SANTA CLARA, Calif. – August 28, 2024 – Today Pure Storage (NYSE: PSTG), the IT pioneer that delivers the world's most advanced data storage technologies and services, announced financial results for its second quarter fiscal year 2025 ended August 4, 2024.

“In a world where energy demands are soaring, the power savings of Pure Storage alone make the move from hard disks to Pure technology a smart choice for both hyperscaler and enterprise data centers,” said Pure Storage Chairman and CEO Charles Giancarlo. “Businesses can grow their data storage and reduce their energy footprint with Pure on a platform that eliminates existing data silos and simplifies customers’ data centers with guaranteed service-level agreements.”

Second Quarter Financial Highlights 

•Revenue $763.8 million, an increase of 11% year-over-year

•Subscription services revenue $361.2 million, up 25% year-over-year

•Subscription annual recurring revenue (ARR) $1.5 billion, up 24% year-over-year

•Remaining performance obligations (RPO) $2.3 billion, up 24% year-over-year

•GAAP gross margin 70.7%; non-GAAP gross margin 72.8%

•GAAP operating income $24.9 million; non-GAAP operating income $138.6 million

•GAAP operating margin 3.3%; non-GAAP operating margin 18.1%

•Q2 operating cash flow $226.6 million; free cash flow $166.6 million

•Total cash, cash equivalents, and marketable securities $1.8 billion

“We delivered strong financial results through the first half of our fiscal year, highlighting the effectiveness of our strategic initiatives,” said Kevan Krysler, Chief Financial Officer, Pure Storage. “Our highly differentiated data storage platform strategy is demonstrating success with our customers.”

Second Quarter Company Highlights

•Platform Innovation: The Pure platform delivers agility and risk reduction with a consistent, as-a-service experience across the broadest set of use cases and IT environments. At its annual Pure//Accelerate conference, Pure Storage announced critical new platform capabilities to further improve the ability for enterprises to deploy AI, improve cyber resilience, and modernize applications, including Evergreen//One for AI, the first purpose-built AI storage as-a-service, enhancements to Pure Fusion, delivering first-of-its-kind storage automation, and an industry-first generative AI copilot for storage. Additionally, Pure continued to extend its Storage as-a-Service (STaaS) leadership with new service level agreements (SLAs), now delivering the industry’s most comprehensive set of SLAs.

•ESG Leadership: Pure Storage released its third Environmental, Social, and Governance (ESG) report, offering visibility into current metrics and setting commitments for meaningful progress towards a more sustainable future. The latest report outlines that Pure Storage's platform requires up to 10x less energy than mechanical spinning disk storage (HDD) and up to 5x less than solid state drives (SSDs).

•Enterprise AI Momentum: Pure Storage continued to accelerate enterprise AI adoption, announcing that it will be a certified storage solution for NVIDIA DGX SuperPOD by the end of 2024. Additionally, Pure joined the Ultra Ethernet Consortium (UEC), a Linux Foundation initiative, underscoring its commitment to expanding the capabilities of high performance Ethernet for large-scale AI and HPC initiatives.

•Fortune Best Large Workplaces in the Bay Area (Ranked #15)

•Fortune Best Workplaces for Millennials (Ranked #34)

•Business Intelligence Group's 2024 Sustainability Leadership Award

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 second quarter fiscal 2025 results at 2:00 pm PT today, August 28, 2024. A live audio broadcast of the conference call will be available on the Pure Storage Investor Relations website. Pure will also post its earnings presentation and prepared remarks to this website concurrent with this release.

A replay will be available following the call on the Pure Storage Investor Relations website or for two weeks at 1-800-770-2030 (or 1-647-362-9199 for international callers) with passcode 5667482.

Additionally, Pure is scheduled to participate at the following investor conference:

Date: Wednesday, September 11, 2024

Time: 12:25 p.m. PT / 3:25 p.m. ET

Chairman and CEO Charles Giancarlo and Chief Financial Officer Kevan Krysler

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

Pure Storage (NYSE: PSTG) delivers the industry’s most advanced data storage platform to store, manage, and protect the world’s data at any scale. With Pure Storage, organizations have ultimate simplicity and flexibility, saving time, money, and energy. From AI to archive, Pure Storage delivers a cloud experience with one unified Storage as-a-Service platform across on premises, cloud, and hosted environments. Our platform is built on our Evergreen architecture that evolves with your business – always getting newer and better with zero planned downtime, guaranteed. Our customers are actively increasing their capacity and processing power while significantly reducing their carbon and energy footprint. It’s easy to fall in love with Pure Storage, as evidenced by the highest Net Promoter Score in the industry. For more information, visit www.purestorage.com.

