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☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Pure Storage, Inc.
(Exact Name of Registrant as Specified in its Charter)

 

Delaware						27-1069557
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  x     No  o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  x     No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

x

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  x

As of June 4, 2025, the registrant had 326,831,678 shares of its Class A common stock outstanding.

 

						Page
Note About Forward-Looking Statements						ii
PART I.			FINANCIAL INFORMATION
Item 1.			Financial Statements (unaudited)			1
			Condensed Consolidated Balance Sheets			1
			Condensed Consolidated Statements of Operations			2
			Condensed Consolidated Statements of Comprehensive Loss			3
			Condensed Consolidated Statements of Stockholders’ Equity			4
			Condensed Consolidated Statements of Cash Flows			5
			Notes to Condensed Consolidated Financial Statements			6
Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations			24
Item 3.			Quantitative and Qualitative Disclosures About Market Risk			34
Item 4.			Controls and Procedures			35
PART II.			OTHER INFORMATION
Item 1.			Legal Proceedings			36
Item 1A.			Risk Factors			36
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds			57
Item 3.			Defaults Upon Senior Securities			57
Item 4.			Mine Safety Disclosures			57
Item 5.			Other Information			57
Item 6.			Exhibits			59
Signatures

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this report, including statements regarding our future results of operations and financial condition, business strategy and plans and objectives of management for future operations, are forward-looking statements. In some cases, forward-looking statements may be identified by words such as “anticipate,” “believe,” “continue,” “could,” “design,” “estimate,” “expect,” “intend,” “may,” “plan,” “potentially,” “predict,” “project,” “should,” “will” or the negative of these terms or other similar expressions.

Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements regarding macroeconomic conditions, including, among other issues, inflation, interest rates, tariffs, and a slowdown in demand, our ability to sustain or manage our profitability and growth, our expectations regarding demand for our products and subscription services, including Evergreen//One, trends in the external storage market, our ability to expand market share, our expectations that sales prices may decrease or fluctuate over time, our plans to expand and continue to invest internationally, our plans to continue investing in marketing, sales, support and research and development, our shift to subscription services, including as-a-Service offerings, our expectations regarding fluctuations in our revenue and operating results, including the timing and magnitude of sales in connection with our design win announcement with a hyperscaler, our expectations that we may continue to experience losses despite revenue growth, our ability to successfully attract, motivate, and retain qualified personnel and maintain our culture, our expectations regarding our technological leadership and market opportunity, including our ability to meet hyperscalers’ performance and price requirements, our ability to realize benefits from our acquisitions and investments, our ability to innovate and introduce new or enhanced products, our expectations regarding technology and product strategy and technology differentiation, specifically our sustainability goals, our customer priorities around sustainability, and the environmental and energy saving benefits to our customers of using our products, our competitive position and the effects of competition and industry dynamics, including alternative offerings from incumbent, emerging and public cloud vendors, the potential disruptions to our contract manufacturers or supply chain, our expectations about the impact of, and trends relating to, component pricing, our expectations concerning relationships with third parties, including our partners, customers, suppliers, and contract manufacturers, the adequacy of our intellectual property rights, expectations concerning potential legal proceedings and related costs, and the impact of adverse economic conditions on our business, operating results, cash flows and/or financial condition.

We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, and financial needs. These forward-looking statements are subject to a number of known and unknown risks, uncertainties and assumptions, including risks described in the section titled “Risk Factors.” These risks are not exhaustive. Other sections of this report include additional factors that could harm our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time, and it is not possible for our management to predict all risk factors nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ from those contained in, or implied by, any forward-looking statements.

Investors should not rely upon forward-looking statements as predictions of future events. We cannot assure investors that the events and circumstances reflected in the forward-looking statements will be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason after the date of this report or to conform these statements to actual results or to changes in our expectations. Investors should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed as exhibits to this report with the understanding that our actual future results, levels of activity, performance and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.

 

 

Pure Storage, Inc. (the Company, we, us, or other similar pronouns) was originally incorporated in the state of Delaware in October 2009 under the name OS76, Inc. In January 2010, we changed our name to Pure Storage, Inc. We are headquartered in Santa Clara, California and have wholly owned subsidiaries throughout the world.

We operate using a 52/53 week fiscal year ending on the first Sunday after January 30, which for fiscal 2025 was February 2, 2025 and for fiscal 2026 will be February 1, 2026. The first quarter of fiscal 2025 and 2026 ended on May 5, 2024 and May 4, 2025. Unless otherwise stated, all dates refer to our fiscal year and fiscal quarters.

The condensed consolidated financial statements include the accounts of the Company and our wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (U.S. GAAP) and applicable rules and regulations of the Securities and Exchange Commission regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in our Annual Report on Form 10-K for fiscal 2025.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, comprehensive loss and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full fiscal year 2026 or any future period.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the financial statements and accompanying notes. Actual results could differ from these estimates and assumptions due to risks and uncertainties. Such estimates include, but are not limited to, the determination of standalone selling price for revenue arrangements with multiple performance obligations when the price at which the performance obligation sold separately or observable past transactions are not available, useful lives of intangible assets and property and equipment, the period of benefit for deferred contract costs for commissions, fair value for certain stock-based awards, provision for income taxes including related reserves, fair value of leases and impairment of related right-of-use (ROU) assets. Management bases its estimates on historical experience and on various other assumptions which management believes to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.

