NetApp, Inc. [NTAP] Filings

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10-Q 1 ntap-20211029.htm 10-Q 10-Q

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 29, 2021


☐	TRANSITION QUARTERLY 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.

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 30, 2021, there were 222,277,741 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 October 29, 2021 and April 30, 2021	3
	Condensed Consolidated Statements of Income for the Three and Six Months Ended October 29, 2021 and October 30, 2020	4
	Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended October 29, 2021 and October 30, 2020	5
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended October 29, 2021 and October 30, 2020	6
	Condensed Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended October 29, 2021 and October 30, 2020	7
	Notes to Condensed Consolidated Financial Statements	9
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3	Quantitative and Qualitative Disclosures About Market Risk	40
Item 4	Controls and Procedures	41

PART II — OTHER INFORMATION

Item 1	Legal Proceedings	42
Item 1A	Risk Factors	42
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	55
Item 3	Defaults upon Senior Securities	55
Item 4	Mine Safety Disclosures	55
Item 5	Other Information	55
Item 6	Exhibits	56
SIGNATURE		57

TRADEMARKS

© 2021 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.

PART I — FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (Unaudited)

NETAPP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except par value)

(Unaudited)


	October 29, 2021			April 30, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	4,509		$	4,529
Short-term investments		39			67
Accounts receivable		647			945
Inventories		155			114
Other current assets		319			346
Total current assets		5,669			6,001
Property and equipment, net		549			525
Goodwill		2,050			2,039
Other intangible assets, net		87			101
Other non-current assets		867			694
Total assets	$	9,222		$	9,360

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	432		$	420
Accrued expenses		796			970
Short-term deferred revenue and financed unearned services revenue		1,967			2,062
Total current liabilities		3,195			3,452
Long-term debt		2,634			2,632
Other long-term liabilities		735			650
Long-term deferred revenue and financed unearned services revenue		1,899			1,941
Total liabilities		8,463			8,675

Commitments and contingencies (Note 15)

Stockholders' equity:
Common stock and additional paid-in capital, $0.001 par value; 223 and 222 shares issued and outstanding as of October 29, 2021 and April 30, 2021, respectively		603			504
Retained earnings		194			211
Accumulated other comprehensive loss		(38	)		(30	)
Total stockholders' equity		759			685
Total liabilities and stockholders' equity	$	9,222		$	9,360

See accompanying notes to condensed consolidated financial statements.

NETAPP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per share amounts)

(Unaudited)


	Three Months Ended						Six Months Ended
	October 29, 2021			October 30, 2020			October 29, 2021			October 30, 2020
Net revenues:
Product	$	814		$	749		$	1,544		$	1,376
Services		752			667			1,480			1,343
Net revenues		1,566			1,416			3,024			2,719
Cost of revenues:
Cost of product		372			360			701			676
Cost of services		135			123			265			238
Total cost of revenues		507			483			966			914
Gross profit		1,059			933			2,058			1,805
Operating expenses:
Sales and marketing		465			432			916			861
Research and development		216			212			426			445
General and administrative		76			67			142			128
Restructuring charges		7			37			29			42
Acquisition-related expense		1			3			2			11
Total operating expenses		765			751			1,515			1,487
Income from operations		294			182			543			318
Other expense, net		(14	)		(7	)		(26	)		(39	)
Income before income taxes		280			175			517			279
Provision for income taxes		56			38			91			65
Net income	$	224		$	137		$	426		$	214
Net income per share:
Basic	$	1.00		$	0.62		$	1.91		$	0.96
Diluted	$	0.98		$	0.61		$	1.86		$	0.96
Shares used in net income per share calculations:
Basic		223			222			223			222
Diluted		229			224			229			223

See accompanying notes to condensed consolidated financial statements.

NETAPP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

(Unaudited)


	Three Months Ended						Six Months Ended
	October 29, 2021			October 30, 2020			October 29, 2021			October 30, 2020
Net income	$	224		$	137		$	426		$	214
Other comprehensive income (loss):
Foreign currency translation adjustments		(4	)		—			(8	)		9
Unrealized gains (losses) on available-for-sale securities:
Unrealized holding gains (losses) arising during the period		—			(1	)		(1	)		1
Unrealized gains (losses) on cash flow hedges:
Unrealized holding gains (losses) arising during the period		1			1			2			(8	)
Reclassification adjustments for (gains) losses included in net income		(1	)		7			(1	)		8
Other comprehensive income (loss)		(4	)		7			(8	)		10
Comprehensive income	$	220		$	144		$	418		$	224

See accompanying notes to condensed consolidated financial statements.

