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PSTG Pure Storage

Participants
Sanjot Khurana VP of IR
Charlie Giancarlo CEO
Kevan Krysler CFO
Rob Lee Chief Technology Officer
Jason Ader William Blair
Aaron Rakers Wells Fargo
Simon Leopold Raymond James
Rod Hall Goldman Sachs
Steve Enders KeyBanc
Tim Long Barclays
Karl Ackerman Cowen
Call transcript
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Operator

Good day, ladies and gentlemen. Thank you for standing by, and welcome to the Pure Storage Third Quarter Fiscal Year 2022 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. introduce for to Mr. conference like now your today’s host call, I’d Khurana. Sanjot Mr. Khurana, please go ahead.

Sanjot Khurana

good to name afternoon. third and Relations you, Thank Welcome Storage. XXXX Vice of conference at Khurana, Pure quarter the earnings call. Sanjot My is President Investor fiscal Storage Pure

are Charlie me our CFO and Giancarlo, Kevan today Joining Rob Lee. our Krysler CTO our CEO

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

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

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

is the that, the property is CEO, broadcast the of over our on I’ll being of and Giancarlo. to to in purposes. on orders. total Pure the An for prepared webcast refer and Investor call will With excluding we sales archive Storage Relations the be the This live we when being remarks, Charlie cancelable Additionally, call recorded our bookings turn Pure Storage. website is website playback IR mean available

Charlie Giancarlo

everyone. Welcome

today get you many terrific to of Thanks for American and all us to extend you joining our us quarter. at ready Pure Thanksgiving, As discuss for families of another

We innovation pleased with QX results, together. our when what great enthusiastic which and focus are work demonstrate achieved very customer can be

Our quarter-over-quarter both international US with double-digit QX across lines revenue the was up markets. all XX% and product year-over-year across and growth

this We strong a in market. all are Pure and share steady customer With continuing growing and sustained key through also with continues across year. to growth regions, profitability and fiscal trend this our products pleased segments, large take

to in experience Pure to while aspects modern our and strategy Our our every data we services and firsts industry the on applications our new Modernizing experience. demand. product the as multi-cloud all closer latest infrastructure, their data deliver together quarter application, storage deliver customers to portfolio data defined is to a to deploy operation and the allow this data continues modern enabling brings partners with customers better storage on data multi-cloud manage we major quarter a software developers to advance Fusion, lead almost of even self-service additions will that that new environment, sophisticated environment a storage announced

data self-same experience, engagement will everywhere PureX has services Services, with enabling We to enterprises also our further a model deploy operating Kubernetes, announced grade production and together allow been digital on Data quickly those is which cloud and advances strong. for Portworx developers Pure

third more available file infrastructure Our not in in of customers and given strong and innovation, to all and Today of modernization full breadth rapidly revenues, and again should execution continue surprise unstructured Pure’s are our we growing see the primary storage represent for validated in their platform. a a market Pure’s speed our both next December that once Evergreen, has Quadrant, leadership will Pure purchasing it of across Magic a as and Pure object of Portworx, X, on push as which of the FlashArray our data, breadth Gartner growth vision announcement are our even more portfolio. extend together recognizing and Storage service, service further the be and a capabilities

chose ability SLAs with performance full and a work FlashArray Massachusetts a object. the Pure describe a and data what for a of our quarter, for scale This Commonwealth with competition was provide and they file can for data as The block cost solution service Pure provide And rapid Portworx and FlashDeck reliability service offering recovery suite as and ransomware Commonwealth capacity. fast that type applications. transparency, seamlessly plane effectiveness. delivered through protection with unified put our them modernize of an said to as the what any ahead to and containerized Massachusetts and FlashBlade that of all

the enforcement and their federal are One strong cases sector, state criminal law progress personnel an provide agencies. to under no their application and enforcement and fast in they segment governmental and Massachusetts to agencies of law a and to be degradation use steady long Pure using am I for increasing international the modernize access seeing with of record safety see governments load, with even first Portworx that public the pleased local continues traction will will information we Pure adoption Pure. have strong heavy public. been and for US distributed

