NetApp (NTAP)

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  1. Latest Earnings - Q4'20
NetApp delivered a steady performance for its fiscal fourth quarter (ending April 2019), with the company beating consensus estimates for earnings and revenues. Overall, the company's total revenue decreased by 12% year-over-year to $1.2 billion, mainly due to a 21% decline in product revenues. Moreover, the company's non-GAAP earnings per share fell by 2% y-o-y to $1.19, compared to $1.22 per share reported in the year-ago period. NetApp didn't provide guidance for full-year FY'21 due to uncertainty surrounding the Covid-19 pandemic. While for the fiscal first quarter, the company expects revenue to be in the range of $1.09 to $1.24 billion, and the adjusted EPS to fall in the range of $0.36 to $0.44.

  1. Impact Of Covid-19
Netapp stock has lost a bulk of its value since the outbreak of coronavirus. The global spread of coronavirus has led to lockdown in various cities across the globe, which has affected industrial and economic activity. This is likely to adversely impact the company's revenues as major companies are likely to delay expenses related to upgrading infrastructure and software. Notably, the company derives a bulk of its revenues from the US, which has become the new epicenter of the outbreak, with the country recording the largest numbers of COVID-19 cases across the globe. We believe NetApp’s fiscal Q4 results in April will confirm the trend in revenues. It is also likely to accompany lower FY'21 guidance


Below are key drivers of NetApp's value that present opportunities for upside or downside to the current Trefis price estimate of NetApp:

Storage Hardware

  • Products Revenue: We currently forecast NetApp's products revenue to grow at a CAGR of 7% through the end of the Trefis forecast period. However, there could be a 25% upside to the Trefis price estimate if NetApp's products revenue can grow in low double-digits. This is possible, as the next generation storage market is estimated to grow at a CAGR of over 34% till 2023, and NetApp's TAM will also expand.
  • Netapp's Gross Margin: We currently forecast that the company's gross margin will see modest growth to around 65% in the coming years. There could be 25% upside to the Trefis price estimate if the gross margins were to improve to 70% by the end of our forecast period.

For additional details, select a driver above or select a division from the interactive Trefis split for NetApp at the top of the page.


NetApp makes money by selling storage hardware and storage software to small and medium businesses as well as large enterprises. NetApp's storage hardware helps customers manage data efficiently and keep the information available and secure. The disks are used for large, data-intensive applications like e-mail, inventory, supply chain, backups and regulatory & compliance information. NetApp's storage software enables customers to use all features and functions related to data storage. Software ships along with the hardware system but is priced separately. Features enabled by NetApp's software include back-up and recovery, replication, and retention.


NetApp Gaining Share in Storage Hardware Market

Over the years NetApp has witnessed an increase in its share of the external disk storage market. In enterprise storage as well, NetApp ranks third in market share currently, third only to Dell and HPE. However, there is a competition from small companies that sell cheap white-box storage systems.

High Profit on Software Sales

NetApp sells licenses for the software used along with NetApp storage hardware. Buyers of NetApp storage software and hardware are primarily corporate IT departments and datacenters that have to store vast amounts of user-generated data.

In addition to the initial software license, NetApp sells maintenance contracts for software updates, patches and support. NetApp has gross margins of 96% on software maintenance.


Falling Storage Hardware Prices and Rising Volume

The storage hardware industry is characterized by a decline in dollars earned per Gigabyte (GB) as well as rising volumes of storage sold. According to our estimates, NetApp sold each GB of storage for just under $0.70 in 2013, which further fell to under $0.60 per GB in 2015, $0.50 per GB in 2016, and $0.47 per GB in 2017. We estimate that the price will fall to about 20 cents per GB in the coming years.

Transition To Flash

There has been a sharp decline in NAND pricing over the last few quarters, and several companies are transitioning to flash-based storage devices. NetApp is benefiting from the same. As of Q3 fiscal 2019, only 15% of NetApp's installed base ran all-flash arrays.

Recent Trefis Articles

NetApp Stock Has Recovered 20% So Far, But Another 40% Gain Cannot Be Ruled Out

Comparing the trend in NetApp’s (NASDAQ: NTAP) stock over recent months with its trajectory during and after the Great Recession of 2008, we believe that the stock can potentially gain 40% to reach almost $60, once fears surrounding the coronavirus outbreak subside. ...More

Is NetApp Stock Oversold At $40?

After almost a 35% decline in NetApp’s (NASDAQ: NTAP) stock since the beginning of this year, we believe that NetApp’s stock is likely oversold at the current price of $40 per share and it has a significant upside. ...More

Why NetApp’s Profits Are Likely To Shrink In 2020 Despite Steadily Declining Expenses

NetApp (NASDAQ: NTAP) is a technology company that makes money selling data management hardware, software and solutions. The company has achieved steady growth over FY 2016-2019 (ending April), with the company’s net income witnessing a 5. ...More

How Will NetApp’s Hybrid Cloud Focus Help Its Revenue Base Over Coming Years?

