PSTG
$31.60
Pure Storage
Earnings Details
3rd Quarter October 2021
Tuesday, November 23, 2021 4:02:00 PM
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Summary

Pure Storage Beats

Pure Storage (PSTG) reported 3rd Quarter October 2021 earnings of $0.22 per share on revenue of $562.7 million. The consensus earnings estimate was $0.12 per share on revenue of $530.8 million. The Earnings Whisper number was $0.16 per share. Revenue grew 37.0% on a year-over-year basis.

The company said it expects fourth quarter revenue of approximately $630.0 million. The current consensus revenue estimate is $602.15 million for the quarter ending January 31, 2022.

Results
Reported Earnings
$0.22
Earnings Whisper
$0.16
Consensus Estimate
$0.12
Reported Revenue
$562.7 Mil
Revenue Estimate
$530.8 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Pure Storage Announces Third Quarter Fiscal 2022 Financial Results

MOUNTAIN VIEW, Calif., Nov. 23, 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 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."

Third Quarter 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
  • GAAP gross margin 66.6%; non-GAAP gross margin 68.5%
  • GAAP operating loss $(18.1) million; non-GAAP operating income $69.5 million
  • GAAP operating margin (3.2)%; non-GAAP operating margin 12.3%
  • 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 Fusion™, 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.

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.

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.

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



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


 

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

 

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


 

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.

 

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).

 

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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SOURCE Pure Storage