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PSTG Pure Storage

Participants
Matt Danziger IR
Charlie Giancarlo Chairman and CEO
Kevan Krysler CFO
Matt Kixmoeller VP of Strategy
Aaron Rakers Wells Fargo
Alex Kurtz KeyBanc
Bala Reddy Goldman Sachs
Katy Huberty Morgan Stanley
Karl Ackerman Cowen
Jason Ader William Blair
Simon Leopold Raymond James
George Iwanyc Oppenheimer
Wamsi Mohan Bank of America Merrill Lynch
Pinjalim Bora JP Morgan
Erik Suppiger JMP 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 fourth quarter fiscal 2020 earnings conference call. [Operator Instructions]

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

Matt Danziger

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

Joining me today Kevan are our CEO Charlie VP Strategy Krysler Giancarlo of Matt Kixmoeller. our our CFO;

you growth sales opportunities; I future and facts and we our like prospects them. and model; forward-looking its will begin operating and to products; technology our forward-looking are revenue based and and uncertainties. that trends; our risks and which relation of our strategy future update to statements this today margin we business regarding including These operations we Before on include make and to as make remind statements current are statements periods. undertake call bookings assumptions to that revenue; and would management no for guidance various and and subject Any positioning during competitive obligation industry

reported be in future refer actual may uncertainties these forecasted with differ materially to from risks contained the our discussion indication relating SEC and of the results filings you the public an and to not business results and performance. filings. some of as is Our our should of A we results considered

Storage. purposes. reconciliations talking measures being for will XX broadcast on Pure the archive about directly website the Pure recorded least the for most is slides. this the is call our playback and measures This website provided at is days property An on During performance webcast earnings and Storage live call in Relations be IR Investor of being discuss GAAP and non-GAAP will of available and to are the we in the company's comparable press release

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

Charlie Giancarlo

Thank QX transformation with explain will digital Pure's an from resulting bookings next his and on Matt excitement the in navigate our for best call quarter largest help call. our record I and history. of Thank for year. good us us everyone. highlights is the review I'll to positioned am and in why future. follow share performance Kevan year revenue a enterprises you for the their earnings Pure for with pleased Pure and joining outlook financials afternoon today's joining our earnings first you share

last Pure second strategy announced September Accelerate At we our decade. for

Purity of Pure's and portfolio at how our any customers performance cloud are and environments on era our the our products center all is of simplicity data by serve on-premise model. dev by software Experience automation brings majority and API to operations Cloud running Pure strategic will backup hybrid. share managed helping can in transform Our recovery a one customers. modern Purity shared platform we unified Data storage the strategy and our all test The as disaster to in-cloud software of this Mission-critical the recovery service customers' for analytics a storage workloads their production our succeeding more at I scale. now call and We Modern technology initiatives. and

would because sympathize it. virus like outbreak. we Before on spend moment commend and both working and coronavirus I to it of customers of our minds all I We everyone directly is our share tirelessly a investors and to the the by those on address so affected the results with

not what impact to quarter's We we our supply have taken ensure partners. do those employees chain active today of anticipate of we measures know significant and a the on safety to to multi-continent our and situation although Pure our and operations diligently. Based and we chain continue place in products assemble developing strategy components the source situation to monitor supply supply has quite fluid. remains the a this

through billion year share pricing is evidenced more return finished non-GAAP will full exited $X.XX XXXX industry see gross customer million Fiscal while growing strong QX. We continued XX.X% new to with pricing revenue from a to the the which of year Pure's customers than 'XX we profitability. year environment. In the XX% XXX. will started Now our a navigating $XX and with normalized by to total yet Kevan full of QX operating our full Fortune our differentiation of total demonstrating year another decline. XXXX unparalleled profit margin. from was later provide to an now XX% includes over color I year-on-year more results. Non-GAAP bringing account highlights

deliver API-driven are paying off infrastructure. with services the to a innovation. with their through meet of simple teams storage-as-a-service their their engineering and developers applications. Experience These our It portfolio pace a across Pure's needs cloud-like everywhere; operations experience and our products around our technology matters; innovation delight is the for requirements customers. the to and innovation tenants: with of subscription solutions modern them delivering continued smart; drive Pure that and enables and resonate and because customers tenants DevOps performance to transformative key four built portfolio Modern cloud Data solutions is fast aligns and it

and for year test as-a-Service applications. Pure is enables also choice services Pure managed. mission-critical Cloud in customers shared-as-a-service silos Cloud And storage hallmark in now Ready key our on A dev Google and joined Anthos for consumed helping Store our a delivering model. strategy Initiative manually Storage disaster and Microsoft in bespoke business modern with to in is use from deployments Store QX this flexibility Pure managed their transform Store to earlier customers released cases and subscription last model Azure. of Block is Cloud's implement recovery Block operations beta how Cloud Evergreen multi-cloud AWS Pure is month. storage for migration Block

