Hybrid cloud data services and data management company NetApp has lowered its guidance for its second fiscal quarter of 2023, and the remainder of the fiscal year, in reaction to unstable macroeconomic conditions. The change is also driven by the company’s fears of a slowdown in cloud services revenue, despite reporting record second-quarter billings, revenue, gross profit dollars, operating income, and earnings per share. Chief Executive Officer George Kurian made the announcement during remarks to financial analysts, while also boasting a positive quarter in a dynamic environment.
Companies worldwide across industries are tightening their budgets, resulting in smaller deals and longer selling cycles for NetApp, especially in the American hi-tech and service provider sectors, according to Kurian. While second-quarter public cloud segment revenue increased by more than 60% year-over-year, its public cloud annual recurring revenue (ARR) of $603 million failed to meet expectations. The company’s stock price has suffered in response to the change in guidance, dropping to about $60 per share, down from nearly $75 the last week of November.
The company hopes to attract customers starting new projects in the new year, but is taking belt-tightening measures such as a hiring freeze and reducing discretionary spending.