29.11.2023 22:05:00

Pure Storage Announces Third Quarter Fiscal 2024 Financial Results

Record sales for FlashBlade portfolio including FB//E

Expect nearly $400 Million of Combined Annual Evergreen//One and Evergreen//Flex Sales

Increased Operating Margin Annual Guidance

SANTA CLARA, Calif., Nov. 29, 2023 /PRNewswire/ -- Today Pure Storage (NYSE: PSTG), the IT pioneer that delivers the world's most advanced data storage technology and services, announced financial results for its third quarter fiscal 2024 ended November 5, 2023.

www.purestorage.com (PRNewsFoto/Pure Storage)

"Pure continues to see extraordinary growth in our Evergreen Storage-as-a-Service consumption services providing customers with a Cloud Operating Model for their multi-cloud infrastructure," said Charles Giancarlo, Chairman and CEO, Pure Storage. "And we have raised the bar for data storage management with strong SLAs that guarantee no change management downtime or disruption, and no future data migrations for hardware changes or replacements — all while simplifying data storage operations, optimizing cloud storage, and reducing costs."

Third Quarter Financial Highlights 

  • Revenue $762.8 million, an increase of 13% year-over-year
  • Subscription services revenue $309.6 million, up 26% year-over-year
  • Subscription annual recurring revenue (ARR) $1.3 billion, up 26% year-over-year
  • Remaining performance obligations (RPO) $2.0 billion, up 30% year-over-year
  • GAAP gross margin 72.5%; non-GAAP gross margin 74.0%
  • GAAP operating income $74.2 million; non-GAAP operating income $169.1 million
  • GAAP operating margin 9.7%; non-GAAP operating margin 22.2%
  • Operating cash flow $158.4 million; free cash flow $113.4 million
  • Total cash, cash equivalents, and marketable securities $1.35 billion
  • Returned approximately $22.4 million in Q3 to stockholders through share repurchases of 0.6 million shares

"We are pleased to see strengthening demand across our data storage platform, including the growth of our Evergreen//One Storage-as-a-Service offering, while also expanding our operating margin," said Kevan Krysler, Chief Financial Officer, Pure Storage. "Our business strategy continues to focus on continually increasing the value we provide to our customers including our consumption and subscription based offerings."

Third Quarter Company Highlights

  • Industry-First Paid Power and Rack Commitment: In Q3, Pure tackled the growing challenges of managing rising electricity costs and rack unit space with the introduction of a first of its kind program which will pay for its customers' power and rack space through an Evergreen//One Storage as-a-Service and Evergreen//Flex subscription, taking responsibility for the associated costs of power and rack unit to run our offerings.
  • Storage as-a-Service Innovation: Already a leader in service-level agreement (SLA) guarantees, Pure added three new SLA guarantees for No Data Migration, Zero Data Loss, and Power and Space Efficiency across its family of Evergreen (//Forever, //One, //Flex) offerings.
  • General Availability (GA) of FlashArray//E: FlashArray//E has begun shipping, completing the //E family of products. The combination of FlashArray//E and FlashBlade//E starting from 1 PB, taking Pure's all-flash promise to the heart of the now-legacy disk market.
  • Leader inGartner Magic Quadrant for Distributed File Systems & Object Storage: Pure was named a leader for the third consecutive year in the rapidly growing storage market for unstructured data.

Fourth Quarter and FY24 Guidance

Q4 and FY24 revenue and revenue growth rates are reflective of continuing outperformance and increased momentum in Evergreen//One Storage-as-a-Service.


Q4FY24

FY24

Revenue

$782M

$2.82B

Non-GAAP Operating Income

$150M

$450M

Non-GAAP Operating Margin

19 %

16 %

These statements are forward-looking and actual results may differ materially. Refer to the Forward Looking Statements section below for information on the factors that could cause our actual results to differ materially from these statements. Pure has not reconciled its guidance for non-GAAP operating income and non-GAAP operating margin to their most directly comparable GAAP measures because certain items that impact these measures are not within Pure's control and/or cannot be reasonably predicted. Accordingly, reconciliations of these non-GAAP financial measures guidance to the corresponding GAAP measures are not available without unreasonable effort.

