Q2 total revenue growth of 11% year-over-year
Subscription services ARR growing 24% year-over-year
SANTA CLARA, Calif., Aug. 28, 2024 /PRNewswire/ — Today Pure Storage (NYSE: PSTG), the IT pioneer that delivers the world’s most advanced data storage technologies and services, announced financial results for its second quarter fiscal year 2025 ended August 4, 2024.
“In a world where energy demands are soaring, the power savings of Pure Storage alone make the move from hard disks to Pure technology a smart choice for both hyperscaler and enterprise data centers,” said Pure Storage Chairman and CEO Charles Giancarlo. “Businesses can grow their data storage and reduce their energy footprint with Pure on a platform that eliminates existing data silos and simplifies customers’ data centers with guaranteed service-level agreements.”
Second Quarter Financial Highlights
Revenue $763.8 million, an increase of 11% year-over-yearSubscription services revenue $361.2 million, up 25% year-over-yearSubscription annual recurring revenue (ARR) $1.5 billion, up 24% year-over-yearRemaining performance obligations (RPO) $2.3 billion, up 24% year-over-yearGAAP gross margin 70.7%; non-GAAP gross margin 72.8%GAAP operating income $24.9 million; non-GAAP operating income $138.6 millionGAAP operating margin 3.3%; non-GAAP operating margin 18.1%Q2 operating cash flow $226.6 million; free cash flow $166.6 millionTotal cash, cash equivalents, and marketable securities $1.8 billion
“We delivered strong financial results through the first half of our fiscal year, highlighting the effectiveness of our strategic initiatives,” said Kevan Krysler, Chief Financial Officer, Pure Storage. “Our highly differentiated data storage platform strategy is demonstrating success with our customers.”
Second Quarter Company Highlights
Platform Innovation: The Pure platform delivers agility and risk reduction with a consistent, as-a-service experience across the broadest set of use cases and IT environments. At its annual Pure//Accelerate conference, Pure Storage announced critical new platform capabilities to further improve the ability for enterprises to deploy AI, improve cyber resilience, and modernize applications, including Evergreen//One for AI, the first purpose-built AI storage as-a-service, enhancements to Pure Fusion, delivering first-of-its-kind storage automation, and an industry-first generative AI copilot for storage. Additionally, Pure continued to extend its Storage as-a-Service (STaaS) leadership with new service level agreements (SLAs), now delivering the industry’s most comprehensive set of SLAs.
ESG Leadership: Pure Storage released its third Environmental, Social, and Governance (ESG) report, offering visibility into current metrics and setting commitments for meaningful progress towards a more sustainable future. The latest report outlines that Pure Storage’s platform requires up to 10x less energy than mechanical spinning disk storage (HDD) and up to 5x less than solid state drives (SSDs).
Enterprise AI Momentum: Pure Storage continued to accelerate enterprise AI adoption, announcing that it will be a certified storage solution for NVIDIA DGX SuperPOD by the end of 2024. Additionally, Pure joined the Ultra Ethernet Consortium (UEC), a Linux Foundation initiative, underscoring its commitment to expanding the capabilities of high performance Ethernet for large-scale AI and HPC initiatives.
Awards and Accolades
Fortune Best Large Workplaces in the Bay Area (Ranked #15)Fortune Best Workplaces for Millennials (Ranked #34)Business Intelligence Group’s 2024 Sustainability Leadership Award
Third Quarter and FY25 Guidance
Q3FY25
Revenue
$815M
Revenue YoY Growth Rate
6.8 %
Non-GAAP Operating Income
$140M
Non-GAAP Operating Margin
17.2 %
FY25
Revenue
$3.1B
Revenue YoY Growth Rate
10.5 %
TCV Sales for Subscription-as-a-Service Offerings
$500M
TCV Sales for Subscription-as-a-Service Offerings YoY
Growth Rate
Approximately 25%
Non-GAAP Operating Income
$532M
Non-GAAP Operating Margin
17 %
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 and non-GAAP operating margin to their most directly comparable GAAP measures because certain items that impact these measures are not within Pure’s control and/or cannot be reasonably predicted. Accordingly, reconciliations of these non-GAAP financial measures guidance to the corresponding GAAP measures are not available without unreasonable effort.
Conference Call Information
Pure will host a teleconference to discuss the second quarter fiscal 2025 results at 2:00 pm PT today, August 28, 2024. A live audio broadcast of the conference call will be available on the Pure Storage Investor Relations website. Pure will also post its earnings presentation and prepared remarks to this website concurrent with this release.
