Good day, ladies and gentlemen, and welcome to NetApp's Fourth Quarter and Fiscal Year 2015 Financial Earnings Conference Call. At this time all participants are in a listen-only mode. Later we'll conduct a question-and-answer session and instructions will be given at that time. And as a reminder, this conference call may be recorded. At this time, I would like to hand the conference over to Kris Newton, Vice President of Investor Relations. Ma'am, you may begin.

Hello, and thank you for joining us on our Q4 fiscal year 2015 earnings call. With me today are CEO, Tom Georgens; and CFO, Nick Noviello. This call is being webcast live and will be available for replay on our website at netapp.com along with the earnings release, our financial tables and guidance, a historical supplemental data table and the non-GAAP to GAAP reconciliation. As a reminder, during today's call we will make forward-looking statements and projections with respect to our financial outlook and future prospects such as our guidance for the first quarter and full fiscal year 2016, our expectations regarding areas for investment, expectations regarding market acceptance of clustered Data ONTAP, our ability to drive growth and operational and financial performance, our expectations for our evolving business transition and our expectations regarding our business model and FY 2016, all of which involve risk and uncertainty. Such statements reflect our best judgment based on factors currently known to us and are being made as of today. We disclaim any obligation to update our forward-looking statements and projections. Actual results may differ materially from our statements and projections for a variety of reasons. We describe some of these reasons in our accompanying press release, which we have furnished to the SEC on a Form 8-K. Please refer to the documents we file from time to time with the SEC, specifically our Form 10-K for fiscal year 2014, subsequent Form 10-Q quarterly reports and our current reports on Form 8-K, all of which can be found on our website. During the call we will discuss non-GAAP financial measures. These non-GAAP measures are not prepared in accordance with Generally Accepted Accounting Principles. A reconciliation of our GAAP and non-GAAP results is provided in today's press release and on our website. I'll now…

Thank you. The first question comes from the Kulbinder Garcha from Credit Suisse. Your line is open. Please go ahead. Kulbinder S. Garcha - Credit Suisse Securities (USA) LLC (Broker): Thanks. I have a (33:42) simple question and a follow-up. Tom, a question for you on the transition on clustered ONTAP. I'm just – I was looking at the last transcript and on there you talked about ONTAP meeting the technical requirements of your largest customers and most demanding customers. But it sounds like it was kind of a release and it didn't? What I'm trying to (34:02) understand what exactly (34:03) what you thought the last three months ago to actually now in terms of this actual release and how the customer feedback has gone? What exactly went wrong and what's causing this transition, frankly? And then just for Nick, I understand the operating margin decline that you spoke about. I think you said down to about 6% to 7% in the first quarter. What's the gross margin direction? I assume it's going down. I'm trying to (34:27) understand how much is negative OpEx average (34:28) versus gross margin. Thanks. Thomas Georgens - Chairman & Chief Executive Officer: Yeah. I think – first of all on clustered ONTAP, as we went into the year and even as the year progressed is we got off to a pretty good start and we were ahead of our internal plan at the halfway point and it seems like things were picking up. And we felt on prior calls like this, we talked about where the optimism in the second half and we certainly knew that we were going to get easier compares on the U.S. public sector and we certainly saw that come to fruition. And the other side is the breadth…

Thank you. Our next question comes from Brian Alexander from Raymond James. Your line is open. Please go ahead. Brian G. Alexander - Raymond James & Associates, Inc.: Nick, you said you'd return to normal growth in the second half of the year. I just wanted you to clarify that, because I think Q1 is going to be down low-double digits year over year. So are you expecting some well-above seasonal quarters in the back half to get to, to get the market growth, because it's just hard to make the math work on that? Nicholas R. Noviello - Chief Financial Officer & Executive VP-Operations: Well, so first of all, Brian, a couple points. So what I'm saying in terms of revenue for the year is don't expect any more than flat. Okay? So what I'm saying in terms of the operating margins of the company, I would say that the operating margins in the back half we expect to be back in the range that we've talked about before, so I'm talking about beta (40:21) 18% to 20% range in the back half of the year. I also expect that from a cash flow perspective that as we get into that back half of the year we're going to be back to the cash flow ranges that we've talked about generating, which is the 17% to 19% on free cash flow. So I'm not talking about market growth here. What I'm talking about is don't expect more than flat revenues, but expect us from an operating model perspective to get back to those percentages we've talked about as a percentage of revenue for both our profit margin as well as cash, free cash flow as a percentage of revenue. And then I think the other thing here that I pointed out is that we've taken costs out and you should expect that we will be very focused on costs as we roll through this year.

