And so I want to credit our go-to-market teams for their focus and the results that they have delivered this quarter, and that is one of the key contributors. The second is the really strong performance of our all-flash portfolio. We talked in the prepared remarks about a large competitive win against a purely flash competitor. And we see that across multiple segments where we are seeing competitive wins with our portfolio. So those are the two fundamental reasons: go-to-market focus and execution and confidence in our portfolio.
Meta Marshall: Great. Thank you.
Operator: And our next question today comes from Krish Sankar with TD Cowen. Please go ahead.
Krish Sankar: Yes. Hi. Thanks for taking my question. Actually I have two questions for George. George, first one, kind of like what are the lead times for the storage products today? And what does that imply for your visibility when you look into calendar ’24? And the second question is, curious whether on a storage content per customer, does it – have you seen any increase in it because of AI? Or do you think that will happen maybe at some point in the future? Or is there any way to put some time lines around it?
George Kurian: With regard to lead times, we are at normal lead times for our portfolio, and we reached those normal lead times a few quarters ago. With regard to the question on storage demand for AI, listen, I think we have been in the AI business for predictive AI or industrial AI for five years. And there are large data sets that are built out to support training of those models and the implementation of those models across the enterprise. So we have a good and robust business there. We are starting to see early signs of trials and use cases with generative AI. Generative AI is particularly well suited for NetApp’s capabilities because it operates on unstructured data, files, documents, video, audio and so on. And so we have large repositories of those and customers, and we are able to use that data set and add to that data set to support AI use cases.
This quarter, we won a large AI implementation at a very large U.S. bank that was really focused on generative AI document summarization analysis and so on, and we are the infrastructure foundation for that. So it will take time for generative AI to become a demand driver. We are seeing early positive signs there.
Krish Sankar: Thanks, George.
Operator: Thank you. And our next question comes from Steven Fox with Fox Advisors. Please go ahead.
Steven Fox: Hi. Good afternoon. I had two questions on the product business. So first of all, I’m not fully understanding what you’re saying about the pricing environment. At one point you said, you maintained disciplined pricing and then at another point you would be flexible going forward with pricing. So can you sort of give us a sense for how challenging or not challenging it is to hold pricing in these gross margins? And the second one is related to the product gross margins. I’m just still trying to get a sense for how sustainable this last quarter and the guidance for the next quarter is in terms of product gross margins, even if we adjust for the changes in NAND pricing? Thanks.
George Kurian: Listen, on pricing, we’ve been in this industry for a very long period of time. And while there will be people who are vendors who are aggressive in any particular transaction or other, depending on their own strategic reasons. Overall, we don’t see fundamental changes in the pricing environment. Clearly, the room with lower component costs gives you an opportunity to do more in terms of pricing flexibility. But I think that our past quarter’s gross margin results our demonstration of the fact that we’ve been able to maintain pricing discipline at a time where demand is soft, and it talks to both the differentiation of our product portfolio and the execution in our field teams. I’ll have Mike talk a bit about your second question.
Mike Berry: Thanks, George. And I’ll refer to George’s comments, Steve, when I talk about the sustainability. So as — so we finished at 61% product margins in Q2. We guided a range of 50% to 60% in the back half. We feel very good about our component costs and the view of that for the rest of our fiscal ’24. The reason why we guided slightly lower than Q2 from a margin perspective, that’s exactly what George talked about, which is we feel really good about our pricing discipline in our products but we want to make sure and leave room to be flexible should we need that in the second half. That’s the one part of the equation that we don’t control as much as the cost. So hopefully, that helps. We would not have guided that range if we didn’t feel good about it for the second half, Steve.
Steven Fox: Yes. That’s very helpful. Thank you.
Operator: Thank you. And our next question today comes from Asiya Merchant with Citi. Please go ahead.
Asiya Merchant: Great. Thank you. Maybe just a little bit on the macro. Clearly, you’re executing really well. And should we — should we expect slightly better than seasonal growth for you guys in the second half, just given the fact that you guys are ramping on a new product? And then just broadly on the macro, are we starting to see more adoption of flash across the customer base in general as people start to appreciate maybe more pricing being more attractive or is this something that was specific to NetApp just given the success that you’re seeing in your C-Series? Thank you.
