Pure Storage Announces First Quarter Fiscal 2024 Financial Results
Subscription services ARR of $1.2 billion, up 29% year-over-year
Record Evergreen//One subscription sales
Shipped first FlashBlade//E systems
MOUNTAIN VIEW, Calif., May 31, 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 first quarter fiscal 2024 ended May 7, 2023.
"We are the clear leader in data storage, now delivering a portfolio that can address the vast majority of storage needs for all enterprises," said Charles Giancarlo, Chairman and CEO, Pure Storage. "The superior economics, performance, and operational and environmental efficiencies of Pure's product portfolio over both hard disk and SSD-based, all-flash competitive offerings are now undeniable."
First Quarter Financial Highlights
- Revenue $589.3 million, a decrease of 5% year-over-year, and an increase of 5% year-over-year, when excluding the impact of $60 million of first quarter fiscal 2023 product revenue that was contemplated in the second half of last year
- Subscription services revenue $280.3 million, up 28% year-over-year
- Subscription annual recurring revenue (ARR) $1.2 billion, up 29% year-over-year
- Remaining performance obligations (RPO) $1.8 billion, up 26% year-over-year
- GAAP gross margin 70.1%; non-GAAP gross margin 72.2%
- GAAP operating loss $(71.8) million; non-GAAP operating income $19.6 million
- GAAP operating margin (12.2)%; non-GAAP operating margin 3.3%
- Operating cash flow $173.2 million; free cash flow $121.8 million
- Total cash, cash equivalents, and marketable securities $1.2 billion
- Returned approximately $70 million in Q1 to stockholders through share repurchases of 2.9 million shares
- Repaid $575 million of outstanding convertible senior notes
"Through innovation, our competitive differentiation is unmatched in providing both high business value and lower total cost of ownership benefits across our portfolio to our customers," said Kevan Krysler, CFO, Pure Storage. "Subscription services ARR grew 29%, with strong momentum from our record Evergreen//One subscription sales this quarter."
First Quarter Company Highlights
- Flash at disk economics: Pure introduced FlashBlade//E, a scale-out unstructured data repository built to handle exponential data growth with industry-leading energy efficiency. At an acquisition cost competitive with disk and much lower operational costs, the introduction of FlashBlade//E means that customers no longer need to settle for disk.
- Truly unified block and file: Pure announced the general availability of the FlashArray Unified Block and File Platform, the first and only storage service designed from the ground up to access native block and file. This empowers organizations to access native block and file services from a single, global pool of storage resources.
- Cloud native momentum: A new partnership between Portworx by Pure Storage and MongoDB includes a first-of-its-kind integration between the industry's first Database-Platform-as-a-Service (DBPaaS), Portworx Data Services, and MongoDB that revolutionizes how developers build modern applications.
- Advancing the world's AI projects: Pure is the chosen vendor for AI environments across a broad range of industries, notably media & entertainment, pharma, healthcare, aerospace, transportation, and financial services. We've continued to advance FlashBlade's high-performance parallel architecture making it the market's leading portfolio for AI projects.
Second Quarter and FY24 Guidance
Q2 FY24 | FY24 | |
Revenue | $680M | Mid to High Single Digit Y/Y |
Non-GAAP Operating Income | $90M | - |
Non-GAAP Operating Margin | 13 % | 15 % |
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 first quarter fiscal 2024 results at 2:00 pm PT today, May 31, 2023. A live audio broadcast of the conference call will be available at the Pure Storage Investor Relations website, investor.purestorage.com. Pure will also post its earnings presentation to this website in advance of the call and post its prepared remarks to this website within 24 hours following completion of the call.
A replay will be available following the call on the Pure Storage Investor Relations website or for two weeks at 1-866-813-9403 (or +44 204 525 0658 for international callers) with passcode 425076.
