NetApp, Inc. (NTAP) Earnings Call Transcript & Summary

Hello, everyone, and thank you so much for joining us here today at Citi's Global Technology Conference. We are very pleased with this fireside chat to have NetApp, stock ticker NTAP, and having the Chief Financial Officer and EVP, Mr. Mike Berry. Before we get started, NetApp has asked me to read their safe harbor. It includes -- today's discussion may include forward-looking statements regarding NetApp's future performance, which are subject to risk and uncertainty. Actual results may differ materially from the statements made today for a variety of reasons, which are described in NetApp's most recent 10-K and 10-Q filed with the SEC and available at their website at netapp.com. NetApp disclaims any obligation to update information in their forward-looking statements for any reason. I also wanted to mention a couple of other things. No media and no press are allowed. If you are media or press, please disconnect immediately. We also do want to note that if you are an investor subject to MiFID II, please ensure you have the applicable agreement into place. There are disclosures also from Citigroup Investment Research that is associated with this that are available on our website. We also do want to let you know, if there are any questions, you can e-mail me or you can, through this website, hit the Submit A Question, and we'll try to get to you if there is time. So with that, I officially want to thank Mike for joining us.

And maybe, Mike, when you start things off, can you talk a little bit about a brief snapshot of the state of the data management industry now, maybe cloud versus hybrid and on-premise demand and where is NetApp currently positioned within that industry?

Sure. So hey, good morning, Jim, and thank you to Citi for having us. We're thrilled to be here. And gosh darn it, I think we all hope next year, we can do this in person and I can see a person in a tie. That would be good. So yes, thanks for the question. So as we have talked about really starting in the second half last year, we've started to see increased buying across our customer base. And we've seen especially some of our large customers looking to gain a competitive advantage through their accelerating cloud and digital initiatives. And as we've talked about, hey, NetApp is really a data company. Data is critical to all of those initiatives. And as we see that rise in data across, again, on-prem and in the cloud, we're starting to see our customers adapt their buying behavior to that. And they're really leveraging their hybrid cloud instances. And we've talked about, hey, we love our position, on-prem, in the hybrid cloud and in the public cloud as well, using the full power of their data to respond to what is, I guess, we can only say, hopefully, a once-in-a-lifetime experience for all of us, especially with the back-to-work situation. So we feel really good about where we are in that position as -- and we expect it to continue throughout the year as we've given in our guidance. And again, for us, data is the underlying driver of our growth, and we feel really good about that. I would also note, as you look at some of those deployments, a lot of focus around all-flash and a lot of focus around cloud, which is where we feel really good about our competitive position as well.

Mike, I will note, though, that while you're CFO, the history of NetApp has always been not always such strength. In fact, when we look back, the most recent couple of years have been very strong with your demand. But there have been some pockets of softness. Can you help investors understand a little bit what's kind of different now versus, say, some more historically challenging times for NetApp? And how should we think about the revenue growth trajectory from here? And any type of levers that we should think about?

Yes. Thanks for the question. I think it's super important. So while I wasn't here, I certainly want to make sure that we learn from the past. I would say that NetApp, as I sit here today, is a very different company in a couple of different ways. One is we've talked about, hey, our focus is on cloud and software. That's what we've always been in NetApp and that -- and we will continue to focus on that. The other piece is the revenue model continues to evolve, a lot more recurring revenue, which is, again, a lot more sustainable. We like that position. It's up to, I think, now 47%; in the last quarter, 45%. That will continue to grow. Internally, I think you've seen a much bigger change as well. We're very focused now. George has done a wonderful job of getting us all in focus around what are those key growth areas. And that is all-flash and cloud. And you see that focus come through in the results. We've also invested in areas where we think we'll drive growth. And we've talked about the 200 salespeople separately. We've also put a good bit of investment in cloud. So the focus in the areas of investment are super important. As I just mentioned as well, hey, we're in those market segments where we think are going to continue to grow in our area. All-flash and in public cloud, and you've seen that growth across both of those, especially in the last quarter. I think some of the tech trends that you see around Kubernetes, around software-defined, especially around cloud, we're very well positioned in those as well. And hey, we're also -- we're going to continue to do M&A to extend our product set. And in the past, maybe that wasn't the case. So those are the areas that we look at and say, "Hey, let's learn from the past." But more importantly, looking forward, those are the areas why we think we're a different company, and we feel really good about this year and moving past fiscal '22.

