MOUNTAIN VIEW, Calif. – May 31, 2023 – Today Pure Storage (NYSE: PSTG), the IT pioneer that delivers the world's most advanced data storage technology and services, announced financial results for its first quarter fiscal 2024 ended May 7, 2023.

“We are the clear leader in data storage, now delivering a portfolio that can address the vast majority of storage needs for all enterprises,” said Charles Giancarlo, Chairman and CEO, Pure Storage. “The superior economics, performance, and operational and environmental efficiencies of Pure’s product portfolio over both hard disk and SSD-based, all-flash competitive offerings are now undeniable.”

First Quarter Financial Highlights 

•Revenue $589.3 million, a decrease of 5% year-over-year, and an increase of 5% year-over-year, when excluding the impact of $60 million of first quarter fiscal 2023 product revenue that was contemplated in the second half of last year

•Subscription services revenue $280.3 million, up 28% year-over-year

•Subscription annual recurring revenue (ARR) $1.2 billion, up 29% year-over-year

•Remaining performance obligations (RPO) $1.8 billion, up 26% year-over-year

•GAAP gross margin 70.1%; non-GAAP gross margin 72.2%

•GAAP operating loss $(71.8) million; non-GAAP operating income $19.6 million

•GAAP operating margin (12.2)%; non-GAAP operating margin 3.3%

•Operating cash flow $173.2 million; free cash flow $121.8 million

•Total cash, cash equivalents, and marketable securities $1.2 billion

•Returned approximately $70 million in Q1 to stockholders through share repurchases of 2.9 million shares

•Repaid $575 million of outstanding convertible senior notes

"Through innovation, our competitive differentiation is unmatched in providing both high business value and lower total cost of ownership benefits across our portfolio to our customers," said Kevan Krysler, CFO, Pure Storage. "Subscription services ARR grew 29%, with strong momentum from our record Evergreen//One subscription sales this quarter."

First Quarter Company Highlights

•Flash at disk economics: Pure introduced FlashBlade//E, a scale-out unstructured data repository built to handle exponential data growth with industry-leading energy efficiency. At an acquisition cost competitive with disk and much lower operational costs, the introduction of FlashBlade//E means that customers no longer need to settle for disk.

•Truly unified block and file: Pure announced the general availability of the FlashArray Unified Block and File Platform, the first and only storage service designed from the ground up to access native block and file. This empowers organizations to access native block and file services from a single, global pool of storage resources.

•Cloud native momentum: A new partnership between Portworx by Pure Storage and MongoDB includes a first-of-its-kind integration between the industry’s first Database-Platform-as-a-Service (DBPaaS), Portworx Data Services, and MongoDB that revolutionizes how developers build modern applications.

•Advancing the world’s AI projects: Pure is the chosen vendor for AI environments across a broad range of industries, notably media & entertainment, pharma, healthcare, aerospace, transportation, and financial services. We’ve continued to advance FlashBlade’s high-performance parallel architecture making it the market’s leading portfolio for AI projects.

These statements are forward-looking and actual results may differ materially. Refer to the Forward Looking Statements section below for information on the factors that could cause our actual results to differ materially from these statements. Pure has not reconciled its guidance for non-GAAP operating income and non-GAAP operating margin to their most directly comparable GAAP measures because certain items that impact these measures are not within Pure’s control and/or cannot be reasonably predicted. Accordingly, reconciliations of these non-GAAP financial measures guidance to the corresponding GAAP measures are not available without unreasonable effort.

Pure will host a teleconference to discuss the first quarter fiscal 2024 results at 2:00 pm PT today, May 31, 2023. A live audio broadcast of the conference call will be available at the Pure Storage Investor Relations website, investor.purestorage.com. Pure will also post its earnings presentation to this website in advance of the call and post its prepared remarks to this website within 24 hours following completion of the call.

A replay will be available following the call on the Pure Storage Investor Relations website or for two weeks at 1-866-813-9403 (or +44 204 525 0658 for international callers) with passcode 425076.

