NetApp, Inc.

first quarter of fiscal year 2025 earnings call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to Chris Newton, Vice President, Investor Relations. Please go ahead.

Hi, everyone. Thanks 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, including, without limitation, our guidance for the second quarter and fiscal year 2025, our expectations regarding future revenue profitability and shareholder returns, and other growth initiatives and strategies. These statements are subject to various risks and uncertainties which may cause our actual results to differ materially. For more information, please refer to the documents we file from time to time with the SEC and on our website, including our most recent Form 10-K and Form 10-Q. We disclaim any obligation to update our forward-looking statements and projections. During the call, all financial measures presented will be non-GAAP unless otherwise indicated. Reconciliations of GAAP to non-GAAP estimates are available on our website. I'll now turn the call over to George.

Thank you, Chris. Welcome, everyone. We started FY25 strong, building on our momentum exiting last fiscal year. In Q1, we delivered 8% year-over-year revenue growth, and set records for first quarter operating margin and EPS. These results are a testament to our strong execution in a continued uncertain macroeconomic environment, our unwavering confidence in the customer benefits of the highly differentiated NetApp intelligent data infrastructure platform, and our discipline management of the business. As a result, we are raising our FY25 outlook for both revenue and profit. As we said during our recent Investor Day, we are focused on our uniquely differentiated solutions in Flash, Block, Cloud Storage, and AI. They address markets which are bolstered by both secular and company-specific tailwinds, and represent our biggest opportunities to fuel revenue growth and increase market share. In Q1, we experienced notable momentum across all these areas, evidence that our value proposition is resonating. This focus, coupled with our dedication to innovation, drives my confidence in our continued success. Customers choose NetApp, because we help them address their most important data challenges, leveraging the power of public and hybrid clouds to rapidly deploy new applications, unify their data for AI, simplify cloud integration, and strengthen data protection. We uniquely deliver a comprehensive and integrated storage and data management platform, giving our customers the power to unify all their data for any application anywhere and the ability to seamlessly and consistently manage it while ensuring data remains secure and protected. We again delivered robust year-over-year performance in our hybrid cloud segment with revenue growth of 8% and product revenue growth of 13%, driven by strength in all-flash storage. Broad-based demand across our all-flash storage portfolio propelled our all-flash array annualized revenue run rate to $3.4 billion, up 21% year-over-year. At the start of Q1, we introduced the new AFF A-series family of high-performance all-flash arrays capable of powering the most demanding environments from today's mission-critical applications to tomorrow's Gen AI workloads. Delivering the advanced data management, industry-leading ransomware protection, and cloud integration that modern workloads require, the new AFF A-Series saw positive customer reception and performed ahead of our expectations. Both our capacity flash and block-optimized all-flash array families exhibited strong growth year over year, addressing an expanded TAM and driving share gains. In Q1, we had numerous competitive takeouts across a broad set of workloads and vertical markets as customers leveraged our C-series and ASA products to modernize the legacy infrastructures and deploy new applications like artificial intelligence. The ASA enabled us to capture a new to NetApp customer displacing a legacy block storage competitor at a European-based manufacturer. The compelling price performance of the ASA, together with its modern architecture and comprehensive software capabilities, helped the customers realize savings as they refreshed their SAN environment. This is the first step in a larger relationship as the customer plans to purchase additional ASA systems to replace the remaining competitive footprint and evaluate our public cloud services. Keystone, our storage as a service offering, was again a highlight this quarter, with revenue growing over 60% from Q1 a year ago. Keystone gives customers the operational agility and reduced financial risk they need to manage in a dynamic environment. A good example of this is the leading automotive supplier that chose Keystone to help address rapidly changing storage demands created by ongoing transformation of the automotive market. Keystone gives them the flexibility to manage rapid growth, but also the ability to shrink based on changing circumstance. AI is the cornerstone of many of my customer conversations reinforcing NetApp's position as a proven data infrastructure platform provider and thought leader in this space. Customers are selecting NetApp as their partner at every stage of the AI lifecycle because of our high-performance all-flash storage, unique cloud integration, and extensive data management capabilities. These capabilities support a