opex major a a Pure including on a so their Pure offering unify in a consumption whether We focus transformation. hands-free driving environment international banks. customers the allows to matters model deployed model as-a-Service on-premise hybrid in-cloud genuine to QX of provides they service. that in business storage as-a-Service wins bookings hybrid procurement Pure or can ever utility true flexible cloud what as at storage strategy largest achieved three consistent

portfolio. industry bar that product been our announced delivers products end-to-end for further continuously seventh has higher storage. never redefines a Today we applications modern like QX suite the FlashArray//X and economics. the Pure raising of to models fully performance subscription generation memory. advanced architecture NVMe on and XX% comprehensive. of This new performance through mission-critical existing FlashArray across FlashArray new of more bring all class supports Turning to product with year customers. the Evergreen last every FlashArray//X only for Tier the in And nondisruptive in two upgrade generation storage the flash is is FlashArray//C available introduced our all-flash application the to first of

of from FlashBlade that anti with metropolitan data two Pure's case mode as better cities analytics and fastest FlashBlade and growth file several and Elastic log restore and Pure customers look as potential safe cybersecurity growth what's all-flash to the introduction And already data and analytics become recover Splunk and in hub AI attacks. ransomware to customers detection use of use a to already big consolidate product solution generation infrastructure. next first data FlashBlade fast rapid in quarters solve power has to create product has has an We of partnership for are fraud is continues ever. A massive Vertica. seeing IoT phenomenal particular adoption cases redefined of FlashArray//C container their with use object with popular be strength its possible the FlashBlade to area in area helped ransomware a protect unique made QX

our Lastly beyond and announced we our Experience current journeys. our Francisco an FY and box-based strategy on last committed and integrated Modern two deliver strategies ago enterprise environment storage we experience. 'XX excitement our our anniversary we're as-a-Service fall to to to team sales was just meeting accelerate In On to Pure digital annual transformation multi-cloud the San from customers' Data had kickoff decade weeks transform in our the extraordinary.

And over with I'll that to it turn Kevan.

Kevan Krysler

United million QX $XX XX.X% XX% $XX and in year-over-year. prior product Non-GAAP prior year. million was increasing year-over-year. performance X.X million $X.XX margins be this to points revenue Weighted key margin the us which at and earnings was We with QX as-a-Service strong increasing Charlie. subscription points net the QX net $XXX per our used continue And XX% in non-GAAP million $XXX in quarter. revenue QX QX at increasing growing share in points average differentiates in was growing QX services revenue basis subscription was Non-GAAP QX operating services year-over-year during broad-based Product earnings million non-GAAP year-over-year. share. was per for all was and Non-GAAP share from Pure share. per metrics million XX.X% in $XXX profit margin million XX.X% and Evergreen revenue solid and Total for margin during increasing XX% in was was quarter non-GAAP income QX QX of Non-GAAP Total in the subscriptions Store. subscription pleased revenues per Block was million QX year-over-year. share you during our Total X.X Thank X.X product the in year-over-year. basis and million $XXX earnings year-over-year includes growing was per was XX% QX gross XX% across States $XX in were the year-over-year. and shares $XXX was non-GAAP in income million calculation $XX was basis $X.XX year-over-year year international non-GAAP Cloud revenue services gross gross was growing the million and total market. growing non-GAAP $XXX $XXX Total financial

for investments billion deferred $XX increasing was the in million at $XX cash Total $XX cash in $XXX year year. $XXX and end was in cash was year. the million the million flow was million of million was to prior of XXXX. year. the was $X.X at fiscal was Free $XXX million the QX flow $XXX revenue fiscal prior the and XXXX end and at Operating and end was million million in at cash QX XXXX from QX in XXXX. Total billion $XX the prior Operating the cash and million prior the compared of $XXX year. $X.X of QX million fiscal for flow cash year Free flow the end fiscal of in was $XX of

repurchased was we market $XXX was million QX end repurchase XXXX shares XXXX in share approximately headcount the at the approximately the $XX the and year. our open remaining totaling authorization. at of prior employees and of During year million end employees have approximately the in Total

we fluid remarks coronavirus prepared effects in As adverse although business and actively business currently his annual guide. not And have guide the situation into are unpredictable. impacts our incorporated specific on Charlie seeing the monitoring are to QX developments. been or our we mentioned Potential our not the is

performance expect from derived Revenue over growth our multiple subscription we to strong the recognized and growth that begin service next of subscription time service recurring. offerings will our is year. growth bookings outpace and is With outlook our revenue offerings

evaluate to to we the is expect next metric provide the useful As which year such approximately bookings of XX%. a we growth and our more to business leave annual be growth rate of transparency total

including at will bookings We the total for of beginning guidance the each growth full annual year fiscal update year. our