Restricted cash is associated with our letters of credit for leases and certain employee-related benefits. At the end of fiscal 2025 and the first quarter of fiscal 2026, we had restricted cash of $14.2 million and $20.8 million. Included in these amounts are $1.6 million and $1.8 million classified as prepaid expenses and other current assets in our condensed consolidated balance sheets.

In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires greater disaggregation of tax information in rate reconciliation and income taxes paid by jurisdiction. ASU 2023-09 will be effective for our fiscal year beginning February 3, 2025, with early adoption permitted. We are currently evaluating the impact of this standard on our financial statement disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires additional disclosures of specific expense categories included within each expense caption presented on the Statements of Operations. The new standard can be applied on either a fully retrospective or prospective basis. ASU 2024-03 will be effective for our fiscal year beginning February 1, 2027, and interim periods within our fiscal year beginning February 7, 2028, with early adoption permitted. We are currently evaluating the impact of this new standard on our financial statement disclosures.

We define fair value as the exchange price that would be received from sale of an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. We measure our financial assets and liabilities at fair value at each reporting period using a fair value hierarchy which requires us to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

Three levels of inputs may be used to measure fair value:

•Level 1 - Observable inputs are unadjusted quoted prices in active markets for identical assets or liabilities;

•Level 2 - Observable inputs are quoted prices for similar assets and liabilities in active markets or inputs other than quoted prices that are observable for the assets or liabilities, either directly or indirectly through market corroboration, for substantially the full term of the financial instruments; and

•Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. These inputs are based on our own assumptions used to measure assets and liabilities at fair value and require significant management judgment or estimation.

We measure our cash equivalents, marketable securities, publicly held equity securities, and restricted cash at fair value on a recurring basis. We classify these assets within Level 1 or Level 2 because they are valued using either quoted market prices or inputs other than quoted prices which are directly or indirectly observable in the market, including readily-available pricing sources for the identical underlying security which may not be actively traded. Our fixed income available-for-sale securities consist of high quality, investment grade securities from diverse issuers. The valuation techniques used to measure the fair value of our marketable securities were derived from non-binding market consensus prices that are corroborated by observable market data or quoted market prices for similar instruments.

The following tables summarize our assets that were measured at fair value on a recurring basis by significant investment categories and their classification within the fair value hierarchy and in our condensed consolidated balance sheets at the end of fiscal 2025 and the first quarter of fiscal 2026 (in thousands):

_________________________________

(1) Subject to short-term lock-up restrictions.

The amortized cost and estimated fair value of our marketable securities are shown below by contractual maturity (in thousands):

Unrealized losses on our marketable securities have not been recorded into income because we do not intend to sell nor is it more likely than not that we will be required to sell these investments prior to recovery of their amortized cost basis. The fair value of our marketable securities is impacted by the interest rate environment and related credit spreads. The credit ratings associated with our marketable securities are highly rated and the issuers continue to make timely principal and interest payments. As a result, there were no credit or non-credit impairment charges recorded in the first quarter of fiscal 2025 and 2026. The following table presents the fair values and gross unrealized losses for those investments that were in a continuous unrealized loss position at the end of fiscal 2025 and the first quarter of fiscal 2026, aggregated by investment category (in thousands):

Realized gains or losses on sale of marketable securities were not significant for all periods presented.

Strategic investments primarily include equity investments in privately-held companies without readily determinable fair values in which we do not own a controlling interest or exercise significant influence. At the end of fiscal 2025 and the first quarter of 2026, the carrying amount of these investments was $36.7 million and $11.7 million and included primarily in other assets, non-current in our condensed consolidated balance sheets. During the first quarter of fiscal 2026, one of the privately-held companies completed its initial public offering and as a result its fair value at the end of the first quarter of fiscal 2026 is included in the above fair value hierarchy table as Level 1.

Strategic investments that are remeasured due to an observable event or impairment are classified as Level 3 in the fair value hierarchy as nonrecurring fair value measurements may include observable and unobservable inputs. No remeasurements occurred during the first quarter of fiscal 2025 and 2026.

The investments held in our nonqualified deferred compensation plan trust are considered trading securities that are measured at fair value using Level 1 inputs. The fair value of these investments was $8.4 million and $10.6 million at the end of fiscal 2025 and the first quarter of fiscal 2026.

Inventory consists of the following (in thousands):

Property and equipment, net consists of the following (in thousands):

 

			At the End of
			Fiscal 2025						First Quarter of Fiscal 2026
Test and infrastructure equipment (1)			$	457,033					$	461,934
Computer equipment and software			393,623						416,446
Furniture and fixtures			13,948						14,203
Leasehold improvements			102,002						103,456
Capitalized software development costs			65,824						73,135
Total property and equipment			1,032,430						1,069,174
Less: accumulated depreciation and amortization			(570,699)						(565,647)
Property and equipment, net			$	461,731					$	503,527

_________________________________

(1) Includes finance lease right-of-use assets. Refer to Note 8.

Depreciation and amortization expense related to property and equipment was $31.1 million and $30.3 million for the first quarter of fiscal 2025 and 2026.