NETAPP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)


	Six Months Ended
	October 29, 2021			October 30, 2020
Cash flows from operating activities:
Net income	$	426		$	214
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		92			105
Non-cash operating lease cost		28			26
Stock-based compensation		115			103
Deferred income taxes		(32	)		—
Other items, net		(12	)		28
Changes in assets and liabilities, net of acquisitions of businesses:
Accounts receivable		292			197
Inventories		(41	)		29
Other operating assets		34			8
Accounts payable		11			(59	)
Accrued expenses		(206	)		(69	)
Deferred revenue and financed unearned services revenue		(97	)		(118	)
Long-term taxes payable		(65	)		(46	)
Other operating liabilities		(5	)		(17	)
Net cash provided by operating activities		540			401
Cash flows from investing activities:
Purchases of investments		(6	)		(3	)
Maturities, sales and collections of investments		32			110
Purchases of property and equipment		(97	)		(92	)
Proceeds from sale of properties		—			6
Acquisitions of businesses, net of cash acquired		(14	)		(350	)
Other investing activities, net		—			8
Net cash used in investing activities		(85	)		(321	)
Cash flows from financing activities:
Proceeds from issuance of common stock under employee stock award plans		53			49
Payments for taxes related to net share settlement of stock awards		(63	)		(34	)
Repurchase of common stock		(225	)		—
Repayments of commercial paper notes, original maturities of three months or less, net		—			(420	)
Issuance of debt, net of issuance costs		—			2,057
Repayments and extinguishment of debt		—			(689	)
Dividends paid		(224	)		(214	)
Other financing activities, net		(2	)		(3	)
Net cash (used in) provided by financing activities		(461	)		746
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(13	)		44
Net change in cash, cash equivalents and restricted cash		(19	)		870
Cash, cash equivalents and restricted cash:
Beginning of period		4,535			2,666
End of period	$	4,516		$	3,536

See accompanying notes to condensed consolidated financial statements.

NETAPP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In millions, except per share amounts)

(Unaudited)


	Three Months Ended October 29, 2021
										Accumulated
	Common Stock and									Other
	Additional Paid-in Capital						Retained			Comprehensive
	Shares			Amount			Earnings			Loss			Total
Balances, July 30, 2021		224		$	550		$	204		$	(34	)	$	720
Net income		—			—			224			—			224
Other comprehensive loss		—			—			—			(4	)		(4	)
Issuance of common stock under employee stock award plans, net of taxes		1			(6	)		—			—			(6	)
Repurchase of common stock		(2	)		(3	)		(122	)		—			(125	)
Stock-based compensation		—			62			—			—			62
Cash dividends declared ($0.50 per common share)		—			—			(112	)		—			(112	)
Balances, October 29, 2021		223		$	603		$	194		$	(38	)	$	759


	Three Months Ended October 30, 2020
							Accumulated
	Common Stock and						Other
	Additional Paid-in Capital				Retained		Comprehensive
	Shares		Amount		Earnings		Loss			Total
Balances, July 31, 2020		222	$	323	$	—	$	(39	)	$	284
Net income		—		—		137

NetApp, Inc. [NTAP] Filings
10-Q	[2021-12-02]
10-Q	[2021-09-02]
10-K	[2021-06-21]
10-Q	[2021-03-01]
10-Q	[2020-12-03]
10-Q	[2020-08-28]
10-K	[2020-06-15]
10-Q	[2020-02-18]
10-Q	[2019-11-18]
10-Q	[2019-08-19]
10-K	[2019-06-18]
10-Q	[2019-02-19]
10-Q	[2018-11-19]
10-Q	[2018-08-21]
10-K	[2018-06-19]
10-Q	[2018-02-22]
10-Q	[2017-11-29]
10-Q	[2017-08-29]
10-K	[2017-06-20]
10-Q	[2017-02-28]
10-Q	[2016-12-02]
10-Q	[2016-09-02]
10-K	[2016-06-22]
10-Q	[2016-03-07]
10-Q	[2015-12-02]
10-Q	[2015-09-08]
10-K	[2015-06-12]
10-Q	[2015-02-25]
10-Q	[2014-11-25]
10-Q	[2014-08-28]
10-K	[2014-06-17]
10-Q	[2014-02-26]
10-Q	[2013-11-26]
10-Q	[2013-08-29]
10-K	[2013-06-17]
10-Q	[2013-02-28]
10-Q	[2012-11-30]
10-Q	[2012-08-30]
10-K	[2012-06-19]
10-Q	[2012-03-05]