And Mike, at the beginning, you mentioned that we hope next year we can do this in person, and I agree. There's been a lot of mixed data points, whether it be vaccination rates and issues that may prompt customers to take different stances, whether it's cautionary, whether it's hybrid work or things like that. And some customers, when they spend, they're looking at different ways of spending. So can you maybe talk a little bit about when customers do spend, what are the types and scales of projects that they're kind of embarking upon in the world as you see it right now?

Yes. So as we talked about it in the first 2 questions, we're really focused on helping them achieve their digital transformation, which is, hey, that's a very wide spectrum, right, in terms of what they can do to make sure to react to the new environment. And people have had folks on-prem. They've had them for those areas where people had to be there. But very importantly, I think the initiatives early on were make sure that people could work remotely, that we could do this, they can do it securely. And then there are other areas, I think you're seeing CIOs now focusing around, yes, hey, virtual work is important, but we feel good about where we are there. Security certainly bumped up in the prioritization and so did digital transformation. And cloud has always been a big initiative. So what we see our customers doing is continuing down that path, again, in that multi-cloud environment, where we think that we fit in very well. And look, there's a lot out there. There's hybrid work. There's potential tax changes. There's supply chain. There are so many macro things out there. It's hard to bifurcate any of those one pieces. But I think as companies look forward, especially us at NetApp, we're saying, "Hey, there's a lot of great opportunity to go grab market share." And we want to make sure to invest where we can drive those -- that competitive advantage. And that's what we're seeing our customers do.

Mike, you mentioned earlier a little bit about ramping up the sales force. And if I remember right, it was about 200 new salespeople, and that's no small feat. That's a lot of people. Can you walk us through a little bit? Are they all fully ramped and contributing today? Or I imagine there is not only onboarding and getting your human resources and medical benefits and all that signed up, but there's probably also an engagement and ramping process. How should we think about the contribution of those fully ramped salespeople today, the 200? Is it already in your recent results? Or is there still more to come as we look forward?

Yes. Thanks. And George and team did a wonderful job not only making that call. That was done before I got here, recognizing that was an area of investment, by getting them up and running. So all with -- all 200 of them are here. Certainly, there's been some change over in that group. Fully ramped largely takes about 6 to 12 months. It's going to depend on the territory you put them in. Most of those were focused around what we call white space, where we want to go drive net new to NetApp. Certainly, there were some where we had an existing patch. Those are going to get ramped up a little bit sooner. And as we look forward, very important -- and yes, it's all in the guidance in terms of what we think that their productivity will be. Looking forward, we will continue to add sales where we think we have opportunity to drive growth either in net new or certainly within the existing customer base. That's on -- in hybrid cloud and in public cloud. And certainly, our customer success teams as well. But as we've said multiple times, Jim, hey, you shouldn't expect to see another step function. You should see us investing as we look to drive that growth. It's much more in the run rate, and it's just going to flow with the revenue growth. So that was a great onetime thing that we did. We'll continue to add sales where we think it will drive returns, but it's just much more what we do every day now versus a big step function.

Well, Mike, one thing that you have done since being the new Chief Financial Officer at NetApp is you have also given some new segment reporting breakouts. And if I remember right, it's hybrid cloud and public cloud. And can you help us better understand about looking through those lenses, kind of what's behind that and a better understanding about your place in the industry? And how investors should think about that additional disclosures, which I find quite useful and interesting?

So first of all, I'm glad you liked them. So we thought it was super important to -- for that segment disclosure for 2 reasons. Number one, that is how George runs the business. So we always want to make sure we are reporting as we run the business. Number two, we've talked a lot about while there's a lot of relationships and, I'll say, correlation between those 2 businesses. ONTAP runs everything across our hybrid cloud and our public cloud. Our sales teams now are selling all products. So there is certainly relationships across both those segments. But we thought it was super important for a couple of reasons. One is to show very clearly that, based on the scale of that business, the software portion and the cloud portion of that revenue stream, that, hey, the margins are actually right now better than the company average. And we do expect that to continue to grow as we build out scale, as we add M&A, as software and cloud become a bigger part of that revenue stream. And when we talk about the sum of the parts, which is -- I will -- I've talked about since the day I got here 18 months ago, and I'll talk about it for the rest of the time I'm here, is we have a wonderful hybrid cloud business where we feel really good about our competitive strengths, the growth in all-flash and the ability to grow that business. It also has very strong margins and generates a bunch of cash flow. That business in and of itself should be viewed, I think, from a valuation perspective separately. Then you have the public cloud business, which is very high-growth, playing in areas around our cloud platform, which will grow significantly. And if you compare that to any publicly traded or other private company, that is at -- expected to be at $500 million of ARR, growing to $1 billion. That has much different valuation metrics. So we're going to talk a lot about the sum of the parts. We're going to talk about the margins in that business, both of them. And we thought it was super important for that additional disclosure. And again, to go back to it, it is how George is running the business, and we want to make sure that we are reporting consistent with how we run the business.