Additionally, Pure is scheduled to participate at the following investor conferences or events:
Bank of America Global Technology Conference
Date: Tuesday, June 6, 2023
Time: 10:40 a.m. PT / 1:40 p.m. ET
Charles Giancarlo, Chairman and CEO and Kevan Krysler, CFO
William Blair 42rd Annual Growth Stock Conference
Date: Thursday, June 8, 2023
Time: 10:00 a.m. PT / 1:00 p.m. ET
Rob Lee, Chief Technology Officer (CTO)
Product & Technology-Focused Meeting for Financial Analysts at Pure//Accelerate 2023
Date: Thursday, June 15, 2023
Time: 1:00 p.m. PT / 4:00 p.m. ET
Register for Pure//Accelerate 2023 in Las Vegas June 14-16, 2023 to make connections, get inspired, and learn more about tools and strategies to implement sustainable change, energy efficiency, and operational excellence within your organization. Pure executives and world-leading experts - including Pure Storage CEO Charles Giancarlo and NBA Hall of Famer Shaquille O'Neal - will share insights, strategies, and their vision for the future.
The presentation(s) 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 2022 Gartner Magic Quadrant for Primary Storage
Leader in the 2022 Gartner Magic Quadrant for Distributed File Systems & Object Storage
Connect with Pure
Blog
LinkedIn
Twitter
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, our technology and product strategy, specifically customer priorities around sustainability, our ability to adjust to 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, the pandemic and its lingering impacts, demand for our products and subscription services, including Evergreen//One, our expectations regarding our product and technology differentiation, including FlashBlade//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 May 31, 2023, and Pure undertakes no duty to update this information unless required by law.
Key Business Metric
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.
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 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 | ||||
First Quarter of | Fiscal 2023 | |||
Assets | ||||
Current assets: | ||||
Cash and cash equivalents | $ 378,285 | $ 580,854 | ||
Marketable securities | 805,715 | 1,001,352 | ||
Accounts receivable, net of allowance of $1,062 and $1,057 | 391,286 | 612,491 | ||
Inventory | 51,821 | 50,152 | ||
Deferred commissions, current | 68,826 | 68,617 | ||
Prepaid expenses and other current assets | 171,824 | 161,391 | ||
Total current assets | 1,867,757 | 2,474,857 | ||
Property and equipment, net | 302,894 | 272,445 | ||
Operating lease right-of-use-assets | 155,205 | 158,912 | ||
Deferred commissions, non-current | 179,362 | 177,239 | ||
Intangible assets, net | 45,064 | 49,222 | ||
Goodwill | 361,427 | 361,427 | ||
Restricted cash | 9,960 | 10,544 | ||
Other assets, non-current | 37,584 | 38,814 | ||
Total assets | $ 2,959,253 | $ 3,543,460 | ||
Liabilities and Stockholders' Equity | ||||
Current liabilities: | ||||
Accounts payable | $ 71,334 | $ 67,121 | ||
Accrued compensation and benefits | 143,204 | 232,636 | ||
Accrued expenses and other liabilities | 121,230 | 123,749 | ||
Operating lease liabilities, current | 37,995 | 33,707 | ||
Deferred revenue, current | 732,433 | 718,149 | ||
Debt, current | — | 574,506 | ||
Total current liabilities | 1,106,196 | 1,749,868 | ||
Long-term debt | 100,000 | — | ||
Operating lease liabilities, non-current | 139,665 | 142,473 | ||
Deferred revenue, non-current | 663,237 | 667,501 | ||
Other liabilities, non-current | 44,348 | 42,385 | ||
Total liabilities | 2,053,446 | 2,602,227 | ||
Stockholders' equity: | ||||
Common stock and additional paid-in capital | 2,521,176 | 2,493,799 | ||
Accumulated other comprehensive loss | (10,906) | (15,504) | ||
