1 00:00:00,040 --> 00:00:03,600 Speaker 1: You're listening to Bloomberg Business Week with Carol Messer and 2 00:00:03,680 --> 00:00:08,400 Speaker 1: Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. Also reporting 3 00:00:08,640 --> 00:00:12,719 Speaker 1: net App uh net adjusted first quarter EPs a dollar 4 00:00:12,760 --> 00:00:14,720 Speaker 1: twenty beat. The estimate of one ten sales came in 5 00:00:14,760 --> 00:00:17,200 Speaker 1: at one point five nine billion, better than the one 6 00:00:17,239 --> 00:00:19,520 Speaker 1: point came at one point five nine billion, better than 7 00:00:19,560 --> 00:00:21,560 Speaker 1: the one point five five billion estimates. So some good 8 00:00:21,640 --> 00:00:26,560 Speaker 1: numbers there. Let's bring in the CEO of uh net App, 9 00:00:26,640 --> 00:00:30,520 Speaker 1: George Curian. He joins us on Zoom from Menlo Park, California. 10 00:00:30,840 --> 00:00:34,080 Speaker 1: George talked to us about the quarter you just reported. 11 00:00:34,120 --> 00:00:36,240 Speaker 1: The stocks up about three percent and after market trading. 12 00:00:37,840 --> 00:00:40,840 Speaker 1: Good afternoon, Thanks for having me. We are excited. We're 13 00:00:40,840 --> 00:00:43,760 Speaker 1: off to a great start to our new fiscal year. 14 00:00:43,840 --> 00:00:47,440 Speaker 1: We just completed the first uh fiscal quarter of the 15 00:00:47,520 --> 00:00:51,599 Speaker 1: year and saw broad based demand and strength across all 16 00:00:51,640 --> 00:00:55,720 Speaker 1: our geographies. We have set record highs pretty much across 17 00:00:55,800 --> 00:01:00,200 Speaker 1: the board in terms of revenue, billings, gross margin, dollar is, 18 00:01:00,240 --> 00:01:03,640 Speaker 1: operating margin dollars and EPs for Q one, So I'm 19 00:01:03,680 --> 00:01:05,959 Speaker 1: really pleased. It's always good to get off to a 20 00:01:05,959 --> 00:01:08,399 Speaker 1: good start in the year. Yeah. Absolutely, that's a great 21 00:01:08,400 --> 00:01:11,680 Speaker 1: way better than the alternative. UM Paul did break down 22 00:01:11,680 --> 00:01:14,240 Speaker 1: some of your numbers. Your customer base has concluded the 23 00:01:14,280 --> 00:01:19,120 Speaker 1: likes of Amazon, Microsoft, Alphabet, Hitachi, Intel, Tata. It's global 24 00:01:19,160 --> 00:01:21,840 Speaker 1: in nature. It really gives us a good clue in 25 00:01:21,920 --> 00:01:24,080 Speaker 1: terms of what's going on in the economy. How would 26 00:01:24,080 --> 00:01:26,800 Speaker 1: you describe in terms of more color, demand for your 27 00:01:26,840 --> 00:01:31,760 Speaker 1: core products from your big customers. We're involved in helping 28 00:01:31,760 --> 00:01:37,800 Speaker 1: our customers store, protect and use their data for business advantage. 29 00:01:38,040 --> 00:01:41,560 Speaker 1: We do that not only with data center equipment for 30 00:01:41,720 --> 00:01:45,720 Speaker 1: their data centers, but as you mentioned, with cloud based 31 00:01:45,760 --> 00:01:49,360 Speaker 1: services that are deeply integrated into the world's leading cloud 32 00:01:49,400 --> 00:01:53,600 Speaker 1: providers Amazon, Microsoft, Google, IBM and others. And we saw 33 00:01:54,000 --> 00:01:58,320 Speaker 1: a really good portfolio balance across all of our geographies 34 00:01:58,360 --> 00:02:02,360 Speaker 1: and customer segments. Data. As you know, it's foundational to 35 00:02:03,000 --> 00:02:08,160 Speaker 1: competitive advantage, understanding customers, working with your supply chain, UH 36 00:02:08,200 --> 00:02:11,480 Speaker 1: and so on. And so we continue to see demand 37 00:02:12,000 --> 00:02:15,520 Speaker 1: strong and we've had to work really hard to have 38 00:02:15,639 --> 00:02:18,400 Speaker 1: all the supply to meet it, and we continue to 39 00:02:18,440 --> 00:02:20,880 Speaker 1: do that work. Talk to us about the supply chain. 