NetApp Inc (NTAP) 2024 Q2 法說會逐字稿

Good day, and welcome to the NetApp Second Quarter Fiscal Year 2024 Earnings Call. (Operator Instructions). Please note, this event is being recorded.

美好的一天，歡迎參加 NetApp 2024 財年第二季財報電話會議。 （操作員說明）。請注意，此事件正在被記錄。

I would now like to turn the conference over to Kris Newton, Vice President, Investor Relations. Please go ahead.

我現在想將會議交給投資者關係副總裁克里斯牛頓 (Kris Newton)。請繼續。

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.

大家好。感謝您加入我們。今天和我在一起的是我們的執行長 George Kurian；和財務長麥克·貝裡。本次電話會議正在進行網路直播，並將在我們的網站 netapp.com 上重播。

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 third quarter and fiscal year 2024; 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 other forward-looking statements and projections.

在今天的電話會議中，我們將就我們的財務前景和未來前景做出前瞻性陳述和預測，包括但不限於我們對第三季和 2024 財年的指導；我們對未來收入、獲利能力和股東回報的預期；以及其他成長舉措和策略。這些陳述受到各種風險和不確定性的影響，可能導致我們的實際結果有重大差異。欲了解更多信息，請參閱我們不時向 SEC 和我們網站上提交的文件，包括我們最新的 10-K 表格和 10-Q 表格。我們不承擔更新其他前瞻性陳述和預測的義務。

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.

除非另有說明，在電話會議期間提出的所有財務指標都將採用非公認會計準則。我們的網站上提供了 GAAP 與非 GAAP 估算的調整表。

I'll now turn the call over to George.

我現在把電話轉給喬治。

Thanks, Kris. Good afternoon, everyone. Thank you for joining us today.

謝謝，克里斯。大家下午好。感謝您今天加入我們。

Q2 improved on our solid start to FY '24 in what continues to be a challenging macroeconomic environment. We delivered revenue above the midpoint of guidance, while our operational discipline yielded company all-time highs for gross margin, operating margin and EPS.

在仍然充滿挑戰的宏觀經濟環境中，我們在 24 財年的穩健開局基礎上取得了進展。我們的收入高於指導中點，而我們的營運紀律使公司的毛利率、營業利潤率和每股盈餘創歷史新高。

We remain relentlessly focused on managing the elements within our control while driving better performance in our storage business and building a more focused approach to our Public Cloud business. We are seeing positive results from these actions with increased profitability and a stronger position for delivering long-term growth.

我們仍然堅持不懈地專注於管理我們控制範圍內的要素，同時推動我們的儲存業務取得更好的效能，並為我們的公有雲業務建立更集中的方法。我們看到這些行動取得了積極成果，獲利能力得到提高，並在實現長期成長方面處於更有利的地位。

In Q2, we held our INSIGHT user conference where I witnessed the tangible excitement for the silo-free innovation our unified data storage provides. It was invigorating to be with the thousands of attendees and hear stories of the extraordinary outcomes NetApp delivers for our customers.

在第二季度，我們舉行了 INSIGHT 用戶會議，在會上我親眼目睹了我們的統一資料儲存提供的無孤島創新帶來的切實興奮。與數千名與會者一起聆聽 NetApp 為客戶帶來的非凡成果的故事令人振奮。

NetApp is at the forefront of the evolution of the storage industry, helping our customers turn disruption into opportunity with intelligent data infrastructure. Today's organizations need storage infrastructure that harnesses the power of public and hybrid clouds while keeping data secure and protected from ransomware attacks. They need infrastructure that supports dynamic workloads like AI, cloud-native and open-source applications. And they need infrastructure that helps to create more sustainable data centers.

NetApp 處於儲存產業發展的前沿，幫助我們的客戶透過智慧資料基礎設施將顛覆轉化為機會。當今的組織需要儲存基礎設施來利用公有雲和混合雲的強大功能，同時保持資料安全並防止勒索軟體攻擊。他們需要支援動態工作負載（例如人工智慧、雲端原生和開源應用程式）的基礎架構。他們需要有助於創建更永續的資料中心的基礎設施。

Only NetApp delivers an entire architecture of unified data storage solutions based on one operating system, ONTAP, that supports any application, any data type and spans on-premises and multiple cloud environments. This comprehensive architecture delivers unparalleled simplicity of management, simplicity of deployment and consistency of automation, all unified by common APIs and a single control plane. We further elevate the customer experience with our BlueXP sustainability dashboard and NetApp Advance, a common set of programs and guarantees that include Storage Lifecycle Program, which removes the burden of upgrade cycles as well as storage efficiency, ransomware recovery and data availability guarantees. Intelligent data infrastructure combines unified data storage, integrated data services, and intelligent operations so customers can operate with seamless flexibility to deploy new applications, unify their data for AI and simplify data protection in a world of limited IT resources, rapid data growth and increased cybersecurity threats.

只有 NetApp 提供基於單一作業系統 ONTAP 的統一資料儲存解決方案的完整架構，該解決方案支援任何應用程式、任何資料類型並跨越本地和多個雲端環境。這種全面的架構提供了無與倫比的管理簡單性、部署簡單性和自動化一致性，所有這些都透過通用 API 和單一控制平面進行統一。我們透過BlueXP 永續發展儀表板和NetApp Advance 進一步提升客戶體驗，NetApp Advance 是一套通用的計劃和保證，其中包括儲存生命週期計劃，可消除升級週期的負擔以及儲存效率、勒索軟體復原和資料可用性保證。智慧數據基礎設施結合了統一數據儲存、整合數據服務和智慧操作，因此客戶可以在IT 資源有限、數據快速增長和網路安全性增強的世界中以無縫的靈活性部署新應用程式、統一AI 數據並簡化資料保護威脅。

Looking at the results of the quarter, momentum from new products and the go-to-market changes we made at the start of the year drove 10% quarter-over-quarter growth in hybrid cloud segment revenue to $1.4 billion. Our all-flash array business benefited from the growth of the AFF C-Series, increasing 14% from Q1 to an annualized revenue run rate of $3.2 billion.

從本季的業績來看，新產品的推動力以及我們在年初做出的入市變革推動混合雲部門營收季增 10%，達到 14 億美元。我們的全快閃陣列業務受益於 AFF C 系列的成長，較第一季成長 14%，年化收入達到 32 億美元。

The AFF C-Series all-flash array continues to exceed our expectations, delivering new-to-NetApp customers and numerous wins over the competition. In the quarter, we successfully competed against an All-Flash competitor with C-Series to win a $16 million deal at an Infrastructure-as-a-Service company. The customer was looking for new storage to host a broad variety of critical applications. Our ease of management for large storage environments, unique data resilience, common toolkit across all our storage systems and the right price/performance ratio secured our win despite the competitor's attempt to use price once they realized their value proposition was insufficient. ONTAP One, our all-in-one software license that gives customers access to the industry's most comprehensive data management suite, has laid the groundwork for future tech refresh and expansion opportunities.

AFF C 系列全快閃陣列持續超越我們的預期，為 NetApp 新客戶帶來了巨大的競爭優勢。本季度，我們成功與 C 系列全快閃競爭對手競爭，贏得了基礎設施即服務公司 1,600 萬美元的訂單。客戶正在尋找新的儲存空間來託管各種關鍵應用程式。儘管競爭對手在意識到其價值主張不足後試圖使用價格，但我們對大型儲存環境的輕鬆管理、獨特的資料彈性、所有儲存系統的通用工具包以及正確的性價比確保了我們的勝利。 ONTAP One 是我們的一體化軟體許可證，讓客戶能夠存取業界最全面的資料管理套件，為未來的技術更新和擴展機會奠定了基礎。

Building on the success of the C-Series, we introduced block-optimized and AI-ready versions. The ASA C-Series family is a solution tailored to deliver high-performance and guaranteed high availability storage for critical applications, databases and VMware infrastructure, coupled with capacity flash to make enterprise-grade block storage more affordable and sustainable than ever. We added the AFF C-Series to the ONTAP AI architecture, lowering the overall cost of entry to scalable AI without sacrificing performance.

基於 C 系列的成功，我們推出了區塊優化和 AI 就緒版本。 ASA C 系列系列是一款專為關鍵應用程式、資料庫和VMware 基礎架構提供高效能且有保證的高可用性儲存而量身定制的解決方案，再加上容量閃存，使企業級區塊儲存比以往更加經濟實惠且可持續。我們將 AFF C 系列添加到 ONTAP AI 架構中，在不犧牲效能的情況下降低了進入可擴展 AI 的整體成本。

Keystone, our Storage as a Service offering, is also growing rapidly. In Q2, we added performance and availability guarantees to Keystone, expanding on the existing sustainability and storage efficiency guarantees, creating a comprehensive program to keep storage operations running optimally. We also announced NetApp storage on Equinix Metal, powered by Keystone, providing customers with a single subscription to a full stack of compute, networking and storage infrastructure with low-latency interconnection to all major public clouds.