Thank you. Our next question comes from Sherri Scribner from Deutsche Bank. Your line is open. Please go ahead.

Hi. Thank you. Tom, I was hoping you could give us a couple of metrics on how much your installed base has transitioned to clustered ONTAP, considering that it's taking a bit longer? I think you gave a number of 50% of the nodes are going to clustered ONTAP, so trying to reconcile that with the slow adoption by customers. I'm just trying to understand what gives you the confidence that customers will start to adopt clustered ONTAP later in the year. Thanks. Thomas Georgens - Chairman & Chief Executive Officer: Yeah. In terms of shipments, if you look at the various categories of the products, we are well over 50% of the shipments, we're over 70% of the bookings. Our largest machines are in the 80% range. Our mid-range machines are in the 70% range. And the low end of machines really weren't, because of a bunch of technical reasons, really weren't going to convert over to clustered ONTAP until 8.3, and that's happening now. So 50% of the models, but the models that are targeted for clustered ONTAP are well up in the two-thirds to three-quarters. But – and that's an important metric and one that we track constantly. It's not the only metric. The metric that's also important is what percentage of our installed base has converted over? So if customers are in a mode where – the methodology by which they convert to clustered ONTAP typically involves buy new equipment and then basically migrating the data over. So most big ONTAP transitions occur in conjunction with tech refreshes. So if the customers in the category are saying, okay, 8.3 is the least I'm looking for beginning to start my planning process, but I'm not going to buy hardware today and then move to it and then…

Thank you. Our next question comes from Jayson Noland from Robert Baird. Your line is open. Please go ahead. Jayson A. Noland - Robert W. Baird & Co., Inc. (Broker): Okay. Great. Thank you. I wanted to ask about direct versus indirect. Tom, I believe you said there was a focus on regaining traction in the channel, but if you go back to the Analyst Day, there was some talk of consolidating to some of your larger partners. So just wondering how much of changes in the channel, excuse me, have had an impact on your business? Thomas Georgens - Chairman & Chief Executive Officer: Yeah, I think certainly as we look at our channel base, we have a very, very, very large number of channel partners and a very, very long tail of active partners that aren't doing a lot of business, and a lot of our business is concentrated at the top. So clearly making our largest partners more successful, has been a focus. And in fact, our largest partners actually had a pretty good year with us last year in terms of our reseller partners. I think the channel is also seeing the dynamics around clustered ONTAP. Those that have made the investments, some of our partners were the first to go; in fact that was going to be a differentiator for them and they were going to lead the way. And I think they've done a really good job in terms of getting their customers transitioned, being trained up and actually using this to sell to new accounts. Other of our partners who are back behind this, they're watching customers not necessarily upgrade and that's impacting not only the NetApp business but it's also impacting our mind share with them around the other elements of the…

Thank you. Our next question comes from Maynard Um from Wells Fargo. Your line is open. Please go ahead.

Hi. Thanks. I just wanted to focus a little bit on the back half and the recovery and the confidence you have. Are customers indicating they have migration plans? Or is this – how long does a typical migration take? Is this purely a function of having enough people to do the migration? Or are you kind of going under the assumption that the one-year service renewals will convert to product sales at the end of the extensions? And then just directly related to that, understanding customers are unlikely to move to other on-prem solutions, is there any reason why we shouldn't anticipate that customers might use this transition to negotiate price, because it sounds like the gross margins are going to go back to sort of the normalized level, so I'm just curious why you wouldn't anticipate that in a transition like this? Thanks. Thomas Georgens - Chairman & Chief Executive Officer: Well, I mean, these migrations, I don't want to use the word complete around them per se. Some of these migrations and individual customers include hundreds, if not thousands of machines in dozens of countries. And so there is a planning cycle that they need to get through that they could start a migration. So they could be doing migrations through that entire estate over an extended period of time, and that's okay. Well, we can't be in a situation where they aren't starting that process because they're in the planning cycle, and we need to help them with that. So when we talk about investments and helping them through that, in some of those cases we will be directly involved. And in some of those cases where they're very, very strategic and there is a lot of business behind it, we're willing to do that at…

