Pure Storage Announces First Quarter Fiscal 2022 Financial Results

05.26.2021
Return to double digit revenue growth of 12% year-over-year
New customer additions of approximately 330 this quarter, up 15% year-over-year
Continued strength and momentum of Subscription Services

MOUNTAIN VIEW, Calif., May 26, 2021 /PRNewswire/ -- Today Pure Storage (NYSE: PSTG), the IT pioneer that delivers storage as-a-service in a multi-cloud world, announced financial results for its fiscal first quarter ended May 2, 2021.

"Pure Storage expanded our strong growth trend from last quarter with balanced contributions across all aspects of our business," said Charles Giancarlo, Chairman and CEO, Pure Storage. "Our growing customer base loves our Modern Data Experience consisting of the industry's most advanced platforms, unique Evergreen and Pure as-a-Service models, with leading reliability and total cost of ownership."

First Quarter Financial Highlights 

  • Revenue $412.7 million, up 12% year-over-year
  • Subscription services revenue $162.8 million, up 35% year-over-year
  • GAAP gross margin 68.3%; non-GAAP gross margin 70.5%
  • GAAP operating loss $(76.2) million; non-GAAP operating income $0.3 million
  • Operating cash flow $21.4 million; free cash flow $(6.4) million
  • Total cash and investments $1.2 billion
  • Deferred revenue $866.2 million, up 23% year-over-year
  • Remaining performance obligations (RPO) exceeding $1.1 billion, up 24% year-over-year

"We are very pleased with the strong start to the year returning to double digit revenue growth," said Kevan Krysler, CFO, Pure Storage. "Broad-based performance in the quarter included early signs of strength in our commercial business and continuing accelerated momentum of FlashArray//C."

First Quarter Company Highlights and Achievements

  • Industry Accolades: FlashBlade® was named a leader in the GigaOm Radar Report for High-Performance Object Storage and a Gartner Peer Insights Customers' Choice for Distributed File Systems and Object Storage.
  • Purity software enhancements across Pure's portfolio enable new use cases: Updates to the flagship Purity software for FlashBlade and FlashArrayTM accelerate Windows applications; deliver ransomware protection across file, block, and native cloud-based apps; and make hybrid storage for both departmental and data center workloads obsolete with the FlashArray//C all-QLC platform.
  • New Bare Metal as-a-Service solution with Equinix: Pure Storage on Equinix Metal is a full stack, bare metal solution that delivers a unified, connected platform for any stage of an organization's cloud journey.
  • Pure Cloud Block Store is now generally available on both AWS and Microsoft Azure: Cloud Block Store eliminates common storage tradeoffs by combining high-performance, efficiency, reliability, and simplicity into a cloud native solution, now available on multiple hyperscalers.

Second Quarter Guidance


Q2 FY22

Revenue

$ 470 Million

Non-GAAP Operating Income

$ 15 Million

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 (loss) to the most directly comparable GAAP measure because certain items that impact this measure are not within Pure's control and/or cannot be reasonably predicted. Accordingly, a reconciliation of this non-GAAP financial measure guidance to the corresponding GAAP measure is not available without unreasonable effort.

Conference Call Information

Pure will host a teleconference to discuss the first quarter fiscal 2022 results at 2:00 pm PT today, May 26, 2021. 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 of completion of the call. A replay will be available following the call on the Pure Storage Investor Relations website and in addition, for two weeks at (855) 859-2056 (or 404-537-3406 for international callers) with passcode 9699895.

Upcoming Events

Pure is scheduled to participate virtually at the following investor conferences:

William Blair 41st Annual Growth Stock Conference
Date: Tuesday, June 1, 2021
Time: 10:00 am PT
Pure Presenters: Charles Giancarlo, Chairman and CEO and Kevan Krysler, CFO
Pure Participants: Matt Kixmoeller, VP, Strategy and Sanjot Khurana, VP of Investor Relations

Cowen 49th Annual Technology, Media & Telecom Conference
Date: Thursday, June 3, 2021
Pure Participants: Kevan Krysler, CFO, Rob Lee, VP and Chief Architect and Sanjot Khurana, VP of Investor Relations

Bank of America 2021 Global Technology Conference
Date: Tuesday, June 8, 2021
Time: 11:30 am PT
Pure Presenters: Charles Giancarlo, Chairman and CEO and Kevan Krysler, CFO
Pure Participants: Matt Kixmoeller, VP, Strategy and Sanjot Khurana, VP of Investor Relations

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

_______

About Pure Storage

Pure Storage gives technologists their time back. Pure delivers a modern data experience that empowers organizations to run their operations as a true, automated, storage as-a-service model seamlessly across multiple clouds. Pure helps customers put data to use while reducing the complexity and expense of managing the infrastructure behind it. And with a certified customer satisfaction score in the top one percent of B2B companies, Pure's ever-expanding list of customers are among the happiest in the world.