You actually brought up and mentioned FSx under AWS. Can you talk and help investors? You made an announcement very recently. Some of us were on vacation around Labor Day and getting children ready for school. Can you go over that announcement a little bit about that and hyperscale and kind of what's going on there so people can grasp that?

Yes, sure. It was an interesting time. So Amazon had their Storage Day on September 2. And it was a big announcement. We've been asked a lot about our relationship with the hyperscalers. We feel super good about all 3 of them. They're all a little bit different. What they announced was FSx ONTAP, which is a fully managed service on AWS for both -- for mostly file workloads. And again, it is all software managed by AWS, sold and managed using ONTAP as the engine. So this is now a first-party service with the largest hyperscaler in the world. I think you look at some industry stats where they have 60% of the file market. It also allows us to do object as well. Now combining that with our great relationship with Microsoft and Azure NetApp Files, we now have a first-party service with the 2 largest hyperscalers. And we feel really good about our relationship with GCP. We're very integrated into what they do as well. Most of that is through the Marketplace. So we think it is really a -- it was a defining moment for us because of the recognition that, hey, file workloads are hard. They're super important. And it's a lot easier to partner with the industry-leading provider, which is us, and then go to market using their resources and, again, managed by them. So it really underscores our position and what we said multiple times, which is we think we have a very unique, defendable, competitive advantage in the cloud because they're going to have their sales team selling it. And again, it's powered by ONTAP, which Azure NetApp Files is as well. And from an economic perspective, Jim, it's super important because it's all software. And so while we deploy hardware with Microsoft and feel really good about that relationship, the AWS product is powered by our software. So that will help as well with margins. So again, we feel great about all 3 of the hyperscalers. They're each in a little bit different parts of it. I would also note too, hey, Storage Day announced availability. So everybody is different the way they announce it. You can go buy it and use it right now. So starting on September 2, it was available -- generally available. So we feel great about it. Again, it really underscored what we said given our competitive position. And another nice thing is that we've talked about it, it's all ONTAP. And again, when you talk about on-prem and in the cloud, it is our ONTAP software, which is really the competitive advantage. So great day. We feel really good about our relationships. As I say all the time, Jim, hey, I'm not going to talk for 3 of the largest companies in the world. They make their own decisions. We're just really happy to be partners in providing a really critical service to them, and we look forward to that partnership going forward.

I actually got several investor questions, Mike, on this topic about your hyperscalers, whether it be AWS or GCP. And they all basically say, "Can Mike talk a little bit about the economics of going into this? Are margins similar, dilutive, accretive? Is there a ramp phase where you have to invest the seed -- the fruits of the future? Or how should we think about the economics as you go into this new frontier?"

Yes. So thanks for asking. So let's -- so when we -- we'll never talk about the contractual relationships with them. Let's talk about how it influences the gross margin. So keep in mind that in cloud, there's really 4 areas that we focus on. 2 of them are storage-related. You have Cloud Insights and you have Spot. We have a couple of other important areas, but those are the big 4. You can do cloud storage in a self-managed service, which is what FSx ONTAP is, which is what Azure NetApp Files is. It's affectionately called CVS, Cloud Volume Services. You can also have storage in the cloud on CVO, which is Cloud Volumes ONTAP, which is -- think of it as a bring your own, where storage admin brings their own software, still deploys it on the public cloud. That's all software. Cloud Insights, which is our monitoring tool, not only in the cloud, but also on-prem and connects as well to what we do in the hybrid cloud, that's all software. And that was our OnCommand Insights product that we brought to the cloud. And then you have Spot, which is optimization, allowing our customers to optimize their cloud spend, and that's cloud. So of those 4, only 1 requires hardware deployment at a significant scale, and that's Azure NetApp Files. And it's great. And it's really -- and you see it in the numbers. It's starting to drive growth in that gross margin number as well. The other 3 are cloud and software. So those will, by definition, have higher margins. The great part about ANF is it's been a wonderful relationship, growing very quickly. We're starting to see the benefits of the scale in that business. And then I would just make one comment. I know I got a little bit of grief after Q3 when we talked about investments in OpEx. Folks, it was -- this was a big part of it. So we've already invested a lot of money with Amazon on the integration. We've already spooled up sales. Obviously, we'll focus on marketing going forward. And again -- and I'll just highlight this, and again, thanks for asking the question. We said back in September that we would continue to invest in the business where we saw growth opportunities, but we will grow OpEx at a lower rate than revenue. And that's exactly what we've done. This is a perfect example of where we needed to ramp up some investment, but we knew that there was a return coming. So a lot of it is in the run rate. As we grow that business, we'll continue to invest in it, but we'll work with our partners to make sure that we're spending in the right areas of sales, customer success, marketing and, of course, R&D. So thanks for that question, Jim.