We Evergreen differentiated Store focused Pure our subscription Cloud services. on are Block growing as-a-Service highly and

expected revenue is expected $XX to approximately that total revenue subscription margins approximately offerings year-over-year. next to fiscal gross for XX% expected recurring XX.X% year and billion be year. these non-GAAP approximately Non-GAAP Given million be growing the provide is be income $X.X are to operating

year-over-year. Moving Total revenue expected growing approximately XX% QX QX is guidance. $XXX to our to for million be

with Non-GAAP four As shipping recall issue be and QX to I momentum expected ahead. team from is to QX We revenue the opportunity QX normalizing operating basis our joined our Pure have approximately margins a million. approximately in strong guided innovative excited points non-GAAP XXXX. in very revenue service continue position during am at customers. be benefited offerings. XX.X% market are When us rate in Storage and shipping for the our will might That growth loss $XX this to be including higher. portfolio year's and in would well see QX the expected to you subscription QX our gross last issue

With that the open we now call for questions. will

Operator

from question Aaron Wells first from Fargo. comes Your Instructions] Rakers [Operator

Aaron Rakers

for question. taking guys thanks, Yeah, a

last the guidance? think a see underpins mentioned of in help quarter can I quarter-over-quarter remarks this about basis? us the And wise you think just pricing normalized just more we you're what starting that that how current then you saw the model? assumption dynamic you on environment for what And prepared your If Flash. can to Can a curious quarter should you to during understand you pricing

Charlie Giancarlo

the year. price pricing Right. prior early the Well a through of the breathtaking know early of declines year just had NAND as in in that the we in market from were quarters you a created free earlier saw parts fall by

good QX used we're generally when know for year have are Now But fall is years. have the then in because we have been time prices catch year which us us to which to NAND after it out very go saw It are magnetic up. some year suddenly generally in it are what and go in We storage very stabilized next that excited every elasticity drops to And market. more do the in doesn't about. commodity normal up is seeing we creates time elasticity to projected prices year. for allows

And so even certainly that better a one continue ahead to can to we hopefully in and us allow industry. to pricing environment us of normal regain and grow growth the presages initiative which

Kevan Krysler

as a declines contemplates think what past guide we concept is normalized about and we've in the outside ASPs. dynamic When a year. expansion what we again of pricing this as that saw Kevan. both well seen normalized really And And for in QX this consider you of Aaron guide specifically annual volume would that the environment that's this

Aaron Rakers

just then tied somewhat follow-up And quick and that. a Okay. to as maybe

next something You margin go more both the guys overall. little front? using that margin product to velocity continue at maybe what's actively the forward starting more are a that forward? year going bit and think after to the in as strong activity in gross Or remarkably do guys business? report that you this embedded Is we guys gross gross on the you invoke to given about How business guidance margin really a more outlook that look for fiscal

Charlie Giancarlo

margin ways: compared competitors. one the two business; gross and of to fund to to use can is in is course we the know you fund pricing As other declines

our in Our value software our every XX% paying we at it's that for view XX% to is this week. belief look that and that the lose we when we lower I don't versus be but a is And literally that premium fact it reasons. generally is on And provide customers our product do ours than other ever based do the believe price really deal our competition. we we that we mean price. deals. And lose for it's might having

feel trade-off for And seeing would that certainly we're that's so now. more don't we wins but we win believe minute could price at we the what we like right

the use We continue way feet to sales more our margin. on calling believe of the force customers more more that is expansion on to on right opportunities street the

Aaron Rakers

Thank you.

Charlie Giancarlo

Thanks, Aaron Next question.

Operator

from Capital Kurtz Markets. Alex from comes question next Your KeyBanc

Alex Kurtz

taking Thanks guys for for the question.

couple remember price you some you both about pricing a the I little with level having kind market of last a negatively the a of improve You some the know, that NAND discussion the positively. pass-through Charlie quarters would of stabilize when with right because environment there bit environment at as be revenue and impacting see it's upside

at year from look full all So upside as contemplated as revenue some at you is capturing the that far this? as guide

Charlie Giancarlo

a looking growth a that roughly this not year We We're year XX% to more looking at definitely allows as are compared pricing year-to-year. at certainly a forecast we're a industry. macro flat environment. much a And normal to us flat

industry projecting We in So environment have terms an that in holds in that downside on overall performance to which of believe competitive above in not upside we're the overall. or going pricing growth. well overall we're

Kevan Krysler

to we're Alex me Alex for would for XX% just prudent some macro momentum to creating we're lag why let we're that Charlie. I that could as we seeing add And And we'll just in in as we of metric a and we're running that how revenue of that. Charlie that bookings year in be the highlight. dynamic sure current we're also our that's the looking I One this want the which a at that of next terms again the to it. bookings on if is business and make year said environment on given year. provided between growth clearly is headwinds really terms But want and dynamics see couple terms seeing next we're of subscription Look side this services of contemplating and at

coronavirus. Now would seeing headwinds. still some exclude that of But we're that outside

