Paramveer Singh

Param Singh of Oppenheimer & Co. Inc. questioned NetApp's technical advantages in AI workloads compared to competitors and asked for evidence of customer traction. He followed up by asking about specific AI inferencing applications where NetApp has a high win rate.

Answer

CEO George Kurian outlined several technical advantages: proven performance and scaling (evidenced by NVIDIA certifications), robust data management for security and governance, and unique hybrid cloud integration. As proof of traction, he cited 150 AI customer wins in Q4. He identified three key application areas: modernizing data infrastructure for AI, building AI centers of excellence with partners like NVIDIA, and enabling cloud service providers to host inferencing environments.

Param Singh of Oppenheimer & Co. Inc. asked about NetApp's technical advantages in AI workloads compared to competitors and for evidence of customer wins, given the guidance's reliance on AI success. He also requested color on specific AI inferencing applications where NetApp has a high win rate.

Answer

CEO George Kurian highlighted several technical advantages: proven performance and scaling (validated by NVIDIA SuperPOD), robust data management for security and governance, and unique hybrid cloud integration with tools like Vertex and Bedrock. As evidence, he cited 150 AI customer wins in Q4. He identified three key use cases for high win rates: data infrastructure modernization, building AI centers of excellence (often with NVIDIA reference architectures), and enabling cloud service providers to host inferencing environments.

Param Singh of Oppenheimer & Co. Inc. asked about NetApp's specific technical advantages in AI workloads compared to competitors and requested evidence of customer traction. He followed up by asking about the key AI inferencing applications where NetApp feels it is best positioned to win.

Answer

CEO George Kurian outlined several advantages: superior performance and scaling (validated by NVIDIA certifications), robust data management for security and governance, and unique hybrid cloud integration. As proof, he cited 150 AI customer wins in Q4. He identified three key application areas: data infrastructure modernization, building AI centers of excellence, and enabling cloud service providers to host inferencing environments.

Paramveer Singh asked for more detail on the deal push-outs, specifically whether they were competitive displacement opportunities or refreshes of NetApp's existing footprint, and about the general sales mix.

Answer

CEO George Kurian responded that the pushed deals did not follow any specific pattern of competitive vs. refresh, but were instead tied to customer procurement lifecycle issues that are now being addressed with greater scrutiny. He reiterated that with all-flash penetration at only 43%, a 'preponderant part' of the flash business is necessarily from winning net new footprints or logos, not just refreshing the installed base.

Paramveer Singh asked about the drivers behind the public cloud revenue recovery and the customer feedback and growth prospects for the Keystone offering.

Answer

CEO George Kurian attributed the public cloud recovery to a focused go-to-market with hyperscalers, broader offerings, and stabilization of the subscription business. CFO Mike Berry added that a return to teens growth is possible in fiscal 2025. On Keystone, Kurian described customer feedback as 'stellar' with no churn, and expects growth to continue as partner engagement expands.

In a follow-up, Paramveer Singh asked what market dynamics are needed for further pricing rationalization, potentially slowing price declines from the high-teens to the low-double-digits.

Answer

CEO Todd Nightingale responded that strong sales execution is a critical factor. He believes the current competitive landscape supports a healthier market with mid-teens price declines, which would provide a tailwind for both gross margin and revenue. He affirmed that his team is actively pushing the market in that direction.

Paramveer Singh asked about the competitive landscape, particularly following the Cohesity-Veritas acquisition, and Commvault's strategy to compete. He also inquired about the focus of organic investments over the next 1-3 years and the company's view on backup vendors serving as a 'source of truth' for Large Language Models (LLMs).

Answer

CEO Sanjay Mirchandani emphasized that Commvault's strategy is focused on cyber resilience and its broad hybrid platform is taking market share. He stated that future investments are centered on enhancing recovery capabilities like Cleanroom, Active Directory recovery, and Clumio's large-scale data handling, rather than just specific workloads. Regarding LLMs, he affirmed that Commvault's application-aware nature makes it a strong 'source of truth,' a role he sees as increasingly important for AI applications.

Paramveer Singh asked for details on the adoption of security-focused modules by SaaS customers and whether there has been an acceleration. He also inquired about plans for future module expansion, either organically or via M&A, in the context of driving margin expansion.

Answer

CEO Sanjay Mirchandani stated that security is built into the core platform, which is FedRAMP certified, rather than being a simple bolt-on. He highlighted that capabilities like Cleanroom, Active Directory recovery, and AirGap Protect are integral to enhancing customer resilience. He believes the current offerings provide a strong, natural growth path for customers and are second to none, suggesting the focus is on driving adoption of the existing innovative portfolio.

Paramveer Singh from Oppenheimer & Co. asked to quantify the impact of VMware's situation on growth, inquired about the primary challenges customers face when migrating from VMware, and asked about the company's M&A strategy.

Answer

CFO Rukmini Sivaraman said it is difficult to parse out the specific impact of the VMware situation. CEO Rajiv Ramaswami identified key migration challenges as the timing of VMware license renewals, the need for a hardware refresh, and general customer inertia. Regarding M&A, he stated the strategy continues to focus on smaller, tuck-in acquisitions that complement the existing portfolio, similar to the past acquisition of D2iQ.

Paramveer Singh asked about the Evergreen//One opportunity, questioning if customers might be more inclined to move workloads directly to a hyperscaler using Pure's technology, rather than opting for an Evergreen//One on-premise sale.

Answer

CEO Charles Giancarlo stated this is unlikely, as the hyperscaler deal provides foundational storage technology, not the end-user storage services that enterprises consume. He explained that enterprise decisions on application placement (on-prem vs. cloud) are separate from the underlying storage hardware. He noted that Pure Fusion actually brings cloud-like operating models to the enterprise, unifying on-prem and cloud storage, which is a complementary, not conflicting, motion.