Conference Call Information

Pure will host a teleconference to discuss the third quarter fiscal 2024 results at 2:00 pm PT today, November 29, 2023. A live audio broadcast of the conference call will be available on the Pure Storage Investor Relations website. Pure will also post its earnings presentation and prepared remarks to this website concurrent with this release.

A replay will be available following the call on the Pure Storage Investor Relations website or for two weeks at 1-800-770-2030 (or 1-647-362-9199 for international callers) with passcode 5667482.

Additionally, Pure is scheduled to participate at the following investor conferences:

UBS Global Technology Conference
Date: Thursday, November 30, 2023
Time: 7:55 a.m. PT / 10:55 a.m. ET
Chief Technology Officer Rob Lee

Barclays Global Technology Conference
Date: Wednesday, December 6, 2023
Time: 12:45 p.m. PT / 3:45 p.m. ET
Chairman and CEO Charles Giancarlo, and CFO Kevan Krysler

The presentations will be webcast live and archived on Pure's Investor Relations website at investor.purestorage.com.

----

About Pure Storage

Pure Storage (NYSE: PSTG) uncomplicates data storage, forever. Pure delivers a cloud experience that empowers every organization to get the most from their data while reducing the complexity and expense of managing the infrastructure behind it. Pure's commitment to providing true storage as-a-service gives customers the agility to meet changing data needs at speed and scale, whether they are deploying traditional workloads, modern applications, containers, or more. Pure believes it can make a significant impact in reducing data center emissions worldwide through its environmental sustainability efforts, including designing products and solutions that enable customers to reduce their carbon and energy footprint. And with the highest Net Promoter Score in the industry, Pure's ever-expanding list of customers are among the happiest in the world. For more information, visit www.purestorage.com.

Analyst Recognition

Leader in the 2023 Gartner Magic Quadrant for Primary Storage
Leader in the 2023 Gartner Magic Quadrant for Distributed File Systems & Object Storage

Connect with Pure

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LinkedIn
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Facebook

Pure Storage, the Pure P Logo, Portworx, and the marks on the Pure Trademark List at www.purestorage.com/legal/productenduserinfo.html are trademarks of Pure Storage, Inc. Other names are trademarks of their respective owners. 

Forward Looking Statements

This press release contains forward-looking statements regarding our products, business and operations, including but not limited to our views relating to future period financial results, demand for our products and subscription services, including Evergreen//One, our technology and product strategy, specifically customer priorities around sustainability, the benefits to our customers of using our products, our ability to perform during current macro conditions and expand market share, our sustainability goals and benefits, the timing and magnitude of large orders, the impact of inflation, economic or supply chain disruptions, our expectations regarding our product and technology differentiation, including FlashBlade//E and FlashArray//E, new customer acquisition, the continued success of the Portworx technology, and other statements regarding our products, business, operations and results. Forward-looking statements are subject to known and unknown risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements.

Actual results may differ materially from the results predicted, and reported results should not be considered as an indication of future performance. The potential risks and uncertainties that could cause actual results to differ from the results predicted include, among others, those risks and uncertainties included under the caption "Risk Factors" and elsewhere in our filings and reports with the U.S. Securities and Exchange Commission, which are available on our Investor Relations website at investor.purestorage.com and on the SEC website at www.sec.gov. Additional information is also set forth in our Annual Report on Form 10-K for the year ended February 5, 2023. All information provided in this release and in the attachments is as of November 29, 2023, and Pure undertakes no duty to update this information unless required by law.

Key Business Metrics

Subscription ARR is a key business metric that refers to total annualized contract value of all active subscription agreements on the last day of the quarter, plus on-demand revenue for the quarter multiplied by four.

Sales, or bookings, of Pure's Evergreen//One and Evergreen//Flex offerings is an operating metric, representing the value of orders received and/or expected to be received during the fiscal year.

Non-GAAP Financial Measures

To supplement our unaudited condensed consolidated financial statements, which are prepared and presented in accordance with GAAP, Pure uses the following non-GAAP financial measures: non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income (loss), non-GAAP operating margin, non-GAAP net income (loss), non-GAAP net income (loss) per share, and free cash flow.

