Pure Storage Announces First Quarter Fiscal 2017 Financial Results
MOUNTAIN VIEW, Calif., May 25, 2016 /PRNewswire/ -- Pure Storage (NYSE: PSTG) today announced financial results for its fiscal quarter ended April 30, 2016.
Key highlights include:
- Quarterly revenue: $139.9 million, up 89% Y-Y, and ahead of the guidance range
- Quarterly gross margin: 66.5% GAAP; 67.3% non-GAAP, up 6.5 ppts and 6.8 ppts Y-Y, respectively
- Quarterly operating margin: -45.6% GAAP; -29.4% non-GAAP, up 19.5 ppts and 23.8 ppts Y-Y, respectively
"We are pleased to report another strong quarter," said Scott Dietzen, CEO of Pure Storage. "Year over year, our revenue growth continues to dramatically outpace both our storage industry competitors and the broader enterprise technology sector. While the legacy players retool complex, 20-year-old products to compete, customers continue to be attracted to Pure's simplicity and superior customer experience across flash-optimized software, hardware, our Evergreen business model and cloud management."
"Pure delivered robust April quarter results, with better-than-expected revenue and improving margin performance year over year," said Tim Riitters, CFO of Pure Storage. "We continue to expect to reach sustained positive cash flow by the second half of calendar year 2017."
In the quarter, Pure Storage grew its customer base to more than 1,950 organizations, adding almost 300 new customers, including SoftBank, the University of Melbourne, The World Bank and GMO CLOUD K.K., Japan's largest Internet hosting company.
First Quarter Fiscal 2017 Financial Highlights
The following tables summarize our consolidated financial results for the fiscal quarters ended April 30, 2015 and 2016 (in millions except per share amounts, unaudited):
|
GAAP Quarterly Financial Information | |||
|
Three Months Ended April 30, 2015 |
Three Months Ended April 30, 2016 |
Year-Over-Year Change | |
|
Revenue |
$74.1 |
$139.9 |
89% |
|
Gross Margin |
60.0% |
66.5% |
6.5 ppts |
|
Product Gross Margin |
64.3% |
69.5% |
5.2 ppts |
|
Support Gross Margin |
33.8% |
54.3% |
20.5 ppts |
|
Operating Loss |
-$48.3 |
-$63.8 |
-$15.5 |
|
Operating Margin |
-65.1% |
-45.6% |
19.5 ppts |
|
Net Loss |
-$49.1 |
-$63.5 |
-$14.4 |
|
Net Loss per Share |
-$1.51 |
-$0.34 |
$1.17 |
|
Weighted-Average Shares (Basic and Diluted) |
32.6 |
189.3 |
N/A |
|
Non-GAAP Quarterly Financial Information | |||
|
Three Months Ended April 30, 2015 |
Three Months Ended April 30, 2016 |
Year-Over-Year Change | |
|
Gross Margin |
60.5% |
67.3% |
6.8ppts |
|
Product Gross Margin |
64.4% |
69.6% |
5.2ppts |
|
Support Gross Margin |
37.0% |
58.0% |
21.0ppts |
|
Operating Loss |
-$39.4 |
-$41.1 |
-$1.7 |
|
Operating Margin |
-53.2% |
-29.4% |
23.8ppts |
|
Net Loss |
-$40.3 |
-$40.8 |
-$0.5 |
|
Net Loss per Share |
-$0.26 |
-$0.22 |
$0.04 |
|
Weighted-Average Shares (Basic and Diluted) |
154.9 |
189.3 |
N/A |
|
Free Cash Flow |
-$20.9 |
-$17.6 |
$3.3 |
A reconciliation between GAAP and non-GAAP information is provided at the end of this release.
Financial Outlook
Second Quarter Fiscal 2017 Guidance:
- Revenue in the range of $153 million to $157 million
- Non-GAAP gross margin in the range of 65% to 68%
- Non-GAAP operating margin in the range of -30% to -26%
All forward-looking non-GAAP financial measures contained in this section titled "Financial Outlook" exclude stock-based compensation expense, payroll tax expense related to stock-based activities and, as applicable, other special items. We have not reconciled guidance for non-GAAP gross margin and non-GAAP operating margin to their most directly comparable GAAP measures because such items that impact these measures are not within our control and/or cannot be reasonably predicted. Accordingly, a reconciliation of the non-GAAP financial measure guidance to the corresponding GAAP measures is not available without unreasonable effort.
Conference Call Information
Pure Storage will host a teleconference to discuss the first quarter of fiscal 2017 results at 2:00 p.m. (PT) on May 25, 2016. Pure Storage will post its supplemental earnings presentation to the investor relations website at investor.purestorage.com following the conference call. Teleconference details are as follows:
- To Listen via Telephone: 877-883-0383 or 412-902-6506 (for international callers) with passcode 6650445.