Analyst Recognition

Pure Storage has been named a Leader in the 2020 Gartner Magic Quadrant for Primary Storage Arrays.

Connect with Pure

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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. 

Forward Looking Statements

This press release contains forward-looking statements regarding our products, business and operations, including but not limited to our views relating to future period outcomes, our continued momentum and growth potential, the scope and duration of the COVID-19 pandemic and its impact on our business operations, liquidity and capital resources, employees, customers, supply chain, financial results and the economy, our expectations regarding product and technology differentiation, including our new offerings, strategy and adoption of subscription services, growing customer adoption, 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 captions "Risk Factors" and elsewhere in our filings and reports with the U.S. Securities and Exchange Commission, which are available on our Investor Relations website at investor.purestorage.com and on the SEC website at www.sec.gov. Additional information is also set forth in our Annual Report on Form 10-K for the year ended January 31, 2021. All information provided in this release and in the attachments is as of May 26, 2021, and Pure undertakes no duty to update this information unless required by law.

Non-GAAP Financial Measures

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 discount and debt issuance costs related to long-term debt, amortization of intangible assets acquired from acquisitions, acquisition-related transaction and integration expenses, restructuring activities, and expenses directly related to the COVID-19 pandemic 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.

PURE STORAGE, INC.

Condensed Consolidated Balance Sheets

(in thousands, unaudited)




At the End of



First Quarter of
Fiscal 2022


Fiscal 2021






Assets





Current assets:





Cash and cash equivalents


$

300,808



$

337,147


Marketable securities


933,376



916,388


Accounts receivable, net of allowance of $1,046 and $1,033


327,507



460,879


Inventory


49,287



46,733


Deferred commissions, current


55,212



57,183


Prepaid expenses and other current assets


117,880



89,836


Total current assets


1,784,070



1,908,166


Property and equipment, net


172,381



163,041


Operating lease right-of-use-assets


129,582



134,668


Deferred commissions, non-current


130,663



130,741


Intangible assets, net


72,351



76,648


Goodwill


358,736



358,736


Restricted cash


10,544



10,544


Other assets, non-current


39,611



36,896


Total assets


$

2,697,938



$

2,819,440


Liabilities and Stockholders' Equity





Current liabilities:





Accounts payable


$

40,563



$

67,530


Accrued compensation and benefits


84,322



160,817


Accrued expenses and other liabilities


52,823



61,754


Operating lease liabilities, current


33,886



32,231


Deferred revenue, current


458,705



438,321


Total current liabilities


670,299



760,653


Long-term debt


763,064



755,814


Operating lease liabilities, non-current


114,304



120,361


Deferred revenue, non-current


407,455



405,376


Other liabilities, non-current


27,343



27,230


Total liabilities


1,982,465



2,069,434


Stockholders' equity:





Common stock and additional paid-in capital


2,359,923



2,307,608


Accumulated other comprehensive income


4,768



7,410


Accumulated deficit


(1,649,218)



(1,565,012)


Total stockholders' equity


715,473



750,006


Total liabilities and stockholders' equity


$

2,697,938



$

2,819,440


 

PURE STORAGE, INC.

Condensed Consolidated Statements of Operations

(in thousands, except per share data, unaudited)



First Quarter of Fiscal


2022


2021





Revenue:




Product

$

249,888



$

246,939


Subscription services

162,819



120,180


Total revenue

412,707



367,119


Cost of revenue:




Product (1)

79,064



69,285


Subscription services(1)

51,777



41,009


Total cost of revenue

130,841



110,294


Gross profit

281,866



256,825


Operating expenses:




Research and development (1)

131,381



112,446


Sales and marketing (1)

183,496



173,433


General and administrative (1)

43,146



41,125


Restructuring and other (2)



14,702


Total operating expenses

358,023



341,706


Loss from operations

(76,157)



(84,881)


Other income (expense), net

(4,727)



(3,416)


Loss before provision for income taxes

(80,884)



(88,297)


Income tax provision

3,322



2,297


Net loss

$

(84,206)



$

(90,594)






Net loss per share attributable to common stockholders, basic and diluted

$

(0.30)



$

(0.34)


Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted

280,331



262,935



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






Cost of revenue -- product

$

1,347



$

996


Cost of revenue -- subscription services

4,406



3,392


Research and development

30,421



28,711


Sales and marketing

16,808



16,272


General and administrative

8,352



9,323


Total stock-based compensation expense

$

61,334



$

58,694



(2) Includes expenses related to restructuring and incremental expenses directly related to COVID-19

 

PURE STORAGE, INC.

