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PSTG Pure Storage

Participants
Charles Giancarlo Chief Executive Officer
Paul Mountford Chief Operating Officer
David Hatfield Vice Chair
Matt Kixmoeller VP of Strategy
Matt Danziger Head of Investor Relations
Alex Kurtz KeyBanc Capital Markets
Ittai Kidron Oppenheimer
Aaron Rakers Wells Fargo
Simon Leopold Raymond James
Wamsi Mohan Bank of America
Bala Reddy Goldman Sachs
Karl Ackerman Cowen
Katy Huberty Morgan Stanley
Mehdi Hosseini SIG
Amit Daryanani Evercore
Jason Ader William Blair
Matt Cabral Credit Suisse
Steven Fox Cross Research
Pinjalim Bora JPMorgan
Alvin Park Stifel
Eric Desrosiers GMP Securities
Nehal Chokshi Maxim Group
Call transcript
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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Pure Storage, Third Quarter Fiscal 2020 Earnings Conference Call. At this time all participants are in a listen-only mode. After the speakers presentation there will be a question-and-answer session. [Operator Instructions]. Please be advised that today’s conference is being recorded. Instructions]. [Operator

like of conference Thank Investor go sir. now speaker to you. hand ahead, Head today, Relations to would over the your Please I Matt Danziger.

Matthew Danziger

third afternoon. the Thank conference Welcome and XXXX earnings good Pure you Storage quarter fiscal call. to

our are Giancarlo; Charles Vice today Mountford; VP of our and David Hatfield; me our Paul Strategy, our CEO, Joining COO, Chair, Matt Kixmoeller.

for make uncertainties. to would like periods. competitive, technology during future include management our including and will model, operations that future various regarding to this subject our current and are and you I growth prospects forward-looking remind begin, and industry which we revenue trends, guidance These positioning Before statements our and risks statements and operating business call and products, strategy, opportunity, margin

based them. undertake as make statements today, of we we update Any forward-looking no that to on assumptions obligation are and

from may of should as be results considered differ actual Our results materially results reported predicted, not performance. indication and an the future

of filings. uncertainties the SEC, risks discussion with refer to you As and we filings our public these relating business contained our and a various is in to

During and this earnings most slides. to will call comparable in in directly reconciliation provided measures GAAP are the press the company's release non-GAAP talking our measures about we and performance, discuss

webcast This days the Storage. Pure XX is will Investor live the least be being IR call is on for An on is and at of being available Storage Relations property recorded purposes. website broadcast the Pure archive for website and playback of the

to With Charles Giancarlo. that, CEO, our over call the I'll turn

Charles Giancarlo

today’s will our earnings go-to-market will by the will afternoon update, everyone. and quarter. FYXX. a Thank Hat you, guidance remainder for sharing and highlights good us results begin you Thank I of the with I Matt, on from joining for close call. provide our high-level and

XX% up million, $XXX as whole. a major the than was our significantly year-over-year, QX for competitors and faster market Revenue

quarter, commented by although higher a global expectations were signs seeing the we expected, infrastructure the of which environment large accounted suppliers. revenue are our more than at on the as beginning other gap declines, to of also we pricing challenging Continued for business

all-time-high at of our headwinds, Despite X.X%, margin to quarter resiliency in achieved our speak the guided of high was XX% the model environment. These of guided these for end XX%. results Pure the margins well in-quarter the XX.X%, Operating this range above range. gross of current to our quarter

starting recently Leadership; leadership to Turning to Pure, his into Pure, reporting announced Hat seven team he changes customers chapter transitioning a at serving almost we Chair on can globally. to After moving new partners, value our delivering Vice where is Executive and at a to important as years, David Pure. a me. new to Hatfield advisor vision is and to role leverage strategic passion, focusing and Pure’s

Officer was and our I as role Professional Chief Operating Support am Paul Pure Marketing, on assumes as that most Chief person to and joined Experience, leadership. Sales has at all Go-to-Market Alliances November including Sales, responsibility deep next drive Services. CEO excited His of activities, X. for him as market Paul extend including the and and growth right held experience Paul Riverbed and Channels, the of knowledge makes stage Pure’s well Officer. Technology, recently Mountford very earlier Customer

has Finance be successful our Third, will He VMware. These will VMware, experience. Prior for will Kevan an us was where Earnings was set Kevan joining team in our served a KPMG, at industry Vice to Officer second He scale, recently, participate Chief and call. to we that wealth and Krysler incredibly up Senior a technology both experience emerging Finance our of and Kevan today partner will he and in next decade. early in CFO Most additions and software bring with relevant both announced changes and of December. companies. Pure highly new multi-national building Accounting in as President

user services, this largest-ever, Turning immediately we our hosted were in conference available. new quarter, Austin and which products the past to all almost quarter. from highlights Accelerate a We dozen introduced

vision, Pure’s call innovation of will We our growth. power the the also vision Data next which this shared decade We Experience. Modern and

data array still an workloads. In least storage these arrays Pure’s remains extraordinarily data the Delivering highly a decade manual an competitive data data modern redefined process first what we the the the landscape. like, particular technology bar in of layer cloud-like storage enterprise Despite to in storage is resetting fundamentally looked dedicated for still customized with center. advances, storage and

biggest data transformation, storage on-prem storage storage-as-a-service data but It Pure run and its to of is is as architecture. customers our storage cloud, powers that today’s operations automated, infrastructure. more the across to cloud-like XX-year their public of modern, model, a because a consistent old one remains services obstacles, data helping seamlessly digital true, of limitations delivering cloud transforming

around built we this tenets: threats releases, we’re customers data delivers First, rockets, through push Pure Whether products, MATTERS. FAST compile four solutions launch detect our real-time modern Matters. believe Fast or and helping and key services, code experience

data one our data, our matters. new applications with solutions twice deliver that We high enabling efficiency, platform, FlashArray//C. access FlashBlade; multiple push the QLC-optimized consistent new FlashArray as with larger with deliver DirectMemory; or bandwidth latency, greater for to for our on and fast to looking When with boundaries applications high-performance end-to-end big data low on

link CLOUD to Organizations public in agility. cloud operations want IT cloud seamlessly believe and for the we to both, transform Second, to on-prem model, the EVERYWHERE. their

storage clouds, private. Customers architecture data also and a single, public want for consistent, all

all Block Cloud provides protection test/dev, operations, disaster applications. multi-cloud including migration, Store consistent for and recovery

at Pure this Ignite Store previewed conference. was made on recently Azure AWS past the quarter, Our offering Microsoft Block Microsoft Cloud and we Available Generally on

