Pure Storage Announces Second Quarter Fiscal 2022 Financial Results

Total Q2 revenue grows 23% year-over-year Subscription Services revenue up 31% year-over-year Raised FY22 revenue outlook to $2.04 Billion

August 25, 2021 4:05 PM EDT

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MOUNTAIN VIEW, Calif., Aug. 25, 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 second quarter ended August 1, 2021.

"With revenue growth exceeding 23%, and the highest Q2 operating profit in our history, it's clear that our long-term strategy to provide customers with modern data services is working," said Charles Giancarlo, Chairman and CEO, Pure Storage. "We are in a great innovation cycle with our portfolio and our sales momentum and execution have never been stronger."

Second Quarter Financial Highlights 

  • Revenue $496.8 million, up 23% year-over-year
  • Subscription services revenue $171.9 million, up 31% year-over-year
  • GAAP gross margin 68.4%; non-GAAP gross margin 70.5%
  • GAAP operating loss $(33.9) million; non-GAAP operating income $46.6 million
  • GAAP operating margin (6.8)%; non-GAAP operating margin 9.4%
  • Operating cash flow $123.4 million; free cash flow $95.7 million
  • Total cash and investments $1.3 billion
  • Deferred revenue $909.8 million, up 26% year-over-year
  • Remaining performance obligations (RPO) $1.2 billion, up 25% year-over-year

"Our outstanding financial performance this quarter reflected strong sales execution and our long standing practice of providing leading edge solutions and best-in-class services to our customers," said Kevan Krysler, CFO, Pure Storage. "We saw strength from both our enterprise and commercial customers across our entire solutions portfolio."

Second Quarter Company Highlights and Achievements

  • Industry Accolades: FlashArray was named a Gartner Peer Insights Customers' Choice for Primary Storage Arrays. Pure was named a Kubernetes storage leader in two GigaOm Radar Reports and recognized as leader in Enterprise Flash Array Storage and Object Storage categories by TrustRadius for the second consecutive year. 
  • Pure achieved the highest total sales for any second quarter in the history of the company, growing more than 30% year-over-year.
  • The company saw continued strength and momentum in Subscription Services revenue, up 31% year-over-year with strong growth in Pure as-a-Service, which almost doubled revenues compared to the prior year.
  • Success in the large enterprise segment continues to grow, comprising over 50% of sales, with the top 10 customers spending more than $100 million in total.

Pure will host its next Financial Analyst Day on Tuesday, September 28, 2021, beginning at 10:00 am PT / 1:00 pm ET. The event has changed from in-person to live webcast and will feature presentations by Pure's executive leadership team, followed by a live Q&A session.

Details:

The replay of the event and associated presentation materials will also be available at investor.purestorage.com for at least 90 days following the completion of the event.

Third Quarter and FY22 Guidance

Q3 FY22

FY22

Revenue

$530 million

$2.04 billion

Non-GAAP Operating Income

$40 million

$150 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 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 second quarter fiscal 2022 results at 1:30 pm PT today, August 25, 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 (800) 585-8367 (or 416-621-4642 for international callers) with passcode 5535534.

Upcoming Events

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

Deutsche Bank Technology Conference 2021 Date: Friday, September 10, 2021 Pure Presenters: Charles Giancarlo, Chairman and CEO, Kevan Krysler, CFO and Rob Lee, CTO Pure Participants: 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 financial results, 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 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 January 31, 2021. All information provided in this release and in the attachments is as of August 25, 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

Second Quarter of Fiscal 2022

Fiscal 2021

Assets

Current assets:

Cash and cash equivalents

$

340,252

$

337,147

Marketable securities

944,285

916,388

Accounts receivable, net of allowance of $960 and $1,033

358,460

460,879

Inventory

47,169

46,733

Deferred commissions, current

58,003

57,183

Prepaid expenses and other current assets

111,390

89,836

Total current assets

1,859,559

1,908,166

Property and equipment, net

184,048

163,041

Operating lease right-of-use-assets

122,638

134,668

Deferred commissions, non-current

137,962

130,741

Intangible assets, net

68,279

76,648

Goodwill

358,736

358,736

Restricted cash

10,544

10,544

Other assets, non-current

41,918

36,896

Total assets

$

2,783,684

$

2,819,440

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable

$

54,686

$

67,530

Accrued compensation and benefits

126,589

160,817

Accrued expenses and other liabilities

53,043

61,754

Operating lease liabilities, current

34,482

32,231

Deferred revenue, current

485,927

438,321

Total current liabilities

754,727

760,653

Long-term debt

770,662

755,814

Operating lease liabilities, non-current

106,693

120,361

Deferred revenue, non-current

423,887

405,376

Other liabilities, non-current

30,271

27,230

Total liabilities

2,086,240

2,069,434

Stockholders' equity:

Common stock and additional paid-in capital

2,388,446

2,307,608

Accumulated other comprehensive income

3,481

7,410

Accumulated deficit

(1,694,483)

(1,565,012)

Total stockholders' equity

697,444

750,006

Total liabilities and stockholders' equity

$

2,783,684

$

2,819,440

 

 

PURE STORAGE, INC.

Condensed Consolidated Statements of Operations

(in thousands, except per share data, unaudited)

Second Quarter of Fiscal

First Two Quarters of Fiscal

2022

2021

2022

2021

Revenue:

Product

$

324,935

$

272,309

$

574,823

$

519,248

Subscription services

171,896

131,414

334,715

251,594

Total revenue

496,831

403,723

909,538

770,842

Cost of revenue:

Product (1)

101,150

84,731

180,214

154,016

Subscription services(1)

55,654

44,266

107,431

85,275

Total cost of revenue

156,804

128,997

287,645

239,291

Gross profit

340,027

274,726

621,893

531,551

Operating expenses:

Research and development (1)

140,107

114,652

271,488

227,098

Sales and marketing (1)

190,386

171,434

373,882

344,867

General and administrative (1)

43,464

44,471

86,610

85,596

Restructuring and other (2)

8,288

22,990

Total operating expenses

373,957

338,845

731,980

680,551

Loss from operations

(33,930)

(64,119)

(110,087)

(149,000)

Other income (expense), net

(7,410)

1,603

(12,137)

(1,813)

Loss before provision for income taxes

(41,340)

(62,516)

(122,224)

(150,813)

Income tax provision

3,925

2,451

7,247

4,748

Net loss

$

(45,265)

$

(64,967)

$

(129,471)

$

(155,561)

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

$

(0.16)

$

(0.25)

$

(0.46)

$

(0.59)

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

283,931

264,799

282,147

263,867

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

Cost of revenue -- product

$

1,566

$

990

$

2,913

$

1,986

Cost of revenue -- subscription services

5,137

3,686

9,543

7,078

Research and development

35,125

29,839

65,546

58,550

Sales and marketing

18,358

16,848

35,166

33,120

General and administrative

10,243

10,089

18,595

19,412

Total stock-based compensation expense

$

70,429

$

61,452

$

131,763

$

120,146

(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)

Second Quarter of Fiscal

First Two Quarters of Fiscal

2022

2021

2022

2021

Cash flows from operating activities

Net loss

$

(45,265)

$

(64,967)

$

(129,471)

$

(155,561)

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

Depreciation and amortization

19,273

16,464

38,099

31,597

Amortization of debt discount and debt issuance costs

7,751

7,189

15,154

14,125

Stock-based compensation expense

70,429

61,452

131,763

120,146

Impairment of long-lived assets

7,505

7,505

Other

3,895

267

6,516

1,972

Changes in operating assets and liabilities:

Accounts receivable, net

(30,874)

(17,545)

102,506

91,896

Inventory

266

3,105

(3,242)

1,735

Deferred commissions

(10,090)

(2,324)

(8,041)

(5,483)

Prepaid expenses and other assets

5,452

(20,091)

(24,955)

(26,389)

Operating lease right-of-use assets

7,237

7,475

14,818

14,181

Accounts payable

15,087

(6,796)

(9,267)

(21,090)

Accrued compensation and other liabilities

43,885

46,426

(40,952)

(3,217)

Operating lease liabilities

(7,308)

(6,145)

(14,205)

(13,071)

