Pure Storage : Announces Third Quarter Fiscal 2022 Financial Results - Form 8-K
November 24, 2021 at 02:40 am IST
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Pure Storage Announces Third Quarter Fiscal 2022 Financial Results
Q3 revenue growing 37% year-over-year
Subscription Services ARR $788 million, up 30% year-over-year
Raised FY22 revenue outlook to $2.1 billion
MOUNTAIN VIEW, Calif. - November 23, 2021- 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 third quarter ended October 31, 2021.
"With Q3 revenue up 37% year-over-year and with increasing profitability, it's clear that Pure continues to set the pace for the industry," said Charles Giancarlo, Chairman and CEO, Pure Storage. "We're delighted to provide cutting edge data services to customers and with our continued leadership in two Gartner Magic Quadrants."
ThirdQuarter Financial Highlights
•Revenue $562.7 million, up 37% year-over-year
•Subscription Services revenue $187.8 million, up 38% year-over-year
•Subscription Annual Recurring Revenue (ARR) $788.3 million, up 30% year-over-year
•Remaining Performance Obligations (RPO) $1.2 billion, up 27% year-over-year
•Operating cash flow $127.0 million; free cash flow $101.3 million
•Total cash and investments $1.4 billion
"Our strong Q3 performance was fueled by increased customer demand and execution across the entire business," said Kevan Krysler, CFO, Pure Storage. "We are in a great innovation cycle with our portfolio."
Third Quarter Company Highlights and Achievements
•Gartner Magic Quadrant: A storage leader for eight consecutive years
◦Magic Quadrant for Primary Storage Arrays: Gartner named Pure a storage leader eight years in a row and the second year in a row the company has been positioned highest on the ability to execute axis and furthest on the completeness of vision axis.
◦Magic Quadrant for Distributed File Systems and Object Storage: Gartner positioned Pure as a leader in the rapidly growing storage market for unstructured data.
•Net Promoter Score (NPS) of 83.5: For six years running, Pure continues to maintain a market-leading NPS, taking the top 1% spot across Medallia benchmarked B2B scores.
•Significant announcements in Q3 bring infrastructure and applications closer together by enabling cloud-like automation and delivery of storage:
◦Pure FusionTM, a self-service, autonomous storage-as-code platform built for limitless scale, lets customers bring the cloud operating model anywhere and run, operate, and consume traditional storage like a cloud service.
◦Portworx® Data Services, a Database-as-a-Service platform for Kubernetes, lets DevOps engineers deploy a managed, production-grade data service with the click of a button.
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Fourth Quarter and FY22 Guidance
Q4 FY22
FY22
Revenue
$630 million
$2.1 billion
Non-GAAP Operating Income
$90 million
$206 million
Non-GAAP Operating Margin
approx. 14%
approx. 10%
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, a reconciliation of these non-GAAP financial measures guidance to the corresponding GAAP measures is not available without unreasonable effort.
Conference Call Information
Pure will host a teleconference to discuss the third quarter fiscal 2022 results at 1:30 pm PT today, November 23, 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 or for two weeks at 800-585-8367 (or 416-621-4642 for international callers) with passcode 9027916.
Upcoming Events
Pure is scheduled to participate at the following investor conferences:
Wells Fargo Virtual 5th Annual TMT Summit
Date: Tuesday, November 30, 2021
Time: 11:00 am PST
Pure Presenters: Charles Giancarlo, Chairman and CEO, Kevan Krysler, CFO
Pure Participants: Rob Lee, VP and CTO, Sanjot Khurana, VP, Investor Relations
Credit Suisse 25th Annual Technology Conference
Date: Wednesday, December 1, 2021
Time: 1:10 pm MST
Pure Presenters: Charles Giancarlo, Chairman and CEO, Kevan Krysler, CFO
Pure Participants: Rob Lee, VP and CTO, Sanjot Khurana, VP, Investor Relations
UBS Virtual Global TMT Conference
Date: Monday, December 6, 2021
Pure Participants: Charles Giancarlo, Chairman and CEO, Kevan Krysler, CFO, Rob Lee, VP and CTO, and Sanjot Khurana, VP, Investor Relations
Barclays Virtual Global Technology, Media and Telecommunications Conference
Date: Tuesday, December 7, 2021
Pure Participants: Kevan Krysler, CFO, Rob Lee, VP and CTO, and Sanjot Khurana, VP, Investor Relations
Raymond James Virtual Technology Investors Conference
Date: Wednesday, December 8, 2021
Pure Participants: Charles Giancarlo, Chairman and CEO, Kevan Krysler, CFO, Rob Lee, VP and CTO, and Sanjot Khurana, VP, Investor Relations
The presentations will be webcast live and archived on Pure's Investor Relations website at investor.purestorage.com.
