Speaker 1: You're listening to Bloomberg Business Week with Carol Messer and
Speaker 1: Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. Also reporting
Speaker 1: net App uh net adjusted first quarter EPs a dollar
Speaker 1: twenty beat. The estimate of one ten sales came in
Speaker 1: at one point five nine billion, better than the one
Speaker 1: point came at one point five nine billion, better than
Speaker 1: the one point five five billion estimates. So some good
Speaker 1: numbers there. Let's bring in the CEO of uh net App,
Speaker 1: George Curian. He joins us on Zoom from Menlo Park, California.
Speaker 1: George talked to us about the quarter you just reported.
Speaker 1: The stocks up about three percent and after market trading.
Speaker 1: Good afternoon, Thanks for having me. We are excited. We're
Speaker 1: off to a great start to our new fiscal year.
Speaker 1: We just completed the first uh fiscal quarter of the
Speaker 1: year and saw broad based demand and strength across all
Speaker 1: our geographies. We have set record highs pretty much across
Speaker 1: the board in terms of revenue, billings, gross margin, dollar is,
Speaker 1: operating margin dollars and EPs for Q one, So I'm
Speaker 1: really pleased. It's always good to get off to a
Speaker 1: good start in the year. Yeah. Absolutely, that's a great
Speaker 1: way better than the alternative. UM Paul did break down
Speaker 1: some of your numbers. Your customer base has concluded the
Speaker 1: likes of Amazon, Microsoft, Alphabet, Hitachi, Intel, Tata. It's global
Speaker 1: in nature. It really gives us a good clue in
Speaker 1: terms of what's going on in the economy. How would
Speaker 1: you describe in terms of more color, demand for your
Speaker 1: core products from your big customers. We're involved in helping
Speaker 1: our customers store, protect and use their data for business advantage.
Speaker 1: We do that not only with data center equipment for
Speaker 1: their data centers, but as you mentioned, with cloud based
Speaker 1: services that are deeply integrated into the world's leading cloud
Speaker 1: providers Amazon, Microsoft, Google, IBM and others. And we saw
Speaker 1: a really good portfolio balance across all of our geographies
Speaker 1: and customer segments. Data. As you know, it's foundational to
Speaker 1: competitive advantage, understanding customers, working with your supply chain, UH
Speaker 1: and so on. And so we continue to see demand
Speaker 1: strong and we've had to work really hard to have
Speaker 1: all the supply to meet it, and we continue to
Speaker 1: do that work. Talk to us about the supply chain.
Speaker 1: It's it's been such an issue for so many businesses
Speaker 1: across so many parts of the economy, and and it's
Speaker 1: a global issue here. How is it for your company
Speaker 1: now versus maybe in a year or two ago, and
Speaker 1: kind of how do you think it's gonna progress? I
Speaker 1: think a year ago was the really difficult time. We've
Speaker 1: seen kind of steady improvements in silicon availability, and I
Speaker 1: would say cautiously that we've seen stabilization. Uh in terms
Speaker 1: of you know, the silicon supply chain. It's still not
Speaker 1: where it is needed to be to meet all of
Speaker 1: our demand, but at least it's stopped backsliding. We have
Speaker 1: also been doing work to deal with some of the
Speaker 1: freight and logistical challenges. I think, as you know, the
Speaker 1: sort of the gap between demand and supply continues to
Speaker 1: get a little bit smaller. We demand still ahead of supply.
Speaker 1: We hope that these things get better over the course
Speaker 1: of our next twelve months. Well, I do wonder. I
Speaker 1: do wonder to George, how did supply chain issues or
Speaker 1: pressures or constraints impact your ability to you know, in
Speaker 1: terms of your adjustments or your outlook. Are raising your
Speaker 1: outlook estimates for the full year? You know? I think
Speaker 1: we have had to do a huge amount of work
Speaker 1: to be able to meet demand. We've had to re
Speaker 1: engineer products, We've had to source supply in multiple parts
Speaker 1: of the world, and sort of extraordinary measures to meet demand.
Speaker 1: I would say that backlog is still ahead of pre
Speaker 1: pandemic levels, So we're still in elevated sort of backlog
Speaker 1: situations and love to be able to you know, sort
Speaker 1: of make those uh products available to customers. Were working
Speaker 1: closely with our suppliers to do that. We did in
Speaker 1: our press release reconfirmed the full year guidance, which, given
Speaker 1: the currency movements subsequent to when we guided, is actually
Speaker 1: taking up guidance as you noted, by about a you know,
Speaker 1: one or two points. So we feel good about you know, demand.
Speaker 1: We feel that we've got to go do the work
Speaker 1: and supply and continue to do the work to need it.
Speaker 1: We still have George Curry, he stays with us. He's
Speaker 1: a chief executive officer of net app, joining us on
Speaker 1: Zoom from Menlo Park, California. So, Georgia, I love it.