We use these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. Our management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance and liquidity by excluding certain expenses and expenditures such as stock-based compensation expense, payments to former shareholders of acquired companies, payroll tax expense related to stock-based activities, amortization of debt issuance costs related to debt, amortization of intangible assets acquired from acquisitions, acquisition-related transaction and integration expenses, and costs associated with the exit of certain operations and closing of certain leased facilities that may not be indicative of our ongoing core business operating results. Pure believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when analyzing historical performance and liquidity and planning, forecasting, and analyzing future periods. The presentation of these non-GAAP financial measures is not meant to be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP, and our non-GAAP measures may be different from non-GAAP measures used by other companies.

For a reconciliation of these non-GAAP financial measures to GAAP measures, please see the tables captioned "Reconciliations of non-GAAP results of operations to the nearest comparable GAAP measures" and "Reconciliation from net cash provided by operating activities to free cash flow," included at the end of this release.

 

PURE STORAGE, INC.

Condensed Consolidated Balance Sheets

(in thousands, unaudited)




At the End of



Third Quarter of
Fiscal 2024


Fiscal 2023






Assets





Current assets:





Cash and cash equivalents


$           529,191


$           580,854

Marketable securities


821,868


1,001,352

Accounts receivable, net of allowance of $1,178 and $1,057


636,324


612,491

Inventory


46,211


50,152

Deferred commissions, current


74,303


68,617

Prepaid expenses and other current assets


139,129


161,391

Total current assets


2,247,026


2,474,857

Property and equipment, net


337,559


272,445

Operating lease right-of-use-assets


126,558


158,912

Deferred commissions, non-current


190,614


177,239

Intangible assets, net


36,868


49,222

Goodwill


361,427


361,427

Restricted cash


9,960


10,544

Other assets, non-current


45,497


38,814

Total assets


$        3,355,509


$        3,543,460






Liabilities and Stockholders' Equity





Current liabilities:





Accounts payable


$           101,092


$             67,121

Accrued compensation and benefits


149,705


232,636

Accrued expenses and other liabilities


141,241


123,749

Operating lease liabilities, current


44,301


33,707

Deferred revenue, current


801,562


718,149

Debt, current



574,506

Total current liabilities


1,237,901


1,749,868

Long-term debt


100,000


Operating lease liabilities, non-current


122,388


142,473

Deferred revenue, non-current


694,945


667,501

Other liabilities, non-current


51,820


42,385

Total liabilities


2,207,054


2,602,227

Stockholders' equity:





Common stock and additional paid-in capital


2,699,676


2,493,799

Accumulated other comprehensive loss


(10,032)


(15,504)

Accumulated deficit


(1,541,189)


(1,537,062)

Total stockholders' equity


1,148,455


941,233

Total liabilities and stockholders' equity


$        3,355,509


$        3,543,460

 

PURE STORAGE, INC.

Condensed Consolidated Statements of Operations

(in thousands, except per share data, unaudited)



Third Quarter of Fiscal


First Three Quarters of Fiscal


2024


2023


2024


2023









Revenue:








Product

$         453,277


$         431,281


$      1,161,978


$      1,247,045

Subscription services

309,561


244,769


878,838


696,182

Total revenue

762,838


676,050


2,040,816


1,943,227

Cost of revenue:








Product (1)

126,770


135,546


343,588


395,322

Subscription services (1)

83,321


74,169


244,541


211,576

Total cost of revenue

210,091


209,715


588,129


606,898

Gross profit

552,747


466,335


1,452,687


1,336,329

Operating expenses:








Research and development (1)

182,100


180,008


549,923


506,971

Sales and marketing (1)

231,707


212,140


696,885


637,129

General and administrative (1)

64,729


65,054


192,944


173,300

Impairment and other (2)



16,766


Total operating expenses

478,536


457,202


1,456,518


1,317,400

Income (loss) from operations

74,211


9,133


(3,831)


18,929

Other income (expense), net

5,184


(2,814)


23,619


(8,410)

Income before provision for income taxes

79,395


6,319


19,788


10,519

Income tax provision

9,006


7,106


23,915


11,919

Net income (loss)

$           70,389


$              (787)


$           (4,127)


$           (1,400)









Net income (loss) per share attributable to common
stockholders, basic

$              0.22


$             (0.00)


$             (0.01)


$             (0.00)

Net income (loss) per share attributable to common
stockholders, diluted

$              0.21


$             (0.00)


