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PSTG Pure Storage

Participants
Nicole Noutsios Investor Relations
Charlie Giancarlo Chief Executive Officer
Kevan Krysler Chief Financial Officer
Jason Ader William Blair
Alex Kurtz KeyBanc Capital Markets
Aaron Rakers Wells Fargo
Pinjalim Bora JPMorgan
Nehal Chokshi Northland
Karl Ackerman Cowen
Mehdi Hosseini Susquehanna
Simon Leopold Raymond James
Tim Long Barclays
Eric Martinuzzi Lake Street
Katy Huberty Morgan Stanley
Call transcript
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Operator

Good day, ladies and gentlemen, and thank you for standing by, and welcome to the Pure Storage third quarter fiscal year 2021 earnings release conference call. At this time, all participants are in a listen-only mode. At the conclusion of our prepared remarks, there will be a question-and-answer session. [Operator Instructions] As a reminder, this call is being recorded. I would now like to introduce your host for today's conference call, Ms. Noutsios. Nicole ahead. go please Noutsios,

Nicole Noutsios

you and third is the Storage welcome Noutsios good fiscal XXXX afternoon, Storage. quarter Pure name Relations to earnings Investor Pure of Thank call. Nicole My

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

today, our management subject advantages, statements technology begin, to disruptions, to current outlook, Portworx to including and and These obligation competitive include our call, various Any the prospects, make assumptions we industry forward-looking and and COVID-XX trends, them. and statements update of on business related that during future strategy forward-looking remind including risks and Before we make you which regarding and offerings, undertake our pandemic based I'd its that this we and like are sales our no will growth are product statements operations. all and facts and uncertainties. QX as

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

release Pure With measures the to on the Giancarlo. property be slides. and Web. During directly live reconciliations is and on Pure website press purposes. the to in Charlie archive Storage. the our This this comparable website provided An broadcast of in the the relations being available CEO, call that, investor being webcast the GAAP discuss call call, will and recorded we is company's playback will earnings turn for non-GAAP our And most over about I'll is of IR talking performance and Storage measures are

Charlie Giancarlo

good evening, for joining and you everyone. on today's call. earnings Thank Good us afternoon

all you of ending. hopes my never on excited scientists, decade expectations therapies assumptions. for and of learned reports are with we about relief forward been a many XXXX have many the doctors and of of to has COVID well. As by and reset families, all fantastic certainly agent thoughts experienced vaccines faring our hope The you, colleagues they all and change and healthy I we've end with been year extraordinary that look the seem you, and XXXX, friends and and brighter we challenges this your Like look have stamina with progress staying are this changes the the lessons call. have with am I high And the this and world's on the all resilience. created engineers. in and

corner battle global Through continue stakeholders. impact there past COVID economic turned an we am will normal. feel However, all quarter's performance Pure services accelerated created that this has cope and made. plans will confidence the the provide most Pure for performance has Growth Pure in continues enabled against have all with our virus this to with regardless of our the and opportunity. pleased I to there that that of with progress all of the customers the crisis. challenges and this COVID, our for progress to our for and of know to we during that in business the new been I communities and me months our challenges thrive exit enterprise on to year, downturn due rate ability delivering customers that confident the this capacity, come to in of its and operate and their be customers

vendors. see resonates the and changed deliver should second cloud years, and from In customers’ expectations what decade, and management. hybrid Pure, modern our expectations changing for with storage data data customers. strongly of the strategy completely XX they we’re our experience our our storage In storage Our to arrays vision first

full is platform, very namely offering and from that to two-product for family. brings and multi-cloud data pleased company build of build the services to the Portworx Portworx hybrid infrastructure, pure cloud team, and platform their that progress IT, native a team I'm in good increasing developers PSO, growing cloud both those Pure Kubernetes to dev-ops. plan. our our running leading are applications have applications, native Portworx services now services expanded to both We pre-acquisition sales a well, we Service cloud to welcome perform existing our those relevance across who We've Portworx part to Orchestrator, continues applications data beating containers. easily and and container-based environments. made with the or integration, With capabilities industry Pure traditional the data

storage to the data importantly, automate supporting code outcomes Purity born evolve may are management for the and rather deployed deliver they And create strategy management desire SaaS-based onprem their capabilities enable those to comfortably are in data not is suppliers provide outcomes VMs the to managed specifically in are are looking to storage their as to not roadmap Pure means to continue They to Portworx and and Kubernetes and set layer like Portworx for is management themselves. Customers our Customers more because than migrate solutions unique and PureX moving infrastructure. customers Our that software, their new and with software-defined as hyperscalers They developers. container a and to the to workloads, to customers specifically control transformation. just continue bare-metal moving their it's who never with consider just as looking cloud to through subscriptions. complete and services cloud system. of in to customers our solutions Pure’s SaaS cloud. digital are all on-premises,

