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PSTG Pure Storage

Filed: 26 May 21, 4:10pm


Exhibit 99.1
 
Pure Storage Announces First Quarter Fiscal 2022 Financial Results
Return to double digit revenue growth of 12% year-over-year
New customer additions of approximately 330 this quarter, up 15% year-over-year
Continued strength and momentum of Subscription Services

 
MOUNTAIN VIEW, Calif., May 26, 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 first quarter ended May 2, 2021.

“Pure Storage expanded our strong growth trend from last quarter with balanced contributions across all aspects of our business,” said Charles Giancarlo, Chairman and CEO, Pure Storage. “Our growing customer base loves our Modern Data Experience consisting of the industry's most advanced platforms, unique Evergreen and Pure as-a-Service models, with leading reliability and total cost of ownership."

First Quarter Financial Highlights 

Revenue $412.7 million, up 12% year-over-year
Subscription services revenue $162.8 million, up 35% year-over-year
GAAP gross margin 68.3%; non-GAAP gross margin 70.5%
GAAP operating loss $(76.2) million; non-GAAP operating income $0.3 million
Operating cash flow $21.4 million; free cash flow $(6.4) million
Total cash and investments $1.2 billion
Deferred revenue $866.2 million, up 23% year-over-year
Remaining performance obligations (RPO) exceeding $1.1 billion, up 24% year-over-year

“We are very pleased with the strong start to the year returning to double digit revenue growth,” said Kevan Krysler, CFO, Pure Storage. “Broad-based performance in the quarter included early signs of strength in our commercial business and continuing accelerated momentum of FlashArray//C.”

First Quarter Company Highlights and Achievements

Industry Accolades: FlashBlade® was named a leader in the GigaOm Radar Report for High-Performance Object Storage and a Gartner Peer Insights Customers’ Choice for Distributed File Systems and Object Storage.

Purity software enhancements across Pure’s portfolio enable new use cases: Updates to the flagship Purity software for FlashBlade and FlashArrayTM accelerate Windows applications; deliver ransomware protection across file, block, and native cloud-based apps; and make hybrid storage for both departmental and data center workloads obsolete with the FlashArray//C all-QLC platform.

New Bare Metal as-a-Service solution with Equinix: Pure Storage on Equinix Metal is a full stack, bare metal solution that delivers a unified, connected platform for any stage of an organization's cloud journey.

Pure Cloud Block Store is now generally available on both AWS and Microsoft Azure: Cloud Block Store eliminates common storage tradeoffs by combining high-performance, efficiency, reliability, and simplicity into a cloud native solution, now available on multiple hyperscalers.

Second Quarter Guidance

Q2 FY22
Revenue$ 470 Million
Non-GAAP Operating Income$ 15 Million

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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 first quarter fiscal 2022 results at 2:00 pm PT today, May 26, 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 and in addition, for two weeks at (855) 859-2056 (or 404-537-3406 for international callers) with passcode 9699895.

Upcoming Events

Pure is scheduled to participate virtually at the following investor conferences:

William Blair 41st Annual Growth Stock Conference
Date: Tuesday, June 1, 2021
Time: 10:00 am PT
Pure Presenters: Charles Giancarlo, Chairman and CEO and Kevan Krysler, CFO
Pure Participants: Matt Kixmoeller, VP, Strategy and Sanjot Khurana, VP of Investor Relations

Cowen 49th Annual Technology, Media & Telecom Conference
Date: Thursday, June 3, 2021
Pure Participants: Kevan Krysler, CFO, Rob Lee, VP and Chief Architect and Sanjot Khurana, VP of Investor Relations

Bank of America 2021 Global Technology Conference
Date: Tuesday, June 8, 2021
Time: 11:30 am PT
Pure Presenters: Charles Giancarlo, Chairman and CEO and Kevan Krysler, CFO
Pure Participants: Matt Kixmoeller, VP, Strategy and Sanjot Khurana, VP of Investor Relations

