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NetApp (NTAP) Q1 Earnings & Revenues Top Estimates, Fall Y/Y
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NetApp, Inc (NTAP - Free Report) reported first-quarter fiscal 2024 non-GAAP earnings of $1.15 per share, which surpassed the Zacks Consensus Estimate by 7.5%. Yet, the bottom line decreased 4.2% year over year. Management anticipated non-GAAP earnings in the range of $1.00-$1.10.
Revenues of $1.432 billion decreased 10% year over year. NTAP projected revenues in the $1.325-$1.475 billion band. Weak IT spending due to tough macro environment affected performance.
However, revenues beat the consensus mark by 1.5%.
NetApp continues to expect fiscal 2024 revenues to decline in the mid-to-low single digit range on a year-over-year basis. However, management now suggests Public Cloud revenue growth to be lower than the earlier expectation owing to a softness in subscription services.
The company forecasts non-GAAP earnings per share for fiscal 2024 to be between $5.65 and $5.85. The Zacks Consensus Estimate is pegged at $5.68.
For fiscal 2024, NetApp expects non-GAAP gross margin to be nearly 70%. Non-GAAP operating margin is projected to be nearly 25%.
Following the announcement, shares were down 1.7% in the pre-market trading on Aug 24. In the past year, shares have lost 2.6% compared with the sub-industry’s growth of 19.8%.
Image Source: Zacks Investment Research
Top-Line Details
NTAP reports revenues under two segments, namely, Hybrid Cloud and Public Cloud.
The Hybrid Cloud segment consists of revenues from enterprise datacenter business, including product, support and professional services.
The Public Cloud segment comprises revenues from products, which are delivered as-a-service and entail related support. The portfolio contains cloud automation and optimization services, and storage services and cloud infrastructure monitoring services.
Revenues from the Hybrid Cloud segment were down 12% year over year to $1.278 billion. The Public Cloud segment’s revenues were up 17% from the year-ago quarter’s levels to $154 million.
We projected revenues from Hybrid Cloud and Public Cloud segment for the fiscal first quarter to be $1253.7 million and $154.6 million, respectively.
Within the Hybrid Cloud segment, Product revenues (46% of segmental revenues) decreased 25% year over year to $590 million.
Revenues from Support Contracts (48%) totaled $611 million, gaining 2.2% year over year. Professional and Other Services revenues (6%) were $77 million, rose 1.3% year over year.
Software product revenues amounted to $342 million, dipping 28.2%.
Region-wise, the Americas, Europe, Middle East and Africa and Asia Pacific contributed 53%, 31% and 16% to total revenues, respectively.
Direct and Indirect revenues added 24% and 76%, respectively, to total revenues.
Key Metrics
During the fiscal first quarter, the company’s All-Flash Array Business’ annualized net revenue run rate of $2.8 billion declined 7% year over year. Total billings decreased 17% year over year to $1.3 billion. Deferred revenues were $4.2 billion, unchanged on a year-over-year basis.
Public Cloud Services recorded annualized recurring revenues of $619 million, up 6% year over year.
Operating Details
Non-GAAP gross margin of 70.7% expanded 400 basis points (bps) from the prior-year quarter’s levels.
The Hybrid segment’s gross margin was 71.1%, which extended 470 bps year over year. The Public Cloud segment witnessed gross margin of 66.9%, contracting 280 bps year over year.
Non-GAAP operating expenses were $703 million compared with $702 million in the previous-year quarter. As a percentage of net revenues, the figure came in at 49.1%, up 500 bps on a year-over-year basis.
Non-GAAP operating income declined 14.2% year over year to $309 million. Non-GAAP operating margin shrank 100 bps to 21.6%.
Balance Sheet & Cash Flow
NetApp exited the quarter ending Jul 28, 2023, with $2.975 billion in cash, cash equivalents and investments compared with $3.07 billion as of Apr 28. Long-term debt was $2.390 billion compared with $2.389 billion as of Apr 28.
Net cash from operations was $453 million compared with $235 million in the previous quarter.
Free cash flow was $418 million (free cash flow margin of 29.2%) compared with $196 million in the prior quarter (12.4%).
The company returned $506 million to shareholders as dividend payouts and share repurchases in the fiscal first quarter. It has $1 billion worth of shares remaining under its existing authorization.
NTAP also announced a dividend of 50 cents payable on Oct 25, to shareholders of record as of the close of business on Oct 6.
Q2 2024 Guidance
Management projects non-GAAP earnings per share to be between $1.35 and $1.45. The Zacks Consensus Estimate is pegged at $1.39.
Net revenues are anticipated in the range of $1.455-$1.605 billion. The Zacks Consensus Estimate is pegged at $1.51 billion.
The Zacks Consensus Estimate for Badger Meter’s 2023 earnings has risen 6.3% in the past 60 days to $2.86 per share. BMI’s earnings beat estimates in the last four quarters, the average surprise being 6.7%. Shares of BMI have surged 63.3% in the past year.
The Zacks Consensus Estimate for Salesforce’s fiscal 2024 earnings is pegged at $7.44 per share, unchanged in the past 60 days. The long-term earnings growth rate is anticipated to be 19.3%.
CRM’s earnings surpassed estimates in the last four quarters, the average beat being 15.5%. Shares of CRM have grown 21.3% in the past year.
The Zacks Consensus Estimate for Pegasystems’ 2023 earnings has improved 6.6% in the past 60 days to $1.46 per share. PEGA’s earnings has an average surprise of 166.2% in the trailing four quarters. Shares of PEGA have jumped 30.9% in the past year.
