Q3 revenue growing 37% year-over-year
Subscription Services ARR $788 million, up 30% year-over-year
Raised FY22 revenue outlook to $2.1 billion
MOUNTAIN VIEW, Calif., Nov. 23, 2021 /PRNewswire/ -- Today Pure Storage (NYSE: PSTG), the IT pioneer that delivers storage as-a-service in a multi-cloud world, announced financial results for its fiscal third quarter ended October 31, 2021.
"With Q3 revenue up 37% year-over-year and with increasing profitability, it's clear that Pure continues to set the pace for the industry," said Charles Giancarlo, Chairman and CEO, Pure Storage. "We're delighted to provide cutting edge data services to customers and with our continued leadership in two Gartner Magic Quadrants."
Third Quarter Financial Highlights
-
Revenue $562.7 million, up 37% year-over-year
-
Subscription Services revenue $187.8 million, up 38% year-over-year
-
Subscription Annual Recurring Revenue (ARR) $788.3 million, up 30% year-over-year
-
Remaining Performance Obligations (RPO) $1.2 billion, up 27% year-over-year
-
GAAP gross margin 66.6%; non-GAAP gross margin 68.5%
-
GAAP operating loss $(18.1) million; non-GAAP operating income $69.5 million
-
GAAP operating margin (3.2)%; non-GAAP operating margin 12.3%
-
Operating cash flow $127.0 million; free cash flow $101.3 million
-
Total cash and investments $1.4 billion
"Our strong Q3 performance was fueled by increased customer demand and execution across the entire business," said Kevan Krysler, CFO, Pure Storage. "We are in a great innovation cycle with our portfolio."
Third Quarter Company Highlights and Achievements
-
Gartner Magic Quadrant: A storage leader for eight consecutive years
-
Net Promoter Score (NPS) of 83.5: For six years running, Pure continues to maintain a market-leading NPS, taking the top 1% spot across Medallia benchmarked B2B scores.
-
Significant announcements in Q3 bring infrastructure and applications closer together by enabling cloud-like automation and delivery of storage:
Fourth Quarter and FY22 Guidance
|
Q4 FY22 |
FY22 |
|
|
Revenue |
$630 million |
$2.1 billion |
|
Non-GAAP Operating Income |
$90 million |
$206 million |
|
Non-GAAP Operating Margin |
approx. 14% |
approx. 10% |
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, a reconciliation of these non-GAAP financial measures guidance to the corresponding GAAP measures is not available without unreasonable effort.
Conference Call Information
Pure will host a teleconference to discuss the third quarter fiscal 2022 results at 1:30 pm PT today, November 23, 2021. 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 of completion of the call. A replay will be available following the call on the Pure Storage Investor Relations website or for two weeks at 800-585-8367 (or 416-621-4642 for international callers) with passcode 9027916.
Upcoming Events
Pure is scheduled to participate at the following investor conferences:
Wells Fargo Virtual 5th Annual TMT Summit
Date: Tuesday, November 30, 2021
Time: 11:00 am PST
Pure Presenters: Charles Giancarlo, Chairman and CEO, Kevan Krysler, CFO
Pure Participants: Rob Lee, VP and CTO, Sanjot Khurana, VP, Investor Relations
Credit Suisse 25th Annual Technology Conference
Date: Wednesday, December 1, 2021
Time: 1:10 pm MST
Pure Presenters: Charles Giancarlo, Chairman and CEO, Kevan Krysler, CFO
Pure Participants: Rob Lee, VP and CTO, Sanjot Khurana, VP, Investor Relations
UBS Virtual Global TMT Conference
Date: Monday, December 6, 2021
Pure Participants: Charles Giancarlo, Chairman and CEO, Kevan Krysler, CFO, Rob Lee, VP and CTO, and Sanjot Khurana, VP, Investor Relations
Barclays Virtual Global Technology, Media and Telecommunications Conference
Date: Tuesday, December 7, 2021
Pure Participants: Kevan Krysler, CFO, Rob Lee, VP and CTO, and Sanjot Khurana, VP, Investor Relations
Raymond James Virtual Technology Investors Conference
Date: Wednesday, December 8, 2021
Pure Participants: Charles Giancarlo, Chairman and CEO, Kevan Krysler, CFO, Rob Lee, VP and CTO, and Sanjot Khurana, VP, Investor Relations
The presentations will be webcast live and archived on Pure's Investor Relations website at investor.purestorage.com.
