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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 October 25, 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 November 21, 2024, there were 203,306,424 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

3

Condensed Consolidated Statements of Income

4

Condensed Consolidated Statements of Comprehensive Income

5

Condensed Consolidated Statements of Cash Flows

6

 

 

Condensed Consolidated Statements of Stockholders’ Equity

 

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

37

Item 4

Controls and Procedures

38

 

 

 

PART II — OTHER INFORMATION

 

 

 

 

 

Item 1

Legal Proceedings

39

Item 1A

Risk Factors

39

Item 2

Unregistered Sales of Equity Securities and Use of Proceeds

39

Item 3

Defaults upon Senior Securities

39

Item 4

Mine Safety Disclosures

39

Item 5

Other Information

39

Item 6

Exhibits

40

SIGNATURE

41

 

 

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)

 

 

 

October 25,
 2024

 

 

April 26,
  2024

 

ASSETS

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,478

 

 

$

1,903

 

Short-term investments

 

 

744

 

 

 

1,349

 

Accounts receivable

 

 

873

 

 

 

1,007

 

Inventories

 

 

317

 

 

 

186

 

Other current assets

 

 

527

 

 

 

452

 

Total current assets

 

 

3,939

 

 

 

4,897

 

Property and equipment, net

 

 

593

 

 

 

604

 

Goodwill

 

 

2,759

 

 

 

2,759

 

Purchased intangible assets, net

 

 

96

 

 

 

124

 

Other non-current assets

 

 

1,617

 

 

 

1,503

 

Total assets

 

$

9,004

 

 

$

9,887

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

554

 

 

$

517

 

Accrued expenses

 

 

969

 

 

 

1,013

 

Current portion of long-term debt

 

 

749

 

 

 

400

 

Short-term deferred revenue and financed unearned services revenue

 

 

2,045

 

 

 

2,176

 

Total current liabilities

 

 

4,317

 

 

 

4,106

 

Long-term debt

 

 

1,244

 

 

 

1,992

 

Other long-term liabilities

 

 

496

 

 

 

585

 

Long-term deferred revenue and financed unearned services revenue

 

 

2,055

 

 

 

2,058

 

Total liabilities

 

 

8,112

 

 

 

8,741

 

 

 

 

 

 

 

 

Commitments and contingencies (Note 14)

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

Common stock and additional paid-in capital, $0.001 par value; 203 and 206 shares issued and outstanding as of October 25, 2024 and April 26, 2024, respectively

 

 

947

 

 

 

997

 

Retained earnings

 

 

 

 

 

208

 

Accumulated other comprehensive loss

 

 

(55

)

 

 

(59

)

Total stockholders' equity

 

 

892

 

 

 

1,146

 

Total liabilities and stockholders' equity

 

$

9,004

 

 

$

9,887

 

 

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

 

 

Six Months Ended

 

 

 

October 25,
 2024

 

 

October 27,
2023

 

 

October 25,
 2024

 

 

October 27,
2023

 

Net revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Product

 

$

768

 

 

$

706

 

 

$

1,437

 

 

$

1,296

 

Services

 

 

890

 

 

 

856

 

 

 

1,762

 

 

 

1,698

 

Net revenues

 

 

1,658

 

 

 

1,562

 

 

 

3,199

 

 

 

2,994

 

Cost of revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of product

 

 

307

 

 

 

276

 

 

 

576

 

 

 

541

 

Cost of services

 

 

174

 

 

 

176

 

 

 

348

 

 

 

347

 

Total cost of revenues

 

 

481

 

 

 

452

 

 

 

924

 

 

 

888

 

Gross profit

 

 

1,177

 

 

 

1,110

 

 

 

2,275

 

 

 

2,106

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

485

 

 

 

461

 

 

 

956

 

 

 

929

 

Research and development

 

 

257

 

 

 

262

 

 

 

509

 

 

 

509

 

General and administrative

 

 

77

 

 

 

75

 

 

 

152

 

 

 

149

 

Restructuring charges

 

 

12

 

 

 

5

 

 

 

29

 

 

 

31

 

Acquisition-related expense

 

 

1

 

 

 

3

 

 

 

2

 

 

 

6

 

Total operating expenses

 

 

832

 

 

 

806

 

 

 

1,648

 

 

 

1,624

 

Income from operations

 

 

345

 

 

 

304

 

 

 

627

 

 

 

482

 

Other income, net

 

 

15

 

 

 

