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PSTG Pure Storage

Filed: 24 Feb 21, 4:07pm

Exhibit 99.1
 
Pure Storage Announces Fourth Quarter and Full Year Fiscal 2021 Financial Results

Completed record number of eight deals greater than $10 million in Q4
Annual Subscription Services revenue exceeding $500 million and achieving 33% growth
Consecutive record sales quarters for FlashBlade and FlashArray//C

MOUNTAIN VIEW, Calif. - February 24, 2021 -- 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 fourth quarter and full year ended January 31, 2021.

“Pure ended fiscal 2021 with great strength and growth, setting new revenue and sales records for the quarter and for the full fiscal year,” said Charles Giancarlo, Chairman and CEO, Pure Storage. “I am confident in our opportunity, our long-term strategy, and our ability to accelerate growth. Our Q4 results are a leading indicator of that acceleration. We saw broad based growth year over year, including in our subscription services, our enterprise and cloud segments, our new product lines, and in every theater.”

Fourth Quarter and Full Year Financial Highlights

Q4 revenue $502.7 million, up 2.2% year-over-year
Full-year revenue $1.684 billion, up 2.5% year-over-year

Q4 GAAP gross margin 67.8%; non-GAAP gross margin 69.4%
Full-year GAAP gross margin 68.2%; non-GAAP gross margin 70.0%

Q4 GAAP operating loss $46.8 million; non-GAAP operating income $36.7 million
Full-year GAAP operating loss $261.0 million; non-GAAP operating income $46.0 million

Q4 operating cash flow $69.0 million; and full-year operating cash flow $187.6 million
Q4 free cash flow $47.7 million; and full-year free cash flow $92.7 million

Total cash and investments $1.25 billion
Remaining performance obligations (RPO) $1.1 billion, up 24% year-over-year; and deferred revenue $843.7 million, up 21% year-over-year

“We are very pleased to be exiting this year on a high note as sales and revenue have surpassed our expectations with particular strength from our enterprise customers,” said Kevan Krysler, CFO, Pure Storage. “The momentum we are seeing is the result of our consistent focus on investing in innovation for our customers.”

Fourth Quarter and Full Year Company Highlights and Achievements

Leader in the Gartner Magic Quadrant for Primary Storage Arrays: Pure was named the clear leader, positioned highest on the ability to execute axis and furthest on the completeness of vision axis in the 2020 Gartner Magic Quadrant.
Strong Subscription Services Momentum: Only Pure delivers true flexible storage consumption, a cloud experience on-prem, an easy path to move data to the cloud, and aligns spend with actual consumption. In Q4, Pure expanded the Pure as-a-ServiceTM offering with a new Service Catalog aimed at revolutionizing the industry by publishing transparent pricing for on-prem and hybrid cloud storage delivered as-a-Service, providing a seamless purchasing model for customers.
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Market-Leading Portfolio Innovation: Pure continued its pace of innovation across the portfolio to enable new use cases and render hybrid arrays obsolete. Among this year’s new offerings, Pure expanded the industry-defining unified, fast file and object FlashBlade® with scale-out native SMB support and the industry’s first all-QLC solution with the third generation FlashArray//C. Both products achieved consecutive record sales quarters in FY21.
Extending Kubernetes Market Leadership with Portworx: With Portworx® fully integrated into Pure, the company delivers the industry’s most complete Kubernetes Data Services Platform, supporting cloud native applications on any infrastructure, on-prem or in-cloud. In Q4, we saw significant growth of in-cloud deployments of Portworx and traction through the IBM partnership both in-cloud and on-prem via our best-in-class support for Red Hat OpenShift. In FY21, Portworx was named a leader in the GigaOm Radar for Data Storage for Kubernetes and for Kubernetes Data Protection.

Guidance: Q1 FY22 and Annual FY22

Q1 FY22FY22
Revenue$405 Million14%-15% Y/Y Growth
Non-GAAP Operating Income (Loss)$(20) Million~$90 Million

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 (loss) to the most directly comparable GAAP measure because certain items that impact this measure are not within Pure’s control and/or cannot be reasonably predicted. Accordingly, a reconciliation of this non-GAAP financial measure guidance to the corresponding GAAP measure is not available without unreasonable effort.

Conference Call Information

Pure will host a teleconference to discuss the fourth quarter and full year fiscal 2021 results at 2:00 pm PT today, February 24, 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 supplemental earnings presentation and prepared conference call remarks to the Investor Relations website in advance of the call for reference. A replay will be available following the call on the Pure Storage Investor Relations website for two weeks at (855) 859-2056 (or 404-537-3406 for international callers) with passcode 6395722.