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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
Leader in the 2021 Gartner Magic Quadrant for Primary Storage Arrays
Leader in the 2021 Gartner Magic Quadrant for Distributed File Systems & Object Storage
Connect with Pure
Blog
LinkedIn
Twitter
Facebook
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, supply chain constraints, the scope and duration of the COVID-19 pandemic and its impact on our business operations, liquidity and capital resources, employees, customers, financial results and the economy, demand for our products and subscription services, our expectations regarding product and technology differentiation, new customer acquisition, 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 November 23, 2021, and Pure undertakes no duty to update this information unless required by law.
Key Business Metric
Subscription ARR is a key business metric that refers to total annualized contract value of all active subscription agreements, including Evergreen, on the last day of the quarter, plus on-demand revenue for the quarter multiplied by four.
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.
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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.
Contacts
Sanjot Khurana -- Investor Relations, Pure Storage
ir@purestorage.com
Rena Fallstrom -- Global Communications, Pure Storage
pr@purestorage.com
###
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PURE STORAGE, INC.
Condensed Consolidated Balance Sheets
(in thousands, unaudited)
At the End of
Third Quarter of Fiscal 2022
Fiscal 2021
Assets
Current assets:
Cash and cash equivalents
$
404,692
$
337,147
Marketable securities
958,180
916,388
Accounts receivable, net of allowance of $965 and $1,033
354,179
460,879
Inventory
44,036
46,733
Deferred commissions, current
63,422
57,183
Prepaid expenses and other current assets
102,117
89,836
Total current assets
1,926,626
1,908,166
Property and equipment, net
193,141
163,041
Operating lease right-of-use-assets
115,731
134,668
Deferred commissions, non-current
144,898
130,741
Intangible assets, net
66,992
76,648
Goodwill
358,736
358,736
Restricted cash
10,544
10,544
Other assets, non-current
39,088
36,896
Total assets
$
2,855,756
$
2,819,440
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable
$
48,708
$
67,530
Accrued compensation and benefits
122,969
160,817
Accrued expenses and other liabilities
73,884
61,754
Operating lease liabilities, current
35,061
32,231
Deferred revenue, current
499,176
438,321
Total current liabilities
779,798
760,653
Long-term debt
778,366
755,814
Operating lease liabilities, non-current
99,031
120,361
Deferred revenue, non-current
450,574
405,376
Other liabilities, non-current
23,563
27,230
Total liabilities
2,131,332
2,069,434
Stockholders' equity:
Common stock and additional paid-in capital
2,447,945
2,307,608
Accumulated other comprehensive (loss) income
(307)
7,410
Accumulated deficit
(1,723,214)
(1,565,012)
Total stockholders' equity
724,424
750,006
Total liabilities and stockholders' equity
$
2,855,756
$
2,819,440
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PURE STORAGE, INC.
