NetApp Inc

Previous wording

During the first six months of fiscal 2025, we repurchased approximately 5.8 million shares of our common stock at an average price of $121.58 per share, for an aggregate purchase price of $700 million. We also declared aggregate cash dividends of $1.04 per share in that period, for which we paid $213 million.

Current wording

During the first nine months of fiscal 2025, we repurchased approximately 7.4 million shares of our common stock at an average price of $121.46 per share, for an aggregate purchase price of $900 million. We also declared aggregate cash dividends of $1.56 per share in that period, for which we paid $319 million.

Previous wording

In the first six months of fiscal 2025, we approved restructuring plans to redirect resources to highest return activities and reduce costs. Aggregate charges recorded from the restructuring plans during the second quarter and first six months of fiscal 2025 totaled $12 million and $29 million, respectively.

Current wording

In the first nine months of fiscal 2025, we approved restructuring plans to redirect resources to highest return activities and reduce costs. Aggregate charges recorded from the restructuring plans during the third quarter and first nine months of fiscal 2025 totaled $9 million and $38 million, respectively.

Previous wording

The increase in net revenues for the second quarter and first six months of fiscal 2025 compared to the corresponding periods of fiscal 2024 was due to an increase in product revenues and, to a lesser extent, an increase in services revenues. Product revenues as a percentage of net revenues increased by one percentage point and two percentage points, respectively, in the second quarter and first six months of fiscal 2025 compared to the corresponding periods of fiscal 2024.

Current wording

The increase in net revenues for the third quarter and first nine months of fiscal 2025 compared to the corresponding periods of fiscal 2024 was due to an increase in both product revenues and services revenues. Product revenues as a percentage of net revenues decreased by one percentage point during the three months ended January 24, 2025 and increased by one percentage point during the nine months ended January 24, 2025, as compared to the corresponding periods of fiscal 2024.

Previous wording

Total product revenues increased in the second quarter and first six months of fiscal 2025 compared to the corresponding periods of the prior year due to higher sales of C-Series all-flash array systems.

Current wording

Total product revenues increased in the third quarter and first nine months of fiscal 2025 compared to the corresponding periods of the prior year due to higher sales of C-Series all-flash array systems.

Previous wording

Professional and other services revenues increased by $8 million and $13 million in the second quarter and first six months of fiscal 2025, respectively, compared to the corresponding periods of the prior year.

Current wording

Professional and other services revenues increased by $11 million and $24 million in the third quarter and first nine months of fiscal 2025, respectively, compared to the corresponding periods of the prior year.

Previous wording

Public Cloud revenues increased in the second quarter and first six months of fiscal 2025 compared to the corresponding periods of the prior year, due to higher customer demand, driven by NetApp’s diversified cloud offerings and an overall growth in the cloud market.

Current wording

Public Cloud revenues increased in the third quarter and first nine months of fiscal 2025 compared to the corresponding periods of the prior year, due to higher customer demand, driven by NetApp’s diversified cloud offerings and an overall growth in the cloud market.

Previous wording

Cost of Hybrid Cloud product revenues represented approximately 40% of product revenues for the second quarter and first six months of fiscal 2025 compared to 39% and 42%, respectively, for the corresponding periods of fiscal 2024. Materials costs represented 89% of cost of Hybrid Cloud product revenues for the second quarter and first six months of fiscal 2025, compared to 86% and 87%, respectively, for the corresponding periods of fiscal 2024.

Current wording

Cost of Hybrid Cloud product revenues represented approximately 43% and 41% of product revenues for the third quarter and first nine months of fiscal 2025, respectively, compared to 37% and 40%, respectively, for the corresponding periods of fiscal 2024. Materials costs represented 89% of cost of Hybrid Cloud product revenues for the third quarter and first nine months of fiscal 2025, compared to 89% and 88%, respectively, for the corresponding periods of fiscal 2024.

Previous wording

Materials costs increased by $34 million and $38 million, respectively, in the second quarter and first six months of fiscal 2025 compared to the corresponding periods of the prior year.

Current wording

Materials costs increased by $42 million and $80 million, respectively, in the third quarter and first nine months of fiscal 2025 compared to the corresponding periods of the prior year.