40 00:02:20,919 --> 00:02:23,120 Speaker 1: It's it's been such an issue for so many businesses 41 00:02:23,560 --> 00:02:25,960 Speaker 1: across so many parts of the economy, and and it's 42 00:02:26,000 --> 00:02:28,840 Speaker 1: a global issue here. How is it for your company 43 00:02:29,120 --> 00:02:31,360 Speaker 1: now versus maybe in a year or two ago, and 44 00:02:31,480 --> 00:02:34,840 Speaker 1: kind of how do you think it's gonna progress? I 45 00:02:34,880 --> 00:02:37,840 Speaker 1: think a year ago was the really difficult time. We've 46 00:02:37,840 --> 00:02:42,680 Speaker 1: seen kind of steady improvements in silicon availability, and I 47 00:02:42,680 --> 00:02:48,160 Speaker 1: would say cautiously that we've seen stabilization. Uh in terms 48 00:02:48,240 --> 00:02:52,240 Speaker 1: of you know, the silicon supply chain. It's still not 49 00:02:52,760 --> 00:02:55,560 Speaker 1: where it is needed to be to meet all of 50 00:02:55,600 --> 00:02:59,840 Speaker 1: our demand, but at least it's stopped backsliding. We have 51 00:03:00,280 --> 00:03:03,720 Speaker 1: also been doing work to deal with some of the 52 00:03:03,880 --> 00:03:08,240 Speaker 1: freight and logistical challenges. I think, as you know, the 53 00:03:08,280 --> 00:03:12,760 Speaker 1: sort of the gap between demand and supply continues to 54 00:03:12,840 --> 00:03:16,680 Speaker 1: get a little bit smaller. We demand still ahead of supply. 55 00:03:16,840 --> 00:03:19,160 Speaker 1: We hope that these things get better over the course 56 00:03:19,200 --> 00:03:22,160 Speaker 1: of our next twelve months. Well, I do wonder. I 57 00:03:22,200 --> 00:03:25,280 Speaker 1: do wonder to George, how did supply chain issues or 58 00:03:25,360 --> 00:03:29,519 Speaker 1: pressures or constraints impact your ability to you know, in 59 00:03:29,639 --> 00:03:32,640 Speaker 1: terms of your adjustments or your outlook. Are raising your 60 00:03:32,639 --> 00:03:36,600 Speaker 1: outlook estimates for the full year? You know? I think 61 00:03:37,120 --> 00:03:40,119 Speaker 1: we have had to do a huge amount of work 62 00:03:40,200 --> 00:03:42,880 Speaker 1: to be able to meet demand. We've had to re 63 00:03:43,000 --> 00:03:47,320 Speaker 1: engineer products, We've had to source supply in multiple parts 64 00:03:47,320 --> 00:03:50,680 Speaker 1: of the world, and sort of extraordinary measures to meet demand. 65 00:03:51,600 --> 00:03:55,040 Speaker 1: I would say that backlog is still ahead of pre 66 00:03:55,160 --> 00:03:59,000 Speaker 1: pandemic levels, So we're still in elevated sort of backlog 67 00:03:59,120 --> 00:04:02,000 Speaker 1: situations and love to be able to you know, sort 68 00:04:02,000 --> 00:04:05,960 Speaker 1: of make those uh products available to customers. Were working 69 00:04:06,000 --> 00:04:09,120 Speaker 1: closely with our suppliers to do that. We did in 70 00:04:09,200 --> 00:04:14,320 Speaker 1: our press release reconfirmed the full year guidance, which, given 71 00:04:14,480 --> 00:04:18,640 Speaker 1: the currency movements subsequent to when we guided, is actually 72 00:04:18,680 --> 00:04:21,640 Speaker 1: taking up guidance as you noted, by about a you know, 73 00:04:21,680 --> 00:04:24,560 Speaker 1: one or two points. So we feel good about you know, demand. 