NetApp, Inc. (NASDAQ:NTAP) Q3 2019 Earnings Conference Call Transcript

Feb 13, 2019 • 02:30 pm ET

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NetApp, Inc. (NASDAQ:NTAP) Q3 2019 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good afternoon, ladies and gentlemen. Welcome to NetApp's Third Quarter Fiscal Year 2019 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. I will now turn the call over to Kris Newton, Vice President, Corporate Communications and Investor Relations.

Executive
Kris Newton

Thank you for joining us on our Q3 fiscal year 2019 earnings call. With me today are our CEO, George Kurian; and CFO, Ron Pasek. This call is being webcast live and will be available for replay on our website at netapp.com. As a reminder, we adopted the new accounting standard ASC 606 in Q1. Our historical financial results have been restated to conform to the new revenue recognition rules. Reconciliations of our previously reported GAAP results to the restated 606 GAAP results as well as our 606 GAAP to non-GAAP results are included in our Q3 earnings release for the applicable periods which is posted on our website along with our financial tables and guidance, a historical supplemental data table and the non-GAAP to GAAP reconciliation. Unless otherwise noted, we will refer to non-GAAP and 606 numbers.

During today's call, we will make forward-looking statements and projections with respect to our financial outlook and future prospects such as our guidance for the fourth quarter and full fiscal year 2019, our expectations regarding future revenue, profitability, cash flow and shareholder returns, and our ability to grow and expand our opportunities and address the key market transitions, all of which involve risk and uncertainty. We disclaim any obligation to update our forward-looking statements and projections. Actual results may differ materially from our statements and projections for a variety of reasons, including global political, macroeconomic and market conditions, and our ability to expand our total available market, introduce and deliver new and differentiated products and services without disruption, manage our gross profit margins, capitalize on our market position in cloud strategy, maintain execution and continue our capital allocation strategy.

Please also refer to the documents we file from time to time with the SEC and available on our website, specifically our most recent Form 10-K for fiscal year 2018 and our current reports on Form 8-K. During the call, all financial measures presented will be non-GAAP unless otherwise indicated.

I'll now turn the call over to George.

Executive
George Kurian

Thank you, Kris, and thanks to everyone joining us today. In the face of an uncertain macroeconomic environment, we focused on the variables within our control and delivered a strong third quarter. Although I'm disappointed with revenue being at the low end of expectations, our operational discipline delivered gross margin, operating margin and EPS that were above the high end of our guidance ranges. Regardless of the demand headwinds, we remain well positioned for the long term, as we address the growth areas of the market and drive efficiency in our business. I'd like to address the challenges we saw in Q3 head on.

The macroeconomic environment