to now news companies Global of branches Fortune to data very our turn minds. in on topics is the Fortune's and XX% Defense. to three which experience companies, modern continued Department and the now XXX almost instance more branches all speaks the our than federal growth. investor’s For XX% to deployments briefly Enterprise in experience and proud I of of markets to US of of list commercial we universal the appeal deliver US two XXX of have strong and much the portfolio. now government three Pure will

of how speaking, IOPS am next competitive appreciate chains use seriously this in year, immune when less and Pure’s power prospects a to power Pure Simply look subscription. Our becomes Pure We referring calendar global environmental offerings. dramatically forward first customers expanded waste and green this in and solutions mind, advantage not everyone's environmental, their waste less customers create than footprint. throughput, report and very take and are true their am governance and beginning to achieve by energy, ESG objectives. social publishing helping referring our products no far much to Supply and is evergreen I learn I scope and early partner reduce not or responsibility green our by the space our on to them to and company and disruption. energy

have and our with trusted the As built strong, a in open based Pure partners. has on we robust relationships reported chain past, supply very

continue sites to quarter, continents and global was and Our responsiveness. flexibility, than next enable this strategy quarter, environment multiple last incorporates past and manufacturing This and operations resilience expect semiconductor year. multiple availability global on challenging into to we in more

Dan the shout motivating and may how over out face. our to Officer, in a six team who data have of at individually our well our all strong our that our I'd experience give the we've am employees bench years his business. deep him, to many increasing like executed, we is our at they Knowing challenge Dan recently built every company. the customers is with thrown Revenue other world special Chief America's our have and delivered well, and leading are continuing to incredibly operations and helping leadership However, impacts and partnerships modern to to salivation people FitzSimons, new I business and most customers, Pure suppliers have the our continued challenges Pure our innovated, minimizing congratulations excellence. COVID to environment products team. to work the proud of to risen has indicative the across strength despite we've

Given Pure. you. our the and Kevan, and over remains to team, of of strength partner the for quality customer the effectiveness relationships, our bright future our the products of

Kevan Krysler

you, good afternoon. and Thank Charlie

orders. continued profit segments. strong of are across excluding as We the entire balanced well countable delivering we growth as the saw during It incredibly by quarter high XX%, and The demand our growth strong key robust was execution market evidenced and very our quarter. portfolio, with this operating across our an sales pleased was both revenue portfolio, geographies our demand

includes of growth FlashArray//C one quarter top sales also XX the this Our to hyperscalers. sales of

chain supply that for environment, increasingly constrained Our execute, and our customers, team dynamic. disruptions to continue minimizing supply suppliers is an despite

with performance pleased subscription value approximately XXX XX% day as was billion, XX% of of Subscription as annual growing obligations or plus on-demand the growth. last revenue, new XX%. noncancelable committed includes improvement over acquisition QX services year-over-year $X.X in year-over-year. ARR representing recurring Remaining XX% grew future Subscription new revenue. the last active or which of and an RPO, business saw our customer at We growing subscription revenue progress our quarter, contracts at was revenue also to subscription the annualized with compared customers of continued are We annualized year. of end includes $XXX the million at ARR all the

balanced were geography, across acquisitions our solutions market and portfolio. customer segments New

over which Our total XXX customer includes companies. XX% customers, count of has exceeded X,XXX Fortune

turning specific Now for compared XX% the in financial last grew quarter. Revenue XX% States approximately million. to grew revenue to $XXX grew United revenue and additional to the Total international XX% results year.