我們的儲存即服務產品 Keystone 也在快速成長。在第二季度，我們為 Keystone 增加了效能和可用性保證，擴展了現有的可持續性和儲存效率保證，創建了一個全面的計劃來保持儲存作業以最佳狀態運作。我們也宣佈在 Equinix Metal 上推出由 Keystone 提供支援的 NetApp 存儲，為客戶提供完整的運算、網路和儲存基礎架構堆疊的單一訂閱，並與所有主要公有雲實現低延遲互連。

Turning to Public Cloud. As we said last quarter, our priority is growing first-party cloud storage services. We aligned our cloud sales specialists to our hyperscaler partners' go-to-market structures at the start of the fiscal year and are seeing new customer additions and growth in those services.

轉向公有雲。正如我們上季度所說，我們的首要任務是發展第一方雲端儲存服務。在本財年開始時，我們將雲端銷售專家與超大規模合作夥伴的上市結構進行了調整，並看到這些服務的新客戶增加和成長。

However, that growth has been masked by weakness in subscription services, which have declined to 23% of public Cloud ARR.

然而，這種成長被訂閱服務的疲軟所掩蓋，訂閱服務佔公有雲 ARR 的比例已下降至 23%。

During the quarter, we engaged in a strategic review to sharpen the focus of our cloud portfolio. As a result, we will continue to prioritize cloud storage offerings delivered through the hyperscalers while refocusing some services, such as Cloud Insights and Instaclustr, to complement and extend our Hybrid Cloud storage offerings, creating greater differentiation and additional value for customers. We will integrate other services that are sold as stand-alone subscriptions today, such as data protection, into the core functionality of cloud volumes. We will also carefully manage the transition of cloud storage subscription services to align to customer preference for consumption offerings. And we have decided to exit the SaaS backup and virtual desktop services.

在本季度，我們進行了策略審查，以突出我們的雲端產品組合的重點。因此，我們將繼續優先考慮透過超大規模供應商提供的雲端儲存產品，同時重新關注某些服務（例如Cloud Insights 和Instaclustr），以補充和擴展我們的混合雲端儲存產品，為客戶創造更大的差異化和附加價值。我們將把目前作為獨立訂閱出售的其他服務（例如資料保護）整合到雲端磁碟區的核心功能中。我們也將謹慎管理雲端儲存訂閱服務的過渡，以適應客戶對消費產品的偏好。我們也決定退出 SaaS 備份和虛擬桌面服務。

We anticipate ARR headwinds of approximately $55 million from exited services and unrenewed subscriptions in the second half of fiscal year '24. Growth in first-party and marketplace services are expected to partially offset this decline, positioning us to enter FY '25 with a more focused and much healthier business from which to grow.

我們預計 24 財年下半年退出的服務和未續訂的訂閱將帶來約 5,500 萬美元的 ARR 阻力。第一方和市場服務的成長預計將部分抵消這一下降，使我們能夠在進入 25 財年時擁有更專注、更健康的業務來實現成長。

Now to the results of the quarter. Public Cloud segment revenue in Q2 was $154 million, flat from Q1 and up 8% year-over-year. Our first-party and marketplace offerings are highly differentiated and are tightly aligned with customers' buying preferences. These services grew over 30% from Q2 a year ago. We continue to see customer expansion and deepening partnerships as well as increases in customer count, capacity, revenue and ARR in this part of the portfolio.

現在來看看本季的業績。第二季公有雲部門營收為 1.54 億美元，與第一季持平，年增 8%。我們的第一方和市場產品具有高度差異化，並且與客戶的購買偏好緊密結合。這些服務較去年第二季成長了 30% 以上。我們繼續看到客戶擴張和深化合作夥伴關係，以及這部分產品組合的客戶數量、產能、收入和 ARR 的增加。

In Q2, we extended our partnership with Google with the introduction of Google Cloud NetApp volumes. Now we are not only the only vendor to have a natively integrated storage service in the public cloud, but we are natively integrated into all 3 of the leading hyperscale vendors. And we are not standing still with this advantage. Just 2 months after introducing the GCNV service, we announced the availability of a new lower-cost tier of Google Cloud NetApp volumes, expanding the offering to address a greater range of workloads.

在第二季度，我們透過推出 Google Cloud NetApp 磁碟區擴展了與 Google 的合作關係。現在，我們不僅是唯一在公有雲中擁有本機整合儲存服務的供應商，而且我們還本機整合到所有 3 個領先的超大規模供應商中。我們並沒有因為這優勢而停滯不前。在推出 GCNV 服務僅 2 個月後，我們宣布推出新的低成本 Google Cloud NetApp 卷，擴展了產品範圍以應對更廣泛的工作負載。

These partnerships uniquely position and enable us to participate in the innovation and adoption of AI services in the public cloud. As examples, during Q2, we announced support for Google Cloud's Vertex AI with Google Cloud NetApp volumes as well as cross-protocol, hybrid cloud AI pipelines on Amazon FSx for NetApp ONTAP with support for SageMaker Studio notebooks.

這些合作關係具有獨特的地位，使我們能夠參與公有雲中人工智慧服務的創新和採用。例如，在第二季度，我們宣布透過 Google Cloud NetApp 磁碟區支援 Google Cloud 的 Vertex AI，以及 Amazon FSx for NetApp ONTAP 上的跨協定、混合雲 AI 管道，並支援 SageMaker Studio 筆記本。

Our position with the hyperscalers also enables us to displace legacy on-premises competitors as customers migrate workloads to the cloud. A U.S.-based medical equipment company chose FSx for NetApp ONTAP to replace a competitor's SAN systems when they moved their database workloads to the cloud. This is the customer's first engagement with NetApp. Following a successful initial deployment, they are evaluating FSxN for workload consolidation and disaster recovery.

當客戶將工作負載遷移到雲端時，我們在超大規模企業中的地位也使我們能夠取代傳統的本地競爭對手。一家美國醫療設備公司在將資料庫工作負載遷移到雲端時選擇了 FSx for NetApp ONTAP 來取代競爭對手的 SAN 系統。這是客戶第一次與 NetApp 合作。成功完成初步部署後，他們正在評估 FSxN 的工作負載整合和災難復原功能。

Looking forward, our focus is clear and is delivering results. We expect the momentum we saw in Q2 to continue through FY '24 despite continued softness in the demand environment due to the challenging macro. Customers value our modern approach to hybrid, multi-cloud infrastructure and data management, which enables IT organizations to leverage data across their entire estate simply, securely and sustainably. With recent innovations that enable us to address a broader set of markets more efficiently, I'm confident that we are well positioned to deliver positive outcomes for customers and stockholders.

展望未來，我們的重點很明確，並且正在取得成果。儘管由於宏觀挑戰導致需求環境持續疲軟，但我們預計第二季的動能將持續到 24 財年。客戶重視我們的混合、多雲基礎設施和資料管理的現代方法，它使 IT 組織能夠簡單、安全且永續地利用整個資產的資料。最近的創新使我們能夠更有效地應對更廣泛的市場，我相信我們有能力為客戶和股東帶來積極的成果。

I'll now turn the call over to Mike.

我現在將電話轉給麥克。

Thank you, George, and good afternoon, everyone.

謝謝喬治，大家下午好。

Q2 was a very solid quarter in what continues to be a challenging macro environment with soft IT spend. Our relentless focus and consistent execution delivered results that met and exceeded our guidance ranges and drove record-setting non-GAAP profitability measures across consolidated gross margin, product gross margin, operating margin and EPS.

在宏觀環境依然充滿挑戰且 IT 支出疲軟的情況下，第二季表現非常穩健。我們不懈的專注和一致的執行力帶來了達到並超越我們指導範圍的結果，並在綜合毛利率、產品毛利率、營業利潤率和每股收益方面推動了創紀錄的非公認會計準則盈利能力指標。

Before I get into the financial details, let me walk you through the key themes for the quarter. As a reminder, all numbers discussed are non-GAAP unless otherwise noted.

在介紹財務細節之前，讓我先向您介紹本季的關鍵主題。提醒一下，除非另有說明，所有討論的數字均非公認會計原則。

Our modern, innovative solutions are resonating with customers and our disciplined operational management drove profitability margins to a record high. As we look ahead, we expect our industry-leading solutions and unwavering focus to drive revenue growth and profitability in the second half of the fiscal year.

我們現代、創新的解決方案引起了客戶的共鳴，我們嚴格的營運管理將利潤率推向歷史新高。展望未來，我們預計我們行業領先的解決方案和堅定不移的重點將推動本財年下半年的營收成長和獲利能力。

Q2 consolidated gross margins of 72% and were at an all-time high, driven by product gross margins of 61%, also at an all-time high. Gross margin leverage and the returns on our strategic investments drove record operating margins of 27% and record EPS of $1.58.

第二季綜合毛利率為 72%，創歷史新高，這得益於產品毛利率 61%，也創歷史新高。毛利率槓桿和策略性投資回報推動營運利潤率達到創紀錄的 27%，每股收益達到創紀錄的 1.58 美元。

During the quarter, we returned approximately $403 million to stockholders through cash dividends and share repurchases, reducing share count by 4% versus Q2 '23. Over the course of the year, we expect to return at least 100% of free cash flow to stockholders.