SIMPLE belief SMART. that Third, a IS is core

deliver as-a-service complex to is a Engine, preventing elements intelligence practice all themselves, experience, we hard built and products standard for is delivering things that Making IT. enabling Pure we don’t, self-driving, from for those Meta ridiculously know, simple reputation As a automation. making things leverage in PureX that has storage self-managing and work. manage our problems AI increasing

simplify capabilities leveraging storage enterprise to these the entire experience. are We

finally, of new terms And continual SaaS and the like market, INNOVATION. and other Unlike act look products SUBSCRIPTION service Pure upgrades a in TO on a products functionality.

Pure’s Evergreen customers always and storage ever experience, our new, and the data constantly without product every downtime will or twice. toward past, more they will storage, modern service be product for an same all With bought buy evolve every today the paying in

the a is leading as customers Experience, to OpEx industry the as service. true Pure consume in Modern allowing Data delivering both as well XXX%

in for adoption seen its as-a-Service, strong type trend and customers a consumption entire offerings formerly portfolio have market, Pure for of We traction from makes other as-a-Service. signaling ESX, the available Unlike model. this Pure

storage as enterprise-wide integrated experience. environment an reimagined storage have enterprise We box-based the

storage storage-as-a-service transformation. sets Modern to digital grow delivering customer’s of fuel large Data market. continue well to our to We’re the share Experience Pure’s us data up our

it over turn I’ll that, to Hat. With

David Hatfield

complexity believe empowering improving their infrastructure. possible. Modern Thanks, reducing Experience their performance way and is them companies data, the extract Pure’s expense approach Charlie. that on of We value Data that from businesses to managing outcomes achieve while forward, modern most enabling strategic our digital initiatives, more and to previously were deliver helps not

Day, others satisfaction, NOT market our forklift are shared industry-leading require and Because Pure still share of this, being while our expanding technology XXx customer are is in differentiated who competitor. ownership that than growing Evergreen Pure disservice benefit done was Customers and from we by at upgrades model. and our a portfolio, industry closest innovating, faster the Pure’s taking who Investor customers

because is modernize of customers analytics. Pure applications multi-cloud, to chosen being accelerate containers and real-time we their existing enable their and adoption

XXX X,XXX a doubling customers, Our in We the nicely. continued customers The basis. new focus business year-to-date total quarter on more on day, with and nearly finished particular segment the adding QX, continues a Government than bright net-new in Enterprise, per six segments to Commercial Cloud, be customers QX. to spot Government to in progress with equating approximately

momentum more to make a ability Modern in reality and has our evident. for never the to Turning today Data portfolio; the been Experience into future customers our

extremely industry-leading customers to SaaS for Our environments cloud FlashArray//C, platform FlashArray//X, it hybrid Services. FlashBlade, portfolio, Data Cloud manage their across makes our and including PureX easy

faster lower Pure’s of at is total workloads, consolidate to allows Rapid fit to ideal Restore and and more cost analytics platform and of use ownership their customers next-generation simple secondary primary data data automated much a for and their delivering an access cases.

for FlashArray//C better at performance, have all-NVMe targeted levels quarter, and with ServiceNow, vision tier reliability, customer their to to the goal center fastest of FlashArray//C a of for the now and for product eliminating an share deliver announcement an We leading spinning SaaS have FlashArray//X any disk Accelerate, the environment, service FlashBlade, of workloads. cost, our with can tier seen their ever data the introduction world-class added we In launched our all-flash two. for customers. of we existing of continue growth they has so creating Following company, the their two

And, launched enables technical AWS Ignite on-prem on our Cloud in to Pure’s part as recent economics Cloud and public on the the Store at our of Services, Data conference. empowers Store including mobility strategy, multi-cloud cloud. Microsoft customers we Block Microsoft recently Azure achieve Cloud Block of preview data

the set whenever today most future. or cloud we our want, can preferred choice and been the also innovation of always on-prem their We’ve are With advantage and for innovative and they take of customers. subscription model, Pure growing now the unique products as-a-Service or safest public customers in the however in

fulfilling years. Lastly, an built to from culture IT the to Storage, Pure a They and as and incredible as Evergreen on partners business with seven team the Enterprise to any industry in a moment for past the I of customers, and been want fast my company our rewarding thank than personal $X changed most we grew more history. $X.X career. billion, note, take the Together, we have company

with to my with help look has on team for Paul am strategy. help and that in role staying success. closely forward planning COO be beyond I XXXX to I incredible the partnering as and I’ll excited and new set-up to joined him transition,

role an on ability never day. our excitement and every is to will is changing, While customers make and my our waver my enthusiasm what impact

today Data ever are vision on to execute organizations the long-term are We truly our optimistic Modern just to tomorrow. getting We started. Experience for to as as provide and build freedom for and deliver

Charlie? now that, I with to back over And will turn it Charlie,

Charlie Giancarlo

you, Thank Hat.

$X.X highlights, Free $XX in Moving quarter at from was investments to and previous quarter. of the we $XX strong billion, an the positive increase million. finished million QX with key cash flow of financial cash

the $XXX revenue and period ESX. the year increase strong of XX% end deal, quarter. again the included Pure of quarter, We a again over ago in delivered amount the a At was same an deferred deferred as-a-Service revenue million, record formerly of

In we the more turn past quarters, well year, Now guidance. as setting to seen we’ve challenging the as a our of environment. remainder for account global the I guidance have in two into declines taken the will pricing

is which growth by evidenced that We margins, and in continuing profit to on focused as within remain quarter. a offered by range gross highly we manner the evidenced are our last our operating accordingly differentiated guide as invest prudent industry-leading and fiscally we

XX.X%; For range margin XX% of XXXX, between the expect we to $XXX million in QX operating in of in fiscal $XXX midpoint. midpoint; of of range XX.X% at or the and revenues the and million, between at range $XXX gross XX% XX% the margin and the million

fiscal between revenues we year billion midpoint. XXXX, or X.X% the billion between X.X% in now at and billion margin For of the operating of and the X.X% range full the XX.X% expect and or $X.XXX Gross range $X.XXX between the midpoint; of the and at XX.X%; margin of in in range $X.XXX

it open Operator. that, up we’ll for With questions.

