It's one small step for NetApp (NTAP) and one big sigh of relief on Wall Street. The storage provider delivered better-than-expected quarterly results this week -- and the channel played a key role in that upside surprise.
During NetApp's Q1 2017 (which ended July 29, 2016), the company's indirect sales "ticked up a few percentage points sequentially," noted one analyst on NetApp's earnings call this week.
CEO George Kurian credited Executive VP Henri Richard for some of the progress. Richard joined NetApp in April, with the mission to "drive expanding relationships with NetApp’s strategic technology partners, resellers, and customers across the globe."
NetApp Channel Priorities
Describing the channel gains, Kurian said:
"We have a new leader of our go to market organization, Henri Richard, who is focused on accelerating our penetration and returning product revenue to growth, but the indirect channel is an important strategic asset to NetApp. We work closely with our channel to help them accelerate capabilities into the market for our All-Flash Arrays for cluster data ONTAP as well as for SolidFire. We also had a strong quarter on the OEM side, which is reflected in both the mix of mature as well as the mix of indirect channel. And so we're going to continue to focus on the right mix of direct and indirect and the channels are really important part of our go to market model."
At first glance, NetApp's overall financials may not impress the casual observer. Revenue for Q1 2017 was $1.294 billion, down from $1.335 billion in Q1 2016. Indicated revenues represented about 77 percent of the business -- up 3 percent from Q4 2016 but flat compared to Q1 2016.
NetApp All Flash Array Progress
Take a closer look and you'll begin to see why Wall Street was impressed. In recent years, NetApp has been caught in an awkward position -- squeezed on multiple sides by cloud storage providers, enterprise giants and hyperconverged startups.
Now for the progress: NetApp's All-Flash Arrays business grew by 385% year on year and reached $775 million in annual run rate last quarter, Bert Hochfeld notes on SeekingAlpha. Based on that number, flash has become 30% of the company's product revenues, he estimates.
Flash alone won't restore NetApp to its glory days. But it looks like some of the recent bleeding at NetApp has subsided -- and perhaps even ended. Credit the channel for some of that progress.