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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended January 26, 2024

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 000-27130

NetApp, Inc.

(Exact name of registrant as specified in its charter)

Delaware

77-0307520

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)

3060 Olsen Drive,

San Jose, California 95128

(Address of principal executive offices, including zip code)

(408) 822-6000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

 

Name of exchange on which registered

Common Stock, $0.001 Par Value

NTAP

 

The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

Accelerated filer

 

 

 

 

Non-accelerated filer

 

Smaller reporting company

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of February 23, 2024, there were 206,376,661 shares of the registrant’s common stock, $0.001 par value, outstanding.


 

TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION

 

 

 

 

 

Item 1

Condensed Consolidated Financial Statements (Unaudited)

3

Condensed Consolidated Balance Sheets as of January 26, 2024 and April 28, 2023

3

Condensed Consolidated Statements of Income for the Three and Nine Months Ended January 26, 2024 and January 27, 2023

4

Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended January 26, 2024 and January 27, 2023

5

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended January 26, 2024 and January 27, 2023

6

 

 

Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended January 26, 2024 and January 27, 2023

 

7

Notes to Condensed Consolidated Financial Statements

9

Item 2

Management’s Discussion and Analysis of Financial Condition and Results of Operations

26

Item 3

Quantitative and Qualitative Disclosures About Market Risk

39

Item 4

Controls and Procedures

40

 

 

 

PART II — OTHER INFORMATION

 

 

 

 

 

 

Item 1

Legal Proceedings

41

Item 1A

Risk Factors

41

Item 2

Unregistered Sales of Equity Securities and Use of Proceeds

41

Item 3

Defaults upon Senior Securities

41

Item 4

Mine Safety Disclosures

41

Item 5

Other Information

41

Item 6

Exhibits

42

SIGNATURE

43

 

TRADEMARKS

© 2024 NetApp, Inc. All Rights Reserved. No portions of this document may be reproduced without prior written consent of NetApp, Inc. NetApp, the NetApp logo, and the marks listed at http://www.netapp.com/TM are trademarks of NetApp, Inc. Other company and product names may be trademarks of their respective owners.

 

2


 

PART I — FINANCIAL INFORMATION

 

 

Item 1. Condensed Consolidated Financial Statements (Unaudited)

NETAPP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except par value)

(Unaudited)

 

 

 

January 26,
 2024

 

 

April 28,
  2023

 

ASSETS

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,820

 

 

$

2,316

 

Short-term investments

 

 

1,097

 

 

 

754

 

Accounts receivable

 

 

787

 

 

 

987

 

Inventories

 

 

131

 

 

 

167

 

Other current assets

 

 

492

 

 

 

456

 

Total current assets

 

 

4,327

 

 

 

4,680

 

Property and equipment, net

 

 

607

 

 

 

650

 

Goodwill

 

 

2,759

 

 

 

2,759

 

Purchased intangible assets, net

 

 

138

 

 

 

181

 

Other non-current assets

 

 

1,538

 

 

 

1,548

 

Total assets

 

$

9,369

 

 

$

9,818

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

396

 

 

$

392

 

Accrued expenses

 

 

876

 

 

 

857

 

Current portion of long-term debt

 

 

400

 

 

 

 

Short-term deferred revenue and financed unearned services revenue

 

 

2,093

 

 

 

2,218

 

Total current liabilities

 

 

3,765

 

 

 

3,467

 

Long-term debt

 

 

1,991

 

 

 

2,389

 

Other long-term liabilities

 

 

585

 

 

 

708

 

Long-term deferred revenue and financed unearned services revenue

 

 

2,034

 

 

 

2,095

 

Total liabilities

 

 

8,375

 

 

 

8,659

 

 

 

 

 

 

 

 

Commitments and contingencies (Note 15)

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

Common stock and additional paid-in capital, $0.001 par value; 206 and 212 shares issued and outstanding as of January 26, 2024 and April 28, 2023, respectively

 

 

934

 

 

 

945

 

Retained earnings

 

 

115

 

 

 

265

 

Accumulated other comprehensive loss

 

 

(55

)

 

 

(51

)

Total stockholders' equity

 

 

994

 

 

 

1,159

 

Total liabilities and stockholders' equity

 

$

9,369

 

 

$

9,818

 

 

See accompanying notes to condensed consolidated financial statements.

