NetApp Q1 Performance Beats Expectations, Issues Upbeat Q2 Outlook

NetApp Inc. NTAP reported first-quarter revenue growth of 9% year-over-year to $1.59 billion, +13% on a constant currency basis, beating the consensus of $1.55 billion.

Q1 product revenue grew 8% Y/Y to $786 million; and billings were $1.56 billion (+13% Y/Y), +18% in constant currency.

NetApp Public Cloud annualized revenue run rate (ARR) increased 73% Y/Y to $584 million, and All-flash array ARR increased 7% Y/Y to $3 billion.

Adjusted EPS was $1.20, beating the consensus of $1.10. The adjusted gross margin was 66.7%, down from 69.3% in 1Q22, and the adjusted operating margin was 22.6%, down by 40 bps.

The company returned $460 million to shareholders in share repurchases and cash dividends. NetApp’s cash provided by operations for the quarter totaled $281 million, compared to $242 million in 1Q22. It held cash, cash equivalents, and investments of $3.44 billion at the end of the quarter.

Dividend: The company declared a cash dividend of $0.50 per share, payable on October 26, 2022, to shareholders of record as of the close of business on October 7, 2022.

2Q23 Outlook: NTAP expects revenue of $1.595 billion – $1.745 billion vs. consensus of $1.66 billion; adjusted gross margin of 66%-67%; and adjusted operating margin of ~23%. It expects an adjusted EPS of $1.28 – $1.38.

FY23 Outlook: The company expects revenue growth of 6%-8% year-over-year, an adjusted gross margin of 66%-67%, and an adjusted operating margin of 23%-24%. It expects an adjusted EPS of $5.40 – $5.60.

Price Action: NTAP shares are trading higher by 5.73% at $76.99 during the post-market session on Wednesday.

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