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NetApp (NTAP) Q4 Earnings in Line, Revenues Top Estimates
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NetApp, Inc (NTAP - Free Report) reported fourth-quarter fiscal 2024 non-GAAP earnings of $1.80 per share, in line with the Zacks Consensus Estimate but up 17% year over year. Management anticipated non-GAAP earnings in the range of $1.73-$1.83.
Revenues of $1.67 billion increased 6% year over year. NTAP projected revenues in the range of $1.585-$1.735 billion. The uptick was caused by solid demand across the all-flash and cloud storage portfolio. Also, revenues beat the consensus mark by 0.4%.
For fiscal 2024, revenues came in at $6.27 billion, down 1% year over year. NetApp expected fiscal 2024 revenues in the band of $6.185-$6.335 billion. Non-GAAP earnings came in at $6.46 compared with $5.59 reported in fiscal 2023. The company forecast non-GAAP earnings in the range of $6.40-$6.50 per share for fiscal 2024.
NetApp now expects fiscal 2025 revenues in the band of $6.45-$6.65 billion. The company expects its strengthening position in tackling critical customer priorities, such as business analytics, AI, cloud transitions, data security and application modernization to drive expansion amid volatile macroeconomic conditions. Management also expects Public Cloud revenues to return to steady growth in fiscal 2025.
The company now expects non-GAAP earnings per share (EPS) in the range of $6.80-$7 for fiscal 2025.
For fiscal 2025, NetApp expects non-GAAP gross margin of 71-72%. Non-GAAP operating margin is projected at 27-28%.
Following the announcement, shares are up 2.8% in the pre-market trading on May 31. In the past year, NTAP’s shares had risen 61.9% compared with the sub-industry’s growth of 112.3%.
Image Source: Zacks Investment Research
Top-Line Details
NTAP reports revenues under two segments — Hybrid Cloud and Public Cloud.
The Hybrid Cloud segment consists of revenues from the enterprise data center business, including product, support and professional services.
The Public Cloud segment comprises revenues from products, which are delivered as a service and include related supports. The portfolio contains cloud automation and optimization services, as well as storage and cloud infrastructure monitoring services.
Revenues from the Hybrid Cloud segment increased 6% year over year to $1.52 billion. The Public Cloud segment’s revenues improved 1% from the year-ago quarter’s level to $152 million.
We projected fiscal fourth-quarter revenues from the Hybrid Cloud and Public Cloud segments at $1,507.9 million and $151.2 million, respectively.
Within the Hybrid Cloud segment, Product revenues (53.2% of segmental revenues) increased 8% year over year to $806 million.
Revenues from Support Contracts (41.1%) totaled $623 million, up 4% year over year. Professional and Other Services revenues (5.7%) amounted to $87 million, down 1.1% year over year.
Software product revenues amounted to $446 million, up 2.1% year over year. . Region-wise, the Americas, Europe, Middle East and Africa and Asia Pacific contributed 51%, 34% and 15% to total revenues, respectively.
Direct and indirect revenues added 26% and 74%, respectively, to total revenues.
Key Metrics
During the fiscal fourth quarter, the company’s All-Flash Array Business’s annualized net revenue run rate was $3.6 billion, up 17% year over year. Total billings rose 8% year over year to $1.8 billion. Deferred revenues totaled $4.2 billion, down 2% on a year-over-year basis.
Public Cloud services recorded annualized recurring revenues of $630 million, up 2% year over year.
Operating Details
Non-GAAP gross margin of 71.5% expanded 250 basis points (bps) from the prior-year levels.
The Hybrid Cloud segment’s gross margin was 71.8%, which expanded 240 bps year over year. The Public Cloud segment recorded a gross margin of 68.4%, which expanded 280 bps year over year.
Non-GAAP operating expenses amounted to $723 million compared with $677 million in the prior-year quarter.
Non-GAAP operating income increased 13.3% year over year to $469 million. Non-GAAP operating margin expanded 190 bps to 28.1%.
Balance Sheet & Cash Flow
NetApp exited the quarter ending Apr 26, 2024, with $3.252 billion in cash, cash equivalents and investments compared with $2.917 billion as of Jan 26.