Previous wording

Hybrid Cloud product gross margins remained relatively flat in the second quarter of fiscal 2025 compared to the corresponding period of the prior year. Hybrid Cloud product gross margins increased by approximately two percentage points in the first six months of fiscal 2025 compared to the corresponding period of the prior year, primarily due to lower component and freight costs.

Current wording

Hybrid Cloud product gross margins decreased by approximately six percentage points and one percentage point in the third quarter and first nine months of fiscal 2025 compared to the corresponding periods of the prior year due to higher component and freight costs.

Previous wording

Unallocated cost of product revenues were relatively flat in the second quarter and first six months of fiscal 2025 compared to the corresponding periods of the prior year.

Current wording

Unallocated cost of product revenues were relatively flat in the third quarter and first nine months of fiscal 2025 compared to the corresponding periods of the prior year.

Previous wording

Cost of Hybrid Cloud services revenues, which are composed of the costs of support and professional and other services, increased in the second quarter and first six months of fiscal 2025 compared to the corresponding periods of fiscal 2024. Cost of Hybrid Cloud services revenues represented approximately 16% of Hybrid Cloud services revenues for the second quarter and first six months of fiscal 2025 compared to 16% and 15%, respectively, for the corresponding periods of fiscal 2024.

Current wording

Cost of Hybrid Cloud services revenues, which are composed of the costs of support and professional and other services, increased in the third quarter and first nine months of fiscal 2025 compared to the corresponding periods of fiscal 2024. Cost of Hybrid Cloud services revenues represented approximately 16% of Hybrid Cloud services revenues for the third quarter and first nine months of fiscal 2025 compared to 15% for the corresponding periods of fiscal 2024.

Previous wording

Hybrid Cloud support gross margins were relatively flat in the second quarter and first six months of fiscal 2025 compared to the corresponding periods of the prior year. Hybrid Cloud professional and other services gross margins increased by approximately two percentage points in the second quarter of fiscal 2025 compared to the corresponding period of fiscal 2024 due to the mix of services provided. Hybrid Cloud professional and other services gross margins remained relatively flat in the first six months of fiscal 2025 compared to the corresponding period of fiscal 2024.

Current wording

Hybrid Cloud support gross margins were relatively flat in the third quarter and first nine months of fiscal 2025 compared to the corresponding periods of the prior year. Hybrid Cloud professional and other services gross margins increased by approximately four percentage points and one percentage point, respectively, in the third quarter and first nine months of fiscal 2025 compared to the corresponding periods of fiscal 2024 due to the mix of services provided.

Previous wording

Cost of Public Cloud revenues decreased in each the second quarter and first six months of fiscal 2025. Public Cloud gross margins increased by eight percentage points and six percentage points, respectively, in the second quarter and first six months of fiscal 2025 compared to the corresponding periods of fiscal 2024. The decrease in cost of Public Cloud revenues and improved gross margins was due to cost optimization that included a decrease in fixed assets depreciation, and the mix of offerings provided.

Current wording

Cost of Public Cloud revenues decreased in each the third quarter and first nine months of fiscal 2025. Public Cloud gross margins increased by eleven percentage points and eight percentage points, respectively, in the third quarter and first nine months of fiscal 2025 compared to the corresponding periods of fiscal 2024. The decrease in cost of Public Cloud revenues and improved gross margins was due to cost optimization that included a decrease in fixed assets depreciation, and the mix of offerings provided.

Previous wording

Unallocated cost of services revenues were relatively flat in the second quarter and first six months of fiscal 2025 compared to the corresponding periods of the prior year.

Current wording

Unallocated cost of services revenues were relatively flat in the third quarter and first nine months of fiscal 2025 compared to the corresponding periods of the prior year.

Previous wording

Sales and marketing, research and development, and general and administrative expenses for the second quarter and first six months of fiscal 2025 totaled $819 million, or 49% of net revenues, and $1,617 million, or 51% of net revenues, respectively, each reflecting a decrease of two percentage points compared to the corresponding periods of fiscal 2024, primarily due to the increase in net revenues.

Current wording

Sales and marketing, research and development, and general and administrative expenses for the third quarter and first nine months of fiscal 2025 totaled $772 million, or 47% of net revenues, and $2,389 million, or 49% of net revenues, respectively, reflecting a decrease of one and two percentage points, respectively, compared to the corresponding periods of fiscal 2024, primarily due to the increase in net revenues.

