BOA CloudOps -CloudOps a deeper look to assess NTAPs positioning（英文）行业资料

Timestamp:21June202210:25AMEDT

W

FreeCashFlowYield*

*ForfulldefinitionsofiQmethodSMmeasures,seepage8.

Estimates(Apr)(US$)

2021A

2022A

2023E

2024E

2025E

EPS

4.06

5.29

5.28

5.94

6.52

GAAPEPS

3.22

4.10

4.10

4.64

5.10

EPSChange(YoY)ConsensusEPS(Bloomberg)

-52.5%

30.3%

-0.2%

5.46

12.5%

6.07

9.8%NA

DPS

1.89

1.96

2.00

2.00

2.00

Valuation(Apr)

P/E

162x

124x

124x

111x

101x

GAAPP/E

20.4x

16.0x

16.0x

14.1x

12.9x

DividendYield

29%

30%

30%

30%

30%

EV/EBITDA*

11.8x

9.7x

9.4x

8.6x

7.9x

8.0%

6.7%

7.7%

9.1%

10.4%

BofASecuritiesdoesandseekstodobusinesswithissuerscoveredinitsresearchreports.Asaresult,investorsshouldbeawarethatthefirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreport.Investorsshouldconsiderthisreportasonlyasinglefactorinmakingtheirinvestmentdecision.

Refertoimportantdisclosuresonpage9to11.AnalystCertificationonpage7.Price

ObjectiveBasis/Riskonpage7.12430734

Accessibleversion

NetAppInc.

CloudOps:adeeperlooktoassessNTAP’spositioning

|Price:65.65USD

ReiterateRating:NEUTRAL|PO:77.00USD

SharegaininCloudOpschallengedbycompetition

NTAPistargeting$1.3bn-$1.4bninpubliccloudrev(~16%-17%oftotalrevs)byF25,aswellas$2bninpubliccloudARRbyF26.Thistargetincludes~40%contributionfromCloudOps(Fig.6-7).WeseeriskattachedtoNTAP’sCloudOpsgrowthstrategygiven:1)TAMforCloudCosts(wheremajorityofNTAP’scorecompetencyare)is<10%ofoverallCloudOpsTAM(Fig.8),2)sharecapture/retentionischallenginggivenstiffcompetitionfromenterprises(VMWare,IBM),startups,andhyperscalers(Azure,AWS,GoogleCloud)(Fig.1-3),3)limitedadoptionbycustomersofpaidCloudOpsservicessofar(Fig.4),4)NTAP’sCloudOpsgrowthhaslargelycomefromstrategicacquisitions,whichcreatesexecutionrisk,and5)earlyinningsforstrategy(lastquarter,PCSARRmissedguide).ReiterateNeutralasslowingmomentuminPCS&AFAaswellassupplychainrisksarewethinkcounterbalancedbystrongfreecashflow.

CanNTAPholdontoshareinthecloudcostmarket?

NTAPsizedCloudOpsasan$11bn+TAMopportunityby2025.ButouranalysisofIDCdatashowsthatNTAP’scorecompetenciesarelargelyincloudcost&capacityoptimizationmarket.Thissubmarketwillbeworthabout~$4bninsizeby2025asperourests.Inthismarket,hyperscalersarepricingaggressively(freemiummodels).Also,severalenterpriseseitherhaveestablishedadominantposition(e.g.:VMWare)orhaveawiderportfolio(allowingthemtoofferbundledservices,whichcustomersprefer).ThesedynamicscouldchallengeNTAP’sabilitytoretainitsCloudOpsshare,esp.givenrecentexecutionissues.CloudOpssawhigherchurn,lowerexpansionrates,andsalesforceturnoverinF4Q.NTAPisworkingonitsCloudOpsstrategyforproductintegration/GTM.

