Flash Helps Offset Flagging Sales in NetApp's Q4

By Pedro Hernandez

Increased enterprise flash adoption is helping NetApp improve its margins even as sales take a bit of a breather.

Sunnyvale, Calif.-based NetApp, an enterprise data storage systems provider, this week announced that revenue has slipped to $1.649 billion during the company's fourth quarter (Q4) ended April 25, compared to $1.71 billion a year ago. In total, the company racked up $6.325 billion in sales during its 2014 fiscal year (FY14), a modest drop from the $6.332 billion that the company generated in FY13.

Net income (non-GAAP) during Q4 was $284 million or $0.84 per share, reported the company, beating Wall Street estimates. Analysts had been banking on an earnings per share figure of $0.79.

NetApp's profits spiked during FY14. The company said net income came in at $968 million, or $2.78 per share, for the year. By comparison, NetApp reported net income of $841 million, or $2.28 per share, in FY13. The July 22 dividend is being raised to $0.165 per share, added the company.

In prepared remarks, NetApp CEO Tom Georgens said his company "saw market share gains and delivered a solid operational performance in fiscal year 2014 highlighted by margin expansion and strong cash generation." He credits the gains to the company's clustered Data ONTAP data storage platform, its flash-based product slate and a cloud-centric solutions strategy.

NetApp's portfolio got a big bump during Q4 when the company launched a high-performance, cloud-friendly hybrid arrays. Dubbed the FAS8000, the unified system (SAN and NAS) product line leverages flash to deliver blistering performance of up to 2.6 million IOPs. Brendon Howe, VP of product and solutions marketing for NetApp told InfoStor that the FAS8000 was the "most capable and powerful boxes that we ever shipped.

Georgens continues to be bullish on flash. During a May 21 conference call, the CEO revealed NetApp had sold 18 petabytes of flash last quarter. He referred to NetApp as "the leader in the flash market with the best positioned portfolio both in terms of what is available today and what is coming."

Data ONTAP, NetApp's storage management software foundation, also contributed to the cause. Georgens said "clustered nodes grew 242 percent from fiscal year 2013" and the clustered ONTAP attach rate "increased across all of our product lines with high-end platforms approaching 50 percent in Q4."

"Most notably, the attach rate of our new FAS8000 product line was over 60 percent," added Georgens. "To date, we have shipped over one Exabyte of storage managed by clustered ONTAP systems."

Pedro Hernandez is a contributing editor at InfoStor. Follow him on Twitter @ecoINSITE.

Photo courtesy of Shutterstock.

This article was originally published on May 23, 2014