PURE STORAGE, INC. MOUNTAIN VIEW, Calif., Aug. 25, 2016 /PRNewswire/ -- Pure Storage (NYSE: PSTG) today announced financial results for its fiscal second quarter ended July 31, 2016.
http://photos.prnewswire.com/prnvar/20150127/171513LOGO
Key financial highlights include:
-- Quarterly revenue: $163.2 million, up 92.8% Y/Y, and ahead of the
guidance range of $153 million to $157 million.
-- Quarterly gross margin: 65.2% GAAP; 66.3% non-GAAP, up 6.7 ppts and 7.1
ppts Y/Y, respectively, and in line with non-GAAP gross margin guidance
of 65-68%.
-- Quarterly operating margin: -36.4% GAAP; -19.3% non-GAAP, up 38.5 ppts
and 41.7 ppts Y/Y, respectively, and ahead of non-GAAP operating margin
guidance of -30% to -26%.
"We are delighted to report another great quarter with record revenue," Pure Storage CEO Scott Dietzen said. "We are very pleased with the growth of the business in the July quarter, driven by solid repeat purchase rates, by partnering with the channel to accelerate our go-to-market, by healthy demand from cloud customers -- which accounts for more than 25% of our business -- and by growing sales to international customers, who made up 25% of revenue."
In the quarter, Pure began shipping FlashBlade, the company's second major product line.
"While we aren't planning on FlashBlade materially impacting revenue this year," Dietzen said, "we're excited about the expanded range of possibilities that FlashBlade is already offering customers in chip design, genomics and life sciences, big data analytics, software development, Internet of Things, machine learning and film production."
"We continue to execute well against our operating plan," Pure Storage CFO Tim Riitters said. "While driving rapid growth, we also significantly improved operating margin year over year. We nearly doubled our business over the last year, while at the same time cutting our operating losses almost 40%."
In the quarter, Pure Storage added more than 350 new customers, increasing the total to more than 2,300 organizations, including nearly 20% of the Fortune 500. New customer wins in the quarter include: British Airways, The University of Tokyo, NIFTY Corporation and Sally Beauty Supply, among others. Also in the second quarter, Baylor Miraca Genetics Labs purchased FlashBlade to transform its genetics research pipeline, and the Farm Bureau of Michigan purchased FlashBlade to deliver high performance infrastructure.
Additionally, for the third straight year, Pure Storage is positioned in the Gartner Magic Quadrant for Solid State Arrays (SSAs) furthest along the "Completeness of Vision" axis. More details can be found here.
Second Quarter Fiscal 2017 Financial Highlights
The following tables summarize our consolidated financial results for the fiscal quarters ended July 31, 2015 and 2016 (in millions except per share amounts, unaudited):
GAAP Quarterly Financial Information
------------------------------------
Three Three Y/Y Change
Months Months
Ended July Ended July
31, 2015 31, 2016
-------- --------
Revenue $84.7 $163.2 92.8%
------- ----- ------ ----
Gross
Margin 58.5% 65.2% 6.7ppts
------ ---- ---- -------
Product
Gross
Margin 61.2% 67.3% 6.1 ppts
------- ---- ---- --------
Support
Gross
Margin 44.3% 56.6% 12.3 ppts
------- ---- ---- ---------
Operating
Loss -$63.4 -$59.5 $3.9
--------- ------ ------ ----
Operating
Margin -74.9% -36.4% 38.5 ppts
--------- ----- ----- ---------
Net
Loss -$63.8 -$59.6 $4.2
---- ------ ------ ----
Net
Loss
per
Share -$1.89 -$0.31 $1.58
----- ------ ------ -----
Weighted-
Average
Shares
(Basic
and
Diluted) 33.7 192.7 N/A
--------- ---- ----- ---
Non-GAAP Quarterly Financial Information
----------------------------------------
Three Three Y/Y Change
Months Months
Ended July Ended July
31, 2015 31, 2016
-------- --------
Gross
Margin 59.2% 66.3% 7.1 ppts
------ ---- ---- --------
Product
Gross
Margin 61.2% 67.4% 6.2ppts
------- ---- ---- -------
Support
Gross
Margin 48.2% 62.0% 13.8ppts
------- ---- ---- --------
Operating
Loss -$51.6 -$31.4 +$20.2
--------- ------ ------ ------
Operating
Margin -61.0% -19.3% 41.7ppts
--------- ----- ----- --------
Net
Loss -$52.0 -$31.5 $20.5
---- ------ ------ -----
Net
Loss
per
Share -$0.33 -$0.16 $0.17
----- ------ ------ -----
Weighted-
Average
Shares
(Basic
and
Diluted) 156.0 192.7 N/A
--------- ----- ----- ---
Free
Cash
Flow -$45.5 -$33.3 $12.2
---- ------ ------ -----
A reconciliation between GAAP and non-GAAP information is provided at the end of this release.