Upcoming IR Events

Pure will be presenting at the Morgan Stanley Technology, Media and Telecom Virtual Conference on March 2 at 9:30 am PT.
Pure will be presenting at the Raymond James Institutional Investors Virtual Conference on March 3 at 8:40 am PT.

The presentations from these events will be webcast live, and all information will be available on the Investor Relations website at investor.purestorage.com.

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Share Repurchase Authorization

Pure’s board of directors has authorized incremental share repurchases of up to an additional $200 million under its stock repurchase program. The authorization allows Pure to repurchase shares of its Class A common stock opportunistically and will be funded from available working capital. Repurchases may be made at management’s discretion from time to time on the open market through privately negotiated transactions, transactions structured through investment banking institutions, block purchase techniques, 10b5-1 trading plans, or a combination of the foregoing. The repurchase program does not have an expiration date, does not obligate Pure to acquire any of its common stock, and may be suspended or discontinued by the company at any time without prior notice.

About Pure Storage

Pure Storage (NYSE: PSTG) 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. One of the fastest-growing enterprise IT companies in history, 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. For more information, visit www.purestorage.com.

Analyst Recognition

Pure Storage has been named a Leader in the 2020 Gartner Magic Quadrant for Primary Storage Arrays.

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 outcomes, our momentum and growth potential, the scope and duration of the COVID-19 pandemic and its impact on our business operations, liquidity and capital resources, employees, customers, supply chain, financial results and the economy, our expectations regarding product and technology differentiation, including our new offerings, strategy and adoption of subscription services, the success of the Portworx acquisition and 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.

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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 captions "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 February 24, 2021, and Pure undertakes no duty to update this information unless required by law.

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.

Contacts

Nicole Noutsios - Investor Relations, Pure Storage
ir@purestorage.com
Rena Fallstrom - Public Relations, Pure Storage
pr@purestorage.com


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PURE STORAGE, INC.
Condensed Consolidated Balance Sheets
(in thousands, unaudited)
 
At the End of Fiscal
20212020
 
Assets  
Current assets:  
Cash and cash equivalents$337,147 $362,635 
Marketable securities916,388 936,518 
Accounts receivable, net of allowance of $1,033 and $542460,879 458,643 
Inventory46,733 38,518 
Deferred commissions, current57,183 37,148 
Prepaid expenses and other current assets89,836 56,930 
Total current assets1,908,166 1,890,392 
Property and equipment, net163,041 122,740 
Operating lease right-of-use assets134,668 112,854 
Deferred commissions, non-current130,741 102,056 
Intangible assets, net76,648 58,257 
Goodwill358,736 37,584 
Restricted cash10,544 15,287 
Other assets, non-current36,896 25,034 
Total assets$2,819,440 $2,364,204 
Liabilities and stockholders' equity  
Current liabilities:  
Accounts payable$67,530 $77,651 
Accrued compensation and benefits160,817 106,592 
Accrued expenses and other liabilities61,754 47,223 
Operating lease liabilities, current32,231 27,264 
Deferred revenue, current438,321 356,011 
Total current liabilities760,653 614,741 
Long-term debt755,814 477,007 
Operating lease liabilities, non-current120,361 92,977 
Deferred revenue, non-current405,376 341,277 
Other liabilities, non-current27,230 8,084 
Total liabilities2,069,434 1,534,086 
Stockholders’ equity:  
Common stock and additional paid-in capital2,307,608 2,107,605 
Accumulated other comprehensive income7,410 5,449 
Accumulated deficit(1,565,012)(1,282,936)
Total stockholders' equity750,006 830,118 
Total liabilities and stockholders' equity$2,819,440 $2,364,204 


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PURE STORAGE, INC.
Condensed Consolidated Statements of Operations
(in thousands, except per share data, unaudited)
 
