Pure Storage Announces First Quarter Fiscal 2018 Financial Results
MOUNTAIN VIEW, Calif., May 24, 2017 /PRNewswire/ -- Pure Storage (NYSE: PSTG) today announced financial results for its first quarter ended April 30, 2017.
Key quarterly business and financial highlights include:
- Quarterly revenue: $182.6 million, up 31% Y-Y, 4% ahead of midpoint of guidance
- Quarterly gross margin: 65.2% GAAP; 66.4% non-GAAP, reflecting strength in our core FlashArray business and a strong performance from our FlashBlade business
- Quarterly operating margin: -34.7% GAAP; -16.7% non-GAAP, up 11.5 ppts and 12.7 ppts Y-Y, respectively
- First shipments of FlashArray//X lead next-gen industry transformation to NVMe
"Pure Storage has built the data platform for the cloud era," said Pure Storage CEO Scott Dietzen. "We are pursuing one of the biggest available markets in tech in supporting new data-driven applications including AI, the rapid adoption of cloud computing and the revamping of the enterprise data center. With our best year of innovation yet, we could not be more excited about the road ahead."
"Q1 was a strong quarter for Pure, with our results notably exceeding both top line and bottom line guidance," said Pure Storage CFO Tim Riitters. "We continue to drive strong year over year improvement in operating leverage as we drive to our $1 billion full year revenue target."
In the quarter, approximately 300 new customers joined Pure Storage, increasing the total to more than 3,350 organizations, including nearly 25% of the Fortune 500. New customer wins in the quarter include: Churchill Downs Incorporated, Fujitsu Cloud Technologies, Henry Schein, Inc., telecommunications and Cloud IaaS service provider IP Telecom, MacStadium, Oppenheimer & Co. and Securitas Direct. New FlashBlade customer wins include: Black Duck Software, the City of Davenport and nuclear power plant KKG.
First Quarter Fiscal 2018 Financial Highlights
The following tables summarize our consolidated financial results for the fiscal quarters ended April 30, 2017 and 2016 ($ in millions except per share amounts, unaudited):
|
GAAP Quarterly Financial Information | |||
|
Three Months EndedApril 30, 2017 |
Three Months EndedApril 30, 2016 |
Y/YChange | |
|
Revenue |
$182.6 |
$139.9 |
31% |
|
Gross Margin |
65.2% |
66.4% |
-1.2 ppts |
|
Product Gross Margin |
66.3% |
69.5% |
-3.2 ppts |
|
Support Gross Margin |
61.8% |
54.1% |
7.7 ppts |
|
Operating Loss |
-$63.4 |
-$64.7 |
$1.3 |
|
Operating Margin |
-34.7% |
-46.2% |
11.5 ppts |
|
Net Loss |
-$62.4 |
-$63.8 |
$1.4 |
|
Net Loss per Share |
-$0.30 |
-$0.34 |
$0.04 |
|
Weighted-Average Shares (Basic and Diluted) |
205.8 |
189.3 |
N/A |
|
Non-GAAP Quarterly Financial Information | |||
|
Three Months EndedApril 30, 2017 |
Three Months EndedApril 30, 2016 |
Y/YChange | |
|
Gross Margin |
66.4% |
67.3% |
-0.9 ppts |
|
Product Gross Margin |
66.6% |
69.6% |
-3.0 ppts |
|
Support Gross Margin |
65.8% |
58.0% |
7.8 ppts |
|
Operating Loss |
-$30.5 |
-$41.1 |
$10.6 |
|
Operating Margin |
-16.7% |
-29.4% |
12.7 ppts |
|
Net Loss |
-$29.5 |
-$40.3 |
$10.8 |
|
Net Loss per Share |
-$0.14 |
-$0.21 |
$0.07 |
|
Free Cash Flow |
-$27.1 |
-$17.4 |
-$9.7 |
A reconciliation between GAAP and non-GAAP information is provided at the end of this release.
Financial Outlook
Pure Storage's second quarter fiscal 2018 guidance is as follows:
- Revenue in the range of $214 million to $222 million
- Non-GAAP gross margin in the range of 63.5% to 66.5%
- Non-GAAP operating margin in the range of -16% to -12%
Pure Storage's full year fiscal 2018 guidance is as follows:
- Revenue in the range of $975 million to $1.025 billion
- Non-GAAP gross margin in the range of 63.5% to 66.5%
- Non-GAAP operating margin in the range of -9% to -5%
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 fiscal 2018 results at 1:30 p.m. (PT) on May 24, 2017. 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: 877-201-0168 or 647-788-4901 (for international callers).
