Joe Cardoso: Hey. Thanks for the question. This is Joe Cardoso on for Samik. So, first one for me. It seems like you continue to see strong momentum with the C-Series and the other new flash products that you guys have introduced and they even appear to be outperforming your expectation in each quarter. So just curious, if you could talk to how momentum for those products have tracked through 3Q and into 4Q to-date. It doesn’t sound like you’re seeing any signs of that momentum slowing down, but can you just confirm that. And do you expect that we’re still very much in the early innings of these product cycles with your customers? And then I have a follow-up. Thanks.
George Kurian: Yes. Maybe I can address that in three ways. I think the C-Series product cycle is to modernize both, traditional hybrid flash systems as well as deploy new private cloud environments, and we are seeing strong advantages there. That’s the first use case. And you can see we do not see any end to that. The 10-K drive transition is a multiyear transition. We’re in the early stages of that. On the private cloud side, I think some of the changes in licensing that some of the software vendors have, have renewed interest in our technology as a vehicle to give them — give customers a path to the future. The second opportunity is the ASA product family. NetApp has had a long history in the block storage space, we’ve had tens of thousands of customers using our technology to serve block workloads, and we are in the early innings of bringing out a package solution that’s focused solely on the block market.
And we’ve been pleased with both of those use cases. And then the third area, of course, which is set for rapid expansion and growth is AI. And I feel really, really good with the focus on execution. Every time we’ve set a set of targets internally, we’ve been them and we’ve raised them externally. And so, we got strong momentum. We’re going to stay focused and disciplined in our execution going forward.
Joe Cardoso: Got it. I appreciate the color there, George. And then just as my second one, it appears the appetite from customers to consume storage more on a consumption basis is increasing based on our checks with the channel as well as comments from you and your peers. I know you touched on the driver being in some part due to this uneven macro that we’re seeing. But are you seeing anything else as a driver there, like the maturity around the offerings or go-to-market motion. The reason I’m asking, it just feels like it wasn’t too long ago when the opportunity here felt more theoretical and there was not as much appetite coming from the customers. So I would just be interested to hear, like has anything changed on that front? Thank you.
George Kurian: I think there’s probably two or three things. I think the maturity of the offerings. I think customers comfort around how they would procure cloud-like models. I think the second is the increase in interest rates that on the margin caused certain customers to think about CapEx versus OpEx. And then the third, of course, is the customers that are in transition from one environment to another. For example, when you’re in a data center transition and you’ve got a portion of the life of a data center environment that needs to be continued, moving to an as-a-service model is a good transition point. We have offered as a service for many years. Clearly, the most flexible, the fastest and the easiest to build an elastic environment, is around true public cloud.
We also have solutions with colocation providers like Equinix that allows the customer to get a full cloud-like opportunity in a colocation environment, connected to the Public Cloud and our Keystone service in the customers’ data centers had another really strong quarter. We are up year-to-date almost more than triple-digits, including this past quarter. So we see strong momentum in that category. And we do not see a mandate for it, but it’s a nice new way for us to address a set of customer buying preferences.
Joe Cardoso: Great. You appreciate the questions.
Operator: [Operator Instructions] The next question today comes from Mehdi Hosseini with SIG. Please go ahead.
Mehdi Hosseini: Yes. Thanks for taking my question. George, I just wanted to better understand the current competitive landscape for fiber storage market, especially given the AI application. And I have a follow-up.
George Kurian: It’s always big competitive. There are different vendors that come and go in the market. I think if you look at the installed base of unstructured data, that becomes the vehicle to build data pipelines for AI and ML applications, NetApp has a very strong position. And we have the only solutions that allow customers to build hybrid cloud pipelines to build solutions that are super scalable and high performance. But also have the security protection and data management that AI will need as these models get scaled. So I feel really good about our position and look forward to continuing to expand our presence in that market.
Mehdi Hosseini: Maybe perhaps I could rephrase my question. Mike just, raised is product gross margin to 60%, which is pretty much what you’re guiding for the January quarter. You’re also increasing use of QLC. So should we anticipate some flexibility with pricing that QLC gives you, by remaining competitive with your competitors? Because I don’t see gross margins already at work the new target is. So where do we go from here?
George Kurian: Listen, I think that, first of all, the mix shift from hard drives to flash, in our business continues. And it’s an important kind of underlying factor that gives us confidence that we are raising the structural baseline product gross margin, as Mike said, from the mid-50s, which has been a historic norm to the upper-50s and up to 60%. The mix shift is the most important lever in that equation. The second, of course, is the value of our ONTAP Software and the ongoing management of the commodity supply chain. I think all of those, factor in. I think that we are uniquely positioned with our operating system to benefit from using QLC in a broad bench of applications. Currently, only another one other vendor has QLC based all-flash arrays, and it gives us an opportunity to go target other vendors who don’t have QLC support.