A replay will be available following the call on the Pure Storage Investor Relations website or for two weeks at 1-800-770-2030 (or 1-647-362-9199 for international callers) with passcode 5667482.
Additionally, Pure is scheduled to participate at the following investor conference:
Goldman Sachs Communacopia + Technology Conference
Date: Wednesday, September 11, 2024
Time: 12:25 p.m. PT / 3:25 p.m. ET
Chairman and CEO Charles Giancarlo and Chief Financial Officer Kevan Krysler
The presentations will be webcast live and archived on Pure’s Investor Relations website at investor.purestorage.com.
—-
About Pure Storage
Pure Storage (NYSE: PSTG) delivers the industry’s most advanced data storage platform to store, manage, and protect the world’s data at any scale. With Pure Storage, organizations have ultimate simplicity and flexibility, saving time, money, and energy. From AI to archive, Pure Storage delivers a cloud experience with one unified Storage as-a-Service platform across on premises, cloud, and hosted environments. Our platform is built on our Evergreen architecture that evolves with your business – always getting newer and better with zero planned downtime, guaranteed. Our customers are actively increasing their capacity and processing power while significantly reducing their carbon and energy footprint. It’s easy to fall in love with Pure Storage, as evidenced by the highest Net Promoter Score in the industry. For more information, visit www.purestorage.com.
Analyst Recognition
Leader in the 2023 Gartner Magic Quadrant for Primary Storage
Leader in the 2023 Gartner Magic Quadrant for Distributed File Systems & Object Storage
Connect with Pure
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Pure Storage, the Pure P Logo, Portworx, and the marks on the Pure Storage Trademark List are trademarks or registered trademarks of Pure Storage Inc. in the U.S. and/or other countries. The Trademark List can be found at purestorage.com/trademarks. Other names may be 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 and business results, demand for our products and subscription services, including Evergreen//One, our technology and product strategy, specifically customer priorities around sustainability, the environmental and energy saving benefits to our customers of using our products, our ability to perform during current macro conditions and expand market share, our sustainability goals and benefits, our ability to capture storage workloads for AI environments and hyperscalers, the timing and magnitude of large orders, the impact of inflation, economic or supply chain disruptions, our expectations regarding our product and technology differentiation, including the E//Family, new customer acquisition, 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 February 4, 2024. All information provided in this release and in the attachments is as of August 28, 2024, and Pure undertakes no duty to update this information unless required by law.
Key Performance Metrics
Subscription ARR is a key business metric that refers to total annualized contract value of all active subscription agreements on the last day of the quarter, plus on-demand revenue for the quarter multiplied by four.
Total Contract Value (TCV) Sales, or bookings, of Pure’s Evergreen//One and Evergreen//Flex offerings is an operating metric, representing the value of orders received and/or expected to be received during the fiscal year.
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 such as stock-based compensation expense, payments to former shareholders of acquired companies, payroll tax expense related to stock-based activities, amortization of debt issuance costs related to debt, amortization of intangible assets acquired from acquisitions, restructuring costs related to severance and termination benefits, and costs associated with the impairment and early exit of certain leased facilities 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 2025
Fiscal 2024
Assets
Current assets:
Cash and cash equivalents
$ 965,028
$ 702,536
Marketable securities
855,453
828,557
Accounts receivable, net of allowance of $959 and $1,060
416,501
662,179
Inventory
43,548
42,663
Deferred commissions, current
87,424
88,712
Prepaid expenses and other current assets
185,072
173,407
Total current assets
2,553,026
2,498,054
Property and equipment, net
396,676
352,604
Operating lease right-of-use-assets
138,781
129,942
Deferred commissions, non-current
210,755
215,620
Intangible assets, net
27,004
33,012
Goodwill
361,427
361,427
Restricted cash
14,779
9,595
Other assets, non-current
78,825
55,506
Total assets
$ 3,781,273
$ 3,655,760
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
$ 68,104
$ 82,757
Accrued compensation and benefits
176,553
250,257
Accrued expenses and other liabilities
119,430
135,755
Operating lease liabilities, current
49,575
44,668
Deferred revenue, current
869,332
852,247
Total current liabilities
1,282,994
1,365,684
Long-term debt
100,000
100,000
Operating lease liabilities, non-current
128,674
123,201
Deferred revenue, non-current
754,328
742,275
Other liabilities, non-current
62,116
54,506
Total liabilities
2,328,112
2,385,666
Stockholders’ equity:
Common stock and additional paid-in capital
2,925,540
2,749,627
Accumulated other comprehensive income (loss)
2,707
(3,782)
Accumulated deficit
(1,475,086)
(1,475,751)
Total stockholders’ equity
1,453,161
1,270,094
Total liabilities and stockholders’ equity
$ 3,781,273
$ 3,655,760
PURE STORAGE, INC.
