Pure Storage Announces Third Quarter Fiscal 2024 Financial Results
Record sales for FlashBlade portfolio including FB//E
Expect nearly $400 Million of Combined Annual Evergreen//One and Evergreen//Flex Sales
Increased Operating Margin Annual Guidance
SANTA CLARA, Calif. – November 29, 2023 – Today Pure Storage (NYSE: PSTG), the IT pioneer that delivers the world's
most advanced data storage technology and services, announced financial results for its third quarter fiscal 2024 ended
November 5, 2023.
"Pure continues to see extraordinary growth in our Evergreen Storage-as-a-Service consumption services providing
customers with a Cloud Operating Model for their multi-cloud infrastructure,” said Charles Giancarlo, Chairman and CEO,
Pure Storage. “And we have raised the bar for data storage management with strong SLAs that guarantee no change
management downtime or disruption, and no future data migrations for hardware changes or replacements — all while
simplifying data storage operations, optimizing cloud storage, and reducing costs.”
Third Quarter Financial Highlights
• Revenue $762.8 million, an increase of 13% year-over-year
• Subscription services revenue $309.6 million, up 26% year-over-year
• Subscription annual recurring revenue (ARR) $1.3 billion, up 26% year-over-year
• Remaining performance obligations (RPO) $2.0 billion, up 30% year-over-year
• GAAP gross margin 72.5%; non-GAAP gross margin 74.0%
• GAAP operating income $74.2 million; non-GAAP operating income $169.1 million
• GAAP operating margin 9.7%; non-GAAP operating margin 22.2%
• Operating cash flow $158.4 million; free cash flow $113.4 million
• Total cash, cash equivalents, and marketable securities $1.35 billion
• Returned approximately $22.4 million in Q3 to stockholders through share repurchases of 0.6 million shares
"We are pleased to see strengthening demand across our data storage platform, including the growth of our Evergreen//
One Storage-as-a-Service offering, while also expanding our operating margin,” said Kevan Krysler, Chief Financial Officer,
Pure Storage. “Our business strategy continues to focus on continually increasing the value we provide to our customers
including our consumption and subscription based offerings."
Third Quarter Company Highlights
• Industry-First Paid Power and Rack Commitment: In Q3, Pure tackled the growing challenges of managing
rising electricity costs and rack unit space with the introduction of a first of its kind program which will pay for its
customers’ power and rack space through an Evergreen//One Storage as-a-Service and Evergreen//Flex
subscription, taking responsibility for the associated costs of power and rack unit to run our offerings.
• Storage as-a-Service Innovation: Already a leader in service-level agreement (SLA) guarantees, Pure added
three new SLA guarantees for No Data Migration, Zero Data Loss, and Power and Space Efficiency across its
family of Evergreen (//Forever, //One, //Flex) offerings.
• General Availability (GA) of FlashArray//E: FlashArray//E has begun shipping, completing the //E family of
products. The combination of FlashArray//E and FlashBlade//E starting from 1 PB, taking Pure’s all-flash promise
to the heart of the now-legacy disk market.
• Leader in Gartner Magic Quadrant for Distributed File Systems & Object Storage: Pure was named a leader
for the third consecutive year in the rapidly growing storage market for unstructured data.
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Fourth Quarter and FY24 Guidance
Q4 and FY24 revenue and revenue growth rates are reflective of continuing outperformance and increased momentum in
Evergreen//One Storage-as-a-Service.
Q4FY24 FY24
Revenue $782M $2.82B
Non-GAAP Operating Income $150M $450M
Non-GAAP Operating Margin 19% 16%
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 third quarter fiscal 2024 results at 2:00 pm PT today, November 29, 2023. 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 conferences:
UBS Global Technology Conference
Date: Thursday, November 30, 2023
Time: 7:55 a.m. PT / 10:55 a.m. ET
Chief Technology Officer Rob Lee
Barclays Global Technology Conference
Date: Wednesday, December 6, 2023
Time: 12:45 p.m. PT / 3:45 p.m. ET
Chairman and CEO Charles Giancarlo, and CFO Kevan Krysler
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 (NYSE: PSTG) uncomplicates data storage, forever. Pure delivers a cloud experience that empowers every
organization to get the most from their data while reducing the complexity and expense of managing the infrastructure
behind it. Pure’s commitment to providing true storage as-a-service gives customers the agility to meet changing data
needs at speed and scale, whether they are deploying traditional workloads, modern applications, containers, or more.
Pure believes it can make a significant impact in reducing data center emissions worldwide through its environmental
sustainability efforts, including designing products and solutions that enable customers to reduce their carbon and energy
footprint. And with the highest Net Promoter Score in the industry, Pure's ever-expanding list of customers are among the
happiest in the world. 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
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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, demand for our products and subscription services, including
Evergreen//One, our technology and product strategy, specifically customer priorities around sustainability, the 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, 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 FlashBlade//E and
FlashArray//E, 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 February 5, 2023. All information provided in this
release and in the attachments is as of November 29, 2023, and Pure undertakes no duty to update this information unless
required by law.