Previous wording

Total compensation costs included in sales and marketing, research and development and general and administrative expenses in the second quarter and first six months of fiscal 2025, were relatively flat compared to the corresponding periods of the prior year.

Current wording

Total compensation costs included in sales and marketing, research and development and general and administrative expenses in the third quarter and first nine months of fiscal 2025, were relatively flat compared to the corresponding periods of the prior year.

Previous wording

The increases in sales and marketing expenses in the second quarter and first six months of fiscal 2025 compared to the corresponding periods of the prior year were primarily due to an increase in sales commissions expenses.

Current wording

The increase in sales and marketing expenses in the first nine months of fiscal 2025 compared to the corresponding period of the prior year were primarily due to an increase in sales commissions expenses.

Previous wording

Research and development expenses remained relatively flat in the first six months of fiscal 2025 compared to the corresponding period of the prior year.

Current wording

Research and development expenses remained relatively flat in the third quarter and first nine months of fiscal 2025 compared to the corresponding periods of the prior year.

Previous wording

In the first six months of fiscal 2025, management approved restructuring plans to redirect resources to highest return activities and reduce costs, which included a reduction of our global workforce by approximately 2%. Charges related to the plans consisted primarily of employee severance-related costs. The activities under the plans are expected to be substantially complete by the end of fiscal 2025.

Current wording

In the first nine months of fiscal 2025, management approved restructuring plans to redirect resources to highest return activities and reduce costs, which included a reduction of our global workforce by approximately 4%. This includes, in the third quarter of fiscal 2025, a plan approved related to the anticipated sale of our cloud optimization and management software business known as Spot by NetApp, resulting in the elimination of certain roles. Charges related to the plans consisted primarily of employee severance-related costs. The activities under the plans are expected to be substantially complete by the end of fiscal 2025.

Previous wording

In the first six months of fiscal 2024, management executed a restructuring plan to redirect resources to highest return activities, and to optimize our global office space for our hybrid work model. In connection with the plan, we reduced our global workforce by approximately 1% and terminated certain real estate leases in various countries, resulting in restructuring charges comprised primarily of employee severance-related expenses and lease termination charges. The activities under the plan were substantially complete by the end of fiscal 2024.

Current wording

In the first nine months of fiscal 2024, management executed restructuring plans to redirect resources to highest return activities, and to optimize our global office space for our hybrid work model. In connection with these plans, we reduced our global workforce by approximately 2% and terminated certain real estate leases in various countries, resulting in restructuring charges comprised primarily of employee severance-related expenses and lease termination charges. The activities under these plans were substantially complete by the end of fiscal 2024.

Previous wording

Acquisition-related expenses decreased by $2 million and $4 million, respectively, in the second quarter and first six months of fiscal 2025 compared to the corresponding periods of the prior year.

Current wording

Acquisition-related expenses decreased by $1 million and $5 million, respectively, in the third quarter and first nine months of fiscal 2025 compared to the corresponding periods of the prior year.

Previous wording

Interest income increased in the second quarter and first six months of fiscal 2025 compared to the corresponding periods of the prior year, primarily due to higher yields earned on our cash and investments. Interest expense was relatively flat in the second quarter and first six months of fiscal 2025 compared to the corresponding periods of fiscal 2024.

Current wording

Interest income decreased in the third quarter of fiscal 2025 primarily due to the lower average outstanding balances of our cash and investments and lower yields thereon, compared to the corresponding period of the prior year. Interest income increased in the first nine months of fiscal 2025 compared to the corresponding period of the prior year, primarily due to higher yields earned.

Previous wording

Our effective tax rate for the three and six months ended October 25, 2024 includes an increase in discrete tax benefits related to stock compensation compared to the corresponding periods of the prior year. Our effective tax rate for the three and six months ended October 27, 2023 included a benefit for increased fiscal 2023 foreign tax credits resulting from legislative guidance for those periods partially offset by an increase in stock compensation for which no tax benefit is recorded.

