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Earnings preview: What to expect from NetApp Q4?

Data storage provider NetApp Inc. (NTAP) is set to report its earnings results for the fourth quarter of 2019 on Wednesday after the market closes. The results will be benefited by lower costs and expenses as well as revenue growth in product and software maintenance while hardware maintenance and other services could drag the results down.

The company’s major hurdle in the top line growth includes the falling revenue from the original equipment manufacturer, and tough macroeconomic scenario, as well as the competition from HP Inc. (HPQ) and International Business Machines (IBM) in the storage area network market.

The results will be driven by all-flash array annualized and cloud data services net revenue run rate. The popularity in the storage area network could drive the product revenues growth for the quarter and the synergies from strategic enterprise agreements could be beneficial for the all-flash array business segment.

NetApp Q4 2019 earnings preview
Image Courtesy: NetApp

Analysts expect the company’s earnings to jump by 20% to $1.26 per share and revenue will rise by 0.30% to $1.65 billion for the fourth quarter. In comparison, during the previous year quarter, NetApp posted a profit of $1.05 per share on revenue of $1.64 billion.

The company has surprised investors by beating analysts’ expectations in the past four quarters. Investors expect NetApp to report upbeat results for the fourth quarter. Majority of the analysts recommended a “strong buy” or “buy” rating while expecting the stock to reach $79.30 per share in the next 52 weeks.

Previous Quarter Performance

For the third quarter, the data storage provider swung to a profit from a loss last year, helped by lower costs and expenses. Revenue inched up by 2% helped by revenue increases in product and software maintenance but hardware maintenance and other services saw a decline. In terms of geographic mix, Americas comprised 52% of revenue, with the majority coming from Americas Commercial.

For the fourth quarter of 2019, NetApp expects net revenues in the range of $1.59 billion to $1.69 billion and GAAP earnings in the range of $1.06 to $1.12 per share. Adjusted earnings are anticipated to be in the range of $1.22 to $1.28 per share.

Also read: Earnings to watch for this week

The company’s advantage over its competitors will continue, as the market shifts to flash, and NetApp expects that shift to accelerate with ongoing NAND price declines. All-flash arrays carry a higher average selling price, which benefits not only product revenue, but also recurring services revenue for the third quarter.

The major market transition, which the company is exploiting, is the shift from traditional IT to the private cloud, and the shift from on-premises infrastructure to hybrid clouds. NetApp is seeing accelerating momentum with its private cloud solutions and public cloud solutions are positioned to deliver strong growth in fiscal 2020.

The fourth quarter has historically proven to be a strong seasonal period for free cash flow conversion, as such the company remained committed to driving free cash flow of 19% to 21% of revenues for the full fiscal year. NetApp’s confidence in its long-term vision and execution is reflected in capital allocation strategy.

Shares of NetApp closed Monday’s regular session down 1.39% at $68.13 on the Nasdaq. The stock has risen over 15% in the year so far and over 4% in the past three months.

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Qutoutiao stock plunges after reporting Q1 earnings; CEO Lei Li resigns

Chinese mobile content platform Qutoutiao Inc. (NASDAQ: QTT) reported its first quarter ending March 31, 2019. Non-GAAP net loss attributable to Qutoutiao Inc.’s ordinary shareholders widened to RMB619.8 million ($92.4 million) in the first quarter of 2019 from RMB233.2 million in the first quarter of 2018. Shares of Qutoutiao tanked 8.9% to $5.12 when the market closed today and continued to bleed during the extended hours of trading.

Qutoutiao announced today that Lei Li has resigned from the position of CEO due to personal reasons and will remain as Director and Vice Chairman of the board of the company. Eric Siliang Tan, the co-founder and Chairman of Qutoutiao has taken over the role of CEO. The company also appointed Xiaolu Zhu as Co-CFO, who previously served as CFO at KrSpace Inc.

Revenue jumped 373% year-over-year to RMB1.119 billion (US$166.7 million) and was within the company’s guided range of RMB1.100 billion and RMB1.120 billion.

Non-GAAP net loss was RMB617.7 million ($92 million) compared to non-GAAP net loss of RMB216.3 million in the prior-year quarter. Non-GAAP net loss per ADS was RMB2.51 ($0.37). Each four ADSs represent one Class A ordinary share of the Quotoutiao.

For the second quarter of 2019, Quotoutiao expects revenue to be between RMB1.38 billion and RMB1.42 billion. For full-year 2019, the company expects revenue to be between RMB7.5 billion and RMB8.5 billion.

Also read: Chinese e-commerce firm Pinduoduo delivers 228% growth in Q1 revenues

“We continue to attract top talent to join us to drive our core technical capabilities which underpin everything from precise content recommendation to effective targeting in advertising. We leverage the very same capabilities in developing all products, and most recently we have been testing a new short video application for which initial results are promising,” said Eric Siliang Tan, Chairman and CEO.

Combined average monthly active users jumped 297% year-over-year to 111.4 million and combined average daily active users surged 232% to 37.5 million in the recently ended quarter. Average daily time spent per DAU reached 62.1 minutes, representing an year-over-year increase of 91%.

To further enhance the value proposition of Midu Novels, which was launched by Qutoutiao in May 2018, the company had planned to launch its proprietary writer platform to promote original content in the second quarter.

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