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

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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

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.
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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 continued 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, growing customer adoption, 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 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 May 26, 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
Sanjot Khurana -- 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
First Quarter of Fiscal 2022Fiscal 2021
 
Assets 
Current assets: 
Cash and cash equivalents$300,808 $337,147 
Marketable securities933,376 916,388 
Accounts receivable, net of allowance of $1,046 and $1,033327,507 460,879 
Inventory49,287 46,733 
Deferred commissions, current55,212 57,183 
Prepaid expenses and other current assets117,880 89,836 
Total current assets1,784,070 1,908,166 
Property and equipment, net172,381 163,041 
Operating lease right-of-use-assets129,582 134,668 
Deferred commissions, non-current130,663 130,741 
Intangible assets, net72,351 76,648 
Goodwill358,736 358,736 
Restricted cash10,544 10,544 
Other assets, non-current39,611 36,896 
Total assets$2,697,938 $2,819,440 
Liabilities and Stockholders' Equity  
Current liabilities:  
Accounts payable$40,563 $67,530 
Accrued compensation and benefits84,322 160,817 
Accrued expenses and other liabilities52,823 61,754 
Operating lease liabilities, current33,886 32,231 
Deferred revenue, current458,705 438,321 
Total current liabilities670,299 760,653 
Long-term debt763,064 755,814 
Operating lease liabilities, non-current114,304 120,361 
Deferred revenue, non-current407,455 405,376 
Other liabilities, non-current27,343 27,230 
Total liabilities1,982,465 2,069,434 
Stockholders’ equity:  
Common stock and additional paid-in capital2,359,923 2,307,608 
Accumulated other comprehensive income4,768 7,410 
Accumulated deficit(1,649,218)(1,565,012)
Total stockholders' equity715,473 750,006 
Total liabilities and stockholders' equity$2,697,938 $2,819,440 

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PURE STORAGE, INC.
Condensed Consolidated Statements of Operations
(in thousands, except per share data, unaudited)
 
 First Quarter of Fiscal
 20222021
 
Revenue:
Product$249,888 $246,939 
Subscription services162,819 120,180 
Total revenue412,707 367,119 
Cost of revenue:  
Product (1)
79,064 69,285 
Subscription services(1)
51,777 41,009 
Total cost of revenue130,841 110,294 
Gross profit281,866 256,825 
Operating expenses:  
Research and development (1)
131,381 112,446 
Sales and marketing (1)
183,496 173,433 
General and administrative (1)
43,146 41,125 
Restructuring and other (2)
— 14,702 
Total operating expenses358,023 341,706 
Loss from operations(76,157)(84,881)
Other income (expense), net(4,727)(3,416)
Loss before provision for income taxes(80,884)(88,297)
Income tax provision3,322 2,297 
Net loss$(84,206)$(90,594)
Net loss per share attributable to common stockholders, basic and diluted$(0.30)$(0.34)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted280,331 262,935 


(1) Includes stock-based compensation expense as follows:
Cost of revenue -- product$1,347 $996 
Cost of revenue -- subscription services4,406 3,392 
Research and development30,421 28,711 
Sales and marketing16,808 16,272 
General and administrative8,352 9,323 
Total stock-based compensation expense$61,334 $58,694 

(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)
 