Additionally, Pure is scheduled to participate at the following investor conferences or events:

Date: Tuesday, June 6, 2023

Time: 10:40 a.m. PT / 1:40 p.m. ET

Charles Giancarlo, Chairman and CEO and Kevan Krysler, CFO

Date: Thursday, June 8, 2023

Time: 10:00 a.m. PT / 1:00 p.m. ET

Rob Lee, Chief Technology Officer (CTO)

Date: Thursday, June 15, 2023

Time: 1:00 p.m. PT / 4:00 p.m. ET

Register for Pure//Accelerate 2023 in Las Vegas June 14-16, 2023 to make connections, get inspired, and learn more about tools and strategies to implement sustainable change, energy efficiency, and operational excellence within your organization. Pure executives and world-leading experts - including Pure Storage CEO Charles Giancarlo and NBA Hall of Famer Shaquille O'Neal - will share insights, strategies, and their vision for the future.

The presentation(s) will be webcast live and archived on Pure's Investor Relations website at investor.purestorage.com.

Pure Storage (NYSE: PSTG) uncomplicates data storage, forever. Pure delivers a cloud experience that empowers every organization to get the most from their data while reducing the complexity and expense of managing the infrastructure behind it. Pure’s commitment to providing true storage as-a-service gives customers the agility to meet changing data needs at speed and scale, whether they are deploying traditional workloads, modern applications, containers, or more. Pure believes it can make a significant impact in reducing data center emissions worldwide through its environmental sustainability efforts, including designing products and solutions that enable customers to reduce their carbon and energy footprint. And with the highest Net Promoter Score in the industry, Pure's ever-expanding list of customers are among the happiest in the world. For more information, visit www.purestorage.com.

Leader in the 2022 Gartner Magic Quadrant for Primary Storage

Leader in the 2022 Gartner Magic Quadrant for Distributed File Systems & Object Storage

Blog

LinkedIn

Twitter

Facebook

Pure Storage, the Pure P Logo, Portworx, and the marks on the Pure Trademark List at www.purestorage.com/legal/productenduserinfo.html are trademarks of Pure Storage, Inc. Other names are trademarks of their respective owners.

This press release contains forward-looking statements regarding our products, business and operations, including but not limited to our views relating to future period financial results, our technology and product strategy, specifically customer priorities around sustainability, our ability to adjust to current macro conditions and expand market share, our sustainability goals and benefits, the timing and magnitude of large orders, the impact of inflation, economic or supply chain disruptions, the pandemic and its lingering impacts, demand for our products and subscription services, including Evergreen//One, our expectations regarding our product and technology differentiation, including FlashBlade//E, new customer acquisition, the continued success of the Portworx technology, and other 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 caption "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 February 5, 2023. All information provided in this release and in the attachments is as of May 31, 2023, and Pure undertakes no duty to update this information unless required by law.

Subscription ARR is a key business metric that refers to total annualized contract value of all active subscription agreements on the last day of the quarter, plus on-demand revenue for the quarter multiplied by four.

To supplement our unaudited condensed consolidated financial statements, which are prepared and presented in accordance with GAAP, Pure uses 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, and free cash flow.

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, payments to former shareholders of acquired companies, payroll tax expense related to stock-based activities, amortization of debt issuance costs related to debt, amortization of intangible assets acquired from acquisitions, acquisition-related transaction and integration expenses, and costs associated with the exit of certain operations that may not be indicative of our ongoing core business operating results. Pure believes 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," included at the end of this release.

Paul Ziots -- Investor Relations, Pure Storage

ir@purestorage.com

 

Rena Fallstrom -- Global Communications, Pure Storage

pr@purestorage.com

###

 

