Technology

Pure Storage Announces Second Quarter Fiscal 2025 Financial Results

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Q2 total revenue growth of 11% year-over-year
Subscription services ARR growing 24% year-over-year

SANTA CLARA, Calif., Aug. 28, 2024 /PRNewswire/ — Today Pure Storage (NYSE: PSTG), the IT pioneer that delivers the world’s most advanced data storage technologies and services, announced financial results for its second quarter fiscal year 2025 ended August 4, 2024.

“In a world where energy demands are soaring, the power savings of Pure Storage alone make the move from hard disks to Pure technology a smart choice for both hyperscaler and enterprise data centers,” said Pure Storage Chairman and CEO Charles Giancarlo. “Businesses can grow their data storage and reduce their energy footprint with Pure on a platform that eliminates existing data silos and simplifies customers’ data centers with guaranteed service-level agreements.”

Second Quarter Financial Highlights 

Revenue $763.8 million, an increase of 11% year-over-yearSubscription services revenue $361.2 million, up 25% year-over-yearSubscription annual recurring revenue (ARR) $1.5 billion, up 24% year-over-yearRemaining performance obligations (RPO) $2.3 billion, up 24% year-over-yearGAAP gross margin 70.7%; non-GAAP gross margin 72.8%GAAP operating income $24.9 million; non-GAAP operating income $138.6 millionGAAP operating margin 3.3%; non-GAAP operating margin 18.1%Q2 operating cash flow $226.6 million; free cash flow $166.6 millionTotal cash, cash equivalents, and marketable securities $1.8 billion

“We delivered strong financial results through the first half of our fiscal year, highlighting the effectiveness of our strategic initiatives,” said Kevan Krysler, Chief Financial Officer, Pure Storage. “Our highly differentiated data storage platform strategy is demonstrating success with our customers.”

Second Quarter Company Highlights

Platform Innovation: The Pure platform delivers agility and risk reduction with a consistent, as-a-service experience across the broadest set of use cases and IT environments. At its annual Pure//Accelerate conference, Pure Storage announced critical new platform capabilities to further improve the ability for enterprises to deploy AI, improve cyber resilience, and modernize applications, including Evergreen//One for AI, the first purpose-built AI storage as-a-service, enhancements to Pure Fusion, delivering first-of-its-kind storage automation, and an industry-first generative AI copilot for storage. Additionally, Pure continued to extend its Storage as-a-Service (STaaS) leadership with new service level agreements (SLAs), now delivering the industry’s most comprehensive set of SLAs.

ESG Leadership: Pure Storage released its third Environmental, Social, and Governance (ESG) report, offering visibility into current metrics and setting commitments for meaningful progress towards a more sustainable future. The latest report outlines that Pure Storage’s platform requires up to 10x less energy than mechanical spinning disk storage (HDD) and up to 5x less than solid state drives (SSDs).

Enterprise AI Momentum: Pure Storage continued to accelerate enterprise AI adoption, announcing that it will be a certified storage solution for NVIDIA DGX SuperPOD by the end of 2024. Additionally, Pure joined the Ultra Ethernet Consortium (UEC), a Linux Foundation initiative, underscoring its commitment to expanding the capabilities of high performance Ethernet for large-scale AI and HPC initiatives.

Awards and Accolades

Fortune Best Large Workplaces in the Bay Area (Ranked #15)Fortune Best Workplaces for Millennials (Ranked #34)Business Intelligence Group’s 2024 Sustainability Leadership Award

Third Quarter and FY25 Guidance

Q3FY25

Revenue

$815M

Revenue YoY Growth Rate

6.8 %

Non-GAAP Operating Income

$140M

Non-GAAP Operating Margin

17.2 %

FY25

Revenue

$3.1B

Revenue YoY Growth Rate

10.5 %

TCV Sales for Subscription-as-a-Service Offerings

$500M

TCV Sales for Subscription-as-a-Service Offerings YoY
Growth Rate

Approximately 25%

Non-GAAP Operating Income

$532M

Non-GAAP Operating Margin

17 %

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 second quarter fiscal 2025 results at 2:00 pm PT today, August 28, 2024. 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 conference:

Goldman Sachs Communacopia + Technology Conference
Date: Wednesday, September 11, 2024
Time: 12:25 p.m. PT / 3:25 p.m. ET
Chairman and CEO Charles Giancarlo and Chief Financial Officer Kevan Krysler

The presentations will be webcast live and archived on Pure’s Investor Relations website at investor.purestorage.com.

