Pure Storage Announces First Quarter Fiscal 2019 Financial Results
Pure Storage Announces First Quarter Fiscal 2019 Financial Results
MOUNTAIN VIEW, Calif., May 21, 2018 /PRNewswire/ -- Pure Storage (NYSE: PSTG), the all-flash storage platform that helps innovators build a better world with data, today announced financial results for its first quarter ended April 30, 2018.
Key quarterly financial highlights include:
-- Revenue: $255.9 million, up 40% Y/Y, exceeding the high end of our
guidance;
-- Operating margin: -24.2% GAAP; -6.0% non-GAAP, up 7.7 ppts and 7.9 ppts
Y/Y, respectively;
-- Operating cash flow: $18.6 million, free cash flow without ESPP impact:
$8.6 million.
"Pure has delivered another strong quarter as we lead the industry in delivering new data-centric architectures that enable enterprises to succeed both today and tomorrow," said Pure Storage CEO Charles Giancarlo. "The combination of our innovative business model, first-to-market technology innovations, and focus on customer success drove continued momentum in Q1."
Approximately 300 new customers joined Pure Storage in the quarter, increasing the total to more than 4,800 organizations. New customer wins in the quarter include: ALDI International, Barnes & Noble Education, Inc., U.S. Department of Energy, Paige.AI, and Panasonic Taiwan.
"Q1 marked a great start to fiscal 2019, growing 40% year-over-year in revenue and exceeding our operating margin goal," said Tim Riitters, CFO of Pure Storage. "We are focused on driving industry-leading growth and profitability in our business."
New Revenue Accounting Standard
Pure Storage adopted ASC 606, the new standard related to revenue recognition effective February 1, 2018. Prior period financial information in this press release has been adjusted to reflect the adoption of this new standard. Please also refer to our earnings presentation on investor.purestorage.com for further information.
First Quarter Fiscal 2019 Financial Highlights
The following tables summarize our consolidated financial results for the fiscal quarters ended April 30, 2018 and 2017 (in millions except percentages, per share amounts and headcount, unaudited):
GAAP Quarterly Financial Information
Three Months Ended Three Months Ended Y/Y Change
April 30, 2018 April 30, 2017
-------------- --------------
Revenue $255.9 $182.6 40%
------- ------ ------ ---
Gross Margin 65.0% 65.2% -0.2 ppts
------------ ---- ---- ---------
Product Gross Margin 66.0% 67.3% -1.3 ppts
-------------------- ---- ---- ---------
Support Subscription Gross
Margin 61.6% 57.5% 4.1 ppts
-------------------------- ---- ---- --------
Operating Loss -$61.9 -$58.2 -$3.7
-------------- ------ ------ -----
Operating Margin -24.2% -31.9% 7.7 ppts
---------------- ----- ----- --------
Net Loss -$64.3 -$57.2 -$7.1
-------- ------ ------ -----
Net Loss per Share (Basic
and Diluted) -$0.29 -$0.28 -$0.01
------------------------- ------ ------ ------
Weighted-Average Shares 223.8 205.8 18.0
----------------------- ----- ----- ----
Headcount >2,300 >1,800 ~500
--------- ------ ------ ----
Non-GAAP Quarterly Financial Information
----------------------------------------
Three Months Ended Three Months Y/Y Change
April 30, 2018 Ended April 30, 2017
-------------- --------------------
Gross Margin 66.3% 66.4% -0.1 ppts
------------ ---- ---- ---------
Product Gross Margin 66.3% 67.6% -1.3 ppts
-------------------- ---- ---- ---------
Support Subscription Gross
Margin 66.3% 62.1% 4.2 ppts
-------------------------- ---- ---- --------
Operating Loss -$15.3 -$25.3 $10.0
-------------- ------ ------ -----
Operating Margin -6.0% -13.9% 7.9 ppts
---------------- ---- ----- --------
Net Loss -$16.2 -$24.3 $8.1
-------- ------ ------ ----
Net Loss per Share -$0.07 -$0.12 $0.05
------------------ ------ ------ -----
Weighted-Average Shares 223.8 205.8 18.0
----------------------- ----- ----- ----
A reconciliation between GAAP and non-GAAP information is provided at the end of this release.