ExpandinginotherCloudOpsareascouldchallengegrowth

ForNTAPtoreachimpliedCloudOpsrevtargetof~$540mnatmidpointbyF25wouldsuggest3-yearCAGRof51%.ImpliedCloudOpsARRguideof~800mnbyF26wouldsuggest4-yearCAGRof41%(Fig.5).ThisisinlinewithCAGRforcloudcostsmarketbutishigherthanthe3-yearCAGRof23%forCloudOpsmarket,basedonIDCests.IfNTAPexpandstonon-cloudcostsareasoftheCloudOpsmarket,itwillbetoughertomeetthegrowthrateembeddedinitstargets.CloudOps,andinturnPCS,growthrateishigh-marginrev,andkeyforNTAPtorealizemid-termearningsexpansion.OverallGMtargetof69%-70%byF25embedsPCSGMexpansionfrom70.2%inF22to75%-80%byF25.OurPOstaysat$77isbasedon13xourC23EEPSof$5.79.

21June2022

Equity

WamsiMohan

ResearchAnalyst

BofAS

+16468553854

RupluBhattacharya

ResearchAnalyst

BofAS

+16468550315

EshaVaish

ResearchAnalyst

BofAS

+16468551262

JongLee

ResearchAnalyst

BofAS

+16465561811

StockData

Price

PriceObjective

DateEstablished

InvestmentOpinion

52-WeekRange

MrktVal(mn)/SharesOut(mn)

AverageDailyValue(mn)BofATicker/ExchangeBloomberg/ReutersROE(2023E)

NetDbttoEqty(Apr-2022A)

ESGMeterTM

65.65USD77.00USD2-Jun-2022B-2-7

62.78USD-96.82USD

14,610USD/222.5

130.72USD

NTAP/NAS

NTAPUS/NTAP.OQ145.9%-112.1%

High

ESGMeterisnotindicativeofacompany'sfuture

stockpriceperformanceandisnotaninvestment recommendationorrating.ESGMeterisindependentofBofAGlobalResearch’sequityinvestmentrating,volatilityriskrating,incomerating,andpriceobjectiveforthatcompany.Forfulldetails,referto

“BofAESGMeterMethodology

”.

CloudOps:CloudOperations

CAGR:CompoundedAnnualRecurringRevenue

TAM:TotalAddressableMarket

ARR:AnnualRecurringRevenue

GTM:GoToMarket

GM:GrossMargin

PCS:PublicCloudSegment

SaaS:SoftwareasaService

N/T:NearTerm

SAM:SecuritiesAnalystMeeting

AFA:All-FlashArray

W

2021A18.7%197.8%20.6%1,171

2022A20.6%158.8%23.7%985

2023E18.9%145.9%23.0%1,125

2024E20.4%161.7%23.3%1,335

2025E21.4%149.8%23.6%1,514

ReturnonCapitalEmployed

CashRealizationRatio1.5x1.0x1.2x1.2x1.2x

15.7%

21.5%

21.5%

21.5%

-145.1%47.7x

-177.2%NM

-194.7%NM

iQprofileSMNetAppInc.

iQmethodSM–BusPerformance*

(US$Millions)

ReturnonEquity

OperatingMargin

FreeCashFlow

iQmethodSM–QualityofEarnings*

(US$Millions)2021A2022A2023E2024E2025E

0.8x

1.2x

AssetReplacementRatio

1.2x

1.1x

1.1x

TaxRate18.3%

-112.1%

24.1x

NetDebt-to-EquityRatio-205.1%

InterestCover19.4x

IncomeStatementData(Apr)

(US$Millions)2021A2022A2023E2024E2025E

Sales

5,744

6,318

6,629

7,245

7,833

%Change

-10.9%

10.0%

4.9%

9.3%

8.1%

GrossProfit

3,870

4,270

4,410

4,837

5,255

%Change

-17.8%

10.3%

3.3%

9.7%

8.6%

EBITDA

1,391

1,690

1,746

1,919

2,091

%Change

-40.8%

21.5%

3.3%

9.9%

9.0%

NetInterest&OtherIncome

(61)

(62)

(32)

(14)

(14)

NetIncome(Adjusted)