Condensed Consolidated Statements of Operations
(in thousands, except per share data, unaudited)
Second Quarter of Fiscal
First Two Quarters of Fiscal
2025
2024
2025
2024
Revenue:
Product
$ 402,595
$ 399,738
$ 749,979
$ 708,701
Subscription services
361,176
288,933
707,271
569,277
Total revenue
763,771
688,671
1,457,250
1,277,978
Cost of revenue:
Product (1)
129,723
120,605
230,476
216,818
Subscription services (1)
93,968
81,473
190,988
161,220
Total cost of revenue
223,691
202,078
421,464
378,038
Gross profit
540,080
486,593
1,035,786
899,940
Operating expenses:
Research and development (1)
195,490
182,492
389,310
367,823
Sales and marketing (1)
250,267
232,732
501,239
465,178
General and administrative (1)
69,445
60,831
146,232
128,215
Restructuring and impairment (2)
—
16,766
15,901
16,766
Total operating expenses
515,202
492,821
1,052,682
977,982
Income (loss) from operations
24,878
(6,228)
(16,896)
(78,042)
Other income (expense), net
19,437
6,686
33,528
18,435
Income (loss) before provision for income taxes
44,315
458
16,632
(59,607)
Income tax provision
8,641
7,573
15,967
14,909
Net income (loss)
$ 35,674
$ (7,115)
$ 665
$ (74,516)
Net income (loss) per share attributable to common stockholders, basic
$ 0.11
$ (0.02)
$ 0.00
$ (0.24)
Net income (loss) per share attributable to common stockholders, diluted
$ 0.10
$ (0.02)
$ 0.00
$ (0.24)
Weighted-average shares used in computing net income (loss) per share
attributable to common stockholders, basic
326,326
309,510
324,458
307,687
Weighted-average shares used in computing net income (loss) per share
attributable to common stockholders, diluted
343,443
309,510
341,509
307,687
(1) Includes stock-based compensation expense as follows:
Cost of revenue — product
$ 3,445
$ 2,958
$ 6,227
$ 5,613
Cost of revenue — subscription services
7,961
6,851
16,832
12,498
Research and development
50,869
44,085
101,163
82,317
Sales and marketing
24,418
19,493
47,937
36,674
General and administrative
18,197
16,060
45,725
30,175
Total stock-based compensation expense
$ 104,890
$ 89,447
$ 217,884
$ 167,277
(2) Includes expenses for severance and termination benefits related to workforce realignment and lease impairment and abandonment charges associated with cease-use of our former corporate headquarters.
PURE STORAGE, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands, unaudited)
Second Quarter of Fiscal
First Two Quarters of Fiscal
2025
2024
2025
2024
Cash flows from operating activities
Net income (loss)
$ 35,674
$ (7,115)
$ 665
$ (74,516)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization
35,884
30,223
69,827
59,913
Stock-based compensation expense
104,890
89,447
217,884
167,277
Noncash portion of lease impairment and abandonment
—
16,766
3,270
16,766
Other
1,120
(1,225)
2,726
(3,029)
Changes in operating assets and liabilities:
Accounts receivable, net
6,953
(133,974)
245,721
87,231
Inventory
(4,956)
4,152
(6,661)
4,460
Deferred commissions
(1,554)
(7,229)
6,153
(9,560)
Prepaid expenses and other assets
(17,787)
5,737
(27,006)
(358)
Operating lease right-of-use assets
8,406
8,634
16,528
19,635
Accounts payable
13,423
30,304
(13,158)
26,311
Accrued compensation and other liabilities
30,392
31,558
(78,732)
(57,524)
Operating lease liabilities
(8,031)
(7,033)
(18,257)
(13,133)
Deferred revenue
22,183
41,373
29,137
51,392
Net cash provided by operating activities
226,597
101,618
448,097
274,865
Cash flows from investing activities
Purchases of property and equipment (1)
(60,035)
(55,105)
(108,853)
(106,529)
Purchases of marketable securities and other
(105,328)
(117,829)
(270,451)
(246,617)
Sales of marketable securities
10,735
5,708
48,424
48,748
Maturities of marketable securities
70,127
98,330
197,984
386,703
Net cash provided by (used in) investing activities
(84,501)
(68,896)
(132,896)
82,305
Cash flows from financing activities
Net proceeds from exercise of stock options
4,545
25,218
17,768
29,848
Proceeds from issuance of common stock under employee stock purchase plan
—
—
25,328
21,219
Principal payments on borrowings and finance lease obligations
(2,836)
(287)
(3,935)
(577,067)
Proceeds from borrowing
—
—
—
100,000
Tax withholding on vesting of equity awards
(74,208)
(5,068)
(86,686)
(11,827)
Repurchases of common stock
—
(21,970)
—
(91,881)
Net cash used in financing activities
(72,499)
(2,107)
(47,525)
(529,708)
Net increase (decrease) in cash, cash equivalents and restricted cash
69,597
30,615
267,676
(172,538)
Cash, cash equivalents and restricted cash, beginning of period
910,210
388,245
712,131
591,398
Cash, cash equivalents and restricted cash, end of period
$ 979,807
$ 418,860
$ 979,807
$ 418,860
(1) Includes capitalized internal-use software costs of $5.3 million for both the second quarter of fiscal 2025 and 2024 and $9.8 million and $10.6 million for the first two quarters of fiscal 2025 and 2024.
