NetApp Inc Q1 2023 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: David Vogt - UBS Investment Bank, Research Division - Analyst : Maybe this is a question for both George and Mike. So when I think about the profitability and the challenges that the industry is facing, it looks like just quickly from our math, that the Hybrid Cloud incremental gross margin might be at the lowest level that we've seen in quite some time, kind of below 20%. And should we -- so therefore, if I think about the business going forward, are we at the low-water mark from product gross margin this quarter given your commentary about supply chain getting better? And should we expect sort of a sequential improvement in product gross margin going forward? Or is there something else under the hood like are we expecting some sort of Public Cloud gross margin pressure in the back half as well? I'm just trying to triangulate kind of where we are today versus where we might be in 3 to 4 quarters from now.

Question: David Vogt - UBS Investment Bank, Research Division - Analyst : And then maybe can I just follow up, Mike. So you may be leveraging what Meta had asked before on operating expenses. Was there anything sort of unique in the first quarter? It certainly appeared to us at least maybe there might have been some tight cost controls on your end to keep sales and marketing looks like flat year-over-year and down fairly meaningfully quarter-over-quarter. As supply chain gets better and revenue continues to ramp, should we expect some incremental dollars to flow back into the OpEx lines over the next couple of quarters?

Question: Angela Jin - JPMorgan Chase & Co, Research Division - Analyst : This is Angela Jin on for Samik Chatterjee. I just wanted to dig into the comment you made about over 100% growth in ARR from AWS, Azure and Google Cloud combined. I'm guessing the majority of that contribution comes from ANF just given its scale right now, but -- do you mind parsing through how each one is trending and where you're seeing the greatest traction and where you might see it going in the future?