 Fourth Quarter of FiscalFiscal Year Ended
 2021202020212020
 
Revenue:    
Product$350,380 $376,517 $1,144,098 $1,238,654 
Subscription services152,338 115,487 540,081 404,786 
Total revenue502,718 492,004 1,684,179 1,643,440 
Cost of revenue:
Product (1)
112,310 103,510 352,987 362,970 
Subscription services (1)
49,551 40,284 182,268 146,916 
Total cost of revenue161,861 143,794 535,255 509,886 
Gross profit340,857 348,210 1,148,924 1,133,554 
Operating expenses:
Research and development (1)
130,388 114,904 480,467 433,662 
Sales and marketing (1)
198,865 190,389 716,014 728,022 
General and administrative (1)
50,414 43,611 182,477 163,153 
Restructuring and other (2)
8,009 — 30,999 — 
Total operating expenses387,676 348,904 1,409,957 1,324,837 
Loss from operations(46,819)(694)(261,033)(191,283)
Other income (expense), net(2,427)(924)(9,127)(3,383)
Loss before provision for income taxes(49,246)(1,618)(270,160)(194,666)
Income tax provision3,047 3,033 11,916 6,321 
Net loss$(52,293)$(4,651)$(282,076)$(200,987)
Net loss per share attributable to common
   stockholders, basic and diluted
$(0.19)$(0.02)$(1.05)$(0.79)
Weighted-average shares used in computing net
   loss per share attributable to common
   stockholders, basic and diluted
274,421 259,218 267,824 252,820 

(1) Includes stock-based compensation expense as follows:
 
Cost of revenue -- product$988 $889 $4,001 $3,732 
Cost of revenue -- subscription services4,018 3,302 14,979 14,403 
Research and development29,450 26,726 117,220 107,658 
Sales and marketing17,230 16,389 65,248 67,560 
General and administrative10,903 8,857 40,896 33,352 
Total stock-based compensation expense$62,589 $56,163 $242,344 $226,705 
 
(2) Includes expenses related to restructuring and incremental expenses directly related to COVID-19.
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PURE STORAGE, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands, unaudited)
 
 Fourth Quarter of FiscalFiscal Year Ended
 2021202020212020
 
Cash flows from operating activities    
Net loss$(52,293)$(4,651)$(282,076)$(200,987)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization20,231 22,925 70,042 89,710 
Amortization of debt discount and debt issuance costs7,545 6,993 29,070 27,179 
Stock-based compensation expense62,589 56,163 242,344 226,705 
Impairment of long-lived assets— — 7,505 — 
Other3,229 1,819 7,340 1,336 
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable, net(82,810)(96,521)410 (79,442)
Inventory(3,966)(329)(8,690)2,393 
Deferred commissions(35,836)(16,073)(48,721)(24,231)
Prepaid expenses and other assets3,624 (18,198)(33,982)(16,734)
Operating lease right-of-use assets7,370 6,549 28,804 26,511 
Accounts payable(22,930)16,388 (14,364)(18,856)
Accrued compensation and other liabilities86,709 47,059 76,972 20,296 
Operating lease liabilities(6,874)(6,357)(27,318)(25,377)
Deferred revenue82,445 54,091 140,305 161,071 
Net cash provided by operating activities69,033 69,858 187,641 189,574 
Cash flows from investing activities
Purchases of property and equipment(21,332)(13,641)(94,975)(87,847)
Acquisitions, net of cash acquired165 — (339,641)(51,594)
Purchase of intangible assets— — — (9,000)
Purchases of marketable securities(119,568)(155,556)(573,959)(795,580)
Sales of marketable securities39,323 83,733 171,530 200,251 
Maturities of marketable securities99,156 73,402 423,936 419,059 
Other— — (5,000)— 
Net cash used in investing activities(2,256)(12,062)(418,109)(324,711)
Cash flows from financing activities
Net proceeds from exercise of stock options33,695 17,095 59,372 42,899 
Proceeds from issuance of common stock under employee stock purchase plan— 32,439 43,298 
Proceeds from borrowings, net of issuance costs— — 251,892 — 
Repayment of borrowings(33)— (33)— 
Repayment of debt assumed from acquisition— — — (11,555)
Tax withholding on vesting of equity awards(4,178)(1,592)(8,258)(10,379)
Repurchases of common stock(23,621)(15,017)(135,175)(15,017)
Net cash provided by financing activities5,863 493 200,237 49,246 
Net increase (decrease) in cash and cash equivalents and restricted cash72,640 58,289 (30,231)(85,891)
Cash, cash equivalents and restricted cash, beginning of period275,051 319,633 377,922 463,813 
Cash, cash equivalents and restricted cash, end of period$347,691 $377,922 $347,691 $377,922 


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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):

 Fourth Quarter of FiscalFourth Quarter of Fiscal
20212020
 GAAP
results
GAAP
gross
margin  (a)
Adjustment Non-
GAAP
results
Non-
GAAP
gross
margin  (b)
GAAP
results
GAAP
gross
margin  (a)
AdjustmentNon-
GAAP
results
Non-
GAAP
gross
margin  (b)
$988 (c)$889 (c)
18 (d)14 (d)
3,062 (e)2,074 (e)
Gross profit --
   product
$238,070 67.9 %$4,068 $242,138 69.1 %$273,007 72.5 %$2,977 $275,984 73.3 %
   