wide range of needs, from data preparation, model training and tuning, to retrieval augmented generation or RAG, and inferencing, and address the requirements for responsible AI, including model and data versioning, as well as data governance and privacy. While we believe the large opportunity for enterprise AI is still ahead of us, we are seeing good momentum today with our AI business performing well ahead of our expectations. In Q1, we had over 50 AI and data lake modernization wins. I'll give you just a couple of examples. We were selected by another of the world's largest oil and gas companies for their AI and high performance compute workloads. Our all-flash storage will power the customer's AI environment, servicing more than 40,000 CPU cores and GPUs, which run simulations and 3D virtualization workloads. Additionally, we made it practical for a leading financial services institution to consolidate petabytes of data into a single data lake for AI and analytics workloads, including fraud detection, credit scoring and portfolio management, and improving the productivity of their data scientists. Both instances are examples of how our deep understanding of and experience in AI workloads, together with our intelligent data infrastructure platform, help drive customer preference for NetApp infrastructure to service their growing AI requirements. We continue to advance our strong position with the development of GenAI Cloud and on-premises solutions in partnership with industry leaders. In Q1, in partnership with Lenovo, we announced the full-stack OVX system, optimized for Gen AI and designed to support RAG. Additionally, we introduced new capabilities designed for cloud AI workloads. We integrated the NetApp Gen AI toolkit with Microsoft Azure NetApp Files, giving customers the ability to generate unique, high-quality, and ultra-relevant results from GenAI projects by combining their proprietary data with pre-trained foundational models. In conjunction with AWS, we released a reference architecture for Amazon Bedrock to help customers implement RAG-enabled workflows that bring proprietary data stored on Amazon FSx for NetApp ONTAP into their GenAI data pipelines. GenAI is a truly hybrid workload And only NetApp has the breadth of products and services to reduce the complexity, resources, and risks for customers in managing these strategic workloads across increasingly complex hybrid multi-cloud environments. Public cloud segment revenue was $159 million, up 3% year over year. our highly differentiated first party and hyperscaler marketplace storage services remain our focus and top priority. These services continue to grow rapidly, increasing roughly 40% year over year and performing ahead of our expectations at each of our hyperscaler partners. As we outlined on previous calls, we expect the headwinds from subscription services to lessen over the course of FY25, allowing the strength of our first-party and marketplace storage services to shine through. Our rapid innovation in cloud storage services, broadening workload support, capabilities, price and performance points, continues to solidify our leadership position. In Q1, we again enhanced the capabilities of AWS FSx for NetApp on TAP, boosting scalability and performance to address evolving business needs. Microsoft recognized the unique value we and Capgemini bring with its 2024 Partner of the Year Award in the Migration to Azure category for our work in moving a large Asian retail customer to Azure, which included Azure NetApp Files. Our strong Q1 performance continues the momentum from last year, paving a confident path into FY25. The robust growth in our revenue, billing, and profitability reflects the increasing alignment of customer needs with our unique solutions. We believe our highly differentiated intelligent data infrastructure platform, designed for the age of data, positions us to capture the growth potential in flash, block, cloud storage, and AI promising continued success for our shareholders and customers. Looking ahead, our priorities are clear. We are well positioned to seize a growing market opportunity. As we grow, we will maintain our disciplined operational management to drive leverage throughout our business model. In closing, I want to thank the NetApp team for their dedication to delivering exceptional results in an uncertain macro environment. I also want to remind you that we are hosting our Insight Customer Conference in Las Vegas next month, where we will announce advances to our innovation agenda and showcase how we help our customers make their data infrastructure intelligent for the age of AI. I hope to see you there. Before I turn the call over to Mike, I'm sure you've already seen the news of his upcoming retirement. Mike has been a great partner to me in our focus on delivering profitable growth and shareholder value. Over the course of his tenure, from FY21 through FY24, he has helped drive revenue growth of 9% and EPS growth of almost 60%. In Mike, I have been blessed to have a wise partner from whom I learn much every day, a world-class human being whose trusted friendship has helped us navigate disruption smoothly, and who has entertained us with his encyclopedic knowledge of country music. I appreciate Mike's commitment to stay through the end of the fiscal year to ensure a seamless transition. Over to you, Mike.