Current wording

Our effective tax rate reflects the impact of a significant amount of earnings being taxed in foreign jurisdictions at rates below the United States (U.S.) statutory rate. Our effective tax rate for the three and nine months ended January 24, 2025 includes an increase in discrete tax benefits related to stock compensation compared to the corresponding periods of the prior year. Our effective tax rate for the three months ended January 24, 2025 also includes an increase in discrete tax expense related to prior period adjustments compared to the corresponding period of the prior year. Our effective tax rate for the three and nine months ended January 26, 2024 included a benefit for increased fiscal 2024 foreign tax credits resulting from legislative guidance for those periods partially offset by an increase in stock compensation for which no tax benefit is recorded.

Previous wording

As of October 25, 2024, we had $223 million of gross unrecognized tax benefits. Inclusive of penalties, interest and certain income tax benefits, $162 million would affect our provision for income taxes if recognized. Net unrecognized tax benefits of $161 million have been recorded in other long-term liabilities.

Current wording

As of January 24, 2025, we had $228 million of gross unrecognized tax benefits. Inclusive of penalties, interest and certain income tax benefits, $169 million would affect our provision for income taxes if recognized. Net unrecognized tax benefits of $169 million have been recorded in other long-term liabilities.

Previous wording

As of October 25, 2024, our cash, cash equivalents and short-term investments were $2.2 billion, which represents a decrease of $1.0 billion during the first six months of fiscal 2025. The decrease was primarily due to $700 million used for the repurchase of our common stock, a $400 million principal repayment of our 3.30% Senior Notes due September 2024, $213 million used for the payment of dividends, $132 million used for payment of taxes related to net share settlement of stock awards and $86 million used for purchases of property and equipment, partially offset by $446 million provided by operating activities. Our net working capital deficit was $378 million as of October 25, 2024, a reduction of $1.2 billion when compared to April 26, 2024, primarily due to the decrease in cash, cash equivalents and short-term investments discussed above and the reclassification of $750 million principal amount of our Senior Notes from long-term to current liabilities.

Current wording

As of January 24, 2025, our cash, cash equivalents and short-term investments were $2.3 billion, which represents a decrease of $1.0 billion during the first nine months of fiscal 2025. The decrease was primarily due to $900 million used for the repurchase of our common stock, a $400 million principal repayment of our 3.30% Senior Notes due September 2024, $319 million used for the payment of dividends, $168 million used for payment of taxes related to net share settlement of stock awards and $133 million used for purchases of property and equipment, offset by $831 million provided by operating activities and $108 million in proceeds from the issuance of common stock under employee stock award plans. Our net working capital deficit was $287 million as of January 24, 2025, a reduction of $1.1 billion when compared to April 26, 2024, primarily due to the decrease in cash, cash equivalents and short-term investments discussed above and the net increase in the current portion of long-term debt after the repayment of our 3.30% Senior Notes and the reclassification of $750 million principal amount of our Senior Notes from long-term to current liabilities.

Previous wording

During the first six months of fiscal 2025, we generated cash from operating activities of $446 million, reflecting net income of $547 million which was adjusted for non-cash depreciation and amortization expense of $126 million and non-cash stock-based compensation expense of $188 million, compared to $588 million of cash generated from operating activities during the first six months of fiscal 2024.

Current wording

During the first nine months of fiscal 2025, we generated cash from operating activities of $831 million, reflecting net income of $846 million which was adjusted for non-cash depreciation and amortization expense of $190 million and non-cash stock-based compensation expense of $291 million, compared to $1.1 billion of cash generated from operating activities during the first nine months of fiscal 2024.

Previous wording

Significant changes in assets and liabilities in the first six months of fiscal 2025 included the following:

Current wording

Significant changes in assets and liabilities in the first nine months of fiscal 2025 included the following:

Previous wording

Accounts receivable decreased $138 million, reflecting lower billings in the first six months of fiscal 2025 compared to the last six months of fiscal 2024.

Current wording

Accounts receivable decreased $104 million, reflecting more favorable invoicing linearity in the first nine months of fiscal 2025 compared to the last nine months of fiscal 2024.

Previous wording

Inventory increased by $132 million, primarily due to higher raw materials purchases.

Current wording

Inventory increased by $82 million, primarily due to higher raw materials purchases.

Previous wording

Deferred revenue and financed unearned services revenue decreased by $164 million, due to a decrease in deferred revenue for software and hardware support contracts.

