INDUSTRY ANALYSIS ARCHIVE

Pure Storage Announces Record Fourth Quarter and Fiscal Year 2017 Financial Results

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MOUNTAIN VIEW, Calif., March 1, 2017 /PRNewswire/ — Pure Storage (NYSE: PSTG) today announced financial results for its fourth quarter and fiscal year ended January 31, 2017.

Key quarterly business and financial highlights include:

  • Record quarterly revenue of $227.9 million, up 52% Y/Y, 2.2% above midpoint of guidance
  • Record full year revenue of $728.0 million, up 65% Y/Y, 3.3% above midpoint of guidance
  • Record quarterly operating leverage, GAAP margin of -18.6%, 10.0 ppts improvement Y/Y and non-GAAP margin of -1.9%, 12.0 ppts improvement Y/Y
  • Positive momentum in unstructured data market with FlashBlade now generally available

“Pure Storage is delivering the data platform for the cloud era, helping customers put data to work for their businesses,” said Pure Storage CEO Scott Dietzen. “This year, Pure expects to reach $1 billion in revenue – a remarkable achievement and evidence that we’re only just getting started. We could not be more excited about the opportunities ahead.”

“Q4 was a solid quarter and a strong end to our fiscal 2017 with consistent year-over-year revenue growth and a strong improvement in our operating leverage,” said Pure Storage CFO Tim Riitters. “We are confident in our outlook for fiscal 2018 and remain focused on executing steadily on our business model for continued growth and industry leadership.”

A record 450 new customers joined Pure Storage this quarter, increasing the total to more than 3,000 organizations, including more than 20% of the Fortune 500. New customer wins in the quarter include: Hulu, KONAMI, Optus Business, Royal Philips, Phreesia and Subway. New FlashBlade customer wins include: the National Hockey League, law firm Keker, Van Nest & Peters and geoscience solutions provider ION.

Fourth Quarter Fiscal 2017 Financial Highlights

The following tables summarize our consolidated financial results for the fiscal quarters ended January 31, 2016 and 2017 (in millions except per share amounts, unaudited):

GAAP Quarterly Financial Information

Three Months Ended
January 31, 2016

Three Months Ended
January 31, 2017

Y/Y
Change

Revenue

$150.2

$227.9

52%

Gross Margin  

65.3%

65.3%

0.0 ppts

Product Gross Margin

68.2%

66.5%

-1.7 ppts

Support Gross Margin

49.5%

59.6%

10.1 ppts

Operating Loss

-$42.9

-$42.5

$0.4

Operating Margin

-28.6%

-18.6%

10.0 ppts

Net Loss

-$44.3

-$42.9

$1.4

Net Loss per Share

-$0.24

-$0.21

$0.03

Weighted-Average Shares (Basic and Diluted)

187.4

201.0

13.6

 

Non-GAAP Quarterly Financial Information

Three Months Ended
January 31, 2016

Three Months Ended
January 31, 2017

Y/Y
Change

Gross Margin

66.0%

66.1%

0.1 ppts

Product Gross Margin

68.3%

66.6%

-1.7 ppts

Support Gross Margin

53.4%

63.6%

10.2 ppts

Operating Loss

-$20.9

-$4.4

$16.5

Operating Margin

-13.9%

-1.9%

12.0 ppts

Net Loss

-$22.3

-$4.8

$17.5

Net Loss per Share

-$0.12

-$0.02

$0.10

Weighted-Average Shares (Basic and Diluted)

187.4

201.0

13.6

Free Cash Flow

$32.1

$25.3

-$6.8

A reconciliation between GAAP and non-GAAP information is provided at the end of this release.

Financial Outlook

Full Year Fiscal 2018 Guidance:

  • Revenue in the range of $975 million to $1,025 million
  • Non-GAAP gross margin in the range of 63.5% to 66.5%
  • Non-GAAP operating margin in the range of -9% to -5%

First Quarter Fiscal 2018 Guidance:

  • Revenue in the range of $171 million to $179 million
  • Non-GAAP gross margin in the range of 63.5% to 66.5%
  • Non-GAAP operating margin in the range of -27% to -23%

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.

CEO Commentary

Pure Storage has posted a blog from its CEO discussing fourth quarter and fiscal year 2017 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 83.5, Pure customers are some of the happiest in the world, and include organizations of all sizes, across an ever-expanding range of industries.

Forward Looking Statements

This press release contains forward-looking statements regarding our products, business and operations, including our expectations regarding technology differentiation, including momentum with FlashBlade, our opportunity and ability to execute for continued growth and industry leadership, and our outlook for the first quarter and full year fiscal 2018 and statements regarding our products, business, operations and results, including progress toward profitability. 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 Quarterly Report on Form 10-Q for the quarter ended October 31, 2016, which are 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 Annual Report on Form 10-K for the fiscal year ended January 31, 2017. All information provided in this release and in the attachments is as of March 1, 2017, 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 operating loss, 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 and payroll tax expense related to stock-based activities. 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 provided by operating activities to free cash flow,” included at the end of this release.