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 2025
Second Quarter of Fiscal 2024
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)
$ 3,445
(c)
$ 2,958
(c)
224
(d)
135
(d)
—
402
(e)
3,306
(f)
3,306
(f)
Gross profit –product
$ 272,872
67.8 %
$ 6,975
$ 279,847
69.5 %
$ 279,133
69.8 %
$ 6,801
$ 285,934
71.5 %
$ 7,961
(c)
$ 6,851
(c)
658
(d)
481
(d)
—
413
(e)
—
5
(g)
Gross profit —
subscription services
$ 267,208
74.0 %
$ 8,619
$ 275,827
76.4 %
$ 207,460
71.8 %
$ 7,750
$ 215,210
74.5 %
$ 11,406
(c)
$ 9,809
(c)
882
(d)
616
(d)
—
815
(e)
3,306
(f)
3,306
(f)
—
5
(g)
Total gross profit
$ 540,080
70.7 %
$ 15,594
$ 555,674
72.8 %
$ 486,593
70.7 %
$ 14,551
$ 501,144
72.8 %
(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 duplicate lease costs during the transition of our corporate headquarters.
(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 2025
Second Quarter of Fiscal 2024
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)
$ 104,890
(c)
$ 89,447
(c)
—
876
(d)
5,292
(e)
4,507
(e)
3,536
(f)
3,837
(f)
—
2,617
(g)
—
16,766
(h)
Operating income (loss)
$ 24,878
3.3 %
$ 113,718
$ 138,596
18.1 %
$ (6,228)
-0.9 %
$ 118,050
$ 111,822
16.2 %
$ 104,890
(c)
$ 89,447
(c)
—
876
(d)
5,292
(e)
4,507
(e)
3,536
(f)
3,837
(f)
—
2,617
(g)
—
16,766
(h)
153
(i)
153
(i)
Net income (loss)
$ 35,674
$ 113,871
$ 149,545
$ (7,115)
$ 118,203
$ 111,088
Net income (loss) per share — diluted
$ 0.10
$ 0.44
$ (0.02)
$ 0.34
Weighted-average shares used in per
share calculation — diluted
343,443
—
343,443
309,510
17,060
(j)
326,570
(a) GAAP operating margin is defined as GAAP operating income (loss) divided by revenue.
(b) Non-GAAP operating margin is defined as non-GAAP operating income divided by revenue.
(c) To eliminate stock-based compensation expense.
(d) To eliminate payments to former shareholders of acquired company.
(e) To eliminate payroll tax expense related to stock-based activities.
(f) To eliminate amortization expense of acquired intangible assets.
(g) To eliminate duplicate lease costs during the transition of our corporate headquarters.
(h) To eliminate lease impairment and abandonment charges associated with cease-use of our former corporate headquarters.
(i) To eliminate amortization expense of debt issuance costs related to our debt.
(j) 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
2025
2024
Net cash provided by operating activities
$ 226,597
$ 101,618
Less: purchases of property and equipment (1)
(60,035)
(55,105)
Free cash flow (non-GAAP)
$ 166,562
$ 46,513
(1) Includes capitalized internal-use software costs of $5.3 million for both the second quarter of fiscal 2025 and 2024.
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