Current wording

Deferred revenue and financed unearned services revenue decreased by $92 million, due to a decrease in deferred revenue for software and hardware support contracts.

Previous wording

During the first six months of fiscal 2025, we generated $597 million from maturities and sales of investments, net of purchases and paid $86 million for capital expenditures, as compared to the same period of fiscal 2024, in which we generated $72 million from maturities and sales of investments, net of purchases, and paid $73 million for capital expenditures.

Current wording

During the first nine months of fiscal 2025, we generated $590 million from maturities and sales of investments, net of purchases and paid $133 million for capital expenditures, as compared to the same period of fiscal 2024, in which we used $329 million for the purchases of investments, net of maturities and sales, and paid $109 million for capital expenditures.

Previous wording

During the first six months of fiscal 2025, cash flows used in financing activities totaled $1.4 billion and included $700 million for the repurchase of approximately 6 million shares of common stock, $400 million principal repayment upon maturity of our 3.30% Senior Notes due in September 2024 and $213 million for the payment of dividends. During the first six months of fiscal 2024, cash flows used in financing activities totaled $942 million and included $700 million for the repurchase of approximately 9 million shares of common stock and $209 million for the payment of dividends.

Current wording

During the first nine months of fiscal 2025, cash flows used in financing activities totaled $1.7 billion and included $900 million for the repurchase of approximately 7.4 million shares of common stock, $400 million principal repayment upon maturity of our 3.30% Senior Notes due in September 2024 and $319 million for the payment of dividends. During the first nine months of fiscal 2024, cash flows used in financing activities totaled $1.1 billion and included $800 million for the repurchase of approximately 11 million shares of common stock and $312 million for the payment of dividends.

Previous wording

Key factors that could affect our cash flows include changes in our revenue mix and profitability, our ability to effectively manage our working capital, in particular, accounts receivable, accounts payable and inventories, the timing and amount of stock repurchases and payment of cash dividends, the impact of foreign exchange rate changes, our ability to effectively integrate acquired products, businesses and technologies and the timing of repayments of our debt. Based on past performance and our current business outlook, we believe that our sources of liquidity, including cash, cash equivalents and short-term investments, cash generated from operations, and our ability to access capital markets and committed credit lines will satisfy our working capital needs, capital expenditures, investment requirements, stock repurchases, cash dividends, contractual obligations, commitments, principal and interest payments on our debt and other liquidity requirements associated with operations and meet our cash requirements for at least the next 12 months and thereafter for the foreseeable future. However, in the event our liquidity is insufficient, we may be required to curtail spending and implement additional cost saving measures and restructuring actions or enter into new financing arrangements. We cannot be certain that we will continue to generate cash flows at or above current levels or that we will be able to obtain additional financing, if necessary, on satisfactory terms, if at all. For further discussion of factors that could affect our cash flows and liquidity requirements, see Item 1A. Risk Factors.

Current wording

Key factors that could affect our cash flows include changes in our revenue mix and profitability, our ability to effectively manage our working capital, in particular, accounts receivable, accounts payable and inventories, the timing and amount of stock repurchases and payment of cash dividends, the impact of foreign exchange rate changes, our ability to effectively integrate acquired products, businesses and technologies and the timing of repayments of our debt. Based on past performance and our current business outlook, we believe that our sources of liquidity, including cash, cash equivalents and short-term investments, cash generated from operations, and our ability to access capital markets and committed credit lines will satisfy our working capital needs, capital expenditures, investment requirements, stock repurchases, cash dividends, contractual obligations, commitments, principal and interest payments on our debt and other liquidity requirements associated with operations and meet our cash requirements for at least the next 12 months and thereafter for the foreseeable future. We may choose to periodically raise additional debt capital based on certain conditions, including the refinancing of upcoming maturities and/or for potential strategic acquisitions and investments. Our ability to obtain this or any additional financing that we may pursue or need, will depend on, among other things, our business plans, operating performance and the condition of the capital markets at the time we seek financing. We may not be able to obtain such financing on terms acceptable to us or at all. In the event our liquidity is insufficient and we are unable to enter into new financing arrangements, we may be required to curtail spending and implement additional cost saving measures and restructuring actions. We cannot be certain that we will continue to generate cash flows at or above current levels. For further discussion of factors that could affect our cash flows and liquidity requirements, see Item 1A. Risk Factors.