Alex Kurtz

Kevan. quickly one you Just question for

as Given do and to bringing What so as company platform practices a Block think globally. And that where you kind thoughts software of far about from do obviously best your distribute scale you Cloud Evergreen time see Vmware Store? your far? What's opportunities to could at at initial Pure? that expand

Kevan Krysler

let share probably thoughts but also that Yes would I nice me terms in comment of really I'll Yes. doing an initial view some standpoint observation is company my from the a job.

software. investment In we have And on in fact its practice best of R&D our company that's amount already clearly development what's differentiating group software from competitors. of this the in terms

different and to focusing from there services models really as-a-Service including look on that's And subscription Block we're so our on why expand Store. and at we'll Cloud Pure

Charlie Giancarlo

you are this well. Alex software know developers. developers And actually our XX% Yes. of

So beta started and multi-platform. by products all have and Azure. directly unique more Block in soon is top on unified of across in of operating pretty that our operating and which to we're now as a shrink Store products a of offering software wrapping software we and multi-cloud respect on out company AWS significantly software iron Cloud FlashArray And such it XXX% And with both and now multi-protocol. our multi-tier it's Purity in

on mean we revenue such us in transitions deal with have able big of Pure help satisfy think one because a to to a business. does recognizing think products this to system at the course to subscription different We're look with in is have single software to management a managed by way we we Most of one Kevan and that So it workloads managing business base our So software pleasure be managing that real competitors board it it's environments. going differentiator. multiple all at

set skill a board. on have to great it's So

Kevan Krysler

Thanks, Alex.

Next question, please.

Operator

Hall from comes Sachs. Your next from Goldman question Rod

Bala Reddy

the implied of billion 'XX revenue Rod. XX% year-over-year. Bala If year full revenue on growth I $X.X fiscal for is the year is look at Reddy This guidance

if this compare year-on-year in 'XX However that the gave to implied you rate growth only is year guidance fiscal guidance the $X.X I X%. guys back original billion hypothetical

outside subscription the the just fastest but that changed a guide an year? as anything fundamentally business of conservativeness in element Is there up. has market mentioned I in You past for wondering the all-flash if array have follow of well?

Charlie Giancarlo

than the to a we bookings our speak prepared that going identified course mean cause I of we understand that Well revenue calculation. XX% increase investors. subscription it we I is can't for the our in identify meant increasing amounts but to at to is believe start our what overall don't as to is X%. do I growth of revenue and to rate that's faster bookings revenue remarks

Bala Reddy

All operating right. I have well. expense question as on a

So as the you're rate as growing opex Can why my guidance you XX% benefits roughly the it of if increases? is not it's revenues looks like operating leverage scale revenue the at some implied math right color about around seeing same on the like XX%. give

Kevan Krysler

Yes.

to I think expecting revenue our than would the be that actually we first thing year. is we're growth less would of expenses be different than I this operating our growth which what highlight saw

good So that on front. improvement

we for plan we're contemplating The other at investment growth XX% our when rate. a thing next highlight look I'd is year

you generating profit. provided growth. revenue just for to why a new invest putting And that's our investment some like terms to with on in we're of subscription our even business. I the committed said look that's our we But the again we're be as revenue subscription growth. on dynamic obviously in outpacing see our And recurring a in revenue continuing will you'd growth pressure due this So growing to metric bookings. we're business revenue And lag operating

Our unchanged. operating the leverage philosophy remains long-term the into of driving business over more

Charlie Giancarlo

Bala. Thanks,

question, Next please.

Bala Reddy

Thanks,

Operator

Stanley. Katy from from comes question next Morgan Your Huberty

Katy Huberty

of initiatives a then follow-up. signed therefore And the just Can stronger I new quarter XXX think bookings? Thank is customers you. I Good driving in afternoon. new customers a you behind a have and level record. about talk the

Charlie Giancarlo

lot that really is so pleased We to the to with customers generation and new we're early strong that's overall took us. really therefore especially that opening something ability pipeline. potential And enterprise very Absolutely on and of that the in we finish in growth focusing customers enterprise a saw this for that customers. work Katy. especially And them an we quite going build new included year a improve good pleased continue of our on to to initiative building up in the believe course lead for on new year. I'm future. the to And

Katy Huberty

that in And the any customers you number quarter? product around the the of to or bookings brought FlashArray//C of percentage in color from terms contribution of new that

Charlie Giancarlo

But numbers fastest hesitate can fastest Katy two individual as new FlashArray//C product We growing individual of company's any product mentioned with as I new I you know growth the be they give products new on history. because in lumpy. to of really products especially out revenues quarters quite

with one FlashArray regular. for It's than FlashArray. I reason rather that is is think QLC a it a just

consider range So product it's product. new It's with a a version it a version a it. wouldn't it's I not built example X.X full price into for a X.X performance

And it's so the get than hoped. better early we good and expect it out even performing of probably to but would have box it's might we

it I good going been have nice. of gen. for preselling because we quarter second quarters to first if on It been the really was couple quarter largely it First But in obviously was see been that. demand pent-up a there really be before to outpaced the based demand quarter have knew have we was