917

1,209

1,174

1,313

1,441

%Change

-53.6%

31.8%

-2.9%

11.9%

9.7%

FreeCashFlowData(Apr)

(US$Millions)

2021A

2022A

2023E

2024E

2025E

NetIncomefromContOperations(GAAP)

730

937

912

1,025

1,127

Depreciation&Amortization

207

194

219

232

241

ChangeinWorkingCapital

285

(22)

293

333

388

DeferredTaxationCharge

NA

NA

NA

NA

NA

OtherAdjustments,Net

111

102

(34)

(1)

33

CapitalExpenditure

(162)

(226)

(265)

(254)

(274)

FreeCashFlow

1,171

985

1,125

1,335

1,514

%Change

BalanceSheetData(Apr)

(US$Millions)

25.1%

2021A

-15.9%

2022A

14.2%

2023E

18.7%

2024E

13.4%

2025E

Cash&Equivalents

4,037

3,575

3,755

4,148

4,720

TradeReceivables

945

1,230

1,045

977

943

OtherCurrentAssets

1,019

1,140

1,156

1,217

1,146

Property,Plant&Equipment

525

602

648

670

704

OtherNon-CurrentAssets

2,834

3,479

3,479

3,479

3,479

TotalAssets

9,360

10,026

10,084

10,490

10,992

Short-TermDebt

0

250

250

250

250

OtherCurrentLiabilities

3,452

3,703

3,701

3,889

4,030

Long-TermDebt

2,632

2,386

2,386

2,386

2,386

OtherNon-CurrentLiabilities

2,591

2,849

2,976

3,112

3,255

TotalLiabilities

8,675

9,188

9,313

9,637

9,921

TotalEquity

685

838

771

853

1,071

TotalEquity&Liabilities

9,360

10,026

10,084

10,490

10,992

*ForfulldefinitionsofiQmethodSMmeasures,seepage8.

CompanySector

ITHardware

CompanyDescription

NetApp(NTAP)isaleadingproviderofstoragesystems,softwareandservicesthatsimplifythecomplexityofmanagingcorporatedata.

InvestmentRationale

OurNeutralratingisbasedonrisk/rewardbalanceasupsidetolong-termpubliccloudARRandrevenuetargetsisbalancedbyriskintroducedfromadditionalinvestmentsincludingopexrequiredforgrowth

1,991,210

StockData

AverageDailyVolume

QuarterlyEarningsEstimates

20221.15A1.28A1.44A

1.42A

20231.10E1.27E1.41E

1.50E

Q1

Q2

Q3

Q4

2

NetAppInc.|21June2022

W

VMWare

13%

GoogleCloud14%

Servicenow

9%

RestofMarket

36%

Azure20%

IBM

7%

Nutanix4%

ServiceNow10%

Oracle

4%

Snowflake4%

NetApp

4%

BMC9%

Morpheus

2%

AWS

25%

Densify

8%

Source:BofAGlobalResearch

survey(publishedMay2022)

CompetitiveLandscapeinCloudOps

Figure2:MostfrequentlyusedvendorsforCloudOps,excludingNetApp,bycustomersofsurveyedVARs

Hyperscalers(AWS,Azure,GoogleCloud)andVMWarearethemostfrequentlyusedvendors,excludingNetApp,forCloudOps

Figure1:GlobalCloudCostTransparencySoftwareShareSnapshot

NetApphad4%shareinmarket,trailingVMWare’s24%andother

playerssuchasServiceNow,BMC,Morpheus,Densify

VMWare24%

Morpheus9%

BofAGLOBALRESEARCH

Source:IDC(dataasofC2020)

IDChasnotpublishedupdatedfigures.IDC’sdataexcludesshareathyperscalers

BofAGLOBALRESEARCH

Figure3:IDCIntelligentCloudOpsCompetitiveLandscape

NTAPcompeteslargelyinCloudCost&CapacityOptimizationcrosssectionoftheIntelligentCloudOperationsMarket