Financial Outlook
Pure Storage's second quarter fiscal 2019 guidance is as follows:
-- Revenue in the range of $296 million to $304 million
-- Non-GAAP gross margin in the range of 63.5% to 66.5%
-- Non-GAAP operating margin in the range of -7.0% to -3.0%
Pure Storage's full year fiscal 2019 guidance is as follows:
-- Revenue in the range of $1.320 billion to $1.370 billion
-- Non-GAAP gross margin in the range of 63.5% to 66.5%
-- Non-GAAP operating margin in the range of 0% to 4%
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, amortization of debt discount and debt issuance costs and any applicable anti-dilutive share count impact of the convertible debt hedge agreements 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.
Conference Call Information
Pure Storage will host a teleconference to discuss the first quarter fiscal 2019 results at 2:00 p.m. (PT) on May 21, 2018. Pure Storage will post its supplemental earnings presentation to the investor relations website at investor.purestorage.com following the conference call.
Teleconference details are as follows:
-- To Listen via Telephone: (877) 201-0168 or (647) 788-4901 (for
international callers).
-- To Listen via the Internet: A live and replay audio broadcast of the
conference call with corresponding slides will be available at
investor.purestorage.com.
-- Replay: A telephone playback of this conference call is scheduled to be
available two hours after the call ends on Monday, May 21, 2018, through
June 4, 2018. The replay will be accessible by calling (800) 585-8367 or
(416) 621-4642 (for international callers), with conference ID 9572519.
The call runs 24 hours per day, including weekends.
2018 Annual Meeting of Stockholders
Pure Storage will hold its 2018 annual meeting of stockholders on Thursday, June 21, 2018 at 10:00 a.m. (PT). The meeting will be held virtually, via live webcast at www.virtualshareholdermeeting.com/PSTG2018. The record date for the meeting was April 25, 2018, and only stockholders of record on that date are eligible to participate in the meeting. Other interested persons may listen to the live webcast of the meeting and can view the 2018 proxy statement and Annual Report on Form 10-K at investor.purestorage.com.
Upcoming Events
Pure Storage will host an investor session at its annual conference, Pure//Accelerate 2018, on May 23, 2018 at 2:00 p.m. (PT). The event will be a live webcast on the investor relations website at investor.purestorage.com. Pure Storage will also be participating in financial conferences on June 6th,7th, and 12th of 2018.
About Pure Storage
Pure Storage (NYSE: PSTG) helps innovators build a better world with data. Pure's data solutions enable SaaS companies, cloud service providers, and enterprise and public sector customers to deliver real-time, secure data to power their mission-critical production, DevOps, and modern analytics environments in a multi-cloud environment. One of the fastest growing enterprise IT companies in history, Pure Storage enables customers to quickly adopt next-generation technologies, including artificial intelligence and machine learning, to help maximize the value of their data for competitive advantage. And with a Satmetrix-certified NPS 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:
Gartner Magic Quadrant for Solid-State Arrays
IDC MarketScape for All-Flash Arrays
Pure Storage, Evergreen, FlashBlade, FlashStack and the "P" Logo mark are trademarks of Pure Storage, Inc. All other trademarks or names referenced in this document are the property of their respective owners.
Forward Looking Statements
This press release contains forward-looking statements regarding our products, business and operations, including our growth prospects and expectations regarding technology differentiation, and our outlook for the second quarter and full year fiscal 2019, and 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 captions "Risk Factors" and elsewhere in our filings and reports with the U.S. Securities and Exchange Commission, including, 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 available in our Annual Report on Form 10-K for the year ended January 31, 2018. All information provided in this release and in the attachments is as of May 21, 2018,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, free cash flow as a percentage of revenue, free cash flow without ESPP impact, and free cash flow without ESPP impact as a percentage of revenue. 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 and amortization of debt discount and debt issuance costs 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 (used in) operating activities to free cash flow and free cash flow without ESPP impact," included at the end of this release.
PURE STORAGE, INC.