Key Business 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.
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 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 issuance costs related to debt, amortization of intangible assets acquired
from acquisitions, acquisition-related transaction and integration expenses, and costs associated with the exit of certain
operations and closing 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.
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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
Paul Ziots -- Investor Relations, Pure Storage
Rena Fallstrom -- Global Communications, Pure Storage
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PURE STORAGE, INC.
Condensed Consolidated Balance Sheets
(in thousands, unaudited)
At the End of
Third Quarter of
Fiscal 2024 Fiscal 2023
Assets
Current assets:
Cash and cash equivalents
$ 529,191 $ 580,854
Marketable securities
821,868 1,001,352
Accounts receivable, net of allowance of $1,178 and $1,057
636,324 612,491
Inventory
46,211 50,152
Deferred commissions, current
74,303 68,617
Prepaid expenses and other current assets
139,129 161,391
Total current assets
2,247,026 2,474,857
Property and equipment, net
337,559 272,445
Operating lease right-of-use-assets
126,558 158,912
Deferred commissions, non-current
190,614 177,239
Intangible assets, net
36,868 49,222
Goodwill
361,427 361,427
Restricted cash
9,960 10,544
Other assets, non-current
45,497 38,814
Total assets
$ 3,355,509 $ 3,543,460
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable
$ 101,092 $ 67,121
Accrued compensation and benefits
149,705 232,636
Accrued expenses and other liabilities
141,241 123,749
Operating lease liabilities, current
44,301 33,707
Deferred revenue, current
801,562 718,149
Debt, current
— 574,506
Total current liabilities
1,237,901 1,749,868
Long-term debt
100,000 —
Operating lease liabilities, non-current
122,388 142,473
Deferred revenue, non-current
694,945 667,501
Other liabilities, non-current
51,820 42,385
Total liabilities
2,207,054 2,602,227
Stockholders’ equity:
Common stock and additional paid-in capital
2,699,676 2,493,799
Accumulated other comprehensive loss
(10,032) (15,504)
Accumulated deficit
(1,541,189) (1,537,062)
Total stockholders' equity
1,148,455 941,233
Total liabilities and stockholders' equity
$ 3,355,509 $ 3,543,460
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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
2024 2023 2024 2023
Revenue:
Product
$ 453,277 $ 431,281 $ 1,161,978 $ 1,247,045
Subscription services
309,561 244,769 878,838 696,182
Total revenue
762,838 676,050 2,040,816 1,943,227
Cost of revenue:
Product
(1)
126,770 135,546 343,588 395,322
Subscription services
(1)
83,321 74,169 244,541 211,576
Total cost of revenue 210,091 209,715 588,129 606,898
Gross profit
552,747 466,335 1,452,687 1,336,329
Operating expenses:
Research and development
(1)
182,100 180,008 549,923 506,971
Sales and marketing
(1)
231,707 212,140 696,885 637,129
General and administrative
(1)
64,729 65,054 192,944 173,300
Impairment and other
(2)
— — 16,766 —
Total operating expenses
478,536 457,202 1,456,518 1,317,400
Income (loss) from operations
74,211 9,133 (3,831) 18,929
Other income (expense), net
5,184 (2,814) 23,619 (8,410)
Income before provision for income taxes
79,395 6,319 19,788 10,519
Income tax provision
9,006 7,106 23,915 11,919
Net income (loss)
$ 70,389 $ (787) $ (4,127) $ (1,400)
Net income (loss) per share attributable to common
stockholders, basic $ 0.22 $ (0.00) $ (0.01) $ (0.00)
Net income (loss) per share attributable to common
stockholders, diluted $ 0.21 $ (0.00) $ (0.01) $ (0.00)
Weighted-average shares used in computing net
income (loss) per share attributable to common
stockholders, basic 314,153 300,984 309,842 298,101
Weighted-average shares used in computing net
income (loss) per share attributable to common
stockholders, diluted 330,255 300,984 309,842 298,101
(1) Includes stock-based compensation expense as follows:
Cost of revenue -- product
$ 1,443
$ 2,984
$ 7,056 $ 7,454
Cost of revenue -- subscription services
6,849
5,814
19,347 16,978
Research and development
43,908
42,390
126,225 120,482
Sales and marketing
19,209
18,441
55,883 54,740
General and administrative
16,557
17,350
46,732 45,460
Total stock-based compensation expense
$ 87,966 $ 86,979 $ 255,243 $ 245,114
(2) Lease impairment and abandonment charges associated with cease-use of our former corporate headquarters
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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
2024 2023 2024 2023
Cash flows from operating activities
Net income (loss)