the product XX.X% Non-GAAP demand non-GAAP to was XX.X% total FlashArray//C decline sequentially XX the which the gross of QX. margins quarter. non-GAAP approximately the total growing very in this strong driven were compared both year and With including margins, were last gross this sale to top of by hyperscalers XX%. is quarter, in revenue one strong, products, margins, The gross

expenses strong top quarter. quarter trend the profitability. $XX hyperscalers million this from continued to gross of during from X,XXX sales the Cash benefit quarter and hiring. subscription increasing over of that environment to $XXX quarter. XX.X% the COVID $XX very again margin Our with over and and saw million were and These growth, of repurchase operating end sales Increasing quarter. We operating non-GAAP increasing flow relate drivers XX.X% of supply At approximately product quarter. reduced one are share achieved two We the our planned X.X services We cash quarter to contributed the impacting shares. FlashArray//C this the margin approximately $XXX of $X.XX points million a of the we nearly than capital effects quarter ended and extent, we're physical estimate XX slower XX program. this were to environment significantly costs marketing lesser billion operations COVID effects our our this million slightly million, have to the revenue primary $XX.X the of expenditures approximately quarter. operating travel, remaining million non-GAAP generally repurchase and profit reduced events we of the Non-GAAP to this this at efficiency capital to million approximately employees. margins favorably of returned chain margins in We of

we QX strong guidance, be approximately demand million, QX to in to revenue XX%. turning growing estimated Now expect with $XXX

operating profit $XX million operating to XX% non-GAAP margin. with We non-GAAP also profitability, estimated be expect representing approximately continued healthy in QX approximately

highly our For QX profit will why year thank the to approximately XX% we that, strong In turn to Non-GAAP are operating We team a annual the closing, questions. guidance. FY are can margin. our full portfolio over partners will the I customers want so also channel is our our is operator choosing in fiscal XXXX non-GAAP approximately for With million operating your differentiated be get to navigating growing services continuing we environment. that billion and outlook given our be now terrific expect revenue QX and representing results and innovative entire business of to deliver while our Pure to and estimated $XXX for it $X.X performance XX%. raising Pure. dynamic approximately I for

Operator

the Our William Instructions] is Blair. question line first [Operator from Ader of Jason from

Jason Ader

to I didn't know something. me if dance a do you wanted or

Charlie Giancarlo

Yeah.

Jason Ader

Okay.

be well. can to the mean, main I outperformance, easy, pretty guess are driving you a of question is, my weird is your I bit obviously, really but seem factors given guys to you that the a yeah rank main So, year, this cops water executing

as you struggling maybe macro we that's maybe don't and execution, in competitor your new weakness, supply, know just of then know your to well factoring products think competitors that that some because performance? with So are I and

Charlie Giancarlo

we that that thank everything Jason, question. very of describing the quarter. say sense well the first went And time Yeah. a in all, this hard had very, quarter this only past for you I'd

was going So any that one else well. thing really calling seemed only out to very diminish everything

growth their the to utilize advance these the which we all will forward. investments to of extent lumpy added continued a out be business, investments in you of contributed saw the as as really out, we and promising longer pay enterprise, us this very us to our we've contributed very, be it's year to if are very even The to much as broadening fact infrastructure, were the among environment, quarter products enterprise, the have comparison balanced technology And to balanced coming advance which we’ve hyperscalers force our the to and of we continued sales fact to in quarter. making that strength. of made But, that pretty strong fact the course, very comps in we've that we invest been as COVID over again, pointed so point two our these our think continue sales dividends will all mentioned, terms. comps, the easier, across to strength the even Obviously, from major together you investments that, we that a general longer, this and line go to So that, looking the for new I balanced technology to that force, be lot across out, terms that product to the did in we've enterprises. but the

that? So does that does

Jason Ader

Yeah, broad margin, outperformance that's of COVID some obviously, from for us? thinking points there And the just top mentioned And about benefits. related that's And just strokes Kevin, XXXX great. both this year serious kind got is you X operating should then, line? that, you early we fiscal fiscal And and kind on look you've coming of any be how perfect. XXXX then at

Kevan Krysler

lens from Yeah, Jason. when And robust. think again, to a about be we it demand continues

beyond as see think change wouldn't about significant we I we look in As QX, a demand QX.

specific a then A COVID Look, with all so these views, remainder call-outs in think Jason. that's that the the reflected we is that hopefully reflecting continued for also year. do the out to when year year. a think you mentioned being but we quarter terrific this well as environment, to of next we get bit to how about probably into plays couple it's rates with QX. guide And would helpful, when well obviously, that aided think next said, the like for take as hyperscalers about mentioned that growth early I year, opportunity reasons, of see Now, this need when strength Charlie are next that's do is great in But by account. as consideration being we about our