by strong advanced just initiatives. are to including benefiting They most share FlashBlade. modernize a GigaOm for their rapid analytics of the in are a continues computing, Kubernetes also and customers systems. momentum for and with Portworx this continued existing Data and defeat new same saw pleased recovery. we customers protection. number across and quarter, strategic by choosing and containers, Office of DataScan, chosen and storage technical be customers, Health Technology System we to Bankers FlashBlade to Louisiana ports continues a Leading the This Expedient new enable object we momentum Momentum uses, data and run National use unstructured Bank, leader were named including demonstrates consolidate customers demand are strong Services that I'm both First to like PSO the to choosing And build FlashBlade to Sinai from choice leading be to for these and their Eurobank, rapid to recovery ransomware. that in

seeing adoption flash released recover data entire modernize to customer our for also strong We protection initial stack. and recently solution are interest the

This provide. in our flexibility guarantees, selected in performance electronic quarter, offerings, Cadence accelerate developers. choice and design productivity and market. the deliver Services, Cadence as-a-Service and University QX, and our Science to file Cadence, their include to this ability services. to service Bank accelerate offerings quarter. combined developer of Pure to service increase through their consumption-based as time that a as-a-Service enables consolidate Texas computational Center model subscription Pure transition software, data these their with their a global Customers Selecting to and again automate to IT FlashBlade’s evergreen which offering many our object Health Pure like fast strong Australia organizations such workloads environment and and modern to Pure’s leader growth in level Any and had Pure’s as-a-Service are recognized outcomes the Subscription services looking to and

new makes industry managed Catalog. marks first delivered announcement data migration service. in subscribing to consume, Our their public Pure and easier. to stranded a substantially another enables making and by our cloud Service lives store, the publishing center time and for their for as-a-Service like worrying by for paying the as-a-Service transparency an Pure, they of cloud, to offering service catalog Today to assets. customers of Pure cloud with pricing unified hybrid storage service possible subscribe only provides cloud subscription any which benefits on-premises without as storage both a cockblock at Pure in the operational The the includes milestone, about The what

D by code base. FlashArray//C file storage our service choose customer D based most combined innovative hybrid intelligence delivered they for both range continues an costs enables subscription of workloads at a PureX’s for pace. the reduce applications both generation are workloads by grow into derived for the Flash below their FlashArray//C, second and place Summit disk scenarios. of place can and The cloud accelerated to of The each thousands level customers from price block data So customers the driven A.I. service want levels tier customers services Pure and memory performance array. best easily can where C month, full well consistency their available and to and and the and software, customers all on on storage show under flexibility Memory technology. that right to right Pure wide consume address portfolio providing received workload onprem planner This single flash performance with same consolidate workload Array its the the our workloads, to in unified delivered Flash FlashArray enable services. at in customers of how The by efficiencies award powered financial

new actually solutions our solutions I well we new that customers Revenue Navigating deliver reporting Officer, versed position innovation Dominick Pure well. to single fresh him of As stage individuals team a their Dominick has of scale as growth. COVID a working excited scale models Earlier provider an four perspective is broad-based expertise, customers consumption-based continue software to of organizations crisis welcome been He core. with data our in and and to product its years storage Chief has all strategies for we exercise the outcomes. improve worldwide. understanding brings for next market, transformation business from selling business directly introducing closely as month, the a resilience and management to we we to this ebb digital certainly their all and our subscription am this Delfino and for me, with just as announced ago company in flow incredible and flexibility into deep at capabilities, our

As QX, reengage customers rush digital new in in we drive companies strategies solve for given their past with to QX have the replan to a in and to plans calls, QX, begin stated to digital reset transformation. This after earnings urgent saw we clearer environment. prior immediate needs new,

the usual are automation customers new As provide self-service yet and with infrastructure. looking to customers these are provide over their organizations away it portfolio. to concerns these their simplify efficient and with future. developers to electronic power, impact business fantastic operations, cooling and savings Pure last done the their for waste environmental largely us Pure the part with years improve offerings in And with of across several reliability makes rising has well the easy made have craving. initiatives, initiatives importance, progress our efficiency, as and deliver and for sustainability we Pure’s position

our expanded dramatically product have We portfolio.

which to that, and native enabled grow application and and our pandemic, now are We've true uncertainties the and remain environment over have as our hybrid capabilities Even to for Kevan. we vision, be economy of solutions deliver cloud, it from strategy the run consumed scale. created for in storage we With turn the a team the a We in enterprise and with workloads, ability cloud I'll development to confident you, deployment. our service. our

Kevan Krysler

good and Thank you, Charlie, afternoon.