74 00:04:24,720 --> 00:04:27,559 Speaker 1: We feel that we've got to go do the work 75 00:04:27,560 --> 00:04:29,760 Speaker 1: and supply and continue to do the work to need it. 76 00:04:30,760 --> 00:04:33,520 Speaker 1: We still have George Curry, he stays with us. He's 77 00:04:33,520 --> 00:04:36,200 Speaker 1: a chief executive officer of net app, joining us on 78 00:04:36,320 --> 00:04:39,560 Speaker 1: Zoom from Menlo Park, California. So, Georgia, I love it. 79 00:04:39,760 --> 00:04:42,920 Speaker 1: From your perspective, where is the biggest source of growth 80 00:04:42,960 --> 00:04:45,840 Speaker 1: for your business here over the next five years? I'm 81 00:04:45,839 --> 00:04:47,400 Speaker 1: gonna ask you to think a little bit far out, 82 00:04:47,400 --> 00:04:49,839 Speaker 1: which I know your board asked you to do. Occasionally, 83 00:04:49,839 --> 00:04:52,279 Speaker 1: but on a five year plan, you're in so many 84 00:04:52,279 --> 00:04:54,960 Speaker 1: pieces of the pie that are you have some really 85 00:04:55,000 --> 00:04:57,560 Speaker 1: strong growth dynamics. Where do you really think your focused 86 00:04:57,560 --> 00:05:02,800 Speaker 1: should be? We really see the two big transformational trends 87 00:05:02,839 --> 00:05:08,520 Speaker 1: are data driven business or digital business and cloud. You know, 88 00:05:08,640 --> 00:05:13,320 Speaker 1: we on the data side, we help our clients store 89 00:05:13,680 --> 00:05:19,120 Speaker 1: aggregate enormous amounts of data, whether it's for traditional applications 90 00:05:19,160 --> 00:05:22,120 Speaker 1: like an E r P or you mentioned salesforce those 91 00:05:22,200 --> 00:05:27,080 Speaker 1: kinds of applications, or for the really modern advanced analytics 92 00:05:27,120 --> 00:05:31,839 Speaker 1: and artificial intelligence applications. We for example, work with companies 93 00:05:31,839 --> 00:05:36,520 Speaker 1: like Siemens Health and Years which makes medical imaging systems, 94 00:05:36,960 --> 00:05:40,560 Speaker 1: and we use AI technology together with huge amounts of 95 00:05:40,680 --> 00:05:43,120 Speaker 1: data to be able to make the life of a 96 00:05:43,279 --> 00:05:47,719 Speaker 1: radiologist much easier. We can predict help them predict which 97 00:05:47,760 --> 00:05:50,799 Speaker 1: patients are more likely to have COVID, or find cost 98 00:05:50,880 --> 00:05:55,400 Speaker 1: effective ways to deal with the breast cancer and so on. 99 00:05:55,480 --> 00:05:58,919 Speaker 1: So that's one data and the other is cloud. You know. 100 00:05:59,000 --> 00:06:03,640 Speaker 1: You see there's a vast migration of customers to using 101 00:06:04,120 --> 00:06:07,960 Speaker 1: cloud based technologies, and we help all of the leading 102 00:06:08,520 --> 00:06:12,560 Speaker 1: cloud providers as well as their end customers to make 103 00:06:12,640 --> 00:06:18,360 Speaker 1: their cloud projects much more reliable performance secured, especially security 104 00:06:18,480 --> 00:06:22,839 Speaker 1: of data from attacks like ransomware, is a growing trend 105 00:06:22,960 --> 00:06:26,720 Speaker 1: that we have really good solutions for. Carol, I think 106 00:06:26,880 --> 00:06:29,680 Speaker 1: I'm even in the cloud. I know I am. You 107 00:06:29,720 --> 00:06:32,120 Speaker 1: know if I'm in the cloud, you know it's a thing. 