Operator

Instructions]. [Operator

of comes Markets. the line Alex Your KeyBanc first from Kurtz from Capital question

Alex Kurtz

you Thanks me Can guys. hear okay?

Charles Giancarlo

Alex. Hi Yes.

Alex Kurtz

working future calls, working on afternoon. you. hear the but been investment with it’s with community. great good Hat, Hopefully Hey, for you thanks we’ll

David Hatfield

As always.

Alex Kurtz

was you here, the at ASP dynamic, or want Near-term longer ahead. question or you deal Go Charlie, of I this to deals it, look for, actually however and trying slippage quick on then and shift did the number. of at when it on is to there look long-term got array was you the real like guess the or quarter. pricing or account units part so that really you excluding that hit number to term…

Charles Giancarlo

me answer Sorry. you then and on. go Well, that ask, let I'll let

miss, we really so up it overall the was on issue expected was so made all entirely all and ship, it that of target. an for we pricing So units to shipped

Alex Kurtz

you the couple aren't a even I the Okay. think the a competitors question then to think that going is favorable to going your years there’s pricing lower longer among know NAND increase. market And the customers of for investors term allow get And the used broader to skepticism in more and you customers right. environment fair all-flash I the respond to become, over with next perhaps, see pricing being and market,

seeing we're to So levels acclimate that it you what confidence to the that's now. aren't that to just the going going gives happen; the right not pricing new that customers

Charles Giancarlo

Well, It's place interestingly less less Alex, market bits. less is the to to penetrate, because XX% it's flash take than XX right. XX% bits, dollars, than good of by it when elasticity and XX% customers new the – remember pricing, allows storage by get acclimated by than overall but to

goes So we up as down, the take of get magnetic more pricing to market.

The doesn't catch in issue quickly drops individual up on the an elasticity. pricing so that when is market quarter,

saw of obviously quarters. know drop just to You thing, we not difficult of was in That's predict double-digit each a It the unusual. few last that normal. pricing very because it's sort

penetrate But It now we at typically for And reduce of FlashArray//C very for continue are for very it going to decline, to continue good a is where what the moderate. workloads the pricing can't to and magnetic this, pricing go well right. rate will that it drop its FlashArray//C is so good that in its as forward decline; that to bodes for and very takes is, that's start rate. us. of called volumes rate, good now eventually that's second but will flash business, tier thing will market, us. reduce advantage

Alex Kurtz

Alright, thank you.

Operator

question next Kidron comes from from line Your of Oppenheimer. the Ittai

Ittai Kidron

what I'm more come Charlie, are your follow-up. Can here up to guide, to in and was have stable about on you three with maybe I assumption regards to is talk follow weeks of going the first questions. pricing from a is how and working you that And your pricing or there a Alex's Thanks. November

Charles Giancarlo

dynamics through. Yeah. week-by-week, Pricing as varies go a just lot you deal

exactly clear NAND firmed when commodity fact So the as it's right just now. I has know ease will level, – call can't there at that is not is for our but this we a do pricing in can't month. I What market. in is say pricing higher Commodity of higher pricing up,

you why in a and know everybody's How pricing, That's go inventory more market this gets long and that's is to little we're a a you pricing? know to forecast. the the to challenging – that time it takes through right array by bit very market now

Ittai Kidron

you one as And that from it. in happy appreciate in make business, the tier, Got that. application good perhaps in an more a feel and use you and reaching not doesn't business productivity? the given an a productivity haven't could your it's but know what enterprise mentioned vertical, I do Shouldn't invest assume You anyone growth that portfolio how follow-up, case under investing profits, your and you case tier. you're your you're with about operating level?

Charles Giancarlo

me start of let part I'll with productivity one the that and So the first pass over to Hat.

one unfortunately both it have You know can't ways.

in of You fiscally aggressively that can know company the say that responsible. a your and to even also business you is and during headwinds investors own investing period be showing

more make out to the place you more the business a productive. of efficiency cyclical they've But on up we and that, are into business drive already more a know it take every honestly to growth bit put and – company catch than opportunities these we allow to that of in and the organizations

an I picks which the point, some efficiency want expect to the some it up, about in as opportunity productivity? do business begin actually to will investment. Hat, you So drive at hopefully view operation this and talk additional I we'll is

David Hatfield

Yeah, I the cohorts in expectations. cohorts brought in on. in think are and our from largest line our with coming is that productive with classes The line productivity earlier latest are most they we

a that confident. we're the longer for to you in that line, enterprise in it the segment and cycles, of know to segment, we're Now, we into we quarters, we with sales bottom large the those bit of long some a etcetera, seeing put longer previous may lot and the take enterprise very environment knew but as did shared take little hit the challenging enterprise,

got gains in investments the long-term time with business. We the market that bet product right to expansion the we line we've capabilities those and it’s be share and know the for

no is we're turn that to there the be well enterprise. when So things positioned very going that capitalize doubt in to

Ittai Kidron

Very good. luck, Good guys.

