MOUNTAIN VIEW, Calif., May 21, 2019 /PRNewswire/ -- Pure Storage (NYSE: PSTG), the data solutions leader that helps innovators build a better world with data, today announced financial results for its first quarter ended April 30, 2019.
"Pure continues to gain market share with innovation, a differentiated business model and our laser focus on customer delight," said Charles Giancarlo, Chairman and CEO, Pure Storage. "As enterprises embark on their hybrid cloud journeys, Pure is excited to play a role in modernizing their business."
Q1 Key Business and Financial Highlights:
- Revenue: $326.7 million, up 28% year over year
- Gross margin: GAAP 66.2%; non-GAAP 68.1%
- Operating margin: GAAP -29.8%; non-GAAP -9.6%
Recent Company Highlights:
During Pure's first quarter of fiscal year 2020, the Company:
- Announced the acquisition of Compuverde - a leading developer of file software solutions for enterprises and cloud providers. The acquisition will expand Pure Storage's file capabilities by providing a unified storage offering, as well as empowering customers to implement true hybrid architectures.
- Released ObjectEngine™ for General Availability - the industry's first data protection platform purpose-built for flash and cloud. ObjectEngine unifies cloud and on-premises with seamless, rapid backup and recovery across both on-prem and the cloud and enables customers to modernize their entire data protection strategy to a "flash-to-flash-to-cloud" model.
- Announced expansion of Evergreen™ Storage Service (ES2) - to enable a unified subscription model across hybrid environments. This allows organizations to leverage Pure's best-in-class storage-as-a-service model on-premises, hosted and in the cloud, without the need to manage multiple subscriptions or purchase separate or overlapping capacity.
"Q1 was a solid beginning of the year for Pure," said Tim Riitters, CFO, Pure Storage. "We continued to demonstrate strong growth, industry-leading margins, and innovation across our product portfolio."
First Quarter Fiscal 2020 Financial Highlights
The following tables summarize our consolidated financial results for the fiscal quarters ended April 30, 2019 and 2018 (in millions except percentages, per share amounts and headcount, unaudited):
GAAP Quarterly Financial Information |
||||||
Three Months Ended |
Three Months Ended |
Y/Y Change |
||||
Revenue |
$326.7 |
$255.9 |
28% |
|||
Gross Margin |
66.2% |
65.0% |
1.2 ppts |
|||
Product Gross Margin |
67.9% |
66.0% |
1.9 ppts |
|||
Support Subscription Gross Margin |
61.7% |
61.6% |
0.1 ppts |
|||
Operating Loss |
$(97.4) |
$(61.9) |
$(35.5) |
|||
Operating Margin |
-29.8% |
-24.2% |
-5.6 ppts |
|||
Net Loss |
$(100.3) |
$(64.3) |
$(36.0) |
|||
Net Loss per Share – Basic and Diluted |
$(0.41) |
$(0.29) |
$(0.12) |
|||
Weighted-Average Shares |
245.3 |
223.8 |
21.5 |
|||
Headcount |
>3,150 |
>2,300 |
~850 |
|||
Non-GAAP Quarterly Financial Information |
||||||
Three Months Ended |
Three Months Ended |
Y/Y Change |
||||
Gross Margin |
68.1% |
66.3% |
1.8 ppts |
|||
Product Gross Margin |
68.7% |
66.3% |
2.4 ppts |
|||
Support Subscription Gross Margin |
66.3% |
66.3% |
0.0 ppts |
|||
Operating Loss |
$(31.2) |
$(15.3) |
$(15.9) |
|||
Operating Margin |
-9.6% |
-6.0% |
-3.6 ppts |
|||
Net Loss |
$(27.6) |
$(16.2) |
$(11.4) |
|||
Net Loss per Share |
$(0.11) |
$(0.07) |
$(0.04) |
|||
Weighted-Average Shares |
245.3 |
223.8 |
21.5 |
A reconciliation between GAAP and non-GAAP information is provided at the end of this release.