108 00:06:32,200 --> 00:06:36,160 Speaker 1: It's a market. So, George, I'm looking at our PGeo 109 00:06:36,320 --> 00:06:38,600 Speaker 1: function on the Bloomberg terminal that allows me to look 110 00:06:38,600 --> 00:06:41,480 Speaker 1: at breakdown of your businesses by lots of different measures 111 00:06:41,520 --> 00:06:44,320 Speaker 1: and by geography. I see that. Yeah, but a little 112 00:06:44,320 --> 00:06:46,400 Speaker 1: more than half of your businesses in the US and 113 00:06:46,600 --> 00:06:50,159 Speaker 1: CANA in Latin America, maybe about a third, thirty in Europe, 114 00:06:50,200 --> 00:06:56,000 Speaker 1: and about fourteen in Asia. Going forward, where regionally will 115 00:06:56,040 --> 00:06:58,080 Speaker 1: you be allocating more of your capital? Where do you 116 00:06:58,080 --> 00:07:02,960 Speaker 1: see more growth? On a gineral basis, we continue to 117 00:07:03,000 --> 00:07:06,320 Speaker 1: focus on the biggest markets in each of those geographies. 118 00:07:06,880 --> 00:07:11,200 Speaker 1: I think several years ago, about maybe five or six 119 00:07:11,280 --> 00:07:15,760 Speaker 1: years ago, we decided to participate in the China market, 120 00:07:15,920 --> 00:07:19,000 Speaker 1: which is the largest Asian market, through a joint venture 121 00:07:19,480 --> 00:07:24,400 Speaker 1: with Lenovo that allows us to serve the vast expanse 122 00:07:24,480 --> 00:07:30,640 Speaker 1: of Chinese customers with local partnerships and local knowledge of 123 00:07:30,680 --> 00:07:33,080 Speaker 1: the local market. So the rest of the world. We 124 00:07:33,160 --> 00:07:36,480 Speaker 1: served through our own uh you know kind of sales 125 00:07:36,720 --> 00:07:40,480 Speaker 1: and go to market organization and through partners, and we're 126 00:07:40,520 --> 00:07:43,040 Speaker 1: pleased with the strength of our you know, it's a 127 00:07:43,040 --> 00:07:46,800 Speaker 1: balanced book of business. We've seen strong adoption of our 128 00:07:46,840 --> 00:07:49,840 Speaker 1: portfolio across all the leading markets, and so I'm excited 129 00:07:49,840 --> 00:07:52,600 Speaker 1: about what the future holds. Hey, George, I do wanted 130 00:07:52,640 --> 00:07:54,640 Speaker 1: to and some of the major macro issues that are 131 00:07:54,680 --> 00:07:58,760 Speaker 1: out there, whether it's near shoring, offshoring, on shoring, uh 132 00:07:58,800 --> 00:08:00,960 Speaker 1: and then through on top of that g political tensions 133 00:08:00,960 --> 00:08:04,280 Speaker 1: which is creating all of that changes. How is that 134 00:08:04,320 --> 00:08:07,640 Speaker 1: impacting you guys in terms of where you produce, where 135 00:08:07,640 --> 00:08:11,480 Speaker 1: you do business. Clearly, it's a great question, Carol, I 136 00:08:11,560 --> 00:08:15,000 Speaker 1: think clearly, over the last few years, both because of 137 00:08:15,040 --> 00:08:20,360 Speaker 1: geopolitical risk, but also just supply availability and risk management, 138 00:08:20,800 --> 00:08:25,040 Speaker 1: we've built a diverse kind of geographic base for supply 139 00:08:25,120 --> 00:08:29,800 Speaker 1: and manufacturing. We've moved our dependence