- To Listen via the Internet: A live and replay audio broadcast of the conference call with corresponding slides will be available at investor.purestorage.com.
- Replay: A telephone playback of this conference call is scheduled to be available two hours after the call ends on Wednesday, May 24, 2017, through June 7, 2017. The replay will be accessible by calling 800-585-8367 or 416-621-4642 (for international callers), with conference ID 14674669. The call runs 24 hours per day, including weekends.
CEO Commentary
Pure Storage has posted a blog from its CEO discussing first quarter fiscal 2018 results at investor.purestorage.com and blog.purestorage.com.
2017 Annual Meeting of Stockholders
Pure Storage will hold its 2017 annual meeting of stockholders on Tuesday, June 20, 2017 at 10:00 a.m. (PT). The meeting will be held virtually, via live webcast at www.virtualshareholdermeeting.com/PSTG2017. The record date for the meeting was April 25, 2017, 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 2017 proxy statement and Annual Report on Form 10-K at investor.purestorage.com.
2017 Investor Day
Pure Storage will host its 2017 investor day from 1:00 p.m. to 4:00 p.m. (PT) on June 13, 2017, in conjunction with its second annual technology conference, Pure//Accelerate. A live video webcast will be available at investor.purestorage.com. This event is designed for financial analysts and institutional investors.
Pure//Accelerate
Building upon a successful inaugural Pure//Accelerate last year, the 2017 conference will feature guest speakers from technology giants such as Cisco and VMware; marquee brands including Mercedes AMG Petronas Formula One and The World Bank; cutting-edge scientific minds from the UC Berkeley AMPLab; and Jeffrey Ma of the infamous MIT Blackjack Team. Pure//Accelerate will be held June 12-14, 2017 at Pier 70 in San Francisco.
About Pure Storage
Pure Storage (NYSE: PSTG) helps companies push the boundaries of what's possible. Pure's end-to-end data platform – including FlashArray, FlashBlade and our converged offering with Cisco, FlashStack – is powered by innovative software that's cloud-connected for management from anywhere on a mobile device and supported by the Evergreen business model. The company's all-flash based technology, combined with its customer-friendly business model, drives business and IT transformation with solutions that are effortless, efficient and evergreen. With Pure's industry leading Satmetrix-certified NPS score of 83.5, Pure customers are some of the happiest in the world, and include organizations of all sizes, across an ever-expanding range of industries.
Connect with Pure Storage:Read the blog Converse on Twitter Follow on LinkedIn
Analyst Recognition:Gartner Magic Quadrant for Solid-State Arrays IDC MarketScape for All-Flash Arrays
Pure Storage, Evergreen, FlashBlade, FlashStack and the "P" Logo mark are trademarks of Pure Storage, Inc. All other trademarks or names referenced in this document are the property of their respective owners.
Forward Looking Statements
This press release contains forward-looking statements regarding our products, business and operations, including our expectations regarding technology differentiation, our current and future opportunities and ability to execute for continued growth and industry leadership, and our outlook for the second quarter and full year fiscal 2018 and statements regarding our products, business, operations and results, including progress toward profitability. 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 year ended January 31, 2017, which are 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, 2017. All information provided in this release and in the attachments is as of May 24, 2017, 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 operating loss, 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 and payroll tax expense related to stock-based activities. 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.