在本季度，我們透過現金股利和股票回購向股東返還了約 4.03 億美元，與 2023 年第二季相比，股票數量減少了 4%。在這一年中，我們預計將至少 100% 的自由現金流返還給股東。

Given our growth, profitability and working capital improvements, we expect operating cash flow for the full year to normalize and track relatively in line with net income for the full year.

鑑於我們的成長、獲利能力和營運資本的改善，我們預計全年的營運現金流將正常化並與全年淨利潤相對一致。

Due to our solid execution and operational efficiencies, we outperformed the second quarter and expect our continued focus and discipline to deliver year-over-year revenue growth in the second half of the year. As a result, we are raising all our guidance measures for fiscal year '24.

由於我們紮實的執行力和營運效率，我們的表現優於第二季度，並預計我們持續的專注和紀律將在下半年實現營收年增。因此，我們提高了 24 財年的所有指導措施。

Now to the details of the quarter. Q2 billings of $1.5 billion decreased 9% year-over-year and revenue of $1.6 billion decreased 6% year-over-year as IT budgets remain constrained in a challenging macro environment. Adjusting for the FX tailwind of 160 basis points, billings and revenue would have decreased 11% and 8% year-over-year, respectively.

現在介紹本季的詳細資訊。由於 IT 預算在充滿挑戰的宏觀環境中仍然受到限制，第二季的營業額為 15 億美元，年減 9%，營收為 16 億美元，較去年同期下降 6%。根據 160 個基點的匯率順風進行調整，帳單和收入將分別年減 11% 和 8%。

Hybrid Cloud revenue of $1.4 billion decreased 7% year-over-year and product revenue of $706 million decreased 16% year-over-year.

混合雲收入為 14 億美元，年減 7%，產品收入為 7.06 億美元，年減 16%。

As discussed last quarter, the first half of fiscal year '23 revenue and most notably, product revenue benefited from elevated levels of backlog entering fiscal year '23. For the second half of fiscal year '24 year-over-year comparisons should be more apples-to-apples. Support revenue, an attach to our install base and indicative of the value of our products, grew 3% year-over-year to $623 million. We are pleased with the momentum of our product portfolio and our go-to-market initiatives implemented at the start of fiscal year '24.

如上季所討論的，'23 財年上半年的收入，尤其是產品收入受益於進入'23 財年的積壓水準的提高。對於 24 財年下半年來說，年比比較應該更相似。支援收入是我們安裝基礎的一部分，也是我們產品價值的體現，年增 3%，達到 6.23 億美元。我們對我們的產品組合的勢頭以及我們在 24 財年年初實施的上市計劃感到滿意。

Public Cloud revenue increased 8% year-over-year to $154 million and was relatively flat from Q1 '24. As George noted, year-over-year growth was driven by hyperscaler first-party and marketplace services, partially offset by continued declines in subscription services.

公有雲營收年增 8%，達到 1.54 億美元，與 2024 年第一季相比相對持平。正如喬治指出的那樣，同比增長是由超大規模第一方和市場服務推動的，但部分被訂閱服務的持續下降所抵消。

Now for our operating results. Q2 consolidated gross margin increased 580 basis points year-over-year to 72%, and product gross margin increased 1,080 basis points year-over-year to 61%. Product gross margin benefited from 3 main factors: number one, a mix shift to higher margin and higher capacity products; number two, favorable COGS stemming from lower component costs and our strategic purchase agreements for NAND. Number three, price discipline in a cost-sensitive, competitive pricing environment.

現在來看我們的經營業績。第二季綜合毛利率年增580個基點至72%，產品毛利率年增1,080個基點至61%。產品毛利率受惠於三個主要因素：第一，轉型為更高利潤率和更高產能產品的混合；第二，有利的 COGS 源自於較低的組件成本和我們的 NAND 策略採購協議。第三，在成本敏感、競爭性定價環境中的價格紀律。

I want to be very clear on this point: there were no unusual or onetime transactions that drove the higher product gross margin results.

我想明確這一點：沒有任何異常或一次性交易推動了更高的產品毛利率結果。

As we discussed in prior calls, we continue to make strategic purchase commitments to lock in NAND pricing and mitigate margin pressure from rising prices in the future as NAND prices largely bottomed out in Q2.

正如我們在之前的電話會議中討論的那樣，隨著 NAND 價格在第二季度基本觸底，我們將繼續做出戰略採購承諾，以鎖定 NAND 定價並減輕未來價格上漲帶來的利潤壓力。

Operating expenses of $706 million were flat year-over-year and grew $3 million quarter-over-quarter. Within a relatively consistent OpEx envelope, we will continue to reallocate investments to areas of higher opportunity to drive long-term growth.

營運支出為 7.06 億美元，與去年同期持平，但季增 300 萬美元。在相對穩定的營運支出範圍內，我們將繼續將投資重新分配到機會更大的領域，以推動長期成長。

In Q2, operating margin increased 320 basis points year-over-year to 27%, which includes 80 basis points of FX tailwind. EPS grew 7% year-over-year to $1.58, which includes a $0.07 FX tailwind. These record results demonstrate the strength of our business model, product relevance and unwavering focus and execution.

第二季度，營業利潤率年增 320 個基點至 27%，其中包括 80 個基點的外匯利好因素。每股收益年增 7% 至 1.58 美元，其中包括 0.07 美元的外匯推動因素。這些創紀錄的業績證明了我們業務模式、產品相關性以及堅定不移的專注和執行的實力。

As expected, Q2 operating cash flow of $135 million was impacted by seasonally lower collections and repatriation tax payments. DSO was 46 and inventory turns were 15. More importantly, year-to-date operating cash flow of $588 million grew 19% year-over-year compared to a decline of 8% in the same period a year ago. Free cash flow came in at $97 million, bringing the year-to-date amount to $515 million, up 46% year-over-year.

正如預期的那樣，第二季度營運現金流為 1.35 億美元，受到季節性稅收和匯回稅款減少的影響。 DSO 為 46，庫存週轉率為 15。更重要的是，年初至今營運現金流為 5.88 億美元，年增 19%，而去年同期則下降 8%。自由現金流為 9,700 萬美元，使年初至今的金額達到 5.15 億美元，較去年同期成長 46%。

During the quarter, we returned $403 million to stockholders through share repurchases and cash dividends, ending the quarter with approximately $230 million in net cash.

本季，我們透過股票回購和現金股利向股東返還 4.03 億美元，本季末淨現金約 2.3 億美元。

Our balance sheet remains healthy. Total deferred revenue as of the end of Q2 was $4 billion. The slight decline year-over-year is driven by lower multiyear support and public cloud subscription billings. We ended the quarter with approximately $2.6 billion in cash and short-term investments.

我們的資產負債表保持健康。截至第二季末，遞延收入總額為 40 億美元。年比小幅下降的原因是多年支持和公有雲訂閱帳單的減少。截至本季末，我們擁有約 26 億美元的現金和短期投資。

Now turning to guidance. Given the success of our product portfolio and consistent execution on operational improvements, we are raising our fiscal '24 guidance in still a soft IT spending environment.

現在轉向指導。鑑於我們產品組合的成功以及對營運改善的持續執行，我們在 IT 支出環境仍然疲軟的情況下提高了 24 財年指導。

We now expect fiscal year '24 revenues to be down approximately 2% year-over-year, an improvement from our previous guidance. We expect to see continued strength in product and hyperscale or first-party and marketplace services as we work through minor headwinds from Public Cloud subscription services.

我們現在預計 24 財年的收入將年減約 2%，比我們先前的指導有所改善。當我們克服公有雲訂閱服務的小阻力時，我們預期產品和超大規模或第一方和市場服務將持續強勁。

Consolidated gross margins are expected to be approximately 71%. For the second half, we expect product gross margin to range between 58% to 60% driven by continued mix shift to all-flash products and taking into account the current pricing environment and our commitment to maintain pricing flexibility.

綜合毛利率預計約71%。下半年，我們預計產品毛利率將在 58% 至 60% 之間，這主要得益於向全快閃產品的持續混合轉型，並考慮到當前的定價環境以及我們對維持定價靈活性的承諾。

Operating margin is expected to be approximately 26% and EPS to be in the range of $6.05 to $6.25 with the assumption of net interest income of approximately $30 million and share count of 212 million.

假設淨利息收入約為 3,000 萬美元，股票數量為 2.12 億股，營業利潤率預計約為 26%，每股收益將在 6.05 至 6.25 美元之間。

Operating cash flow is expected to move in line with net income, although there will be some quarterly variance based on working capital.

營運現金流預計將與淨利潤保持一致，儘管根據營運資本會出現一些季度差異。

In Q3, we expect revenue to range between $1.51 billion and $1.67 billion, which at the midpoint implies an increase of 4% year-over-year. We expect Q3 consolidated gross margins to be roughly 71%, and operating margin to be approximately 28%. EPS is expected to be in the range of $1.64 to $1.74.