11

 

 

 

32

 

 

 

19

 

Income before income taxes

 

 

360

 

 

 

315

 

 

 

659

 

 

 

501

 

Provision for income taxes

 

 

61

 

 

 

82

 

 

 

112

 

 

 

119

 

Net income

 

$

299

 

 

$

233

 

 

$

547

 

 

$

382

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.47

 

 

$

1.12

 

 

$

2.67

 

 

$

1.82

 

Diluted

 

$

1.42

 

 

$

1.10

 

 

$

2.59

 

 

$

1.79

 

Shares used in net income per share calculations:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

204

 

 

 

208

 

 

 

205

 

 

 

210

 

Diluted

 

 

210

 

 

 

211

 

 

 

211

 

 

 

214

 

See accompanying notes to condensed consolidated financial statements.

 

4


 

NETAPP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

(Unaudited)

 

 

Three Months Ended

 

 

Six Months Ended

 

October 25,
 2024

 

 

October 27,
2023

 

 

October 25,
 2024

 

 

October 27,
2023

 

 

Net income

 

$

299

 

 

$

233

 

 

$

547

 

 

$

382

 

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

3

 

 

 

(7

)

 

 

4

 

 

 

(5

)

 

Unrealized gains on available-for-sale securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized holding gains arising during the period

 

 

1

 

 

 

 

 

 

1

 

 

 

 

 

Unrealized gains (losses) on cash flow hedges:

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized holding gains (losses) arising during the period

 

 

(2

)

 

 

3

 

 

 

(3

)

 

 

5

 

 

Reclassification adjustments for losses (gains) included in net income

 

 

2

 

 

 

(3

)

 

 

2

 

 

 

(4

)

 

Other comprehensive income (loss)

 

 

4

 

 

 

(7

)

 

 

4

 

 

 

(4

)

 

Comprehensive income

 

$

303

 

 

$

226

 

 

$

551

 

 

$

378

 

 

 

 

See accompanying notes to condensed consolidated financial statements.

 

5


 

NETAPP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

 

 

Six Months Ended

 

 

 

October 25,
 2024

 

 

October 27,
2023

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income

 

$

547

 

 

$

382

 

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

 

 

 

 

 

 

Depreciation and amortization

 

 

126

 

 

 

128

 

Non-cash operating lease cost

 

 

21

 

 

 

23

 

Stock-based compensation

 

 

188

 

 

 

180

 

Deferred income taxes

 

 

(69

)

 

 

(13

)

Other items, net

 

 

35

 

 

 

(27

)

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

 

 

 

 

 

 

Accounts receivable

 

 

138

 

 

 

185

 

Inventories

 

 

(132

)

 

 

46

 

Other operating assets

 

 

(107

)

 

 

(26

)

Accounts payable

 

 

36

 

 

 

14

 

Accrued expenses

 

 

(84

)

 

 

48

 

Deferred revenue and financed unearned services revenue

 

 

(164

)

 

 

(241

)

Long-term taxes payable

 

 

(91

)

 

 

(110

)

Other operating liabilities

 

 

2

 

 

 

(1

)

Net cash provided by operating activities

 

 

446

 

 

 

588

 

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of investments

 

 

(882

)

 

 

(860

)

Maturities, sales and collections of investments

 

 

1,479

 

 

 

932

 

Purchases of property and equipment

 

 

(86

)

 

 

(73

)

Other investing activities, net

 

 

2

 

 

 

 

Net cash provided by (used in) investing activities

 

 

513

 

 

 

(1

)

Cash flows from financing activities:

 

 

 

 

 

 

Proceeds from issuance of common stock under employee stock award plans

 

 

55

 

 

 

52

 

Payments for taxes related to net share settlement of stock awards

 

 

(132

)

 

 

(85

)

Repurchase of common stock

 

 

(700

)

 

 

(700

)

Repayments and extinguishment of debt

 

 

(400

)

 

 

 

Dividends paid

 

 

(213

)

 

 

(209

)

Net cash used in financing activities

 

 

(1,390

)

 

 

(942

)

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

 

 

9

 

 

 

(26

)

Net change in cash, cash equivalents and restricted cash

 

 

(422

)

 

 

(381

)

Cash, cash equivalents and restricted cash:

 

 

 

 

 

 

Beginning of period

 

 

1,909

 

 

 

2,322

 

End of period

 

$

1,487

 

 

$

1,941

 