Charles Giancarlo

you. Thank

Operator

Wells Fargo. of line Rakers comes Aaron Your the from next from question

Aaron Rakers

the if can questions Yeah, thanks I background guys. two apologize as here, well. And I for noise but

of commentary macro suggested you all, seeing guidance, of that kind you of softening. looking at First just the are signs the offered

in of far midpoint follow-up. saw million ago being fit XQ, midpoint the embedded year you of when the relative like for year guidance have last I softening what's here do million understand $XX up market revenue 'XX $XX a what a the kind was and your of signs storage know healthy and of you through the of do again, just $XX macro you to of curious versus on in commentary guidance how to kind sequentially that of progression that this Just quarter, I'm quarter revenue in I trying offer. weakening as guidance, as those million fiscal your

Charles Giancarlo

Thank you, Aaron. Thank you.

we enterprise So slows that down as by that second seen see down, typically buying just the it of do that quarter, things longer decision we bit I a is headwinds, when experience is do etcetera we have slows through little cycles, and first slips, macro you of went – looks, some see mean that. did my the their and

we The macro, challenging. but second this, as much so economically term globally, did as is, not

let we we indicates bit are Asia, of Brexit a than you just the seeing the with you that that other We Hat, areas think those economic little of slowdown headwinds. it, trade and know things – in And more slowdowns, take global the saw where things are the... I tensions will

David Hatfield

in the so our if range I with is the we within mean, we have line that think forecast, had. Yes, would here pricing I the were been headline

in looking the well U.K. specifically pricing, of like deals. feel at phenomenons, So are specifically, really Japan as but enterprise some we it's as do these the international

there. steady really seeing win so if They loss decrease. that rates see rates not improving out are We're anything, we are

pushes. So bit decisions the slowing it's a of more more little and just

in have contemplated that QX. we our So

Charles Giancarlo

comp, left doc, that remember issue the we the the had on QX shipping comps. last that And product affects year-to-year thing last so it Right. just on the

Aaron Rakers

can, appreciate NAND less growth to appreciate to pricing this I you you than say help saw follow-up point. in know that bit relative can us but Fair of ship, we acceleration know it’s your dynamic, the The if quarter. NAND still last shipments quarter question pricing and less would the you the still of is, bit XX% the an about when than we I dynamics flash in think and is

So and behind some put just context understand trying to elasticity.

Charles Giancarlo

of when for up have quarters, That's within this just Yeah, way, in but are the as digit catch as double decline difficult, prices way up. general, said, prices, the a portion quarter shipments two difficult I year bit decrease made large a in up. last in the to it's they just

Aaron Rakers

Okay, fair enough. Thank you.

Operator

next Your comes question from Leopold James. of line Simon from the Raymond

Simon Leopold

got you. longer-term near-term question. one I've one kind thank Great, and of

On the or got to pricing willingness responding near-term, to this or aggressor of, environment, particular the behavior get essentially a from understanding when competitors is Is coming from better customers’ the it you're in follow-up. then about like discussing price this pay. a customers market of the and a I'd everybody general the to is I've

Charles Giancarlo

my In from coming experience, competitors. it's

competitors a the price, with do the out are competitor, but same so are that. least competitors, in different not strategies are In feel of argue we lead cost-plus are case is variety we there but would I market. there competitive is competitor one at our in operates think other we value-oriented I that a way, respond. that I that there There do

gross with lead model and go see price in right margin they'll follow. the ones away, a those price that sell market to on the and then they'll built – they've based are and that they we When

through the difference. through it's makes that flows inventory P&L, So really their the cost how their

Simon Leopold

term a to I understanding the FlashArray//C. Thank the up then get you. oriented. follow longer want from regarding is try better to prospects my And

you how product contributing announced much, just some that TAM about September, expansion. you've think revenue for that but that's numbers Could put the around presumably does Thank to what in opportunities? talked really about You you. not

Charles Giancarlo

bet. You

including it fastest product, introduced, growth product. that has our So had new of any the we've product first ever

had It it is us. now, was of talking widely but bodes it course very that's something course some about time, that So well – been we – was with for anticipated. customers it of for

all TAM expansion, consistent say Now you sure here. just when let – make we say me we when are

up TAM into of can opens You place know $X that or next know year of two, expand as we the we you discuss we've more another we into. it believe over put billion and it opening that up the TAM

sell It up market. we So new it's a not market the before. big into a part of opens did generally that

Simon Leopold

Thank much. very Great! you

Operator

line from Bank Your Wamsi next comes of of from question the America. Mohan

Wamsi Mohan

background you. noise. Thank at you hear the for I an Hopefully, can I'm apologize me. airport.

I the is came in you running year-on-year with these you margins, range as levels operating Are While at your the the of an the or business end incremental the higher almost better future much with investment, OpEx. incremental acceleration expectation normal as than same for in follow-up. although industry you expecting growth of mid new and a teen of the this a the rate, have

Charles Giancarlo

but get that think we and life the forth. viewing add better; new we're products as I the But we not CBS Azure, on as said, with and this next pricing that new world will products market. stabilizes, get to not has the believe FlashArray//C, declines and the I we're very believe course, do year We're proud putting challenging so new the the in pleased pricing been we're will yet. our normal. a with products year of and Yeah, obviously as as better, We guiding

aggressor. the be we'll believe, We

that if $XX to we that market rates billion, a the share billion taking know know market at a of you ahead continue You share, opportunity we're $XX lot is we've taking us. got in fundamentally market of

Wamsi Mohan

itself. I as this follow-up, Okay, mean elasticity. year should you thanks you that where feels very it think price Charlie. didn't growth did. again and I you And seen Clearly elasticity the mentioned have said translate price because acceleration of the you was significant revenue in into pricing a like

why in as growth? be You look the in kicks inelasticity an should know go down fast. you when as revenue acceleration doesn't quite price forward, Now, there pricing

revenue true the I just what the understand So growth. doing I'm pricing commodity to to in the actual of trying this guess context underlying is

Charles Giancarlo

over down, right. magnetic this market. Flash we've takes of over Sure, studied come up. more as And prices goes years, the elasticity many

and in is to down have flash up the take price this happen. have order to market, of to coming more in going you So

comes every single and quarters to a we suit the Now, flash better new and to be customers predictably of That and saw allow able quarter as matter fluctuation guide, would with a to makes would but later. quarter is flash before for dramatically plan fact to couple love market. where of follow varying the its world down demand vary us fabs we the last hyper-scaler of that that way supply or prices eventually and with quarter our rather demand pricing

over with But the in the slower dropping long very price price year. term, dropping, the elasticity fast following and is real usually means it

it So a basis, can't while predict can. you we on exactly, long-term

Wamsi Mohan

Thanks Charlie.