CloudCost&

Capacity

Optimization

CloudITOperationsManagement

(ITOM)

CloudObservability

VMware

Flexera

ServiceNow

CloudCheckr

CloudBolt

Centilytics

Virtana

NetApp

IBM

Nutanix

bmc

AmazonAWS

MicrosoftAzure

GoogleCloud

Oracle

Snowflake

Morpheus

Turbonomic

Densify

Dynatrace

Splunk

Turbonomic

SumoLogic

ManageEngine

Elastic

Appdynamics

NewRelic

VMware

Observe

ScienceLogic

OpsRamp

IBM

MicrosoftAzure

Datadog

Oracle

bmc

GoogleCloud

AmazonAWS

LogicMonitor

Virtana

Management

MultiCluster

Container

Management

CloudITAutomation&Configuration

Programmable

Configuration

Automation

CloudConfiguration,Provisioning&

Governance

VMware

RedHat

D2IQ

HPE

IBM

GoogleCloud

Upbound

Rafay

Kubermatic

Rancher

Diamanti

Mirantis

Fairwinds

VMware

AmazonAWS

GoogleCloud

MicrosoftAzure

bmc

Cisco

Oracle

HPE

Scalr

Morpheus

Nutanix

CloudBolt

Flexera

CloudSphere

MicroFocus

Snowflake

IBM

ServiceNow

Centilytics

ManageEngine

MontyCloud

NOBL

ConcourseLabs

Jamcracker

Corestack

Epsagon

Puppet

HashiCorp

RedHat

AmazonAWS

SaltStack

MicrosoftAzure

Pulumi

CHEFProgress

GoogleCloud

CloudIT

Service

Management

(ITSM)

ServiceNow

bmc

Snowflake

Cherwell

Atlassian

PagerDuty

MicroFocus

Freshworks

Hybrid&MulticloudManagementControl

Planes

DisruptiveTechnologies

Serverless

Computing&

Functions

MicrosoftAzure

GoogleCloud

VMware

IBM

Cisco

AmazonAWSNutanixOracle

AmazonAWSMicrosoftAzure

GoogleCloud

CloudFlare

IBM

NetAppInc.|21June20223

W

CloudInsights

Spot

CloudCheckr

CloudJumper

DataMechanics

CloudHawk.io

Fylamynt

StratCloud

12%

9%

8%

4%

7%

4%

4%

3%

3%

Source:IDC(dataasofC1Q21)

BofAGLOBALRESEARCH

Figure4:PercentageofVARcustomersusingeachofthefollowingNTAPCloudservices?

CloudInsights(15%)andSpot(9%)arethemostwidelyusedNetAppCloudservices.Majorityoftheportfoliohaslowsingledigitcustomeradoption,whichdirectionallysuggestsadoptionisstilllimited

16%15%

1%

0%

Source:BofAGlobalResearchsurvey(publishedMay2022)

BofAGLOBALRESEARCH

CloudOpskeytoNetAppmid-termtargets

AtSAM2022,mgmt.notedthatNTAPistrackingaheadofitspubliccloudARRtarget,

andraisedlong-termguidanceto$2bninARRexitingF26(includinganest.$250-

300mnfromM&A)vs.priortargetof>$1bninARRbyF25,andcomparedto$525-

545mn,or$535mnatmid-pointforF22.NTAPhowevermissedthattargetand

delivered$505mninPCSARRinF22.NTAPstatedthatitderives40%ofitspubliccloud

ARRfromitsCloudOpsportfolio,andsaiditexpectsthecontributionproportionto

remainroughlyunchangedinthemid-term.