Financial Outlook
Third Quarter Fiscal 2017 Guidance:
-- Revenue in the range of $187 million to $195 million (consensus $190.7
million)
-- Non-GAAP gross margin in the range of 64% to 67%
-- Non-GAAP operating margin in the range of -17.5% to -13.5%
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 second quarter of fiscal 2017 results at 2:00 p.m. (PT) on August 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: 877-201-0168 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 beginning at 4:00 p.m. (PT) on August 25, 2016, through 4:00
p.m. (PT) on October 3, 2016. The replay will be accessible by calling
855-859-2056 (international callers: 404-537-3406), with conference ID
55513477. The call runs 24 hours per day, including weekends.
CEO Commentary
Pure Storage has posted a blog from its CEO discussing second quarter results at investor.purestorage.com and blog.purestorage.com.
About Pure Storage
Pure Storage (NYSE: PSTG) helps companies push the boundaries of what's possible. The company's all-flash based technology, combined with its customer-friendly business model, drives business and IT transformation with Smart Storage that is effortless, efficient and evergreen. Pure Storage offers two flagship products: FlashArray//m, optimized for structured workloads, and FlashBlade, ideal for unstructured data. With Pure's industry leading Satmetrix-certified NPS score of 83, 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 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, customer adoption and business model advantages, our ability to maintain growth and take market share, and our financial outlook for the third 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 July 31, 2016. All information provided in this release and in the attachments is as of August 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 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 July 31, 2016
---------------- -------------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $604,742 $205,818
Marketable securities - 364,356
Accounts receivable, net of
allowance of $944 and $2,146 126,324 118,532
Inventory 20,649 22,630
Deferred commissions, current 15,703 14,023
Prepaid expenses and other
current assets 20,652 20,933
------ ------
Total current assets 788,070 746,292
Property and equipment, net 52,629 78,523
Intangible assets, net 6,980 7,312
Deferred income taxes, non-
current 536 815
Other long-term assets 22,568 29,262
Total assets $870,783 $862,204
======== ========
Liabilities and stockholders'
equity
Current liabilities:
Accounts payable $38,187 $30,526
Accrued compensation and
benefits 32,995 33,369
Accrued expenses and other
liabilities 14,076 20,464
Deferred revenue, current 94,514 127,430
Liability related to early
exercised stock options 4,760 4,274
----- -----
Total current liabilities 184,532 216,063
Deferred revenue, non-current 121,690 129,876
Other long-term liabilities 1,207 2,209
Total liabilities 307,429 348,148
------- -------
Stockholders' equity:
Common stock and additional
paid-in capital 1,118,689 1,193,956
Accumulated other
comprehensive income - 852
Accumulated deficit (1) (555,335) (680,752)
Total stockholders' equity 563,354 514,056
------- -------
Total liabilities and
stockholders' equity $870,783 $862,204
======== ========
(1) In March 2016, the Financial
Accounting Standards Board
issued Accounting Standard
Update No. 2016-09 ("ASU
2016-09"), which allows a
company to make a policy
election to account for
forfeitures as they occur. We
early adopted this standard and
elected to account for
forfeitures as they occur using
the modified retrospective
transition method. The adoption
of this standard resulted in an
increase of $2.1 million in our
accumulated deficit on February
1, 2016. The adjustment was
reflected in our condensed
consolidated balance sheets.