Accumulated deficit | (1,604,463) | (1,537,062) | ||
Total stockholders' equity | 905,807 | 941,233 | ||
Total liabilities and stockholders' equity | $ 2,959,253 | $ 3,543,460 | ||
PURE STORAGE, INC. Condensed Consolidated Statements of Operations (in thousands, except per share data, unaudited) | |||
First Quarter of Fiscal | |||
2024 | 2023 | ||
Revenue: | |||
Product | $ 308,963 | $ 401,161 | |
Subscription services | 280,344 | 219,244 | |
Total revenue | 589,307 | 620,405 | |
Cost of revenue: | |||
Product (1) | 96,213 | 125,484 | |
Subscription services (1) | 79,747 | 68,495 | |
Total cost of revenue | 175,960 | 193,979 | |
Gross profit | 413,347 | 426,426 | |
Operating expenses: | |||
Research and development (1) | 185,331 | 161,273 | |
Sales and marketing (1) | 232,446 | 218,153 | |
General and administrative (1) | 67,384 | 51,567 | |
Total operating expenses | 485,161 | 430,993 | |
Loss from operations | (71,814) | (4,567) | |
Other income (expense), net | 11,749 | (6,181) | |
Loss before provision for income taxes | (60,065) | (10,748) | |
Income tax provision | 7,336 | 787 | |
Net loss | $ (67,401) | $ (11,535) | |
Net loss per share attributable to common stockholders, basic and diluted | $ (0.22) | $ (0.04) | |
Weighted-average shares used in computing net loss per share attributable to common | 305,863 | 295,843 | |
(1) Includes stock-based compensation expense as follows: | |||
Cost of revenue -- product | $ 2,655 | $ 1,863 | |
Cost of revenue -- subscription services | 5,647 | 5,356 | |
Research and development | 38,232 | 36,517 | |
Sales and marketing | 17,181 | 18,345 | |
General and administrative | 14,115 | 12,490 | |
Total stock-based compensation expense | $ 77,830 | $ 74,571 | |
PURE STORAGE, INC. Condensed Consolidated Statements of Cash Flows (in thousands, unaudited) | |||
First Quarter of Fiscal | |||
2024 | 2023 | ||
Cash flows from operating activities | |||
Net loss | $ (67,401) | $ (11,535) | |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||
Depreciation and amortization | 29,690 | 22,663 | |
Stock-based compensation expense | 77,830 | 74,571 | |
Other | (1,804) | 947 | |
Changes in operating assets and liabilities: | |||
Accounts receivable, net | 221,205 | 196,129 | |
Inventory | 308 | (1,699) | |
Deferred commissions | (2,331) | 15,309 | |
Prepaid expenses and other assets | (6,095) | (11,742) | |
Operating lease right-of-use assets | 11,001 | 7,749 | |
Accounts payable | (3,993) | (7,419) | |
Accrued compensation and other liabilities | (89,082) | (88,963) | |
Operating lease liabilities | (6,100) | (8,480) | |
Deferred revenue | 10,019 | 32,602 | |
Net cash provided by operating activities | 173,247 | 220,132 | |
Cash flows from investing activities | |||
Purchases of property and equipment (1) | (51,424) | (32,810) | |
Purchases of marketable securities | (128,788) | (17,251) | |
Sales of marketable securities | 43,040 | — | |
Maturities of marketable securities | 288,373 | 116,175 | |
Net cash provided by investing activities | 151,201 | 66,114 | |
Cash flows from financing activities | |||
Net proceeds from exercise of stock options | 4,630 | 11,405 | |
Proceeds from issuance of common stock under employee stock purchase plan | 21,219 | 19,396 | |
Principal payments on borrowings and finance lease obligations | (576,780) | (251,395) | |
Proceeds from borrowings | 100,000 | — | |
Tax withholding on vesting of equity awards | (6,759) | (10,194) | |
Repurchases of common stock | (69,911) | (66,420) | |
Net cash used in financing activities | (527,601) | (297,208) | |
Net decrease in cash, cash equivalents and restricted cash | (203,153) | (10,962) | |
Cash, cash equivalents and restricted cash, beginning of period | 591,398 | 476,743 | |
