Data management solutions provider NetApp, Inc. (NASDAQ: NTAP) reported stronger-than-expected earnings for the second quarter of 2020, while revenues declined and missed the view. The management provided guidance for the third quarter and fiscal 2020. Shares of the tech firm declined Wednesday evening, immediately after the announcement.
During the three-month period, total revenue dropped to $1.37 billion from $1.52 billion in the second quarter of 2019 and came in below the market’s forecast.
Also read: Microchip Technology Q2 earnings meet
Product revenues dropped 16% year-over-year, hurt by weakness in both the Strategic and Mature sub-divisions. Region-wise, the Americas accounted for about 56% of total revenue and EMEA 29%. Around 14% of the revenues came from Asia-Pacific.
Earnings up 3%
At $1.09 per share, adjusted earnings were up 3% from last year and above the consensus estimates. On a reported basis, the company reported net profit of $243 million or $1.03 per share, compared to $241 million or $0.91 per share last year.
“We continue to be disciplined in our spending and have a strong financial model with growing gross margins and operating margins that enable us to return cash to shareholders and invest in the long-term health of our business, “ said George Kurian, chief executive officer of NetApp.
For the third quarter, the management expects revenues to be between $1.390 billion and $1.540 billion. Unadjusted earnings per share are expected to be in the $0.96-1.04 range and adjusted earnings in the range of $1.14 per share to 1.22 per share.
In the whole of 2020, net revenue is expected to decline by around 8% year-over-year. Consolidated gross margin is expected to be 66-67% and operating margin between 18% and 19%.
During the quarter, NetApp returned $611 million to shareholders through share repurchases and dividends. The company also declared a cash dividend of $0.48 per share, to be paid on January 22, 2020, to shareholders of record on January 3, 2020.
After slipping to a two-year low in August, NetApp shares are currently back on the growth path. The stock lost 16% since last year. It closed Wednesday’s regular session lower and dropped further during the extended session.