NetApp (NASDAQ: NTAP) is a technology company that makes money selling data management hardware, software and solutions. The company competes with Dell, HPE, Pure Storage and Nutanix, among others, in the hybrid cloud data services and data management space. ...More

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

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. ...More

How Did NetApp Fare In Q4, And What Can We Expect From Fiscal 2020?

NetApp (NASDAQ: NTAP) recently reported its Q4 fiscal 2019 results, which were slightly below our estimates. This note details the company’s Q4 performance, and Trefis’ forecasts for the full fiscal 2020. ...More

What Factors Will Impact NetApp’s Q4 Fiscal 2019 Earnings?

NetApp (NASDAQ: NTAP) is expected to publish its Q4 fiscal 2019 results on May 22. This note details Trefis’ forecasts for NetApp, as well as some of the key trends we will be watching when the company reports earnings. ...More

Transition To Flash-Based Storage Will Aid NetApp’s Near Term Earnings Growth

NetApp (NASDAQ: NTAP) has performed very well in recent years, with steady top line and bottom line growth. In the most recent quarter, the company’s revenues grew in low single-digits, despite a weakened demand environment in the recent past. This can be attributed to transition to flash storage arrays. ...More

Why We Revised Our Price Estimate For NetApp To $90

NetApp (NASDAQ: NTAP) has performed very well in recent years. The company has consistently beaten market EPS expectations, while its top line continues to trend upwards. In the most recent quarter, the company’s revenues grew by 11.6% year-over-year to $1.47 billion, largely driven by an impressive 20. ...More

Strong Growth In Product Adoption Drives A Beat For NetApp

NetApp (NASDAQ: NTAP) reported strong fiscal first-quarter results, as both its revenue and earnings per share beat market expectations. The stock price, however, dipped slightly after the earnings release. ...More

How Is NetApp Likely To Grow In The Next Two Years?

NetApp (NASDAQ: NTAP) had a strong 2018, as both its revenue and adjusted earnings per share saw growth. Furthermore, NetApp’s stock price has gained close to 15% since the last earnings announcement, and we expect the company to gain further momentum given its strong product performance and the consumer shift towards ... ...More

A Look At NetApp’s Key Sources Of Value

NetApp (NASDAQ: NTAP) has three primary businesses - Product, Software Maintenance, and Hardware Maintenance & Other Services. Below we expand on these sources of revenue, their recent performance and what to expect going forward. ...More

Key Takeaways And Trends From NetApp’s Q4

NetApp (NASDAQ: NTAP) reported strong fiscal fourth quarter results, as both its revenue and earnings per share beat market expectations. The stock price, however, dipped slightly after the earnings release. ...More

How Will NetApp Perform In Its Fourth Quarter?

NetApp (NASDAQ: NTAP) has delivered strong results in recent years, with earnings and revenue beating market expectations more often than not. The company is scheduled to announce earnings on May 23, and we expect it to report another solid quarter, driven mainly by growth in the product and software maintenance businesses. ...More

What’s Driving Our $74 Price Estimate For NetApp?

NetApp (NASDAQ: NTAP) has seen mixed results in recent years. After a fairly weak 2016, the company saw its revenue stabilize in 2017. The company has seen growth in its Product segment, driven by ONTAP system volume growth, and its Software Maintenance segment driven by favorable pricing. ...More

Is NetApp Fairly Valued?

NetApp (NASDAQ: NTAP) has seen mixed results in recent years. After a weak 2016, the company saw its revenue stabilize in 2017. While the growth in Product segment was fueled by a 15% increase in unit volume of ONTAP systems, efficient pricing strategy drove the growth in the Software maintenance s... ...More

NetApp Earnings: Strategic Products Continue To Drive Results

NetApp (NASDAQ:NTAP) announced its fiscal Q3 earnings on February 14, reporting 8% annual growth in net revenue to $1.5 billion. Through the course of the current fiscal year, NetApp has witnessed solid revenue growth, driven by the company's Strategic Product segment. ...More

Strategic Product Sales To Help Drive NetApp’s Profitability

NetApp (NASDAQ:NTAP) is scheduled to report its fiscal Q3 earnings on February 14. Through the course of the previous fiscal year, NetApp witnessed a decline in net revenues driven by low product sales. ...More

How Sensitive Is NetApp’s Stock To Changes In Its Storage Product Margin?

NetApp (NASDAQ:NTAP) had a positive year with a solid revenue growth through the year. NetApp's enhanced focus on its Strategic Product line, which primarily includes Clustered ONTAP, E-Series storage products and SolidFire all-flash storage arrays, led to the revenue growth. ...More

How Changes In NetApp’s Storage Systems Market Share Impact Its Stock Price

Storage giant NetApp (NASDAQ:NTAP) is one of the largest players in the storage industry, with an estimated 13% share in the global external storage systems market. It competes with large IT hardware vendors Dell-EMC, IBM (NYSE:IBM), HPE (NYSE:HPE) and Hitachi on one end of the spectrum and newer flash-storage startups on the other end. ...More

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