Operator

Your next Sachs. question of Hall Goldman comes from line Rod the from

Bala Reddy

Hi, for Rod. this taking Thanks for on questions. my is Bala Reddy

the that macro Just understand want to better here. you cited weakness

if have pricing that that macro been pressure would the the situation compensated in cited? better So quarter, the issue had then you

Charles Giancarlo

mean to there you're if our that guidance, asking, the pricing? the better, original gap that talking – and no reason made macro macro know only about dominant I could for but was The had you think the far here, by stronger what would is I have been a have we're easily the pricing X% overcome up. question

Bala Reddy

the you If last gave from in year. first revenue time I guidance look at the fiscal QX that like year full

a the the the year? issues X% I as quarters the large in back. of year. of cited you So each guide down in well couple full help impacted that is Can enterprise us overall the the like quantify for know revenues you weakness

here? order to issues trying to how these better just So understand rank

Charles Giancarlo

vast is remarkable when majority macro. the might in in is pricing, face But up. year issue this but decline again, not a able – terms It's stronger stronger of to when been lot quite talking really really, It the that pricing really. is the of have make – you market. a about macro you're – of percent; course We're same the

Bala Reddy

Thanks.

the had quick a Just question. macro follow-up on

well that addition particularly, I this – expected? do as in as exposure of to to too. cloud quarter not the Like, So, in an you which had SaaS segments which of did the as mid-market know large,

David Hatfield

public in progress nice had actually sector. we mentioned I the Well, as

business in majority commercial ups well, challenged. some solid were There’s very of tied think some there the as quarter. and specific front Our the markets issues. are some that on to internationally, vast was for and tied was it the are execution macro There downs those to largely of but the international I

Operator

comes Cowen. question next of Ackerman from Your line the Karl from

Karl Ackerman

afternoon, good may. if gentlemen. Two questions Hey, I

the larger your demand. The first on more are is traditional SMB conference, funnel deals. was how of a you see focus. At your deal incremental your Do incremental, toward the of global and you outside opportunity Accelerate follow-up revenue accounts shifting about the question that realm spoke the

One about Are IT from this a of of do how forward? year, away combat chief I is how storage that procurer shifting spoke two of and your storage your peers the performance manager. we going traditional the those dynamics primary influencers guess,

David Hatfield

the Public there. Government the is Like progress I'll you that. see in a business serve. so Sector, overall business, we this of performance that we I Well, space, in and our continuing to XX% the just represent mentioned Hat. take at crack know of in commercial north We've cloud seen nice segment in the a segments sound

think know partially weaker macro. Enterprise, to tied what overall you large enterprise was that a and expected the we we than is little bit

and The we've something few decision changing that driving been maker the persona years. is the last

flash attack is generation saw with of at admin platform actually or a You you know made latency. analytics into into we've benefits storage you FlashBlade our or largely plan is our database virtual the traditional know then that admin business owner system business the folks go next you sold know other to DevOps, removing the in the and sold know

sales a focus sale, and X of kind multi-threaded what really subscription leading workload-by-workload the our So from shifting our been our as always in units, and with a unit-by-business is business model platform modern service product-by-product, into portfolio our and of attack feel differentiated. peer so process a A day a with it's lot campaign comfortable a and Tier we more sales of ability that. is experience to go

enable the It and penalty technically and need and really it data flexibility does commercially for so today put to to move know where future, customers, you their allows without they in them traction, we sell get believe that a as solution solution. higher for help little continue get platform and up to us continue the to to differentiated that starts organization supplying product in will

Karl Ackerman

appreciate I that.

just of for in do next revenue few going to to I on increased know moment, you. need additional the gets back FlashArray//C progressing helpful. it’s for FlashArray//C do well, Thank drive Going in and would customer implied any you essentially to that what quarters guess how like see be but do adoption. there you sounds a the curious level you quarter December and It metrics just what

Charles Giancarlo

product-by-product Right. new on products new customer Well, through as basis to force the be products, getting sales so tend you on know, especially and we experience and as because and don't a provide really new forth. lumpy metrics you're

said, product at But the adoption is largest company ever. being this I seen that and cycle the new that we've said, as fastest

I it, lower for by to think just way in a so a product customers channels know with the sell. that field easy that a it, so our it module us. our FlashArray, cost price, is It's bodes it, it's sense well knows it, our lower storage from know

I additional here. commentary has Kix, some think Kix

Matt Kixmoeller

cases close FlashArray’s a really were into. first than it with in there just call we cannibalistic went use might the that be to the new of whether in really and concern last of was deployments net being motions of also some point team. the They really I’d Yeah, pleased all made say about it FlashArray//X,

for X You of with up tiers know as have might and as that together to pleased Tier on disk, as well to DR alternative opposed opening them sold applications Tier and we been being another. applications an so largely DR really new one X targeted

Charles Giancarlo

one add will piece color. other I of

so that You know it's pipeline know in out. clearly seven digit the we you deals for this – something and eight product, it's stands have a

Karl Ackerman

you. Thank

Operator

of from Morgan line Your the Stanley. comes Huberty question from Katy next

Katy Huberty

Yes, It sounds quarter in be October quarter, what around elasticity. January to you. that the you it you just can come see round you're specific thank Charlie, price assuming in like didn't expect through. the

Just around January whether I you not clear and there's follow-up. have see whether an a then it in assumption

Charles Giancarlo

past – for the knowing so double competitors, expect absolutely down didn't said without we we and about other knowing levels exact to be expect could know do this NAND, digit we the with wish positive as double inventory quarter, pin I of without quarter the timing. signals past Yeah, certainly to digit I but and that, levels moderate it's you hard don't inventory demand this expect we it coming

Katy Huberty

months. January But now in are the prices the lower for – several have in unit quarter, faster market assuming because the been you prices growth the

Charles Giancarlo

Certainly, certainly.