Condensed Consolidated Statements of Operations
(in thousands, except per share data, unaudited)
Third Quarter of Fiscal
First Three Quarters of Fiscal
2022
2021
2022
2021
Revenue:
Product
$
374,913
$
274,470
$
949,736
$
793,718
Subscription services
187,827
136,149
522,542
387,743
Total revenue
562,740
410,619
1,472,278
1,181,461
Cost of revenue:
Product (1)
129,721
86,661
309,935
240,677
Subscription services(1)
58,227
47,442
165,658
132,717
Total cost of revenue
187,948
134,103
475,593
373,394
Gross profit
374,792
276,516
996,685
808,067
Operating expenses:
Research and development (1)
147,808
122,981
419,296
350,079
Sales and marketing (1)
193,172
172,282
567,054
517,149
General and administrative (1)
51,890
46,467
138,500
132,063
Restructuring and other (2)
-
-
-
22,990
Total operating expenses
392,870
341,730
1,124,850
1,022,281
Loss from operations
(18,078)
(65,214)
(128,165)
(214,214)
Other income (expense), net
(7,953)
(4,887)
(20,090)
(6,700)
Loss before provision for income taxes
(26,031)
(70,101)
(148,255)
(220,914)
Income tax provision
2,700
4,121
9,947
8,869
Net loss
$
(28,731)
$
(74,222)
$
(158,202)
$
(229,783)
Net loss per share attributable to common stockholders, basic and diluted
$
(0.10)
$
(0.28)
$
(0.56)
$
(0.87)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted
287,462
269,144
283,918
265,626
(1) Includes stock-based compensation expense as follows:
Cost of revenue -- product
$
1,634
$
1,027
$
4,547
$
3,013
Cost of revenue -- subscription services
5,555
3,883
15,098
10,961
Research and development
36,797
29,220
102,343
87,770
Sales and marketing
19,151
14,898
54,317
48,018
General and administrative
12,863
10,581
31,458
29,993
Total stock-based compensation expense
$
76,000
$
59,609
$
207,763
$
179,755
(2) Includes expenses related to restructuring and incremental expenses directly related to COVID-19
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PURE STORAGE, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands, unaudited)
Third Quarter of Fiscal
First Three Quarters of Fiscal
2022
2021
2022
2021
Cash flows from operating activities
Net loss
$
(28,731)
$
(74,222)
$
(158,202)
$
(229,783)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization
21,506
18,214
59,605
49,811
Amortization of debt discount and debt issuance costs
7,857
7,400
23,011
21,525
Stock-based compensation expense
76,000
59,609
207,763
179,755
Impairment of long-lived assets
471
-
471
7,505
Other
2,060
2,139
8,576
4,111
Changes in operating assets and liabilities:
Accounts receivable, net
4,282
(8,676)
106,788
83,220
Inventory
3,280
(6,459)
38
(4,724)
Deferred commissions
(12,354)
(7,402)
(20,395)
(12,885)
Prepaid expenses and other assets
12,672
(11,217)
(12,283)
(37,606)
Operating lease right-of-use assets
7,243
7,253
22,061
21,434
Accounts payable
(4,989)
29,656
(14,256)
8,566
Accrued compensation and other liabilities
5,701
(6,520)
(35,251)
(9,737)
Operating lease liabilities
(7,889)
(7,373)
(22,094)
(20,444)
Deferred revenue
39,937
30,397
106,054
57,860
Net cash provided by operating activities
127,046
32,799
271,886
118,608
Cash flows from investing activities
Purchases of property and equipment
(25,718)
(24,867)
(81,217)
(73,643)
Acquisition, net of cash acquired
-
(339,806)
-
(339,806)
Purchase of strategic investment
-
(5,000)
-
(5,000)
Purchases of marketable securities
(185,667)
(163,154)
(503,038)
(454,391)
Sales of marketable securities
32,896
40,856
146,934
132,207
Maturities of marketable securities
133,388
118,606
303,158
324,780
Net cash used in investing activities
(45,101)
(373,365)
(134,163)
(415,853)
Cash flows from financing activities
Net proceeds from exercise of stock options
22,580
4,019
33,743
25,677
Proceeds from issuance of common stock under employee stock purchase plan
18,915
16,418
36,641
32,439
Proceeds from borrowings, net of issuance costs
-
246,942
-
251,892
Repayments of borrowings
(265)
-
(870)
-
Principal payments on finance lease obligations
(414)
-
(414)
-
Tax withholding on vesting of equity awards
(2,106)
(1,239)
(8,670)
(4,080)
Repurchases of common stock
(56,215)
(21,411)
(130,608)
(111,554)
Net cash (used in) provided by financing activities
(17,505)
244,729