我們預計第三季營收將在 15.1 億美元至 16.7 億美元之間，中間值意味著年增 4%。我們預計第三季綜合毛利率約為 71%，營業利潤率約為 28%。 EPS 預計在 1.64 美元至 1.74 美元之間。

In closing, I want to thank our customers, employees and investors once again for their steadfast commitment and investment in NetApp. I remain confident in our ability to manage the elements in our control and focus our key priorities to help customers successfully achieve their digital and cloud journeys. Our portfolio is well aligned to priority IT investments, and we are committed to delivering sustainable, long-term value for our stockholders.

最後，我要再次感謝我們的客戶、員工和投資者對 NetApp 的堅定承諾和投資。我對我們管理控制範圍內的要素的能力仍然充滿信心，並專注於我們的關鍵優先事項，以幫助客戶成功實現他們的數位和雲端之旅。我們的投資組合與優先 IT 投資非常一致，我們致力於為股東提供可持續的長期價值。

I'll now turn the call over to Kris to open the Q&A. Kris?

我現在將把電話轉給克里斯來開始問答。克里斯？

Thanks, Mike. Operator, we'll begin the Q&A.

謝謝，麥克。接線員，我們開始問答。

(Operator Instructions) Today's first question comes from Mehdi Hosseini with SIG.

（操作員說明）今天的第一個問題來自 SIG 的 Mehdi Hosseini。

Two quick follow-ups. Given the updated fiscal year '24 revenue guide, should we assume that the July product revenue of $590 million was essentially the bottom and you would continue to see a sequential improvement in the second half?

兩次快速跟進。鑑於更新後的 24 財年收入指南，我們是否應該假設 7 月份的產品收入 5.9 億美元基本上處於底部，並且您會在下半年繼續看到連續改善？

And the second question has to do with the momentum with some of these higher margin, higher capacity to product. To what extent should we assume these market share has enabled you to ride out a tough IT spend environment?

第二個問題與其中一些更高利潤、更高生產能力的勢頭有關。我們應該在多大程度上假設這些市場佔有率使您能夠安然度過艱難的 IT 支出環境？

I'll take the second one, and then Mike can take the first, maybe. We feel very good about the momentum with our C-Series portfolio. We are able to serve customer workloads and use cases, particularly at a time of soft IT spending, that we are aligned to the value that they bring. And the software value of ONTAP is particularly useful in these all-flash configurations. We are also expanding the total addressable market with the all-SAN array configuration of the CDs and of the high-performance flash products. So I'm excited about what the future holds for our flash business, and it is because of that momentum and the focus of our go-to-market that we've taken up our guide for the full year.

我會選擇第二個，然後麥克可能會選擇第一個。我們對 C 系列產品組合的動能感到非常滿意。我們能夠為客戶的工作負載和用例提供服務，特別是在 IT 支出軟弱的時期，我們與它們帶來的價值保持一致。 ONTAP 的軟體價值在這些全快閃配置中特別有用。我們也透過 CD 和高效能快閃記憶體產品的全 SAN 陣列配置來擴展整個潛在市場。因此，我對我們快閃記憶體業務的未來感到興奮，正是由於這種勢頭和我們進入市場的重點，我們才制定了全年指南。

Thank you, George. On your question on product revenue, certainly for fiscal '24, implied in the guidance is continued growth and our growth in the second half for the product line. Total revenue growth averages about 4% for the second half. We have not guided for fiscal '25 yet, but we certainly would -- we feel good about going into '25 as it relates to our product portfolio and our operational improvements.

謝謝你，喬治。關於您關於產品收入的問題，當然是 24 財年的收入，指導中暗示的是持續成長以及我們下半年產品線的成長。下半年總收入平均成長約4%。我們還沒有為 25 財年提供指導，但我們肯定會——我們對進入 25 財年感覺良好，因為這與我們的產品組合和營運改進有關。

And our next question comes from Meta Marshall with Morgan Stanley.

我們的下一個問題來自摩根士丹利的梅塔·馬歇爾。

A couple of questions. Just one, realizing that you're saying there's no kind of major contributor to the gross margin upside, but just how do you see NAND prices increasing, just kind of an outlook on how you see gross margins developing throughout the year and whether these are sustainable?

有幾個問題。只是一個，意識到你說毛利率上升沒有任何主要因素，但你如何看待 NAND 價格的上漲，只是對全年毛利率如何發展以及這些是否會增長的展望可持續的？

And then just as a second question, do you attribute kind of the more confident in the year to the early success that you're having with C-Series? Do you kind of attribute it to signs you're kind of seeing coming out of INSIGHT? Just kind of what gives you more confidence on the year just given the dampened environment?

接下來的第二個問題是，您是否將今年更有信心歸因於 C 系列的早期成功？您是否將其歸因於您從洞察力中看到的跡象？考慮到環境低迷，是什麼讓您對這一年更有信心？

Meta, this is Mike. I'll take the first one, and then George will take the second one. So the comment in the script was specifically related to no onetime transactions that drove the overachievement product margins. As we look forward through the rest of fiscal '24 and '25, and let's start with the second half of '24, we're currently guiding product gross margins between 58% and 60%. As we all know, we continue to benefit from the lowest component costs we've seen in many years. We have included some room in our guidance to be flexible in pricing as well as mix and capacity. And as we've all seen from the industry analyst reports, we do expect that component pricing has bottomed out in our Q2 and will rise as we go throughout the rest of '24.

梅塔，這是麥克。我拿第一個，然後喬治拿第二個。因此，腳本中的評論與沒有推動超額產品利潤的一次性交易特別相關。當我們展望 24 財年和 25 財年的剩餘時間時，讓我們從 24 財年下半年開始，我們目前將產品毛利率指導在 58% 到 60% 之間。眾所周知，我們繼續受益於多年來最低的組件成本。我們在指導中留出了一些空間，以便在定價、組合和容量方面保持靈活性。正如我們從行業分析師報告中看到的那樣，我們確實預計組件價格已在第二季觸底，並將在 2024 年剩餘時間內上漲。

We do feel very good about our position for the rest of the fiscal year as it relates to purchase agreements that we struck as well as prebuy. Similar to '24, we are looking to extend that into '25, and we'll continue to work with our suppliers as we go through the rest of the year. I'd also note that, hey, historically, though, the storage industry pricing evolves as component pricing changes, and we expect that trend to continue.

我們確實對本財年剩餘時間的狀況感到非常滿意，因為這與我們達成的購買協議以及預購協議有關。與 24 年類似，我們希望將其延續到 25 年，並​​且在今年剩餘時間內我們將繼續與供應商合作。我還想指出的是，嘿，從歷史上看，儲存行業的定價隨著組件定價的變化而變化，我們預計這種趨勢將持續下去。

So all that being said, we feel good about the second half of '24 as we've included in our outlook. As we head into '25, we'll see how things progress as it relates to mix, pricing and component costs, and we'll guide '25 when we get to our Q4 call. With that, I'll hand it to George.

話雖如此，我們對 24 年下半年的情況感覺良好，因為我們已將其納入我們的展望中。當我們進入 25 年時，我們將看到與組合、定價和組件成本相關的事情進展如何，當我們進行第四季度電話會議時，我們將指導 25 年。說完，我會把它交給喬治。

With regard to your question on the underlying factors that support our optimism in the guide, first of all, from a macro perspective, it's still a challenged macro with the soft demand environment. We saw incremental improvement in North America but equally, a deceleration in certain parts of Europe, mirroring the economic landscape in the public domain. I think within the large enterprise, we see a case-by-case situation in terms of demand and we continue to see a more robust product business in the commercial or mid-market customer base, so no real fundamental change in the demand environment.

關於你提到《指南》中支持我們樂觀情緒的根本因素的問題，首先，從宏觀角度來看，在需求疲軟的環境下，宏觀經濟仍然面臨挑戰。我們看到北美的經濟逐漸改善，但同樣，歐洲某些地區的經濟也在減速，這反映了公共領域的經濟格局。我認為在大型企業中，我們在需求方面看到了具體情況，我們繼續看到商業或中端市場客戶群中的產品業務更加強勁，因此需求環境沒有真正的根本變化。

With regard to the two underlying factors for confidence. One is we are a much more focused go-to-market organization, and we are seeing the second consecutive quarter of pipeline performance from the changes we made at the start of the fiscal year. And so I want to credit our go-to-market teams for their focus and the results that they have delivered this quarter, and that is one of the key contributors.

關於信心的兩個根本因素。一是我們是一個更專注於進入市場的組織，並且我們從本財年開始時所做的改變中看到了連續第二季的管道績效。因此，我要讚揚我們的市場推廣團隊的專注和他們本季交付的成果，這是關鍵貢獻者之一。

The second is the really strong performance of our all-flash portfolio. We talked in the prepared remarks about a large competitive win against a purely flash competitor. And we see that across multiple segments where we are seeing competitive wins with our portfolio. So those are the two fundamental reasons: go-to-market focus and execution and confidence in our portfolio.

第二是我們的全快閃產品組合的強勁表現。我們在準備好的發言中談到了對純粹閃存競爭對手的巨大競爭勝利。我們看到，在多個細分市場中，我們的產品組合都取得了競爭性勝利。因此，這就是兩個根本原因：市場重點、執行力以及對我們投資組合的信心。

And our next question today comes from Krish Sankar with TD Cowen.