Speaker 1: From your perspective, where is the biggest source of growth
Speaker 1: for your business here over the next five years? I'm
Speaker 1: gonna ask you to think a little bit far out,
Speaker 1: which I know your board asked you to do. Occasionally,
Speaker 1: but on a five year plan, you're in so many
Speaker 1: pieces of the pie that are you have some really
Speaker 1: strong growth dynamics. Where do you really think your focused
Speaker 1: should be? We really see the two big transformational trends
Speaker 1: are data driven business or digital business and cloud. You know,
Speaker 1: we on the data side, we help our clients store
Speaker 1: aggregate enormous amounts of data, whether it's for traditional applications
Speaker 1: like an E r P or you mentioned salesforce those
Speaker 1: kinds of applications, or for the really modern advanced analytics
Speaker 1: and artificial intelligence applications. We for example, work with companies
Speaker 1: like Siemens Health and Years which makes medical imaging systems,
Speaker 1: and we use AI technology together with huge amounts of
Speaker 1: data to be able to make the life of a
Speaker 1: radiologist much easier. We can predict help them predict which
Speaker 1: patients are more likely to have COVID, or find cost
Speaker 1: effective ways to deal with the breast cancer and so on.
Speaker 1: So that's one data and the other is cloud. You know.
Speaker 1: You see there's a vast migration of customers to using
Speaker 1: cloud based technologies, and we help all of the leading
Speaker 1: cloud providers as well as their end customers to make
Speaker 1: their cloud projects much more reliable performance secured, especially security
Speaker 1: of data from attacks like ransomware, is a growing trend
Speaker 1: that we have really good solutions for. Carol, I think
Speaker 1: I'm even in the cloud. I know I am. You
Speaker 1: know if I'm in the cloud, you know it's a thing.
Speaker 1: It's a market. So, George, I'm looking at our PGeo
Speaker 1: function on the Bloomberg terminal that allows me to look
Speaker 1: at breakdown of your businesses by lots of different measures
Speaker 1: and by geography. I see that. Yeah, but a little
Speaker 1: more than half of your businesses in the US and
Speaker 1: CANA in Latin America, maybe about a third, thirty in Europe,
Speaker 1: and about fourteen in Asia. Going forward, where regionally will
Speaker 1: you be allocating more of your capital? Where do you
Speaker 1: see more growth? On a gineral basis, we continue to
Speaker 1: focus on the biggest markets in each of those geographies.
Speaker 1: I think several years ago, about maybe five or six
Speaker 1: years ago, we decided to participate in the China market,
Speaker 1: which is the largest Asian market, through a joint venture
Speaker 1: with Lenovo that allows us to serve the vast expanse
Speaker 1: of Chinese customers with local partnerships and local knowledge of
Speaker 1: the local market. So the rest of the world. We
Speaker 1: served through our own uh you know kind of sales
Speaker 1: and go to market organization and through partners, and we're
Speaker 1: pleased with the strength of our you know, it's a
Speaker 1: balanced book of business. We've seen strong adoption of our
Speaker 1: portfolio across all the leading markets, and so I'm excited
Speaker 1: about what the future holds. Hey, George, I do wanted
Speaker 1: to and some of the major macro issues that are
Speaker 1: out there, whether it's near shoring, offshoring, on shoring, uh
Speaker 1: and then through on top of that g political tensions
Speaker 1: which is creating all of that changes. How is that
Speaker 1: impacting you guys in terms of where you produce, where
Speaker 1: you do business. Clearly, it's a great question, Carol, I
Speaker 1: think clearly, over the last few years, both because of
Speaker 1: geopolitical risk, but also just supply availability and risk management,
Speaker 1: we've built a diverse kind of geographic base for supply
Speaker 1: and manufacturing. We've moved our dependence from the far East
Speaker 1: too much more local markets, so we manufacture heavily in
Speaker 1: Mexico and in some parts of Europe. We've moved, you know,
Speaker 1: our supply base from a silicon perspective into a diverse
Speaker 1: mix of silicon providers, and we've moved the way our
Speaker 1: systems are built. Rather than from highly integrated systems that
Speaker 1: have risk from one component, we're moving it to more
Speaker 1: of a Lego style building block models, so that if
Speaker 1: one component isn't there, you can slot in another one.
Speaker 1: So we had to do a lot of work. We
Speaker 1: continue to believe that the world's uh, you know, we
Speaker 1: need to think about supply rather than in the old
Speaker 1: model of just in time management to actually be risking
Speaker 1: supply to meet demand. Yeah, that's we've heard definite. A
Speaker 1: lot of companies, a lot of different industries, real quick,
Speaker 1: George thirty seconds. Labor You have about twelve thousand employees
Speaker 1: health tough? Is they get labor health to us that
Speaker 1: they keep labor? I think it's been. It's a very
Speaker 1: competitive job market, especially for the type of talent software
Speaker 1: and cloud talent that we look for. We've got a
Speaker 1: really good value proposition for employees. They get to do
Speaker 1: great work in a you know, very supportive culture, and
Speaker 1: we are got a global population, so we can source
Speaker 1: talent wherever in the world. It is. Yeah, but is
Speaker 1: it getting more expensive? Just got about fifteen seconds. Yeah,
Speaker 1: I mean, clearly having the best talent in the world
Speaker 1: is a source of competitive advantage, and we've got good
Speaker 1: compensation programs to meet what what's needed. All right, listen,
Speaker 1: thank you so much, really appreciate all the time on
Speaker 1: what we know is a busy day for you folks.
Speaker 1: George Corey and he is a chief executive officer at
Speaker 1: net App via zoom from Menlo Park, California. This as
Speaker 1: we see net app excuse me, net App reporting after
Speaker 1: the close and its stock is up about five percently
Speaker 1: after our so investors reacting favorably to what the company
Speaker 1: had to say.