$             (0.01)


$             (0.00)

Weighted-average shares used in computing net
income (loss) per share attributable to common
stockholders, basic

314,153


300,984


309,842


298,101

Weighted-average shares used in computing net
income (loss) per share attributable to common
stockholders, diluted

330,255


300,984


309,842


298,101






(1) Includes stock-based compensation expense as follows:













Cost of revenue -- product

$             1,443


$             2,984


$             7,056


$             7,454

Cost of revenue -- subscription services

6,849


5,814


19,347


16,978

Research and development

43,908


42,390


126,225


120,482

Sales and marketing

19,209


18,441


55,883


54,740

General and administrative

16,557


17,350


46,732


45,460

Total stock-based compensation expense

$           87,966


$           86,979


$         255,243


$         245,114


(2) Lease impairment and abandonment charges associated with cease-use of our former corporate headquarters

 

PURE STORAGE, INC.

Condensed Consolidated Statements of Cash Flows

(in thousands, unaudited)



Third Quarter of Fiscal


First Three Quarters of Fiscal


2024


2023


2024


2023









Cash flows from operating activities








Net income (loss)

$               70,389


$                   (787)


$                (4,127)


$                (1,400)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:








Depreciation and amortization

31,647


25,719


91,560


72,268

Stock-based compensation expense

87,966


86,979


255,243


245,114

Lease impairment and abandonment charges



16,766


Other

(2,814)


(558)


(5,843)


2,473

Changes in operating assets and liabilities, net of effect of acquisition:








Accounts receivable, net

(111,190)


(33,791)


(23,959)


106,216

Inventory

818


(3,849)


5,278


(16,341)

Deferred commissions

(9,501)


549


(19,061)


11,175

Prepaid expenses and other assets

20,044


(40,601)


19,686


(56,164)

Operating lease right-of-use assets

6,763


9,253


26,398


26,073

Accounts payable

7,533


29,065


33,844


22,536

Accrued compensation and other liabilities

4,767


20,085


(52,757)


(17,739)

Operating lease liabilities

(7,454)


(6,897)


(20,587)


(28,339)

Deferred revenue

59,464


69,529


110,856


168,336

Net cash provided by operating activities

158,432


154,696


433,297


534,208

Cash flows from investing activities








Purchases of property and equipment (1)

(45,062)


(39,916)


(151,591)


(97,910)

Acquisition, net of cash acquired




(1,989)

Purchases of marketable securities

(105,108)


(74,878)


(351,725)


(92,129)

Sales of marketable securities

3,747



52,495


Maturities of marketable securities

109,196


111,302


495,899


352,295

Net cash provided by (used in) investing activities

(37,227)


(3,492)


45,078


160,267

Cash flows from financing activities








Net proceeds from exercise of stock options

3,056


3,867


32,904


19,131

Proceeds from issuance of common stock under employee stock purchase plan

23,870


20,569


45,089


39,965

Principal payments on borrowings and finance lease obligations

(7,515)


(4,568)


(584,582)


(256,145)

Proceeds from borrowings

6,890



106,890


Tax withholding on vesting of equity awards

(4,755)


(3,143)


(16,582)


(16,130)

Repurchases of common stock

(22,460)


(24,565)


(114,341)


(151,564)

Net cash used in financing activities

(914)


(7,840)


(530,622)


(364,743)

Net increase (decrease) in cash, cash equivalents and restricted cash

120,291


143,364


(52,247)


329,732

Cash, cash equivalents and restricted cash, beginning of period

418,860


663,111


591,398


476,743

Cash, cash equivalents and restricted cash, end of period

$             539,151


$             806,475


$             539,151


$             806,475


(1) Includes capitalized internal-use software costs of $5.1 million and $3.7 million for the third quarter of fiscal 2024 and 2023 and $15.7 million and $10.5 million for the first three quarters of fiscal 2024 and 2023.

