You're listening to Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. Also reporting net App uh net adjusted first quarter EPs a dollar twenty beat. The estimate of one ten sales came in at one point five nine billion, better than the one point came at one point five nine billion, better than the one point five five billion estimates. So some good numbers there. Let's bring in the CEO of uh net App,
George Curian. He joins us on Zoom from Menlo Park, California. George talked to us about the quarter you just reported. The stocks up about three percent and after market trading. Good afternoon, Thanks for having me. We are excited. We're off to a great start to our new fiscal year. We just completed the first uh fiscal quarter of the year and saw broad based demand and strength across all
our geographies. We have set record highs pretty much across the board in terms of revenue, billings, gross margin, dollar is, operating margin dollars and EPs for Q one, So I'm really pleased. It's always good to get off to a good start in the year. Yeah. Absolutely, that's a great way better than the alternative. UM Paul did break down some of your numbers. Your customer base has concluded the likes of Amazon, Microsoft, Alphabet, Hitachi, Intel, Tata. It's global
in nature. It really gives us a good clue in terms of what's going on in the economy. How would you describe in terms of more color, demand for your core products from your big customers. We're involved in helping our customers store, protect and use their data for business advantage. We do that not only with data center equipment for their data centers, but as you mentioned, with cloud based services that are deeply integrated into the world's leading cloud
providers Amazon, Microsoft, Google, IBM and others. And we saw a really good portfolio balance across all of our geographies and customer segments. Data. As you know, it's foundational to competitive advantage, understanding customers, working with your supply chain, UH and so on. And so we continue to see demand strong and we've had to work really hard to have all the supply to meet it, and we continue to do that work. Talk to us about the supply chain.
It's it's been such an issue for so many businesses across so many parts of the economy, and and it's a global issue here. How is it for your company now versus maybe in a year or two ago, and kind of how do you think it's gonna progress? I think a year ago was the really difficult time. We've seen kind of steady improvements in silicon availability, and I would say cautiously that we've seen stabilization. Uh in terms
of you know, the silicon supply chain. It's still not where it is needed to be to meet all of our demand, but at least it's stopped backsliding. We have also been doing work to deal with some of the freight and logistical challenges. I think, as you know, the sort of the gap between demand and supply continues to get a little bit smaller. We demand still ahead of supply. We hope that these things get better over the course
of our next twelve months. Well, I do wonder. I do wonder to George, how did supply chain issues or pressures or constraints impact your ability to you know, in terms of your adjustments or your outlook. Are raising your outlook estimates for the full year? You know? I think we have had to do a huge amount of work to be able to meet demand. We've had to re engineer products, We've had to source supply in multiple parts of the world, and sort of extraordinary measures to meet demand.
I would say that backlog is still ahead of pre pandemic levels, So we're still in elevated sort of backlog situations and love to be able to you know, sort of make those uh products available to customers. Were working closely with our suppliers to do that. We did in our press release reconfirmed the full year guidance, which, given the currency movements subsequent to when we guided, is actually taking up guidance as you noted, by about a you know,
one or two points. So we feel good about you know, demand. We feel that we've got to go do the work and supply and continue to do the work to need it. We still have George Curry, he stays with us. He's a chief executive officer of net app, joining us on Zoom from Menlo Park, California. So, Georgia, I love it. From your perspective, where is the biggest source of growth for your business here over the next five years? I'm gonna ask you to think a little bit far out,
which I know your board asked you to do. Occasionally, but on a five year plan, you're in so many pieces of the pie that are you have some really strong growth dynamics. Where do you really think your focused should be? We really see the two big transformational trends
are data driven business or digital business and cloud. You know, we on the data side, we help our clients store aggregate enormous amounts of data, whether it's for traditional applications like an E r P or you mentioned salesforce those kinds of applications, or for the really modern advanced analytics
and artificial intelligence applications. We for example, work with companies like Siemens Health and Years which makes medical imaging systems, and we use AI technology together with huge amounts of data to be able to make the life of a radiologist much easier. We can predict help them predict which patients are more likely to have COVID, or find cost effective ways to deal with the breast cancer and so on. So that's one data and the other is cloud. You know.
You see there's a vast migration of customers to using cloud based technologies, and we help all of the leading cloud providers as well as their end customers to make their cloud projects much more reliable performance secured, especially security of data from attacks like ransomware, is a growing trend that we have really good solutions for. Carol, I think I'm even in the cloud. I know I am. You know if I'm in the cloud, you know it's a thing.
It's a market. So, George, I'm looking at our PGeo function on the Bloomberg terminal that allows me to look at breakdown of your businesses by lots of different measures and by geography. I see that. Yeah, but a little more than half of your businesses in the US and CANA in Latin America, maybe about a third, thirty in Europe, and about fourteen in Asia. Going forward, where regionally will you be allocating more of your capital? Where do you
see more growth? On a gineral basis, we continue to focus on the biggest markets in each of those geographies. I think several years ago, about maybe five or six years ago, we decided to participate in the China market, which is the largest Asian market, through a joint venture with Lenovo that allows us to serve the vast expanse of Chinese customers with local partnerships and local knowledge of
the local market. So the rest of the world. We served through our own uh you know kind of sales and go to market organization and through partners, and we're pleased with the strength of our you know, it's a balanced book of business. We've seen strong adoption of our portfolio across all the leading markets, and so I'm excited
about what the future holds. Hey, George, I do wanted to and some of the major macro issues that are out there, whether it's near shoring, offshoring, on shoring, uh and then through on top of that g political tensions which is creating all of that changes. How is that impacting you guys in terms of where you produce, where
you do business. Clearly, it's a great question, Carol, I think clearly, over the last few years, both because of geopolitical risk, but also just supply availability and risk management, we've built a diverse kind of geographic base for supply and manufacturing. We've moved our dependence from the far East too much more local markets, so we manufacture heavily in
Mexico and in some parts of Europe. We've moved, you know, our supply base from a silicon perspective into a diverse mix of silicon providers, and we've moved the way our systems are built. Rather than from highly integrated systems that have risk from one component, we're moving it to more of a Lego style building block models, so that if one component isn't there, you can slot in another one.
So we had to do a lot of work. We continue to believe that the world's uh, you know, we need to think about supply rather than in the old model of just in time management to actually be risking supply to meet demand. Yeah, that's we've heard definite. A lot of companies, a lot of different industries, real quick, George thirty seconds. Labor You have about twelve thousand employees health tough? Is they get labor health to us that
they keep labor? I think it's been. It's a very competitive job market, especially for the type of talent software and cloud talent that we look for. We've got a really good value proposition for employees. They get to do great work in a you know, very supportive culture, and we are got a global population, so we can source talent wherever in the world. It is. Yeah, but is
it getting more expensive? Just got about fifteen seconds. Yeah, I mean, clearly having the best talent in the world is a source of competitive advantage, and we've got good compensation programs to meet what what's needed. All right, listen, thank you so much, really appreciate all the time on what we know is a busy day for you folks. George Corey and he is a chief executive officer at
net App via zoom from Menlo Park, California. This as we see net app excuse me, net App reporting after the close and its stock is up about five percently after our so investors reacting favorably to what the company had to say.