Previous wording

As of October 25, 2024 and April 26, 2024, $1.9 billion and $2.1 billion, respectively, of cash, cash equivalents and short-term investments were held by various foreign subsidiaries and were generally based in U.S. dollar-denominated holdings, while $0.3 billion and $1.2 billion, respectively, were available in the U.S.

Current wording

As of January 24, 2025 and April 26, 2024, $2.0 billion and $2.1 billion, respectively, of cash, cash equivalents and short-term investments were held by various foreign subsidiaries and were generally based in U.S. dollar-denominated holdings, while $0.3 billion and $1.2 billion, respectively, were available in the U.S.

Previous wording

We expect to fund our capital expenditures, including our commitments related to facilities, equipment, operating leases and internal-use software development projects over the next few years through existing cash, cash equivalents, investments and cash generated from operations. The timing and amount of our capital requirements cannot be precisely determined and will depend on a number of factors, including future demand for products, changes in the network storage industry, hiring plans and our decisions related to the financing of our facilities and equipment requirements. We anticipate capital expenditures for the remainder of fiscal 2025 to be between $50 million and $100 million.

Current wording

We expect to fund our capital expenditures, including our commitments related to facilities, equipment, operating leases and internal-use software development projects over the next few years through existing cash, cash equivalents, investments and cash generated from operations. The timing and amount of our capital requirements cannot be precisely determined and will depend on a number of factors, including future demand for products, changes in the network storage industry, hiring plans and our decisions related to the financing of our facilities and equipment requirements. We anticipate capital expenditures for the remainder of fiscal 2025 to be between approximately $30 million and $60 million.

Previous wording

In the first quarter of fiscal 2025, our Board of Directors authorized the repurchase of an additional $1.0 billion of our common stock. As of October 25, 2024, our Board of Directors had authorized cumulative repurchases of up to $17.1 billion of our common stock under our stock repurchase program. Under this program, we may purchase shares of our outstanding common stock through solicited or unsolicited transactions in the open market, in privately negotiated transactions, through accelerated share repurchase programs, pursuant to a Rule 10b5-1 plan or in such other manner as deemed appropriate by our management. The stock repurchase program may be suspended or discontinued at any time. Since the May 13, 2003 inception of this program through October 25, 2024, we repurchased a total of 377 million shares of our common stock at an average price of $43.25 per share, for an aggregate purchase price of $16.3 billion. As of October 25, 2024, the remaining authorized amount for stock repurchases under this program was $0.8 billion.

Current wording

In the first quarter of fiscal 2025, our Board of Directors authorized the repurchase of an additional $1.0 billion of our common stock. As of January 24, 2025, our Board of Directors had authorized cumulative repurchases of up to $17.1 billion of our common stock under our stock repurchase program. Under this program, we may purchase shares of our outstanding common stock through solicited or unsolicited transactions in the open market, in privately negotiated transactions, through accelerated share repurchase programs, pursuant to a Rule 10b5-1 plan or in such other manner as deemed appropriate by our management. The stock repurchase program may be suspended or discontinued at any time. Since the May 13, 2003 inception of this program through January 24, 2025, we repurchased a total of 379 million shares of our common stock at an average price of $43.59 per share, for an aggregate purchase price of $16.5 billion. As of January 24, 2025, the remaining authorized amount for stock repurchases under this program was $0.6 billion.

Previous wording

In the ordinary course of business, we make commitments to third-party contract manufacturers and component suppliers to manage manufacturer lead times and meet product forecasts, and to other parties, to purchase various key components used in the manufacture of our products. In addition, we have open purchase orders and contractual obligations associated with our ordinary course of business for which we have not yet received goods or services. These off-balance sheet purchase commitments totaled approximately $0.9 billion at October 25, 2024.

Current wording

In the ordinary course of business, we make commitments to third-party contract manufacturers and component suppliers to manage manufacturer lead times and meet product forecasts, and to other parties, to purchase various key components used in the manufacture of our products. In addition, we have open purchase orders and contractual obligations associated with our ordinary course of business for which we have not yet received goods or services. These off-balance sheet purchase commitments totaled approximately $1.1 billion at January 24, 2025.