NetApp (NTAP) has reported a 4.58 percent fall in profit for the quarter ended Jan. 27, 2017. The company has earned $146 million, or $0.52 a share in the quarter, compared with $153 million, or $0.52 a share for the same period last year. On the other hand, adjusted net income for the quarter stood at $231 million, or $0.82 a share compared with $206 million or $0.70 a share, a year ago.
Revenue during the quarter went up marginally by 1.30 percent to $1,404 million from $1,386 million in the previous year period. Gross margin for the quarter contracted 108 basis points over the previous year period to 60.61 percent. Total expenses were 86.97 percent of quarterly revenues, down from 88.10 percent for the same period last year. This has led to an improvement of 113 basis points in operating margin to 13.03 percent.
Operating income for the quarter was $183 million, compared with $165 million in the previous year period.
However, the adjusted operating income for the quarter stood at $284 million compared to $244 million in the prior year period. At the same time, adjusted operating margin improved 262 basis points in the quarter to 20.23 percent from 17.60 percent in the last year period.
"Q3 marked another quarter of strong execution by NetApp,” said George Kurian, chief executive officer. "The transformation of NetApp is yielding solid results and has changed the trajectory of our business. With our industry-leading portfolio of solutions and Data Fabric strategy, NetApp is well positioned to lead in the next era of IT."
For the fourth-quarter, NetApp expects revenue to be in the range of $1,365 million to $1,515 million. The company projects diluted earnings per share to be in the range of $0.60 to $0.65. On an adjusted basis, the company projects diluted earnings per share to be in the range of $0.79 to $0.84.
Operating cash flow falls marginally
NetApp has generated cash of $621 million from operating activities during the nine month period, down 1.27 percent or $8 million, when compared with the last year period.
The company has spent $133 million cash to meet investing activities during the nine month period as against cash inflow of $753 million in the last year period
The company has spent $1,128 million cash to carry out financing activities during the nine month period as against cash outgo of $790 million in the last year period.
Cash and cash equivalents stood at $2,213 million as on Jan. 27, 2017, down 11.30 percent or $282 million from $2,495 million on Jan. 29, 2016.
Working capital drops significantly
NetApp has witnessed a decline in the working capital over the last year. It stood at $1,802 million as at Jan. 27, 2017, down 49.78 percent or $1,786 million from $3,588 million on Jan. 29, 2016. Current ratio was at 1.47 as on Jan. 27, 2017, down from 2.45 on Jan. 29, 2016.
Cash conversion cycle (CCC) has decreased to 9 days for the quarter from 24 days for the last year period. Days sales outstanding were almost stable at 39 days for the quarter, when compared with the last year period.
Days inventory outstanding has decreased to 10 days for the quarter compared with 19 days for the previous year period. At the same time, days payable outstanding went up to 40 days for the quarter from 34 for the same period last year.
Debt increases substantially
NetApp has witnessed an increase in total debt over the last one year. It stood at $1,884 million as on Jan. 27, 2017, up 26.44 percent or $394 million from $1,490 million on Jan. 29, 2016. Short-term debt stood at $1,140 million as on Jan. 27, 2017. Total debt was 20.81 percent of total assets as on Jan. 27, 2017, compared with 16.96 percent on Jan. 29, 2016. Debt to equity ratio was at 0.70 as on Jan. 27, 2017, up from 0.48 as on Jan. 29, 2016.
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