 First Quarter of Fiscal
 20222021
 
Cash flows from operating activities
Net loss$(84,206)$(90,594)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization18,826 15,133 
Amortization of debt discount and debt issuance costs7,403 6,936 
Stock-based compensation expense61,334 58,694 
Other2,621 1,705 
Changes in operating assets and liabilities:
Accounts receivable, net133,380 109,441 
Inventory(3,508)(1,370)
Deferred commissions2,049 (3,159)
Prepaid expenses and other assets(30,407)(6,298)
Operating lease right-of-use assets7,581 6,706 
Accounts payable(24,354)(14,294)
Accrued compensation and other liabilities(84,837)(49,643)
Operating lease liabilities(6,897)(6,926)
Deferred revenue22,463 8,772 
Net cash provided by operating activities21,448 35,103 
Cash flows from investing activities
Purchases of property and equipment(27,829)(23,782)
Purchases of marketable securities(171,563)(98,161)
Sales of marketable securities85,537 17,657 
Maturities of marketable securities65,740 95,375 
Net cash used in investing activities(48,115)(8,911)
Cash flows from financing activities
Net proceeds from exercise of stock options8,016 9,275 
Proceeds from issuance of common stock under employee stock purchase plan17,726 16,021 
Proceeds from borrowings— 4,950 
Repayments of borrowings(344)— 
Tax withholding on vesting of equity awards(5,050)(1,374)
Repurchases of common stock(30,020)(70,119)
Net cash used in financing activities(9,672)(41,247)
Net decrease in cash, cash equivalents and restricted cash(36,339)(15,055)
Cash, cash equivalents and restricted cash, beginning of period347,691 377,922 
Cash, cash equivalents and restricted cash, end of period$311,352 $362,867 




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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):
 First Quarter of Fiscal 2022First Quarter of Fiscal 2021
 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)
$1,347 (c)$996 (c)
78 (d)36 (d)
— 438 (e)
3,067 (f)2,004 (f)
Gross profit --product$170,824 68.4 %$4,492  $175,316 70.2 %$177,654 71.9 %$3,474  $181,128 73.3 %
   $4,406 (c)    $3,392 (c)  
243 (d)99 (d)
— 190 (e)
24 (g)— 
Gross profit -- subscription services$111,042 68.2 %$4,673  $115,715 71.1 %$79,171 65.9 %$3,681  $82,852 68.9 %
   $5,753 (c)    $4,388 (c)  
321 (d)135 (d)
— 628 (e)
3,067 (f)2,004 (f)
24 (g)— 
Total gross profit$281,866 68.3 %$9,165  $291,031 70.5 %$256,825 70.0 %$7,155  $263,980 71.9 %


(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 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):
 First Quarter of Fiscal 2022First Quarter of Fiscal 2021
 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)
$61,334 (c)$58,694 (c)
5,675 (d)1,872 (d)
3,791 (e)1,623 (e)
— 9,531 (f)
— 5,799 (g)
3,600 (h)2,004 (h)
2,043 (i)— 
Operating Income (loss)$(76,157)-18.5 %$76,443  $286 0.1 %$(84,881)-23.1 %$79,523  $(5,358)-1.5 %
   $61,334 (c)    $58,694 (c) 
5,675 (d)1,872 (d)
   3,791 (e)    1,623 (e) 
— 9,531 (f)
— 5,799 (g)
3,600 (h)2,004 (h)
2,043 (i)— 
7,403 (j)6,936 (j)
Net loss$(84,206) $83,846 $(360) $(90,594) $86,459  $(4,135) 
Net loss per share -- basic and diluted$(0.30)   $ (0.00) $(0.34)   $(0.02) 
Weighted-average shares used in per share calculation -- basic and diluted280,331  280,331  262,935  262,935 

(a) GAAP operating margin is defined as GAAP operating loss divided by revenue.
(b) Non-GAAP operating margin is defined as non-GAAP operating loss 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 resulting from workforce reduction in February 2020.
(h) To eliminate amortization expense of acquired intangible assets.
(i) To eliminate acquisition-related transaction and integration expenses.
(j) To eliminate amortization expense of debt discount and debt issuance costs related to our long-term debt.





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Reconciliation from net cash provided by operating activities to free cash flow (in thousands except percentages, unaudited):
 First Quarter of Fiscal
 20222021
Net cash provided by operating activities$21,448 $35,103 
Less: purchases of property and equipment(27,829)(23,782)
Free cash flow (non-GAAP)$(6,381)$11,321 

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