Cash, cash equivalents and restricted cash, end of period | $ 388,245 | $ 465,781 | |
(1) | Includes capitalized internal-use software costs of $5.3 million and $2.9 million for the first quarter 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):
First Quarter of Fiscal 2024 | First 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) | ||||||||||||||||
$ 2,655 | (c) | $ 1,863 | (c) | ||||||||||||||||||||||
147 | (d) | 188 | (d) | ||||||||||||||||||||||
3,306 | (e) | 3,199 | (e) | ||||||||||||||||||||||
Gross profit -- | $ 212,750 | 68.9 % | $ 6,108 | $ 218,858 | 70.8 % | $ 275,677 | 68.7 % | $ 5,250 | $ 280,927 | 70.0 % | |||||||||||||||
$ 5,647 | (c) | $ 5,356 | (c) | ||||||||||||||||||||||
338 | (d) | 582 | (d) | ||||||||||||||||||||||
— | 135 | (f) | |||||||||||||||||||||||
13 | (g) | 24 | (g) | ||||||||||||||||||||||
Gross profit -- | $ 200,597 | 71.6 % | $ 5,998 | $ 206,595 | 73.7 % | $ 150,749 | 68.8 % | $ 6,097 | $ 156,846 | 71.5 % | |||||||||||||||
$ 8,302 | (c) | $ 7,219 | (c) | ||||||||||||||||||||||
485 | (d) | 770 | (d) | ||||||||||||||||||||||
3,306 | (e) | 3,199 | (e) | ||||||||||||||||||||||
— | 135 | (f) | |||||||||||||||||||||||
13 | (g) | 24 | (g) | ||||||||||||||||||||||
Total gross | $ 413,347 | 70.1 % | $ 12,106 | $ 425,453 | 72.2 % | $ 426,426 | 68.7 % | $ 11,347 | $ 437,773 | 70.6 % | |||||||||||||||
(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 amortization expense of acquired intangible assets. |
(f) | To eliminate costs associated with the exit of certain operations. |
(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):
First Quarter of Fiscal 2024 | First 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) | |||||||||||||
$ 77,830 | (c) | $ 74,571 | (c) | |||||||||||||||||||
885 | (d) | 1,800 | (d) | |||||||||||||||||||
4,815 | (e) | 6,996 | (e) | |||||||||||||||||||
— | 2,868 | (f) | ||||||||||||||||||||
4,070 | (g) | — | ||||||||||||||||||||
3,839 | (h) | 3,730 | (h) | |||||||||||||||||||
Operating income | $ (71,814) | -12.2 % | $ 91,439 | $ 19,625 | 3.3 % | $ (4,567) | -0.7 % | $ 89,965 | $ 85,398 | 13.8 % | ||||||||||||
$ 77,830 | (c) | $ 74,571 | (c) | |||||||||||||||||||
885 | (d) | 1,800 | (d) | |||||||||||||||||||
4,815 | (e) | 6,996 | (e) | |||||||||||||||||||
— | 2,868 | (f) | ||||||||||||||||||||
4,070 | (g) | — | ||||||||||||||||||||
3,839 | (h) | 3,730 | (h) | |||||||||||||||||||
647 | (i) | 801 | (i) | |||||||||||||||||||
Net income | $ (67,401) | $ 92,086 | $ 24,685 | $ (11,535) | $ 90,766 | $ 79,231 | ||||||||||||||||
Net income | $ (0.22) | $ 0.08 | $ (0.04) | $ 0.25 | ||||||||||||||||||
Weighted- | 305,863 | 11,134 | (j) | 316,997 | 295,843 | 20,037 | (j) | 315,880 | ||||||||||||||
(a) | GAAP operating margin is defined as GAAP operating loss 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 costs primarily associated with the exit of certain operations. |
(g) | To eliminate duplicate lease costs during the transition of our corporate headquarters. |
(h) | To eliminate amortization expense of acquired intangible assets. |
(i) | To eliminate amortization expense of debt issuance costs related to our debt. |
(j) | 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):
First Quarter of Fiscal | |||
2024 | 2023 | ||
Net cash provided by operating activities | $ 173,247 | $ 220,132 | |
Less: purchases of property and equipment (1) | (51,424) | (32,810) | |
Free cash flow (non-GAAP) | $ 121,823 | $ 187,322 | |
(1) | Includes capitalized internal-use software costs of $5.3 million and $2.9 million for the first quarter of fiscal 2024 and 2023. |
View original content to download multimedia:https://www.prnewswire.com/news-releases/pure-storage-announces-first-quarter-fiscal-2024-financial-results-301839077.html
SOURCE Pure Storage