Subscription is where we saw a challenge, both a small part of cloud storage subscription as well as CloudOps and we are conducting a review and we’ll get you an update at the next quarterly call about our plans for that part of our business.
Michael Tsvetanov: Okay. Thank you. That’s helpful. And if I can just add one more. I just want to understand your all-flash business is down about 7%. And I can appreciate the macro backdrop there, but I’m wondering if you can just help me understand the share kind of trends? And maybe your best estimate where that’s been this quarter? How it’s changing? And kind of what your expectations are moving through the year? Thank you.
George Kurian: I think first of all, the year-on-year compare for our flash product business is impacted by last year benefiting from elevated levels of backlog that we shipped in the comparable quarter last year. If you — if you remove that backlog, flash actually grew year-on-year this quarter and we saw strong growth from our capacity flash products. We expect overall flash portfolio to grow as a percentage of our business through the course of the year. The first-quarter customers are still qualifying our capacity flash products, the C-Series. And so we weren’t able to move all of our intended customer environments over to all-flash yet, but they are headed that way. And so we feel really good about both the go-to-market changes that are starting to reflect in pipeline expansion as well as in the flash product portfolio that we have.
And you should see that reflected in growth in the second-half of the year. With regard to share gains, our expectation based on what the others have guided is that we have picked-up the second position in share in the market behind Dell.
Operator: The next question is from Simon Leopold with Raymond James. Please go ahead.
Victor Chiu: Hi, this is Victor Chiu in for Simon Leopold. You guys noted that the product gross margin is expected to hold for the remainder of the year, but I think the latest industry forecasts and commentary from NAND manufacturers implies that the market experiences a sharp overcorrection next year. Can you help us understand how this impacts your expectations for the next fiscal year and whether you’ve secured any pricing agreements for flash media beyond this fiscal year?
Mike Berry: Yes. Hey, Victor, it’s Mike. So, hey, we haven’t guided for fiscal ’25, but let us walk you through that. As we talked about between pre-buys and price locks, we have secured a large portion of our NAND purchases for fiscal ’24, not all of it, you never want to hedge the whole bucket, but we feel really good about that. In addition, some of those agreements do flow into fiscal ’25, it’s not a majority at this point. So where we stand today as we feel really good about where we are at ‘24, we have some of that rolling into ’25 and we are certainly looking for about — what should we do? We’ll do a lot more work on that, call it, in the next 90-days and update you on the next call. As you know, it’s a very changing market. We want to make sure it be prudent and think through that, but it is something that we are looking hard at.
Victor Chiu: Okay, that’s helpful. And just on the other side of the legacy part of the business, the last several quarters have seen pretty sharp declines in shipments of legacy spinning drives. I know historically, there has not very much correlation between storage media trends, the storage systems, but more recently, one of your competitors have asserted that there won’t be any new spinning disk drives manufacturer in five years. Do you have any view on this commentary? Do you agree with this perspective and how do you see this impacting NetApp I guess over the long-run?
George Kurian: Listen, I think we have the best spinning media and the best flash technologies in the market. I think that’s reflected by the richness of our feature set, the flexibility of our operating system and increasingly the data security functionality that natively integrated into our offerings. I think that the outlines of what our competitors have talked about is a long-time. And so we give our customers choice and we’ll continue to invest in a broad range of technologies that meet the right price performance points. When you cannot support a type of technology, like our competitors cannot, then you have to throw grenades and say that that technology doesn’t exist because you frankly can’t support it.
Victor Chiu: Okay, so you think that that’s extreme view that that the past legacy — is that spinning drives will be gone in five years, that’s extreme in your opinion?
George Kurian: Five years is a long-time in technology as we’ve all learned.
Victor Chiu: Yes. Okay, okay. Thank you.
Operator: The next question is from Asiya Merchant with Citigroup. Please go ahead.
Asiya Merchant: Great, thank you for taking my question. In the past, I think you guided for some linearity on first-half versus second-half. So just wanted to clarify if that still holds for the remainder of this year? And just back on the public-cloud side of things. I know it’s guiding to a little bit lower relative to prior expectations, due to the subscription weakness. How should we think about just the linearity? I mean, are we expecting these run-rates to kind of continue to have any more insight into how we should think about the growth rates for the rest of the year? Are we still looking at something — are we still expecting from a year-on-year basis as the comps get easier in the back-half of fiscal ’24 to have cloud revenues accelerate from this point? Thank you.
George Kurian: Yes, thank you for the question. So, on the first question on linearity, based on the midpoint of guidance, we are still assuming about 48% revenue in the first-half and 52% in the second, pretty close to round in which is very consistent with what we did last quarter. So, no big change there. And that’s very consistent with the linearity that we’ve shown historically. Also, our Q2 guide is up about 7% quarter-on-quarter, which is well within our historical linearity as well. On the cloud revenue number, so we’re not going to update the guidance. We had originally thought and forecasted somewhere around, call it, mid-teens growth in that cloud revenue business. Even if as you look at the historical numbers, that cloud revenue, and we’re not forecasting it, well, if it stays where it’s at today, there would still be growth year-over-year because of the growth last year.
So we have baked all of that into our full-year number, so we feel good about where we are on that guide. We’ll see how the rest of the year goes. But at this point, we’ve reflected that in our full-year number.
Asiya Merchant: Great, thank you.
George Kurian: Thank you.
Operator: The next question is from Krish Sankar with TD Cowen. Please go ahead.
Krish Sankar: Yes, hi, thanks for taking my question. I have two high-level questions in AI for George. Our understanding is that most of the benefit of storage, as we put all-flash unified file and object solution; A, is that assessment accurate or are you seeing hybrid HDD solutions being used in AI workloads today? And second, for unified cloud and object, can you speak about your product portfolio there and your competitive position, compared to other solutions like FlashBlade from Pure Storage and PowerScale from Dell. And also if unified filing object solutions are more expected of benefit from AI, it’s a market share that’s similar to market-share in other storage solutions like block and file? Thank you.