Intangible assets, net consist of the following (in thousands):

 

			At the End of
			Fiscal 2025																		First Quarter of Fiscal 2026
			Gross Carrying Value						Accumulated Amortization						Net Carrying Amount						Gross Carrying Value						Accumulated Amortization						Net Carrying Amount
Technology patents			$	20,875					$	(17,652)					$	3,223					$	20,875					$	(18,082)					$	2,793
Developed technology			83,211						(69,812)						13,399						83,211						(73,118)						10,093
Customer relationships			6,459						(4,007)						2,452						6,459						(4,237)						2,222
Intangible assets, net			$	110,545					$	(91,471)					$	19,074					$	110,545					$	(95,437)					$	15,108

 

Intangible assets amortization expense was $3.9 million and $4.0 million for the first quarter of fiscal 2025 and 2026. At the end of the first quarter of fiscal 2026, the weighted-average remaining amortization period was 0.7 year for technology patents, 0.8 year for developed technology, and 2.4 years for customer relationships. We record amortization of technology patents in general and administrative expenses due to their defensive nature, developed technology in cost of product revenue, and customer relationships in sales and marketing expenses in the condensed consolidated statements of operations.

At the end of the first quarter of fiscal 2026, future expected amortization expense for intangible assets is as follows (in thousands):

As of the end of fiscal 2025 and the first quarter of fiscal 2026, goodwill was $361.4 million. There were no impairments to goodwill for the first quarter of fiscal 2025 and 2026.

Accrued expenses and other liabilities consist of the following (in thousands):

_________________________________

(1) Primarily consists of subscription cloud services and outside services costs.

(2) Primarily consists of accruals related to our inventory and inventory purchase commitments with our contract manufacturers.

Deferred commissions consist of incremental costs paid to our sales force to obtain customer contracts.

Changes in total deferred commissions during the periods presented are as follows (in thousands):

Of the $332.3 million total deferred commissions balance at the end of the first quarter of fiscal 2026, we expect to recognize approximately 30% as sales commission expense over the next 12 months and the remainder thereafter.

There was no impairment related to capitalized commissions for the first quarter of fiscal 2025 and 2026.

Deferred revenue primarily consists of amounts that have been invoiced but have not yet been recognized as revenue including performance obligations pertaining to subscription services.

Changes in total deferred revenue during the periods presented are as follows (in thousands):

Revenue recognized during the first quarter of fiscal 2025 and 2026 from deferred revenue at the beginning of each respective period was $293.9 million and $340.8 million.

Total remaining performance obligations (RPO) which is contracted but not recognized revenue was $2.7 billion at the end of the first quarter of fiscal 2026. Total RPO includes $55.7 million in remaining non-cancelable product orders, of which $43.1 million relates to a lessor arrangement. RPO consists of both deferred revenue and non-cancelable amounts that are expected to be invoiced and recognized as revenue in future periods. Product orders are generally cancelable until delivery has occurred, and as such, unfulfilled product orders that are cancelable are excluded from RPO. Of the $2.7 billion RPO at the end of the first quarter of fiscal 2026, we expect to recognize approximately 48% over the next 12 months, and the remainder thereafter.

In August 2020, we entered into a Credit Agreement with a consortium of financial institutions and lenders that provides for a five-year, senior secured revolving credit facility of $300.0 million (Existing Credit Facility). Proceeds from the Existing Credit Facility may be used for general corporate purposes and working capital. The Existing Credit Facility expires, absent default or termination by us, on August 24, 2025.

The annual interest rates applicable to loans under the Existing Credit Facility are, at our option, equal to either a base rate plus a margin ranging from 0.50% to 1.25% or term Secured Overnight Financing Rate (SOFR) (based on one, three or six-month interest periods), subject to a floor of 0%, plus a margin ranging from 1.50% to 2.25%. Interest on revolving loans is payable quarterly in arrears with respect to loans based on the base rate and at the end of an interest period in the case of loans based on term SOFR (or at each three-month interval if the interest period is longer than three months). We are also required to pay a commitment fee on the unused portion of the commitments ranging from 0.25% to 0.40% per annum, payable quarterly in arrears.

We had $100.0 million outstanding under the Existing Credit Facility at the end of the first quarter of fiscal 2026. The outstanding borrowing bore weighted-average interest at an annual rate of approximately 6.83% and 5.82% during the first quarter of fiscal 2025 and 2026 based on a one-month term SOFR period. Interest expense was not material for the first quarter of fiscal 2025 and 2026.

Borrowings under the Existing Credit Facility are collateralized by substantially all of our assets and subject to certain restrictions and two financial ratios measured as of the last day of each fiscal quarter: a consolidated leverage ratio not to exceed 4.5:1 and an interest coverage ratio not to be less than 3:1. We were in compliance with all covenants under the Existing Credit Facility at the end of the first quarter of fiscal 2026.

At the end of the first quarter of fiscal 2026, we had various non-cancelable operating and finance lease commitments for office and data center facilities. Refer to Note 8—Leases for additional information regarding lease commitments.

At the end of fiscal 2025 and the first quarter of fiscal 2026, we had outstanding letters of credit in the aggregate amount of $7.2 million and $13.5 million in connection with our facility leases and a certain employee-related benefit. The letters of credit associated with our facility leases are collateralized by either restricted cash or the Credit Facility and mature on various dates through September 2030. The letter of credit associated with the certain employee-related benefit is collateralized by restricted cash.

From time to time, we have become involved in claims and other legal matters arising in the normal course of business. We investigate these claims as they arise. Although claims are inherently unpredictable, we currently are not aware of any matters that we expect to have a material adverse effect on our business, financial position, results of operations or cash flows. Accordingly, no material loss contingency has been recorded in our condensed consolidated balance sheet as of the end of the first quarter of fiscal 2026.