—-

About Pure Storage

Pure Storage (NYSE: PSTG) delivers the industry’s most advanced data storage platform to store, manage, and protect the world’s data at any scale. With Pure Storage, organizations have ultimate simplicity and flexibility, saving time, money, and energy. From AI to archive, Pure Storage delivers a cloud experience with one unified Storage as-a-Service platform across on premises, cloud, and hosted environments. Our platform is built on our Evergreen architecture that evolves with your business – always getting newer and better with zero planned downtime, guaranteed. Our customers are actively increasing their capacity and processing power while significantly reducing their carbon and energy footprint. It’s easy to fall in love with Pure Storage, as evidenced by the highest Net Promoter Score in the industry. 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

Connect with Pure 

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Pure Storage, the Pure P Logo, Portworx, and the marks on the Pure Storage Trademark List are trademarks or registered trademarks of Pure Storage Inc. in the U.S. and/or other countries. The Trademark List can be found at purestorage.com/trademarks. Other names may be 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 and business results, demand for our products and subscription services, including Evergreen//One, our technology and product strategy, specifically customer priorities around sustainability, the environmental and energy saving 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, our ability to capture storage workloads for AI environments and hyperscalers, 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 the E//Family, new customer acquisition, 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 4, 2024. All information provided in this release and in the attachments is as of August 28, 2024, and Pure undertakes no duty to update this information unless required by law.

Key Performance 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.

Total Contract Value (TCV) 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 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, restructuring costs related to severance and termination benefits, and costs associated with the impairment and early exit 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.

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

Second Quarter of
Fiscal 2025

Fiscal 2024

Assets

Current assets:

Cash and cash equivalents

$           965,028

$           702,536

Marketable securities

855,453

828,557

Accounts receivable, net of allowance of $959 and $1,060

416,501

662,179

Inventory

43,548

42,663

Deferred commissions, current

87,424

88,712

Prepaid expenses and other current assets

185,072

173,407

Total current assets

2,553,026

2,498,054

Property and equipment, net

396,676

352,604

Operating lease right-of-use-assets

138,781

129,942

Deferred commissions, non-current

210,755

215,620

Intangible assets, net

27,004

33,012

Goodwill

361,427

361,427

Restricted cash

14,779

9,595

Other assets, non-current

78,825

55,506

Total assets

$        3,781,273

$        3,655,760

Liabilities and Stockholders’ Equity

Current liabilities:

Accounts payable

$             68,104

$             82,757

Accrued compensation and benefits

176,553

250,257

Accrued expenses and other liabilities

119,430

135,755

Operating lease liabilities, current

49,575

44,668

Deferred revenue, current

869,332

852,247

Total current liabilities

1,282,994

1,365,684

Long-term debt

100,000

100,000

Operating lease liabilities, non-current

128,674

123,201

Deferred revenue, non-current

754,328

742,275

Other liabilities, non-current

62,116

54,506

Total liabilities

2,328,112

2,385,666

Stockholders’ equity:

Common stock and additional paid-in capital

2,925,540

2,749,627

Accumulated other comprehensive income (loss)

2,707

(3,782)

Accumulated deficit

(1,475,086)

(1,475,751)

Total stockholders’ equity

1,453,161

1,270,094

Total liabilities and stockholders’ equity

$        3,781,273

$        3,655,760

 

PURE STORAGE, INC.

