Cloud service provider NetApp, Inc. (NASDAQ: NTAP) reported weaker-than-expected earnings and revenues for the third quarter of 2020. The stock lost sharply during Wednesday’s after-hours session, soon after the announcement. The company also provided guidance for the fourth quarter and fiscal 2020.
Third-quarter earnings, excluding one-off items, dropped to $1.16 per share from $1.20 per share last year. The bottom-line also missed the Street view.
Earnings Miss
Reported profit, meanwhile, rose to $277 million or $1.21 per share from $249 million or $0.98 per share in the third quarter of 2019. Revenues declined to $1.40 billion from $1.56 billion and missed the consensus forecast.
“We see significant opportunity ahead and are focused on replicating the areas where we have proven success. Our strong business model enables us to navigate the market dynamics, while making the strategic investments necessary to position the company for long-term growth,” said CEO George Kurian.
Outlook
The management currently expects fourth-quarter revenues to be in the range of $1.455 billion to $1.605 billion and adjusted earnings between $1.28 per share and $1.36 per share. The company is looking for unadjusted earnings in the range of $1.11 per share to $1.19 per share for the quarter.
In the whole of 2020, net revenue is expected to decline by 10% year-over-year. The forecast for full-year adjusted gross margin is 67%-68%.
Of late, the company has been witnessing weakness in its hardware segment amid softness in spending by enterprises. There has been an uptick in expenditure due to heavy spending on product development, with the aim of tackling competition from the likes of Pure Storage (PSTG).
New Board Member
Last week, the company appointed Deepak Ahuja to its board of directors, bringing the total number of directors to eight. Currently, Ahuja is serving as the chief financial officer of Verily.
NetApp shares witnessed significant volatility last year and lost about 6% in the past twelve months. The stock closed Wednesday’s regular trading session higher.