Yes. And Mike, you actually kind of alluded to the next question a little bit about operating and free cash flows. You mentioned that you did some incubation of early investments. You said it back in September. You mentioned it, and now some announcements have recently coming out. So as we look forward, how should we think about operating and free cash flow?

Yes. So what we've talked about -- so if you -- first of all, I'll take a step back. What we guided for the full year '22 was operating margins at a level that we have never achieved as a company. Assuming we achieve at least the low end of 23%, that's a record for NetApp. So we continue to focus on growing the company but doing it prudently and driving operating profits as well. And that's what you see in the guide. Again, we will focus -- we always look to optimize first, Jim. Hey, we need to spend money. Hey, we -- can we deprioritize something versus just spending incremental? The team is really, really good about that. But there are areas where we want to spend incremental dollars, and that's going to be focused around, hey, again, adding sales as we see that growth in hybrid cloud; adding the customer success teams, which is super important to the cloud and software business; spending prudently on R&D. And then, of course, M&A will drop in there whenever that does kind of episodically, and we'll deal with that at the time. So those are the areas that we're looking. But again, always with the growth of driving up operating margins. If you look at it historically, and I don't think this will change in the near term, operating cash flow moves pretty correlated with our non-GAAP operating income. There are some bumps in working capital. And if you take a look at the collection cycle and then you look at cash taxes and then a little bit of working capital, over 4 quarters, it's largely going to move and be very correlated to that. So we expect to see, as operating margins go up, operating cash flow as well. Now this year on free cash flow, we have a little bit of a bump in CapEx. We've guided to about $230 million. Some of that is the hardware to deploy that is a great investment for -- especially for Azure NetApp Files. In addition, there's about $50 million for a couple of facilities projects in Wichita and our Santana Row site. We'll always do some facilities, but I expect to see that drop. And then really importantly, this goes back to your earlier question. We expect '22 and '23 to be the highest CapEx as it relates to supporting all the locations for Azure NetApp Files. At some point, you're in all the geos. And now it's more of you're adding to support additional capacity. And so we expect that while it will still be in the CapEx to decline a little bit, so I feel really good about being able to generate free cash flow going forward as well based on certainly revenue growth, which will drive operating margins, which should drive operating cash flow and then down to free cash.

So Mike, if I heard you correctly, you mentioned CapEx kind of peaking in '22 or '23. Is that the way to think about that?

Yes. Yes, thank you. I think it peaks in '22 because of the CapEx stuff. It probably comes down a little bit in '23 and then modulates to more of a normalized rate after that. There will be some bumps, and we'll do certain projects. But I think you'll -- I expect '22 probably to be the high watermark for CapEx.

Great. And then you're CFO, so you also have to plan and talk a little bit about dividends. You do have a dividend. You also have a stock buyback. How should we think about the capital deployment more broadly beyond just some of these near-term CapEx expenditures that you're doing, so kind of broadly capital expenditures?

Yes. So we're still pretty much in line with what we talked about, very much in line with what we talked about in September. So when we look at our free cash flow, dividends is the first call on capital. We take very seriously our commitment to return cash to shareholders. So our target is -- and again, this will bounce around every quarter and, candidly, every year. But over the long term, about 50% of free cash flow to dividends. We think that, that is the best way to return cash to shareholders. And we take our ability to drive that dividend yield very seriously. And then on the share buybacks, our commitment is to offset the dilution from our equity plans, all of our plans, be it equity grants or our employee stock plan. That will average somewhere, call it, around 20%. Again, that will move around a little bit depending on stock price and other things. And then importantly -- so that's 70% return to shareholders. The remaining 30%, we want to make sure that we allocate for M&A, super important for us to make sure that we are investing in either tech- and talent-type acquisitions. And you saw us just announce one several weeks ago. That is a -- think of that more as a road map accelerator. And then we'll certainly continue to look for Spot-size deals, which bring in new products or services underneath that cloud platform to continue to drive that growth. So we do -- and again, 30% will move around a little bit. But over time, we want to make sure and be clear, hey, we do take seriously our commitment to return cash to shareholders. We also want to grow the company.

