NetApp quietly slipped an acquisition of storage memory software startup Plexistor into an earnings call otherwise noteworthy for strong results last quarter and a disappointing forecast for this quarter.
NetApp CEO George Kurian disclosed the Plexistor acquisition during the Wednesday night earnings call. NetApp did not include the acquisition in its press release or filing with the SEC, and provided no financial details.
Plexistor came out of stealth in late 2015 with SDM – a software-defined memory product designed to deliver high-capacity nonvolatile storage at near-memory speed. The vendor chased customers running big data analytics and in-memory database processing.
SDM talks directly to a physical memory device, presenting DRAM and persistent storage in one namespace. It uses dual-inline memory module (NVDIMM) memory cards, NVMe flash and a spinning disk tier.
In late 2016, Plexistor bundled SDM on Supermicro servers and Micron NVDIMM cards in a product called Persistent Memory over Fabric Brick (PMoF Brick). PMoF Brick was aimed at big data analytics and high-performance NoSQL databases.
It’s unclear whether NetApp will sell Plexistor as a separate product or embed the technology into its flash storage. Kurian referred to Plexistor as “a company with technology and expertise in ultra-low latency persistent memory. This differentiated intellectual property will help us further accelerate our leadership position and capture new application types and emerging workloads.”
SDM runs on servers, making it a candidate for incorporation in NetApp’s coming hyper-converged product that will use SolidFire’s all-flash technology. NetApp has yet to formally launch the hyper-converged appliance.
The Plexistor acquisition is an example of how NetApp is trying to use flash – as well as the cloud – to bounce back after a tough two-year stretch. Kurian said the vendor has turned the corner, offering its results last quarter as proof.
NetApp’s revenue of $1.48 billion last quarter increased 7.3% over the previous year and beat the consensus Wall Street analyst expectation by $400 million.
Kurian called the last fiscal year “a pivotal year for NetApp. We started the year with bold commitments, and we delivered against all of them. We did what many said could not be done: return the company to growth while simultaneously expanding operating margins. With each successful step in our transformation, my confidence in our ability to create new opportunities and execute against those opportunities grows.”
NetApp’s problems may not be completely behind it, though. Its forecast for this quarter fell short of expectations. NetApp guided for $1.24 billion to $1.39 billion this quarter, which amounts to around two percent growth at the midpoint and falls below analysts’ expectations.
When Kurian became CEO two years ago, NetApp struggled with its flash strategy and with a disruptive upgrade process that slowed customer upgrades from its Data OnTap 7-Mode operating system to Clustered Data OnTap (CDOT). The vendor was stuck in a cycle of flat or declining revenue, which it didn’t snap until the final quarter of 2016.
NetApp now stands second behind Dell EMC in all-flash revenue and Kurian said most of the capacity on NetApp FAS arrays has moved to CDOT. He said 95% of FAS systems that shipped last quarter had CDOT installed. “The transition from 7-Mode to Clustered OnTap is now behind us,” he said.
The transition from disk to flash continues. Kurian called it the “early innings” in flash, and said NetApp’s all-flash revenue grew almost 140% last quarter. He said NetApp’s All-Flash FAS (AFF), EF Series and SolidFire are on pace for $1.4 billion in revenue over the next year.
“We are winning with flash and expanding our intellectual property in this market, positioning us for success in the multiyear transition from disk to flash,” he said
As for the low guidance, Kurian said NetApp would rather err on the side of caution. “We really are giving realistic and, in some cases, conservative estimates,” he said. “We want to make sure we meet or beat every commitment we made, as we have the last four quarters.”