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November 19, 2009
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NetApp Inc. (NTAP) reported second-quarter EPS of 37 cents, exceeding the Zacks Consensus estimate of 19 cents per share.
Revenues
The company reported second-quarter revenues of $910.0 million, down 0.2% from $912.0 million reported in the year-ago quarter. Foreign currency losses decreased the company’s year-over-year growth by just over 1 percentage point.
Product revenue for the quarter was $525.1 million, down 7.9% from $570.4 million reported in the year-ago quarter. Products represented around 58% of total revenues. Product revenues include additional revenues from a software, which was 15% of total revenues. Software Entitlement & Maintenance revenues for the quarter were $169.8 million, up 11.2% from $152.7 million reported in the year-ago quarter. Service revenues for the quarter were $215.0 million, up 14.1% from $188.5 million reported in the year-ago quarter. Service revenues mainly consist of hardware maintenance support and professional services.
Margin
Gross margin for the quarter was 66.7%, up from 59.9% reported in the year-ago quarter. Gross margin for the quarter was nearly 4 percentage points higher than the first quarter, primarily due to significantly higher than product margins.
Operating Results
Income from operations for the quarter was $115.4 million (12.7% of revenue), up 76% from $65.6 million (7.2% of revenue) in the year-ago quarter.
GAAP net income for the second quarter of 2010 was $96 million, or 27 cents per share compared to GAAP net income of $43 million, or 13 cents per share for the same period in the prior year.
On a non-GAAP basis, net income for the second fiscal quarter of 2010 was $130 million, or $0.37 per share, compared to non-GAAP net income of $92.0 million, or 28 cents per share in the same period one year ago.
Balance Sheet, Cash Flow & Capex
The company exited the second quarter with cash and short-term investments of nearly $3 billion, or a net increase in cash and short term investments of $293 million over the first quarter. At the end of the second quarter, the company’s cash and short-term investments held in the U.S. were 49% of the total. The total deferred revenue was $1.7 billion at the end of the quarter, reflecting a sequential increase of approximately $7.3 million this quarter and a 9% increase from the year-ago quarter. Cash from operations for the quarter was $267 million, up 29.0% from the year-ago quarter. The company incurred capital expenditures of about $23 million this quarter, down from $25 million last quarter.
Guidance
The company expects third-quarter revenues in the range of $935 million to $955 million. NetApp expects the third-quarter GAAP earnings per share in the range of approximately 24 cents to 25 cents and non-GAAP earnings per share between 36 cents and 37 cents per share.
Read the full analyst report on "NTAP"
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