Our arrangements generally include certain provisions for indemnifying customers against liabilities if our products or services infringe a third party’s intellectual property rights. Other guarantees or indemnification arrangements include guarantees of product and service performance and standby letters of credit for lease facilities. It is not possible to determine the maximum potential amount under these indemnification obligations due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. To date, we have not incurred any material costs as a result of such obligations and have not accrued any liabilities related to such obligations in the condensed consolidated financial statements. In addition, we indemnify our officers, directors and certain key employees while they are serving in good faith in their respective capacities. To date, there have been no claims under any indemnification provisions.

We lease office and data center facilities under non-cancelable operating lease agreements expiring through July 2032. Our lease agreements do not contain any material residual value guarantees or restrictive covenants.

We also lease certain engineering test equipment under financing agreements. These finance leases have a lease term of three to five years and contain a bargain purchase option that we have exercised or expect to exercise at the end of the respective lease terms.

The components of lease costs during the periods presented were as follows (in thousands):

____________________________________

(1) Variable lease cost predominantly included common area maintenance charges.

Supplemental information related to leases is as follows (in thousands):

			At the End of
			Fiscal 2025						First Quarter of Fiscal 2026
Operating leases:
Weighted-average remaining lease term (in years)			4.9						4.7
Weighted-average discount rate			7.4		%				7.4		%
Finance leases:
Finance lease right-of-use assets, net (1)			$	5,555					$	5,377
Finance lease liabilities, current (2)			$	387					$	297
Finance lease liabilities, non-current (3)			—						788
Total finance lease liabilities			$	387					$	1,085
Weighted-average remaining lease term (in years)			1.0						4.7
Weighted-average discount rate			3.3		%				5.8		%

____________________________________

(1) Included in the condensed consolidated balance sheets within property and equipment, net.

(2) Included in the condensed consolidated balance sheets within accrued expenses and other liabilities.

(3) Included in the condensed consolidated balance sheets within other liabilities, non-current.

Supplemental cash flow information related to leases is as follows (in thousands):

Future lease payments under our non-cancelable leases at the end of the first quarter of fiscal 2026 are as follows (in thousands):

We, as a lessor, have entered into non-cancelable arrangements to lease our data storage solutions and subscription services. The arrangements include multiple seven-year leases that either commenced during fiscal 2025 or will commence in fiscal 2026 with total net consideration of $217.5 million. The arrangements provide an end-of-term option to purchase the leased assets for a pre-determined price.

We determined, at inception of the respective arrangements, that each of the leases include sales-type leases, an operating lease, and non-lease components. The non-lease components are comprised of subscription support services and professional services. The total net consideration for each lease was allocated to these components based on relative standalone selling price. The amounts allocated to the lease and non-lease components are accounted for in accordance with ASC 842 and ASC 606, respectively.

We recognized $7.2 million in product revenue related to a sales-type lease component during the first quarter of fiscal 2025. The associated profit was $5.3 million based on the product revenue recognized less certain costs, during the first quarter of fiscal 2025. No product revenue was recognized during the first quarter of fiscal 2026. Subscription services revenue related to the operating lease and non-lease components recognized during the first quarter of fiscal 2025 and 2026 was not material and $7.2 million.

Future minimum gross lease payments for the leases that have commenced allocated to the sales-type leases and operating lease components are as follows (in thousands). The remaining lease payments of $95.7 million allocated to the non-lease components, are excluded from the table below.

In February 2024, we initiated a workforce realignment plan (the Plan) to better align our resources with our business strategy that reduced our headcount by nearly 250 employees globally. We recognized total restructuring costs of $27.9 million associated with one-time severance and other termination benefits, of which $9.9 million was recognized in the first quarter of fiscal 2025. The restructuring costs recognized in the first quarter of fiscal 2025 included $0.4 million in cost of revenue in our condensed consolidated statement of operations. The Plan was completed by the third quarter of fiscal 2025.

During the first quarter of fiscal 2025, we recognized $6.4 million in incremental abandonment and impairment charges related to certain leases associated with our former corporate headquarters that we ceased use during the second quarter of fiscal 2024. The incremental impairment charge represents the amount that the carrying value of the underlying asset exceeded its estimated fair value, which was determined by utilizing a discounted cash flow approach that incorporated revised sublease assumptions.

We have 20.0 million authorized shares of undesignated preferred stock, the rights, preferences and privileges of which may be designated from time to time by our Board of Directors. At the end of the first quarter of fiscal 2026, there were no shares of preferred stock issued or outstanding.

We have two classes of authorized common stock, Class A common stock, which we refer to as our “common stock”, and Class B common stock. At the end of the first quarter of fiscal 2026, we had 2.0 billion authorized shares of Class A common stock and 250.0 million authorized shares of Class B common stock, with each class having a par value of $0.0001 per share. At the end of the first quarter of fiscal 2026, 326.9 million shares of Class A common stock were issued and outstanding.

In February 2025, our Board of Directors authorized a $250.0 million increase to the share repurchase program, bringing the total remaining authorization for future share repurchases to $271.5 million. During the first quarter of fiscal 2026, we repurchased and retired approximately 2.5 million shares of our common stock at an average purchase price of $48.10 per share for an aggregate repurchase price of $119.9 million. At the end of the first quarter of fiscal 2026, $151.6 million remained available for future share repurchases under our current repurchase authorization.