Condensed Consolidated Statements of Operations

(in thousands, except per share data, unaudited)

Second Quarter of Fiscal

First Two Quarters of Fiscal

2025

2024

2025

2024

Revenue:

Product

$         402,595

$         399,738

$         749,979

$         708,701

Subscription services

361,176

288,933

707,271

569,277

Total revenue

763,771

688,671

1,457,250

1,277,978

Cost of revenue:

Product (1)

129,723

120,605

230,476

216,818

Subscription services (1)

93,968

81,473

190,988

161,220

Total cost of revenue

223,691

202,078

421,464

378,038

Gross profit

540,080

486,593

1,035,786

899,940

Operating expenses:

Research and development (1)

195,490

182,492

389,310

367,823

Sales and marketing (1)

250,267

232,732

501,239

465,178

General and administrative (1)

69,445

60,831

146,232

128,215

Restructuring and impairment (2)

16,766

15,901

16,766

Total operating expenses

515,202

492,821

1,052,682

977,982

Income (loss) from operations

24,878

(6,228)

(16,896)

(78,042)

Other income (expense), net

19,437

6,686

33,528

18,435

Income (loss) before provision for income taxes

44,315

458

16,632

(59,607)

Income tax provision

8,641

7,573

15,967

14,909

Net income (loss)

$           35,674

$           (7,115)

$               665

$         (74,516)

Net income (loss) per share attributable to common stockholders, basic

$               0.11

$             (0.02)

$              0.00

$             (0.24)

Net income (loss) per share attributable to common stockholders, diluted

$               0.10

$             (0.02)

$              0.00

$             (0.24)

Weighted-average shares used in computing net income (loss) per share
attributable to common stockholders, basic

326,326

309,510

324,458

307,687

Weighted-average shares used in computing net income (loss) per share
attributable to common stockholders, diluted

343,443

309,510

341,509

307,687

(1) Includes stock-based compensation expense as follows:

Cost of revenue — product

$             3,445

$             2,958

$             6,227

$             5,613

Cost of revenue — subscription services

7,961

6,851

16,832

12,498

Research and development

50,869

44,085

101,163

82,317

Sales and marketing

24,418

19,493

47,937

36,674

General and administrative

18,197

16,060

45,725

30,175

Total stock-based compensation expense                                                   

$         104,890

$           89,447

$         217,884

$         167,277

(2) Includes expenses for severance and termination benefits related to workforce realignment and lease impairment and abandonment charges associated with cease-use of our former corporate headquarters.

 

PURE STORAGE, INC.

Condensed Consolidated Statements of Cash Flows

(in thousands, unaudited)

Second Quarter of Fiscal

First Two Quarters of Fiscal

2025

2024

2025

2024

Cash flows from operating activities

Net income (loss)

$               35,674

$                (7,115)

$                     665

$              (74,516)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization

35,884

30,223

69,827

59,913

Stock-based compensation expense

104,890

89,447

217,884

167,277

Noncash portion of lease impairment and abandonment

16,766

3,270

16,766

Other

1,120

(1,225)

2,726

(3,029)

Changes in operating assets and liabilities:

Accounts receivable, net

6,953

(133,974)

245,721

87,231

Inventory

(4,956)

4,152

(6,661)

4,460

Deferred commissions

(1,554)

(7,229)

6,153

(9,560)

Prepaid expenses and other assets

(17,787)

5,737

(27,006)

(358)

Operating lease right-of-use assets

8,406

8,634

16,528

19,635

Accounts payable

13,423

30,304

(13,158)

26,311

Accrued compensation and other liabilities

30,392

31,558

(78,732)

(57,524)

Operating lease liabilities

(8,031)

(7,033)

(18,257)

(13,133)

Deferred revenue

22,183

41,373

29,137

51,392

Net cash provided by operating activities

226,597

101,618

448,097

274,865

Cash flows from investing activities

Purchases of property and equipment (1)

(60,035)

(55,105)

(108,853)

(106,529)

Purchases of marketable securities and other

(105,328)

(117,829)

(270,451)

(246,617)

Sales of marketable securities

10,735

5,708

48,424

48,748

Maturities of marketable securities

70,127

98,330

197,984

386,703

Net cash provided by (used in) investing activities

(84,501)

(68,896)

(132,896)

