Network Appliance, Inc. (NASDAQ: NTAP), the leader in advanced networked storage solutions, today reported results for the third quarter of fiscal year 2007. Revenues for the third fiscal quarter were $729.3 million, an increase of 36% compared to revenues of $537.0 million for the same period a year ago and an increase of 12% compared to $652.5 million in the prior quarter. For the third fiscal quarter, GAAP net income was $66.5 million, or $0.17 per share (1) compared to GAAP net income of $76.4 million, or $0.20 per share for the same period in the prior year. Non-GAAP (2) net income for the third fiscal quarter increased 31% to $111.1 million, or $0.29 per share, compared to non-GAAP net income of $84.7 million, or $0.22 per share for the same period a year ago.
Revenues for the first nine months of the current fiscal year totaled $2.0 billion, compared to revenues of $1.47 billion for the first nine months of the prior year, an increase of 36% year over year. For the first nine months of the current fiscal year, GAAP net income totaled $208.1 million, or $0.53 per share, compared with GAAP net income of $207.2 million, or $0.54 per share for the same period in the prior year. Non-GAAP net income for the first nine months of the current fiscal year totaled $316.5 million, or $0.81 per share, compared to non-GAAP net income of $226 million, or $0.58 per share for the first nine months of the prior fiscal year.
"Our third quarter performance again demonstrates that customers increasingly understand the NetApp data management value proposition," said Dan Warmenhoven, chief executive officer. "With revenues up 36% over Q3 of last year, and 100 petabytes of storage shipped during the quarter, NetApp is quickly becoming the vendor of choice for enterprise customers' storage and data management needs."
Outlook Network Appliance estimates that sequential growth in revenue for the fourth quarter of fiscal year 2007 will be in the range of 8% to 10%, which translates to 32% to 34% growth year over year.
Including the implementation of SFAS123(R) and with current information and assumptions, the company expects fourth quarter GAAP earnings per share to finish between $0.19 and $0.20 per share. Network Appliance expects fourth quarter non-GAAP earnings to round to $0.30 per share.
For the full fiscal year 2007, Network Appliance estimates that revenues will finish in the range of 35% to 36% higher than fiscal year 2006.
Including the implementation of SFAS123(R) and with current information and assumptions, the company expects GAAP earnings per share for fiscal year 2007 to be about $0.73 per share. Network Appliance estimates full-year non-GAAP earnings per share will finish between $1.11 to $1.12 per share.
Quarterly Highlights During the third quarter of fiscal year 2007, Network Appliance continued to enhance its data management and data protection portfolios with a key acquisition and several product announcements. It also extended its data center portfolio with several additions including new midrange platforms, broader Fibre Channel (FC) storage area network (SAN) capabilities and significant enhancements in the NetApp® Manageability Software Family. The company also continued to gain momentum in the storage area network (SAN) market while maintaining strong leadership in both the network-attached storage (NAS) and iSCSI markets.
This quarter, NetApp completed the acquisition of Topio, a privately held Santa Clara, California–based company with R&D in Haifa, Israel. The acquisition continues to expand the NetApp data protection portfolio by adding heterogeneous disaster recovery capabilities to existing heterogeneous disk-to-disk backup solutions from NetApp. In addition to delivering a broader range of data protection, data migration, and data cloning capabilities, this acquisition expands the NetApp heterogeneous data protection portfolio by simplifying the replication of data from other storage arrays to NetApp storage systems.
Also during the third quarter, NetApp extended its data center portfolio with the addition of its highest-performing midrange platforms, the FAS3070 and V3070 series; broader FC SAN capabilities; significant enhancements and introductions in the NetApp Manageability Software Family; and new professional services, all aimed at making enterprise data center management easier for customers who demand high-performance SAN solutions and increased application uptime to meet their business needs.
From a market perspective, according to IDC's Worldwide Quarterly Disk Storage Systems Tracker Q3 2006 (3), NetApp gained share in both capacity shipped and revenue for the FC SAN market. NetApp also continued to grow faster than the market in FC SAN in both revenue and capacity, year over year. For capacity shipped, NetApp grew at 210.2%, while the market grew at 46.3%. In terms of revenue, NetApp grew faster than the market for the 11th consecutive quarter at 62.1%, while the market grew at 14.1%. Sequentially, NetApp grew at 16.0%, while the market grew at 6.4%.
NetApp also demonstrated continued leadership in the NAS and iSCSI storage markets in the third quarter, according to IDC. NetApp maintained the number-one market share position in capacity shipped for NAS (42.0%) and in iSCSI for both capacity shipped (32.6%) and revenue (21.5%).
