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Tue. 23 Nov 2021, 4:02pm ETBenzinga
In: Earnings, Press Releases

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
    • Magic Quadrant for Primary Storage Arrays: Gartner named Pure a storage leader eight years in a row and the second year in a row the company has been positioned highest on the ability to execute axis and furthest on the completeness of vision axis.
    • Magic Quadrant for Distributed File Systems and Object Storage: Gartner positioned Pure as a leader in the rapidly growing storage market for unstructured data.

  • 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:
    • Pure Fusion™, a self-service, autonomous storage-as-code platform built for limitless scale, lets customers bring the cloud operating model anywhere and run, operate, and consume traditional storage like a cloud service.
    • Portworx® Data Services, a Database-as-a-Service platform for Kubernetes, lets DevOps engineers deploy a managed, production-grade data service with the click of a button.

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

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 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.

Condensed Consolidated Balance Sheets

(in thousands, unaudited)







At the End of





Third Quarter of

Fiscal 2022



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.

Condensed Consolidated Statements of Operations

(in thousands, except per share data, unaudited)





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.

Condensed Consolidated Statements of Cash Flows

(in thousands, unaudited)





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)





(4,080)



Repurchases of common stock

(56,215)





(21,411)





(130,608)





(111,554)



Net cash (used in) provided by financing activities

(17,505)





244,729





(70,178)





194,374



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

64,440





(95,837)





67,545





(102,871)



Cash, cash equivalents and restricted cash, beginning of period

350,796





370,888





347,691





377,922



Cash, cash equivalents and restricted cash, end of period

$

415,236





$

275,051





$

415,236





$

275,051



 

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 2022



Third 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)































































$

1,634





(c)



















$

1,027





(c)





















42





(d)



















13





(d)





















3,207





(e)



















2,396





(e)









Gross profit --product



$

245,192





65.4

%



$

4,883









$

250,075





66.7

%



$

187,809





68.4

%



$

3,436









$

191,245





69.7

%































































$

5,555





(c)



















$

3,883





(c)





















279





(d)



















59





(d)





















24





(f)



















7





(f)









Gross profit --subscription services



$

129,600





69.0

%



$

5,858









$

135,458





72.1

%



$

88,707





65.2

%



$

3,949









$

92,656





68.1

%































































$

7,189





(c)



















$

4,910





(c)





















321





(d)



















72





(d)





















3,207





(e)



















2,396





(e)





















24





(f)



















7





(f)









Total gross profit



$

374,792





66.6

%



$

10,741









$

385,533





68.5

%



$

276,516





67.3

%



$

7,385









$

283,901





69.1

%





(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.

 

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 2022



Third 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)

























































$

76,000





(c)



















$

59,609





(c)

















4,230





(d)



















3,533





(d)

















2,631





(e)



















1,166





(e)

















551





(f)









































3,739





(g)



















2,573





(g)

















382





(h)



















1,762





(h)







Operating

Income (loss)

$

(18,078)





-3.2

%



$

87,533









$

69,455





12.3

%



$

(65,214)





-15.9

%



$

68,643







$

3,429





0.8

%

























































$

76,000





(c)



















$

59,609





(c)

















4,230





(d)



















3,533





(d)

















2,631





(e)



















1,166





(e)

















551





(f)









































3,739





(g)



















2,573





(g)

















382





(h)



















1,762





(h)

















7,857





(i)



















7,400





(i)







Net income (loss)

$

(28,731)









$

95,390









$

66,659









$

(74,222)









$

76,043







$

1,821





















































Net income (loss) per share -- diluted

$

(0.10)

















$

0.22









$

(0.28)















$

0.01







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

287,462









20,835





(j)



308,297









269,144









15,677





(j)

284,821











(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 impairment of right-of-use assets associated with cease-use of a certain facility.

(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).

 

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





Third Quarter of Fiscal



2022



2021

Net cash provided by operating activities

$

127,046





$

32,799



Less: purchases of property and equipment

(25,718)





(24,867)



Free cash flow (non-GAAP)

$

101,328





$

7,932



 

 

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SOURCE Pure Storage