$4,018 (c)$3,302 (c)
64 (d)88 (d)
25 (f)— 
Gross profit --
  subscription services
$102,787 67.5 %$4,107  $106,894 70.2 %$75,203 65.1 %$3,390  $78,593 68.1 %
   $5,006 (c)$4,191 (c)
82 (d)102 (d)
3,062 (e)2,074 (e)
25 (f)— 
Total gross profit$340,857 67.8 %$8,175  $349,032 69.4 %$348,210 70.8 %$6,367  $354,577 72.1 %

(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 payments to former shareholders of acquired company.
























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The following table presents non-GAAP gross margins by revenue source before certain items (in thousands except percentages, unaudited):
Fiscal Year Ended
2021
GAAP resultsGAAP gross margin (a)AdjustmentNon-
GAAP
results
Non-
GAAP
gross
margin (b)
$4,001 (c)
84 (d)
735 (e)
9,465 (f)
Gross profit -- product$791,111 69.1 %$14,285 $805,396 70.4 %
$14,979 (c)
267 (d)
190 (e)
32 (g)
Gross profit -- subscription services$357,813 66.3 %$15,468 $373,281 69.1 %
$18,980 (c)
351 (d)
925 (e)
9,465 (f)
32 (g)
Total gross profit$1,148,924 68.2 %$29,753 $1,178,677 70.0 %


(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 expenses directly related to COVID-19 pandemic including hazard pay premiums.
(f) To eliminate amortization expense of acquired intangible assets.
(g) To eliminate payments to former shareholders of acquired company.
























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

 Fourth Quarter of FiscalFourth Quarter of Fiscal
20212020
 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)
$62,589 (c)$56,163 (c)
6,435 (d)1,935 (d)
2,024 (e)1,401 (e)
7,977 (f)— 
3,594 (g)2,074 (g)
921 (h)— 
Operating income (loss)$(46,819)-9.3 %$83,540  $36,721 7.3 %$(694)-0.1 %$61,573  $60,879 12.4 %
   $62,589 (c)   $56,163 (c) 
6,435 (d)1,935 (d)
2,024 (e)1,401 (e)
7,977 (f)— 
3,594 (g)2,074 (g)
921 (h)— 
7,545 (i)6,993 (i)
Net income (loss)$(52,293) $91,085  $38,792  $(4,651) $68,566  $63,915  
Net income (loss) per share -- diluted$(0.19)   $0.13  $(0.02)   $0.23  
Weighted-average shares used in per share calculation -- diluted274,421 22,786(j)297,207 259,218  17,984 (j)277,202 

(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 companies.
(e) To eliminate payroll tax expense related to stock-based activities.
(f) To eliminate restructuring expenses related to (1) workforce reductions and (2) the cease-use of certain facilities.
(g) To eliminate amortization expense of acquired intangible assets.
(h) To eliminate acquisition-related transaction and integration expenses.
(i) To eliminate amortization expense of debt discount and debt issuance costs related to our long-term debt.
(j) To include effect of dilutive securities (employee stock options, restricted stock, and shares from employee stock purchase plan).












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

Fiscal Year Ended
2021
GAAP resultsGAAP operating margin (a)AdjustmentNon- GAAP resultsNon- GAAP operating margin (b)
$242,344 (c)
13,849 (d)
6,040 (e)
9,869 (f)
22,055 (g)
10,174 (h)
2,683 (i)
Operating income (loss)$(261,033)-15.5 %$307,014 $45,981 2.7 %


(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 companies.
(e) To eliminate payroll tax expense related to stock-based activities.
(f) To eliminate expenses directly related to COVID-19 pandemic. These expenses included marketing commitments no longer deemed to have value and hazard pay premiums.
(g) To eliminate restructuring expenses related to (1) workforce reductions and (2) the cease-use of certain facilities.
(h) To eliminate amortization expense of acquired intangible assets.
(i) To eliminate acquisition-related transaction and integration expenses.
































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

 Fourth Quarter of FiscalFiscal Year Ended
 2021202020212020
Net cash provided by operating activities$69,033 $69,858 $187,641 $189,574 
Less: purchases of property and equipment(21,332)(13,641)(94,975)(87,847)
Free cash flow (non-GAAP)$47,701 $56,217 $92,666 $101,727 

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