Mike, I got several investors e-mailing and submitting their questions asking me about the impact of COVID. It's interesting it's kind of split. Half of them are saying, "Geez, did COVID accelerate and pull in demand?" And the other half are saying, "Well, was there nobody there to actually install the new storage?" So maybe post COVID, is there actually an acceleration? So again, some are saying it's a pull forward. Others say that, hey, things have kind of stalled. I don't mean stalled in a bad way. I'm just saying kind of pushed out because the return to office has been kind of a stutter step. Any thoughts on which of those 2 are right?

Yes. So one of the funnest things I think about -- it's such an unfortunate time for all of us, given what's going on with COVID. The very interesting thing to me is -- and I know we all get paid to do this is to try to bifurcate exactly the COVID impact. And so here would be my answer, I don't think it's any one thing, Jim. So let's go back to what happened with COVID. I think that companies, for all the right reasons, focused on making sure we could work, you could do it securely. And I do think that because of the -- hey, it's tougher to return to office, it made cloud even more important and a bigger priority. I think, going forward, now that we all do Zoom or pick your favorite collaboration tool, what they've said is, hey, what's really picked up is security, and that cuts across all digital transformation. They -- all of us as companies need to make sure that we're prepared for this type of an event. More remote work, making sure that we can be productive, that drives digital transformation, make sure you can do it securely. I think the issue of, hey, people working from home, does that have an impact? Almost every company, critical data center folks and IT folks, hey, they have to go into the office anyway. So I don't know -- I don't view that as being a huge driver. What I think the bigger driver is, in general, with COVID, given the new economic situation, given supply chain, everything, that people are looking at saying, "What is the best way for me to drive my digital transformation?" I think that's cloud. Certainly, there's a lot of stuff within that, make sure security is there. There's always -- there's pull forwards in these pushouts. And I know people are trying to pin and saying, "Well, this drove a certain amount of purchases." Hey, we have a big company where we work with the biggest companies in the world. There's always a handful of examples either way. But that's how I look at kind of the macro trends, how it's impacted NetApp. Most importantly, we feel good that, as we go forward, again, the focus on all-flash, the focus on multi-cloud and the focus on public cloud, we feel really good about our position.

And then I got several questions asking about supply chain, whether it be shipping costs or component availabilities. Are you seeing any shortages in components that we need to be mindful of? And shipping costs, it seems like no matter where you are in the supply chain, shipping costs have gone up. So any thoughts around those logistics and such?

Yes. So as we said on the last call, hey, it's a constantly evolving situation. And at least we haven't had to wake up to a ship stuck in a canal somewhere. So -- but who knows what will happen in the quarter. So freight costs have been higher. And look, candidly, that started last fiscal year, certainly, it was in Q1. It's tough to get freight. And then we talked before we jumped on this call about air traffic. At least, more planes are flying, certainly less than before. And then you see all the issues with ports. So yes, freight costs have been tough. Logistics have been tough, but they were before. We certainly knew that going into Q2. And then component costs, it's just a moving target, Jim. And we have a great supply chain and procurement team dealing with all the situations, be it higher cost, be it weather issues, whatever those things are. And again, we've done our best to bake that into our outlook. And it's something that, candidly, we probably talked about every couple of weeks before. It's -- we talk about it all the time because it's evolving constantly.

We've got a couple of questions asking, "Jim, can you ask Mike about his ARR rates?" What's all included in that? Is it storage? Is it software only? How should we think about what's all in your ARR rates? And it seems like you're actually doing additional more and more services that could be ramping up. Can you give any examples so we can visualize and grasp the ARR and what's all going in and things that are being new that we may not historically have been familiar with for NetApp for ARR?