Operator

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

Aaron Rakers

think there that help I opportunity deal, guess, taking this kind how I build last quarter, last you I meaningful about point an figure [indiscernible] all this last for Thanks talked can question. of cloud off Microsoft was follow-up. quarter your Yeah. cloud of expectation the think is something follow-on talk from for I you us impact eight any you that that quarter? did I that deal about, you and relationship with cloud announced that or a may the a was that or be in relationship have separate can for recently Azure is opportunities EDA, a and a vein, opportunities last same

Charlie Giancarlo

XX would think felt architecture hyperscaler. yes wants we confidential, that very we from that customer is hyperscaler us. certainly on one the the performance closely that work But have for workloads where that's or have customers we it, announcement EDA EDA develop don't speed Microsoft to we top the certainly necessarily – announced Right one to not is it to that it's Aaron, want have. very all, something if scale but - we first is But with restricted separate that high believe going it this could workloads, obviously on no we EDA okay to EDA to keep well restricted it's the so of the respect so was the we

you we've to was Kevin let but hyperscale respond that the how we're I'll how different. quarter. insight into given the the with affected looking forward some hyperscaler So

Kevan Krysler

high think not than Yeah that good I about be how we about of quarter hyperscaler more guide. you quarter, But talking a came likely were would about exclude hey mean last it’s way is to we with thinking our in it. if the completed, our that different being as this part to the growth the were it be quarter opportunity year-over-year if through XXs

Aaron Rakers

nothing I announced fulfilled but this in quarter. booked there's last so that's this it top win. wind from embedded quarter a we helpful. quarter, understand and hyperscale We And the And XX Okay. just it

this QX. So is that – in

Charlie Giancarlo

Yeah.

Aaron Rakers

Yeah. impacting gross plus curious Do Day of quarters? I'm achievable gross at margin you you the up, follow outlined And abate? deal to then start Analyst Thank that next the I the XX% gross still and just margin, talked that feel on comfortable that the that think how and margin, stuff, know product should think as you. is do couple we quick you about hyperscale we in gross that margin. about but those, cost headwinds

Charlie Giancarlo

about high driver, think in what a margins. terms increases the perspective normalize back that's sounds from That the the the typically that subscription think lower to our hey, that were gross a XX% it. was you we what it obviously our or of margin, when expect quarter QX, think drop did I But in in opportunity look good the gross have we some into gross considering And we obviously in to we In total with the much see we the but about and be was contemplating. great. would do saw the quarter, this margins product margin I product the to XXs will, hey, that akin a gross or saw costs if looking product even year-over-year in about component, we're headwinds, subscription, on largest that is I increasing when driver cost think the way Yeah. business. more And really sequential the hyperscale

Operator

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

Simon Leopold

or guys know I Pure terms of [indiscernible] been the so Fusion I within the you where field mix, revenue in new, to question. are has [indiscernible] the [indiscernible] wanted is software the but [indiscernible] product Thanks. contribution Appreciate around taking you

Charlie Giancarlo

Well, Simon, as.

them products As the new on that tend the total In well future. range say of revenue lumpy. products to line. they through Pure their have breakup Portworx the know, a would gave in what too on as you then on focus out much especially a new digit I you go three grow, would say, be last to break color But tend I on on be I find probably to as terms year-over-year, we new percentage And They as in the they not as-a-Service. that, quarter, cycles. own Difficulty] [Technical is

Kevan Krysler

Simon. Yeah, [indiscernible] reflected with we're and that [indiscernible] that's of as you seeing delivering our that's that's subscription Solutions [indiscernible] numbers. [indiscernible] margins software the ARR with on growth the software is part look right, year-over-year, we're pleased so both we our that, on gross subscription out and in at

Simon Leopold

Thanks.

of in as follow-up, understanding you a So either the this trying looking a use make maybe if this really think question repeatable opportunity, of this and new customer we with grow undertaking a is it as is or if a to for this should I'm about unpack just other get could see this to repeatable for for… at opportunity, bit I'm case to a an I hyperscaler what customers. wanted an [indiscernible]

Charlie Giancarlo

You're right. Thanks, Simon.