						At the End of
						First Quarter of Fiscal 2024						Fiscal 2023
Assets
Current assets:
Cash and cash equivalents						$	378,285					$	580,854
Marketable securities						805,715						1,001,352
Accounts receivable, net of allowance of $1,062 and $1,057						391,286						612,491
Inventory						51,821						50,152
Deferred commissions, current						68,826						68,617
Prepaid expenses and other current assets						171,824						161,391
Total current assets						1,867,757						2,474,857
Property and equipment, net						302,894						272,445
Operating lease right-of-use-assets						155,205						158,912
Deferred commissions, non-current						179,362						177,239
Intangible assets, net						45,064						49,222
Goodwill						361,427						361,427
Restricted cash						9,960						10,544
Other assets, non-current						37,584						38,814
Total assets						$	2,959,253					$	3,543,460
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable						$	71,334					$	67,121
Accrued compensation and benefits						143,204						232,636
Accrued expenses and other liabilities						121,230						123,749
Operating lease liabilities, current						37,995						33,707
Deferred revenue, current						732,433						718,149
Debt, current						—						574,506
Total current liabilities						1,106,196						1,749,868
Long-term debt						100,000						—
Operating lease liabilities, non-current						139,665						142,473
Deferred revenue, non-current						663,237						667,501
Other liabilities, non-current						44,348						42,385
Total liabilities						2,053,446						2,602,227
Stockholders’ equity:
Common stock and additional paid-in capital						2,521,176						2,493,799
Accumulated other comprehensive loss						(10,906)						(15,504)
Accumulated deficit						(1,604,463)						(1,537,062)
Total stockholders' equity						905,807						941,233
Total liabilities and stockholders' equity						$	2,959,253					$	3,543,460

 

			First Quarter of Fiscal
			2024						2023
Revenue:
Product			$	308,963					$	401,161
Subscription services			280,344						219,244
Total revenue			589,307						620,405
Cost of revenue:
Product (1)			96,213						125,484
Subscription services (1)			79,747						68,495
Total cost of revenue			175,960						193,979
Gross profit			413,347						426,426
Operating expenses:
Research and development (1)			185,331						161,273
Sales and marketing (1)			232,446						218,153
General and administrative (1)			67,384						51,567
Total operating expenses			485,161						430,993
Loss from operations			(71,814)						(4,567)
Other income (expense), net			11,749						(6,181)
Loss before provision for income taxes			(60,065)						(10,748)
Income tax provision			7,336						787
Net loss			$	(67,401)					$	(11,535)
Net loss per share attributable to common stockholders, basic and diluted			$	(0.22)					$	(0.04)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted			305,863						295,843

(1) Includes stock-based compensation expense as follows:

Cost of revenue -- product			$	2,655					$	1,863
Cost of revenue -- subscription services			5,647						5,356
Research and development			38,232						36,517
Sales and marketing			17,181						18,345
General and administrative			14,115						12,490
Total stock-based compensation expense			$	77,830					$	74,571

 

			First Quarter of Fiscal
			2024						2023
Cash flows from operating activities
Net loss			$	(67,401)					$	(11,535)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization			29,690						22,663
Stock-based compensation expense			77,830						74,571
Other			(1,804)						947
Changes in operating assets and liabilities:
Accounts receivable, net			221,205						196,129
Inventory			308						(1,699)
Deferred commissions			(2,331)						15,309
Prepaid expenses and other assets			(6,095)						(11,742)
Operating lease right-of-use assets			11,001						7,749
Accounts payable			(3,993)						(7,419)
Accrued compensation and other liabilities			(89,082)						(88,963)
Operating lease liabilities			(6,100)						(8,480)
Deferred revenue			10,019						32,602
Net cash provided by operating activities			173,247						220,132
Cash flows from investing activities
Purchases of property and equipment (1)			(51,424)						(32,810)
Purchases of marketable securities			(128,788)						(17,251)
Sales of marketable securities			43,040						—
Maturities of marketable securities			288,373						116,175
Net cash provided by investing activities			151,201						66,114
Cash flows from financing activities
Net proceeds from exercise of stock options			4,630						11,405
Proceeds from issuance of common stock under employee stock purchase plan			21,219						19,396
Principal payments on borrowings and finance lease obligations			(576,780)						(251,395)
Proceeds from borrowings			100,000						—
Tax withholding on vesting of equity awards			(6,759)						(10,194)
Repurchases of common stock			(69,911)						(66,420)
Net cash used in financing activities			(527,601)						(297,208)
Net decrease in cash, cash equivalents and restricted cash			(203,153)						(10,962)
Cash, cash equivalents and restricted cash, beginning of period			591,398						476,743
Cash, cash equivalents and restricted cash, end of period			$	388,245					$	465,781

(1) Includes capitalized internal-use software costs of $5.3 million and $2.9 million for the first quarter of fiscal 2024 and 2023.