$ 70,389 $ (787) $ (4,127) $ (1,400)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization
31,647 25,719 91,560 72,268
Stock-based compensation expense
87,966 86,979 255,243 245,114
Lease impairment and abandonment charges
— — 16,766 —
Other
(2,814) (558) (5,843) 2,473
Changes in operating assets and liabilities, net of effect of
acquisition:
Accounts receivable, net
(111,190) (33,791) (23,959) 106,216
Inventory
818 (3,849) 5,278 (16,341)
Deferred commissions
(9,501) 549 (19,061) 11,175
Prepaid expenses and other assets
20,044 (40,601) 19,686 (56,164)
Operating lease right-of-use assets
6,763 9,253 26,398 26,073
Accounts payable
7,533 29,065 33,844 22,536
Accrued compensation and other liabilities
4,767 20,085 (52,757) (17,739)
Operating lease liabilities
(7,454) (6,897) (20,587) (28,339)
Deferred revenue
59,464 69,529 110,856 168,336
Net cash provided by operating activities
158,432 154,696 433,297 534,208
Cash flows from investing activities
Purchases of property and equipment
(1)
(45,062) (39,916) (151,591) (97,910)
Acquisition, net of cash acquired
— — — (1,989)
Purchases of marketable securities
(105,108) (74,878) (351,725) (92,129)
Sales of marketable securities
3,747 — 52,495 —
Maturities of marketable securities
109,196 111,302 495,899 352,295
Net cash provided by (used in) investing activities
(37,227) (3,492) 45,078 160,267
Cash flows from financing activities
Net proceeds from exercise of stock options
3,056 3,867
32,904 19,131
Proceeds from issuance of common stock under
employee stock purchase plan
23,870 20,569 45,089 39,965
Principal payments on borrowings and finance lease
obligations
(7,515) (4,568) (584,582) (256,145)
Proceeds from borrowings
6,890 — 106,890 —
Tax withholding on vesting of equity awards
(4,755) (3,143) (16,582) (16,130)
Repurchases of common stock
(22,460) (24,565) (114,341) (151,564)
Net cash used in financing activities
(914) (7,840) (530,622) (364,743)
Net increase (decrease) in cash, cash equivalents and
restricted cash 120,291 143,364 (52,247) 329,732
Cash, cash equivalents and restricted cash, beginning of
period
418,860 663,111 591,398 476,743
Cash, cash equivalents and restricted cash, end of period
$ 539,151 $ 806,475 $ 539,151 $ 806,475
(1)
Includes capitalized internal-use software costs of $5.1 million and $3.7 million for the third quarter of fiscal 2024 and 2023 and
$15.7 million and $10.5 million for the first three quarters of fiscal 2024 and 2023.
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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 2024 Third Quarter of Fiscal 2023
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)
$ 1,443 (c) $ 2,984 (c)
75 (d) 46 (d)
— 251 (e)
3,306 (f) 3,306 (f)
Gross profit --
product
$ 326,507 72.0 % $ 4,824 $ 331,331 73.1 % $ 295,735 68.6 % $ 6,587 $ 302,322 70.1 %
$ 6,849 (c) $ 5,814 (c)
329 (d) 204 (d)
— 269 (e)
— 24 (g)
Gross profit --
subscription
services
$ 226,240 73.1 % $ 7,178 $ 233,418 75.4 % $ 170,600 69.7 % $ 6,311 $ 176,911 72.3 %
$ 8,292 (c) $ 8,798 (c)
404 (d) 250 (d)
— 520 (e)
3,306 (f) 3,306 (f)
— 24 (g)
Total gross
profit
$ 552,747 72.5 % $ 12,002 $ 564,749 74.0 % $ 466,335 69.0 % $ 12,898 $ 479,233 70.9 %
(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.
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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 2024 Third Quarter of Fiscal 2023
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)
$ 87,966 (c) $ 86,979 (c)
580 (d) 1,479 (d)
2,604 (e) 2,098 (e)
— 3,676 (f)
3,718 (g) 3,838 (g)
Operating
income
$ 74,211 9.7 % $ 94,868
$ 169,079
22.2 % $ 9,133 1.4 % $ 98,070 $ 107,203 15.9 %
$ 87,966 (c) $ 86,979 (c)
580 (d) 1,479 (d)
2,604 (e) 2,098 (e)
— 3,676 (f)
3,718 (g) 3,838 (g)
153 (h) 803 (h)
Net income
(loss)
$ 70,389 $ 95,021
$ 165,410
$ (787) $ 98,873 $ 98,086
Net income
(loss) per
share -- diluted
$ 0.21 $ 0.50 $ (0.00) $ 0.31
Weighted-
average shares
used in per
share
calculation --
diluted
330,255 — 330,255 300,984 15,431 (i) 316,415
(a) GAAP operating margin is defined as GAAP operating income 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 duplicate lease costs during the transition of our corporate headquarters.
(g) To eliminate amortization expense of acquired intangible assets.
(h) To eliminate amortization expense of debt issuance costs related to our debt.
(i) 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
2024 2023
Net cash provided by operating activities
$ 158,432 $ 154,696
Less: purchases of property and equipment
(1)
(45,062) (39,916)
Free cash flow (non-GAAP)
$ 113,370 $ 114,780
(1)
Includes capitalized internal-use software costs of $5.1 million and $3.7 million for the third quarter of fiscal 2024 and 2023.
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