Long-term debt was $1.992 billion compared with $1.991 billion as of Jan 26.
Net cash from operations was $613 million compared with $235 million in the prior-year quarter.
Free cash flow was $567 million (free cash flow margin of 34%) compared with $196 million in the prior-year quarter (12.4%).
The company returned $204 million and $1.32 billion to its shareholders as dividend payouts and share repurchases in the fiscal fourth quarter and fiscal year, respectively.
NTAP also announced a 4% hike in its quarterly dividend and an additional $1 billion share repurchase authorization.
The quarterly dividend of 52 cents per share is payable on Jul 24, 2024, to its shareholders of record at the close of business on Jul 5.
Q1 2025 Guidance
Management projects non-GAAP EPS between $1.40 and $1.50. The Zacks Consensus Estimate for the same is pegged at $1.45.
Net revenues are anticipated in the range of $1.455-$1.605 billion. The Zacks Consensus Estimate for the metric is pegged at $1.52 billion.
The Zacks Consensus Estimate for BMI’s 2024 EPS is pegged at $3.89, up 9.9% in the past 60 days. BMI’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 12.7%. The long-term earnings growth rate is 15.6%. Shares of BMI have risen 39.4% in the past year.
The Zacks Consensus Estimate for Oracle’s fiscal 2025 EPS is pegged at $6.15. The long-term earnings growth rate is 9.7%. Oracle’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 3.6%. Shares of ORCL have grown 10.5% in the past year.
The Zacks Consensus Estimate for Intuit’s fiscal 2024 EPS has increased 0.3% in the past 60 days to $16.46. INTU’s earnings beat the Zacks Consensus Estimate in all the last four quarters, with the average surprise being 16.2%. Shares of INTU have risen 34.3% in the past year.
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NetApp (NTAP) Q4 Earnings in Line, Revenues Top Estimates
NetApp, Inc (NTAP - Free Report) reported fourth-quarter fiscal 2024 non-GAAP earnings of $1.80 per share, in line with the Zacks Consensus Estimate but up 17% year over year. Management anticipated non-GAAP earnings in the range of $1.73-$1.83.
Revenues of $1.67 billion increased 6% year over year. NTAP projected revenues in the range of $1.585-$1.735 billion. The uptick was caused by solid demand across the all-flash and cloud storage portfolio. Also, revenues beat the consensus mark by 0.4%.
For fiscal 2024, revenues came in at $6.27 billion, down 1% year over year. NetApp expected fiscal 2024 revenues in the band of $6.185-$6.335 billion. Non-GAAP earnings came in at $6.46 compared with $5.59 reported in fiscal 2023. The company forecast non-GAAP earnings in the range of $6.40-$6.50 per share for fiscal 2024.
NetApp, Inc. Price, Consensus and EPS Surprise
NetApp, Inc. price-consensus-eps-surprise-chart | NetApp, Inc. Quote
NetApp now expects fiscal 2025 revenues in the band of $6.45-$6.65 billion. The company expects its strengthening position in tackling critical customer priorities, such as business analytics, AI, cloud transitions, data security and application modernization to drive expansion amid volatile macroeconomic conditions. Management also expects Public Cloud revenues to return to steady growth in fiscal 2025.
The company now expects non-GAAP earnings per share (EPS) in the range of $6.80-$7 for fiscal 2025.
For fiscal 2025, NetApp expects non-GAAP gross margin of 71-72%. Non-GAAP operating margin is projected at 27-28%.
Following the announcement, shares are up 2.8% in the pre-market trading on May 31. In the past year, NTAP’s shares had risen 61.9% compared with the sub-industry’s growth of 112.3%.
Image Source: Zacks Investment Research
Top-Line Details
NTAP reports revenues under two segments — Hybrid Cloud and Public Cloud.
The Hybrid Cloud segment consists of revenues from the enterprise data center business, including product, support and professional services.
The Public Cloud segment comprises revenues from products, which are delivered as a service and include related supports. The portfolio contains cloud automation and optimization services, as well as storage and cloud infrastructure monitoring services.