Weest.thatatmidpointofstatedguideforrevenues,NTAP’scloudoperationsbusinesswillhavetocontribute$540mnbyF25

Figure5:EstimatingCloudOperationscontributiontomid-termpubliccloudtargets

(indollars,mn)F22AF25E3-yrCAGR

396

158

40%

1,350

540

40%

NTAPPublicCloudRevTargetImpliedCloudOperationsTarget%contributionfromCloudOps

51%

(indollars,mn)F22AF26E4-yrCAGR

505

202

40%

2,000

800

40%

41%

NTAPPublicCloudARRTarget

ImpliedCloudOperationsTarget

%contributionfromCloudOps

Source:BofAGlobalResearchestimates

BofAGLOBALRESEARCH

4NetAppInc.|21June2022

W

Figure6:NetApptargetsincreasingitsPublicCloudRevenueNTAPhasguidedforF25publiccloudrevenueof$1.3bn-$1.4bn

Source:NetApp

BofAGLOBALRESEARCH

Figure7:NetApptargetsincreasingitsPublicCloudARR

ThecompanyhasguidedforpubliccloudARRof$2bnbyF26

Source:NetApp

BofAGLOBALRESEARCH

Figure8:CloudCostsTAMas%ofWorldwideIntelligentCloudOpsTAM

TheworldwideintelligentCloudOpsTAMwasworth$9.04bnin2020,whereastheCloudCostsTAMwas

$744.3mn

CloudCosts8%

OtherCloudOps

92%

Source:IDC(dataasofC2020)

IDChasnotpublishedupdatedfigures.

BofAGLOBALRESEARCH

NetAppInc.|21June20225

W

Model

Figure9:NetAppIncomeStatement

WemodelF23revof$6.6bnandF25revof$7.8bn

F2022F2023E

($MillionsExceptPerShareData)07/21A10/21A01/22A04/22A07/22E10/22E01/23E04/23EF2021F2022F2023EF2024EF2025E

IncomeStatement

Revenue$1,458.0$1,566.0$1,614.0$1,680.0$1,536.9$1,630.1$1,686.3$1,775.4$5,744.0$6,318.0$6,628.7$7,245.4$7,832.7

Product730.0814.0846.0894.0751.7818.1851.1904.92,991.03,284.03,325.83,531.43,750.2

SWEntitlements&Maintenance(Subscriptions)346.2330.3347.4349.9346.2336.9354.3356.91,281.01,373.61,394.21,436.01,479.1

Services381.9421.7420.6436.1439.0475.2480.9513.62,753.01,660.41,908.72,278.02,603.4

CostofGoodsSold448.0496.0527.0577.0509.8548.2563.5597.31,874.02,048.02,218.92,408.32,577.6

CostofProducts326.0369.0404.0442.0368.3400.9412.8438.91,402.01,541.01,620.81,695.71,775.4

CostofSWEntitlements&Maintenance(Subscriptions)23.523.222.623.823.980.092.193.596.399.2

CostofServices98.861.358.162.2113.669.166.473.3392.0280.4322.4383.9438.0

GrossProfit1,010.01,070.01,087.01,103.01,027.11,081.91,122.71,178.13,870.04,270.04,409.84,837.15,255.1

GPProducts404.0445.0442.0452.0383.4417.2438.3466.01,589.01,743.01,704.91,835.71,974.8

GPSWEntitlements&Maintenance(Subscriptions)322.9308.1324.1326.4322.9314.3330.5332.91,201.01,281.51,300.71,339.71,379.9

GPServices283.1360.4362.5373.9325.5406.1414.5440.32,361.01,379.91,586.31,894.12,165.4

TotalOperatingExpense674.0696.0683.0721.0700.3711.9717.4752.62,686.02,774.02,882.23,150.03,405.0

ResearchandDevelopment195.0197.0201.0213.0208.6208.3213.4225.5817.0806.0855.8935.31,011.1

SalesandMarketing423.0433.0427.0446.0422.6438.5438.4461.61,644.01,729.01,761.21,924.82,080.7

GeneralandAdministrative56.066.055.062.069.065.165.665.5225.0239.0265.2289.8313.2

OperatingIncome(Pre-stock-basedcomp.)336.0374.0404.0382.0326.8370.0405.3425.51,184.01,496.01,527.61,687.11,850.1