I referred to might have also I on, So early and think Erin mean this

Kevan Krysler

Right. Thanks, Simon.

to to didn't – Aaron on I have and early might think respond also I this referred it specifically. we

the to believe let and general case. me where that reason to with I continue. not in use let So for it's want us conversations off it's No hyperscaler, repeatable this Rob on particular we weigh do But start believe repeatable. just

Charlie Giancarlo

Yeah.

So as hyperscaler production better of understanding their case, the use do analysis as environment to this they're how and and that an essentially to deliver It's environment is this using an service. part the far of environment.

is environment. it production So of part the

of repeatability the as far the as case. and it’s think understanding, applicability just use I broad

capacities part options performance we're is I the to fact a size equation. very and this, think the overall them. here, that was available notable that the requirement. talking Obviously, the And evaluated is a customer sophisticated what's about the all cost of

line the I with the But a the balance winning and of and of option, only deliver think it's we're Goldman Sachs. comes forth. thing and a the quantify but with same really we're customer overall undergoing, quickly delivering solve needs, conclusion Hall all able their And every of Your performance, our FlashArray//C solution that next noting that The deal. And now initial work that going was so to with so this that are the footprint nice price, benefits worth savings savings is also disk, each to of FlashArray//C key was as part to obviously pretty also environmental question but to came benefits them ESG one of customers. that was that their Rod the part to the a with Operator to footprints we're analysis. these from

Rod Hall

quick extra this there wrong, my fiscal I I Hey. be week double clarification just be from campaign probably I just to in indicate want Thanks [indiscernible] that a seems but check. for this might that to wanted QX taking but an year could

Charlie Giancarlo

Spot on yeah.

a of in a the about is around million, of we revenue additional contemplate have terms do this headwind revenue as so Probably the for way OpEx in on For bit us of is a contemplated million, side. in OpEx as QX I an -- is week. terms for fiscal year revenue both $XX thinking it and to profitability. we the both it from be QX view side good our with equal that OpEx $XX a side and and additional week about The an

Rod Hall

and you. follow-up. a then Very have helpful Got I

So just on double roadmap. want I to fee, this hyperscale chartered check

more [indiscernible] accommodation customers hyperscale players or of having are about thing digital fee one anyone feel had forward more you for any would evaluating I model who Now be actually be potential asset very helpful. that is going hyperscale do obviously roadmap but color is on there traction might just we the

Charlie Giancarlo

and it's crossover their strongly best the flash business. happens. have hyperscalers be to flash. where disk declines And matter technology particular just inevitably instance will relatively a in We there's from including the point use disk, the everywhere that to that or decline of to start to believe -- player magnetic it's do we switching time before just case a that continues in all, the very Yeah. every Well, first of as going

We conversations are parties. multiple having multiple with

-- these think when they're I that you're issue too waiting. it's environments they're when come is early they big, to do with large come they the uncertain don't lumpy,

So it's is is little matter a for believe and All and a speculate to right. are we it. time But of in I conversations that flash us a used more think before just there substantial on early it too is way.

Let's say in the a hyperscale mainstream environment. in way

Rod Hall

Thank I you, [indiscernible] are revenues assuming in And revenues QX finally hyperscale? from Charlie. think any that fiscal

Charlie Giancarlo

expecting hyperscale We from in We QX. shifted are not that sorry. at all particular revenues that point. I'm Well,

There's the Okay. residual part, in revenue it some for most but no. QX, for

Operator

comes with Your next question the Steve line from Enders of KeyBanc.

