NetApp profits grow by a third despite economic concerns

Storage vendor claims sales cycles and large deals are taking longer, but still grew revenue by four per cent

NetApp claims it has seen the biggest-ever customer uptake in its FlexPod technology in its Q3 as it announces a profit spike of nearly a third.

For the three months to 25 January, NetApp saw GAAP net profits soar 32 per cent year on year on sales that rose four per cent to $1.63bn (£1.05bn), ahead of Wall Street expectations of $1.62bn.

The vendor, which debuted FlexPod in 2010, launched a channel programme around the technology and last summer, and claims to have signed up 2,100 new FlexPod customers during its Q3.

NetApp's chief executive Thomas Gerogens claims that the channel played a big part in FlexPod's successful third quarter.

Speaking on the earnings call, transcribed by Seeking Alpha, he said: "Partnering remains key to our strategy. Both our alliance partners and our reselling channel partners are core to our ability to globally deliver a complete innovation stack to our customers.

"There is no better example in the power of this strategy than FlexPod, a converged solution based on NetApp and Cisco technology sold by our joint channel partners for shared storage infrastructures."

He added that the record amount of new customers was acquired from more than 700 partners in 35 countries.

Sales and marketing spend for the vendor grew three per cent to £493.5m last quarter, while its research and development outgoings jumped by four per cent to £139m.

Georgens added that despite the positive results, economic uncertainty remained, particularly in Europe.

He said: "While there are some pockets of optimism, the global macro environment remains uncertain with renewed concerns in Europe.

"In every geography, we continue to see lengthening of sales cycles and large deals being drawn out. However, I am confident in our ability to execute and realise the payoff investments we have made in innovation and partnerships."

NetApp estimates revenue for its fourth quarter to come in between $1.7bn and $1.8bn.