In IDC's calculations of the network storage market (which includes SAN, NAS, and iSCSI), NetApp grew faster than the market, year over year, in both capacity shipped and revenue. For capacity shipped, NetApp grew at 106.8%, while the market grew at 62.6%. In terms of revenue, NetApp grew 18.9%, while the market grew at 17.2%. Also this quarter, NetApp continued its midrange leadership with the news that it has been positioned by Gartner, Inc., in the "Leaders" quadrant for midrange enterprise disk arrays in its research note, "Magic Quadrant for Midrange Enterprise Disk Array, 2H06" (4).
On the partner front, NetApp announced general availability of two software products in support of Microsoft® Exchange Server 2007. NetApp SnapManager® 4.0 for Exchange Server and NetApp Single Mailbox Recovery 4.2, a near-instantaneous backup and recovery software solution for Exchange Server 2007, provide customers with enterprise-class backup, recovery, and restoration solutions. With the availability of these products, NetApp is helping Exchange Server 2007 customers achieve near-instantaneous, granular recovery of Exchange Server data without a prohibitive—and expensive—increase in storage capacity needs.
In corporate news, NetApp was named by FORTUNE magazine as one of the "100 Best Companies to Work For" for the fifth consecutive year. This year, NetApp ranked in the top 10 of the list, at number six, reflecting the company's emphasis on attracting and retaining the best talent in the industry and continuing to demonstrate the values of what NetApp CEO Dan Warmenhoven calls a "model company." Also this quarter, NetApp was named to Forbes magazine's "400 Best Big Companies in America" list for 2007.
This quarter, Dave Hitz, EVP and cofounder of Network Appliance, was inducted into the CRN Industry Hall of Fame for developing a disruptive technology that altered the landscape of the storage industry.
And finally, NetApp was honored as the 2006 Entrepreneurial Company of the Year by the Peninsula Chapter of the Stanford Business School Alumni Association.
The NetApp quarterly results conference call was broadcast live via the Internet on Wednesday, February 14, 2007. A replay will be available for 72 hours following the completion of the live call by dialing 001 617 801 6888 using replay code 86129226. The Webcast replay will be posted on the Web site for at least one year.
(1) Earnings per share represents the diluted number of shares for all periods presented. (2) Non-GAAP results of operations exclude amortization of intangible assets, stock-based compensation expenses, other acquisition-related cost, in-process research and development, restructuring charges/recoveries, gain/loss on sale of assets and investments, specified nonrecurring discrete events, and the related effects on income taxes. (3) IDC's Worldwide Quarterly Disk Storage Systems Tracker Q3 2006. (4) Gartner, Inc. "Magic Quadrant for Midrange Enterprise Disk Array, 2H06."
Revenues for the first nine months of the current fiscal year totaled $2.0 billion, compared to revenues of $1.47 billion for the first nine months of the prior year, an increase of 36% year over year. For the first nine months of the current fiscal year, GAAP net income totaled $208.1 million, or $0.53 per share, compared with GAAP net income of $207.2 million, or $0.54 per share for the same period in the prior year. Non-GAAP net income for the first nine months of the current fiscal year totaled $316.5 million, or $0.81 per share, compared to non-GAAP net income of $226 million, or $0.58 per share for the first nine months of the prior fiscal year.
"Our third quarter performance again demonstrates that customers increasingly understand the NetApp data management value proposition," said Dan Warmenhoven, chief executive officer. "With revenues up 36% over Q3 of last year, and 100 petabytes of storage shipped during the quarter, NetApp is quickly becoming the vendor of choice for enterprise customers' storage and data management needs."
Outlook Network Appliance estimates that sequential growth in revenue for the fourth quarter of fiscal year 2007 will be in the range of 8% to 10%, which translates to 32% to 34% growth year over year.
Including the implementation of SFAS123(R) and with current information and assumptions, the company expects fourth quarter GAAP earnings per share to finish between $0.19 and $0.20 per share. Network Appliance expects fourth quarter non-GAAP earnings to round to $0.30 per share.
For the full fiscal year 2007, Network Appliance estimates that revenues will finish in the range of 35% to 36% higher than fiscal year 2006.
Including the implementation of SFAS123(R) and with current information and assumptions, the company expects GAAP earnings per share for fiscal year 2007 to be about $0.73 per share. Network Appliance estimates full-year non-GAAP earnings per share will finish between $1.11 to $1.12 per share.
Quarterly Highlights During the third quarter of fiscal year 2007, Network Appliance continued to enhance its data management and data protection portfolios with a key acquisition and several product announcements. It also extended its data center portfolio with several additions including new midrange platforms, broader Fibre Channel (FC) storage area network (SAN) capabilities and significant enhancements in the NetApp® Manageability Software Family. The company also continued to gain momentum in the storage area network (SAN) market while maintaining strong leadership in both the network-attached storage (NAS) and iSCSI markets.
