NetApp Shares Plunge After Lower Q1'20 Revenue, Earnings Outlook
NetApp says it expects a 17-percent drop in revenue compared to previously announced expectations, with GAAP income also falling by over 50 percent.
NetApp shares on Thursday took a solid hit after the Sunnyvale, Calif.-based company said it expects revenue and earnings to fall below expectations.
The hybrid cloud data services and data management company's share price plummeted nearly 18 percent to the $48-range in after-hours trading.
NetApp said it now expects its first fiscal quarter 2020 revenue of between $1.220 and $1.230 billion, which represents a decline of approximately 17 percent from the first quarter of fiscal year 2019. NetApp had previously guided net revenue of $1.315 to $1.465 billion.
After accounting for $90 million in enterprise software license agreements from the first fiscal quarter of 2019 that did not repeat in the first quarter of 2020, revenue would have fallen 12 percent.
Net income on a GAAP basis is now expected to be in the range of 30 cents to 35 cents per share, compared to the 56 cents to 64 cents per share the company previously expected. On a non-GAAP basis, net income is expected to be in the range of 55 cents to 60 cents per share, compared to the expected 78 cents to 86 cents per share.
For full fiscal year 2020, NetApp now expects revenue to be 5 percent to 10 percent below previous expectations.
The company is slated to unveil its actual first fiscal quarter 2020 results on August 14.
While NetApp is disappointed its preliminary first fiscal quarter results are lower than had previously anticipated, the company remains confident in its long-term strategy, said George Kurian, NetApp CEO, in a statement.
"Our customer conversations indicate that our hybrid multicloud portfolio of solutions is the right one. We believe we can return to growth over time by prudently reallocating investments to expand sales coverage and accelerate our participation in the growing private cloud and cloud data services markets," Kurian said in the statement.