QX We by as performance to and are caused our navigate headwinds COVID-XX. execution we pleased continue with financial

total Strong solutions subscription Our sales and offerings. subscription continue quarter. our continues of QX down the value Evergreen as-a-Service approximately the revenue XX.X% results XX.X% the the our down provide quarter. million, growth unified revenue were customers. at Subscription XX% was Product up million with subscription And and Services, and Pure to for recurring million, services product FlashArray//C X.X% expectations and exceeding revenue slightly demonstrate of subscriptions QX $XXX.X our XX% revenue during includes Subscription revenue Services year-over-year. and and revenue $XXX.X totaled was both growth revenue, our for total the beginning pleased the year-over-year. year-over-year, year-over-year our from Subscription strong during Cloud total Block We sales offerings of store. Services as-as-Service unified Evergreen prior FlashBlade demand Pure year. subscription, during which includes $XXX.X revenue approximately represents QX QX growing of

FlashBlade quarter. object our drive investments and innovation highest achieved continue platform in enterprise large FlashArray//C sales and our of needs, high-performance to as offerings the invest generation Our during their customers, their including platform our FlashBlade to both continue protection. including level second Customers, for data in results file

the exceeding Our $X in year-- includes million, our which quarter. remaining or product performance end the or in prior the despite gross half customers, quarter and $XXX.X Subscription Total non-cancelable slightly XX.X% quarter XX.X% year. portfolio, United is was we over of a full which in COVID-XX. sequentially. flat was benefited three reductions our total, a NAND, same which and one grew the Non-GAAP declined We QX year-over-year. and QX created challenging the unprecedented during from to margin year-over-year, operating by declined billion year. Operating product customers year-over-year. year-over-year. and prior during XX.X the gross solution price FlashArray of gross sold point $X.X larger was well million, Services QX, Subscription X% quarter obligations, future where approximately compared product cost less the Non-GAAP approximately year-over-year RPO, quarter deferred gross for profit customers shares compared income prior was declining committed of margins the year $XXX net for Services non-GAAP year. million XXX orders Non-GAAP margins QX as environment and half was included States XXX.X approximately of to in mix year, revenue by $X.X used Non-GAAP Non- at approximately flat systems. this continue during international during to year relatively $XXX.X over shift GAAP million, expenses revenue, we approximately acquire was prior was caused million RPO XX% Non-GAAP Across the one sequentially. one points new reductions during prior during and the point the the generally and was sales X% new And million to income XXX acquired Total compared one Bookings percent both QX in scale. earnings during net average than declining growing margin declining year-over. shares XX% non-GAAP during increased net revenue the million the net of as invest income $X.XX. we remained shares of income QX $XX.X in share during per have $X.XX. share per per non-GAAP and share in of was the as Weighted was million quarter net QX prior the Non-GAAP innovation to continue calculation in year. year-over-year million XXX.X point revenue,

We to are pleased Portworx the during acquisition close of the of completed our have quarter.

of line approximately at investments of through and Our a combination purchase our of QX cash purchase Our cash. is of $X.X Portworx Total funded was credit and revolving billion. the end

repurchase end $XX.X returned During million through at QX, remains. million shareholders XX.X repurchases the approximately Total million of the employees. X.XX share Approximately to we quarter shares. of authorization of XXXX was our headcount share

business Now, moving has of exist. uncertainty by as the and have our remain Visibility navigate we of global of to on in resurgence our impacts our execution QX may caused near-term strategy outlook, confident conditions but the COVID-XX. to the continues COVID impacts, improved, business we

share internal While we business navigate formal will COVID, continue provide guidance. the we to not our but performance, expectations impacts of of

pipeline based growth sequential, see to strong, of opportunity. broad our are pleased We total product

year. However, achieved same the of QX prior the levels not we as have

view revenues fiscal be In will for of QX full total $XXX year is year-over-year. of X% million, will growth. billion, that X% $X.XX decline be representing Our a current approximately approximately revenues total, the internal for

valuable our accentuated resilience are pleased our customers, employees, the outcomes COVID-XX The and are which approximately believe solutions and We $XX with simplicity $XX is we will expect of With a and we our of QX of slightly approximately to during year million Overall, further our revenue, execution performance, million during current the environment. increase year-over-year, be performance expenses investment flexibility for in customers. QX for our view full profit operating partners of Portworx. for and financial operating QX. creating and full including quarter

Our us addition for growth, including will solutions, Portworx, call the growth including now of we revenue strong that, of rich of portfolio recurring for With questions. positions our revenues. the open

Operator

Thank first you. from Jason your [Operator Ader William question line of And of Blair. Instructions] the comes

Jason Ader

of you how impacting Yes, on wanted if NAND have pricing -do that's any that any pent I going sense guys, demand Street hi. then be into update up pricing? XXXX? how -- know you the from might And and to

Charlie Giancarlo

during we very forward. our in call visibility reason plans quarter are it, that's, and your seem as take the hear managing of improvement with improve They’re to a storage good of good COVID solidify end new. the demand to customers data, up to we think to the it We're Good collection and voice. well in for, planning planning and anything All through of Jason. that news the is out I in you, I business. for much terms after that if would you as And as of is transformation, momentum don't I quarter. pleased data can forgotten. for the go I Thank QX, the long pick for what digital even And as more way know, be that very the optimism know pent-up that saw it accelerated. fact the as their the - is that continue able going being to going to is they’re call

