'm it just my to there here we're you as there, the this driver you it motion. like when from with wasn't not it. peers. your Got some asking, the and a the anything offerings consumption one, appears you increasing ago the the the to much touched was consume long from theoretical comments driver coming too part opportunity around I appetite on well second on channel go-to-market a like that the there, or reason

just has So be like front? that to on I hear, changed interested anything would

George Kurian

probably things. I three think there's two or

customers how I would they think the think around maturity the of offerings, comfort I cloud-like models. procure

third, the certain is the And the of the think think increase environment customers in versus caused is I that interest in margin from then are CapEx on course, second customers that transition another. to one about rates the OpEx. to

center model the you're example, point. to of a an data For continued in center be portion as-a-service that transition a is you've good life of a transition environment needs got a to and when data moving

service years. have many to and fastest for an the as environment public is elastic the around true a Clearly, We easiest build cloud. flexible, offered most the

like environment We public customers' connected service the our colocation centers opportunity also to cloud-like colocation allows full in strong and that a customer another really quarter. a with the had Equinix cloud in have solutions providers get to the data Keystone

triple We more quarter. including year-to-date almost past than this digits, are up

a new customer for of it's to do a we for set see us address it, And nice way a buying preferences. that momentum see So strong in category. we mandate not but

Operator

[Operator Instructions].

from Next SIG. comes today question Mehdi with Hosseini

Mehdi Hosseini

current landscape a market, application. better to have given storage wanted And for the just I the I especially fiber competitive George, understand follow-up. AI

George Kurian

go market. and It's that always been the vendors competitive. There in come different are

to the AI that unstructured the a And we vehicle I scalable and build allow performance. that the to hybrid has security installed as and that strong ML to super protection for models solutions at think data pipelines applications, the have high pipelines scaled. get customers and of build if base these data have also position. only that build AI very look solutions cloud NetApp becomes data, you are will But need management

really and our to expand position our continuing in market. to about look good feel forward presence that I So

Mehdi Hosseini

Maybe could you're my to question. perhaps is January gross I product margin which XX%, rephrase pretty for what raised just quarter. is much guiding Mike the

You're also of increasing use QLC.

some anticipate competitors? QLC flexibility we you I at should pricing Because already gives target with that work the So by don't new remaining your is. competitive with margins gross see

do we So here? from where go

George Kurian

product underlying Mike has Listen, to important historic up that the from to it's that norm of the I the said, XX%. drives been the business mid-XXs, margin, XXs in structural equation. most upper in us from an which raising as mix flash And gross and first all, that, of shift lever continues. shift are confidence we that baseline our think The is gives mix the important kind hard our to factor

value is course, of of software of management ongoing our second, ONTAP commodity supply The the the and chain. the

think of those factor I all in.

don't benefit with has us have another who vendors QLC-based uniquely are gives other in of arrays, operating to an other one and applications. system we that target think to I broad QLC a support. Currently, only all-flash using QLC our go bench vendor opportunity positioned it from

for and applications good built not solution. about real price, are feel tell these about would just good So value, They're value of a we our right? customers And about AI you I we and enterprise really over years. many our that all

Operator

comes Merchant Citigroup. question from next with The Asiya

Unknown Analyst

Asiya This Cadiz Citi. is at Mike for

in your So or by companies, my regarding is model is, whether concerns other the any one in sovereignty ongoing given ongoing preferences may notable AI on-prem have? architecture field, the customer there many they AI placements, security anything -- question and or in given that data cloud conversations

George Kurian

their built. business that I their their look foundation needs. augmenting to foundational AI of are data data at is enterprises are models relevance with doing AI you Listen, organizational is which own the what bring they today, the and to And if on think

As all the a a are you is malicious data lineage the regulatory the are impacts maintain conversations security, that of European for Union. cause regulations only result, injection get and like into enforced and to can of get issues data the stronger like environment, seeing, regardless AI, are privacy, bad landscape on as ability in data happening example, they will huge

extreme to life This the secure have across private as and the well data we management capabilities data positioned, of importance, needs environments gives well the in having customers' to cloud are AI exceptionally the cycle build centers. public as in

Operator

question Markets. with next The Chokshi comes Northland from Capital Nehal

Nehal Chokshi

Congrats can you And 'XX. the should some give year on 'XX on things here? fiscal results the fiscal here. thinking strong thoughts are modeling key early Mike, year when us we what be about

