NetApp Inc. NTAP reported fiscal second-quarter 2018 non-GAAP earnings of 81 cents per share, beating the Zacks Consensus Estimate of 69 cents per share. The figure surged 35% on a year-over-year basis and was also within the guided range.
Revenues of $1.42 billion increased 6% from the year-ago quarter, surpassing the Zacks Consensus Estimate of $1.38 billion. The figure met management’s expectation.
The impressive second-quarter results were driven by the company’s successful ongoing transition from underperforming segments to growth oriented sectors like all-flash arrays and hybrid cloud and Data Fabric strategies.
NetApp stock has gained 29.9% year to date, substantially outperforming the 21.9% rally of the industry it belongs to.
Segment Details
Product revenues (56.8% of total revenues) increased 14% year over year to $807 million. This was the fourth consecutive quarter of product revenue growth, which per the company was mainly driven by its “successful pivot to the growth areas of the market.”
Strategic solutions comprised 69% of net product revenues. It increased 23% on a year-over-year basis. Mature solutions revenues declined 3.1% from the year-ago quarter.
Software Maintenance revenues of $375 million (26.4% of total revenue) decreased 3.4% from the year-ago quarter. Revenues from Hardware Maintenance & Other Services (16.8% of total revenue) declined 8% year over year to $240 million.
Management was particularly optimistic about its expanded partnership with Microsoft MSFT Azure for the development of the industry’s first cloud-based enterprise Network File System (NFS) to be delivered via Azure.
The company is positive about making the most of the exponential rate of data growth with its cloud-integrated all-flash solutions that fits well with hybrid cloud infrastructure. During the second quarter, the company’s all-flash array business surged 60% on a year-over-year basis. Its annualized net revenue run rate was $1.7 billion.
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