Thank you. Our next question comes from Lou Miscioscia from CLSA. Your line is open. Please go ahead.

Okay. Thanks, Tom. I guess you've talked about the cloud, but there is many shifts that are going on in storage. You've got a product in the converged category doing well there, congratulations, but when you look at hyper-converged, hyperscale, the start-ups like Nimble and Tintri, software-defined, object storage, I know you've got a product there, and then obviously, just the cloud storage vendors or the cloud companies in general, I mean how do you rank these as secular shifts that are hurting you and possibly going back to your comment that you've lost a bit of share this year in conjunction, obviously, with what you've talked about with ONTAP? Thomas Georgens - Chairman & Chief Executive Officer: Well, I think a treatise on all those topics could take a long time, but I think – we talked about radical transitions. The radical transition is the cloud, and the cloud dwarfs the impact of any of those other technologies. And some of these small companies, their incremental revenue year-over-year might be $50 million or $30 million or $100 million, and you look at the kind of money that's being invested in the cloud, and the cloud is not just the hyperscalers, it's also things like Microsoft Office 365 and Exchange and things like that that are moving to the cloud. So the cloud transition dwarfs all other transitions. Everything else is technology based, and NetApp is a technology company, and the areas that we invest in we are confident in our ability to basically lead that technology and take leadership positions in those areas. So don't minimize the technology stuff. It's work, it's engineering, it's hard, but that's what we do. The cloud is clearly the much – the thing that's roiling the industry at this point in time. There's…

Our next question comes from Keith Bachman from Bank of Montréal. Your line is open. Please go ahead.

Hi, Tom. Thank you. I wanted to ask about first on competition. You talked a lot about on the call the transition to 8.3, but if you could speak to in terms of new workloads or jump balls as I think about it, how do you see the level of competition there? And related, do you think your installed base is flat or declining at this point? And then I wanted to ask a follow-up, too. But let's start with that one, please. Thomas Georgens - Chairman & Chief Executive Officer: Well, the installed base is measured in units is actually growing and growing quite, quite substantially every year. So that – and that's a function of equipment not taking out of service, plus the thousands of new systems that we put out there every day. What we are not seeing is a bunch of machines that mysteriously are no longer being operated and dropping out of our order reporting database. So these machines are reporting back, which means that they are live, customers are applying maintenance on them. So that installed base is continuing to grow. So if there was this big competitive push that was taking us out of all those environments, we would effectively be seeing that go away, and we're not.

Right. Thomas Georgens - Chairman & Chief Executive Officer: In terms of the broader competitive landscape, certainly EMC and the other server vendors, there is usually one of them in every transaction that we do or every competitive situation that we're in. We certainly see the start-up vendors certainly not underestimating, but they are not ubiquitous like the other guys are.