- To Listen via the Internet: A live and replay audio broadcast of the conference call with corresponding slides will be available at http://investor.purestorage.com/.
- Replay: A telephone playback of this conference call is scheduled to be available beginning at 4:00 p.m. (PT) on May 25, 2016, through 4:00 p.m. (PT) on June 1, 2016. The replay will be accessible by calling 877-344-7529 (international callers: 412-317-0088), with access code 10085778. The call runs 24 hours per day, including weekends.
A replay of the webcast will be available for approximately 45 days.
CEO Commentary
Pure Storage has posted a blog from its CEO discussing first quarter results at investor.purestorage.com and blog.purestorage.com.
Upcoming Investor Conferences
Pure Storage Co-Founder and CTO, John "Coz" Colgrove, will be participating in a fireside chat at the Bank of America Merrill Lynch Conference in San Francisco on Thursday, June 2 at 9:15 a.m. (PT). A link to the webcast of this session will be available at investor.purestorage.com.
Pure Storage CEO, Scott Dietzen, will be participating in a fireside chat at the Stifel 2016 Technology, Internet & Media Conference in San Francisco on Monday, June 6 at 11:30 a.m. (PT). A link to the webcast of this session will be available at investor.purestorage.com.
Annual Meeting of Stockholders
Pure Storage will hold its 2016 annual meeting of stockholders on Thursday, June 9, 2016 at 10:00 a.m. (PT). The meeting will be held virtually, via live webcast at www.virtualshareholdermeeting.com/PSTG2016. The record date for the meeting is Monday, April 11, 2016, and only stockholders of record on that date are eligible to participate in the meeting. Other interested persons may listen to the live webcast of the meeting and can view the 2016 proxy statement and Annual Report on Form 10-K at investor.purestorage.com.
About Pure Storage
Pure Storage (NYSE: PSTG) accelerates possible, transforming businesses in ways previously unimagined. The company's disruptive, software-driven storage technology combined with a customer-friendly business model drives business and IT transformation for customers through dramatic increases in performance and efficiency at lower costs. Pure Storage FlashArray//m is simpler, faster and more elegant than any other technology in the data center. FlashArray //m is ideal for the move toward big data and for performance-intensive workloads such as cloud computing, database systems, desktop virtualization, real-time analytics and server virtualization. With Pure's industry leading Satmetrix-certified NPS score of 79, Pure customers are some of the happiest in the world, and include large and mid-size organizations across a range of industries: cloud-based software and service providers, consumer web, education, energy, financial services, governments, healthcare, manufacturing, media, retail and telecommunications. With Pure Storage, companies push the boundaries of what's possible to become faster, smarter and more innovative.
Forward Looking Statements
This press release contains forward-looking statements regarding our products, business and operations, including our expectations regarding technology differentiation, customer adoption and business model advantages, our ability to maintain growth and take market share, and our financial outlook for the second quarter of fiscal 2017 and 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, including, but not limited to, our Annual Report on Form 10-K for the fiscal year ended January 31, 2016, which is available on our investor relations website at investor.purestorage.com and on the SEC website at www.sec.gov. Additional information will also be set forth in our Quarterly Report on Form 10-Q for the quarter ended April 30, 2016. All information provided in this release and in the attachments is as of May 25, 2016, and we undertake no duty to update this information unless required by law.
Non-GAAP Financial Measures
To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with GAAP, we use the following non-GAAP financial measures: non-GAAP gross profit, non-GAAP gross margin, non-GAAP loss from operations, non-GAAP operating margin, non-GAAP net loss, non-GAAP net loss per share, free cash flow, and free cash flow as a percentage of revenue. In computing these non-GAAP financial measures, we exclude the effects of stock-based compensation expense, payroll tax expense related to stock-based activities and assumed preferred stock conversion. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.
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 that may not be indicative of our ongoing core business operating results. We believe 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 (used in) operating activities to free cash flow," included at the end of this release.