Katy Huberty

and it's Okay, about follow just know customers of popular FlashArray//C or on are that talk or applications size the FlashArray//C, most a up whether you into? vertical you can then are get what pulled seeing you type the by

Matt Kixmoeller

one is Yeah, this as I’ll Kix, well. this take

go it's first I and realize X our have quite environments a their of are who target really going and larger Tier larger Tier So we’ve think FlashArray//C applications. so big large where gig, after cost lower per it to key data big, been so is into about seen but has the just thing its X slots organizations they

fundamentally who We've also types different Tier. the seen interested because deal customers become IoT it up in Flash research with data, etcetera, platform, large of a large very use at opens very data, of

Katy Huberty

you. Thank

Operator

line the from comes Hosseini from Your next of SIG. question Mehdi

Mehdi Hosseini

Is diversification see mix. year fiscal pricing trend. that of me that take my delay product taking and your deferred a that mix both revenue see I'm of higher deferred to pressure, seems go Yes, still want of to and really your ramp a revenue. trends in I'm the it is another outside I de-acceleration growth lacking product from revenue of it separate question. rate, back context. trying wondering to in the to reflection just and revenue and new improving is It going is in and products. the product in also the product thanks the diversification see to outside needed to pricing in to for the this just pricing I and

Charles Giancarlo

our relatively two FlashArray, currently associated our then and subscription of products have activities that's still up physical do well revenue stream but and we is made as-a-Service of revenue primarily of small model, FlashBlade And that. surrounding Pure Yeah, those two. course the with support a

So by those subscription revenue far, up streams. deferred the is of made

found pickups we've know seen big especially the service customers subscription, in period Now offsite, of as at for we the overall. in Evergreen mentioned the great in you subscription as Accelerate our value have contract elongation

early Block Services largely very future next out of on to good you're File of Cloud off product. rate we coming level, are mean still mid start, a a interest new anticipating in the FlashArray//C growth then we Store, But I is our the expect is days correct. but year. high lot a based and that course

expand things look will believe all are these to So and we forward our opportunity.

Mehdi Hosseini

follow-up, coming the altogether Services ‘XX out a as could Just that mid-year, phase File is we transitional if company. in is fiscal growth for assume a rate that acceleration with help or just year should

Charles Giancarlo

‘XX to is fun just give in growth. it again will products just guide engineers not The fiscal to but don't first, to going yet, on. work invest that we're our year new we things improve Well expectation

has us we're we are focused able of to a know and it on experience. data growth of architecture; the make platform the this to in that as a left is more delivering new growing set You of company, to of to calling different storage and we're we're isolated very and on it years be that leader rather course know focused deliver lot a a than being very of what That going you modern boxes. very

Mehdi Hosseini

Got it. you. Thank

Operator

Your Evercore. of the Daryanani from Amit comes next from question line

Amit Daryanani

Yeah, thanks well. I have guys; question my for as taking two

just not to and down you more you drive there keep First decision advantage just didn't put go perhaps or in your around of wondering, margin; your I expectations. the came just take target within that ahead to aggressive path. am want for off, not the gross maybe more to that help perhaps why some growth? and revenue be Was your well price pricing elasticity us context that margins of

Charles Giancarlo

you that margin, I think some one such drop drops mentioned, – higher Well, also with in in as so saw double-digit at has been of there gross least competitors price I quarter. the it know indicates you – during come our with

cost price a price activity us. competitors been as than of was there's but better So activity, our was least it lot activity obviously of one for out there at for

is the Now, on margin a based larger The was towards part gross mix shift mix. improvement arrays. of

to mix to systems tend larger a talking mix the a systems between products, lot benefited also reduction. but COGS a from and Now we I'm larger about not a but have higher margin, gross

want has but lead complete with say, price, look, point it's the to don't either. price Your lose don't win a we price to ever on flexibility if as drive We deal. to I going is, field

drive it it's we're So for it everything doing way additional top quarter. worked this line, we the hold the not out margin, to to but can we're going

Amit Daryanani

then offering if from roadmap have And appetite follow-up AWS. you having beyond feedback other adoption a to could you could or seeing there perhaps are talk or just your the your I Understood! just platforms customers on Cloud at Store, comparable Block if about and you're what

Matt Kixmoeller

was right and before, conversations Yeah, Store saw so I'd this being Accelerate excitement the that core to translate use that with both announced saw Azure architecture around it, cloud Block we analysts terms we and we and into GA and at Cloud say customer of really of our frankly business, cloud excitement diving around industry very high, and the hybrid invited we year key customers have able then in in around weren't cases. to and

key Tier block Our cloud applications Tier on X has to moving focus really on the market and this been storage. run focus to in X applications

Block have it's so they’ve perfect one And the really advantage runs SAP of deployments, and and a test so Store case. to who a on-prem the to Pure you production on of to taken an move of we customer cloud Cloud give example hybrid first

in one was get XX cloud, on replicating on-prem, constantly you're it You running to Tier have and that data their to SAP to refreshing data X reduction the able particular test dev-environment. customer

saving there for use CBS. model ROI were driving test the cases the market about that types more into dev. think are the of that cloud and of really These enabling with savings agile the new So

Amit Daryanani

Perfect! Thank you, guys.

Operator

Blair. the Ader from from Your next of question Jason comes William line

Jason Ader

their in Big I'm Yeah. some all something deciding of that their vendors, what's as outsource at service moving a customers infrastructure are you. so, seen talk been to your you companies and outlook on wondering X going some have Guys, SaaS data segment forward? the business your the the where centers that's out data to X there’s the Thank if on some SaaS Big of that vertical, your if there of centers to traditional and

Charles Giancarlo

Yeah, great it's Jason. a question,

cloud, both see the oddly we to out data in moving we extraordinarily storage, see cloud, especially cloud expensive enough environment. of people but I the think their we storage the actually activities; be because also see to tends data people moving

Block of have easier data that identical decide higher service to make into lower overall That looks as Cloud is meant makes just we and cloud directions. in if and both in if experience what's to cloud value our customers mentioned; on-prem of course is easier lift have using similar then if in as it to and the also move cloud the a shift and Store costs. to say to it not on-prem performance, lot many Matt it to it easier to But want their makes you reduce you're if back cost the done cloud your move

It well. and also And direction contract, one a terabyte price. standpoint, terabyte between easier one a in as move on-prem, cloud that makes it to from is our

Jason Ader

it your company SaaS that have fair is like you segment have seen to rate historically. So vertical say growth above

Charles Giancarlo

talking you're about phenomenon the from our business. honestly effect, no seen We've our with SaaS, in SaaS

Jason Ader

thank you. Okay,

Operator

from line from of question the comes Credit Your Cabral Matt next Suisse.