 

3


 

NETAPP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per share amounts)

(Unaudited)

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

January 26,
 2024

 

 

January 27,
2023

 

 

January 26,
 2024

 

 

January 27,
2023

 

Net revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Product

 

$

747

 

 

$

682

 

 

$

2,043

 

 

$

2,305

 

Services

 

 

859

 

 

 

844

 

 

 

2,557

 

 

 

2,476

 

Net revenues

 

 

1,606

 

 

 

1,526

 

 

 

4,600

 

 

 

4,781

 

Cost of revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of product

 

 

282

 

 

 

367

 

 

 

823

 

 

 

1,182

 

Cost of services

 

 

173

 

 

 

158

 

 

 

520

 

 

 

465

 

Total cost of revenues

 

 

455

 

 

 

525

 

 

 

1,343

 

 

 

1,647

 

Gross profit

 

 

1,151

 

 

 

1,001

 

 

 

3,257

 

 

 

3,134

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

439

 

 

 

450

 

 

 

1,368

 

 

 

1,387

 

Research and development

 

 

249

 

 

 

230

 

 

 

758

 

 

 

713

 

General and administrative

 

 

81

 

 

 

59

 

 

 

230

 

 

 

198

 

Restructuring charges

 

 

13

 

 

 

87

 

 

 

44

 

 

 

109

 

Acquisition-related expense

 

 

3

 

 

 

3

 

 

 

9

 

 

 

18

 

Total operating expenses

 

 

785

 

 

 

829

 

 

 

2,409

 

 

 

2,425

 

Income from operations

 

 

366

 

 

 

172

 

 

 

848

 

 

 

709

 

Other income, net

 

 

16

 

 

 

5

 

 

 

35

 

 

 

43

 

Income before income taxes

 

 

382

 

 

 

177

 

 

 

883

 

 

 

752

 

Provision (benefit) for income taxes

 

 

69

 

 

 

112

 

 

 

188

 

 

 

(277

)

Net income

 

$

313

 

 

$

65

 

 

$

695

 

 

$

1,029

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.52

 

 

$

0.30

 

 

$

3.33

 

 

$

4.72

 

Diluted

 

$

1.48

 

 

$

0.30

 

 

$

3.26

 

 

$

4.66

 

Shares used in net income per share calculations:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

206

 

 

 

216

 

 

 

209

 

 

 

218

 

Diluted

 

 

211

 

 

 

219

 

 

 

213

 

 

 

221

 

See accompanying notes to condensed consolidated financial statements.

 

4


 

NETAPP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

(Unaudited)

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

January 26,
 2024

 

 

January 27,
2023

 

 

January 26,
 2024

 

 

January 27,
2023

 

Net income

 

$

313

 

 

$

65

 

 

$

695

 

 

$

1,029

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

2

 

 

 

12

 

 

 

(3

)

 

 

(6

)

Unrealized gains (losses) on cash flow hedges:

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized holding gains (losses) arising during the period

 

 

(4

)

 

 

(11

)

 

 

1

 

 

 

(7

)

Reclassification adjustments for losses (gains) included in net income

 

 

2

 

 

 

6

 

 

 

(2

)

 

 

2

 

Other comprehensive income (loss)

 

 

 

 

 

7

 

 

 

(4

)

 

 

(11

)

Comprehensive income

 

$

313

 

 

$

72

 

 

$

691

 

 

$

1,018

 

 

 

See accompanying notes to condensed consolidated financial statements.