Sure. So let's go back -- so thanks for the question. Let's go back to the earlier discussion. ARR is annualized revenue run rate. We take the revenue of our public cloud services products at the end of whatever that given period is, and we annualize that. So similar to other ARR calculations. It includes the revenue from our storage products, which are CVS and CVO. And we walked through what was in those before. It's the revenue from Cloud Insights. It's the revenue from Spot. And then it's also the revenue from some of our other workplace-type products, Spot PC and some of the other things that we bought, our Global File Cache and Talon as well. Those again are smaller pieces. And as you look at the growth rate, keep in mind, too, that ARR is at the end of a period. So you're going to get a different growth rate than the revenue number, which is the revenue across that period. Specifically in Q1, you saw revenue growth rates of 155%, and then ARR, I think 97%, something like that. A little bit lower because, again, it's the period of measurement. Still super great growth in both of those. So that's what's in ARR. It's the revenue from our public cloud services. As we introduce new things like Astra for public cloud or as we introduce new products, certainly, those would go in there. I want to be super clear. Professional services, not in that number. This is what we get from a subscription or a pay-go solution with our customers, not professional services.

And Mike, as we kind of come to the end here, you've been in CFO now spot for a while, but you also come from a lot of software background. Thus, hearing terms like ARR for hardware analysts and myself aren't as that familiar. What are some things that you think the investing community may be overlooking as far as valuations of the company or positive catalysts ahead that maybe you want to -- because you came in as more of a software lens through your eyes as opposed to us as typically thinking of that as a hardware company. So what are the kind of couple of things you'd like to leave investors with that maybe your eyes have been opened that maybe people should really grasp and feel better about?

Yes. So thanks for the question. And I'll tell you, hey, I feel great about the business. So let's do -- there's probably 3 or 4 areas. And again, thanks for the question. Number one is -- and I've said this before -- one of the dinners I had with George before I joined and I asked him, "Hey, what's your competitive advantage at NetApp? How do you win?" And it was one word, software. And I was kind of, hey, you had me at software. Is the hardware important? Absolutely. I'm not at all saying it's not. But what really drives the value to our customers is our software, specifically ONTAP, and we've talked a lot about that. Today, if you take our software and recurring revenue, it's about 73% of the business. It's by far the majority. Again, hardware is important, but the growth area is in software, cloud and in support as well. And I think that that's a huge thing for the investors to focus on, certainly much higher margins and growth in those areas. We talked about breaking up the Public Cloud and the Hybrid Cloud segments. I think that gives investors also visibility into the 2 different components of our business. And hey, you can do your own math because we're not going to take it down to operating margins. Whatever math you want to use, it also says, hey, Jim, we get a lot of discussions on public cloud, which is great. The Hybrid Cloud business is doing great. It's growing. Margins are growing. And if you look at that segment of the business, that profitability is actually higher than total company NetApp. So if you're going to value that on cash flow or earnings, make sure you take that into account as well. The other part that I'd focus is, hey, we've talked about it. Operating margins and free cash flow continue to grow. Hoping we get at least to the -- pick the midpoint, 23.5% operating margin is almost 1 percentage point higher than the highest we've ever done. So we continue to be focused on driving growth. And then the other thing, you folks know it, hey, I love cash flow. It's what I think drives all businesses. Earnings are certainly critical. Cash pays all the bills. And our ability also to use our cash flow to not only return to shareholders, but to invest in M&A, I think, is a bigger upside than I saw. So all that stuff 18 months ago was important. I feel even better about the cloud business. I feel better about software. I feel better about the ability to generate cash and go do M&A. Now here's the thing. We have to execute. Every 90 days, put the scorecard up and you have to execute. And I think I give George a lot of kudos to focusing the company on the key drivers. Let's focus what's on it, what's important and go drive that growth in the short and the long term. So every day I wake up, I feel better about NetApp. Great start to the year. But I think you folks know I played a lot of hockey. Hey, I can use 3 periods because it's 4 quarters. We just dropped the puck. We have 3 quarters left, and we're super excited about the future.

Well, in hockey terms, it sounds like NetApp is skating to where the puck is going to go and not where it's at now.

Great analogy. I'm glad you used that. You didn't use like a penalty box. I don't even want to have that discussion with you. I'm like, "Hey, skate to where the puck is." So thank you for that analogy.

You bet. And with that, I'd like to sincerely thank NetApp and the Chief Financial Officer, Mike Berry, for joining us today for this fireside presentation. We sincerely hope next year, Mike, you and I are on stage having this in person. Thank you so much, ladies and gentlemen. This concludes this session.

We look forward to that. Thank you, Jim.