from the far East 140 00:08:29,840 --> 00:08:33,640 Speaker 1: too much more local markets, so we manufacture heavily in 141 00:08:33,760 --> 00:08:38,120 Speaker 1: Mexico and in some parts of Europe. We've moved, you know, 142 00:08:38,160 --> 00:08:42,439 Speaker 1: our supply base from a silicon perspective into a diverse 143 00:08:42,559 --> 00:08:46,720 Speaker 1: mix of silicon providers, and we've moved the way our 144 00:08:46,800 --> 00:08:51,280 Speaker 1: systems are built. Rather than from highly integrated systems that 145 00:08:51,400 --> 00:08:54,400 Speaker 1: have risk from one component, we're moving it to more 146 00:08:54,400 --> 00:08:57,679 Speaker 1: of a Lego style building block models, so that if 147 00:08:57,720 --> 00:09:00,280 Speaker 1: one component isn't there, you can slot in another one. 148 00:09:00,679 --> 00:09:02,080 Speaker 1: So we had to do a lot of work. We 149 00:09:02,120 --> 00:09:05,840 Speaker 1: continue to believe that the world's uh, you know, we 150 00:09:05,920 --> 00:09:08,640 Speaker 1: need to think about supply rather than in the old 151 00:09:08,720 --> 00:09:12,640 Speaker 1: model of just in time management to actually be risking 152 00:09:12,720 --> 00:09:15,920 Speaker 1: supply to meet demand. Yeah, that's we've heard definite. A 153 00:09:15,960 --> 00:09:18,480 Speaker 1: lot of companies, a lot of different industries, real quick, 154 00:09:18,679 --> 00:09:22,160 Speaker 1: George thirty seconds. Labor You have about twelve thousand employees 155 00:09:23,160 --> 00:09:24,880 Speaker 1: health tough? Is they get labor health to us that 156 00:09:24,920 --> 00:09:28,840 Speaker 1: they keep labor? I think it's been. It's a very 157 00:09:28,840 --> 00:09:33,880 Speaker 1: competitive job market, especially for the type of talent software 158 00:09:33,880 --> 00:09:37,040 Speaker 1: and cloud talent that we look for. We've got a 159 00:09:37,080 --> 00:09:40,520 Speaker 1: really good value proposition for employees. They get to do 160 00:09:40,640 --> 00:09:44,960 Speaker 1: great work in a you know, very supportive culture, and 161 00:09:45,000 --> 00:09:49,280 Speaker 1: we are got a global population, so we can source 162 00:09:49,320 --> 00:09:51,559 Speaker 1: talent wherever in the world. It is. Yeah, but is 163 00:09:51,600 --> 00:09:55,240 Speaker 1: it getting more expensive? Just got about fifteen seconds. Yeah, 164 00:09:55,320 --> 00:09:58,040 Speaker 1: I mean, clearly having the best talent in the world 165 00:09:58,080 --> 00:10:01,160 Speaker 1: is a source of competitive advantage, and we've got good 166 00:10:01,200 --> 00:10:04,600 Speaker 1: compensation programs to meet what what's needed. All right, listen, 167 00:10:04,640 --> 00:10:06,839 Speaker 1: thank you so much, really appreciate all the time on 168 00:10:06,960 --> 00:10:09,120 Speaker 1: what we know is a busy day for you folks. 169 00:10:09,120 --> 00:10:11,400 Speaker 1: George Corey and he is a chief executive officer at 170 00:10:11,400 --> 00:10:15,319 Speaker 1: net App via zoom from Menlo Park, California. This as 171 00:10:15,360 --> 00:10:19,520 Speaker 1: we see net app excuse me, net App reporting after 172 00:10:19,600 --> 00:10:22,240 Speaker 1: the close and its stock is up about five percently 173 00:10:22,280 --> 00:10:25,360 Speaker 1: after our so investors reacting favorably to what the company 174 00:10:25,520 --> 00:10:26,319 Speaker 1: had to say.