We maintain two equity incentive plans: the 2009 Equity Incentive Plan (the 2009 Plan) and the 2015 Equity Incentive Plan (the 2015 Plan). The 2015 Plan serves as the successor to our 2009 Plan and provides for grants of incentive stock options to our employees and non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units, performance-based stock and cash awards, market-based stock awards, and other forms of stock awards to our employees, directors and consultants. Our equity awards generally vest over a two to four year period and expire no later than ten years from the date of grant.

Upon vesting of equity awards, approximately 0.3 million shares and 1.2 million shares were withheld to cover $12.5 million and $60.1 million in tax withholding obligations during the first quarter of fiscal 2025 and 2026. The shares withheld to satisfy employee tax withholding obligations are returned to our 2015 Plan and will be available for future issuance. Payments for employees’ tax obligations to the tax authorities are recognized as a reduction to additional paid-in capital and reflected as a financing activity in our condensed consolidated statements of cash flows.

Under our Amended and Restated 2015 Employee Stock Purchase Plan (2015 ESPP), our Board of Directors (or a committee thereof) has the authority to establish the length and terms of the offering periods and purchase periods and the purchase price of the shares of common stock which may be purchased under the plan. The current offering terms allow eligible employees to purchase shares of our common stock at a discount through payroll deductions of up to 30% of their eligible compensation, subject to a cap of 3,000 shares on any purchase date, a dollar cap of $7,500 per purchase period, or $25,000 in any calendar year (as determined under applicable tax rules). The current terms also allow for a 24-month offering period beginning March 16th and September 16th of each year, with each offering period consisting of four 6-month purchase periods, subject to a reset provision. Further, currently, on each purchase date, eligible employees may purchase our common stock at a price per share equal to 85% of the lesser of the fair market value of our common stock (1) on the first trading day of the applicable offering period or (2) the purchase date.

Under the reset provision currently authorized, if the closing stock price on the offering date of a new offering falls below the closing stock price on the offering date of an ongoing offering, the ongoing offering would terminate immediately following the purchase of ESPP shares on the purchase date immediately preceding the new offering and participants in the terminated offering would automatically be enrolled in the new offering (ESPP reset), resulting in a modification charge to be recognized over the new offering period. No ESPP reset occurred during the first quarter of fiscal 2025 and 2026.

Stock-based compensation expense related to our 2015 ESPP was $8.0 million and $7.5 million during the first quarter of fiscal 2025 and 2026. At the end of the first quarter of fiscal 2026, total unrecognized stock-based compensation cost related to our 2015 ESPP was $45.1 million, which is expected to be recognized over a weighted-average period of 1.8 years.

A summary of the stock option activity under our equity incentive plans and related information is as follows:

 

			Options Outstanding
			Number of Shares						Weighted- Average Exercise Price						Weighted- Average Remaining Contractual Life (in years)						Aggregate Intrinsic Value (in thousands)
Balance at the end of fiscal 2025			2,426,214						$	14.07					2.0						$	130,798
Options exercised			(348,395)						15.39
Balance at the end of the first quarter of fiscal 2026			2,077,819						$	13.85					2.0						$	71,090
Vested and exercisable at the end of the first quarter of fiscal 2026			2,077,819						$	13.85					2.0						$	71,090

 

The aggregate intrinsic value of options vested and exercisable at the end of the first quarter of fiscal 2026 is calculated based on the difference between the exercise price and the closing price of $47.84 of our common stock on the last day of the first quarter of fiscal 2026.

Stock-based compensation expense related to stock options was fully recognized in fiscal 2025 and was not material during the first quarter of fiscal 2025.

A summary of the RSU activity under our 2015 Plan and related information is as follows:

Stock-based compensation expense related to RSUs was $67.7 million and $77.2 million during the first quarter of fiscal 2025 and 2026. At the end of the first quarter of fiscal 2026, total unrecognized stock-based compensation cost related to unvested RSUs was $891.4 million, which is expected to be recognized over a weighted-average period of 3.0 years.

The number of shares that could be earned under our PRSU grants ranges from 0% to 200% of the target number granted depending on the achievement of certain performance conditions with any unearned shares canceled. Generally, the number of earned shares vest over three years from the date of grant subject to continuous service.

A summary of the PRSU activity under our 2015 Plan and related information is as follows:

____________________________________

(1) Represents the number of shares earned in which the service condition has also been satisfied.

(2) Represents the number of shares canceled as a result of not fully achieving the fiscal 2025 performance conditions.

Stock-based compensation expense related to PRSUs was $33.5 million and $8.0 million during the first quarter of fiscal 2025 and 2026. At the end of the first quarter of fiscal 2026, total unrecognized stock-based compensation cost related to unvested PRSUs was $16.2 million, which is expected to be recognized over a weighted-average period of 1.7 years.

During the first quarter of fiscal 2025, our Board of Directors approved a discretionary adjustment, increasing the earned number of shares to 80 percent of the target for the PRSUs granted in fiscal 2024. Our Board of Directors’ consideration included that fiscal 2024 total revenue growth was impacted by Total Contract Value (TCV) sales growth of our consumption based Evergreen//One and Evergreen//Flex offerings, which far exceeded expectations. This modification resulted in additional stock-based compensation expense of approximately $40.7 million, of which $38.2 million was recognized through the first quarter of fiscal 2026. We recognized $28.7 million and $1.6 million in stock-based compensation expense related to this modification in the first quarter of fiscal 2025 and 2026.