Financial Outlook
Second quarter fiscal 2020 guidance:
- Revenue in the range of $389 million to $401 million, or $395 million at the midpoint
- Non-GAAP gross margin in the range of 65.0% to 68.0%, or 66.5% at the midpoint
- Non-GAAP operating margin in the range of -5.0% to -1.0%, or -3.0% at the midpoint
Full year fiscal 2020 guidance:
- Revenue in the range of $1.70 billion to $1.77 billion, or $1.735 billion at the midpoint
- Non-GAAP gross margin in the range of 65.5% to 68.0%, or 66.75% at the midpoint
- Non-GAAP operating margin in the range of 1.5% to 5.5%, or 3.5% at the midpoint
All forward-looking non-GAAP financial measures contained in this section titled "Financial Outlook" exclude stock-based compensation expense, payroll tax expense related to stock-based activities, amortization of debt discount and debt issuance costs, amortization of intangible assets acquired from acquisitions, any applicable anti-dilutive share count impact of our convertible debt hedge agreements and, as applicable, other special items. We have not reconciled guidance for non-GAAP gross margin and non-GAAP operating margin to their most directly comparable GAAP measures because the items that impact these measures are not within our control and/or cannot be reasonably predicted. Accordingly, a reconciliation of the non-GAAP financial measure guidance to the corresponding GAAP measures is not available without unreasonable effort.
Conference Call Information
Pure Storage will host a teleconference to discuss the first quarter fiscal 2020 results at 2:00 p.m. (PT) on May 21, 2019. Pure Storage will post its supplemental earnings presentation to the investor relations website at investor.purestorage.com following the conference call.
Teleconference details are as follows:
- To Listen via Telephone: (866) 393-4306 or (734) 385-2616 (for international callers) with passcode 4955207.
- To Listen via the Internet: A live and replay audio broadcast of the conference call with corresponding slides will be available at investor.purestorage.com.
- Replay: A telephone playback of this conference call is scheduled to be available two hours after the call ends on Tuesday, May 21, 2019, through June 4, 2019. The replay will be accessible by calling (855) 859-2056 or (404) 537-3406 (for international callers), with conference ID 4955207.
Upcoming Events
Management will participate in upcoming financial Q&A discussions at the Bank of America Global Technology Conference on June 4th at 3:50 pm PT, the William Blair 2019 Growth Stock Conference on June 6th at 6 am PT, and the Stifel Cross Sector Insights Conference on June 11th at 12:35 pm PT. Pure Storage will post a link to each session on the investor relations website at investor.purestorage.com for both live and archived events.
About Pure Storage
Pure Storage (NYSE: PSTG) helps innovators build a better world with data. Pure's data solutions enable SaaS companies, cloud service providers, and enterprise and public sector customers to deliver real-time, secure data to power their mission-critical production, DevOps, and modern analytics environments in a multi-cloud environment. One of the fastest growing enterprise IT companies in history, Pure Storage enables customers to quickly adopt next-generation technologies, including artificial intelligence and machine learning, to help maximize the value of their data for competitive advantage. And with a certified NPS customer satisfaction score in the top one percent of B2B companies, Pure's ever-expanding list of customers are among the happiest in the world.
Pure Storage, DirectFlash, Evergreen, FlashBlade, FlashStack, ObjectEngine and the "P" Logo mark are trademarks of Pure Storage, Inc. All other trademarks or names referenced in this document are the property of their respective owners.
Forward Looking Statements
This press release contains forward-looking statements regarding our products, business and operations, including our growth prospects and expectations regarding product and technology differentiation, and our outlook for the second quarter and full year fiscal 2020, and statements regarding our products, business, operations and results. Forward-looking statements are subject to known and unknown risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements. Actual results may differ materially from the results predicted, and reported results should not be considered as an indication of future performance. The potential risks and uncertainties that could cause actual results to differ from the results predicted include, among others, those risks and uncertainties included under the captions "Risk Factors" and elsewhere in our filings and reports with the U.S. Securities and Exchange Commission, which are available on our investor relations website at investor.purestorage.com and on the SEC website at www.sec.gov. Additional information is also set forth in our Annual Report on Form 10-K for the year ended January 31, 2019. All information provided in this release and in the attachments is as of May 21, 2019, and we undertake no duty to update this information unless required by law.
Non-GAAP Financial Measures
To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with GAAP, we use the following non-GAAP financial measures: non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income (loss), non-GAAP operating margin, non-GAAP net income (loss), non-GAAP net income (loss) per share, free cash flow, free cash flow as a percentage of revenue, free cash flow without ESPP impact, and free cash flow without ESPP impact as a percentage of revenue.
We use these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. Our management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance and liquidity by excluding certain expenses and expenditures such as stock-based compensation expense, amortization of debt discount and debt issuance costs, and amortization of intangible assets acquired from acquisitions that may not be indicative of our ongoing core business operating results. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when analyzing historical performance and liquidity and planning, forecasting, and analyzing future periods. The presentation of these non-GAAP financial measures is not meant to be considered in isolation or as a substitute for, our financial results prepared in accordance with GAAP, and our non-GAAP measures may be different from non-GAAP measures used by other companies.