Right. Thomas Georgens - Chairman & Chief Executive Officer: In terms of jump ball workloads, I think they fall into a bunch of different categories, whether it be analytic workloads, whether it be virtual desktop workloads, whether it be new apps workloads, webscale-type of things. I think where we're seeing the cloud and new application development is around a lot of these new workloads. Whether Hadoop is an on-premise solution, or whether we see analytics in the cloud, whether it be some of the customer service, whether it be the mobile apps, those types of things. And I think that those are very, very much a jump ball. I think as far as the other vendors, I'd say certainly the hyper-converge, we see them in those domains. Flash is a little bit different, I think a lot of the flash battlefield is around some of the new workloads, particularly virtual desktop, but that's not big enough to support everybody's flash investment. The other place where we clearly see flash is basically application acceleration in database, and generically high-performance SAN. So for NetApp, high-performance SAN has not been a historical strength of ours. Certainly with clustered ONTAP we want to compete more aggressively there, but that's not the installed base. It's not the NetApp installed base that's being fought over in the high-performance SAN market. So that's an opportunity that with clustered ONTAP and new, now with the all-flash FAS, the latest release and the performance benchmarks that we have that are compelling, it's something that we want to compete on more aggressively. So I'd say it depends on the workload. I think the cloud is more relevant to next-gen workloads. And then we're starting to see flash around things like VDI, but a lot of it around accelerating traditional workloads, particularly around database acceleration.

Okay. Fair enough. And I just wanted to ask a follow up, Nick. Nick, what happens if your assumptions surrounding your growth potential and transition of 8.3 are incorrect? That is to say we get deeper into the year and NetApp continues to not be able to realize what you believe to be your growth potential. Nick mentioned you're taking out about 4% of your head count out in the risk. Do you see more opportunities if need be as you look out over the next number of quarters where NetApp could skinny up meaningfully, reduce its cost structure if that is what the situation warranted? Thomas Georgens - Chairman & Chief Executive Officer: Yeah, actually I'm glad you ended the conversation that way. I think the lay of the land now based on kind of what we believe is achievable the rest of the year gets us back to our operating model in the second half. And the balance that we have clearly is we spend a lot of time on this portfolio, we know there are things that are under our control that if we can overpower it we believe can unlock growth, and at this point in time I don't want to preclude our ability to do that. So we're making the investments to go after that and go after that aggressively. If it turns out that either the macro substantially deteriorates or our postulate is not correct, although we're pretty convinced that we're on the right track, or any number of other things come in the way and the business doesn't materialize, then clearly our current operating hypothesis will be invalidated and we're going to have to do other things. So certainly there is an opportunity to take more cost out of the infrastructure. I think to take more cost out of the infrastructure now when we know what big bets that we think we're on the cusp of realizing over the next six months to start to see impacts, then I think we want to make those bets now. But if they don't materialize, then clearly we need to rethink what we think the long-term growth rate of this business is, what we think the long-term growth rate of this industry is, and we have to look at our cost structure. So we're not wedded to a dollar figure on the cost structure at this point in time. We're going to be practical. At this point, we took out a certain amount of head count, we took out well more than that and other infrastructure costs in the company, took a couple hundred million dollars out. So we're prepared to do more if the situation warrants, but right now I think we have a structure that enables us to still compete for this business. And if we're right in our hypothesis, then I think we win. And I think that we will be well served by preserving the investments we're making right now.

Thank you. And our final question comes from Amit Daryanani from RBC Capital Markets. Your line is open. Please go ahead.

Thanks a lot. Nick, I just maybe wanted go through the math for the full-year revenue expectations that are no better than zero percent growth I guess. If I look historically, July quarter fiscal Q1 tends to be about 23%, 23.5% of the full-year revenue contributions. If I play that out this time around, I get your sales to be down 9%, 10%. So I'm just curious, which of the next three quarters you think will punch in more than their historical weight to get you to a better trend than down 8%, 9%? If you maybe just help understand that math, that would be helpful. Nicholas R. Noviello - Chief Financial Officer & Executive VP-Operations: Yeah. Now, remember, what I'd also indicated at the beginning of this call was that we took down the front quarter associated with this transition, and we expect this transition to get its legs under it and get moving as we get to the back half of the year. So I do expect that the linearity is going to be a little different and that we will be back-end loaded. In addition to that, as you know, we're not going to have an FX compare in the second half of the year, at least at these rates. So it's really the combination of those two things that you should think about in terms of the revenue and the no better than flat revenue guidance that we gave. Thomas Georgens - Chairman & Chief Executive Officer: Okay. So first of all, thank you all for joining us on the call today. And if I look at where we are right now, we spend a lot of time talking about our cloud strategy and while early days and not moving the top-line needle, or not moving…