In June 2023, we granted market-based LTP Awards to certain executives with an aggregate maximum number of shares of common stock of approximately 4.2 million.

•The total number of shares earned are subject to continuous service through March 20, 2028 and upon vesting, the number of shares vested will be subject to a one-year post-vest holding period.

•The number of shares earned are contingent upon our market capitalization meeting or exceeding $21.0 billion that will be measured over an approximate three to five year period, at the end of our fiscal years ending in 2026, 2027 and 2028.

Total stock-based compensation expense of $73.9 million for these awards is being recognized over the requisite service period of nearly five years using the accelerated attribution method and is not reversed if the market condition is not ultimately met. There were approximately 3.9 million in remaining unvested and outstanding LTP Awards with an aggregate intrinsic value of $188.8 million at the end of the first quarter of fiscal 2026. Stock-based compensation expense related to LTP Awards was $3.6 million during both the first quarter of fiscal 2025 and 2026. At the end of the first quarter of fiscal 2026, total unrecognized stock-based compensation cost related to unvested LTP Awards was $41.7 million, which is expected to be recognized over a weighted-average period of 2.9 years.

The following table summarizes the components of stock-based compensation expense recognized in the condensed consolidated statements of operations (in thousands):

 

			First Quarter of Fiscal
			2025						2026
Cost of revenue—product			$	2,782					$	3,266
Cost of revenue—subscription services			8,871						7,162
Research and development			50,294						49,242
Sales and marketing			23,519						22,084
General and administrative			27,528						14,521
Total stock-based compensation expense, net of amounts capitalized (1)			$	112,994					$	96,275

_________________________________

(1) Stock-based compensation expense capitalized was $1.6 million and $1.9 million during the first quarter of fiscal 2025 and 2026.

The tax benefit related to stock-based compensation expense for all periods presented was not material.

Basic and diluted net loss per share attributable to common stockholders is presented in conformity with the two-class method required for participating securities. Basic net loss per share attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period, less shares subject to repurchase. Diluted net loss per share attributable to common stockholders is computed by giving effect to all potentially dilutive common stock equivalents, including our outstanding stock options, common stock related to unvested RSUs, PRSUs, and LTP Awards, and common stock issuable pursuant to the ESPP. In periods of net loss, all potentially dilutive common stock equivalents have been excluded from the calculation of diluted net loss per share attributable to common stockholders as their effect is anti-dilutive.

The following table sets forth the computation of basic and diluted net loss per share attributable to common stockholders (in thousands, except per share data):

The following weighted-average outstanding shares of common stock equivalents were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented because including them would have been anti-dilutive (in thousands):

 

			First Quarter of Fiscal
			2025						2026
Stock options to purchase common stock			3,883						2,257
Unvested RSUs, PRSUs and LTP Awards			25,516						20,691
Shares issuable pursuant to the ESPP			775						464
Total			30,174						23,412

Other income (expense), net consists of the following (in thousands):

____________________________________

(1) Interest income includes interest income related to our cash, cash equivalents and marketable securities and non-cash interest income (expense) related to accretion (amortization) of the discount (premium) on marketable securities.

(2) Interest expense includes non-cash interest expense related to amortization of debt issuance costs, contractual interest expense related to our debt and accretion of our finance lease liabilities.

Our provision for income tax primarily reflects taxes on international operations and U.S. income taxes. The difference between the income tax provision that would be derived by applying the statutory rate to our income (loss) before provision for income taxes and the income tax provision recorded was primarily attributable to our valuation allowance on U.S. deferred tax assets, research and development credits, U.S. taxes on foreign income, stock-based compensation expense and state taxes driven by Internal Revenue Code Section 174.

At the end of the first quarter of fiscal 2026, there were no material changes to either the nature or the amounts of the uncertain tax positions previously determined for fiscal 2025.

Our chief operating decision maker (CODM), the Chief Executive Officer, manages business activities as a single operating and reportable segment at the consolidated level. The CODM reviews and utilizes consolidated financial information, including revenue, gross profit, operating loss and net loss as reported on the condensed consolidated statements of operations, to assess performance and allocate resources to support strategic priorities. Condensed consolidated net loss is our segment’s primary measure of profit or loss. The measure of segment assets is reported on the condensed consolidated balance sheets as total consolidated assets.

Our CODM reviews the following significant segment expenses, which are each separately disclosed and presented in the condensed consolidated statements of operations: cost of revenue for product, cost of revenue for subscription services, research and development expenses, sales and marketing expenses, and general and administrative expenses. Other segment items within condensed consolidated net loss include restructuring and impairment expenses, other income (expense), net and income tax provision. Other significant noncash segment expenses include stock-based compensation and depreciation and amortization.

The following table depicts the disaggregation of revenue by geographic area based on the billing address of our customers and is consistent with how we evaluate our financial performance (in thousands):

Long-lived assets, which are comprised of property and equipment, net, by geographic area are summarized as follows (in thousands):

 

			At the End of
			Fiscal 2025						First Quarter of Fiscal 2026
United States			$	448,035					$	490,773
Rest of the world			13,696						12,754
Total long-lived assets			$	461,731					$	503,527

In June 2025, we entered into a Credit Agreement with a consortium of financial institutions and lenders that provides for a five-year, senior unsecured revolving credit facility of $500.0 million (2025 Credit Facility). Proceeds from borrowings under the 2025 Credit Facility may be used for general corporate purposes and working capital. Our Existing Credit Facility was terminated effective June 10, 2025 and outstanding borrowings of $100.0 million were repaid.