Condensed Consolidated Statements of Cash Flows

(in thousands, unaudited)



First Quarter of Fiscal


2022


2021





Cash flows from operating activities




Net loss

$

(84,206)



$

(90,594)


Adjustments to reconcile net loss to net cash provided by operating activities:




Depreciation and amortization

18,826



15,133


Amortization of debt discount and debt issuance costs

7,403



6,936


Stock-based compensation expense

61,334



58,694


Other

2,621



1,705


Changes in operating assets and liabilities:




Accounts receivable, net

133,380



109,441


Inventory

(3,508)



(1,370)


Deferred commissions

2,049



(3,159)


Prepaid expenses and other assets

(30,407)



(6,298)


Operating lease right-of-use assets

7,581



6,706


Accounts payable

(24,354)



(14,294)


Accrued compensation and other liabilities

(84,837)



(49,643)


Operating lease liabilities

(6,897)



(6,926)


Deferred revenue

22,463



8,772


Net cash provided by operating activities

21,448



35,103


Cash flows from investing activities




Purchases of property and equipment

(27,829)



(23,782)


Purchases of marketable securities

(171,563)



(98,161)


Sales of marketable securities

85,537



17,657


Maturities of marketable securities

65,740



95,375


Net cash used in investing activities

(48,115)



(8,911)


Cash flows from financing activities




Net proceeds from exercise of stock options

8,016



9,275


Proceeds from issuance of common stock under employee stock purchase plan

17,726



16,021


Proceeds from borrowings



4,950


Repayments of borrowings

(344)




Tax withholding on vesting of equity awards

(5,050)



(1,374)


Repurchases of common stock

(30,020)



(70,119)


Net cash used in financing activities

(9,672)



(41,247)


Net decrease in cash, cash equivalents and restricted cash

(36,339)



(15,055)


Cash, cash equivalents and restricted cash, beginning of period

347,691



377,922


Cash, cash equivalents and restricted cash, end of period

$

311,352



$

362,867


Reconciliations of non-GAAP results of operations to the nearest comparable GAAP measures

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



First Quarter of Fiscal 2022


First Quarter of Fiscal 2021



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)
































$

1,347



(c)










$

996



(c)











78



(d)










36



(d)























438



(e)











3,067



(f)










2,004



(f)





Gross profit -- product


$

170,824



68.4

%


$

4,492





$

175,316



70.2

%


$

177,654



71.9

%


$

3,474





$

181,128



73.3

%
































$

4,406



(c)










$

3,392



(c)











243



(d)










99



(d)























190



(e)











24



(g)

















Gross profit --subscription services


$

111,042



68.2

%


$

4,673





$

115,715



71.1

%


$

79,171



65.9

%


$

3,681





$

82,852



68.9

%
































$

5,753



(c)










$

4,388



(c)











321



(d)










135



(d)























628



(e)











3,067



(f)










2,004



(f)











24



(g)

















Total gross profit


$

281,866



68.3

%


$

9,165





$

291,031



70.5

%


$

256,825



70.0

%


$

7,155





$

263,980



71.9

%


(a) GAAP gross margin is defined as GAAP gross profit divided by revenue.

(b) Non-GAAP gross margin is defined as non-GAAP gross profit divided by revenue.

(c) To eliminate stock-based compensation expense.

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

(e) To eliminate expenses directly related to COVID-19 pandemic including hazard pay premiums.

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

(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 2022


First Quarter of Fiscal 2021


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)





























$

61,334



(c)










$

58,694



(c)









5,675



(d)










1,872



(d)









3,791



(e)










1,623



(e)





















9,531



(f)





















5,799



(g)









3,600



(h)










2,004



(h)









2,043



(i)
















Operating Income (loss)

$

(76,157)



-18.5

%


$

76,443





$

286



0.1

%


$

(84,881)



-23.1

%


$

79,523




$

(5,358)



-1.5

%





























$

61,334



(c)










$

58,694



(c)









5,675



(d)










1,872



(d)









3,791



(e)










1,623



(e)





















9,531



(f)





















5,799



(g)









3,600



(h)










2,004



(h)









2,043 



(i)





















7,403



(j)










6,936



(j)




Net loss

$

(84,206)





$

83,846





$

(360)





$

(90,594)





$

86,459




$

(4,135)



























Net loss per share -- basic and diluted

$

(0.30)









$    (0.00)





$

(0.34)








$

(0.02)




Weighted-average shares used in per share calculation -- basic and              diluted

280,331









280,331





262,935








262,935












































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

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

(c) To eliminate stock-based compensation expense.

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

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

(f) To eliminate expenses directly related to COVID-19 pandemic. These expenses included marketing commitments no longer deemed to have value and hazard pay premiums.

(g) To eliminate restructuring expenses resulting from workforce reduction in February 2020.

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

(i) To eliminate acquisition-related transaction and integration expenses.

(j) To eliminate amortization expense of debt discount and debt issuance costs related to our long-term debt.

Reconciliation from net cash provided by operating activities to free cash flow (in thousands except percentages, unaudited):


First Quarter of Fiscal


2022


2021

Net cash provided by operating activities

$

21,448



$

35,103


Less: purchases of property and equipment

(27,829)



(23,782)


Free cash flow (non-GAAP)

$

(6,381)



$

11,321


 

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SOURCE Pure Storage