And the comes patterns new know, we think new we'll I so believe you of acceleration all spring that optimism to and early emerge. summer, start or you buying see, vaccines, around with know,

pent demand that leave based digital up trends, that's to You whether accelerated transformation you. know, or I'll on that's whether up

Jason Ader

you. Thank

Operator

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

Alex Kurtz

me hear Yeah, thanks. Can okay? you guys

Charlie Giancarlo

Alex. Absolutely,

Alex Kurtz

Great. I week Thanksgiving have healthy. is hope everyone and And here. safe good we'll a

Charlie Giancarlo

Indeed.

Alex Kurtz

software a bigger well, motion Pure focus licensing a Charlie, Sales, your And with move To very to and new Head doing subscription. towards this in obviously that, on brought selling from clear and a in of you as-a-Service customers. of background it's type strong a there's

you organization how how message want next you what's up product, to fiscal how to ultimately would mean growth? be the how to you Like, here to revenue you to start I about, you want the Because for So, - what wanted selling does this deferred if your Kevan, pick frame up. talk like, sales customers year? obviously from licensed? guess, big just would and could And to for be

So, some question, [indiscernible]? big know, you top-level

Charlie Giancarlo

practiced on Global just bet. this I actually, ago a well, my force fully addressed Summit. I'm of because You our entire sales Leadership And couple weeks at

So, the and ask in if SaaS, is with they to the services the to why it's because customer a going is them from they're were are it's for to you world they and not you provide to cloud, the changing why than changing cloud? -- the that themselves. It's are choosing means going develop because just rather better know, the for choosing they -- vendors outcome outcomes, outcomes world

know, internal SaaS, their provides if example, software customer You you direct you will, if SaaS actually providing, customers solution, the to rather a go service, implement themselves. with a a for just to than to interface for it

as a you solutions a are catalog, management which data customer, create to to whether offering forward, so, can service said, go for find and all for need subscribe level online, customers. we figure tiers as the and services that I to want responsibility Pure in tailoring that to type where service data and as-a-Service out outcomes we then provide not now increasingly device And those or completely customers categories you is guarantees. of. our to our onprem know, customer out the Pure their announced it cloud, sorts online. see our to tools able in workloads delivering be go takes that the them Pure for And What of it's measure that of for today, is of what our management, we And they

what service cloud, a they in to know, do approach the you through customers to need, provide offering. increasingly, So and but is onprem both our so

That of they although our that you this does a purchase. for migrating customers be style a as that signaling out would get a up, we've mean with subscription can true. that But Now, to sales, the if go has been largely of CapEx even more of come percentage a subscriptions quite generally to our expectations be sales. picking know, while

- But about you to to tell we the Street this And into forecasting to that. be from manage we will the We're true. sales. improvement overall As that we're the that expect quarter in takes announcements can continue account. providing subscription our that

our And And so, is a we feel of comfortable better that. solution with we course, think customers. for this

the our increasingly, team and go so they customers about good to wants And are sales going changes we're feel the making. where

Kevan Krysler

a from of Services a No, third I'll bit really our to Look, with. little coming revenue know, just add to Charlie. is begin that, Subscription you

revenue great this impact. So, be my start to a though impact total an of we've transition. less will got have in `We'll mind there on some

we'll growth of Subscription that being obviously revenue, would to it incremental benefit Services. that to relates curve our part and as is be other our The see our Portworx subscription

Alex Kurtz

Thank you.

Operator

The of Rakers next question comes from Fargo. Aaron Wells

Aaron Rakers

the around kind for Yeah, taking last comment that build of question. to on I want thanks subscription.

of just revenue us the XX.X% little I balance is RPO a metrics up And it was that's think quarter? how year-over-year. relative the subscription that And think just business? expansion. number interesting remind deferred one was Can to delta there the I that that always this in bit you about true any of Portworx contribution is much

Kevan Krysler

Kevan. is this you, Aaron. And question. Great Thank

would In to to sequentially of it we're the that's look though deferred RPO is be and Pure Portworx between that then differential, when offering seeing significant have would as-a-Service revenue there a the at contribution growth some build. our that RPO, contribution contributing for terms really And not sequentially in you Portworx.