Matt Cabral

you. thank Yeah,

ramping this lot capacity year sales You a by about earlier talked XX%.

bit that thinking about this but you're a you little talk where a some and given about how are in productive cohort into you're earlier, next just more You can touched hiring bit revenue the going just plans seeing? you getting your on of year, slowdown little

David Hatfield

what a ramping have as the previously I They're really new mentioned, for full bit was the of are us. that we The those board into we of capacity in the a we it going Yeah, you knowing did expected enterprise right sales and go take brought ramp was know on but seen to that bottom the line, that so nicely. to well them it out with forward. and lot investments cohorts line hit move long-term going for what longer

together as but year, longer, made know, make those of the long-term and bit to right bets and may It you as we going segments, mid-term tune the at that in very globe and year. of But look very investments across us. we’ve are on little take the work mix resources we a of the across kind you As and we're we're I into you allocation to any confident pay confident do right for made of dividends that ROI. sure Paul get the going sales you fine and the kind the that

Matt Cabral

about are you of year, thinking plans next just, some hiring then revenue going dynamics? the into And how given the

Charles Giancarlo

for our That to our more let's hiring invested to like allows not environment. ramped that rate knew Well in. more slow we be down the coming match – go we or bit assets, any we're to we say, as We going invested this a year, as productive in in those growth people ahead. second really are prudent much this be going much us Those we year ahead. Yeah. more, clearly, year, hired

Matt Cabral

very much. Got you it. Thank

Operator

Your Research. question comes from Steven Cross from Fox next

Steven Fox

afternoon. of good just was Thanks, color the I margin. a could gross wondering sort us on if you little give more

think was if basis about cost that how related the benefits to we price the So of mix quarter-over-quarter, over much XXX of versus declines. improvement points exceeding

Charles Giancarlo

reduction compared largest less part – reduction, or was the of Yeah. little was was so lower. it The course a than mix. the costs price of It lowering cost having half to

it weeks our right. Remember, inventory eight to about flow weeks through to system, for six takes

and so we end gone in went it pipeline but NAND NAND as the as up, prices the price, I was majority mentioned of the in with significant of portion have mix. quarter, the off through started low a a was quarter toward of it and this product we of lot certainly literally quarter, the So in cost

Steven Fox

anything I very the really of competitors that's some macro you seeing, your had you much just ago, you're days as your like then it helpful. as seeing And now up, of pressures on saw there think Okay, Is mix, What being were. antennas XX but versus competitors earlier. geographic weren't of maybe sort relative Thanks. you it reflected we your should of sort quarter? hit of? that now changed the is Or in think say last harder timing else just it to is

David Hatfield

mix the dynamics of some to the is tied international I know Yeah. think No, referenced Charlie had and I that earlier. you it

larger longer so periods We are looks just etcetera, deals, to and executive pushing to evaluate more and are work. into more deals people time see it, at more taking decision cycles longer bundling, needing continue to of and but more the touch

included strong actually and But more continue to close. It's to the losing longer encouraging super taken a bundling. thing that to more us business every is we're as rates win just we're in and little more seeing it's and deal bit so not be terabytes our

Steven Fox

mix say international direct mean who mix, weaker necessarily, when And your you you of having second derivative not customers business overseas. are U.S. you,

Charles Giancarlo

expected. and No. lower mentioned so those Customers a are where were Yeah. the we the than originating, of that are buying UK, we that from mentioned we deals international as examples Japan what couple

Steven Fox

Got you. Thank it.

Operator

Your next question comes from the Pinjalim JPMorgan. line of from Bora

Pinjalim Bora

about you. and the processes step thought the Hey. hold? takes for out it channel? sales drove maybe Was then you working a any ago, Hat, in new for into from as while to we the big leadership move year, changes from great away talk bit next as structure you expect in. with Thanks more we decision sales a Could squeezing little me on leading what should

David Hatfield

Charlie thanks Yeah, a operating issue to be to put a It's active several that can an and for became driver build right about talking have direct. capacity that, family I quarters health and helping that's of they very into it. Pure, their I summer Pure that the have personal this. it. great got last over think I XXX% been appreciate what's It be been acute over the really and a in in deserve Pinjalim joy energy my has and somebody I for very

of on his need balanced, surfaced experience is go to so his more and board. it drive be clearly but a going only focus, to benefit that The right time. and little gotten not bit thrilled skill, was And to from company issue XXX% health We're experience Paul this. cross-functional to have the my as kind

the the like you step for think me in. good for personally somebody perfect but I these So to know very it's thing is Pure, the definitely right and right never it's Paul situations, timing for and have thing

very that I'd this The is third I'm I'm here. place. excited. still point, love I make

out front my customers teams know mentioned, real helping you drive in passion with be to and is this. Charlie As

playing to out in in forward, help role going look only only but with so forward the customers. strategy, able, to not field being And helping I transition, not a on but the also

of So for kind the for me. I win-win think it's a and company

Pinjalim Bora

Okay, you. thank

Operator

from Matthew the Sheerin line comes question next Stifel. from Your of

Alvin Park

cost traditional versus taking give second This your Hi, confirm color And of the all, Pure thank I just mean is for material. the as-a-Service you wanted and economics, recognition some I recognition that significantly if CapEx the could the not sales, Sheerin. not was wondering and you us Flash call. revenue revenue to mature, Pure Matt on as-a-Service. I cadence just into from was of contributions as Park Alvin ESX behalf

Charles Giancarlo

Well first it's so as it's absolute an that growing and significant. all, year-over-year, I mean over on But basis, very is it's Sure. overall of up not nicely. just correct well XXX%

overall. ratably to recognized traditional monthly on premium as basis, model. currently at It's priced the purchase is service a years, CapEx the it Secondly, a over customers a

in that three time customers to be Pure, So richer the year OpEx for to overall. really tends it but operate it horizon, helps those want really on an model

So does that answer your question?