Katy Huberty

operational much just APJ you don't in impact from either any in said you have great hear. market And broadly? you more or in coronavirus? or And expect demand China? to any of supply that that That's revenue seen you base Do Kevan lastly have a

Kevan Krysler

Yes.

we It's see we what the across mentioned So seeing do world. we're lower issues But relating this percentage than in in to time demand point have we APJ. any coronavirus. not business as at a some

Charlie Giancarlo

that in And FYI as part very relatively we you Kate small revenue chain. supply is have of way. China. And little our of comes a invested that in know not Right. out We're really China just China

Katy Huberty

you. Thank

Operator

Karl Your comes from next Cowen. question Ackerman from

Karl Ackerman

customers I such storage few before greater explain in much of to as input the the across you decision? slowdown software departments I attributed a of few over the how purchasing of the year? maybe elevated more environment. costs? spending could beyond just partially for procure think comment are and in decisions efficient cohorts that? quarters plan somewhat curious How sales is what the everyone. afternoon, last follow-up level then revenue of about was as ways storage making guess channel my to And Good you a on if cost uncertain thinking seems as does customer be And other this such that shift on-prem appears to final maybe how you you just be costs what investment do given acquisition an to indirect opex extract So just and/or

Charlie Giancarlo

So into they're in describe in for. how it terms actually decision-making to able that less the we're different get actually of believe that's and the some of we've I that an terms applications of able the infrastructure products departments And where and we to with our admin. fairly we're the can make workloads activity changing the focused not enterprise use around feel results that's to always cases nature looking area case. output storage had for of in because around the very easier certainly the we've those go be we organizations management good

I If by bit say competition. being think able sales effective let's our that it's wouldn't penetrate we're more our made accounts I cost worked actually increased I say of So us. us before a to held that's for at think in strongly anything that's that all.

sorry I'm the just... On

Kevan Krysler

efficiencies. Operational

Charlie Giancarlo

that to fact the most their bigger as smaller vendor coming this And big a to year. have But as is in partners fruit greater the I we initiative to Yes a and of another based to we better more and and year that of before was efficiencies. enable due of of starting of think operational really getting Part this do to to our see last year the our effectiveness systems part be we relied more in portfolio deficient on we're big ongoing this materials our expand staff out this they us of more efficiency but push their do channel were we'll year this selling that the some our training and more the is that selling. of Pure there's enable on percentage channels. are really independent. of more Yes channels a

Kevan Krysler

you're operating to is within is as look And coming down at we're on a year. When slightly In this Even of especially get and revenue some head contemplating when environment. expense in putting Yes. this a marketing. you some pressure sales percentage quota-carrying non lag and the Kevan. operational which Karl operating our the revenue looking take efficiencies that's profits

see our improvements we despite from expect investments standpoint as trying to so heads. some with what And and well R&D there as our an we're to quota-carrying do investment continue

Charlie Giancarlo

Thanks, Karl.

Next please. question,

Operator

question comes William Ader Blair. from from next Your Jason

Jason Ader

the thanks, late already this I here. call so guys. Kevan was call if on jumped the I was VMware Yeah, apologies with asked. I thought on

bit wanted I but leverage. to the little So just understand about a better

the explanation lot limited gave for has So share. what fiscal of says to But you XX% implied Obviously revenue a originally talked solid fiscal year my about it's margin for the for X% the was about 'XX. X% taking because growth leverage been math pretty and this market 'XX? clearly operating you're

Kevan Krysler

are growth think Jason. about a address our for a provided we you sense is And trajectory about we how that's that grow growth math line we rate. new on your we a first bookings all think the in year is to why it's next looking And next give there XX% Yes year. at how for business fast metric we will when that business of and

operating of philosophy a of as with the marketing revenue recognized. the nature revenue day remains see outpacing overall end increased for we're of still our that due look of But And that growth. subscription a the dynamic to and investment that lag we'll our services even to in even dynamic. sales growth year next committed again the over which the But the long-term of is growth And revenue recurring leverage being so that revenue at in with driven driving being growth investing unchanged. more fact it's our by result we're seeing growth that's

Jason Ader

Okay.

get So just to you're is a you revenue going ratable. just quickly? the getting being and result to that... can't basically be clear this the less Is as of leverage as of upfront And more you're a function business therefore

Kevan Krysler

that Yes right you're about thinking That's Jason. right.

Jason Ader

Yep. All Thank you. right.