82,305

Cash flows from financing activities

Net proceeds from exercise of stock options

4,545

25,218

17,768

29,848

Proceeds from issuance of common stock under employee stock purchase plan

25,328

21,219

Principal payments on borrowings and finance lease obligations

(2,836)

(287)

(3,935)

(577,067)

Proceeds from borrowing

100,000

Tax withholding on vesting of equity awards

(74,208)

(5,068)

(86,686)

(11,827)

Repurchases of common stock

(21,970)

(91,881)

Net cash used in financing activities

(72,499)

(2,107)

(47,525)

(529,708)

Net increase (decrease) in cash, cash equivalents and restricted cash

69,597

30,615

267,676

(172,538)

Cash, cash equivalents and restricted cash, beginning of period

910,210

388,245

712,131

591,398

Cash, cash equivalents and restricted cash, end of period

$             979,807

$             418,860

$             979,807

$             418,860

(1) Includes capitalized internal-use software costs of $5.3 million for both the second quarter of fiscal 2025 and 2024 and $9.8 million and $10.6 million for the first two quarters of fiscal 2025 and 2024.

 

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):

Second Quarter of Fiscal 2025

Second Quarter of Fiscal 2024

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)

$      3,445

(c)

$      2,958

(c)

224

(d)

135

(d)

402

(e)

3,306

(f)

3,306

(f)

Gross profit –product

$  272,872

67.8 %

$      6,975

$ 279,847

69.5 %

$  279,133

69.8 %

$      6,801

$  285,934

71.5 %

$      7,961

(c)

$      6,851

(c)

658

(d)

481

(d)

413

(e)

5

(g)

Gross profit —
subscription services

$  267,208

74.0 %

$      8,619

$ 275,827

76.4 %

$  207,460

71.8 %

$      7,750

$  215,210

74.5 %

$    11,406

(c)

$      9,809

(c)

882

(d)

616

(d)

815

(e)

3,306

(f)

3,306

(f)

5

(g)

Total gross profit

$  540,080

70.7 %

$    15,594

$ 555,674

72.8 %

$  486,593

70.7 %

$    14,551

$  501,144

72.8 %

(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.

 

The following table presents certain non-GAAP consolidated results before certain items (in thousands, except per share amounts and percentages, unaudited):

Second Quarter of Fiscal 2025

Second Quarter of Fiscal 2024

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)

$    104,890

(c)

$     89,447

(c)

876

(d)

5,292

(e)

4,507

(e)

3,536

(f)

3,837

(f)

2,617

(g)

16,766

(h)

Operating income (loss)

$   24,878

3.3 %

$    113,718

$  138,596

18.1 %

$     (6,228)

-0.9 %

$    118,050

$  111,822

16.2 %

$    104,890

(c)

$     89,447

(c)

876

(d)

5,292

(e)

4,507

(e)

3,536

(f)

3,837

(f)

2,617

(g)

16,766

(h)

153

(i)

153

(i)

Net income (loss)

$   35,674

$    113,871

$  149,545

$    (7,115)

$    118,203

$  111,088

Net income (loss) per share — diluted  

$       0.10

$     0.44

$     (0.02)

$      0.34

Weighted-average shares used in per
share calculation —  diluted

343,443

343,443

309,510

17,060

(j)

326,570

(a) GAAP operating margin is defined as GAAP operating income (loss) 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 amortization expense of acquired intangible assets.

(g) To eliminate duplicate lease costs during the transition of our corporate headquarters.

(h) To eliminate lease impairment and abandonment charges associated with cease-use of our former corporate headquarters.

(i) To eliminate amortization expense of debt issuance costs related to our 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):

Second Quarter of Fiscal

2025

2024

Net cash provided by operating activities

$               226,597

$             101,618

Less: purchases of property and equipment (1)

(60,035)

(55,105)

Free cash flow (non-GAAP)

$               166,562

$               46,513

(1) Includes capitalized internal-use software costs of $5.3 million for both the second quarter of fiscal 2025 and 2024.

 

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SOURCE Pure Storage

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