Pure Storage, Inc. (PSTG) on Q1 2022 Results - Earnings Call Transcript

Operator: Good day, ladies and gentlemen. Thank you for standing by, and welcome to the Pure Storage First Quarter Fiscal Year 2022 Earnings Release Conference Call. At this time, all participants are in a listen-only mode. At the conclusion of our prepared remarks, there will be a question-and-answer session. As a reminder, this call is being recorded. I would now like to introduce your host for today's conference call, Mr. Sanjot Khurana. Please go ahead. Sanjot Khurana: Thank you, and good afternoon. Welcome to the Pure Storage first quarter fiscal 2022 earnings conference call. My name is Sanjot Khurana, Vice President of Investor Relations at Pure Storage. Joining me today are our CEO, Charlie Giancarlo; our CFO, Kevan Krysler; and our Vice President & Chief Architect, Rob Lee. Before we begin, I would like to remind you all that during this call, management will make some forward-looking statements, which are subject to various risks and uncertainties. These include statements regarding: the COVID-19 pandemic and related disruptions, our growth and sales prospects, competitive, industry and technology trends, our strategy and its advantages, our current and future product offerings, and our business and operations. Any forward-looking statements that we make are based on facts and assumptions as of today, and we undertake no obligation to update them. Our actual results may differ materially from the results forecasted and reported results should not be considered as an indication of future performance. A discussion of some of the risks and uncertainties relating to our business is contained in our filings with the SEC, and we refer you to these public filings. During this call, we will discuss non-GAAP measures in talking about the company's performance, and reconciliations to the most directly comparable GAAP measures are provided in the earnings press release and slides. This call is being broadcast live on the Pure Storage Investor Relations website and is being recorded for playback purposes. An archive of the webcast will be available on the IR website and is the property of Pure Storage. With that, I'll turn the call over to our CEO, Charlie Giancarlo. Charlie Giancarlo: Hello everyone and thank you for joining us today. I hope you and your loved ones are healthy and looking forward to better days ahead as summer begins, vaccination rates increase, and the beginning of the end of COVID restrictions in many parts of the world comes into view. Our hearts go out to our friends in India and other countries still suffering from this scourge and we pray that they will soon recover. Pure delivered very strong results in Q1. We drove double-digit growth against a strong comparison with Q1 of last year. I’m also happy to report that our strong quarter was broad based with balanced contributions across every aspect of our business. We continue to see enterprise expansion, validating our investment in world-class enterprise products, services and our go-to-market teams over the past two years. Kevan Krysler: Thank you, Charlie, and good afternoon. We are very pleased with the broad-based strength of our Q1 results and continued momentum. We delivered double-digit revenue growth despite both a tough compare, as well as continued uncertainty of COVID-19 and its influence on markets across the globe. Operator: Thank you. Your first question comes from the line of Karl Ackerman with Cowen. Karl Ackerman: Yes, thank you. Good afternoon. Two questions if I may? With regard to your current outlook, Kevan, I was hoping maybe you can tell us regarding , I guess what could you tell us regarding from your hardware business? I ask because in the context of a NAND market that is seeing big growth increase at a roughly 30% clip, you know, the all FlashArray revenue is flattish on a year-over-year basis, but, you know, component pricing seems to have bottomed. And I'm wondering whether maybe some of the deflationary pressures from on-prem enterprise spend still recovering abates, going into the second half of the year. And then if you could speak to anything regarding the capacity points per array, as we think about that growth in Exabyte’s in the second half of the year, as well? Charlie Giancarlo: Yeah, Karl, this is Charlie, let me start on that wall. Kevan, I think pulls together some of the stats on that. You know, overall, I would say, you know, that our overall – there's been overall growth in our FlashArray product line counting both FlashArray//X and FlashArray//C, you know, and we were really pleased to see that, you know, that growth for that product line continue. And I have to say that, that I remain very bullish that we'll continue to see growth in that product line, in addition, of course, to FlashBlade and Portworx, all of which are seeing, you know, strong growth overall. So, and then if you count in along with that, the growth that we're seeing in subscriptions and pass in particular, you know, which does not show up immediately on the top line because of the accounting for subscription basis. Yeah, we are seeing good growth overall. And I’ll just comment for a moment on the supply chain side on the NAND. First is, you're correct, we probably will not see, although we entered the year that is the calendar year with some deflationary pressure initially, through the remainder of the year, you're exactly correct. It's unlikely to see any downward pricing in NAND and actually likely to see some upward pricing on the raw NAND as we go forward. You know, and that'll be overall industry affecting. And of course, because most of our sales are