NetApp(NTAP) - 2025 Q2 - Quarterly Results

Financial Performance - Net revenues for Q2 FY2025 were $1.66 billion, a 6% increase year-over-year from $1.56 billion in Q2 FY2024[2] - Billings increased by 9% year-over-year to $1.59 billion, compared to $1.45 billion in Q2 FY2024[3] - GAAP net income was $299 million, up from $233 million in Q2 FY2024, with non-GAAP net income at $392 million compared to $334 million[3] - GAAP earnings per share were $1.42, an increase from $1.10 in Q2 FY2024, while non-GAAP earnings per share rose to $1.87 from $1.58[3] - Net revenues for the three months ended October 27, 2023, increased to $1.658 billion, up from $1.562 billion in the same period last year, representing a growth of 6.1%[47] - Gross profit for the three months ended October 27, 2023, was $1.177 billion, compared to $1.110 billion in the prior year, reflecting an increase of 6.0%[47] - Net income for the three months ended October 27, 2023, was $299 million, up from $233 million year-over-year, indicating a growth of 28.3%[47] - Basic net income per share increased to $1.47 for the three months ended October 27, 2023, compared to $1.12 in the same period last year, a rise of 31.3%[47] Revenue Segments - Hybrid Cloud segment revenue reached $1.49 billion, up from $1.41 billion in the same quarter last year, while Public Cloud segment revenue grew to $168 million from $154 million[3] - The hybrid cloud segment net revenues for Q2 FY25 were $1,490 million, up from $1,382 million in Q1 FY25[49] - Q2'FY25 product revenues were $768 million, an increase from $669 million in Q1'FY25 and $706 million in Q2'FY24[61] - Q2'FY25 services revenues reached $890 million, up from $872 million in Q1'FY25 and $856 million in Q2'FY24[63] Guidance and Projections - Q3 FY2025 revenue guidance is projected between $1.610 billion and $1.760 billion, with GAAP earnings per share expected to be in the range of $1.41 to $1.51[5] - Full FY2025 revenue guidance is updated to a range of $6.540 billion to $6.740 billion, with consolidated gross margins expected between 70% and 72%[5] - Non-GAAP guidance for net income per share for Q3 FY25 is projected to be between $1.85 and $1.95[72] - GAAP guidance for net income per share for FY25 is estimated to be between $5.48 and $5.68[77] - Non-GAAP gross margin guidance for FY25 is expected to be between 71% and 72%[75] - Operating margin guidance for FY25 is projected to be between 21% and 21.5% on a GAAP basis, and between 28% and 28.5% on a non-GAAP basis[75] Cash Flow and Assets - Cash provided by operating activities for the three months ended October 27, 2023, was $105 million, down from $135 million in the prior year[48] - Net cash used in investing activities was $564 million for the three months ended October 27, 2023, compared to $227 million in the same period last year[48] - Net cash used in financing activities totaled $842 million for the three months ended October 27, 2023, compared to $421 million in the prior year[48] - The company reported a cash balance of $1.487 billion at the end of the period, down from $1.941 billion at the beginning of the period[48] Balance Sheet - NetApp's total current assets decreased from $4,897 million in April 2024 to $3,939 million in October 2024, a decline of approximately 19.6%[45] - The company's cash, cash equivalents, and investments dropped from $3,252 million to $2,222 million, representing a decrease of about 31.7%[45] - Current liabilities increased from $4,106 million to $4,317 million, an increase of approximately 5.1%[45] - Long-term debt decreased from $1,992 million to $1,244 million, a reduction of about 37.6%[45] - Total liabilities decreased from $8,741 million to $8,112 million, a decline of approximately 7.2%[45] - Stockholders' equity fell from $1,146 million to $892 million, a decrease of about 22.2%[45] Operational Metrics - Operating expenses rose to $832 million for the three months ended October 27, 2023, compared to $806 million in the same period last year, marking a 3.2% increase[47] - Total cost of revenues for the three months ended October 27, 2023, was $481 million, an increase from $452 million in the same period last year, reflecting a growth of 6.4%[47] - Days sales outstanding (DSO) increased to 48 days in Q2 FY25 from 40 days in Q1 FY25[50] - Inventory turns decreased to 6 in Q2 FY25, down from 8 in Q1 FY25[50] Product and Innovation - New product innovations include the launch of all-flash NetApp™ ASA A-Series storage systems and enhancements to cyber resilience offerings with AI capabilities[6][7] - NetApp is focusing on driving growth in total product revenues through the sale of configured storage systems, with less emphasis on the pricing of individual hardware and software components[23] - The company is considering simplifying pricing for certain products, potentially eliminating separate prices for hardware and software components[24] Non-GAAP Measures - Non-GAAP measures are used to provide supplemental metrics that assist in understanding current results and future prospects, including non-GAAP net income and non-GAAP earnings per share[26] - NetApp approximates billings by adding net revenues to the change in total deferred revenue, providing a performance measure that reflects amounts under purchase orders received during a given period[28] - Non-GAAP income from operations for Q2 FY25 was $475 million, representing 28.6% of net revenues, up from 25.9% in Q1 FY25[50] - Non-GAAP net income for Q2 FY25 was $392 million, compared to $330 million in Q1 FY25[50] - Non-GAAP operating expenses for Q2'FY25 were $719 million, compared to $714 million in Q1'FY25 and $706 million in Q2'FY24[55] - Non-GAAP gross margin for Q2'FY25 was 72.0%, compared to 72.2% in Q1'FY25 and 72.0% in Q2'FY24[59]