|
PURE STORAGE, INC. | ||||
|
Condensed Consolidated Balance Sheets | ||||
|
(in thousands) | ||||
|
As of |
As of | |||
|
April 30, 2017 |
January 31, 2017 | |||
|
(unaudited) |
||||
|
Assets |
||||
|
Current assets: |
||||
|
Cash and cash equivalents |
$ 168,757 |
$ 183,675 | ||
|
Marketable securities |
367,218 |
362,986 | ||
|
Accounts receivable, net of allowance of $1,744 and $2,000 |
132,134 |
168,978 | ||
|
Inventory |
39,478 |
23,498 | ||
|
Deferred commissions, current |
16,409 |
15,787 | ||
|
Prepaid expenses and other current assets |
28,637 |
25,157 | ||
|
Total current assets |
752,633 |
780,081 | ||
|
Property and equipment, net |
82,293 |
81,695 | ||
|
Intangible assets, net |
6,184 |
6,560 | ||
|
Deferred income taxes, non-current |
795 |
844 | ||
|
Other assets, non-current |
30,970 |
30,565 | ||
|
Total assets |
$ 872,875 |
$ 899,745 | ||
|
Liabilities and stockholders' equity |
||||
|
Current liabilities: |
||||
|
Accounts payable |
$ 51,015 |
$ 52,719 | ||
|
Accrued compensation and benefits |
24,714 |
39,252 | ||
|
Accrued expenses and other liabilities |
15,981 |
21,697 | ||
|
Deferred revenue, current |
159,094 |
158,095 | ||
|
Liability related to early exercised stock options |
1,064 |
1,362 | ||
|
Total current liabilities |
251,868 |
273,125 | ||
|
Deferred revenue, non-current |
152,431 |
145,031 | ||
|
Other liabilities, non-current |
3,268 |
3,159 | ||
|
Total liabilities |
407,567 |
421,315 | ||
|
Stockholders' equity: |
||||
|
Common stock and additional paid-in capital |
1,330,607 |
1,281,472 | ||
|
Accumulated other comprehensive loss |
(445) |
(562) | ||
|
Accumulated deficit |
(864,854) |
(802,480) | ||
|
Total stockholders' equity |
465,308 |
478,430 | ||
|
Total liabilities and stockholders' equity |
$ 872,875 |
$ 899,745 | ||
|
PURE STORAGE, INC. | ||||
|
Condensed Consolidated Statements of Operations | ||||
|
(in thousands, except per share data) | ||||
|
Three Months Ended April 30, | ||||
|
2017 |
2016 | |||
|
(unaudited) | ||||
|
Revenue: |
||||
|
Product |
$ 138,425 |
$111,738 | ||
|
Support |
44,206 |
28,209 | ||
|
Total revenue |
182,631 |
139,947 | ||
|
Cost of revenue: |
||||
|
Product (1) |
46,645 |
34,046 | ||
|
Support (1) |
16,903 |
12,934 | ||
|
Total cost of revenue |
63,548 |
46,980 | ||
|
Gross profit |
119,083 |
92,967 | ||
|
Operating expenses: |
||||
|
Research and development (1) |
65,428 |
52,938 | ||
|
Sales and marketing (1) |
96,964 |
83,098 | ||
|
General and administrative (1) |
20,096 |
21,581 | ||
|
Total operating expenses |
182,488 |
157,617 | ||
|
Loss from operations |
(63,405) |
(64,650) | ||
|
Other income (expense), net |
1,995 |
1,282 | ||
|
Loss before provision for income taxes |
(61,410) |
(63,368) | ||
|
Provision for income taxes |
964 |
420 | ||
|
Net loss |
$ (62,374) |
$ (63,788) | ||
|
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 |
205,783 |
189,283 | ||
|
(1) Includes stock-based compensation expense as follows: |
||||
|
Cost of revenue -- product |
$ 397 |
$ 106 | ||
|
Cost of revenue -- support |
1,774 |
1,092 | ||
|
Research and development |
15,588 |
11,658 | ||
|
Sales and marketing |
10,626 |
7,519 | ||
|
General and administrative |
3,834 |
2,623 | ||
|
Total stock-based compensation expense |
$ 32,219 |
$ 22,998 | ||
|
PURE STORAGE, INC. | ||||
|
Condensed Consolidated Statements of Cash Flows | ||||
|
(in thousands) | ||||
|
Three Months Ended April 30, | ||||
|
2017 |
2016 | |||
|
(unaudited) | ||||
|
Cash flows from operating activities |
||||
|
Net loss |
$ (62,374) |
$ (63,788) | ||
|
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
||||
|
Depreciation and amortization |
14,825 |
10,432 | ||
|
Stock-based compensation expense |
32,219 |
22,998 | ||
|
Other |
451 |
182 | ||
|
Changes in operating assets and liabilities: |
||||
|
Accounts receivable, net |
36,571 |
28,593 | ||
|
Inventory |
(16,105) |
(2,623) | ||
|
Deferred commissions |
(362) |
4,141 | ||
|
Prepaid expenses and other current assets |
(3,944) |
(2,744) | ||
|
