NetApp, Inc.

Ladies and gentlemen, thank you for standing by, and welcome to the NetApp Q3 fiscal year 2021 conference call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question at that time, please press star then 1 on your touchstone telephone. As a reminder, today's conference call is being recorded. Our now-internet conference 30 host is Chris Newton. Ma'am, you may begin.

Thank you for joining us. With me today are our CEO, George Kurian, and CFO, Mike Berry. This call is being webcast live and will be available for replay on our website at NetApp.com. During today's call, we will make forward-looking statements and projections with respect to our financial outlook and future prospects, such as our guidance for the fourth quarter fiscal year 2021, our expectations regarding future revenue, profitability, and shareholder return, and our ability to continue overall growth, gain market share, and scale our cloud business. all of which involve risk and uncertainty. We disclaim any obligation to update our forward-looking statements and projections. Actual results may differ materially for a variety of reasons, including macroeconomic and market conditions, such as the continuing impact of the COVID-19 pandemic and the IT capital spending environment, as well as our ability to gain share in the storage market, scale our cloud business, and generate greater cash flow. Please also refer to the documents we file from time to time with the SEC and available on our website, specifically our most recent Forms 10Q and 10K, including in the management's discussion and analysis of financial condition and results of operations and risk factor sections, and our current reports on Form 8K. During the call, all financial measures presented will be non-GAAP unless otherwise indicated. Reconciliations of GAAP to non-GAAP estimates are posted on our website. I'll now turn the call over to George.

Thanks, Chris, and thanks, everyone, for joining us today. I hope that you and your loved ones have stayed safe and healthy since the last time we spoke. I'm pleased to report that we delivered another strong quarter with our third consecutive quarter of revenue and billings growth despite the challenging environment. In the third quarter, our team delivered revenues at the top of our guidance range and operating margin and EPS above the high end of our expectations. Our performance in Q3 was broad-based with notable strength in America's enterprise. The incremental sales capacity we added in FY20 continues to pay off. Additionally, our run-to-netapp competitive takeout program is delivering continued success as we gain share and displace competitors' installed bases. Most importantly, this quarter, we once again demonstrated our ability to grow in both of our key markets, cloud and all-flash arrays. As we have said many times, cloud is additive to our business, that what we do in the cloud helps expand our on-premises business, and that our enterprise-hardened software and experience provide a solid foundation for our work in the cloud. Cloud Services ARR grew to $237 million, an increase of 186% year over year. We saw good momentum across the portfolio, with Azure NetApp Files and Spot being the standout services, both delivering significant growth. We continue to expand with existing customers while adding new enterprise and cloud-native customers. Our cloud services dollar-based net retention rate is a healthy 227%. Our cloud partners are asking us to expand regional deployments, broaden workload certifications, and invest in go-to-market activities to support this rapidly growing business. We had a significant presence at both AWS reInvent and at Google sales kickoff meeting. This engagement helps us stay top of mind with their sellers and reach customers with our cloud value proposition. We are benefiting as customers move more Tier 1 workloads such as SAP to the cloud. Our cloud volume service delivers the performance and availability required by mission-critical applications. To address the substantial cloud opportunity ahead, we are pulling forward investments with our public cloud partners, adding dedicated sales capacity and expanding our presence in additional regions. As we look ahead, we have a strong pipeline to support our Q4 target. Our cloud partner engagement and expanding product roadmap reinforce our confidence in our long-term goal of achieving $1 billion in cloud ARR in fiscal year 25. Our all-flash business grew 11% year-over-year to an annualized net revenue run rate of $2.6 billion. For the third consecutive quarter, we believe we outpaced the market, gaining share from competitors and converting our install base from hybrid arrays to all-flash. At the end of Q3, 27% of installed systems were all-flash, giving us plenty of headroom for continued growth. Our all-flash arrays received accolades from industry analysts customers alike they integrate cloud connectivity with the speed and efficiency of flash to deliver a smart powerful and trusted solution for the most demanding enterprise workloads in q3 we expanded the breadth of our flash offerings with the introduction of the fast 500f our first all flash array and leveraging QLC technology. The FAS 500F is a highly scalable solution for deployments that support huge volumes of unstructured data, such as medical imaging, electronic design automation, and computer-aided design and manufacturing. Our cloud services and flash systems are built on the same primary software foundation, ONTAP. This shared R&D foundation gives us significant leverage in our R&D investment. We are able to innovate and test at cloud speed while bringing new functionality to the enterprise data center at a pace IT can absorb. This shared innovation also benefits customers, giving them a similar operating environment and consistent data management tools on premises and in the cloud. It also enables them to move their data seamlessly to the right location at the right price at the right time. As I noted on our last call, NetApp is helping customers accelerate their digital transformations and put their data to work to elevate their businesses. Digital transformation is now a necessity requiring speed and agility to respond to changing business conditions. Hybrid cloud is the de facto IT architecture at digitally transformed enterprises for the foreseeable future. Having an integrated, flexible data management foundation is critical to the success of digital transformation efforts. Because of this, data is growing in scale and importance. We believe that NetApp is a primary beneficiary of this trend. We are uniquely positioned to address customers' requirements for workloads that move to the cloud, as well as those that maintain and modernize on-premises. Let me share a few wins from the third quarter to illustrate why customers choose NetApp to manage their data in the hybrid cloud. A global pharmaceutical manufacturer needed to overcome the compliance challenges of regulatory mandates while minimizing security risks in moving to the public cloud. They selected NetApp All Flash Pass to underpin their AI-driven healthcare because of our cloud connectivity and the ability to achieve petabyte scale along with our unique data protection and data management capabilities. At a leading global clinical trial laboratory, NetApp displaced Dell to host workloads for the company's AI labs. We won because of our performance, cloud connectivity, and data management and security capabilities. The ability to leverage NetApp cloud services when necessary was critical to the customer's decision. Calendar 2020 was a difficult year for all of us. and I'm glad to have it behind us. I want to express my gratitude to the NetApp team for quickly coming together to deliver solid results by helping our customers thrive while working remotely. We see reasons for optimism for calendar 2021 with expanding vaccine availability and improving public health conditions. However, uncertainty about the new normal as well as the tax and regulatory environments remain. In uncertain markets, data is even more critical as organizations look to drive competitive advantage, and we are confident in our strategy and the strength of our business going forward. Cloud and all-flash FAS fuel the momentum in our high-margin software, cloud services, and recurring maintenance revenue streams. This growth, coupled with our disciplined OpEx management, balanced approach to investing in the business, and sustained capital returns will create significant long-term shareholder value. The new NetApp is a cloud-led software company, and it's built on a solid foundation. We are a trusted partner to the world's leading organizations who are undertaking digital transformations. We have unique strategic partnerships with the world's leading clouds, including deeply integrated technology and go-to-market efforts. And we have a strong business model with a proven track record of turning market transitions to our advantage. As the recovery gradually unfolds, we believe we will be in an even stronger position as customers continue to turn to NetApp to help them solve the challenge of managing data in the hybrid cloud. I'll now turn it over to Mike for more details on our results. Mike?