Revenues from the Hybrid Cloud segment increased 6% year over year to $1.52 billion. The Public Cloud segment’s revenues improved 1% from the year-ago quarter’s level to $152 million.
We projected fiscal fourth-quarter revenues from the Hybrid Cloud and Public Cloud segments at $1,507.9 million and $151.2 million, respectively.
Within the Hybrid Cloud segment, Product revenues (53.2% of segmental revenues) increased 8% year over year to $806 million.
Revenues from Support Contracts (41.1%) totaled $623 million, up 4% year over year. Professional and Other Services revenues (5.7%) amounted to $87 million, down 1.1% year over year.
Software product revenues amounted to $446 million, up 2.1% year over year.
.
Region-wise, the Americas, Europe, Middle East and Africa and Asia Pacific contributed 51%, 34% and 15% to total revenues, respectively.
Direct and indirect revenues added 26% and 74%, respectively, to total revenues.
Key Metrics
During the fiscal fourth quarter, the company’s All-Flash Array Business’s annualized net revenue run rate was $3.6 billion, up 17% year over year. Total billings rose 8% year over year to $1.8 billion. Deferred revenues totaled $4.2 billion, down 2% on a year-over-year basis.
Public Cloud services recorded annualized recurring revenues of $630 million, up 2% year over year.
Operating Details
Non-GAAP gross margin of 71.5% expanded 250 basis points (bps) from the prior-year levels.
The Hybrid Cloud segment’s gross margin was 71.8%, which expanded 240 bps year over year. The Public Cloud segment recorded a gross margin of 68.4%, which expanded 280 bps year over year.
Non-GAAP operating expenses amounted to $723 million compared with $677 million in the prior-year quarter.
Non-GAAP operating income increased 13.3% year over year to $469 million. Non-GAAP operating margin expanded 190 bps to 28.1%.
Balance Sheet & Cash Flow
NetApp exited the quarter ending Apr 26, 2024, with $3.252 billion in cash, cash equivalents and investments compared with $2.917 billion as of Jan 26.
Long-term debt was $1.992 billion compared with $1.991 billion as of Jan 26.
Net cash from operations was $613 million compared with $235 million in the prior-year quarter.
Free cash flow was $567 million (free cash flow margin of 34%) compared with $196 million in the prior-year quarter (12.4%).
The company returned $204 million and $1.32 billion to its shareholders as dividend payouts and share repurchases in the fiscal fourth quarter and fiscal year, respectively.
NTAP also announced a 4% hike in its quarterly dividend and an additional $1 billion share repurchase authorization.
The quarterly dividend of 52 cents per share is payable on Jul 24, 2024, to its shareholders of record at the close of business on Jul 5.
Q1 2025 Guidance
Management projects non-GAAP EPS between $1.40 and $1.50. The Zacks Consensus Estimate for the same is pegged at $1.45.
Net revenues are anticipated in the range of $1.455-$1.605 billion. The Zacks Consensus Estimate for the metric is pegged at $1.52 billion.
NetApp currently carries a Zacks Rank #2 (Buy).
Stocks to Consider
Some better-ranked stocks worth consideration in the broader technology space are Badger Meter (BMI - Free Report) , Oracle (ORCL - Free Report) and Intuit (INTU - Free Report) . While BMI sports a Zacks Rank #1 (Strong Buy), ORCL and INTU carry a Zacks Rank of 2 each, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for BMI’s 2024 EPS is pegged at $3.89, up 9.9% in the past 60 days. BMI’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 12.7%. The long-term earnings growth rate is 15.6%. Shares of BMI have risen 39.4% in the past year.
The Zacks Consensus Estimate for Oracle’s fiscal 2025 EPS is pegged at $6.15. The long-term earnings growth rate is 9.7%. Oracle’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 3.6%. Shares of ORCL have grown 10.5% in the past year.
The Zacks Consensus Estimate for Intuit’s fiscal 2024 EPS has increased 0.3% in the past 60 days to $16.46. INTU’s earnings beat the Zacks Consensus Estimate in all the last four quarters, with the average surprise being 16.2%. Shares of INTU have risen 34.3% in the past year.