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Pure Storage, the Pure P Logo, Portworx, and the marks on the Pure Storage Trademark List are trademarks or registered trademarks of Pure Storage Inc. in the U.S. and/or other countries. The Trademark List can be found at purestorage.com/trademarks. Other names may be 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 and business results, demand for our products and subscription services, including Evergreen//One, our technology and product strategy, specifically customer priorities around sustainability, the environmental and energy saving benefits to our customers of using our products, our ability to perform during current macro conditions and expand market share, our sustainability goals and benefits, our ability to capture storage workloads for AI environments and hyperscalers, the timing and magnitude of large orders, the impact of inflation, economic or supply chain disruptions, our expectations regarding our product and technology differentiation, including the E//Family, new customer acquisition, 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 4, 2024. All information provided in this release and in the attachments is as of August 28, 2024, 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.

Total Contract Value (TCV) Sales, or bookings, of Pure's Evergreen//One and Evergreen//Flex offerings is an operating metric, representing the value of orders received and/or expected to be received during the fiscal year.

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 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, restructuring costs related to severance and termination benefits, and costs associated with the impairment and early exit of certain leased facilities 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
						Second Quarter of Fiscal 2025						Fiscal 2024
Assets
Current assets:
Cash and cash equivalents						$	965,028					$	702,536
Marketable securities						855,453						828,557
Accounts receivable, net of allowance of $959 and $1,060						416,501						662,179
Inventory						43,548						42,663
Deferred commissions, current						87,424						88,712
Prepaid expenses and other current assets						185,072						173,407
Total current assets						2,553,026						2,498,054
Property and equipment, net						396,676						352,604
Operating lease right-of-use-assets						138,781						129,942
Deferred commissions, non-current						210,755						215,620
Intangible assets, net						27,004						33,012
Goodwill						361,427						361,427
Restricted cash						14,779						9,595
Other assets, non-current						78,825						55,506
Total assets						$	3,781,273					$	3,655,760
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable						$	68,104					$	82,757
Accrued compensation and benefits						176,553						250,257
Accrued expenses and other liabilities						119,430						135,755
Operating lease liabilities, current						49,575						44,668
Deferred revenue, current						869,332						852,247
Total current liabilities						1,282,994						1,365,684
Long-term debt						100,000						100,000
Operating lease liabilities, non-current						128,674						123,201
Deferred revenue, non-current						754,328						742,275
Other liabilities, non-current						62,116						54,506
Total liabilities						2,328,112						2,385,666
Stockholders’ equity:
Common stock and additional paid-in capital						2,925,540						2,749,627
Accumulated other comprehensive income (loss)						2,707						(3,782)
Accumulated deficit						(1,475,086)						(1,475,751)
Total stockholders' equity						1,453,161						1,270,094
Total liabilities and stockholders' equity						$	3,781,273					$	3,655,760

 

			Second Quarter of Fiscal												First Two Quarters of Fiscal
			2025						2024						2025						2024
Revenue:
Product			$	402,595					$	399,738					$	749,979					$	708,701
Subscription services			361,176						288,933						707,271						569,277
Total revenue			763,771						688,671						1,457,250						1,277,978
Cost of revenue:
Product (1)			129,723						120,605						230,476						216,818
Subscription services (1)			93,968						81,473						190,988						161,220
Total cost of revenue			223,691						202,078						421,464						378,038
Gross profit			540,080						486,593						1,035,786						899,940
Operating expenses:
Research and development (1)			195,490						182,492						389,310						367,823
Sales and marketing (1)			250,267						232,732						501,239						465,178
General and administrative (1)			69,445						60,831						146,232						128,215
Restructuring and impairment (2)			—						16,766						15,901						16,766
Total operating expenses			515,202						492,821						1,052,682						977,982
Income (loss) from operations			24,878						(6,228)						(16,896)						(78,042)
Other income (expense), net			19,437						6,686						33,528						18,435
Income (loss) before provision for income taxes			44,315						458						16,632						(59,607)
Income tax provision			8,641						7,573						15,967						14,909
Net income (loss)			$	35,674					$	(7,115)					$	665					$	(74,516)
Net income (loss) per share attributable to common stockholders, basic			$	0.11					$	(0.02)					$	0.00					$	(0.24)
Net income (loss) per share attributable to common stockholders, diluted			$	0.10					$	(0.02)					$	0.00					$	(0.24)
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders, basic			326,326						309,510						324,458						307,687
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders, diluted			343,443						309,510						341,509						307,687