Steve Enders

for built I and macro should question. environment ways there. over here? to thinking kind the we has bit see be Thanks past want into guide within expecting how a of about the the kind how guide that days? played strong that Great. the just out [indiscernible] Okay. talk That's assumptions the pretty taking the you're of kind XX what's to But on leading revenue of guide wondering to more just little

Charlie Giancarlo

performance current I'll direction start QX. and let what not the into me on based the to we any major today Kevin not the let go had see changes in Well, contemplating – market of in then certainly world we in it. economy. We're that we're the It's

effect. continue We're macroeconomic COVID watching is and expecting same more So you've in to of generally news the of if forces. a the been seasonal watching expectation the terms figures, it's probably having the

perform for lot of - times demand [indiscernible] customers relatively a our it, don't will see change on expecting lead a order - is business in but quarter, there's a not our don't the this get make bit and based we the that fundamentals least what have expectations will to and can coming it we out think major - to know they that how strong at that we low, is we're we not they so demand, what system. not believe demand demand there have strong it's gain worse, when when need business seasonally So market, will fundamental to that think our our stayed

Kevan Krysler

terms drivers of don't point, in of probably trajectory meaningful Yeah that is real to I there's and QX what no bit seeing to more demand add front. QX. we're change still on Steve COVID think little on about visibility a in I at good looking what we've wave of the terms much wouldn't we're as in a have Charlie's looking think got in as European how those we robust at. terms think No, on we're will more I the But understanding of again, be that,

Steve Enders

Okay great, might little on kind - in hiring plan of then on call like, biggest seems of of that's a and there But anything is the quarter. there challenges terms the just just see bit that the that kind see are been when helpful, environment, behind have where it beginning it to out and in you to reverse?

Charlie Giancarlo

that that an a - was interestingly let's out recruiting, year, this we’ll on the slightly by somewhat seeing now would more last quality the hiring comparison some is year, higher say no to I of it, catch can quality would of up? lot resumes on average very we're lot I in stands that year we’re to to a say be is higher context than Yeah, the lots of blocks one fill. behind confident board, than - able interviews function that that for there's But average the certainly say, years, - to bit one year low a being is bit attrition we across this put last bring need

Kevan Krysler

And guide pick-up but only to in and And that cadence. team, our and QX in of that's terms front. talent that's sequentially. we're a that, obviously are nice talent the hiring not a that we as OpEx also been well. hiring doing pace you'll additional pick-up seeing contemplates add Yeah. a on just as see job acquisition contemplated the And I pick-up week, seeing the that to Thanks on in would a nice

Steve Enders

Thanks Thanks. taking Perfect. the for questions. Okay.

Operator

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

Unidentified Analyst

Hi. first Thank question. is John of you for taking on Wamsi. my question. behalf This My

the quantify was the from you've revenue headwind standpoint… constraint supply impact chain if the wondering mentioned quarter. So face maybe I could just hospital about a you

Charlie Giancarlo

Yes.

Unidentified Analyst

the Thanks. I …as the guide wanted to reflects chain uncertainty. just supply confirmed

Charlie Giancarlo

our what just have is a to well a quarter, job. for at in engineering year-over-year. look, then continue and I Maybe impact in terms the and I'll our look tactically when both operations gross and of it maybe think Because from, drop about team talk Yeah. the And it just team I saw you margins quarter holistic from do obviously talk product terrific more as more Charlie for the do the as sequentially a suppliers standpoint.

to that component during due was and that, As competitive is the we piece slightly quite saw That increases our really the I mentioned, the smaller cost stable ASPs in still marketplace. are that the fact by were moderated quite of that a quarter.

I'll to that, with to a more over give holistic comments. some Charlie So macro it turn

Kevan Krysler

On we associated side, yeah, supply with the all, chain. macro all costs see the

supply have increased So all chain, component and the so XX%. on approximately order costs the of all we annual an with associated costs basis think transformation on logistics

So in traditionally and products. that's for a significant cost deflationary technology increase what market a is

quite So significant.

we're point year. supply remain increases going tight not expecting in costs see the will this chains at expectation same to that of Our while kind next is into

in little supply quarter-by-quarter dramatically said is that and things basis dynamic a and difficult can demand change it a as swings bit because to a Kevin are predict causes on Now both market very pricing.

it's complete as go. story complete mentioned in where confidence and a or exactly a it's it to have Kevin So market it's hard dynamic get very will to hard

Unidentified Analyst

trends a if you. as Thank tracking, that just is And storage? you follow-up how IT out? it. Thank any was the spending you would call you. environment quick And I in particularly wondering Got broader Great. have

Charlie Giancarlo

Yeah.