Aaron Rakers

quick competitors reporting Okay. tonight. of just maybe a got up, follow And one your you've also as

Powersports curious, for the now. been Just in or a better quarter market

digital kind poised is update kind if us landscapes the competitive accelerate? say, in on Just transformation what of of you you're seeing to the

Charlie Giancarlo

being I going just here, not not Aaron. successful. seeing to is we're I'm store. mean, Yeah, of little terribly underwhelm the you We're seeing it power

disruptive a products upgrade or when the go regardless against. to anything, introduced to because of opportunity it's of to So us a if which that they're it customer, to customer, an attempting the upgrade in gives always it's sell

it's - been factor. not a been not just big it's So,

been rates have generally very with win Dell consistent. Our

bit no, better. they’re not I'd say anything, different know, a quarter-by-quarter. this You consistent terribly little quarter, if

bid they change most competition they power absent. power the typical more store, max. even has if in power store So, that time, to go that's will their for the I quickly say the us. largely And with of been

Operator

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

Pinjalim Bora

you. Kevin. thank and Hey Charlie Hello,

is The composition first said think of the seeing us help up, question, up last year. as you that is you're as pipeline pipeline but not just on understand the as the the much last pipeline, quarter. I But

think Has early I at is the that all stage. towards curve maturity indicated changed as you’ve head the that kind into we QX? of

Kevan Krysler

great. Yeah, Great question. absolutely. And

know, strength looking some to those composition, of pipeline little right pleased of the gives evolution at our What of terms we internal a we're when QX the view year-over-year which sequentially in confidence actually with You we are peel we're aging opportunities. outlook. you seeing back see confident when is in the we And the in in are our terms are of compare. of our that then QX terms pipeline QX, build us to bit, some from

as QX, better As into we going we a looking build, opportunities. are see as advanced stage at between when we as stage. And you we're much were but are saw earlier stage QX, getting we opportunities balance that, mentioned, well nice those some early

So nice of evolution our we're QX and what in seeing pipeline. between sequentially QX terms

Pinjalim Bora

hardware cash some one driving outlay a try think past change Help you that buying few, that. you a larger of us has that we gathered figures as now contracts. to companies you. there in this and do environment? transitory behavior? with Talking understand fundamental that. And Or preserve Thank right for it's in what's Is to Understood. kind kind have you -- eight your partners, for of been Charlie, even of

Charlie Giancarlo

a it's beginning the buying it's behavior change. again, think hardware I service. delivering say, fundamental of I We're a there. And as this Well, won't

to that, lot disruption with first actually of for They in if it'll be And involved Parse, with financial we it. set and it the service call same scale in We it's the to the customers all. when will long-term want than that, but their to no unified X.X, attention increasingly, software same really without delivering service the a will, holding to service. It'll subscription for you oriented. I have of of scale and So, commitment acquire introduced a full you as cloud. take getting is PaaS every just hardware. the fact hardware. say a usage, also the was and you services, especially We're a construct know, be of fully more it in That customer up aspect fact, at know, that And without managed. responsibility down the to

that it's time about identify just not happens this. and really to on want cloud. do just as hardware. that their see more about It to to acquiring the premises of subscribing And Absolutely. service is over a I I more well So, we'll that be in as think

Kevan Krysler

Yeah.

is second, for a Just really differentiators a we're in on opportunity. I where the our hitting jump of to Charlie from pursuing like think really competition PaaS one product key of this

dressed competitors, their their in different You up if a look tend come of at know, groups to name. our offerings you kind from financial services and leases just they're

And the as experience customer entire around experience. this thinking engineers a really has as GM that who's unit how program. the business service we're running we about a have change We and

tools purchasing example same And modeling rethinking level a their the going. driving service then today workloads, so the what's service, transparency understand of catalog right about uses have where the the good getting SLAs around for and cloud to service launch way just customer of and the entire with performance hopefully at what And enjoys AI-driven you've seen today existing the is looks pricing, that thinks we're procurement service. a open public in a process people then the really

with of Pure. new the whole So really, interaction a beginning it's of customers

Operator

Capital. the Chokshi question Nehal next line Northland And of of from comes your

Nehal Chokshi

strong million more which portion, to was than the -- ago the Yeah, of thanks, guidance RPO $X and as I well, and year is congrats which it discussion RPO to the QoQ, go the in strong especially results on the back in want my million period. opinion. up unbuild $XX

acceleration. still two a $XX the nice on Aaron year-over-year the past But a clearly as a alluded So step million in from down plus to, basis, had quarters.

So, service periods of as-a-Service past seeing quarters is the seasonality there few deceleration you're that a is with that or of offerings? the some of Pure performance dignified the

Charlie Giancarlo

of the amount more the fact Nehal, really, for large deal to did as-a-Service this may this Pure that able and we're build upfront. a be entire I think quarter we

in entire that deferred actually is So portion revenue.

reflected So they're quite with unbilled very at PaaS mix deferred when our we between quarter and pleased fortunate there were as-a-Service for that are in trends revenue revenue, where got we've over build strong we're deals we those to because portion quarter. do deferred some we look those the versus some What Pure being you're Actually looking have at upfront. trends. in

Nehal Chokshi

I see.

Fantastic. Congratulations. Okay. Great.