Kevan Krysler

you. Thank

Operator

from question next from Raymond Simon Your James. comes Leopold

Simon Leopold

taking 'XX for had the with the gross XX. that to in question. to I product like margins fiscal try look you In so bridge what you a thank two Great, on that next year? margins happens wanted well in get they've quarters the gross been as they're as the maybe quarter

our been expected. better than so net's And

much help you're the and could how bridge And so kind you forecast mix product on I'm kind trying between there's gross connect to margin? going input some pricing is been of regarding of discern you've where competitiveness the if of where that dots

Kevan Krysler

sure margins this it do Kevan like really market. in mentioned is a terrific. differentiator the first. have Simon. I And And And us again is I'll this take Yes been and gross our believe for you've at

From and things we we couple dynamic this at we we're dynamic the similar a specific throughout in our Now to that mentioned year to than different how think for gross year. we saw extraordinary what margin is think that in next is year. year. QX this to pricing looking Charlie some did But next it I of see And experienced. normalize again as that pricing going benefit

dynamic. pricing gross the get that in wouldn't year we obviously margin from So next benefit

relatively as profile year toward that at more I margin also our shift we're look mix mix And will will year. other systems had estimating did remain larger which highlight that The we see us. consistent shift we that next higher element of would a last a is for we actually

you gross see that's bit a drop in year margin. will if little normalize will and So those into going you of a why benefits two next

Simon Leopold

little anything terms situation Great. certainly demand the I'm chain. of your And the get it's coronavirus from seeing have rethinking customers around I it wanted and airlines supply businesses. may that a sounds for a very that large in In obviously example fluid the that a in that not like demand side be may enterprises bit we're you I you're seeing that are aspects hotels to follow-up and surprised perspective. of their

see you'd a puzzle due understanding is of you've base not you're and surveyed way I the up respect I slowing of immunity diligence so that virus? better sort just that can your feel your you or from And channel. resilience bit sales you any the customer help us your why done picking fact from your get a

Charlie Giancarlo

Absolutely Simon.

correct going very seeing any you speak I be And think of just very We're not it me we're just speak it's our may business. yet QX let factually. in uncertainty well too to but or much whether QX the orders contained contained the affect early customers' of not beyond predicting so So quarantines given forth. far virus how may it's and of to start the and

correct. So weeks the effect quarter. could we QX forecast. we're I fact on any you're not right hope in seeing in now the where that on two very of the not our business QX but be is you well change we the are matter yet or may are Obviously but

Simon Leopold

Thanks for question. my taking

MattDanziger

You bet.

Next question, please.

Operator

Your George from next question comes from Iwanyc Oppenheimer.

George Iwanyc

as any that basically same So quarter? Charlie that the is are there they are things indications cycle changing. on regions up any are where there deal just following last Are were sales

Charlie Giancarlo

It's very early in the honest quarter to with be you.

I'm sure unless a even were change it would But far So dramatic tenor. in not that it so no. we see

George Iwanyc

your main versus feel you a And how win rates competitive about just competitors? Okay. standpoint from do

Charlie Giancarlo

quarter terms grew. If at every a probably Very you but every whole. analysts closest of fight continue in times points our XX know we good. industry real we as week look We No to every with change the a competitor more month the QX outpace three them have more we and than as QX growth. we our competitors than through where tough industry grew is

look while every we're recent growing. announcements from I And if competitor. we're more taking at share they're actually the of think some shrinking you

our very position. So about we feel competitive good

George Iwanyc

And last question.

Charlie Giancarlo

Yes please.

George Iwanyc

now in with Azure Box see reach? GA Just How reaction for the on expanding being to Store customer you do while. Cloud AWS a the the beta

Charlie Giancarlo

good. very Yes

without around now their in I see data recovery. having use it a They an of it the of seeing and that a primary we're management manage they the full is can cloud design the do them to application environment primary interest of interfaces. one put They or design backup one really pleased to some unifying which lot And their portfolio. And in I transition and have One software. our DR my refactoring remarks They're and especially a being in regardless rewrite environments. DevOps they to force cases that able reasons. they of of can new prepared they take their regardless it's to way into. set as outlined for cloud whether several or to think easier of of on-prem

put for It's it that way. is very it I very new new So customers. will

minds. kicking testing we're will and on. grow to products continue tire of And optimism and of lot scale we're so a there's And going in lot that to us great happy that see and our a it gives the customers' as we

George Iwanyc

Thank you.

MattDanziger

Thank you.

please. question, Next

Operator

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

Wamsi Mohan

sales new much expecting either terms think or revenue XXXX you're upgrades us help might growth how bookings sales? from Can you of controller your prior versus in customer from come that through

Kevan Krysler

is We really cap at versus really really at looking which is we're out. don't a that's And our were business. what we And that fast business at how growing Kevan. subscription the this Yes break purchases. very differentiation rate looking the between is

Charlie Giancarlo

think I over in XXX and Wamsi with a on quarter Yes. basis. the new customers year-to-year XXXX

that understand comes bit think a that from business of I new there's you can customers. quite

in lot absorb used new the products value from were be change the that proposition brand-new some customer to some large is new them we get of before a tire a from large But kicking Of before. understand we've very come very purchase. we customers younger customers to which course to there'd have for orders they gotten get When more. our buy

customers sometimes say. buying sales so I seven-figure first sales Now we're finding new time product with should new

existing of continue growing lot And course we So of of we're very attention. area pleased But revenue the where with think inside new customers. is focus to an the customers. meat that's our of I a business

Wamsi Mohan

on And cash just flow.

this capex are You a trend obviously in year. very full generation you the had flow cash free and How to flow expecting coming both nice for cash year?