 

5


 

NETAPP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

 

 

Nine Months Ended

 

 

 

January 26,
 2024

 

 

January 27,
2023

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income

 

$

695

 

 

$

1,029

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

191

 

 

 

182

 

Non-cash operating lease cost

 

 

34

 

 

 

40

 

Stock-based compensation

 

 

269

 

 

 

238

 

Deferred income taxes

 

 

(2

)

 

 

(577

)

Other items, net

 

 

4

 

 

 

(69

)

Changes in assets and liabilities, net of acquisitions of businesses:

 

 

 

 

 

 

Accounts receivable

 

 

195

 

 

 

425

 

Inventories

 

 

37

 

 

 

29

 

Other operating assets

 

 

(71

)

 

 

(8

)

Accounts payable

 

 

3

 

 

 

(173

)

Accrued expenses

 

 

(16

)

 

 

(117

)

Deferred revenue and financed unearned services revenue

 

 

(160

)

 

 

(47

)

Long-term taxes payable

 

 

(107

)

 

 

(82

)

Other operating liabilities

 

 

 

 

 

2

 

Net cash provided by operating activities

 

 

1,072

 

 

 

872

 

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of investments

 

 

(1,663

)

 

 

(762

)

Maturities, sales and collections of investments

 

 

1,334

 

 

 

288

 

Purchases of property and equipment

 

 

(109

)

 

 

(200

)

Acquisitions of businesses, net of cash acquired

 

 

 

 

 

(491

)

Other investing activities, net

 

 

 

 

 

60

 

Net cash used in investing activities

 

 

(438

)

 

 

(1,105

)

Cash flows from financing activities:

 

 

 

 

 

 

Proceeds from issuance of common stock under employee stock
   award plans

 

 

100

 

 

 

108

 

Payments for taxes related to net share settlement of stock awards

 

 

(108

)

 

 

(74

)

Repurchase of common stock

 

 

(800

)

 

 

(700

)

Repayments and extinguishment of debt

 

 

 

 

 

(250

)

Dividends paid

 

 

(312

)

 

 

(326

)

Other financing activities, net

 

 

 

 

 

(2

)

Net cash used in financing activities

 

 

(1,120

)

 

 

(1,244

)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

 

(10

)

 

 

4

 

Net change in cash, cash equivalents and restricted cash

 

 

(496

)

 

 

(1,473

)

Cash, cash equivalents and restricted cash:

 

 

 

 

 

 

Beginning of period

 

 

2,322

 

 

 

4,119

 

End of period

 

$

1,826

 

 

$

2,646

 

See accompanying notes to condensed consolidated financial statements.

 

6


 

NETAPP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In millions, except per share amounts)

(Unaudited)

 

 

 

Three Months Ended January 26, 2024

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

Common Stock and

 

 

 

 

 

Other

 

 

 

 

 

 

Additional Paid-in Capital

 

 

Retained

 

 

Comprehensive

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Earnings

 

 

Loss

 

 

Total

 

Balances, October 27, 2023

 

 

206

 

 

$

825

 

 

$

 

 

$

(55

)

 

$

770

 

Net income

 

 

 

 

 

 

 

 

313

 

 

 

 

 

 

313

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock under employee
    stock award plans, net of taxes

 

 

2

 

 

 

25

 

 

 

 

 

 

 

 

 

25

 

Repurchase of common stock

 

 

(2

)

 

 

(5

)

 

 

(95

)

 

 

 

 

 

(100

)

Excise tax on net stock repurchases

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

89

 

 

 

 

 

 

 

 

 

89

 

Cash dividends declared ($0.50 per
    common share)

 

 

 

 

 

 

 

 

(103

)

 

 

 

 

 

(103

)

Balances, January 26, 2024

 

 

206

 

 

$

934

 

 

$

115

 

 

$

(55

)

 

$

994

 

 

 

 

 

Three Months Ended January 27. 2023

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

Common Stock and

 

 

 

 

 

Other

 

 

 

 

 

 

Additional Paid-in Capital

 

 

Retained

 

 

Comprehensive

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Earnings

 

 

Loss

 

 

Total

 

Balances, October 28, 2022

 

 

217

 

 

$

765

 

 

$

499

 

 

$

(62

)

 

$

1,202

 

Net income

 

 

 

 

 

 

 

 

65

 

 

 

 

 

 

65

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

7

 

 

 

7

 

Issuance of common stock under employee
    stock award plans, net of taxes

 

 

 

 

 

43

 

 

 

 

 

 

 

 

 

43

 

Repurchase of common stock

 

 

(3

)

 

 

(12

)

 

 

(188

)

 

 

 

