NetApp, Inc. (NASDAQ:NTAP) Q2 2020 Earnings Conference Call - Final Transcript

Nov 13, 2019 • 05:30 pm ET

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NetApp, Inc. (NASDAQ:NTAP) Q2 2020 Earnings Conference Call - Final Transcript

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Presentation
Executive
George Kurian

of the customer attendees this was their first Insight. The number of executive level customers was up 80% from last year and the number of customers with cloud responsibilities doubled.

Hybrid multi-cloud is the reality of customers IT environments. And NetApp has the strategy, the innovation portfolio and customer experience to help them succeed. At Insight, we announced that we are revolutionizing the customer experience and simplifying the business of hybrid multi-cloud with NetApp Keystone. NetApp Keystone creates a consistent experience from public cloud to the data center, helping customers transform IT to operate with cloud like ease and flexibility everywhere.

First, for customers who want truly elastic scaling without having to manage infrastructure, they can consume NetApp technology as a cloud service through the world's biggest public cloud. Second, for customers who want to cloud like experience on-premises, we offer subscription services. And finally, for customers who want to own and operate technology in their own data centers, we've introduced a radically simplified ownership experience, for how our customers buy, optimize and grow with NetApp. Customers and partners choose NetApp, because of our unique ability to offer a full range of capabilities needed to build their Data Fabric.

NetApp Keystone, complements this with a consistent cloud-like customer experience across the public cloud and on-premises. Let me be clear our approach to cloud is giving us access to new buyers and workloads as well as increasing the relevance of NetApp to companies both large and small.

Cloud gives us both opportunity in the public cloud and makes us more attractive for on-premises deployments. While I am heartened by the enthusiasm generated by our hybrid cloud data services, the headwinds we identified on last quarter's call persisted through Q2. Both macroeconomic and enterprise spending indicators show continued weakness. While we cannot predict when conditions will improve, we are planning our business, assuming no change in these external factors for the foreseeable future.

I'm pleased with our sales discipline and the ability to capture value in this tough market. To that point our product gross margins demonstrate that we were able to maintain pricing discipline despite the soft environment. Regardless of what is happening in the broader macro environment, I remain confident, that we can return to growth because of our ability to deliver real business value to customers hybrid multi-cloud environments. This increases our strategic relevance and enables us to reach new buyers, through new pathways, address new workloads and expand our presence with existing customers.

To better capitalize on our opportunity and replicate our proven areas of success, we laid out a plan for you last quarter that includes increasing sales capacity by approximately 200 primary sales resources by the end of Q1 FY '21, without adding to the total operating expenses for the company. As of the end of Q2 we are well on track to deliver against this goal. The sales headcount will be deployed primarily in our Americas geography. They bring capabilities to acquire new accounts as