Deferred revenue

43,654

18,691

66,117

27,463

Net cash provided by operating activities

123,392

50,706

144,840

85,809

Cash flows from investing activities

Purchases of property and equipment

(27,670)

(24,994)

(55,499)

(48,776)

Purchases of marketable securities

(145,808)

(193,076)

(317,371)

(291,237)

Sales of marketable securities

28,501

73,694

114,038

91,351

Maturities of marketable securities

104,030

110,799

169,770

206,174

Net cash used in investing activities

(40,947)

(33,577)

(89,062)

(42,488)

Cash flows from financing activities

Net proceeds from exercise of stock options

3,147

12,383

11,163

21,658

Proceeds from issuance of common stock under employee stock purchase plan

17,726

16,021

Proceeds from borrowings

4,950

Repayments of borrowings

(261)

(605)

Tax withholding on vesting of equity awards

(1,514)

(1,467)

(6,564)

(2,841)

Repurchases of common stock

(44,373)

(20,024)

(74,393)

(90,143)

Net cash used in financing activities

(43,001)

(9,108)

(52,673)

(50,355)

Net increase (decrease) in cash, cash equivalents and restricted cash

39,444

8,021

3,105

(7,034)

Cash, cash equivalents and restricted cash, beginning of period

311,352

362,867

347,691

377,922

Cash, cash equivalents and restricted cash, end of period

$

350,796

$

370,888

$

350,796

$

370,888

 

 

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):

Second Quarter of Fiscal 2022

Second 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)

$

1,566

(c)

$

990

(c)

63

(d)

15

(d)

297

(e)

3,067

(f)

2,003

(f)

Gross profit --product

$

223,785

68.9

%

$

4,696

$

228,481

70.3

%

$

187,578

68.9

%

$

3,305

$

190,883

70.1

%

$

5,137

(c)

$

3,686

(c)

196

(d)

47

(d)

24

(g)

Gross profit -- subscription services

$

116,242

67.6

%

$

5,357

$

121,599

70.7

%

$

87,148

66.3

%

$

3,733

$

90,881

69.2

%

$

6,703

(c)

$

4,676

(c)

259

(d)

62

(d)

297

(e)

3,067

(f)

2,003

(f)

24

(g)

Total gross profit

$

340,027

68.4

%

$

10,053

$

350,080

70.5

%

$

274,726

68.0

%

$

7,038

$

281,764

69.8

%

 

(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 hazard pay premiums directly related to COVID-19 pandemic.

(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):

Second Quarter of Fiscal 2022

Second 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)

$

70,429

(c)

$

61,452

(c)

4,229

(d)

2,009

(d)

2,081

(e)

1,259

(e)

306

(f)

8,279

(g)

3,600

(h)

2,003

(h)

171

(i)

Operating Income (loss)

$

(33,930)

-6.8

%

$

80,510

$

46,580

9.4

%

$

(64,119)

-15.9

%

$

75,308

$

11,189

2.8

%

$

70,429

(c)

$

61,452

(c)

4,229

(d)

2,009

(d)

2,081

(e)

1,259

(e)

306

(f)

8,279

(g)

3,600

(h)

2,003

(h)

171

(i)

7,751

(j)

7,189

(j)

Net income (loss)

$

(45,265)

$

88,261

$

42,996

$

(64,967)

$

82,497

$

17,530

Net income (loss) per share -- diluted

$

(0.16)

$

0.14

$

(0.25)

$

0.06

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

283,931

16,286

(k)

300,217

264,799

17,698

(k)

282,497

 

(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 marketing commitments no longer deemed to have value and hazard pay premiums directly related to COVID-19 pandemic.

(g) To eliminate restructuring expenses related to (1) impairment of long-lived assets associated with the cease-use of certain facilities and (2) workforce reduction.

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

(i) To eliminate acquisition-related integration expenses.

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

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

 

 

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

Second Quarter of Fiscal

2022

2021

Net cash provided by operating activities

$

123,392

$

50,706

Less: purchases of property and equipment

(27,670)

(24,994)

Free cash flow (non-GAAP)

$

95,722

$

25,712

 

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SOURCE Pure Storage



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