 

 

(200

)

Stock-based compensation

 

 

 

 

 

93

 

 

 

 

 

 

 

 

 

93

 

Cash dividends declared ($0.50 per
    common share)

 

 

 

 

 

 

 

 

(108

)

 

 

 

 

 

(108

)

Balances, January 27, 2023

 

 

214

 

 

$

889

 

 

$

268

 

 

$

(55

)

 

$

1,102

 

 

See accompanying notes to condensed consolidated financial statements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7


 

NETAPP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In millions, except per share amounts)

(Unaudited)

 

 

Nine Months Ended January 26, 2024

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

Common Stock and

 

 

 

 

 

Other

 

 

 

 

 

 

Additional Paid-in Capital

 

 

Retained

 

 

Comprehensive

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Earnings

 

 

Loss

 

 

Total

 

Balances, April 28, 2023

 

 

212

 

 

$

945

 

 

$

265

 

 

$

(51

)

 

$

1,159

 

Net income

 

 

 

 

 

 

 

 

695

 

 

 

 

 

 

695

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(4

)

 

 

(4

)

Issuance of common stock under employee
    stock award plans, net of taxes

 

 

5

 

 

 

(8

)

 

 

 

 

 

 

 

 

(8

)

Repurchase of common stock

 

 

(11

)

 

 

(96

)

 

 

(704

)

 

 

 

 

 

(800

)

Excise tax on net stock repurchases

 

 

 

 

 

(5

)

 

 

 

 

 

 

 

 

(5

)

Stock-based compensation

 

 

 

 

 

265

 

 

 

 

 

 

 

 

 

265

 

Modification of liability-classified awards

 

 

 

 

 

4

 

 

 

 

 

 

 

 

 

4

 

Cash dividends declared ($1.50 per
    common share)

 

 

 

 

 

(171

)

 

 

(141

)

 

 

 

 

 

(312

)

Balances, January 26, 2024

 

 

206

 

 

$

934

 

 

$

115

 

 

$

(55

)

 

$

994

 

 

 

 

Nine Months Ended January 27, 2023

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

Common Stock and

 

 

 

 

 

Other

 

 

 

 

 

 

Additional Paid-in Capital

 

 

Retained

 

 

Comprehensive

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Earnings

 

 

Loss

 

 

Total

 

Balances, April 29, 2022

 

 

220

 

 

$

760

 

 

$

122

 

 

$

(44

)

 

$

838

 

Net income

 

 

 

 

 

 

 

 

1,029

 

 

 

 

 

 

1,029

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(11

)

 

 

(11

)

Issuance of common stock under employee
    stock award plans, net of taxes

 

 

4

 

 

 

34

 

 

 

 

 

 

 

 

 

34

 

Repurchase of common stock

 

 

(10

)

 

 

(37

)

 

 

(663

)

 

 

 

 

 

(700

)

Stock-based compensation

 

 

 

 

 

238

 

 

 

 

 

 

 

 

 

238

 

Cash dividends declared ($1.50 per
    common share)

 

 

 

 

 

(106

)

 

 

(220

)

 

 

 

 

 

(326

)

Balances, January 27, 2023

 

 

214

 

 

$

889

 

 

$

268

 

 

$

(55

)

 

$

1,102

 

 

See accompanying notes to condensed consolidated financial statements.

8


 

NETAPP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

 

1. Description of Business and Significant Accounting Policies

NetApp, Inc. (we, us, NetApp, or the Company) makes data infrastructure intelligent by combining unified data storage, integrated data services, and CloudOps solutions. NetApp creates silo-free infrastructure, harnessing observability and artificial intelligence to enable seamless data management. We provide a full range of enterprise-class software, systems and services that customers use to transform their data infrastructures across data types, workloads, and environments to realize business possibilities.

Basis of Presentation and Preparation

Our fiscal year is reported on a 52- or 53-week year ending on the last Friday in April. An additional week is included in the first fiscal quarter approximately every six years to realign fiscal months with calendar months. Fiscal years 2024 and 2023, ending on April 26, 2024 and April 28, 2023, respectively, are each 52-week years, with 13 weeks in each quarter.