The annual interest rates applicable to U.S. Dollar denominated loans under the 2025 Credit Facility are, at our option, equal to either the term SOFR or the daily simple SOFR, in each case, plus a margin initially set at 0.875% per annum. In addition, we will incur a commitment fee on the unused portion of the commitments at an initial rate of 0.075% per annum. The respective margins will fluctuate based on the then-applicable Consolidated Net Leverage Ratio (as defined in the Credit Agreement) and our debt rating.

We are subject to certain affirmative and negative covenants under the 2025 Credit Facility, including a Consolidated Net Leverage Ratio not to exceed 3.5:1 (which may be increased to 4:1 for the first six consecutive fiscal quarters after a qualified acquisition, as defined in the 2025 Credit Agreement) measured as of the last day of each fiscal quarter, commencing with the fiscal quarter ending August 3, 2025.

Data is foundational to our customers’ business transformation, and we are focused on delivering an innovative and disruptive data storage platform that enables customers to maximize the value of their data.

We are a global leader in data management and storage with a mission to redefine the data experience by simplifying how people manage, consume and interact with data. Our vision of an all-flash data center integrates our foundation of simplicity and reliability with four major market trends that are impacting all organizations large and small: (1) the shift to modernizing today’s data infrastructure with all-flash; (2) the increase of modern cloud-native applications; (3) increasing demand to consume data storage as a service; and (4) increasing demand for data storage to support the acceleration in artificial intelligence (AI) adoption while managing rising energy costs.

Our data storage platform (Pure Platform) supporting structured and unstructured data, at scale and across any data workloads, on premises, in the cloud, and hosted environments, makes it possible for customers to construct their Enterprise Data Clouds (EDC). EDC allows customers to serve a variety of data workloads including mission-critical production, test and development, analytics, disaster recovery, backup and restore, AI, and machine learning with a single consistent, highly automated and agile cloud operating model.

•In March 2025, we further expanded our AI portfolio with the introduction of FlashBlade//EXA, the industry's most powerful storage platform, to empower the most demanding specialty GPU clouds and high performance computing (HPC) environments. Featuring a purpose-built, massively parallel architecture that independently scales both data and metadata, FlashBlade//EXA delivers industry-leading performance, scalability, and adaptability.

•In May 2025, we announced a partnership with Nutanix to provide a joint, integrated solution to provide customers with a seamless way to deploy and manage virtual workloads on a scalable, modern infrastructure.

We derive revenue primarily from the sale of our products and services that comprise our Pure Platform. Our Pure Platform primarily includes our FlashArray and FlashBlade solutions, and our portfolio of Evergreen subscription services offerings. Subscription services also include our professional services offerings such as installation and implementation consulting services.

Provided that all other revenue recognition criteria have been met, we typically recognize product revenue upon transfer of control to our customers and the satisfaction of our performance obligations. For Evergreen//Flex, product revenue is recognized upon the commencement of the underlying subscription services. Products are typically shipped directly by us to customers, and our channel partners generally do not stock our inventory. We expect our product revenue may vary from period to period based on, among other things, the timing and size of orders and delivery of products and the impact of significant transactions.

We generally recognize revenue from the fair value of subscription services provided ratably over the contractual service period or on a consumption basis based on the minimum usage commitment as well as usage above the commitment amount and professional services as delivered. We expect our subscription services revenue to increase and continue to grow faster than our product revenue as more customers choose to consume our storage solutions as a service and our existing Evergreen subscription customers renew and expand their offerings.

Cost of product revenue primarily consists of costs paid to our third-party contract manufacturers, which includes the costs of our raw material components, and personnel costs associated with our supply chain operations. Personnel costs consist of salaries, bonuses and stock-based compensation expense. Our cost of product revenue also includes allocated overhead costs, adjustments to inventory and purchase commitments based on forecasted demand, product warranty costs, amortization of intangible assets pertaining to developed technology, and freight. Allocated overhead costs consist of certain employee benefits and facilities-related costs. We expect our cost of product revenue to increase in absolute dollars as our product revenue increases.

Cost of subscription services revenue primarily consists of personnel costs associated with delivering our subscription and professional services, part replacements, allocated overhead costs, depreciation of infrastructure used to deliver our subscription services, and amortization of capitalized internal-use software. We expect our cost of subscription services revenue to increase in absolute dollars, as our subscription services revenue increases.

Operating expenses consist of research and development, sales and marketing and general and administrative expenses. Salaries and personnel-related costs, including stock-based compensation expense, are the most significant component of each category of operating expenses. Operating expenses also include allocated overhead costs for employee benefits, facilities, and certain information technology costs.

Research and Development. Research and development expenses consist primarily of employee compensation and related expenses, prototype expenses, depreciation associated with assets acquired for research and development, data center and cloud services costs, third-party engineering and contractor support costs, as well as allocated overhead. We expect our research and development expenses to increase in absolute dollars. Key incremental investments will focus on accelerating density of our direct flash modules, and increasing operational scale of our supply chain partners to support expected production deployment ramp in connection with our hyperscale design win for large production deployments starting in fiscal 2027.