OperatingIncome(Post-stock-basedcomp.)283.0312.0340.0316.0261.8299.4334.0354.0987.01,251.01,249.31,375.61,505.6

TotalInterestandOtherIncome/(Expense)(12.0)(14.0)(15.0)(21.0)(12.5)(9.5)(6.5)(3.5)(61.0)(62.0)(32.0)(14.0)(14.0)

InterestIncome/(Expense)0.00.00.00.00.00.00.00.00.00.00.00.00.0

OtherIncome/(Expense)(12.0)(14.0)(15.0)(21.0)0.00.00.00.00.00.00.00.00.0

PretaxIncome324.0360.0389.0361.0314.3360.5398.8422.01,123.01,434.01,495.61,673.11,836.1

ProvisionforIncomeTaxes(Credit)61.068.059.037.067.677.585.790.7206.0225.0321.6359.7394.8

NetIncome(Pro-Forma,Pre-OptionsExp.)263.0292.0330.0324.0246.7283.0313.1331.3917.01,209.01,174.11,313.41,441.3

stock-basedcomp.(netoftax)43.050.354.359.251.055.456.056.1161.7206.8218.5244.5270.5

NetIncome(Pro-Forma,Post-OptionsExp.)220.0241.7275.7264.8195.7227.6257.1275.1755.31,002.2955.51,068.91,170.9

DilutedEPSProForma(Post-OptionsExp.)$0.96$1.06$1.20$1.16$0.87$1.02$1.16$1.24$3.34$4.38$4.30$4.84$5.30DilutedEPSProForma(Pre-OptionsExp.)$1.15$1.28$1.44$1.42$1.10$1.27$1.41$1.50$4.06$5.29$5.28$5.94$6.52

DilutedWeightedAverageShares229.0229.0229.0228.0224.0223.0222.0221.0225.9228.7222.4221.0221.0

%ofRevenues

GrossProfit69.3%68.3%67.3%65.7%66.8%66.4%66.6%66.4%67.4%67.6%66.5%66.8%67.1%

GPProducts55.3%54.7%52.2%50.6%51.0%51.0%51.5%51.5%53.1%53.1%51.3%52.0%52.7%

GPSWEntitlements&Maintenance(Subscriptions)93.3%93.3%93.3%93.3%93.3%93.3%93.3%93.3%93.8%93.3%93.3%93.3%93.3%

GPServices74.1%85.5%86.2%85.7%74.1%85.5%86.2%85.7%85.8%83.1%83.1%83.1%83.2%

Opex46.2%44.4%42.3%42.9%45.6%43.7%42.5%42.4%46.8%43.9%43.5%43.5%43.5%

R&D13.4%12.6%12.5%12.7%13.6%12.8%12.7%12.7%14.2%12.8%12.9%12.9%12.9%

S&M29.0%27.7%26.5%26.5%27.5%26.9%26.0%26.0%28.6%27.4%26.6%26.6%26.6%

G&A3.8%4.2%3.4%3.7%4.5%4.0%3.9%3.7%3.9%3.8%4.0%4.0%4.0%

EBIT(Pre-Options)23.0%23.9%25.0%22.7%21.3%22.7%24.0%24.0%20.6%23.7%23.0%23.3%23.6%

Stock-basedcompensationexpense3.6%4.0%4.0%3.9%4.2%4.3%4.2%4.0%3.4%3.9%4.2%4.3%4.4%

EBIT(Post-Options)19.4%19.9%21.1%18.8%17.0%18.4%19.8%19.9%17.2%19.8%18.8%19.0%19.2%

PretaxIncome22.2%23.0%24.1%21.5%20.5%22.1%23.7%23.8%19.6%22.7%22.6%23.1%23.4%

TaxRate18.8%18.9%15.2%10.2%21.5%21.5%21.5%21.5%18.3%15.7%21.5%21.5%21.5%

NetIncome(Operating,Post-options)15.1%15.4%17.1%15.8%12.7%14.0%15.2%15.5%13.2%15.9%