As FQ1 results beat expectations, NetApp soars


NetApp (NASDAQ:NTAP), a provider of cloud-based, data-centric services, was trading 9% higher pre-market after the company’s FQ1’23 profits topped expectations and it updated its FQ2’23 earnings guidance.

Revenue of $1.59B (+8.9% Y/Y) topped expectations by $40M, and FQ1 non-GAAP EPS of $1.20 beat expectations by $0.10. Demand from a wide range of markets and products within the company’s portfolio drove the results.

During the conference call for the company’s earnings, CFO Mike Berry stated that “strong execution delivered Q1 billings of $1.56B, up 13% Y/Y.” For FQ2, net revenues of between $1.595 billion and $1.745 billion are anticipated ($1.66 billion consensus), and non-GAAP EPS of between $1.28 and $1.38 billion ($1.32 billion consensus).

Non-GAAP operating margin is probably going to be about 23%, while non-GAAP gross margin is anticipated to be between 66% and 67%. The Q2 guidance is based on a share count of 223 million and a $5 million net interest expense.

For FY23, non-GAAP EPS is anticipated to be between $5.40 and $5.60 (vs. the consensus estimate of $5.42), and net revenues to increase between 6% and 8%.

Since supply limitations continue to have a negative impact on product margins, it is projected that non-GAAP gross margins will be in the range of 66% to 67%. Non-GAAP operating margin is anticipated to range between 23% and 24%.

According to the results call, NTAP anticipates further FX headwinds, and the FY23 guidance takes these concerns into account. According to earlier declarations, the corporation announced a quarterly dividend of $0.50 per share.

Despite “ongoing FX, supply headwinds,” a Stifel analyst saw positive outcomes.

The analyst further stated in a note, “The results benefited from a bounce-back in NTAP’s Public Cloud division following a glitch last quarter.

After a beat-and-raise quarter, a Raymond James analyst increased the price objective from $94 to $105 per share. The analyst informs clients that “ongoing supply chain problems constrain the gross product margin, but expected improvement combined with prior price hikes and favorable memory costs provide offsets; we think gross product margin can cause recovery in FY24.”

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