Sales and Marketing. Sales and marketing expenses consist primarily of employee compensation and related expenses, sales commissions, marketing programs, travel and entertainment expenses as well as allocated overhead. Marketing programs consist of advertising, events, corporate communications and brand-building activities. We expect our sales and marketing expenses to increase in absolute dollars.

General and Administrative. General and administrative expenses consist primarily of employee compensation and related expenses for administrative functions including finance, legal, human resources, facilities, IT and fees for third-party professional services as well as amortization of intangible assets pertaining to defensive technology patents and allocated overhead. We expect our general and administrative expenses to increase in absolute dollars.

Restructuring and Impairment. Restructuring and impairment expenses consist primarily of employee severance and termination benefits, and certain lease impairment and abandonment charges.

Other income (expense), net consists primarily of interest income related to cash, cash equivalents and marketable securities, interest expense related to our debt, unrealized gains (losses) from mark-to-market adjustments on equity investments, and gains (losses) from foreign currency transactions.

Provision for income taxes consists primarily of income taxes in certain foreign jurisdictions in which we conduct business and current federal and state income taxes in the United States. Our foreign subsidiaries earn a profit margin based upon transfer pricing principles which require an arm’s length return. Our foreign subsidiaries’ sales and marketing expenses are expected to increase over time as we grow, resulting in higher pre-tax foreign earnings and higher foreign income taxes.

We have provided a full valuation allowance for U.S. deferred tax assets, which includes net operating loss carryforwards, capitalized research costs, and tax credits related primarily to research and development. When considering our historical earnings trend, sufficient positive evidence may become available where we will release all or a portion of the valuation allowance within 12 months. Release of the valuation allowance would result in the recognition of certain deferred tax assets and a decrease to income tax expense for the period the release is recorded.

The following tables set forth our results of operations for the periods presented in dollars and as a percentage of total revenue:

The increase in product revenue during the first quarter of fiscal 2026 when compared to the first quarter of fiscal 2025 was primarily driven by sales of our FlashArray solutions, including FlashArray//XL and FlashArray//E.

The increase in subscription services revenue during the first quarter of fiscal 2026 when compared to the first quarter of fiscal 2025 was largely driven by increases in sales of our Evergreen//One consumption and subscription based offering and renewals of our Evergreen subscription services across our installed base.

During the first quarter of fiscal 2026 compared to the first quarter of fiscal 2025, total revenue in the United States grew 9% from $489.0 million to $530.7 million while total rest of the world revenue grew 21% from $204.5 million to $247.8 million.

We use Subscription ARR as a key business metric to evaluate the performance of subscription services. Subscription ARR should be viewed independently of revenue, deferred revenue and remaining performance obligations and is not intended as a substitute for any of these items.

Subscription ARR is calculated as the total annualized contract value of all active customer subscription agreements at the end of a fiscal quarter, plus on-demand revenue for the quarter multiplied by four. Contract values are established prior to any adjustments made in accordance with ASC 606.

The following table sets forth our Subscription ARR for the periods presented:

The year-over-year growth in our Subscription ARR at the end of the first quarter of fiscal 2025 was 25%. The decline in year-over-year growth to 18% at the end of the first quarter of fiscal 2026 was impacted by lower Total Contract Value (TCV) sales of Evergreen//One and lower Evergreen subscriptions bundled with traditional product sales.

Total remaining performance obligations (RPO) which is total contracted but not recognized revenue was $2.7 billion at the end of the first quarter of fiscal 2026, and includes non-cancelable TCV sales for our storage-as-a-service offerings, including Evergreen//One, Evergreen//Flex, and Cloud Block Store consumption and subscription based offerings, as well as $55.7 million of non-cancelable product orders. RPO consists of both deferred revenue and non-cancelable amounts that are expected to be invoiced and recognized as revenue in future periods. Product orders are generally cancelable until delivery has occurred, and as such, unfulfilled product orders that are cancelable are excluded from RPO. Cancelable orders will fluctuate depending on numerous factors.

TCV sales for our storage-as-a-service offerings is a key business metric we use to evaluate the performance of our consumption and subscription based offerings. TCV sales for these offerings include recurring subscription fees, any non-recurring charges such as initial setup fees, and any other billable services directly tied to the execution of the underlying service contract. Year-over-year growth in RPO to 17% at the end of the first quarter of fiscal 2026 when compared to 14% at the end of fiscal 2025 was driven by both growth of TCV sales for our storage-as-a-service offerings, and strong renewals of our Evergreen subscriptions.

We expect to recognize approximately 48% of total RPO over the next 12 months, and the remainder thereafter. RPO is expected to increase as our subscription services business grows over time.

 

			First Quarter of Fiscal												Change
			2025						2026						$						%
(dollars in thousands, unaudited)
Product cost of revenue			$	97,971					$	137,784					$	39,813					41		%
Stock-based compensation			2,782						3,266						484						17		%
Total product cost of revenue			100,753						141,050						$	40,297					40		%
% of Product revenue			29		%				38		%
Subscription services cost of revenue			$	88,149					$	94,120					$	5,971					7		%
Stock-based compensation			8,871						7,162						(1,709)						(19)		%
Total subscription services cost of revenue			$	97,020					$	101,282					$	4,262					4		%
% of Subscription services revenue			28		%				25		%
Total cost of revenue			$	197,773					$	242,332					$	44,559					23		%
% of Total revenue			29		%				31		%
Product gross margin			71		%				62		%
Subscription services gross margin			72		%				75		%
Total gross margin			71		%				69		%