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NetApp (NTAP) Q1 Earnings & Revenues Top Estimates, Fall Y/Y
NetApp, Inc (NTAP - Free Report) reported first-quarter fiscal 2024 non-GAAP earnings of $1.15 per share, which surpassed the Zacks Consensus Estimate by 7.5%. Yet, the bottom line decreased 4.2% year over year. Management anticipated non-GAAP earnings in the range of $1.00-$1.10.
Revenues of $1.432 billion decreased 10% year over year. NTAP projected revenues in the $1.325-$1.475 billion band. Weak IT spending due to tough macro environment affected performance.
However, revenues beat the consensus mark by 1.5%.
NetApp continues to expect fiscal 2024 revenues to decline in the mid-to-low single digit range on a year-over-year basis. However, management now suggests Public Cloud revenue growth to
be lower than the earlier expectation owing to a softness in subscription services.
The company forecasts non-GAAP earnings per share for fiscal 2024 to be between $5.65 and $5.85. The Zacks Consensus Estimate is pegged at $5.68.
For fiscal 2024, NetApp expects non-GAAP gross margin to be nearly 70%. Non-GAAP operating margin is projected to be nearly 25%.
NetApp, Inc. Price, Consensus and EPS Surprise
NetApp, Inc. price-consensus-eps-surprise-chart | NetApp, Inc. Quote
Following the announcement, shares were down 1.7% in the pre-market trading on Aug 24. In the past year, shares have lost 2.6% compared with the sub-industry’s growth of 19.8%.
Image Source: Zacks Investment Research
Top-Line Details
NTAP reports revenues under two segments, namely, Hybrid Cloud and Public Cloud.
The Hybrid Cloud segment consists of revenues from enterprise datacenter business, including product, support and professional services.
The Public Cloud segment comprises revenues from products, which are delivered as-a-service and entail related support. The portfolio contains cloud automation and optimization services, and storage services and cloud infrastructure monitoring services.
Revenues from the Hybrid Cloud segment were down 12% year over year to $1.278 billion. The Public Cloud segment’s revenues were up 17% from the year-ago quarter’s levels to $154 million.
We projected revenues from Hybrid Cloud and Public Cloud segment for the fiscal first quarter to be $1253.7 million and $154.6 million, respectively.
Within the Hybrid Cloud segment, Product revenues (46% of segmental revenues) decreased 25% year over year to $590 million.
Revenues from Support Contracts (48%) totaled $611 million, gaining 2.2% year over year. Professional and Other Services revenues (6%) were $77 million, rose 1.3% year over year.
Software product revenues amounted to $342 million, dipping 28.2%.
Region-wise, the Americas, Europe, Middle East and Africa and Asia Pacific contributed 53%, 31% and 16% to total revenues, respectively.
Direct and Indirect revenues added 24% and 76%, respectively, to total revenues.
Key Metrics
During the fiscal first quarter, the company’s All-Flash Array Business’ annualized net revenue run rate of $2.8 billion declined 7% year over year. Total billings decreased 17% year over year to $1.3 billion. Deferred revenues were $4.2 billion, unchanged on a year-over-year basis.
Public Cloud Services recorded annualized recurring revenues of $619 million, up 6% year over year.
Operating Details
Non-GAAP gross margin of 70.7% expanded 400 basis points (bps) from the prior-year quarter’s levels.
The Hybrid segment’s gross margin was 71.1%, which extended 470 bps year over year. The Public Cloud segment witnessed gross margin of 66.9%, contracting 280 bps year over year.
Non-GAAP operating expenses were $703 million compared with $702 million in the previous-year quarter. As a percentage of net revenues, the figure came in at 49.1%, up 500 bps on a year-over-year basis.
Non-GAAP operating income declined 14.2% year over year to $309 million. Non-GAAP operating margin shrank 100 bps to 21.6%.
Balance Sheet & Cash Flow
NetApp exited the quarter ending Jul 28, 2023, with $2.975 billion in cash, cash equivalents and investments compared with $3.07 billion as of Apr 28. Long-term debt was $2.390 billion compared with $2.389 billion as of Apr 28.
Net cash from operations was $453 million compared with $235 million in the previous quarter.
Free cash flow was $418 million (free cash flow margin of 29.2%) compared with $196 million in the prior quarter (12.4%).
The company returned $506 million to shareholders as dividend payouts and share repurchases in the fiscal first quarter. It has $1 billion worth of shares remaining under its existing authorization.
NTAP also announced a dividend of 50 cents payable on Oct 25, to shareholders of record as of the close of business on Oct 6.
Q2 2024 Guidance
Management projects non-GAAP earnings per share to be between $1.35 and $1.45. The Zacks Consensus Estimate is pegged at $1.39.
Net revenues are anticipated in the range of $1.455-$1.605 billion. The Zacks Consensus Estimate is pegged at $1.51 billion.
NetApp currently carries a Zacks Rank #3 (Hold)
Stocks to Consider
Some better-ranked stocks worth consideration in the broader technology space are Badger Meter (BMI - Free Report) , Salesforce (CRM - Free Report) and Pegasystems (PEGA - Free Report) . Each stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Badger Meter’s 2023 earnings has risen 6.3% in the past 60 days to $2.86 per share. BMI’s earnings beat estimates in the last four quarters, the average surprise being 6.7%. Shares of BMI have surged 63.3% in the past year.
The Zacks Consensus Estimate for Salesforce’s fiscal 2024 earnings is pegged at $7.44 per share, unchanged in the past 60 days. The long-term earnings growth rate is anticipated to be 19.3%.
CRM’s earnings surpassed estimates in the last four quarters, the average beat being 15.5%. Shares of CRM have grown 21.3% in the past year.
The Zacks Consensus Estimate for Pegasystems’ 2023 earnings has improved 6.6% in the past 60 days to $1.46 per share. PEGA’s earnings has an average surprise of 166.2% in the trailing four quarters. Shares of PEGA have jumped 30.9% in the past year.