Charlie Giancarlo

Nehal. Thanks,

Operator

Cowen. comes question from next Karl of Ackerman Your

Karl Ackerman

Charlie, afternoon. starting first, good Yes, with you I if may.

the Are is Europe, outlook follow-up commercial. improvement I quarter? in seeing particularly the in giving confidence onprem any rebound internal are U.S.? you you that Thanks. considering across sustained a you the seeing actually And internationally, headwinds January for in have healthy, a Your Or greater is

Charlie Giancarlo

Yeah.

Karl. interesting So,

So, international COVID in shows business general. really of the on I think effect

you In effect lockdown, as know, latency September, crisis overall improvement on earlier around And bit our know, early to as saw QX in the in real U.S. -- same time came early of we in saw right late international go saw into the in in already a QX start we and the they Asia we we out you little uptick. but than October. the saw back general we but business. particular, did started So, with international an of Europe contrast,

have transformation the But for become, their an believe why in therefore, we're does robust local it plans. So they're do QX. little say, pursuing of IT really COVID at bit let's more it's to more COVID happens digital the economies, country we have And And the that same environment. to on businesses hit. a cautious effect terms in accustomed time now operating and whichever

optimism, kind clearly, looking once, I the we that a we turn the So how vaccines, Europe Even that QX they down But -- of our spring, in right when with we saw this in effect crisis think of out And now. expect in year. the gives feel summer phenomenon. saw feel cautious what say for we with same let's us especially, --we that at be we in confident QX. spring don't confidence the of think longer-term the then this to spring came around that'll we're

the believe to few are a next future, looking cautious. the much reasons but very So to be months we're do bit more we forward

Karl Ackerman

Yeah. that. Understood. Appreciate

as When quite your shift over from investment You OpEx toward I recent underscore initiative. XXXX of sales think does that, in of How that a it's if marketing? to will OpEx and and be be characterized about desire quarters? that we by on to great your do the it's year offering next you. Kaven, today think helpful. that impact Thank side, about recurring acquisition get that XXXX model. would side, increasingly because revenue the sales the I ability in service your how modified we approach. leverage couple But portfolio expansion our But apparent could growth a really, think, guess know, For we've an we OpEx a think about an

Kevan Krysler

transition as-a-Service Yeah. even potential, Thanks look Karl. margin leverage we're planning with and about operating When on I subscription to are the think achievable we as increasing to year. offerings, both our Pure next that our very out and

this growth especially investments, invested you year. board the the into some of making leverage efforts if our we're to think great will, we next year going kind as curve, of ahead I across

in operating growth profitability actually even margin considering offerings. when So, looking and subscription our I'm to improve

Operator

next SIG. Your question Mehdi Hosseini of from

Mehdi Hosseini

was the want developers project, way especially year-over-year that of about driven better just on questions. services. presentation I app Thanks to is specifically my and customer When we a basis? obviously And right year-over-year addition clarification. the mix with for if X impacting taking that slide basis. just shifting. a new is slides, declined change the revenue probably the what get two Is number Is subscription driven your interesting, some thinking customer the has But by by of more X, type, that to the go more in on I and follow-ups. have

Kevan Krysler

mean, and appliance our take services, subscription. free then to offering, which that I'll Pure or Evergreen on. first, our add I to we our feel Well, customers, about our our when our contribute purchase either integrated new with would customers they'll that will Charlie purchase subscription think new as-a-Service comes

Evergreen But well. customers getting momentum subscriptions renewal standpoint. amount And of And we're customers. significant are continuing from that really from as the coming a so a our into play in also momentum who with existing to invest will that is it

to answer question mix And so that hopefully would the that specific occurring.

Charlie Giancarlo

as overall point terms the answer, new you also me year-over-year. decline customers in of of in a mix let out, Well, and

that lower environment. pretty new an more gain able from commercial tend customers new to logos, incumbents are being new the of a break the we're again, number about have customers because just And commercial. you'd percentage a all, growth of were to so enterprise under given are as if more cautious COVID course, good enterprises, the in numbers That changes what considering current to been of we've as in advantage out than bit to is, in know, the because new say environment, more a customers as I First net worldwide terms of environment. COVID to find and in pleased much environment, the net with you clearly, their pressure existing said, down customers have logos simply the new of or -- is you

spring, abates, expectation should again, that we hopefully our up is the in good So, pick pandemic when by a Corona this. see

Mehdi Hosseini

think But as we Charlie. about from recurring more will customer thanks, the momentum our revenues base probably be existing well. when Yeah, driven

Charlie Giancarlo

Much base. customer Yeah the existing more from

Mehdi Hosseini

increase Now, of you have availability revenue, product look year one the fiscal would housekeeping customers product and at positive along I QLC that passing -- increased up, follow the on into more looking we share? to to NAND, margin going next quick a impact item. is a market that of or to as When prefer