Michael Berry

Yes. for you Thank the question, Nehal.

about Sorry that.

view trends our as gross that good we Series. talked important we fiscal George profitability into it, really drive we're We momentum at good going to look you The product the all well. And the we that. we hey, are continue about of around the when priorities make So us. our growth. around feel our be margins the prudent support to like think will of talked talked QX investment business an about positioned. you built customers We've given where a to want tailwinds driver industry well sure really land. be We've when in C do continues are to feel that we will we about at, looking guidance 'XX, about we that we've that that all for also the QX. And have momentum in as as of well

sure to continue to the do to We want our want able But make hey, also there in to drive and to disciplined we things do are spending. we to need that are that some top be line.

first-party to in lot closer in a the done cloud as much we've for of and a It's the a from better perspective. a storage well. XX%-plus in George that question position continues growth think cloud to next great year. quarter, marketplace be around now asked revenue about XX% as In talked Eddie cloud I grow percentage. work storage to

the where will that's be. So growth

things want make right mindful but return shareholders. that And We then, we're around our flexibility of we investments for we leave to also the will want sure always to share count. to do capital to continue of

to the can digest best you. I 'XX, readers trying without So version that's guide give only

Nehal Chokshi

That's fantastic. off [indiscernible] think If into you're on growth expect year-over-year declines of how the revenue, revenue? that start support I back may, X product should product basically? quarters how coming support revenue now you about the long to we You're revenue up back year-over-year do the

Michael Berry

obviously. Yes, this lot, we great And a question. look at

will support a off at But deferred to in of Keep seen continue can XX% So in hard revenue. balance includes bit tech support year, support a quarters, as the it business look last the a more see last up the a total on has lot you sheet, to take renew helped that in drive declined haul. we've mind, refreshes, Plus we've the for couple come that of revenue quarters. decline that what seen seen X that. different where also is balance what the support also things we've a has little X deferred, so than their of also customers trend actually instead sheet you cloud a year-over-year. and to A

be additional growth the drives multiyear support revenue that with support. see revenue the much don't driver as in deferred. in will You big product But

You'll see billings. that in

revenue. deferred that see in You'll

So we to and feel good about support. get able growth being that

be product think It lagging the revenue follow. I -- hopefully, that little quarters, business least of follow a when going forward, if product it a definitely but support indicator couple it year, grows, at X% a of will model. will bit was revenue of should because and this

Operator

Loop The comes Baruah next from question Capital. Ananda with

Ananda Baruah

like what some really -- number George, you Yes, I I that's few I'm spoke to guess good ongoing of I this, I'd ask, is on and quarters guess there's question was I first I mean calls congrats, strong the and tonight. congrats -- going sorry a And if execution. here guess of to on a

their going with sort think or have beginning do features, I But actually guys couple of product product do that of new to try late. you that it's growth Is strong the what the differently Sorry, of kind to came the data. last to parsable. the new I'm customers on are put parse that products, degree you to degree so, to quarters doing things result of up.

is which material parse second if a any those benefit through way there maybe guess really outlook of is beyond? like what think question I And look of parse go heard you to forward. make appreciate not if I But to a as mention makes like of there's then I things, lot, helpful. Gen that that. would could sort think you think part and going is, begins then I'd you tail calendar the I the AI part that through sense. mean a sounds that's to even but you It lot yet, saying you product the of be I this a demand different 'XX you're know -- is And

George Kurian

consistent Yes. has reason all, macro the the is but Listen, fundamental time. stayed It is of I for not relatively improvement the getting worse, in think, first the results. whole It's uncertain. not it

focus product on the The and second our second is One is for the improving go-to-market execution. two results. is reasons biggest

a that a are And continuing that's brought called AI terms purpose-built of opportunities. billion augmented product, for. addressed we multiple offerings. had to an both to me block in the not storage product, in drag. product the opportunities best We doing it to retrieval market point world's a to QLC have are with or generation context the system training opportunity block Let multibillion world's as tens flash operating major system price expanding operating the dollars, of We see we new all-flash never building hit well storage of dollars X that range brought brought as we we best X customers as on before built

our so And in of have improvements driven results. those all

that equation the be to go-to-market. the our other recognize of in would had from focus we've the benefits think part I

We X focused we on with have prioritized the results first-party marketplace have major pleased two services areas: our in the them, portfolio both storage all-flash and the hyperscaler priorities, as we have had cloud. very And results. of I'm in strong and public cloud

Ananda Baruah

margins just And quick on and touch operating high that. philosophically, follow-up couldn't the over about And Mike everything guess ask operating appreciate That's margin? in some just great attach for XX% you the with I have I there time, attach wanted with in any with you going why talked you reason already XXs, mix is you here. a context. I to Mike, context.

