NetApp

$NTAP (-6.14%) ’s value comes from its ability to drive revenue growth into earnings growth through a business with solid margins.

The stock trades at a reasonable valuation with a forward P/E of 16.8x, reflecting strong earnings growth and potential in AI and cloud segments.

This one should be on investors' watchlist.

$NTAP (-6.14%) 's position in the data management and AI market, as well as its expanded flash portfolio, make it well-positioned for top-line growth.

NetApp's results for FY24 thus far reflect a sequential upward trend in billings, revenue, and its all-flash array annualized revenue run rate.

We're expecting more strong results well into FY25 and beyond...

$NTAP (-6.14%) | NetApp Q2 Earnings Highlights:

🔹 Adj EPS: $1.87 (Est. $1.78) 🟢; UP +18% YoY

🔹 Revenue: $1.66B (Est. $1.65B) 🟢; UP +6% YoY

Q3 Guidance:

🔹 Revenue: $1.61B-$1.76B (Est. $1.68B) 🟡

🔹 Adjusted EPS: $1.85-$1.95 (Est. $1.85) 🟡

FY25 Guidance:

🔹 Revenue: $6.54B-$6.74B (Prev. $6.48B-$6.68B, Est. $6.68B) 🟡; UP +8%-9% YoY

🔹 Adj EPS: $7.20-$7.40 (Prev. $7.00-$7.20, Est. $7.11) 🟡

🔹 Adjusted Operating Margin: 28%-28.5% (Prev. 27%-28%) 🟢

Q2 Segment Performance:

🔹 Hybrid Cloud Revenue: $1.49B; UP +5.8% YoY (Met Estimate)

🔹 Public Cloud Revenue: $168M (Est. $164.3M) 🟢; UP +9.1% YoY

🔹 Product Revenue: $768M (Est. $769.8M) 🟡; UP +8.8% YoY

🔹 Support Revenue: $635M (Est. $633.5M) 🟢; UP +1.9% YoY

Profitability Metrics:

🔹 Non-GAAP Gross Margin: 71.5% (Est. 71.6%) 🟡

🔹 Non-GAAP Operating Margin: 29% (Est. 27.9%) 🟢

🔹 GAAP Net Income: $299M; UP +28% YoY

🔹 Free Cash Flow: $105M

Business Highlights:

🔹 All-Flash Array ARR: $3.8B; UP +19% YoY

🔹 Cloud Storage Services: +43% YoY

🔹 Expanded partnerships with Google Cloud and AWS for AI-ready infrastructure.

Capital Allocation:

🔹 Cash & Investments: $2.22B

🔹 Shareholder Returns: $406M through share repurchases and dividends.

🔹 Dividend: $0.52/share payable January 22, 2025.

Management Commentary:

🔸 CEO George Kurian:

"Our strong Q2 performance was driven by record-breaking all-flash storage and robust cloud storage growth. We are well-positioned to outpace the market and deliver outstanding value for our customers and shareholders."