Alvin Park

follow-up; a mentioned a versus Yeah. then so OpEx And OpEx, you in an is ratable. CapEx

most it service is OpEx subscription cost heavy, of and with be the down. is an say will tempered upfront So where more that recognized afterwards safe be the front-end and revenue to will

Charles Giancarlo

is No, cost. revenue no, thing the and both ratable, whole

Alvin Park

No. know. CapEx you From a –

David Hatfield

three we over years. Oh we're approximately and recognize for we recognize $XXX then upfront and $XX roughly no! the roughly have each we CapEx, $XX

Alvin Park

– So, okay and then…

Charles Giancarlo

COGS. same, subscription they're and as-a-service matched, the about are recognized what and said the those just both Pure of of I $XX sort And revenue base,

Alvin Park

sales or between forward? might of see. then have and mix do any I what be model the forward, your going CapEx versus ideas going And you your as-a-services projections

Charles Giancarlo

is new provided force. customers I'd model not the meaning, as relatively We've new still both to say sales and well that breakout. as-a-service really the our as

get we we've we one standpoint. of at from really an we're out and that in highlighted more not broken not calls, belt to just start that something As to, highlight our a moment experience be our that sort the – ready but sure might a of in under I'm experience

Alvin Park

Thank you Understand. for questions. taking the

Operator

line Eric Desrosiers comes question from the next of from Your GMP Securities.

Eric Desrosiers

seeing could for Then both that NetApp secondly, a I and me follow-up. are well or one you who One, have Yeah, the taking pricing let get the thanks you the talk, from. it question. competitors and what just pressure seeing are Dell pressure? you Is specifically

David Hatfield

kind been a I aggressive has so discernible from always margin product say, Dell kind and points the pricing line between the know difference Yeah, operates announce increased NetApp, you you wouldn't there's gross negative saw, in (a) large on in year-on-year marketplace. growth view of XX and model, cost-plus any well. as of competitors the a in very our dynamic on

they So saw well. as of some COGS the benefits reduction from the

value Charlie and our is how just the large we that's win if other we able something value NetApp to use how far in be be sell said so earlier, what on establish reported much you so competing sure won't I'll to in whether are make that's team. taking delta lose that Dell. I a reinforce that. gross deal, need or know we with points enterprise, we differentiated a But prop points and we to we're XX an us But continuing is very aggressive see indicative opportunity, we When of the price, on we of margin focused the to particularly and think we're share between company the only and marketplace. on we're

aggressive. – points would margin factor. put a of be to those If continue could was to going we're more work, gross have So, to have we we negating that

it year. the next pricing really kind You Hopefully, QX, to about, but about know up dynamic feel temporary. and of that's good board in firm very will like we start talked was we believe the across again, we

Eric Desrosiers

the to did was quick, the want correct? real confirm. concerns. you just Then, In that That U.S., Okay. macro is see I not all international,

David Hatfield

bundle we'll to narrow our more span push so some sales the international but a a It's those sell enterprise resource, trend, products to advance, area taking U.S. tied longer Brexit you trade in we getting saw of well. the bit that's rates think in as and and to know the like from relative holding able win slowness perspective, likely, pipeline some nicely of little we we terabytes. in with No, market where and are we're most dynamics deal and of control an and multiple did see just be I but specific the

we see enterprise international the U.S. So in and it's the bit – of little a large little bit a

Eric Desrosiers

Alright, thank you.

Operator

last And Group. from your the Chokshi question of line from Maxim comes Nehal

Nehal Chokshi

Yeah, thank be less Q like OpEx flat Q straight you. implies will your row. looks second or more for over It quarter a a guidance in

topline and was (a) opportunity there it August. considering slowdown correct, fees been in Why invariably the growth? this it's will why effect effectively this result I looks that's in correct external a provided what and is in like of hiring So since do presume

Charles Giancarlo

certainly there Well, Right. a freeze. to a but hiring not be clear, was slowdown,

higher fact quarter In hires before. each we have slightly slowdown. than quarter to again, market be respond net the But to the will the

are We as also to and a not a opportunity take to rebalance each team as I loss their going a to company of to and after catch run mentioned I at earlier, lot breath this their allow organizations. hiring

they where rebuild to to it view disciplined, and an actually of their opportunity team really they've structured that and next they've are rethink before as I that sure opportunity that growth. So, the they placed efficient spurt each taken they're make – effective how group and for

that freeze. in correct been slowdown, there’s there’s So identifying you're but not a a certainly

Nehal Chokshi

call. on thoughts a your all. you Okay. update you you why utilize initiate you (a) utilize earnings follow-up, (b) it it? like looks repurchase did what parameters when the around last And a It utilize and didn't guys you program are share will the didn't on as it Can

Charles Giancarlo

price it wanted discretionary the what we we as market it a a to in took Well, really as - of huge program – case facility is that have we that and choose a at the keeping should use program, saw it, we opportunity. discretionary disposal out but in we when our we dislocation indicated, that we're as

Nehal Chokshi

thank you. Okay,

Charles Giancarlo

bet. You

it to we into decade, is next value goal to the empower business a our we realize real digital of our the environment modern As data antiquated cloud and multi and current By transformation. architecture data experience, customers help deliver unified storage to take to look them a to ahead create them automated we and recreate experience. the data helping their fragmented

a seven team and want for to Pure to I'd continue Paul to on to and to his with Kevan excited him last partnership Krysler like great Pure welcome in his impact Hat had years. and work He’s again new I'm role. to I dedication the and thank these

all today. in a the very call wish For U.S., to you all and on for want I you Thanksgiving the your to thank those I Happy want time of

Operator

today's this gentlemen, concludes disconnect. call. for you and conference and Ladies may Thank participating now you