Kevan Krysler

a try. take Yeah, me let

markets, suppose the used would the penetrate great environment. in economics ones with know, be is therefore, strictly into I a company new I margins it's such, and in to we're with space to little were belief than as my to think utilizing that. that confidence expect disk able disk us you that for primarily margins to an I be early competing on QLC bit our rather and opine But And be consistent are overall to that, enhancement. first with as

it it will utilizing over it I be term term, expect may in improve the market. product But short that think margin. the overall I long to penetrate that into

Charlie Giancarlo

of say product somewhat And our being the also I'd availability was implied your and case. QLC that's question by that, NAND, not limited that

now. second largest the We've we're the XX-terabyte our GI industry, flash now generation product You module. QLC shipped that know, in a in being module of

And we're view of so, the market. supply differentiated really a supply point place in we And believe a great product. in that it's from really to

Operator

next Our James. Simon Leopold from Raymond of question comes

Simon Leopold

for question. the Thanks taking

responses made First this scenario announcement could thing publishing I more your wanted to One I catalog. ask you've bit consequences. this a trigger about today I'm price the might service competitors. trying the potential suggest about to think guess, from wars little about

On discounting I maybe given other this less you, print out in could the prices hand, imagine for that to leads by customers. putting you're your

about this scenarios Just from how taken. action wondering outcomes various the or think you've you

Charlie Giancarlo

we're it's the further I'll this Do on first Look, customers rep demand along own. stab is, because they’re that. when channel someone doing research thing to and customers take their a pricing want increasingly and sales the buying process. first guess a the I at contact here solutions partner or understand in something then relative self-qualify much

case what chops much how the go really in there And cloud and this service is, customers a Pure to In digital in point more being from MSRP our publish market the to this about so, catalog, are we view, buy to all able of prices. upping sell is want model. of

get discount our through coming programs obviously can channel so, working and a not customer by Pure published. And that's to and

there's still levels make what some, see catalog good them services service to what know, see different so can choice the is, a the are know, or does performance in do allows around. what they are, for you you So, negotiation room very the there. openly it But

XXx get for Okay, increase And XXx worth now Xx range in spend is we pricing the it a performance. of if tiers to you in order look a performance? of amount introduced, at certain service we've that in in increase indeed, range a new offer a

range And load the of there's in a their level customers every services environment. for have and service quite work right so,

Simon Leopold

That's just you I this helpful follow about Q&A, talked up, earlier think very new maybe as to normal. and the customers a in adjusting

as a have available basically, we business. decline how yet, normal do your think and as of it to sequential that that a we your backed next are that that defy customers seasonality, catching aren't adjusting period? up you they to we you might didn't have muted even With do next worst business Thank are your you. year, to more turn do the don't pandemic's in So customers fully mind, quarter, widely might as during they vaccine sort

Charlie Giancarlo

seasonality. year, time. be going spring be epidemiologists that more to through to to early will point COVID growth be here, I then then, to we're back Well, I expect right would start Look, that because the normal of it's know, that back that start that than on get expect beginning see And seasonality That's muted and you might to so with point from the world. hopefully not planning I return know, time across suggest to, it's might around forward, year. would an of think and but get But bit the to, interesting what our at the to fair you then would abate we're question. next expectation greater end a little say simply our year the in a the that economically us

Kevan Krysler

in with environment, we in strength performance pleased really help quarter. I FlashArray//C. sequential to And we're by pleased I couple the look, was But overperformance is positive, of sell customers a of are QX. seeing to see resurgence performance Simon, this in FlashBlade evolves new Back globally. saw I our of our QX what going the what throughout resurgence. how think we're knowing we're QX, What to point, terms see was this Services, to because I QX is to purchasing, comfortable COVID drivers, followed in things. QX currently just I terms actually, see seeing mitigate your think, then confident more folks to those need growth being Subscription we will in and in think especially And from how

direction. it's And point, we to coming Charlie's in COVID So, do to together expect QX. creates certainly We're the that uncertainty. continue going for right in us.

Operator

And Tim your from of comes next question Barclays. Long

Tim Long

Thank you. if Yes, as two, could well. I just

wanted Just follow on FlashArray//C. up to

are applications, Could a see that Gen maybe take deal just second, give you rebound think X And Enterprise that businesses little Just it's sounded curious better like what new then give Gen of small-medium to you color you customer around that us, strong. product, just, product what seeing it from Charlie, us win what sizes, just you. to rates, as pretty you kind X a from if evolves? and could you Thank of to learned was group? going

Charlie Giancarlo

me let well, Yeah, give shot. it a

small In have have think terms to invested online harder were I of one as many as medium because well, have as the first, let -- the commercial were enterprise. already second it. with perhaps large entirely mid-market as we other me hit of and not that which the companies as start And is group identified been crisis large in enterprises quite had that the ready than operate they as by COVID a the