Accounts payable |
(3,982) |
166 | ||
|
Accrued compensation and other liabilities |
(19,998) |
(11,017) | ||
|
Deferred revenue |
8,398 |
20,653 | ||
|
Net cash provided by (used in) operating activities |
(14,301) |
6,993 | ||
|
Cash flows from investing activities |
||||
|
Purchases of property and equipment |
(12,769) |
(24,376) | ||
|
Purchases of marketable securities |
(55,976) |
(343,466) | ||
|
Sales of marketable securities |
5,384 |
23,327 | ||
|
Maturities of marketable securities |
46,321 |
- | ||
|
Net decrease in restricted cash |
- |
706 | ||
|
Net cash used in investing activities |
(17,040) |
(343,809) | ||
|
Cash flows from financing activities |
||||
|
Net proceeds from exercise of stock options |
2,257 |
3,091 | ||
|
Proceeds from issuance of common stock under employee stock purchase plan |
14,166 |
15,079 | ||
|
Net cash provided by financing activities |
16,423 |
18,170 | ||
|
Net decrease in cash and cash equivalents |
(14,918) |
(318,646) | ||
|
Cash and cash equivalents, beginning of period |
183,675 |
604,742 | ||
|
Cash and cash equivalents, end of period |
$168,757 |
$286,096 | ||
|
Reconciliations of non-GAAP results of operations to the nearest comparable GAAP measures | |||||||||||||
|
The following table presents non-GAAP gross margin by revenue source before certain items (in thousands, unaudited): | |||||||||||||
|
Three Months Ended April 30, 2017 |
Three Months Ended April 30, 2016 | ||||||||||||
|
GAAPresults |
GAAPgrossmargin (a) |
Adjustment |
Non-GAAPresults |
Non-GAAP grossmargin (b) |
GAAPresults |
GAAP grossmargin (a) |
Adjustment |
Non-GAAPresults |
Non-GAAPgrossmargin (b) | ||||
|
$ 397 |
(c) |
$ 106 |
(c) |
||||||||||
|
5 |
(d) |
- |
(d) |
||||||||||
|
Gross profit -- product |
$ 91,780 |
66.3% |
$ 402 |
$ 92,182 |
66.6% |
$ 77,692 |
69.5% |
$ 106 |
$ 77,798 |
69.6% | |||
|
$ 1,774 |
(c) |
$ 1,092 |
(c) |
||||||||||
|
31 |
(d) |
- |
(d) |
||||||||||
|
Gross profit -- support |
$ 27,303 |
61.8% |
$ 1,805 |
$ 29,108 |
65.8% |
$ 15,275 |
54.1% |
$ 1,092 |
$ 16,367 |
58.0% | |||
|
$ 2,171 |
(c) |
$ 1,198 |
(c) |
||||||||||
|
36 |
(d) |
- |
(d) |
||||||||||
|
Total gross profit |
$119,083 |
65.2% |
$ 2,207 |
$121,290 |
66.4% |
$ 92,967 |
66.4% |
$ 1,198 |
$ 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. | |||||||||
|
(d) To eliminate payroll tax expense related to stock-based activities. |
|
The following table presents certain non-GAAP consolidated results before certain items (in thousands, except per share amounts, unaudited): | |||||||||||||
|
Three Months Ended April 30, 2017 |
Three Months Ended April 30, 2016 | ||||||||||||
|
GAAPresults |
GAAP operatingmargin (a) |
Adjustment |
Non-GAAPresults |
Non-GAAP operatingmargin (b) |
GAAPresults |
GAAP operatingmargin (a) |
Adjustment |
Non-GAAPresults |
Non-GAAP operatingmargin (b) | ||||
|
$ 32,219 |
(c) |
$ 22,998 |
(c) |
||||||||||
|
651 |
(d) |
505 |
(d) |
||||||||||
|
Loss from operations |
$ (63,405) |
-34.7% |
$ 32,870 |
$ (30,535) |
-16.7% |
$(64,650) |
-46.2% |
$ 23,503 |
$(41,147) |
-29.4% | |||
|
$ 32,219 |
(c) |
$ 22,998 |
(c) |
||||||||||
|
651 |
(d) |
505 |
(d) |
||||||||||
|
Net loss |
$ (62,374) |
$ 32,870 |
$ (29,504) |
$(63,788) |
$ 23,503 |
$(40,285) |
|||||||
|
Net loss per share -- basic and diluted |
$ (0.30) |
$ (0.14) |
$ (0.34) |
$ (0.21) |
|||||||||
|
Weighted-average shares used in per share calculation -- basic and diluted |
205,783 |
205,783 |
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. |
|
Reconciliation from net cash provided by (used in) operating activities to free cash flow (in thousands, unaudited): |
|
Three Months Ended April 30, | |||||||||
|
2017 |
2016 | ||||||||
|
Net cash provided by (used in) operating activities |
$(14,301) |
$ 6,993 | |||||||
|
Less: purchases of property and equipment |
(12,769) |
(24,376) | |||||||
|
Free cash flow |
$(27,070) |
$(17,383) | |||||||
|
Free cash flow as % of revenue |
-14.8% |
-12.4% | |||||||
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SOURCE Pure Storage