Michael Berry

this we So did quarter.

Ananda Baruah

had Sorry, it's the have -- me. didn't I you That's on -- I funny. with all yes, haven't to a I numbers apologize. I miss

So start with ask in work mix should income else margins mix op the we P&L expect then, like I continues about doing mean just mean, forward? as versus in going let's showing favor? the you your something dollars let well, I me you just Like there. to up then how the are thinking

Michael Berry

busy you apologies Yes. know I necessary. no are And today. folks

to at We've say question the was One think, a can is to a that. What to areas. then number. rate So need Nehal's goal of obviously business. up. product to things. to guided margin. to that which which XX,XXX need always I is it than the continues piece. that piece. want Day, to be that drives I OpEx that it much a hey, that revenue a on There QX. said big really to the want sales capacity. we'll at as well how grow We lower Analyst to is XX% are to on lot couple And And make. CFO, is super of those revenue, we we say margins but drive excited some to big invest, storage, would I us around employees product continue -- go-to-market very to which that's a we're last in again, is all want about hey, continue sorry, Where investments able helped we grow some There's a I'm that grow in even the to around And we XX% XX% our depends, know, make invest go the sure have we We've

So don't margins underline, -- is other sure just mind. we product make have gross this operating thing the want to gross a target quite in frankly, both margins. and and And I

percentages, love more. the dollars the we but we margin love Hey,

That in able to down relatively dollars. or our consistent be goal to a is so drive And they may mean quarter. stay that, go up or margins hey,

more revenue, to is operating goal EPS. gross goes more to Our dollars, margin that then more drive

target. So I a give to you don't want

talk June. trade-off. little a There we'll that in bit about Now this is

Operator

from The ISI. Evercore with Daryanani Amit next is question Instructions]. [Operator

Jyhhaw Liu

of is cloud wins Liu upsell particularly new customer can customers. series hybrid deployments for drive mentioned what This services, from But Irvin such with Series. opportunity lines and of you on on for competitor with other you the looks some these XXK George, C sense new product as your displacement and the like give hard Amit. public A disk resulting us a

George Kurian

start the environment, cross-sell into we always with then we one can and Listen, other customer. environments

in and resonance security I market is idea think that multiple seen the landscapes what multiple of across one causing consistent architecture vulnerabilities is landscapes is idea different going operating quite have systems we customers. the and complexity our the clearly in in customer storage of and clearly cost, having to seeing

unified time, of And footprint, A I all think that across customers' over that we more Series as not their The obviously products, part as AFF win high-performance got well offerings have as but one both only to C-Series opportunity work block see we well win done focused our many motion as public the very And as the accounts we've footprint. a have value-oriented of the cloud excited motion. allows in have new relationship are cloud that NetApp using we customers we sales with that. and cloud number shared as of in don't is about sales to penetrate to times, public strong, public us we

front see even this progress to good continue that quarter. We on past

Jyhhaw Liu

follow-up. I also had one

in to on spending? anything sector here of mix just call public Was dip U.S. IT in of government revenue. terms Just out the there your

George Kurian

normal just seasonality. It's

I seasonality think the nothing across us. and actually a for strong sector was globe public other normal for than number us

Kris Newton

going All to back it pass now closing Thanks, some I'm George right. comments. to Urban. for

George Kurian

you, Thank Kris.

and our our flash, macro. that successfully introduced confidence opportunities uncertain for and execution our my market. reiterate new and sharpened strong the products profitability position block despite We've improved enormous our storage in all growth me focus, AI addressable Let to expand Capacity drive us. represent continued

well are these in continued and areas performing We expect growth.

taken our the creating needed business healthier have health the business, to We year improve 'XX. drive growth cloud in of to fiscal actions our

that to our Investor you see our for We profitability. your gain on are today, maintain opportunity and at yielded capitalizing operating the you record June has time discipline hope XX we'll I share and Day. Thank

Operator

The conference your concluded. has Thank now participation. you for

your You lines. may now disconnect

NetApp (NTAP) 29 Feb 242024 Q3 Earnings call transcript