今天我們的下一個問題來自 Krish Sankar 和 TD Cowen。

Actually I have two questions for George. George, first one, kind of like what are the lead times for the storage products today? And what does that imply for your visibility when you look into calendar '24?

事實上我有兩個問題想問喬治。喬治，第一個，有點像今天儲存產品的交貨時間是多少？當您查看 '24 日曆時，這對您的可見度意味著什麼？

And the second question is, curious whether on a storage content per customer, have you seen any increase in it because of AI? Or do you think that will happen maybe at some point in the future? Or is there any way to put some time lines around it?

第二個問題是，您好奇每位客戶的儲存內容是否因人工智慧而增加？或者您認為這可能會在未來的某個時候發生嗎？或是有什麼辦法可以安排一些時間線嗎？

With regard to lead times, we are at normal lead times for our portfolio, and we reached those normal lead times a few quarters ago.

關於交貨時間，我們的產品組合處於正常的交貨時間，並且我們在幾個季度前達到了正常的交貨時間。

With regard to the question on storage demand for AI, listen, I think we have been in the AI business, for predictive AI or industrial AI, for 5 years. And there are large data sets that are built out to support training of those models and the implementation of those models across the enterprise. So we have a good and robust business there.

關於人工智慧儲存需求的問題，聽著，我認為我們從事人工智慧業務，無論是預測性人工智慧還是工業人工智慧，已經有 5 年了。並且建構了大型資料集來支援這些模型的培訓以及這些模型在整個企業中的實施。因此，我們在那裡擁有良好而強勁的業務。

We are starting to see early signs of trials and use cases with generative AI. Generative AI is particularly well suited for NetApp's capabilities because it operates on unstructured data: files, documents, video, audio and so on. And so we have large repositories of those with customers, and we are able to use that data set and add to that data set to support AI use cases. This quarter, we won a large AI implementation at a very large U.S. bank that was really focused on generative AI document summarization, analysis and so on, and we are the infrastructure foundation for that. So it will take time for generative AI to become a demand driver. We are seeing early positive signs there.

我們開始看到生成式人工智慧試驗和用例的早期跡象。生成式 AI 特別適合 NetApp 的功能，因為它可處理非結構化資料：檔案、文件、視訊、音訊等。因此，我們擁有大量客戶儲存庫，我們能夠使用該資料集並添加到該資料集以支援人工智慧用例。本季度，我們贏得了一家大型美國銀行的大型人工智慧實施項目，該銀行真正專注於生成人工智慧文件摘要、分析等，而我們是該項目的基礎設施基礎。因此，生成式人工智慧需要一段時間才能成為需求驅動力。我們在那裡看到了早期的積極跡象。

And our next question comes from Steven Fox of Fox Advisors.

我們的下一個問題來自福克斯顧問公司的史蒂文·福克斯。

I had two questions on the product business. So first of all, I'm not fully understanding what you're saying about the pricing environment. At one point you said you maintained disciplined pricing and then you said you would be flexible going forward with pricing. So can you sort of give us a sense for how challenging or not challenging it is to hold pricing in these gross margins?

我有兩個關於產品業務的問題。首先，我不完全理解你所說的定價環境。您曾經說過，您保持嚴格的定價，然後您又說您將在定價方面保持靈活。那麼您能否讓我們了解一下將定價保持在這些毛利率內有多大的挑戰性或沒有挑戰性？

And the second one is related to the product gross margins. I'm just still trying to get a sense for how sustainable this last quarter and the guidance for the next quarter is in terms of product gross margins, even if we adjust for the changes in NAND pricing.

第二個與產品毛利率有關。即使我們根據 NAND 定價的變化進行調整，我仍然試圖了解上個季度的可持續性以及下個季度的指導在產品毛利率方面的可持續性。

Listen, on pricing, we've been in this industry for a very long period of time. And while there will be people who are vendors who are aggressive in any particular transaction or other, depending on their own strategic reasons, overall, we don't see fundamental changes in the pricing environment. Clearly, the room with lower component costs gives you an opportunity to do more in terms of pricing flexibility. But I think that our past quarter's gross margin results are a demonstration of the fact that we've been able to maintain pricing discipline at a time where demand is soft, and it talks to both the differentiation of our product portfolio and the execution in our field teams.

聽著，關於定價，我們已經進入這個行業很長一段時間了。儘管有些供應商在任何特定交易或其他交易中都表現出侵略性，但總體而言，我們沒有看到定價環境發生根本性變化，這取決於他們自己的策略原因。顯然，組件成本較低的房間讓您有機會在定價靈活性方面做更多的事情。但我認為，我們上個季度的毛利率結果證明了這樣一個事實，即我們能夠在需求疲軟的情況下維持定價紀律，這既體現了我們產品組合的差異化，也體現了我們的執行力。現場團隊。

I'll have Mike talk a bit about your second question.

我會讓麥克談談你的第二個問題。

Thanks, George. And I'll refer to George's comments, Steve, when I talk about the sustainability. So we finished at 61% product margins in Q2. We guided a range of 50% to 60% in the back half. We feel very good about our component costs and the view of that for the rest of our fiscal '24. The reason why we guided slightly lower than Q2 from a margin perspective, that's exactly what George talked about, which is we feel really good about our pricing discipline in our products, but we want to make sure and leave room to be flexible should we need that in the second half. That's the one part of the equation that we don't control as much as the cost. So hopefully, that helps. We would not have guided that range if we didn't feel good about it for the second half, Steve.

謝謝，喬治。當我談論可持續性時，我會參考喬治的評論，史蒂夫。因此，我們第二季的產品利潤率為 61%。我們在後半段指導了50%到60%的範圍。我們對我們的零件成本以及對 24 財年剩餘時間的看法非常滿意。從利潤率角度來看，我們的指導方針略低於第二季度，這正是喬治所說的，我們對產品的定價紀律感到非常滿意，但我們希望確保並在需要時留出靈活性的空間那是在下半場。這是等式中我們無法像成本一樣控制的一部分。希望這會有所幫助。如果我們下半場感覺不好，我們就不會引導這個範圍，史蒂夫。

And our next question today comes from Asiya Merchant with Citi.

今天我們的下一個問題來自花旗銀行的 Asiya Merchant。

Maybe just a little bit on the macro, clearly, you're executing really well. Should we expect slightly better than seasonal growth for you guys in the second half, just given the fact that you guys are ramping on a new product? And then just broadly on the macro, are we starting to see more adoption of flash across the customer base in general as people start to appreciate maybe more -- pricing being more attractive? Or is this something that was specific to NetApp just given the success that you're seeing in your C-Series?

也許只是宏觀上的一點點，顯然，你執行得非常好。鑑於你們正在大力開發新產品，我們是否應該預期你們下半年的成長略好於季節性成長？然後，從宏觀上看，我們是否開始看到整個客戶群越來越多地採用閃存，因為人們開始欣賞定價更具吸引力？還是考慮到您在 C 系列中看到的成功，這是 NetApp 特有的東西？

I'll take the second, and Mike will cover the first question. Thank you for the question. Listen, I think that with regard to customer adoption of flash-based technologies, we saw the high-performance landscape moved to flash several years ago, and there's been a steady movement of that footprint to flash. That is about 15% to 20% of the overall storage market, maybe 20%. The next tranche of use cases are more in the general-purpose application footprint. These are in the process of migrating over multiple years. We are in the early innings of that migration. And so we feel very good about the position of our flash portfolio to attack that part of the market. It is essentially the 10K hard drive market that is about 30% to 40% of the hard drive market, so you'll see that move over time.

我將回答第二個問題，麥克將回答第一個問題。感謝你的提問。聽著，我認為，就客戶對基於閃存的技術的採用而言，我們幾年前就看到高性能領域已轉向閃存，並且該足跡一直在穩步轉向閃存。約佔整個儲存市場的 15% 到 20%，甚至 20%。下一部分用例更多地涉及通用應用程式足跡。這些都在多年的遷移過程中。我們正處於遷移的早期階段。因此，我們對我們的快閃記憶體產品組合在攻擊這部分市場的地位感到非常滿意。本質上，10K 硬碟市場約佔硬碟市場的 30% 到 40%，因此隨著時間的推移，您會看到這種變化。

And so I'll let Mike talk to the first question you had.

因此，我將讓麥克談談您提出的第一個問題。

Sure. On your question, Asiya, as it relates to linearity, we did see a nice quarter-on-quarter pickup in Q2 which was really driven by the factors that George discussed. And looking at the midpoint of guidance for the year, we do expect it to be relatively consistent with the numbers we like to talk about, which is the 48% in the first half and 52% in the second. Again, keep in mind that the good bit of our revenue, thankfully, comes from support, very predictable. Hopefully, we can do a little better, but the midpoint of guidance is pretty much right on linearity.