PSTG-IR
|
PURE STORAGE, INC. | ||||
|
Condensed Consolidated Balance Sheets | ||||
|
(in thousands) | ||||
|
As of |
As of | |||
|
January 31, 2016 |
April 30, 2016 | |||
|
(unaudited) | ||||
|
Assets |
||||
|
Current assets: |
||||
|
Cash and cash equivalents |
$ 604,742 |
$ 286,096 | ||
|
Marketable securities |
- |
320,899 | ||
|
Accounts receivable, net of allowance of $944 and $1,509 |
126,324 |
97,164 | ||
|
Inventory |
20,649 |
21,980 | ||
|
Deferred commissions, current |
15,703 |
12,136 | ||
|
Prepaid expenses and other current assets |
20,652 |
23,154 | ||
|
Total current assets |
788,070 |
761,429 | ||
|
Property and equipment, net |
52,629 |
71,255 | ||
|
Intangible assets, net |
6,980 |
6,654 | ||
|
Deferred income taxes, non-current |
536 |
605 | ||
|
Other long-term assets |
22,568 |
21,532 | ||
|
Total assets |
$ 870,783 |
$ 861,475 | ||
|
Liabilities and stockholders' equity |
||||
|
Current liabilities: |
||||
|
Accounts payable |
$ 38,187 |
$ 42,444 | ||
|
Accrued compensation and benefits |
32,995 |
18,560 | ||
|
Accrued expenses and other liabilities |
14,076 |
15,970 | ||
|
Deferred revenue, current |
94,514 |
107,223 | ||
|
Liability related to early exercised stock options |
4,760 |
4,584 | ||
|
Total current liabilities |
184,532 |
188,781 | ||
|
Deferred revenue, non-current |
121,690 |
129,634 | ||
|
Other long-term liabilities |
1,207 |
1,643 | ||
|
Total liabilities |
307,429 |
320,058 | ||
|
Stockholders' equity: |
||||
|
Common stock and additional paid-in capital |
1,118,689 |
1,159,404 | ||
|
Accumulated other comprehensive income |
- |
807 | ||
|
Accumulated deficit |
(555,335) |
(618,794) | ||
|
Total stockholders' equity |
563,354 |
541,417 | ||
|
Total liabilities and stockholders' equity |
$ 870,783 |
$ 861,475 | ||
|
PURE STORAGE, INC. | ||||
|
Condensed Consolidated Statements of Operations | ||||
|
(in thousands, except per share data) | ||||
|
Three Months Ended April 30, | ||||
|
2015 |
2016 | |||
|
(unaudited) | ||||
|
Revenue: |
||||
|
Product |
$ 63,618 |
$ 111,738 | ||
|
Support |
10,459 |
28,209 | ||
|
Total revenue |
74,077 |
139,947 | ||
|
Cost of revenue: |
||||
|
Product (1) |
22,712 |
34,042 | ||
|
Support (1) |
6,924 |
12,893 | ||
|
Total cost of revenue |
29,636 |
46,935 | ||
|
Gross profit |
44,441 |
93,012 | ||
|
Operating expenses: |
||||
|
Research and development (1) |
31,682 |
52,500 | ||
|
Sales and marketing (1) |
48,327 |
82,816 | ||
|
General and administrative (1) |
12,692 |
21,482 | ||
|
Total operating expenses |
92,701 |
156,798 | ||
|
Loss from operations |
(48,260) |
(63,786) | ||
|
Other income (expense), net |
(703) |
1,282 | ||
|
Loss before provision for income taxes |
(48,963) |
(62,504) | ||
|
Provision for income taxes |
157 |
955 | ||
|
Net loss |
$ (49,120) |
$ (63,459) | ||
|
Net loss per share attributable to common stockholders, basic and diluted |
$ (1.51) |
$ (0.34) | ||
|
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted |
32,605 |
189,283 | ||
|
(1) Includes stock-based compensation expense as follows: |
||||
|
Cost of revenue -- product |
$ 56 |
$ 102 | ||
|
Cost of revenue -- support |
333 |
1,051 | ||
|
Research and development |
3,625 |
11,220 | ||
|
Sales and marketing |
3,444 |
7,237 | ||
|
General and administrative |
1,401 |
2,524 | ||
|
Total stock-based compensation expense |
$ 8,859 |
$ 22,134 | ||
|
PURE STORAGE, INC. | ||||
|
Condensed Consolidated Statements of Cash Flows | ||||
|
(in thousands) | ||||
|
Three Months Ended April 30, | ||||
|
2015 |
2016 | |||
|
(unaudited) | ||||
|
Cash flows from operating activities |
||||
|
Net loss |
$ (49,120) |
$ (63,459) | ||
|
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
||||
|
Depreciation and amortization |
6,479 |
10,432 | ||
|
Stock-based compensation expense |
8,859 |
22,134 | ||
|
Other |
- |
484 | ||
|
Changes in operating assets and liabilities: |
||||
|
Accounts receivable, net |
4,070 |