Kevan Krysler

about would line think it's I about general for should next be thinking Yes how year X% it? capex you be revenue of a thinking of

Wamsi Mohan

much. Okay. Thank you so

MattDanziger

Next question, please.

Operator

from next comes JP Morgan. Bora Pinjalim question from Your

Pinjalim Bora

So thank you. Hey, guys. motion One Charlie. the question on platform

from motion? same? positioning you things default And positive about platform. the plans to as-a-Service specific you I'd Pure especially you incentivize We the of the what choice heard on are the changes a as how driving to making have love kind any are selling platform a bundled are What seeing your sales selling? hear the are comp partners you pretty essentially for

Charlie Giancarlo

just our And in very the our Modern call and I what Pure the was differentiates kickoff completed Experience for encouragement theme situation of sales it Pure force much that a sales a Data kickoff is us in Pinjalim we position as-a-Service. first market to as-a-Service would Absolutely. big strategy because say we overall. the the Well and customer new

data give should be customer day Now a they I not just they're at seven-figure course because look that compensated. time salesman will the the But get for on much own a the Pure to time for what now some to look always really data we think force is at with take-up that us. We year for based they time up flexibility new roughly it's whether being first providing getting deals they're same customer and no But the pleased a or But sale opening sales paid customers' really but opportunities. this focused their the as-a-service we color it's but centers of customer There's team I want on said as-a-Service. cloud's and we're cloud as-a-Service first. equally. want and the centers pretty we great for is first say capex them than our also have be at And their paid how sales of capex good the the we're themselves taking will not end give subscription to Pure six they on choice. need. want been very of acceleration deciding Pure they definitely the how want differently them it's

customer. and now time an figures. be might as-a-Service customer in way It or deal. But deals six a Pure we're seven either these time existing new First deals first these customers

Pinjalim Bora

interesting. Wow

that metrics I basis? should and you're talking becomes metric business of an a would accelerates investors? some becomes effect that larger mean is metric. at subscription based of the to and bookings? bookings that as add you track guess people impact How changes? on I quarterly on And billings the and for maybe calculated noise? kind RPO lag those What looking Or should from kind best And Okay. term takes revenue start the highlighted have this about vein investors

Charlie Giancarlo

let other provided a that our going percentage at it want great greater to basis question. But do speak be what investors a can as that this. we Kevan of bookings Right. It's right I'll to now and there metrics looking mentioned on as business metric that is we're call this We that earlier the understand track know. Kevin are somewhat. a on annual an to are becomes to used we

Kevan Krysler

to least services. getting And especially the point basis. new metric is I Because on an It this starting with this first basis we're at at look a way an Yes to subscription annual think traction our bookings you're think annual quarter-over-quarter. the it year. good right with was going around variability have for I

we'll do a this as important start. year if reflect the we give And that. information we'll to So get definitely into there's

Pinjalim Bora

Thank you.

Matt Danziger

Pinjalim. Thanks.

please. question, Next

Operator

Suppiger comes Erik Securities. question from next from JMP Your

Erik Suppiger

doing any into your for a thanks stockpile bit One of on what you of you be can secondly Do days visibility talk A you just couple flash little Yeah, you question. Or kind about to XX supply. your in And the not inventory are clear then your that? do have of taking questions. contract China? manufacturing out?

Charlie Giancarlo

Yes.

I'll some and then with turn over it. for of to Let that me start Kevan it

we do they're on of subassemblies of right know that our So where some of each we come each lines top China. factories how of that out have the of know We've been operating. the

we as as one an for We're so confident QX. And uncertain confident. we're can be fairly very in said environment confident

It's confidence. early a degree have obviously a QX. fluid to QX situation. We too project for high of it's

it in at to with it's but point reason still this we speak no have surety can't it really time. doubt to We

Kevan Krysler

that to Yes nothing to add Charlie.

Charlie Giancarlo

Yes.

have it. terms of the In good visibility supply into flash we

We suppliers. our are very to close

you know comes places most the U.S. and As flash out Korea Japan of like

to said quarter. ability And diversified. before I this in we fairly confident our well fairly supply as we are We feel

Erik Suppiger

seeing right. for a All You've talk Is of updates or shipping been there quarters. about there? pricing competitive any you FlashArray//C? just dynamics that in who Can couple most with of terms dynamics you're competitive any

Matt Kixmoeller

is This I'll take Kix. one. this

is think competition. I completely the of one So unanswered been surprises it's biggest by largely FlashArray//C the around

two and use of Tier mostly with new between implement go go have flash. Tier enabled tiering cases Tier to forth and set a and we've allows one really around back two customers X ourselves whole applications inoperability C to really between to FlashArray//C strategies And and after data and so

great So haven't heard it's much a at growth story. the all. I on competition been it from

our that's part feel And business year. set that of well like a so the up for great we