Condensed Consolidated Balance Sheets
(in thousands, unaudited)
As of As of
April 30, 2018 January 31, 2018
-------------- ----------------
(As Adjusted*)
Assets
Current assets:
Cash and cash equivalents $735,140 $244,057
Marketable securities 362,817 353,289
Accounts receivable, net
of allowance of $999 and
$1,062 195,926 243,001
Inventory 38,540 34,497
Deferred commissions,
current 20,122 21,088
Prepaid expenses and
other current assets 35,652 47,552
------ ------
Total current assets 1,388,197 943,484
Property and equipment,
net 94,280 89,142
Intangible assets, net 4,681 5,057
Deferred income taxes,
non-current 1,175 1,060
Restricted cash 16,499 14,763
Deferred commissions,
non-current 65,922 66,225
Other assets, non-current 5,305 4,264
----- -----
Total assets $1,576,059 $1,123,995
========== ==========
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $63,994 $84,420
Accrued compensation and
benefits 30,778 59,898
Accrued expenses and
other liabilities 25,629 26,829
Deferred revenue, current 199,622 191,229
Liability related to
early exercised stock
options - 320
--- ---
Total current liabilities 320,023 362,696
Long term debt 430,253 -
Deferred revenue, non-
current 188,992 182,873
Other liabilities, non-
current 5,171 4,025
----- -----
Total liabilities 944,439 549,594
------- -------
Stockholders' equity:
Common stock and
additional paid-in
capital 1,602,144 1,479,905
Accumulated other
comprehensive loss (2,633) (1,917)
Accumulated deficit (967,891) (903,587)
-------- --------
Total stockholders'
equity 631,620 574,401
------- -------
Total liabilities and
stockholders' equity $1,576,059 $1,123,995
========== ==========
* Prior period information has been adjusted to reflect the adoption impact of ASC 606, which we adopted on February 1, 2018.
PURE STORAGE, INC.
Condensed Consolidated Statements of Operations
(in thousands, except per share data, unaudited)
Three Months Ended April 30,
2018 2017
---- ----
(As Adjusted*)
Revenue:
Product $195,449 $142,850
Support subscription 60,496 39,795
------ ------
Total revenue 255,945 182,645
------- -------
Cost of revenue:
Product (1) 66,420 46,645
Support subscription(1) 23,210 16,903
------ ------
Total cost of revenue 89,630 63,548
Gross profit 166,315 119,097
------- -------
Operating expenses:
Research and development
(1) 78,492 65,428
Sales and marketing (1) 122,367 91,763
General and
administrative (1) 27,330 20,096
------
Total operating expenses 228,189 177,287
------- -------
Loss from operations (61,874) (58,190)
Other income (expense),
net (999) 1,995
---- -----
Loss before provision for
income taxes (62,873) (56,195)
Provision for income
taxes 1,431 964
----- ---
Net loss $(64,304) $(57,159)
======== ========
Net loss per share
attributable to common $(0.29) $(0.28)
stockholders, basic and diluted
Weighted-average shares
used in computing net 223,768 205,783
loss per share attributable to common
stockholders, basic and diluted
* Prior period information has been adjusted to reflect the adoption impact of ASC 606, which we adopted on February 1, 2018.
(1) Includes stock-based compensation expense as follows:
Cost of revenue --
product $608 $397
Cost of revenue --
support subscription 2,684 1,774
Research and development 21,090 15,588
Sales and marketing 13,940 10,626
General and
administrative 5,633 3,834
----- -----
Total stock-based
compensation expense $43,955 $32,219
======= =======
PURE STORAGE, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands, unaudited)
Three Months Ended April 30,
2018 2017
---- ----
(As Adjusted*)
Cash flows from operating activities
Net loss $(64,304) $(57,159)
Adjustments to reconcile net loss to net
cash provided by (used in) operating
activities:
Depreciation and
amortization 16,417 14,825
Amortization of debt
discount and debt
issuance costs 1,455 -
Stock-based compensation
expense 43,955 32,219
Other 152 451
Changes in operating assets and liabilities:
Accounts receivable, net 47,143 36,571
Inventory (4,429) (16,105)
Deferred commissions 1,269 (1,367)
Prepaid expenses and
other assets 11,111 (3,944)
Accounts payable (18,802) (3,982)
Accrued compensation and
other liabilities (29,881) (24,194)
Deferred revenue 14,510 8,384
------ -----
Net cash provided by
(used in) operating
activities 18,596 (14,301)
------ -------
Cash flows from investing activities
Purchases of property and
equipment (22,296) (12,769)
Purchases of marketable
securities (81,702) (55,976)
Sales of marketable
securities 10,454 5,384
Maturities of marketable
securities 61,023 46,321
------ ------
Net cash used in
investing activities (32,521) (17,040)
------- -------
Cash flows from financing activities
Net proceeds from
exercise of stock
options 9,614 2,257
Proceeds from issuance of
common stock under
employee stock purchase
plan 19,698 14,166
Proceeds from issuance of
convertible debt, net of
issuance costs 562,062 -
Payment for purchase of
capped call (64,630) -
Repurchase of common
stock (20,000) -
------- ---
Net cash provided by
financing activities 506,744 16,423
------- ------
Net increase (decrease)
in cash, cash
equivalents and
restricted cash 492,819 (14,918)
Cash, cash equivalents
and restricted cash,
beginning of period 258,820 196,409
------- -------
Cash, cash equivalents
and restricted cash, end
of period $751,639 $181,491
======== ========
* Prior period information
has been adjusted to reflect
the adoption impact of ASC
606 and ASU 2016-18, which
we adopted on February 1,
2018.