當然。關於你的問題，Asiya，因為它與線性有關，我們確實看到第二季度出現了不錯的季度環比回升，這實際上是由喬治討論的因素驅動的。看看今年指導的中點，我們確實預計它與我們喜歡談論的數字相對一致，即上半年的 48% 和下半年的 52%。再次請記住，值得慶幸的是，我們收入的大部分來自支持，這是非常可預測的。希望我們能做得更好一點，但指導的中點在線性方面幾乎是正確的。

And our next question today comes from Wamsi Mohan with Bank of America.

今天我們的下一個問題來自美國銀行的瓦姆西·莫漢 (Wamsi Mohan)。

I was wondering, George, if you could comment a little bit on the public cloud revenue trajectory in fiscal '24 given some of the changes that you noted. And given those changes in cloud ops, how does that change your long-term revenue outlook for that business on a relative basis? I think before, you were thinking 40% of total public cloud. Wondering where you're thinking that, that might shake out now in the long term.

喬治，我想知道您是否可以對 24 財年公共雲收入軌跡發表一些評論，因為您注意到了一些變化。鑑於雲端運營方面的這些變化，相對而言，這會如何改變您對該業務的長期收入前景？我認為之前，您想到的是公有雲總量的 40%。想知道您的想法如何，從長遠來看，這可能會發生變化。

So let me provide some baseline before I jump into the strategy review takeaways and the implications. First, cloud is roughly 10% of total revenue. Subscription is 23% of cloud revenue, down about 35% a year ago. So it's a small percentage of the total cloud revenue and an even smaller percentage of the total company revenue. The mix of cloud storage and cloud ops is still relatively consistent, approximately 60-40.

因此，在我開始討論策略審查要點及其影響之前，讓我先提供一些基準。首先，雲端大約佔總收入的 10%。訂閱佔雲端收入的 23%，比一年前下降了約 35%。因此，它只佔雲端總收入的一小部分，占公司總收入的比例甚至更小。雲端儲存和雲端操作的組合仍然相對一致，大約為 60-40。

We focus our strategy review on all elements of our cloud portfolio and have 5 key takeaways that I outlined in my prepared comments. Sharpening the focus on first-party and hyperscaler marketplace storage services, these performed very well in the second quarter and continue to be uniquely differentiated both to end customers of our on-premises solution and a vehicle to acquire net new customers alongside our cloud partners.

我們將策略審查的重點放在雲端產品組合的所有要素上，並在我準備的評論中概述了 5 個關鍵要點。這些服務加強了對第一方和超大規模市場儲存服務的關注，在第二季度表現非常出色，並且繼續對我們的本地解決方案的最終客戶以及與我們的雲端合作夥伴一起獲取淨新客戶的工具保持獨特的差異化。

We would carefully manage the transition of some of the storage subscriptions to our consumption offering. As we roll out [1T] services, customers that used to buy storage subscriptions prefer to now go towards the 1T offering, and we'll manage that carefully. We will integrate some stand-alone services like data protection and privacy into our cloud storage offerings so that they bring more value to the base offering. And we'll refocus other services like Cloud Insights, which are subscription services, and Instaclustr to differentiate NetApp in the cloud storage workload motions that we are focused on.

我們將仔細管理一些儲存訂閱到我們的消費產品的過渡。隨著我們推出 [1T] 服務，過去購買儲存訂閱的客戶現在更願意選擇 1T 產品，我們將謹慎管理。我們將把資料保護和隱私等一些獨立服務整合到我們的雲端儲存產品中，以便它們為基礎產品帶來更多價值。我們將重新關注其他服務，例如 Cloud Insights（訂閱服務）和 Instaclustr，以使 NetApp 在我們關注的雲端儲存工作負載變化中脫穎而出。

We've decided to exit some stand-alone services like Virtual Desktop and SaaS Backup services. And all of this will lead to about a $55 million ARR headwind from these actions in the second half of fiscal year '24. The reduction in public cloud subscription services will be partially offset by the good growth of our consumption cloud storage services in particular. And so our plans for the second half of the year assumes that we will have a modest decline in cloud revenue. We're not going to guide it but we assume that. And we have built that into the guidance for the fiscal year '24, which we took up by approximately $100 million. We're not going to comment today on the outlook for the overall cloud business. We will talk to you when we update our long-term models to that effect.

我們決定退出一些獨立服務，例如虛擬桌面和 SaaS 備份服務。所有這些都將導致 24 財年下半年的這些行動帶來約 5,500 萬美元的 ARR 阻力。公有雲訂閱服務的減少將被我們消費雲端儲存服務的良好成長所部分抵消。因此，我們下半年的計劃假設我們的雲端收入將略有下降。我們不會指導它，但我們假設如此。我們已將其納入 24 財年的指導中，我們為此花費了約 1 億美元。我們今天不會對整體雲端業務的前景發表評論。當我們更新我們的長期模型時，我們會與您交談。

Okay. And if I could, Mike, your margins were really, really strong, both sequentially and on an absolute basis. Wondering, as we think about free cash flow margins, would all this EBIT margin improvement flow through into free cash flow margins?

好的。如果可以的話，麥克，你的利潤率真的非常非常高，無論是連續的還是絕對的。想知道，當我們考慮自由現金流利潤率時，所有這些息稅前利潤率的改善是否都會轉化為自由現金流利潤率？

And secondarily, just on the EBIT margins, is there a way to dimension out of the three things that you noted, maybe rank order or order of magnitude, so that we can get some sense around the confidence of sustainability, especially as it relates to commodity pricing, which you seem to indicate won't really matter too much sequentially, but just wondering what was the biggest sequential driver of that margin improvement.

其次，就息稅前利潤而言，是否有一種方法可以確定您提到的三件事，也許是排名順序或數量級，以便我們能夠對可持續性的信心有一些了解，特別是當它與商品定價，您似乎表明這對連續性並沒有太大影響，但只是想知道利潤率改善的最大連續驅動因素是什麼。

Sure. So Wamsi, two questions there. First of all, on cash flow, and I'll do operating cash flow. We do expect for the year, I talked about it in the prepared remarks, operating cash flow to move relatively consistently with non-GAAP net income. So to your question, yes, as the income increases, so should operating cash flow, short of any quarterly fluctuations in working capital. So all good there in terms of free cash flow margins largely moving with operating cash flow.

當然。 Wamsi，有兩個問題。首先，關於現金流，我會做經營現金流。我們確實預計今年的營運現金流將與非公認會計準則淨利潤相對一致，我在準備好的演講中談到了這一點。因此，對於你的問題，是的，隨著收入的增加，經營現金流也應該增加，營運資金不會有任何季度波動。因此，就自由現金流利潤率而言，一切都很好，很大程度上隨著經營現金流的變化而變化。

And then on the second question, and I'll answer this on a sequential basis, not a year-over-year basis. As we look from Q1 to Q2, certainly, the mix shift was a significant impact. We did receive some benefit on costs as those older inventories are now completely gone. And then, of course, pricing discipline is in there as well. So I would rank, from a sequential perspective, the order that I did in my prepared remarks in terms of mix shift, which is both product and capacity, then favorable COGS and then pricing discipline. So hopefully, that helps.

然後關於第二個問題，我將按順序回答這個問題，而不是逐年回答。當我們從第一季到第二季來看，當然，混合轉變產生了重大影響。我們確實獲得了一些成本效益，因為那些舊庫存現在已經完全消失了。當然，定價紀律也在那裡。因此，我會從順序角度對我在準備好的評論中所做的混合轉變順序進行排序，即產品和產能，然後是有利的銷貨成本，然後是定價紀律。希望這會有所幫助。

Our next question comes from Nehal Chokshi with Northland Capital Markets.

我們的下一個問題來自 Northland Capital Markets 的 Nehal Chokshi。

You guys mentioned 30% growth in first-party storage services. What's the NRR underlying that?

你們提到第一方儲存服務成長了 30%。背後的 NRR 是什麼？

We don't break those out. I think we feel very good about we have brought in the number of workloads that we serve. We have brought in the number of hyperscalers now with Google coming online. We have brought lower price points for Azure and Google, and we have brought higher price points for Amazon. So I feel really, really good about the momentum in our first-party cloud storage services.

我們不會把它們分解出來。我認為我們對所服務的工作負載數量的增加感到非常滿意。隨著Google上線，我們已經引進了一定數量的超大規模企業。我們為 Azure 和 Google 帶來了更低的價格點，為亞馬遜帶來了更高的價格點。因此，我對我們第一方雲端儲存服務的發展勢頭感到非常非常滿意。

Maybe phrasing it in a different way, the driver of that growth is expansion or lands?

也許換句話說，成長的驅動力是擴張還是土地？

The combination of both new customer adds and add new workload use cases within existing customers as well as expansions.

新客戶的結合增加了現有客戶以及擴充功能中的新工作負載用例。

Great. And then a follow-up quick question. George, you talked about how you had a $16 million win with a C-Series. And you mentioned 4 drivers behind that. Which of those 4 drivers was really probably the biggest element of that win?