28,593 | ||
|
Inventory |
(1,470) |
(2,623) | ||
|
Deferred commissions |
1,763 |
4,141 | ||
|
Prepaid expenses and other assets |
(2,985) |
(2,744) | ||
|
Accounts payable |
(285) |
166 | ||
|
Accrued compensation and other liabilities |
(3,626) |
(11,017) | ||
|
Deferred revenue |
22,198 |
20,653 | ||
|
Net cash provided by (used in) operating activities |
(14,117) |
6,760 | ||
|
Cash flows from investing activities |
||||
|
Purchases of property and equipment |
(6,742) |
(24,376) | ||
|
Purchases of marketable securities |
- |
(343,466) | ||
|
Sales of marketable securities |
- |
23,327 | ||
|
Decrease in restricted cash |
- |
706 | ||
|
Net cash used in investing activities |
(6,742) |
(343,809) | ||
|
Cash flows from financing activities |
||||
|
Net proceeds from exercise of stock options |
1,691 |
3,324 | ||
|
Proceeds from issuance of common stock under employee stock purchase |
- |
15,079 | ||
|
Payments of deferred offering costs |
(313) |
- | ||
|
Net cash provided by financing activities |
1,378 |
18,403 | ||
|
Net decrease in cash and cash equivalents |
(19,481) |
(318,646) | ||
|
Cash and cash equivalents, beginning of period |
192,707 |
604,742 | ||
|
Cash and cash equivalents, end of period |
$ 173,226 |
$ 286,096 | ||
|
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, unaudited): | |||||||||||||
|
Three Months Ended April 30, 2015 |
Three Months Ended April 30, 2016 | ||||||||||||
|
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) | ||||
|
$ 56 |
(c) |
$ 102 |
(c) |
||||||||||
|
Gross profit -- product |
$ 40,906 |
64.3% |
$ 56 |
$ 40,962 |
64.4% |
$ 77,696 |
69.5% |
$ 102 |
$ 77,798 |
69.6% | |||
|
$ 333 |
(c) |
$ 1,051 |
(c) |
||||||||||
|
Gross profit -- support |
$ 3,535 |
33.8% |
$ 333 |
$ 3,868 |
37.0% |
$ 15,316 |
54.3% |
$ 1,051 |
$ 16,367 |
58.0% | |||
|
$ 389 |
(c) |
$ 1,153 |
(c) |
||||||||||
|
Total gross profit |
$ 44,441 |
60.0% |
$ 389 |
$ 44,830 |
60.5% |
$ 93,012 |
66.5% |
$ 1,153 |
$ 94,165 |
67.3% | |||
|
(a) GAAP gross margin is defined as 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. |
|||||||||||||
|
The following table presents certain non-GAAP consolidated results before certain items (in thousands, except per share amounts, unaudited): | |||||||||||||
|
Three Months Ended April 30, 2015 |
Three Months Ended April 30, 2016 | ||||||||||||
|
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) | ||||
|
$ 8,859 |
(c) |
$ 22,134 |
(c) |
||||||||||
|
- |
(d) |
505 |
(d) |
||||||||||
|
Loss from operations |
$ (48,260) |
-65.1% |
$ 8,859 |
$ (39,401) |
-53.2% |
$ (63,786) |
-45.6% |
$ 22,639 |
$ (41,147) |
-29.4% | |||
|
$ 8,859 |
(e) |
$ 22,134 |
(c) |
||||||||||
|
- |
(d) |
505 |
(d) |
||||||||||
|
Net loss |
$ (49,120) |
$ 8,859 |
$ (40,261) |
$ (63,459) |
$ 22,639 |
$ (40,820) |
|||||||
|
Net loss per share -- basic and diluted |
$ (1.51) |
$ (0.26) |
$ (0.34) |
$ (0.22) |
|||||||||
|
Weighted-average shares used in per share calculation -- basic and diluted |
32,605 |
122,281 |
(e) |
154,886 |
189,283 |
189,283 |
|||||||
|
(a) GAAP operating margin is defined as loss from operations divided by revenue. |
|
(b) Non-GAAP operating margin is defined as non-GAAP loss from operations divided by revenue. |
|
(c) To eliminate stock-based compensation expense. |
|
(d) To eliminate payroll tax expense related to stock-based activities. |
|
(e) To assume preferred stock conversion as of the beginning of the period. |
|
Reconciliation from net cash provided by (used in) operating activities to free cash flow (in thousands, unaudited): | |||
|
Three Months Ended April 30, | |||
|
2015 |
2016 | ||
|
Net cash provided by (used in) operating activities |
$ (14,117) |
$ 6,760 | |
|
Less: purchases of property and equipment |
(6,742) |
(24,376) | |
|
Free cash flow |
$ (20,859) |
$ (17,616) | |
|
Free cash flow as % of revenue |
-28.2% |
-12.6% | |
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SOURCE Pure Storage