About Pure Storage
Pure Storage gives technologists their time back. Pure delivers a modern data experience that empowers organizations to run their operations as a true, automated, storage as-a-service model seamlessly across multiple clouds. Pure helps customers put data to use while reducing the complexity and expense of managing the infrastructure behind it. And with a certified customer satisfaction score in the top one percent of B2B companies, Pure's ever-expanding list of customers are among the happiest in the world.
Analyst Recognition
Leader in the 2021 Gartner Magic Quadrant for Primary Storage Arrays
Leader in the 2021 Gartner Magic Quadrant for Distributed File Systems & Object Storage
Connect with Pure
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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 continued momentum and growth potential, supply chain constraints, the scope and duration of the COVID-19 pandemic and its impact on our business operations, liquidity and capital resources, employees, customers, financial results and the economy, demand for our products and subscription services, our expectations regarding product and technology differentiation, 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 January 31, 2021. All information provided in this release and in the attachments is as of November 23, 2021, 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, including Evergreen, 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 discount and debt issuance costs related to long-term debt, amortization of intangible assets acquired from acquisitions, acquisition-related transaction and integration expenses, restructuring activities, and expenses directly related to the COVID-19 pandemic 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. |
||||||||
|
At the End of |
||||||||
|
Third Quarter of |
Fiscal 2021 |
|||||||
|
Assets |
||||||||
|
Current assets: |
||||||||
|
Cash and cash equivalents |
$ |
404,692 |
$ |
337,147 |
||||
|
Marketable securities |
958,180 |
916,388 |
||||||
|
Accounts receivable, net of allowance of $965 and $1,033 |
354,179 |
460,879 |
||||||
|
Inventory |
44,036 |
46,733 |
||||||
|
Deferred commissions, current |
63,422 |
57,183 |
||||||
|
Prepaid expenses and other current assets |
102,117 |
89,836 |
||||||
|
Total current assets |
1,926,626 |
1,908,166 |
||||||
|
Property and equipment, net |
193,141 |
163,041 |
||||||
|
Operating lease right-of-use-assets |
115,731 |
134,668 |
||||||
|
Deferred commissions, non-current |
144,898 |
130,741 |
||||||
|
Intangible assets, net |
66,992 |
76,648 |
||||||
|
Goodwill |
358,736 |
358,736 |
||||||
|
Restricted cash |
10,544 |
10,544 |
||||||
|
Other assets, non-current |
39,088 |
36,896 |
||||||
|
Total assets |
$ |
2,855,756 |
$ |
2,819,440 |
||||
|
Liabilities and Stockholders' Equity |
||||||||
|
Current liabilities: |
||||||||
|
Accounts payable |
$ |
48,708 |
$ |
67,530 |
||||
|
Accrued compensation and benefits |
122,969 |
160,817 |
||||||
|
Accrued expenses and other liabilities |
73,884 |
61,754 |
||||||
|
Operating lease liabilities, current |
35,061 |
32,231 |
||||||
|
Deferred revenue, current |