PURE STORAGE, INC.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
Three Months Ended July 31, Six Months Ended July 31,
--------------------------- -------------------------
2015 2016 2015 2016
---- ---- ---- ----
(unaudited)
Revenue:
Product $71,192 $130,920 $134,810 $242,658
Support 13,469 32,294 23,928 60,503
Total revenue 84,661 163,214 158,738 303,161
------ ------- ------- -------
Cost of revenue:
Product (1) 27,641 42,847 50,353 76,893
Support (1) 7,497 14,000 14,421 26,934
------ ------
Total cost of revenue 35,138 56,847 64,774 103,827
Gross profit 49,523 106,367 93,964 199,334
------ ------- ------ -------
Operating expenses:
Research and development (1) 38,188 58,635 69,870 111,573
Sales and marketing (1) 59,517 87,583 107,844 170,681
General and administrative
(1) 15,227 19,630 27,919 41,211
Total operating expenses 112,932 165,848 205,633 323,465
------- ------- ------- -------
Loss from operations (63,409) (59,481) (111,669) (124,131)
Other income (expense), net (371) 37 (1,074) 1,319
---- --- ------ -----
Loss before provision for
income taxes (2) (63,780) (59,444) (112,743) (122,812)
Provision for income taxes 57 106 214 526
--- --- --- ---
Net loss $(63,837) $(59,550) $(112,957) $(123,338)
======== ======== ========= =========
Net loss per share
attributable to common
stockholders, basic and
diluted $(1.89) $(0.31) $(3.41) $(0.65)
====== ====== ====== ======
Weighted-average shares
used in computing net loss
per share attributable to
common stockholders, basic
and diluted 33,688 192,730 33,154 191,026
====== ======= ====== =======
(1) Includes stock-based
compensation expense as
follows:
Cost of revenue -- product $40 $181 $96 $287
Cost of revenue -- support 521 1,712 854 2,804
Research and development 6,804 13,976 10,429 25,634
Sales and marketing 2,536 8,732 5,980 16,251
General and administrative 1,899 3,295 3,300 5,918
----- -----
Total stock-based
compensation expense $11,800 $27,896 $20,659 $50,894
======= ======= ======= =======
(1) The adoption of ASU 2016-09
resulted in an increase of
$864,000 in our stock-based
compensation expense during the
three months ended April 30,
2016. The adjustment was
reflected in our condensed
consolidated statements of
operations for the six months
ended July 31, 2016.
(2) The adoption of ASU 2016-09
resulted in a decrease of
$535,000 in our provision for
income taxes during the three
months ended April 30, 2016. The
adjustment was reflected in our
condensed consolidated
statements of operations for the
six months ended July 31, 2016.
