25.08.2021 22:05:00

Pure Storage Announces Second Quarter Fiscal 2022 Financial Results

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.

www.purestorage.com (PRNewsFoto/Pure Storage)

"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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LinkedIn
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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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