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

Cost of revenue -- product			$	3,445					$	2,958					$	6,227					$	5,613
Cost of revenue -- subscription services			7,961						6,851						16,832						12,498
Research and development			50,869						44,085						101,163						82,317
Sales and marketing			24,418						19,493						47,937						36,674
General and administrative			18,197						16,060						45,725						30,175
Total stock-based compensation expense			$	104,890					$	89,447					$	217,884					$	167,277

(2) Includes expenses for severance and termination benefits related to workforce realignment and lease impairment and abandonment charges associated with cease-use of our former corporate headquarters.

 

			Second Quarter of Fiscal												First Two Quarters of Fiscal
			2025						2024						2025						2024
Cash flows from operating activities
Net income (loss)			$	35,674					$	(7,115)					$	665					$	(74,516)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization			35,884						30,223						69,827						59,913
Stock-based compensation expense			104,890						89,447						217,884						167,277
Noncash portion of lease impairment and abandonment			—						16,766						3,270						16,766
Other			1,120						(1,225)						2,726						(3,029)
Changes in operating assets and liabilities:
Accounts receivable, net			6,953						(133,974)						245,721						87,231
Inventory			(4,956)						4,152						(6,661)						4,460
Deferred commissions			(1,554)						(7,229)						6,153						(9,560)
Prepaid expenses and other assets			(17,787)						5,737						(27,006)						(358)
Operating lease right-of-use assets			8,406						8,634						16,528						19,635
Accounts payable			13,423						30,304						(13,158)						26,311
Accrued compensation and other liabilities			30,392						31,558						(78,732)						(57,524)
Operating lease liabilities			(8,031)						(7,033)						(18,257)						(13,133)
Deferred revenue			22,183						41,373						29,137						51,392
Net cash provided by operating activities			226,597						101,618						448,097						274,865
Cash flows from investing activities
Purchases of property and equipment (1)			(60,035)						(55,105)						(108,853)						(106,529)
Purchases of marketable securities and other			(105,328)						(117,829)						(270,451)						(246,617)
Sales of marketable securities			10,735						5,708						48,424						48,748
Maturities of marketable securities			70,127						98,330						197,984						386,703
Net cash provided by (used in) investing activities			(84,501)						(68,896)						(132,896)						82,305
Cash flows from financing activities
Net proceeds from exercise of stock options			4,545						25,218						17,768						29,848
Proceeds from issuance of common stock under employee stock purchase plan			—						—						25,328						21,219
Principal payments on borrowings and finance lease obligations			(2,836)						(287)						(3,935)						(577,067)
Proceeds from borrowing			—						—						—						100,000
Tax withholding on vesting of equity awards			(74,208)						(5,068)						(86,686)						(11,827)
Repurchases of common stock			—						(21,970)						—						(91,881)
Net cash used in financing activities			(72,499)						(2,107)						(47,525)						(529,708)
Net increase (decrease) in cash, cash equivalents and restricted cash			69,597						30,615						267,676						(172,538)
Cash, cash equivalents and restricted cash, beginning of period			910,210						388,245						712,131						591,398
Cash, cash equivalents and restricted cash, end of period			$	979,807					$	418,860					$	979,807					$	418,860

(1) Includes capitalized internal-use software costs of $5.3 million for both the second quarter of fiscal 2025 and 2024 and $9.8 million and $10.6 million for the first two quarters of fiscal 2025 and 2024.

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

(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 duplicate lease costs during the transition of our corporate headquarters.

(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):

(a) GAAP operating margin is defined as GAAP operating income (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.

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

(h) To eliminate lease impairment and abandonment charges associated with cease-use of our former corporate headquarters.

(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 for both the second quarter of fiscal 2025 and 2024.