(70,178)
194,374
Net increase (decrease) in cash, cash equivalents and restricted cash
64,440
(95,837)
67,545
(102,871)
Cash, cash equivalents and restricted cash, beginning of period
350,796
370,888
347,691
377,922
Cash, cash equivalents and restricted cash, end of period
$
415,236
$
275,051
$
415,236
$
275,051
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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):
Third Quarter of Fiscal 2022
Third 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)
$
1,634
(c)
$
1,027
(c)
42
(d)
13
(d)
3,207
(e)
2,396
(e)
Gross profit --product
$
245,192
65.4
%
$
4,883
$
250,075
66.7
%
$
187,809
68.4
%
$
3,436
$
191,245
69.7
%
$
5,555
(c)
$
3,883
(c)
279
(d)
59
(d)
24
(f)
7
(f)
Gross profit -- subscription services
$
129,600
69.0
%
$
5,858
$
135,458
72.1
%
$
88,707
65.2
%
$
3,949
$
92,656
68.1
%
$
7,189
(c)
$
4,910
(c)
321
(d)
72
(d)
3,207
(e)
2,396
(e)
24
(f)
7
(f)
Total gross profit
$
374,792
66.6
%
$
10,741
$
385,533
68.5
%
$
276,516
67.3
%
$
7,385
$
283,901
69.1
%
(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 amortization expense of acquired intangible assets.
(f) To eliminate payments to former shareholders of acquired company.
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The following table presents certain non-GAAP consolidated results before certain items (in thousands, except per share amounts and percentages, unaudited):
Third Quarter of Fiscal 2022
Third 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)
$
76,000
(c)
$
59,609
(c)
4,230
(d)
3,533
(d)
2,631
(e)
1,166
(e)
551
(f)
-
3,739
(g)
2,573
(g)
382
(h)
1,762
(h)
Operating Income (loss)
$
(18,078)
-3.2
%
$
87,533
$
69,455
12.3
%
$
(65,214)
-15.9
%
$
68,643
$
3,429
0.8
%
$
76,000
(c)
$
59,609
(c)
4,230
(d)
3,533
(d)
2,631
(e)
1,166
(e)
551
(f)
-
3,739
(g)
2,573
(g)
382
(h)
1,762
(h)
7,857
(i)
7,400
(i)
Net income (loss)
$
(28,731)
$
95,390
$
66,659
$
(74,222)
$
76,043
$
1,821
Net income (loss) per share -- diluted
$
(0.10)
$
0.22
$
(0.28)
$
0.01
Weighted-average shares used in per share calculation -- diluted
287,462
20,835
(j)
308,297
269,144
15,677
(j)
284,821
(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 impairment of right-of-use assets associated with cease-use of a certain facility.
(g) To eliminate amortization expense of acquired intangible assets.
(h) To eliminate acquisition-related transaction and integration expenses.
(i) To eliminate amortization expense of debt discount and debt issuance costs related to our long-term debt.
(j) To include effect of dilutive securities (employee stock options, restricted stock, and shares from employee stock purchase plan).
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Reconciliation from net cash provided by operating activities to free cash flow (in thousands except percentages, unaudited):
Third Quarter of Fiscal
2022
2021
Net cash provided by operating activities
$
127,046
$
32,799
Less: purchases of property and equipment
(25,718)
(24,867)
Free cash flow (non-GAAP)
$
101,328
$
7,932
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Pure Storage Inc. published this content on 23 November 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 23 November 2021 21:09:08 UTC.
Pure Storage, Inc. is a data storage and management company. The Company is focused on delivering a disruptive data storage platform, which supports a range of structured and unstructured data, at scale and across any data workload in hybrid and public cloud environments, and includes mission-critical production, test and development, analytics, disaster recovery, backup and restore, artificial intelligence (AI) and machine learning. Its integrated hardware systems include FlashArray and FlashBlade. Its cloud-native storage includes Portworx by Pure Storage and Portworx Data Services. It delivers modern cloud-oriented services, management and automation to customers across their on-premises, private and public cloud environments. Its cloud operating model is delivered through its Pure Fusion, Evergreen architecture and Pure1 cloud management plane. The Company sells its products and subscription services using a direct sales force and its channel partners.