The following table presents non-GAAP gross margins by revenue source before certain items (in thousands except percentages, unaudited):

						First Quarter of Fiscal 2024																																				First Quarter of Fiscal 2023
						GAAP results						GAAP gross margin (a)						Adjustment												Non- GAAP results						Non- GAAP gross margin (b)						GAAP results						GAAP gross margin (a)						Adjustment												Non- GAAP results						Non- GAAP gross margin (b)
																		$	2,655					(c)																														$	1,863					(c)
																		147						(d)																														188						(d)
																		3,306						(e)																														3,199						(e)
Gross profit --product						$	212,750					68.9		%				$	6,108											$	218,858					70.8		%				$	275,677					68.7		%				$	5,250											$	280,927					70.0		%
																		$	5,647					(c)																														$	5,356					(c)
																		338						(d)																														582						(d)
																		—																																				135						(f)
																		13						(g)																														24						(g)
Gross profit -- subscription services						$	200,597					71.6		%				$	5,998											$	206,595					73.7		%				$	150,749					68.8		%				$	6,097											$	156,846					71.5		%
																		$	8,302					(c)																														$	7,219					(c)
																		485						(d)																														770						(d)
																		3,306						(e)																														3,199						(e)
																		—																																				135						(f)
																		13						(g)																														24						(g)
Total gross profit						$	413,347					70.1		%				$	12,106											$	425,453					72.2		%				$	426,426					68.7		%				$	11,347											$	437,773					70.6		%

(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.

(d) To eliminate payroll tax expense related to stock-based activities.

(e) To eliminate amortization expense of acquired intangible assets.

(f) To eliminate costs associated with the exit of certain operations.

(g) To eliminate payments to former shareholders of acquired company.

The following table presents certain non-GAAP consolidated results before certain items (in thousands, except per share amounts and percentages, unaudited):

			First Quarter of Fiscal 2024																																				First Quarter of Fiscal 2023
			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)
															$	77,830					(c)																														$	74,571					(c)
															885						(d)																														1,800						(d)
															4,815						(e)																														6,996						(e)
															—																																				2,868						(f)
															4,070						(g)																														—
															3,839						(h)																														3,730						(h)
Operating income (loss)			$	(71,814)					-12.2		%				$	91,439											$	19,625					3.3		%				$	(4,567)					-0.7		%				$	89,965								$	85,398					13.8		%
															$	77,830					(c)																														$	74,571					(c)
															885						(d)																														1,800						(d)
															4,815						(e)																														6,996						(e)
															—																																				2,868						(f)
															4,070						(g)																														—
															3,839						(h)																														3,730						(h)
															647						(i)																														801						(i)
Net income (loss)			$	(67,401)											$	92,086											$	24,685											$	(11,535)											$	90,766								$	79,231
Net income (loss) per share -- diluted			$	(0.22)																							$	0.08											$	(0.04)																				$	0.25
Weighted-average shares used in per share calculation -- diluted			305,863												11,134						(j)						316,997												295,843												20,037						(j)			315,880

(a) GAAP operating margin is defined as GAAP operating loss divided by revenue.

(b) Non-GAAP operating margin is defined as non-GAAP operating income divided by revenue.

(d) To eliminate payments to former shareholders of acquired company.

(e) To eliminate payroll tax expense related to stock-based activities.

(f) To eliminate costs primarily associated with the exit of certain operations.

(g) To eliminate duplicate lease costs during the transition of our corporate headquarters.

(h) To eliminate amortization expense of acquired intangible assets.

(i) To eliminate amortization expense of debt issuance costs related to our debt.

(j) To include effect of dilutive securities (employee stock options, restricted stock, and shares from employee stock purchase plan).

(1) Includes capitalized internal-use software costs of $5.3 million and $2.9 million for the first quarter of fiscal 2024 and 2023.