On side the quite it's enterprise robust. been

a taking quite and lot data think upgrading. a are good, So we more processing demand, of place lot

commercial. from is recovering have might quite has strong to enterprise COVID. good. continue down actually demand seen say general there. quite slowly. it looking been been recovery for forward I that But recovering overall in that's where we've the we're still think probably And it a Wallace would without would a storage I So

Unidentified Analyst

Thank it. Got you.

Operator

Tim line with question next Barclays. comes Long Your the from of

Tim Long

a talk Maybe margin obviously or in to you. you Thank a if little Charlie the can want in, chime you just bit quarter. if good Kevin performance

offsets but year too work want into moving some a don’t to return that. to benefits guess, Just much curious of lot going with be next becoming the I like and of how know things parts, with get to I of you

in how hyperscale leverage just next over I business. that FlashArray//C about back the thinking year in to of kind to or go much model? And it then the sort could, for I like looks two the So the if are the wanted gross margin and resulted we second, pricing lower a

little or kind had curious, a will Just that pricing to all Is be -- to close is it, on that better. Is going it's is how is somewhat and you hyperscale that to different disk? a what potentially tougher the it then business, that said? bit bogey maybe or deals and up repeat be for front of get margin

just Thank potential and if you around can of movements dynamics So you. talk pricing there. kind about the

Charlie Giancarlo

year. we more into probably and being What and get this visits through certainly Yeah. too some travel the projection get for seeing we well. I category when therefore when as and normal is don't we're for up summer that want to that's things meetings QX -- open get next would then COVID be think our of view we we'll we the QX certainly next start and year of do customers we'll far better to of under planning expense I call have still rules we type in-person most as as and and earnings ahead will open say of a into QX we

more based I return forward organization expecting at the have a and we improving largely this, or to saw marketing been in Coventry more as all even half all basis over is we a be, think - based based really organization about that on the as leverage during terms our you're -- to time gradual But and same in additional and on didn't into in those on So sales think continuous we of see time, that's go you that easing that's in we so the gradual increasingly expenses, we’re more our on going expect there our and and productivity to change productivity. execution organization scale. see so Certainly we'll greater to engineering a year really see of a investment a what much.

Kevan Krysler

related guide year we're But thinking seeing little a in topic. on some hiring. from an margin, that tailwind that full pace, just nice Yeah standpoint about COVID move marketing whether the to we around a puts obviously that's is two and hyperscaler XX% non-GAAP and bit on us to QX more we a operating the three hiring standpoint for our from we're chime then uptick with points of aspects, think fiscal and events that's I'll travel, a which can less whether when less physical about the or from

and next you more year continue continue the some gain in COVID I that. to of to too still we're exclude that how seeing we're roadmap get specific. it's to But about when early [indiscernible] I of and this when kind would thinking from leverage, so tailwinds to expect expect too think nice We about terms

Charlie Giancarlo

that. than costs to with goes so but be, replacing, I’ll to portion they look design rather as wins experience and also would existing we early if builds will sales as but provider. for over time expect to as the improve And margin as but the to their lower comparing disk both on fee, On hyperscaler, gain Right will flash be probably at large not improve, price new it frankly a flash be such, that a will usually more new be into disk they'll go of back fee, replacing the others them builds, this C but potentially Pure

Operator

Cowen. comes with question of from Your the line last Ackerman Karl

Karl Ackerman

Kevin, you. two Good gentlemen. afternoon, I Thank questions, Yes. – please.