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):
Three Months Ended April 30, 2018 Three Months Ended April 30, 2017 (As Adjusted*)
--------------------------------- -----------------------------------------------
GAAP GAAP Adjustment Non- Non- GAAP GAAP Adjustment Non- Non-
results gross GAAP GAAP results gross GAAP GAAP
margin (a) results gross margin (a) results gross
margin (b) margin (b)
--------- ---------
$608 (c) $397 (c)
25 (d) 5 (d)
--- ---
Gross profit -- product $129,029 66.0% $633 $129,662 66.3% $96,205 67.3% $402 $96,607 67.6%
$2,684 (c) $1,774 (c)
142 (d) 31 (d)
--- ---
Gross profit --support
subscription $37,286 61.6% $2,826 $40,112 66.3% $22,892 57.5% $1,805 $24,697 62.1%
$3,292 (c) $2,171 (c)
167 (d) 36 (d)
--- ---
Total gross profit $166,315 65.0% $3,459 $169,774 66.3% $119,097 65.2% $2,207 $121,304 66.4%
======== ====== ======== ======== ====== ========
* Prior period information has been
adjusted to reflect the adoption
impact of ASC 606, which we
adopted on February 1, 2018.
(a) GAAP gross margin is defined as
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.
The following table presents certain non-GAAP consolidated results before certain items (in thousands, except per share amounts and percentages, unaudited):
Three Months Ended April 30, 2018 Three Months Ended April 30, 2017 (As Adjusted*)
--------------------------------- -----------------------------------------------
GAAP GAAP Adjustment Non- Non- GAAP GAAP Adjustment Non- Non-
results operating GAAP GAAP results operating GAAP GAAP
margin (a) results operating margin (a) results operating
margin (b) margin (b)
--------- ---------
$43,955 (c) $32,219 (c)
2,667 (d) 651 (d)
Loss from
operations $(61,874) -24.2% $46,622 $(15,252) -6.0% $(58,190) -31.9% $32,870 $(25,320) -13.9%
$43,955 (c) $32,219 (c)
2,667 (d) 651 (d)
1,455 (e) -
---
Net loss $(64,304) $48,077 $(16,227) $(57,159) $32,870 $(24,289)
======== ======== ======== ========
Net loss per
share --basic
and diluted $(0.29) $(0.07) $(0.28) $(0.12)
====== ====== ====== ======
Weighted-
average shares
used in per
share
calculation -
- basic and
diluted 223,768 223,768 205,783 205,783
* Prior period information has been
adjusted to reflect the adoption
impact of ASC 606, which we
adopted on February 1, 2018.
(a) GAAP operating margin is
defined as loss from operations
divided by revenue.
(b) Non-GAAP operating margin is
defined as non-GAAP loss from
operations divided by revenue.
(c) To eliminate stock-based
compensation expense.
(d) To eliminate payroll tax
expense related to stock-based
activities.
(e) To eliminate the amortization
expense of debt discount and debt
issuance costs related to our
convertible debt.
Reconciliation from net cash provided by (used in) operating activities to free cash flow and free cash flow
without ESPP impact (in thousands except percentages, unaudited):
Three Months Ended April 30,
----------------------------
2018 2017
---- ----
Net cash
provided by
(used in)
operating
activities $18,596 $(14,301)
Less:
purchases
of property
and
equipment (22,296) (12,769)
------- -------
Free cash
flow (non-
GAAP) $(3,700) $(27,070)
Adjust: ESPP
impact 12,252 9,698
------ -----
Free cash
flow
without
ESPP impact
(non-GAAP) $8,552 $(17,372)
====== ========
Free cash
flow as %
of revenue -1.4% -14.8%
Free cash
flow
without
ESPP impact
as % of
revenue 3.3% -9.5%
CONTACT: Matthew Danziger - Investor Relations, Pure Storage, Tel: (650) 429-0456, ir@purestorage.com; Rena Fallstrom - Media Contact, Pure Storage, Tel: (408) 203-3945, pr@purestorage.com
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