偉大的。然後是一個後續的快速問題。喬治，您談到了您如何憑藉 C 系列贏得了 1600 萬美元的勝利。你提到了背後的 4 個驅動因素。這 4 位車手中哪一位真正可能是這場勝利的最大因素？

Listen, I think we have a really strong operating system capability for performance and simplification at scale. Many of the other vendors that start simple run into real trouble when you try to build a large enterprise environment. And we have a really good portfolio to do that. I think that was probably the #1 reason. And the #2 reason is now that we have the C-Series, we have a price point to deliver to customers who used to not have it.

聽著，我認為我們擁有非常強大的作業系統能力，可以實現大規模的效能和簡化。當您嘗試建立大型企業環境時，許多其他從簡單開始的供應商都會遇到真正的麻煩。我們有一個非常好的產品組合來做到這一點。我認為這可能是第一大原因。第二個原因是現在我們有了 C 系列，我們有一個價格點可以提供給以前沒有它的客戶。

Our next question comes from Simon Leopold with Raymond James.

我們的下一個問題來自西蒙·利奧波德和雷蒙德·詹姆斯。

First, just a quick clarification. On the strategic review update, I just want to confirm, it sounds like you've concluded that review apart from sort of regular business kind of reviews. I just want to confirm that that's the case. And then really, the element I'm trying to sort of tease out here is you've taken out $55 million of ARR, so roughly $15 million of revenue, yet your outlook is higher. What is informing the higher outlook? What's been the biggest surprise and the biggest delta contributing to the higher outlook?

首先，快速澄清一下。關於策略審查更新，我只想確認一下，聽起來您已經得出結論，除了常規業務類型的審查之外，還進行了審查。我只是想確認情況確實如此。事實上，我想在這裡挑逗的元素是你已經拿出了 5500 萬美元的 ARR，所以大約有 1500 萬美元的收入，但你的前景更高。什麼告訴我們更高的前景？導致更高前景的最大驚喜和最大增量是什麼？

So first of all, let me hit that in three parts, right? First, we have concluded the strategic review. We have a set of good decisions we've made that we need to now go implement that will result in a more focused cloud business and a healthier subscription base, albeit a smaller one to build off of. We believe that these actions should allow us to get back to growth in fiscal year '25 off a healthier business mix in cloud. We always will do reviews of various aspects of our portfolio as ongoing parts of our business. But the focused strategic review, I would say, is mostly complete.

首先，讓我把它分成三個部分，對嗎？首先，我們完成了戰略審查。我們已經做出了一系列良好的決策，我們現在需要實施這些決策，這將帶來更專注的雲端業務和更健康的訂閱基礎，儘管規模較小。我們相信，這些行動應該能讓我們在 25 財年透過更健康的雲端業務組合恢復成長。作為我們業務的持續組成部分，我們始終會對我們的投資組合的各個方面進行審查。但我想說，重點戰略審查已基本完成。

I think the second is with regard to the confidence we have, listen, we said that when we guided the second half of the year, we took up the overall guide by close to $100 million. That is mostly based on the momentum of our all-flash hybrid cloud storage portfolio. We've raised the second half guide by substantially more than we beat in the second quarter. And it also accounts for the fact that we will have some headwinds through the rest of fiscal year '24 in our cloud subscription business, which will only be partially offset by growth in our cloud consumption business.

我認為第二個是關於我們的信心，聽著，我們說過，當我們指導下半年時，我們佔了整體指導的近1億美元。這主要是基於我們全快閃混合雲端儲存產品組合的勢頭。我們將下半場的指導值提高了很多，遠高於第二季的水平。這也說明了這樣一個事實：在 24 財年剩餘時間裡，我們的雲端訂閱業務將面臨一些阻力，而這些阻力只能被我們雲端消費業務的成長部分抵消。

And our next question then comes from Aaron Rakers with Wells Fargo.

我們的下一個問題來自富國銀行的 Aaron Rakers。

A lot of those have been asked and answered, but I wanted to go back to some prior discussion around this notion of AI. And we hear a lot about like AI, large language models becoming smaller and implemented more maybe pervasively over time in traditional enterprise environments. We've even heard more about inferencing and how that might evolve in enterprises. I'm just curious, are you seeing at all any signs of that pulling, either discussions or early signs, of demand? And if so, is it a prerequisite that, that has to pull all-flash storage with that kind of footprint? And the reason I ask is there's a lot of discussion about a lot of this existing infrastructure that's going to have to be upgraded to support these acceleration of AI in infrastructure. Sorry for the long-winded question.

其中許多問題已經被提出和回答，但我想回到之前圍繞人工智慧概念的一些討論。我們聽到很多關於人工智慧的說法，隨著時間的推移，大型語言模型變得更小，並且在傳統企業環境中可能更普遍地實現。我們甚至聽說了更多關於推理以及它如何在企業中發展的資訊。我只是很好奇，您是否看到任何拉動需求的跡象，無論是討論還是早期跡象？如果是這樣，是否必須採用這種佔用空間的全快閃儲存？我問這個問題的原因是，有許多關於現有基礎設施的討論，這些基礎設施必須升級，以支援基礎設施中人工智慧的加速。抱歉問了這麼長的問題。

Yes. No problem. I'll address that in three steps. I think first is the use of smaller models as opposed to the very, very large model, yes, that term is distillation. We do see that going on in customers whereas they kind of run these different models, they begin to realize that you can get as effective an outcome with much faster results and a smaller number of parameters. For example, the demonstration, the live demonstration, that we showed at NetApp INSIGHT actually was the distillation. We started with a much larger LLM and we brought it to a much smaller range of parameters because you get the same benefit. So that's going on.

是的。沒問題。我將分三步驟解決這個問題。我認為首先是使用較小的模型，而不是非常非常大的模型，是的，這個術語就是蒸餾。我們確實看到，當客戶運行這些不同的模型時，他們開始意識到，您可以透過更快的結果和更少的參數來獲得同樣有效的結果。例如，我們在 NetApp INSIGHT 上展示的演示、現場演示實際上是蒸餾。我們從一個更大的法學碩士開始，我們把它的參數範圍縮小了很多，因為你可以得到同樣的好處。事情就是這樣。

The second is with regard to training environment, which is the part of the data life cycle in AI, when you aggregate a data set and you train the algorithm or the language model for better answers to be able to either predict a good outcome or generate a relevant outcome, you do need very high performance storage because the GPUs that drive those algorithms need very, very fast parallel access to data. And with our unstructured data scale-out file system, we feel very well positioned for that.

第二個是關於訓練環境，這是人工智慧資料生命週期的一部分，當你聚合資料集並訓練演算法或語言模型以獲得更好的答案時，能夠預測良好的結果或產生一個相關的結果是，您確實需要非常高效能的存儲，因為驅動這些演算法的GPU 需要非常非常快的平行資料存取。借助我們的非結構化資料橫向擴展檔案系統，我們感覺自己處於非常有利的位置。

And then the third is with regard to inferencing, Inferencing is the part of the data life cycle where you've taken a model and now you want to put it into production on our data set, could be on a factory floor, could be in a distributed office. There, it really depends on the data set and the use case what type of storage you need. You may need it for larger environments like shop floors, but you may not need super-high performance storage and compute for a very small office, like a claims office, for example, in insurance.

第三個是關於推理，推理是資料生命週期的一部分，您已經採用了模型，現在您希望將其投入到我們的資料集上的生產中，可以在工廠車間，也可以在分散式辦公室。在那裡，這實際上取決於資料集和用例您需要什麼類型的儲存。對於車間等較大的環境，您可能需要它，但對於非常小的辦公室（例如保險理賠辦公室），您可能不需要超高效能儲存和運算。

That's very helpful. And as a quick follow-up real quickly, who is your predominant competitor that you see on the block-optimized C-level all-flash arrays or C-Series arrays?

這非常有幫助。作為快速跟進，您在區塊優化的 C 級全快閃陣列或 C 系列陣列上看到的主要競爭對手是誰？

The block market is a crowded market. We feel very good about our offerings in the mid-range especially and the ability to offer a single solution with common automation, common administration, common life cycle management for both files and block. And no other vendor in the market can do that. And so we feel very good. I think the large competitors are clearly Dell and HPE are in the midrange and then you occasionally see some [pures].

大宗市場是一個擁擠的市場。我們對我們的中端產品感到非常滿意，尤其是能夠為文件和區塊提供具有通用自動化、通用管理、通用生命週期管理的單一解決方案。市場上沒有其他供應商可以做到這一點。所以我們感覺很好。我認為最大的競爭對手顯然是戴爾和慧與，它們處於中端，然後你偶爾會看到一些[純]。

Our next question today comes from Samik Chatterjee with JPMorgan.

今天我們的下一個問題來自摩根大通的 Samik Chatterjee。

I guess if I start with the public cloud strategic review that you discussed, just wanted to clarify, based on the changes you're making there, are there any cost implications, other changes? I'm assuming that allows you to focus your go-to-market a bit more, but is there any sort of cost implication where you're enabling some cost take out there?

我想如果我從您討論的公有雲策略審查開始，只是想根據您在那裡所做的更改來澄清，是否存在任何成本影響或其他更改？我假設這可以讓您更專注於進入市場，但是如果您在那裡啟用一些成本，是否會產生任何成本影響？

And secondly, Mike, you mentioned sort of the 58% to 60% gross margin on the product revenue in the second half. When we think about sort of prebuys that you might do going into fiscal '25, how should we think about the trajectory of the gross margin into fiscal '25. Any levers that you have to offset sort of the flow-through of that to the operating margin that you're really reporting at a very strong level right now?