So economy it's will I help that. a stronger overall just generally think

I'm very economics, the fast, the pricing the we know, As additional allowed indicates that its us that after the market sorry, me gave tier continue. see, us, from thing disappeared. it's FlashArray//C, logos to far market being allowed completely to is has know, with days a there think by you momentum secondary can introduce The with the indicates the new flexibility but pre-COVID able that healthy target net you you and true were question. difference of when main market, first still disk it that go QLC, part primary muted big it's from, I is overall. not commercial remind But to And a early the made disk and

Kevan Krysler

Yeah, just guess very It use run customers sell that very of range been of I for turns arrays the product a and that disk-based cases. hard finding is to wide selling out use going it terms in of cases. been focused hasn't type of that's

work their customer ask them the less the need XX% and actually are it’s disk a simplicity expensive brings it can that way just to easiest why the disk, who's performance go you with And running is market array, benefits of and we application to they look, of with and than do say, if we disk a actually understood flash, still? flash go to bought FlashArray really sell old to so already of space. in still high and to them end an And at the

Operator

of Martinuzzi Lake question next comes Street. Your from Eric

Eric Martinuzzi

transportation, apart have healthcare, a resilient vertical. little pipeline financial the your pick other I some more services, assume you is COVID the been sequentially, know, in more to of strength seen, by the least that would this government, verticals, that green hospitality, sort of exposed wanted entertainment, from at you've that I would any bit -- the thing? shoots verticals,

Kevan Krysler

know, from some more from to buying changes our that. faring we to us verticals they’re in begin with. were less affected couple out But seen - signals how any we've shoots. say no, You now can't right we've -- But the the significant say in not. quarters. as not Eric, that at least I of last I I over showing would to exposed of those industries of call point view, would green the

Charlie Giancarlo

it was I global. strength, broad on The enterprise and and it Kevin, was based many was would that. of our that across Yeah, add verticals

Enterprise, broad-based green was had new looking actually that the for of Enterprise We've terms in was at. in a us. kind board shoot resilience were for across us saw but what of on we pleasing growth we the So

Eric Martinuzzi

in well? as echoed the was that And Okay. pipeline

Charlie Giancarlo

Correct.

Eric Martinuzzi

Thank you.

Operator

comes Katy question next of Morgan Your from Stanley. Huberty

Katy Huberty

And down that Kevan, on back Good the planning on as of decision quarter you. hires you Paul's in step to afternoon. make are revenue Thank contribution what's or you're any And embedded departure? can there color that's fourth his changes then, provide your the a Charlie, internal from Thanks. model? other Portworx to bit more CRO?

Kevan Krysler

I’ll Katy. first, hit the Portworx

actually Revenue Paul? that contribution look QX. build you as way RPO revenue. small Charlie, to in making starts pretty super of its with acquisition. see probably way hit, want we before that significant strategic into terms in start and in out meaningful excited You’re We'll to or is deferred any revenue the to

Charlie Giancarlo

required company that as our year Thank to capabilities part Dominick, Officer felt Paul a to could Paul In of not to into so I Jason you, really Officer Katy. so forth, coming his bring company. been and number Operating and had, know, past started contributed to And Yeah, Dominick to the a now the Officer with and that And had of that as into company. that that recruiting pursue. lot Dominick of, that he's the Paul's at accession board Dominick lot and to for brought look, he or opportunities conversations lot Paul structure of the the Rose been I a that want handling. on also here. go contributions And feel Marketing at we he as Paul a agree and I given operating going the Paul Chief you was we he's of Revenue that really had and Chief over really strong given the to recruiting cadence. had company role role was was operations a the were thank Chief

maybe to it so was make better that And change.

And that to salesforce now over moment, having right so, a leading our I quarter agreed full Dominick salesforce, in really journey. as going two And next want And et I do thank that. the job. on the the continue through the and for aspect has the Paul is to And size and cloud to revenue, of a thank almost Kady the with signals Dominick to with product a want the over our done this onprem then he great to to the Paul we smooth the increasingly both company, a brings of time gotten now Bringing for he end the on a us single of on. this contributed. years of we're as from has portfolio, - basis. cetera. in subscription. every background company, a Kady have salesforce of the ensure the what the for acquisition step of I with size and has changing to global while product well his moved of moving period last leadership us type we’ve three his company, he's doubled move Dom fact board

we're that so with And very overall. pleased

Katy Huberty

you for Thank that color.

Operator

the for concludes remarks. Charlie time, the turn this call I'd question-and-answer. to closing Giancarlo over At like And this to

Charlie Giancarlo

much thank work stay customers, not your on our to working call to And joining it's the for a of we employees, our all for need and better with forward looking our of in a to yet. like you I'd know, closing, I'm In hard a with I you partners, year time future. all of you. happy of family and to rest. all our over and you safe us look the with very build the and Please Thank all have It's mission. XXXX. dedication all Thank been Take take and to today. engaging please Thanksgiving for you to forward you. care. wild