NetApp 1FQ20 Revenue to Be Down 17% From 1FQ19

On August 1, 2019 NetApp, Inc. organized a 1FQ20 guidance call before providing complete 1FQ20 results on next August 14.

He are some quotes from company’s executives:

George Kurian, president and CEO:
“We are clearly disappointed with the results of our first quarter.
“Two of our largest customers that were impacted by the China dispute, shrank their capital spending by 30% year on year and that has meaningful consequences even to IT hardware spending.
“We saw a softening of the IT hardware spending environment in the back half of the quarter. However, the slowdown was not across the board. Our APAC, Europe and U.S. public sector geographies were mostly on track.
“Our largest global enterprise accounts have taken a decidedly more cautious view of the macro-economic environment. These large accounts are spending considerably less in total CapEx this year compared to calendar year 2018. In the past several years, we’ve had a focus on growing in our top mobile customers. We’ve made great progress in some, but need to do more to expand our share in a broader set of these customers. Because of our reliance on some of these very large accounts, we may be more susceptible to the slowdown in spending related to the macro.
“In the Americas, we continue to experience execution issues in acquiring new accounts and selling Private Cloud and Cloud Data Services offerings.
“We know we need to be in more transactions, in more customers, selling our full portfolio to achieve our desired growth rate. Additionally, this weakness was contained to our storage business. Both Private Cloud and Cloud Data Services grew Y/Y in 1FQ20.”

Ronald Pasek, EVP and CFO:
“Our first quarter preliminary revenues are expected to be between $1.22 billion and $1.23 billion, down approximately 17% from the 1FQ19. As a reminder, the 1FQ19 compare includes $90 million in ELA revenues which did not repeat this quarter. Adjusting for ELAs, 1FQ20 preliminary revenues would have been down approximately 12%. Our preliminary 1FQ20 non-GAAP gross margin is expected to be above our guidance range of 65%, due primarily to the mix shift toward higher margin and maintenance revenue as a result of the weakness in product sales.
“For FY20, we expect revenues to be down between 5% and 10% Y/Y.”