 

Reconciliations of non-GAAP results of operations to the nearest comparable GAAP measures

The following table presents non-GAAP gross margins by revenue source before certain items (in thousands except percentages, unaudited):



Third Quarter of Fiscal 2024


Third Quarter of Fiscal 2023



GAAP

results


GAAP

gross

margin (a)


Adjustment




Non-

GAAP

results


Non-

GAAP

gross

margin (b)


GAAP

results


GAAP

gross

margin (a)


Adjustment




Non-

GAAP

results


Non-

GAAP

gross

margin (b)
































$      1,443


(c)










$      2,984


(c)











75


(d)










46


(d)






















251


(e)











3,306


(f)










3,306


(f)





Gross profit --
product


$  326,507


72.0 %


$      4,824




$ 331,331


73.1 %


$  295,735


68.6 %


$      6,587




$  302,322


70.1 %
































$      6,849


(c)










$      5,814


(c)











329


(d)










204


(d)






















269


(e)






















24


(g)





Gross profit --
subscription
services


$  226,240


73.1 %


$      7,178




$ 233,418


75.4 %


$  170,600


69.7 %


$      6,311




$  176,911


72.3 %
































$      8,292


(c)










$      8,798


(c)











404


(d)










250


(d)






















520


(e)











3,306


(f)










3,306


(f)






















24


(g)





Total gross
profit


$  552,747


72.5 %


$    12,002




$ 564,749


74.0 %


$  466,335


69.0 %


$    12,898




$  479,233


70.9 %


(a) GAAP gross margin is defined as GAAP gross profit divided by revenue.

(b) Non-GAAP gross margin is defined as non-GAAP gross profit divided by revenue.

(c) To eliminate stock-based compensation expense.

(d) To eliminate payroll tax expense related to stock-based activities.

(e) To eliminate duplicate lease costs during the transition of our corporate headquarters.

(f) To eliminate amortization expense of acquired intangible assets.

(g) To eliminate payments to former shareholders of acquired company.

 

The following table presents certain non-GAAP consolidated results before certain items (in thousands, except per share amounts and percentages, unaudited):


Third Quarter of Fiscal 2024


Third Quarter of Fiscal 2023


GAAP

results


GAAP

operating

margin (a)


Adjustment




Non-

GAAP

results


Non-

GAAP

operating

margin (b)


GAAP

results


GAAP

operating

margin (a)


Adjustment



Non-

GAAP

results


Non-

GAAP

operating

margin (b)





























$     87,966


(c)










$     86,979


(c)









580


(d)










1,479


(d)









2,604


(e)










2,098


(e)




















3,676


(f)









3,718


(g)










3,838


(g)




Operating
income

$   74,211


9.7 %


$     94,868




$  169,079


22.2 %


$     9,133


1.4 %


$     98,070



$  107,203


15.9 %





























$     87,966


(c)










$     86,979


(c)









580


(d)










1,479


(d)









2,604


(e)










2,098


(e)




















3,676


(f)









3,718


(g)










3,838


(g)









153


(h)










803


(h)




Net income
(loss)

$   70,389




$     95,021




$  165,410




$        (787)




$     98,873



$  98,086


























Net income (loss)
per share -- diluted

$       0.21








$        0.50




$       (0.00)







$      0.31



Weighted-
average
shares used in
per share
calculation -- 
diluted

330,255







330,255




300,984




15,431


(i)

316,415




(a) GAAP operating margin is defined as GAAP operating income divided by revenue.

(b) Non-GAAP operating margin is defined as non-GAAP operating income divided by revenue.

(c) To eliminate stock-based compensation expense.

(d) To eliminate payments to former shareholders of acquired company.

(e) To eliminate payroll tax expense related to stock-based activities.

(f) To eliminate duplicate lease costs during the transition of our corporate headquarters.

(g) To eliminate amortization expense of acquired intangible assets.

(h) To eliminate amortization expense of debt issuance costs related to our debt.

(i) To include effect of dilutive securities (employee stock options, restricted stock, and shares from employee stock purchase plan).

 

Reconciliation from net cash provided by operating activities to free cash flow (in thousands except percentages, unaudited):


Third Quarter of Fiscal


2024


2023

Net cash provided by operating activities

$               158,432


$             154,696

Less: purchases of property and equipment (1)

(45,062)


(39,916)

Free cash flow (non-GAAP)

$               113,370


$             114,780


(1) Includes capitalized internal-use software costs of $5.1 million and $3.7 million for the third quarter of fiscal 2024 and 2023.

 

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SOURCE Pure Storage

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