499,176 |
438,321 |
||||||
|
Total current liabilities |
779,798 |
760,653 |
||||||
|
Long-term debt |
778,366 |
755,814 |
||||||
|
Operating lease liabilities, non-current |
99,031 |
120,361 |
||||||
|
Deferred revenue, non-current |
450,574 |
405,376 |
||||||
|
Other liabilities, non-current |
23,563 |
27,230 |
||||||
|
Total liabilities |
2,131,332 |
2,069,434 |
||||||
|
Stockholders' equity: |
||||||||
|
Common stock and additional paid-in capital |
2,447,945 |
2,307,608 |
||||||
|
Accumulated other comprehensive (loss) income |
(307) |
7,410 |
||||||
|
Accumulated deficit |
(1,723,214) |
(1,565,012) |
||||||
|
Total stockholders' equity |
724,424 |
750,006 |
||||||
|
Total liabilities and stockholders' equity |
$ |
2,855,756 |
$ |
2,819,440 |
||||
|
PURE STORAGE, INC. |
|||||||||||||||
|
Third Quarter of Fiscal |
First Three Quarters of Fiscal |
||||||||||||||
|
2022 |
2021 |
2022 |
2021 |
||||||||||||
|
Revenue: |
|||||||||||||||
|
Product |
$ |
374,913 |
$ |
274,470 |
$ |
949,736 |
$ |
793,718 |
|||||||
|
Subscription services |
187,827 |
136,149 |
522,542 |
387,743 |
|||||||||||
|
Total revenue |
562,740 |
410,619 |
1,472,278 |
1,181,461 |
|||||||||||
|
Cost of revenue: |
|||||||||||||||
|
Product (1) |
129,721 |
86,661 |
309,935 |
240,677 |
|||||||||||
|
Subscription services(1) |
58,227 |
47,442 |
165,658 |
132,717 |
|||||||||||
|
Total cost of revenue |
187,948 |
134,103 |
475,593 |
373,394 |
|||||||||||
|
Gross profit |
374,792 |
276,516 |
996,685 |
808,067 |
|||||||||||
|
Operating expenses: |
|||||||||||||||
|
Research and development (1) |
147,808 |
122,981 |
419,296 |
350,079 |
|||||||||||
|
Sales and marketing (1) |
193,172 |
172,282 |
567,054 |
517,149 |
|||||||||||
|
General and administrative (1) |
51,890 |
46,467 |
138,500 |
132,063 |
|||||||||||
|
Restructuring and other (2) |
— |
— |
— |
22,990 |
|||||||||||
|
Total operating expenses |
392,870 |
341,730 |
1,124,850 |
1,022,281 |
|||||||||||
|
Loss from operations |
(18,078) |
(65,214) |
(128,165) |
(214,214) |
|||||||||||
|
Other income (expense), net |
(7,953) |
(4,887) |
(20,090) |
(6,700) |
|||||||||||
|
Loss before provision for income taxes |
(26,031) |
(70,101) |
(148,255) |
(220,914) |
|||||||||||
|
Income tax provision |
2,700 |
4,121 |
9,947 |
8,869 |
|||||||||||
|
Net loss |
$ |
(28,731) |
$ |
(74,222) |
$ |
(158,202) |
$ |
(229,783) |
|||||||
|
Net loss per share attributable to common stockholders, basic and diluted |
$ |
(0.10) |
$ |
(0.28) |
$ |
(0.56) |
$ |
(0.87) |
|||||||
|
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted |
287,462 |
269,144 |
283,918 |
265,626 |
|||||||||||
|
(1) Includes stock-based compensation expense as follows: |
|||||||||||||||
|
Cost of revenue -- product |
$ |
1,634 |
$ |
1,027 |
$ |
4,547 |
$ |
3,013 |
|||||||
|
Cost of revenue -- subscription services |
5,555 |
3,883 |
15,098 |
10,961 |
|||||||||||
|
Research and development |
36,797 |
29,220 |
102,343 |
87,770 |
|||||||||||
|
Sales and marketing |
19,151 |
14,898 |
54,317 |
48,018 |
|||||||||||
|
General and administrative |
12,863 |
10,581 |
31,458 |
29,993 |
|||||||||||
|
Total stock-based compensation expense |
$ |
76,000 |
$ |
59,609 |