Matt Danziger

Thanks Eric. so much,

you. please question, Next

Operator

Your question next Daryanani comes from Evercore. from Amit

Unidentified Analyst

[indiscernible] is This Michael Amit. for on

around kind So to the I on versus growth year Can guide touch inflect? just what have the to around full of us XX% up on QX pointing tell changes you sales you're XX%. year wanted the goes for as

Kevan Krysler

from mentioned QX our Yes. look is our prepared with is benefited of of four QX and points. to does benefit I that shipping remarks whether back things whether total actually A a this we you my line couple And issue right had QX is QX in And shipping We're about that QX percentage the last at in in normalize Michael you though as that revenue of it evaluate In QX perspective to 'XX. expectations. QX Kevan. we year issue from or seasonality in in actually it a of a look line revenue. at or

we're at for think QX. of we're terms impact did our in how aligned looking growth it rate quite I but it So

Unidentified Analyst

seeing just Okay. is the where it net Or kind And you're the new Is more gains? seeing Pure it is going something as-a-Service you're enable on with existing like that? sounds pretty then well. of it on customers? uptake just We're wondering

Charlie Giancarlo

seeing actually. changing model. in in competitors are this are customers net in is both the frankly quite the very that way really buy opportunities also have done It's new like it's buying seeing interesting. can't No definitely But where actually we're that new manner. who new us it's so our that We're this Yes. But to gains. But who might to with this existing want compete fact we not well. they given And buy. customers environments

accounts new opportunities given existing us as as new well both really in So accounts. it's

Matt Kixmoeller

Yes.

it would One of is think as-a-Service add a sometimes the folks miss subscription. dimension that I transportable I Pure also

And But something the with like the deploy now whenever being game changing. about the to it's to they able compared is move all having so a is that as offering to that our having competition. on-prem. And really service customers to cloud we're optionality conversation differentiates

Charlie Giancarlo

have of one buyers a more product huge particularly be easily that on it's just on our be of customer Azure. has beta user who in Azure But our obviously able on-prem to the based fact their will on-prem primary us. CBS workloads big customer was very that large been continue migrating Yes. They're Azure. of move our And over we time to our They're storage. to planned on to because they that for over advantage a true

Unidentified Analyst

market? by is And seeing you're not the in that offered Okay. competitors that something

Charlie Giancarlo

repackaged the It's seeing We're leases. not same.

Matt Danziger

so Thanks much, Michael.

Next question

Operator

Thank you.

Your of next Group. Maxim Chokshi line the question Nehal from comes from

Nehal Chokshi

Congratulations on and you, Thank yeah. a great Oh, quarter.

help So growth this guidance And us actually XX% to XX% you tell subscription? indeed in year subscription. tease the fiscal bookings revenue To Delta of there increase of how was year fiscal 'XX? make out percent Can expect to what in total subscription. it to 'XX do that is much sure indeed you is bookings this

Kevan Krysler

our is Yes growth Kevan. outpacing where mentioned year a rate dynamic a revenue growth really growth I sharing bookings year divergence rate And year. the We we're did similar first expected this where next because we're as is not last bookings for this rate. the see is again seeing

the the rate year. we're divergence by than our And first for lot being what faster terms Evergreen the were bookings this and seeing Pure to is growing And going Store. Block bookings in in so of a our that's driven at a momentum as-a-Service why our really we're year Cloud growth go subscriptions upcoming really revenue again of the not of prior into the rates detail in is because

Nehal Chokshi

Okay. you of quarter subscription on the of the a little detail value distribution revenue mechanics just give i.e. And book was $X unbilled first of a in deferred revenue booking and then subscriptions can here the contract the subscription? between of

Kevan Krysler

Yes.

both for in of used transactions. terms first TCV our really is subscription detail services well as as capital of the our all So being

the have subscription situations got be revenue. similarity of you going of there. you're services right will deferred So to some outside you've are where But

obligation Charlie. call that back as we disclosed should And of we'll up be in that the a portion to turn picking big You the well. that with remaining over performance

Charlie Giancarlo

joining this on to want you all for thank call. I us

might we only the not realize are product next performance strategy pleased We with platform throughout you was be 'XX. us. allows fantastic value our of announced cloud-like QX As and which but efficiency able for with with orchestration. FY customers year to a decade their tell that very and to for data-as-a-Service to our the is deliver It a really

frankly for that in allow We that and to subscription services we experience us enable Pure product look really about the that our kind the provide excited of deliver quarter. want our what are are customers we them to portfolio next solutions our the want We data front today and you the offers you of opportunities experience are our believe understand very and only combination need us. time to our with and that I your transform. to to of customers speaking thank forward expecting the digitally again customers

Operator

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