For a reconciliation of these non-GAAP financial measures to GAAP measures, please see the tables captioned "Reconciliations of non-GAAP results of operations to the nearest comparable GAAP measures" and "Reconciliation from net cash provided by operating activities to free cash flow and free cash flow without ESPP impact," included at the end of this release.
PURE STORAGE, INC. |
|||||||
Condensed Consolidated Balance Sheets |
|||||||
(in thousands, unaudited) |
|||||||
As of |
As of |
||||||
Assets |
|||||||
Current assets: |
|||||||
Cash and cash equivalents |
$ |
287,192 |
$ |
447,990 |
|||
Marketable securities |
878,958 |
749,482 |
|||||
Accounts receivable, net of allowance of $642 and $660 |
311,843 |
378,729 |
|||||
Inventory |
45,936 |
44,687 |
|||||
Deferred commissions, current |
28,532 |
29,244 |
|||||
Prepaid expenses and other current assets |
54,570 |
51,695 |
|||||
Total current assets |
1,607,031 |
1,701,827 |
|||||
Property and equipment, net |
129,185 |
125,353 |
|||||
Operating lease right-of-use-assets |
120,446 |
— |
|||||
Deferred commissions, non-current |
84,725 |
85,729 |
|||||
Intangible assets, net |
57,220 |
20,118 |
|||||
Goodwill |
36,407 |
10,997 |
|||||
Deferred income taxes, non-current |
1,118 |
1,060 |
|||||
Restricted cash |
16,286 |
15,823 |
|||||
Other assets, non-current |
16,771 |
12,118 |
|||||
Total assets |
$ |
2,069,189 |
$ |
1,973,025 |
|||
Liabilities and stockholders' equity |
|||||||
Current liabilities: |
|||||||
Accounts payable |
$ |
75,481 |
$ |
103,462 |
|||
Accrued compensation and benefits |
48,166 |
99,910 |
|||||
Accrued expenses and other liabilities |
47,392 |
39,860 |
|||||
Operating lease liabilities, current |
25,761 |
— |
|||||
Deferred revenue, current |
283,160 |
266,584 |
|||||
Total current liabilities |
479,960 |
509,816 |
|||||
Convertible senior notes, net |
456,318 |
449,828 |
|||||
Operating lease liabilities, non-current |
101,112 |
— |
|||||
Deferred revenue, non-current |
281,070 |
269,336 |
|||||
Other liabilities, non-current |
6,753 |
6,265 |
|||||
Total liabilities |
1,325,213 |
1,235,245 |
|||||
Stockholders' equity: |
|||||||
Common stock and additional paid-in capital |
1,924,972 |
1,820,067 |
|||||
Accumulated other comprehensive income (loss) |
1,289 |
(338) |
|||||
Accumulated deficit |
(1,182,285) |
(1,081,949) |
|||||
Total stockholders' equity |
743,976 |
737,780 |
|||||
Total liabilities and stockholders' equity |
$ |
2,069,189 |
$ |
1,973,025 |
|||
PURE STORAGE, INC. |
|||||||
Condensed Consolidated Statements of Operations |
|||||||
(in thousands, except per share data, unaudited) |
|||||||
Three Months Ended April 30, |
|||||||
2019 |
2018 |
||||||
Revenue: |
|||||||
Product |
$ |
238,741 |
$ |
195,449 |
|||
Support subscription |
87,959 |
60,496 |
|||||
Total revenue |
326,700 |
255,945 |
|||||
Cost of revenue: |
|||||||
Product (1) |
76,592 |
66,420 |
|||||
Support subscription (1) |
33,721 |
23,210 |
|||||
Total cost of revenue |
110,313 |
89,630 |
|||||
Gross profit |
216,387 |
166,315 |
|||||
Operating expenses: |
|||||||
Research and development (1) |
105,075 |
78,492 |
|||||
Sales and marketing (1) |
166,626 |
122,367 |
|||||
General and administrative (1) |
42,110 |
27,330 |
|||||
Total operating expenses |
313,811 |
228,189 |
|||||
Loss from operations |
(97,424) |
(61,874) |
|||||
Other income (expense), net |
(1,816) |
(999) |
|||||
Loss before provision for income taxes |
(99,240) |
(62,873) |
|||||
Income tax provision |
1,096 |
1,431 |
|||||
Net loss |
$ |
(100,336) |
$ |
(64,304) |
|||
Net loss per share attributable to common stockholders, basic and diluted |
$ |
(0.41) |
$ |
(0.29) |
|||
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted |
245,334 |