$ |
207,763 |
$ |
179,755 |
|||||||
|
(2) Includes expenses related to restructuring and incremental expenses directly related to COVID-19 |
|||||||||||||||
|
PURE STORAGE, INC. |
|||||||||||||||
|
Third Quarter of Fiscal |
First Three Quarters of Fiscal |
||||||||||||||
|
2022 |
2021 |
2022 |
2021 |
||||||||||||
|
Cash flows from operating activities |
|||||||||||||||
|
Net loss |
$ |
(28,731) |
$ |
(74,222) |
$ |
(158,202) |
$ |
(229,783) |
|||||||
|
Adjustments to reconcile net loss to net cash provided by operating activities: |
|||||||||||||||
|
Depreciation and amortization |
21,506 |
18,214 |
59,605 |
49,811 |
|||||||||||
|
Amortization of debt discount and debt issuance costs |
7,857 |
7,400 |
23,011 |
21,525 |
|||||||||||
|
Stock-based compensation expense |
76,000 |
59,609 |
207,763 |
179,755 |
|||||||||||
|
Impairment of long-lived assets |
471 |
— |
471 |
7,505 |
|||||||||||
|
Other |
2,060 |
2,139 |
8,576 |
4,111 |
|||||||||||
|
Changes in operating assets and liabilities: |
|||||||||||||||
|
Accounts receivable, net |
4,282 |
(8,676) |
106,788 |
83,220 |
|||||||||||
|
Inventory |
3,280 |
(6,459) |
38 |
(4,724) |
|||||||||||
|
Deferred commissions |
(12,354) |
(7,402) |
(20,395) |
(12,885) |
|||||||||||
|
Prepaid expenses and other assets |
12,672 |
(11,217) |
(12,283) |
(37,606) |
|||||||||||
|
Operating lease right-of-use assets |
7,243 |
7,253 |
22,061 |
21,434 |
|||||||||||
|
Accounts payable |
(4,989) |
29,656 |
(14,256) |
8,566 |
|||||||||||
|
Accrued compensation and other liabilities |
5,701 |
(6,520) |
(35,251) |
(9,737) |
|||||||||||
|
Operating lease liabilities |
(7,889) |
(7,373) |
(22,094) |
(20,444) |
|||||||||||
|
Deferred revenue |
39,937 |
30,397 |
106,054 |
57,860 |
|||||||||||
|
Net cash provided by operating activities |
127,046 |
32,799 |
271,886 |
118,608 |
|||||||||||
|
Cash flows from investing activities |
|||||||||||||||
|
Purchases of property and equipment |
(25,718) |
(24,867) |
(81,217) |
(73,643) |
|||||||||||
|
Acquisition, net of cash acquired |
— |
(339,806) |
— |
(339,806) |
|||||||||||
|
Purchase of strategic investment |
— |
(5,000) |
— |
(5,000) |
|||||||||||
|
Purchases of marketable securities |
(185,667) |
(163,154) |
(503,038) |
(454,391) |
|||||||||||
|
Sales of marketable securities |
32,896 |
40,856 |
146,934 |
132,207 |
|||||||||||
|
Maturities of marketable securities |
133,388 |
118,606 |
303,158 |
324,780 |
|||||||||||
|
Net cash used in investing activities |
(45,101) |
(373,365) |
(134,163) |
(415,853) |
|||||||||||
|
Cash flows from financing activities |
|||||||||||||||
|
Net proceeds from exercise of stock options |
22,580 |
4,019 |
33,743 |
25,677 |
|||||||||||
|
Proceeds from issuance of common stock under employee stock purchase plan |
18,915 |
16,418 |
36,641 |
32,439 |
|||||||||||
|
Proceeds from borrowings, net of issuance costs |
— |
246,942 |
— |
251,892 |
|||||||||||
|
Repayments of borrowings |
(265) |
— |
(870) |
— |
|||||||||||
|
Principal payments on finance lease obligations |
(414) |
— |
(414) |
... |
|||||||||||
—
Tax withholding on vesting of equity awards
(2,106)
(1,239)
(8,670)
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