PURE STORAGE, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
Three Months Ended July 31, Six Months Ended July 31,
--------------------------- -------------------------
2015 2016 2015 2016
---- ---- ---- ----
(unaudited)
Cash flows from operating activities
Net loss $(63,837) $(59,550) $(112,957) $(123,338)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 7,789 11,904 14,268 22,336
Stock-based compensation expense 11,800 27,896 20,659 50,894
Other - 312 - 494
Changes in operating assets and liabilities:
Accounts receivable, net (25,087) (22,004) (21,017) 6,589
Inventory (183) 231 (1,653) (2,392)
Deferred commissions (6,628) (2,254) (4,865) 1,887
Prepaid expenses and other assets 351 1,935 (2,634) (809)
Accounts payable 2,702 (10,173) 2,417 (10,007)
Accrued compensation and other liabilities 15,105 19,704 11,479 8,687
Deferred revenue 27,615 20,449 49,813 41,102
Net cash used in operating activities (30,373) (11,550) (44,490) (4,557)
------- ------- ------- ------
Cash flows from investing activities
Purchases of property and equipment (15,081) (21,742) (21,823) (46,118)
Purchases of intangible assets - (1,000) - (1,000)
Purchases of marketable securities - (84,502) - (427,968)
Sales of marketable securities - 35,744 - 59,071
Maturities of marketable securities - 5,800 - 5,800
Net increase in restricted cash - (6,306) - (5,600)
Net cash used in investing activities (15,081) (72,006) (21,823) (415,815)
------- ------- ------- --------
Cash flows from financing activities
Net proceeds from exercise of stock options 1,313 3,278 3,004 6,369
Proceeds from issuance of common stock under - - - 15,079
employee stock purchase plan
Payments of deferred offering costs (803) - (1,116) -
Net cash provided by financing activities 510 3,278 1,888 21,448
--- ----- ----- ------
Net decrease in cash and cash equivalents (44,944) (80,278) (64,425) (398,924)
Cash and cash equivalents, beginning of period 173,226 286,096 192,707 604,742
Cash and cash equivalents, end of period $128,282 $205,818 $128,282 $205,818
======== ======== ======== ========
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 July 31, 2015 Three Months Ended July 31, 2016
-------------------------------- --------------------------------
GAAP GAAP Adjustment Non-GAAP Non-GAAP GAAP GAAP Adjustment Non-GAAP Non-GAAP
results gross margin (a) results gross margin (b) results gross margin (a) results gross margin (b)
------- --------------- ------- --------------- ------- --------------- ------- ---------------
$40 (c) $181 (c)
3 (d)
---
Gross profit --
product $43,551 61.2% $40 $43,591 61.2% $88,073 67.3% $184 $88,257 67.4%
------- ------- ------- -------
$521 (c) $1,712 (c)
7 (d)
---
Gross profit --
support $5,972 44.3% $521 $6,493 48.2% $18,294 56.6% $1,719 $20,013 62.0%
------ ------ ------- -------
$561 (c) $1,893 (c)
10 (d)
---
Total gross
profit $49,523 58.5% $561 $50,084 59.2% $106,367 65.2% $1,903 $108,270 66.3%
======= ==== ======= ======== ========
(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 July 31, 2015 Three Months Ended July 31, 2016
-------------------------------- --------------------------------
GAAP GAAP Adjustment Non-GAAP Non-GAAP GAAP GAAP Adjustment Non-GAAP Non-GAAP
results operating margin results operating margin results operating margin results operating margin
(a) (b) (a) (b)
--- --- --- ---
$11,800 (c) $27,896 (c)
158 (d)
Loss from
operations $(63,409) -74.9% $11,800 $(51,609) -61.0% $(59,481) -36.4% $28,054 $(31,427) -19.3%
-------- -------- -------- --------
$11,800 (c) $27,896 (c)
158 (d)
Net loss $(63,837) $11,800 $(52,037) $(59,550) $28,054 $(31,496)
======== ======== ======== ========
Net loss per
share --basic
and diluted $(1.89) $(0.33) $(0.31) $(0.16)
====== ====== ====== ======
Weighted-
average shares
used in per
share
calculation -
- basic and
diluted 33,688 122,281 (e) 155,969 192,730 192,730
(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 used in operating activities to free cash
flow (in thousands, unaudited):
Three Months Ended July
31,
------------------------
2015 2016
---- ----
Net cash used
in operating
activities $(30,373) $(11,550)
Less:
purchases of
property and
equipment (15,081) (21,742)
------- -------
Free cash flow $(45,454) $(33,292)
-------- --------
Free cash flow
as % of
revenue -53.7% -20.4%
Logo - http://photos.prnewswire.com/prnh/20150127/171513LOGO
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/pure-storage-announces-second-quarter-fiscal-2017-financial-results-300318507.html
SOURCE Pure Storage
