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Data-driven digital business is ‘in its first chapter,’ NetApp CEO says

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NetApp CEO George Kurian joins Yahoo Finance’s Akiko Fujita and Brian Sozzi to discuss the outlook on cloud computing, chip supply disruptions, and digital transformations.

Video transcript

AKIKO FUJITA: Cloud Services company NetApp shares dipping into the red after hitting a new high in the session today. NetApp, which has collaborated with some of the biggest names in the cloud industry, including Amazon Web Services, Google Cloud, and Microsoft Azure, has seen strong growth in the last few corners, most recently smashing estimates for both revenue and earnings per share.

Let's bring in George Kurian, NetApp CEO. We've also got Yahoo Finance's Brian Sozzi joining in on the conversation. George, it is great to have you on. You know, we've seen a number of notes from analysts cross through talking about or at least warning about the slowdown that could come in this space from the enterprise side. What do you see as you look to 2022?

GEORGE KURIAN: We see continued strong demand. We have really good drivers behind our business from a demand side, both the use of data to make businesses go faster and the core idea of cloud and digital driving business transformation. So we feel really good about our prospects for this year.

BRIAN SOZZI: George, have you seen any easing in the supply chain challenges you talked about a couple of weeks ago on your earnings call?

GEORGE KURIAN: We continue to work to improve availability of parts and to meet our strong customer demand. I think it's going to continue to be a bit choppy for a few more quarters. But we have got good, deep relationships with our suppliers. And we're starting to see improvements.

BRIAN SOZZI: And, George, where are you seeing those shortages?

GEORGE KURIAN: I think we see issues specifically to select pieces of the semiconductor supply chain. And then, of course, logistics and freight is another area where we've had to pay premiums to use air based distribution and expedite parts to certain parts of the world.

ZACK GUZMAN: It's been interesting to kind of watch the growth and the different companies here operating in cloud space compete to continue some of that growth. I mean, as you see it right now in this chapter of where things are at, I mean, what's NetApp kind of doing to kind of help all those players in the cloud space and what the needs have shifted to now?

GEORGE KURIAN: I think we see businesses now moving their core applications to the public cloud infrastructures. And we are able to bring technologies and work closely with the biggest cloud providers-- Amazon, Microsoft, Google-- to help businesses deploy those applications on the public cloud. This has profound implications for how we can make businesses go faster.

So we've helped vaccine makers bring vaccines to the market faster. We helped Ducati Motors, for example, reduce the time to bring new motorcycle prototypes to market by about 30%. So these are the core idea of using data to help businesses go faster. And we're a cornerstone of that.

AKIKO FUJITA: Yeah, we've been talking so much about how that transition, the use of more digital, more data has accelerated during the pandemic. And I think there's a lot of questions about how much of that runway you can maintain now that a lot of that transition has happened. Can you give us a little more insight on what you see? Where are the big growth opportunities that you're especially excited about?

GEORGE KURIAN: I think we see data-driven digital business as in its first chapter-- meaning data used to be a byproduct of how businesses operated. They sort of have a big store, and they collect a little bit of data around how customers participated in that store. Now, they're using data as an input to drive business rather than as a byproduct.

And we're in the early innings of that. I think you can see data growth being phenomenal, right? The statistics would say there's been more data created in the last couple of years than in the preceding several centuries of human history. So I think that pace is not going to go away.

BRIAN SOZZI: And, George, I've been talking to a lot of tech CEOs lately, and they're starting to spend even more time on recruiting top talent. Within your company, how much time are you spending right now making sure you have the right talent to meet this really strong demand backdrop?

GEORGE KURIAN: We do that as part of our daily job, right? I think a big part of my job is to both build confidence in the outlook of the business and spend time building our team. We have a very strong culture of trust, communications, as well as inclusive opportunity for all of our employees.

And that has stood us in good stead over many years and is clearly an area of strength as we recruit new talent.

AKIKO FUJITA: And, George, to follow up on Brian's point, I mean, how competitive is the landscape for you right now? We've heard from so many companies who've talked about higher expenses they're looking at because of the competition for those jobs-- to fill those jobs. What does that look like for you right now?

GEORGE KURIAN: It's always been competitive in our market. You know, we are a talent-driven business, and so we've done many things over the years to continue to be able to bring really good talent to NetApp. I think the innovation that we are working on is a source of inspiration to a lot of people.

I think the idea of flexible working models where we can bring talent into our organization, regardless of their physical geography, is another area of strength. And then honestly, the culture.

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