What Are NetApp’s’s Key Sources of Revenue?

by Trefis Team
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NetApp (NASDAQ: NTAP) has three primary businesses – Product, Software Maintenance, and Services. Below we expand on these sources of revenue, their recent performance, and what to expect going forward. You can view our interactive dashboard analysis ~  What Are NetApp’s’s Key Sources of Revenue? ~ for more details. In addition, you can see more of our data for Information Technology companies here.

NetApp’s Product Segment Accounts For Over 60% of The Company’s Total Sales


  • Revenue Contribution as of fiscal 2019:
    • Products ~ 61%
    • Services ~ 24%
    • Software Maintenance ~ 15%

Product Sales Could Grow In The Near Term Led By Transition To All-Flash Storage

  • Product segment includes revenues generated from NetApp’s storage-based hardware and related software sales. The product business is categorized into two solutions – strategic solutions and mature solutions. The solutions include configured systems (bundled hardware and software products), add-on drives (flash, disk, or hybrid), and original equipment manufacturer (OEM) products. The segment accounted for a little under 60% of the company’s total revenues in fiscal 2019.
  • Product revenue increased from $3.0 billion in fiscal 2017 to $3.8 billion in fiscal 2019, led by growth in enterprise demand.
  • Looking forward, the segment revenues could grow to $4.1 billion in fiscal 2020, led by continued transition to all-flash arrays. However, sales could be impacted by a slowdown in the enterprise market, given the expected launch of new processors in the near term.
  • NetApp’s services revenue refers to revenues earned from maintenance of hardware sold. It also includes revenues from professional services, and training. It has more or less remained in the range of $1.4 to $1.5 billion in the recent years, and we expect it to remain in that range in the near term. This is a recurring revenue stream, and it can be linked to the company’s installed base. However, the slight decline in the recent past can be attributed to pricing pressure, a trend which could continue in the near term.
  • Software Maintenance refers to product upgrades, enhancements, and technical support for customers. The segment contributed 15% to the company’s top line in the previous fiscal. The segment revenues have hovered in the range of $900 million to $1 billion in the recent years, and this trend will likely continue. The sales growth could be impacted by a slowdown in demand from China, amid trade tensions.



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