223,768 |
|||||
(1) Includes stock-based compensation expense as follows: |
|||||||
Cost of revenue -- product |
$ |
977 |
$ |
608 |
|||
Cost of revenue -- support subscription |
3,951 |
2,684 |
|||||
Research and development |
28,245 |
21,090 |
|||||
Sales and marketing |
18,314 |
13,940 |
|||||
General and administrative |
10,670 |
5,633 |
|||||
Total stock-based compensation expense |
$ |
62,157 |
$ |
43,955 |
|||
PURE STORAGE, INC. |
|||||||
Condensed Consolidated Statements of Cash Flows |
|||||||
(in thousands, unaudited) |
|||||||
Three Months Ended April 30, |
|||||||
2019 |
2018 |
||||||
Cash flows from operating activities |
|||||||
Net loss |
$ |
(100,336) |
$ |
(64,304) |
|||
Adjustments to reconcile net loss to net cash provided by operating activities: |
|||||||
Depreciation and amortization |
21,060 |
16,417 |
|||||
Amortization of debt discount and debt issuance costs |
6,490 |
1,455 |
|||||
Stock-based compensation expense |
62,157 |
43,955 |
|||||
Other |
(811) |
152 |
|||||
Changes in operating assets and liabilities, net of effects of acquisition: |
|||||||
Accounts receivable, net |
67,299 |
47,143 |
|||||
Inventory |
(2,023) |
(4,429) |
|||||
Deferred commissions |
1,716 |
1,269 |
|||||
Prepaid expenses and other assets |
(7,298) |
11,111 |
|||||
Operating lease right-of-use assets |
6,209 |
— |
|||||
Accounts payable |
(25,807) |
(18,802) |
|||||
Accrued compensation and other liabilities |
(43,993) |
(29,881) |
|||||
Operating lease liabilities |
(6,034) |
— |
|||||
Deferred revenue |
28,013 |
14,510 |
|||||
Net cash provided by operating activities |
6,642 |
18,596 |
|||||
Cash flows from investing activities |
|||||||
Purchases of property and equipment |
(24,296) |
(22,296) |
|||||
Acquisition, net of cash acquired |
(47,881) |
— |
|||||
Purchases of marketable securities |
(312,859) |
(81,702) |
|||||
Sales of marketable securities |
22,344 |
10,454 |
|||||
Maturities of marketable securities |
164,139 |
61,023 |
|||||
Net cash used in investing activities |
(198,553) |
(32,521) |
|||||
Cash flows from financing activities |
|||||||
Net proceeds from exercise of stock options |
16,761 |
9,614 |
|||||
Proceeds from issuance of common stock under employee stock purchase plan |
32,042 |
19,698 |
|||||
Proceeds from issuance of convertible senior notes, net of issuance costs |
— |
562,062 |
|||||
Payment for purchase of capped calls |
— |
(64,630) |
|||||
Repayment of debt acquired from acquisition |
(11,555) |
— |
|||||
Tax withholding on vesting of restricted stock |
(5,672) |
— |
|||||
Repurchase of common stock |
— |
(20,000) |
|||||
Net cash provided by financing activities |
31,576 |
506,744 |
|||||
Net increase (decrease) in cash, cash equivalents and restricted cash |
(160,335) |
492,819 |
|||||
Cash, cash equivalents and restricted cash, beginning of period |
463,813 |
258,820 |
|||||
Cash, cash equivalents and restricted cash, end of period |
$ |
303,478 |
$ |
751,639 |
Reconciliations of non-GAAP results of operations to the nearest comparable GAAP measures
The following table presents non-GAAP gross margins by revenue source before certain items (in thousands except percentages, unaudited):
Three Months Ended April 30, 2019 |
Three Months Ended April 30, 2018 |
||||||||||||||||||||||||||||||||||||||
GAAP |
GAAP |
Adjustment |
Non- |
Non- |
GAAP |
GAAP |
Adjustment |
Non- |
Non- |
||||||||||||||||||||||||||||||
$ |
977 |
(c) |
$ |
608 |
(c) |
||||||||||||||||||||||||||||||||||
49 |
(d) |
25 |
(d) |
||||||||||||||||||||||||||||||||||||
922 |
(e) |
— |
|||||||||||||||||||||||||||||||||||||
Gross profit -- product |
$ |
162,149 |
67.9 |
% |
$ |
1,948 |
$ |
164,097 |
68.7 |
% |
$ |
129,029 |
66.0 |
% |
$ |
633 |
$ |
129,662 |
66.3 |
% |