is FlashArray I'm primarily given First expansion particularly your January revised That's you’ve platform revenue. mentioned. Kevin. quarter product of one upside whether impressive the planned chain ongoing supply the upper your outlook the quite given you driven constraints revenue, came product also by in your for for curious remarks. Mostly highlighted this prepared from that

could would If helpful? be that comment on you

Charlie Giancarlo

subscription add commentary our with across how fueled our solution. revenue. absolutely. as great to strength to momentum We've the good we're I way let guess in balanced And works seeing back you're that of view subscription growth ARR But that on in seeing is have yeah, whether a growth obviously specific that's across high traction sales also and to But by subscription seeing and going P&L. before the my our our demand that's its whether translates to to board, and some specific Rob the and to some, well, as this that that's demand XX% we're lag business, gotten Charlie the comes or rates business I'll obviously, product this, Yeah. our portfolio, is which

that's the points here that across balance really the you'd the So storyline strength Rob on or is that we're board. Charlie other seeing add any that front.

Kevan Krysler

demand you're I answers think for and/or our capital regardless products, of base. what think regardless I that subscription is strong demand products that. seeing strong of for our Kevin,

always I which provide buy well. we the in way allow balanced course, want or this But we're – quarter rather. want buy Of to the this expecting customer to be we're want say expecting to to in and to would QX as they

are from starts that we of that’s be given in way service seeing terms the that growth So works to seeing off we're ratable, obviously good just clear, slow. and

quite as be going readily. into you But expect don't to So it, it again, this I quarter. balanced see

Karl Ackerman

on revenue your directly for follow to as margins income, you entire That's bit. outlook to which in seems is the a helpful. want operating do up, I impressive. my quite touch is upside that falling It little guess Thank January you.

it are through rising long volume On your other you're leverage one these term actions. the Now input release seems offsetting outlook. costs with quite in that pricing line in impressive is now benefiting and hand, from operating margins

vein, So year? larger next secondarily, margins perhaps input revenue Thank ability of may improve as further they happen? the in could pass on or discuss subscription improving And becomes revenue costs to you see that as how you rising piece a you.

Charlie Giancarlo

specifically price competition past, cost don't price said in in based we we've on Yeah. don't basis. We plus on market. a Well, we the – the as

of newly our things about that than that is customer discount do every of unique cost to rather pricing customer. we're with One responding is opportunity, as And new nearly operate a competitors. the our basis. other plus an of even standardized the Many competitors say in on with existing primarily for let's market this such, negotiated competitors a

way its that negotiation. so market price And the rising that exists in finds the with into the costs

and So because relatively part of It'll regardless margins. mix it'll obviously costs we But that the for of costs. stay for relatively on that do most expect part hyperscaler think stable deal. we expect the the we stable vary based most ASPs

you fact Now point part out the in of the mix subscription as well offerings. as is

to be value significantly straightforward the reported margins we sale. ours subscription higher do those standard offerings are time in services be we that than more expect long-term such because margins. we’ll be in expect We providing those subscription will they have to as above our the And over offerings capital reported

Kevan Krysler

our clearly even us about subscription what much we're terms point a the cloud our the seeing to give offering profitability gross hasn't here our for term with just to longer in that tailwinds Yeah. be subscription And – with on block Pure of increased really margins communication growth we yeah that. point is as-a-Service COVID. we as to view tailwind our changed on the and very expectations since Day we store are then D. But scale considering the at some clear as our Karl going think margins. your it it Shorter and with pleased to Analyst of Charlie's and term from Portworx

of what So the still and we're we as trade seeing belief we we'll growth increase but like leverage drive definitely and we well. that that the have operating much prioritize can very growth

Operator

time, session. question-and-answer back the I'll over closing concludes This At Giancarlo Charlie turn call to for the remarks. this

Charlie Giancarlo

down I and patience. and a own today. you in sit and of creativity importantly, meal thanks functions, and Thanksgiving. what industry our gratitude my for questions, vendor it I'll certainly and the I'm on family's for effort your and as all offer happy that you grateful team. to and line, and your present excitement Pure in attention building investors is past breadth growth customers. Thank everyone is all Thank and their with for all for And phase our for I building nature I trust wish our product Thursday, operator. their our our Pure trust to you, excellence operational developing years, has our employees and been this of thank most relationships, next want partnerships for preparing our several

Operator

today's concludes This conference call.

may disconnect. You now