This quarter, NetApp completed the acquisition of Topio, a privately held Santa Clara, California–based company with R&D in Haifa, Israel. The acquisition continues to expand the NetApp data protection portfolio by adding heterogeneous disaster recovery capabilities to existing heterogeneous disk-to-disk backup solutions from NetApp. In addition to delivering a broader range of data protection, data migration, and data cloning capabilities, this acquisition expands the NetApp heterogeneous data protection portfolio by simplifying the replication of data from other storage arrays to NetApp storage systems.
Also during the third quarter, NetApp extended its data center portfolio with the addition of its highest-performing midrange platforms, the FAS3070 and V3070 series; broader FC SAN capabilities; significant enhancements and introductions in the NetApp Manageability Software Family; and new professional services, all aimed at making enterprise data center management easier for customers who demand high-performance SAN solutions and increased application uptime to meet their business needs.
From a market perspective, according to IDC's Worldwide Quarterly Disk Storage Systems Tracker Q3 2006 (3), NetApp gained share in both capacity shipped and revenue for the FC SAN market. NetApp also continued to grow faster than the market in FC SAN in both revenue and capacity, year over year. For capacity shipped, NetApp grew at 210.2%, while the market grew at 46.3%. In terms of revenue, NetApp grew faster than the market for the 11th consecutive quarter at 62.1%, while the market grew at 14.1%. Sequentially, NetApp grew at 16.0%, while the market grew at 6.4%.
NetApp also demonstrated continued leadership in the NAS and iSCSI storage markets in the third quarter, according to IDC. NetApp maintained the number-one market share position in capacity shipped for NAS (42.0%) and in iSCSI for both capacity shipped (32.6%) and revenue (21.5%).
In IDC's calculations of the network storage market (which includes SAN, NAS, and iSCSI), NetApp grew faster than the market, year over year, in both capacity shipped and revenue. For capacity shipped, NetApp grew at 106.8%, while the market grew at 62.6%. In terms of revenue, NetApp grew 18.9%, while the market grew at 17.2%. Also this quarter, NetApp continued its midrange leadership with the news that it has been positioned by Gartner, Inc., in the "Leaders" quadrant for midrange enterprise disk arrays in its research note, "Magic Quadrant for Midrange Enterprise Disk Array, 2H06" (4).
On the partner front, NetApp announced general availability of two software products in support of Microsoft® Exchange Server 2007. NetApp SnapManager® 4.0 for Exchange Server and NetApp Single Mailbox Recovery 4.2, a near-instantaneous backup and recovery software solution for Exchange Server 2007, provide customers with enterprise-class backup, recovery, and restoration solutions. With the availability of these products, NetApp is helping Exchange Server 2007 customers achieve near-instantaneous, granular recovery of Exchange Server data without a prohibitive—and expensive—increase in storage capacity needs.
In corporate news, NetApp was named by FORTUNE magazine as one of the "100 Best Companies to Work For" for the fifth consecutive year. This year, NetApp ranked in the top 10 of the list, at number six, reflecting the company's emphasis on attracting and retaining the best talent in the industry and continuing to demonstrate the values of what NetApp CEO Dan Warmenhoven calls a "model company." Also this quarter, NetApp was named to Forbes magazine's "400 Best Big Companies in America" list for 2007.
This quarter, Dave Hitz, EVP and cofounder of Network Appliance, was inducted into the CRN Industry Hall of Fame for developing a disruptive technology that altered the landscape of the storage industry.
And finally, NetApp was honored as the 2006 Entrepreneurial Company of the Year by the Peninsula Chapter of the Stanford Business School Alumni Association.
The NetApp quarterly results conference call was broadcast live via the Internet on Wednesday, February 14, 2007. A replay will be available for 72 hours following the completion of the live call by dialing 001 617 801 6888 using replay code 86129226. The Webcast replay will be posted on the Web site for at least one year.
(1) Earnings per share represents the diluted number of shares for all periods presented. (2) Non-GAAP results of operations exclude amortization of intangible assets, stock-based compensation expenses, other acquisition-related cost, in-process research and development, restructuring charges/recoveries, gain/loss on sale of assets and investments, specified nonrecurring discrete events, and the related effects on income taxes. (3) IDC's Worldwide Quarterly Disk Storage Systems Tracker Q3 2006. (4) Gartner, Inc. "Magic Quadrant for Midrange Enterprise Disk Array, 2H06."