The accompanying unaudited condensed consolidated financial statements have been prepared by the Company, and reflect all adjustments, consisting only of normal recurring adjustments, that are, in the opinion of management, necessary for the fair presentation of our financial position, results of operations, comprehensive income, cash flows and stockholders’ equity for the interim periods presented. The statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information. Accordingly, these statements do not include all information and footnotes required by GAAP for annual consolidated financial statements, and should be read in conjunction with our audited consolidated financial statements as of and for the fiscal year ended April 28, 2023 contained in our Annual Report on Form 10-K. The results of operations for the three and nine months ended January 26, 2024 are not necessarily indicative of the operating results to be expected for the full fiscal year or future operating periods.

The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Such estimates include, but are not limited to, revenue recognition, reserves and allowances; inventory valuation; valuation of goodwill and intangibles; restructuring reserves; employee benefit accruals; stock-based compensation; loss contingencies; investment impairments; income taxes and fair value measurements. Actual results could differ materially from those estimates, the anticipated effects of which have been incorporated, as applicable, into management's estimates as of January 26, 2024.

2. Recent Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which expands the disclosures required for income taxes. This ASU is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The amendment should be applied on a prospective basis while retrospective application is permitted. We are currently evaluating the effect of this pronouncement on our income tax disclosures.

Although there are other new accounting pronouncements issued or proposed by the FASB that we have adopted or will adopt, as applicable, we do not believe any of these accounting pronouncements had or will have a material impact on our consolidated financial position, operating results, cash flows or disclosures.

 

3. Business Combination

Fiscal 2023 Acquisition

Instaclustr Acquisition

On May 20, 2022, we acquired all the outstanding shares of privately-held Instaclustr US Holding, Inc. (Instaclustr) for approximately $498 million. Instaclustr is a leading platform provider of fully managed open-source database, pipeline and workflow applications delivered as-a-service.

The acquisition-date values of the assets acquired and liabilities assumed are as follows (in millions):

9


 

 

 

Amount

 

Cash

 

$

4

 

Intangible assets

 

 

107

 

Goodwill

 

 

413

 

Other assets

 

 

19

 

Total assets acquired

 

 

543

 

Liabilities assumed

 

 

(45

)

Total purchase price

 

$

498

 

The components of the intangible assets acquired were as follows (in millions, except useful life):

 

 

Amount

 

 

Estimated useful life
(years)

 

Developed technology

 

$

55

 

 

 

5

 

Customer contracts/relationships

 

 

50

 

 

 

5

 

Trade name

 

 

2

 

 

 

3

 

Total intangible assets

 

$

107

 

 

 

 

The acquired net assets and assumed debt of Instaclustr were recorded at their estimated values. We determined the estimated values with the assistance of valuations and appraisals performed by third party specialists and estimates made by management. We expect to realize revenue synergies and anticipate opportunities for growth through the ability to leverage additional future products and capabilities. These factors, among others, contributed to a purchase price in excess of the estimated value of their identifiable net assets acquired, and as a result, we have recorded goodwill in connection with the acquisition. The goodwill is not deductible for income tax purposes.

The results of operations related to the acquisition of Instaclustr have been included in our condensed consolidated statements of income from the acquisition date. Pro forma results of operations have not been presented because the impact from the acquisition was not material to our consolidated results of operations.

4. Goodwill and Purchased Intangible Assets, Net

Goodwill by reportable segment as of January 26, 2024 is as follows (in millions):

 

 

Amount

 

Hybrid Cloud

 

$

1,714

 

Public Cloud

 

 

1,045

 

Total goodwill

 

$

2,759

 

Purchased intangible assets, net are summarized below (in millions):

 

 

January 26,
 2024

 

 

April 28,
  2023

 

 

 

Gross

 

 

Accumulated

 

 

Net

 

 

Gross

 

 

Accumulated

 

 

Net

 

 

 

Assets

 

 

Amortization

 

 

Assets

 

 

Assets

 

 

Amortization

 

 

Assets

 

Developed technology

 

$

179

 

 

$

(100

)

 

$

79

 

 

$

212

 

 

$

(107

)

 

$

105

 

Customer contracts/relationships