NetApp, Inc. (NASDAQ:NTAP) Q2 2020 Earnings Conference Call - Final Transcript
Nov 13, 2019 • 05:30 pm ET
Thank you. [Operator Instructions] And our first question comes from the line of Wamsi Mohan with Bank of America.
Yes. Thank you. Your product gross margin is north of 57% have been very strong we've not seen that in the while actually since 2015. Can you talk about how much of that product gross margin was product mix driven versus commodity price tailwind or maybe even federal mix and do you feel that you can sustain or expand these margins as you go into the back half of the year?
So yeah, Wamsi, good question. On a year-over-year basis, most of it was mix, meaning we saw a higher percent this quarter of all-flash than we did say last quarter. Some of that was also cost reduction, not just on and other things as well. And that was in the face of having no ELAs in the quarter as against 2%. I did contemplate the ability to keep this level of gross margin through the rest of the fiscal year. And you saw that in the increase of the total margin guide.
Okay, great, thanks. And if I could really quickly on CDS you exited last quarter with $5 million in monthly sales. It seems like you're exited this quarter with about $6 million despite Azure, GA quarter. Could you talk about what are some of the challenges in not ramping this faster, I know George you expressed a lot of enthusiasm in all your discussions both at Insight and Ignite. So where do you expect CDS annualized revenue run rate could be as you exit fiscal '20? Thank you.
We aren't going to give you guidance on the CDS business. I think as we said, we've taken longer than we originally expected to get to general availability given the technical sophistication of what we are offering to customers. The total addressable market is there. We are seeing a lot of demand and interest from customers and we're adding customers and growing footprints on a daily basis. We are going to just need to keep doing the work necessary to scale and enable all of the pathways associated with being able to take the solution to market and to replicate the wins that we've got across a broad range of foreclosed into more customers. So we're focused on execution at this point.
Thanks Wamsi. Next question.
Our next question comes from the line of Rod Hall with Goldman Sachs.
Yeah, thanks for the questions. I wanted to just check and see, Ron, if you could comment on the accounts receivable and the well the DSOs, that's far highest we've seen I think ever in our models. So just, I heard you say, the tailend of the, you know that it was heavily back-end loaded in the quarter, but any more color on that. And then the ELAs you're holding this 2% guide yet there are no ELAs so far. So just anything you can say that would help us