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 October 25, 2024

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

Common Stock and

 

 

 

 

 

Other

 

 

 

 

 

 

Additional Paid-in Capital

 

 

Retained

 

 

Comprehensive

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Earnings

 

 

Loss

 

 

Total

 

Balances, July 26, 2024

 

 

205

 

 

$

988

 

 

$

 

 

$

(59

)

 

$

929

 

Net income

 

 

 

 

 

 

 

 

299

 

 

 

 

 

 

299

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

4

 

 

 

4

 

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

 

 

1

 

 

 

(35

)

 

 

 

 

 

 

 

 

(35

)

Repurchase of common stock

 

 

(3

)

 

 

(12

)

 

 

(288

)

 

 

 

 

 

(300

)

Excise tax on net stock repurchases

 

 

 

 

 

(2

)

 

 

 

 

 

 

 

 

(2

)

Stock-based compensation

 

 

 

 

 

103

 

 

 

 

 

 

 

 

 

103

 

Cash dividends declared ($0.52 per common share)

 

 

 

 

 

(95

)

 

 

(11

)

 

 

 

 

 

(106

)

Balances, October 25, 2024

 

 

203

 

 

$

947

 

 

$

 

 

$

(55

)

 

$

892

 

 

 

 

 

Three Months Ended October 27, 2023

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

Common Stock and

 

 

 

 

 

Other

 

 

 

 

 

 

Additional Paid-in Capital

 

 

Retained

 

 

Comprehensive

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Earnings

 

 

Loss

 

 

Total

 

Balances, July 28, 2023

 

 

209

 

 

$

921

 

 

$

 

 

$

(48

)

 

$

873

 

Net income

 

 

 

 

 

 

 

 

233

 

 

 

 

 

 

233

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(7

)

 

 

(7

)

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

 

 

1

 

 

 

(20

)

 

 

 

 

 

 

 

 

(20

)

Repurchase of common stock

 

 

(4

)

 

 

(67

)

 

 

(233

)

 

 

 

 

 

(300

)

Excise tax on net stock repurchases

 

 

 

 

 

(3

)

 

 

 

 

 

 

 

 

(3

)

Stock-based compensation

 

 

 

 

 

93

 

 

 

 

 

 

 

 

 

93

 

Modification of liability-classified awards

 

 

 

 

 

4

 

 

 

 

 

 

 

 

 

4

 

Cash dividends declared ($0.50 per common share)

 

 

 

 

 

(103

)

 

 

 

 

 

 

 

 

(103

)

Balances, October 27, 2023

 

 

206

 

 

$

825

 

 

$

 

 

$

(55

)

 

$

770

 

 

See accompanying notes to condensed consolidated financial statements.

 

7


 

NETAPP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In millions, except per share amounts)

(Unaudited)

 

 

Six Months Ended October 25, 2024

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

Common Stock and

 

 

 

 

 

Other

 

 

 

 

 

 

Additional Paid-in Capital

 

 

Retained

 

 

Comprehensive

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Earnings

 

 

Loss

 

 

Total

 

Balances, April 26, 2024

 

 

206

 

 

$

997

 

 

$

208

 

 

$

(59

)

 

$

1,146

 

Net income

 

 

 

 

 

 

 

 

547

 

 

 

 

 

 

547

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

4

 

 

 

4

 

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

 

 

3

 

 

 

(77

)

 

 

 

 

 

 

 

 

(77

)

Repurchase of common stock

 

 

(6

)

 

 

(28

)

 

 

(672

)

 

 

 

 

 

(700

)

Excise tax on net stock repurchases

 

 

 

 

 

(3

)

 

 

 

 

 

 

 

 

(3

)

Stock-based compensation

 

 

 

 

 

188

 

 

 

 

 

 

 

 

 

188

 

Cash dividends declared ($1.04 per common share)

 

 

 

 

 

(130

)

 

 

(83

)

 

 

 

 

 

(213

)

Balances, October 25, 2024

 

 

203

 

 

$

947

 

 

$

 

 

$

(55

)

 

$

892

 

 

 

 

Six Months Ended October 27, 2023

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

382

 

 

 

 

 

 

382

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(4

)

 

 

(4

)

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

 

 

3

 

 

 

(33

)

 

 

 

 

 

 

 

 

(33

)

Repurchase of common stock

 

 

(9

)

 

 

(91

)

 

 

(609

)

 

 

 

 

 

(700

)

Excise tax on net stock repurchases