|||||||||||||||||||
$ |
3,951 |
(c) |
$ |
2,684 |
(c) |
||||||||||||||||||||||||||||||||||
127 |
(d) |
142 |
(d) |
||||||||||||||||||||||||||||||||||||
Gross profit -- support subscription |
$ |
54,238 |
61.7 |
% |
$ |
4,078 |
$ |
58,316 |
66.3 |
% |
$ |
37,286 |
61.6 |
% |
$ |
2,826 |
$ |
40,112 |
66.3 |
% |
|||||||||||||||||||
$ |
4,928 |
(c) |
$ |
3,292 |
(c) |
||||||||||||||||||||||||||||||||||
176 |
(d) |
167 |
(d) |
||||||||||||||||||||||||||||||||||||
922 |
(e) |
— |
|||||||||||||||||||||||||||||||||||||
Total gross profit |
$ |
216,387 |
66.2 |
% |
$ |
6,026 |
$ |
222,413 |
68.1 |
% |
$ |
166,315 |
65.0 |
% |
$ |
3,459 |
$ |
169,774 |
66.3 |
% |
(a) GAAP gross margin is defined as GAAP gross profit divided by revenue. |
(b) Non-GAAP gross margin is defined as non-GAAP gross profit divided by revenue. |
(c) To eliminate stock-based compensation expense. |
(d) To eliminate payroll tax expense related to stock-based activities. |
(e) To eliminate amortization expense of acquired intangible assets. |
The following table presents certain non-GAAP consolidated results before certain items (in thousands, except per share amounts and percentages, unaudited):
Three Months Ended April 30, 2019 |
Three Months Ended April 30, 2018 |
||||||||||||||||||||||||||||||||||||
GAAP results |
GAAP operating margin (a) |
Adjustment |
Non- GAAP results |
Non- GAAP operating margin (b) |
GAAP results |
GAAP operating margin (a) |
Adjustment |
Non- GAAP results |
Non- GAAP operating margin (b) |
||||||||||||||||||||||||||||
$ |
62,157 |
(c) |
$ |
43,955 |
(c) |
||||||||||||||||||||||||||||||||
3,124 |
(d) |
2,667 |
(d) |
||||||||||||||||||||||||||||||||||
922 |
(e) |
— |
|||||||||||||||||||||||||||||||||||
Operating loss |
$ |
(97,424) |
-29.8 |
% |
$ |
66,203 |
$ |
(31,221) |
-9.6 |
% |
$ |
(61,874) |
-24.2 |
% |
$ |
46,622 |
$ |
(15,252) |
-6.0 |
% |
|||||||||||||||||
$ |
62,157 |
(c) |
$ |
43,955 |
(c) |
||||||||||||||||||||||||||||||||
3,124 |
(d) |
2,667 |
(d) |
||||||||||||||||||||||||||||||||||
922 |
(e) |
— |
|||||||||||||||||||||||||||||||||||
6,490 |
(f) |
1,455 |
(f) |
||||||||||||||||||||||||||||||||||
Net loss |
$ |
(100,336) |
$ |
72,693 |
$ |
(27,643) |
$ |
(64,304) |
$ |
48,077 |
$ |
(16,227) |
|||||||||||||||||||||||||
Net loss per share -- basic and diluted |
$ |
(0.41) |
$ |
(0.11) |
$ |
(0.29) |
$ |
(0.07) |
|||||||||||||||||||||||||||||
Weighted-average shares used in per share calculation -- basic and diluted |
245,334 |
245,334 |
223,768 |
223,768 |
(a) GAAP operating margin is defined as GAAP operating loss divided by revenue. |
(b) Non-GAAP operating margin is defined as non-GAAP operating loss divided by revenue. |
(c) To eliminate stock-based compensation expense. |
(d) To eliminate payroll tax expense related to stock-based activities. |
(e) To eliminate amortization expense of acquired intangible assets. |
(f) To eliminate amortization expense of debt discount and debt issuance costs related to our convertible debt. |
Reconciliation from net cash provided by operating activities to free cash flow and free cash flow without ESPP impact (in thousands except percentages, unaudited):
Three Months Ended April 30, |
|||||||
2019 |
2018 |
||||||
Net cash provided by operating activities |
$ |
6,642 |
$ |
18,596 |
|||
Less: purchases of property and equipment |
(24,296) |
(22,296) |
|||||
Free cash flow (non-GAAP) |
$ |
(17,654) |
$ |
(3,700) |
|||
Adjust: ESPP impact |
21,960 |
12,252 |
|||||
Free cash flow without ESPP impact (non-GAAP) |
$ |
4,306 |
$ |
8,552 |
|||
Free cash flow as % of revenue |
-5.4 |
% |
-1.4 |
% |
|||
Free cash flow without ESPP impact as % of revenue |
1.3 |
% |
3.3 |
% |
SOURCE Pure Storage
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