其次，麥克，您提到下半年產品收入的毛利率為 58% 至 60%。當我們考慮進入 25 財年可能進行的預購時，我們應該如何考慮 25 財年的毛利率軌跡。您必須使用任何槓桿來抵消您目前確實處於非常強勁水平的營業利潤率的流動嗎？

On the cost side, listen, I think we will, for the most part, just repurpose those resources to drive growth in our first-party cloud storage. We feel good about the demand environment there, and we want to continue to accelerate that. Whatever cost opportunities they are, it's been factored into the second half guidance that we gave you.

在成本方面，聽著，我認為我們將在很大程度上重新利用這些資源來推動我們第一方雲端儲存的成長。我們對那裡的需求環境感覺良好，並且希望繼續加速這一進程。無論機會成本如何，我們都已將其納入我們為您提供的下半年指導中。

Okay. Thanks for the question, Samik. On the question, especially going into fiscal '25 from a product margin, I'll go over a little bit of my answer to Meta when she asked the same question. So as we've all seen from the analyst reports, we do expect that NAND has largely bottomed. We're at the loss component pricing we've been at in a while. We did a really nice job, again, kudos to the supply chain team for doing the prebuys and purchase agreements for '24. We will certainly look at those and continue to look at those in '25, but it has to make sense for both NetApp and our suppliers.

好的。謝謝你的提問，薩米克。關於這個問題，特別是從產品利潤率進入 25 財年，當 Meta 問同樣的問題時，我將回顧我對她的回答。正如我們從分析師報告中看到的那樣，我們確實預計 NAND 已經基本觸底。我們已經採用虧損部分定價一段時間了。我們做得非常好，再次感謝供應鏈團隊為 24 年完成的預購和採購協議。我們當然會關注這些內容，並在 25 年繼續關注這些內容，但它必須對 NetApp 和我們的供應商都有意義。

So as we go into '21, there are certainly some levers. The big question there, Samik, that I don't have an answer to is what does the market do and pricing do over the next 6 months. That's why we're going to wait. We will guide the margin number when we guide for the full year because we really want to get through the next couple of quarters to see how component pricing goes, what we expect the mix to be and then what happens from a pricing environment perspective.

因此，當我們進入 21 世紀時，肯定會有一些槓桿。 Samik，我無法回答的一個大問題是，未來 6 個月市場和定價會發生什麼變化。這就是我們要等待的原因。當我們指導全年時，我們將指導利潤率數字，因為我們真的希望在接下來的幾個季度中看看零件定價如何，我們期望的組合是什麼，然後從定價環境的角度來看會發生什麼。

And our next question comes from Ananda Baruah with Loop Capital.

我們的下一個問題來自 Loop Capital 的 Ananda Baruah。

I guess, George, an inference-related question, maybe two quick parts. Are you hearing any of your customers talk about legislation around inferencing having an impact on their plans? And I guess, just generally speaking, any opinion you have on sort of what that ramp over what time period kind of looks like, even if just anecdotally would be helpful. I appreciate it.

喬治，我想，這是一個與推理相關的問題，也許有兩個快速部分。您是否聽到任何客戶談論有關推理的立法對其計劃的影響？我想，一般來說，你對這段時間的成長情況有什麼看法，即使只是軼事，也會有所幫助。我很感激。

Yes. I think, first of all, we are in the early stages of generative AI. Predictive AI is quite mature and has very strong use cases. We have done really well in health care and life sciences, in manufacturing, in financial services, lots of use cases, right? And so I think that's mature. It requires good data sets and good data management to make it have the right outcome.

是的。我認為，首先，我們正處於生成式人工智慧的早期階段。預測人工智慧已經相當成熟，並且擁有非常強大的用例。我們在醫療保健和生命科學、製造業、金融服務以及許多用例方面都做得非常好，對吧？所以我認為這已經成熟了。它需要良好的數據集和良好的數據管理才能獲得正確的結果。

With generative AI, there is obviously a lot of discussion on both regulation as well as judicious use of the technology, everything from fairness to ethics, to privacy, to all kinds, cybersecurity, all of those things. And I think it will take time. Where we are with most clients today is proof of concepts, right? They are trying to put their data sets together. They are trying to learn what these models will help them do. And there are some use cases which are really easy to see the benefits from software development. It's very easy to see the benefits from the more advanced ones where some of these concerns exist that we're seeing customers move cautiously, so it will take time. These are multiyear use case developments. And so we feel good about where we are at the moment, and we're just realistic that will take time to build momentum.

對於生成式人工智慧，顯然有很多關於監管以及技術明智使用的討論，從公平到道德，到隱私，到各種網路安全，所有這些事情。我認為這需要時間。我們今天與大多數客戶合作的地方是概念驗證，對嗎？他們正試圖將他們的數據集放在一起。他們正在嘗試了解這些模型將幫助他們做什麼。在一些用例中，很容易看出軟體開發的好處。很容易看到更先進的技術的好處，其中存在一些問題，我們看到客戶採取謹慎的行動，所以這需要時間。這些是多年的用例開發。因此，我們對目前的處境感覺良好，而且我們很現實，這需要時間來建立動力。

And our final question today comes from Shek Ho with Deutsche Bank.

今天我們的最後一個問題來自德意志銀行的 Shek Ho。

I apologize if you have already addressed this. On the macro level, are you seeing any major differences between demand from large enterprises, small, medium businesses and federal. Any particular verticals you would point out that shows particular strength of weakness both on the hybrid cloud and the public cloud businesses?

如果您已經解決了這個問題，我深表歉意。在宏觀層面上，您是否看到大型企業、中小型企業和聯邦的需求之間存在重大差異。您會指出哪些特定垂直領域在混合雲和公有雲業務方面表現出特定的優勢和弱點？

The demand picture is still soft and mixed. Overall, we saw some improvements in the U.S., offset by some weakness in Europe. Nothing that is not in the public domain. With regard to the customer time, large enterprise is still soft. Tech, for example, tech and service provider spending has not really come back. It is really a customer-by-customer situation versus a broad industry situation.

需求情勢仍然疲軟且好壞參半。總體而言，我們看到美國的一些改善被歐洲的一些疲軟所抵消。沒有什麼不屬於公共領域的。對於客戶時間，大企業依然手軟。以科技為例，科技和服務提供者的支出並沒有真正回來。這實際上是逐個客戶的情況與廣泛的行業情況的比較。

With regard to the demand picture in midsized enterprise, our mid-sized enterprise business performed more robustly and secularly better than our large enterprise business. Public sector continues to be a work in progress. We saw some of the impacts of the budget negotiations result in softer budgets for certain agencies. Our business performed well, particularly in the civilian agencies.

就中型企業的需求而言，我們的中型企業業務表現比大型企業業務更強勁、更長期。公共部門仍然是一項正在進行的工作。我們看到預算談判的一些影響導致某些機構的預算疲軟。我們的業務表現良好，特別是在民間機構。

Thank you, Sidney. I'm going to hand it back to George for some final comments.

謝謝你，西德尼。我將把它交還給喬治，徵求一些最後的意見。

In closing, I want to thank the entire NetApp team for their strong execution and operational discipline in Q2, which drove revenue above the midpoint of our guidance and record gross margin, operating margin and EPS.

最後，我要感謝整個 NetApp 團隊在第二季度的強大執行力和營運紀律，這使得收入高於我們指導的中點，並創下了毛利率、營業利潤率和每股收益的紀錄。

Only NetApp delivers an entire architecture of unified data storage solutions, helping customers operate with seamless flexibility to deploy new applications, unifying their data for AI and simplify data protection in a world of limited IT resources, rapid data growth and increased cybersecurity threats. Innovation in our all-flash storage portfolio enables us to address a broader TAM and we continue to innovate and lead in public cloud storage services. Our go-to-market team is laser-focused on these positions of strength, enabling us to deliver strong results in the challenged macro landscape.

只有 NetApp 提供統一資料儲存解決方案的完整架構，幫助客戶在 IT 資源有限、資料快速成長和網路安全威脅增加的世界中以無縫的靈活性部署新應用程式、統一 AI 資料並簡化資料保護。我們的全快閃儲存產品組合的創新使我們能夠解決更廣泛的 TAM，並且我們將繼續在公有雲儲存服務領域進行創新和領先。我們的市場推廣團隊專注於這些優勢地位，使我們能夠在充滿挑戰的宏觀環境中取得強勁成果。

Looking ahead, I'm confident that the momentum we saw in Q2 will continue through the remainder of fiscal year '24. Thank you.

展望未來，我相信我們在第二季度看到的勢頭將持續到 24 財年的剩餘時間。謝謝。

Thank you. And ladies and gentlemen, this concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines, and have a wonderful day.

謝謝。女士們、先生們，今天的電話會議到此結束。我們感謝大家參加今天的演講。您現在可以斷開線路，度過美好的一天。