very competitive in nature, we also saw a slight increase in ASPs and I would expect ASPs to hold, you know, reasonably steady plus or minus through the year overall. So, I think you're correct. We're not going to see a lot of deflationary pressure this year. Kevan Krysler: Yeah, and I agree Charlie, and I think one other thing I would add is the inflationary pressure is just broader than NAND as well. So, we're seeing it across the supply chain, but again, that's been you know, considered in terms of how we're thinking about our Q2 guide, and that's why in the prepared remarks, I commented that about half of our overachievement for operating profit would be incremental, viewed as incremental to our annual guide. Charlie Giancarlo: And then finally, on the, you know, Exabyte, you know, we will definitely ship more Exabyte’s this year than we did last year for sure. You know, in terms of average, I think we're cautiously optimistic that the average will go up. But you know, spending tends to, you know, and I'm expecting that overall spending for data storage this year will also increase for the market as a whole. So, I hope that provides you some indication. Karl Ackerman: That does, and I appreciate that, gentlemen. For my follow up, you know, in your prepared remarks, you spoke about how Pure Cloud Block Store is now GA at AWS and Azure, and so I'm curious, whether you'll be breaking out this business like you're – one of our primary peers, and, you know, maybe jumping the gun a little bit, but any thoughts on when this may reach $100 million annual run rate? Thank you. Kevan Krysler: Yeah, Karl, let me just hit the first point on Cloud Block Store and how that combines really nicely with our unified subscription of here's a service. And that's really why I think we're seeing a lot of continued demand and momentum with Pure as-a-Service. And we're quite excited about cloud block store on Azure and Rob, do you have some comments on that? It'd be great to share some thoughts on Cloud Block Store with Azure? Rob Lee: Yeah, absolutely. You know, we're super excited, just to see the continued growth in the overall cloud portfolio, Cloud Block Store key component for, you know, the modern app, sorry the traditional applications, and now expanding from AWS to Azure, we see that as adding just a ton of value to the unified subscription. You know, as an example, with a large FSI customer this quarter, you know, who was undergoing a tremendous growth in their business, struggling to keep up on their legacy gear brought Pure in under the unified subscription, and was able to get immediate performance capacity and elasticity benefits on prem, as well as utilize Cloud Block Store on Azure to move their Disaster Recovery Environment over to the cloud. And so, I think that flexibility, and last, we were able to deliver just goes to speak to the benefits of the software subscription, the software approach and just the overall unified subscription through which we deliver the cloud products. Karl Ackerman: Thank you. Operator: Your next question comes from Sidney Ho of Deutsche Bank. Sidney Ho: Thanks for taking my questions. My first question is on the gross margin. Clearly, you guys are doing very well there over 70% to continue to be higher than the high-end of the target range. Should we expect gross margins to stay at these higher levels considering subscription services revenue will likely grow faster than product revenue? I think you guys talk about some inflationary pressure there or really does it depends on what type of services is driving the growth? Are there other considerations to think about? Kevan Krysler: No, I think that's a great question. I think the pressure, the inflationary pressure we're seeing really more lends itself to product gross margins. But again, we're very pleased with what we saw coming out of the quarter, really, with strong gross margins, throughout both on the product and subscription side, and to your point, above, kind of a high-end of our expectations. And as we progress through the year, on the product, gross margin side, you know, we would expect to see some pressure on product gross margins due to what we're seeing on the supply chain. But again, we've accounted for that in terms of our Q2 guide in my prepared remarks around the annual view. Sidney Ho: Got it. Maybe a follow-up question is on the enterprise side of things, you guys have been highlighting the strength in your enterprise business last quarter this quarter. But the data points in general in the market hasn't been, it's – I would say is kind of mixed – some semiconductor companies would say it's still kind of weak, maybe just starting to get better. Can you talk about why you are seeing things differently? And if the overall market does start to improve in the second half, do you think your enterprise business will also accelerate along with the market just of a higher starting point? Charlie Giancarlo: The answer to both is yes. The reason why we're seeing such good overall expansion of our enterprise business is because of the investments we made as a company. Remember, just two or three years ago, we were largely a commercial company with some deployments in enterprise. We made major investments both in products as well as our go to market team to really become a brand that would be respected by a broader set, and really by the enterprise customer environment at large. And I think we've achieved that from a brand perspective. But we're still early, in many ways in our expansion into enterprise. So, I expect that expansion, which is not, you know, secular specific to the investments that we made to continue. So, really, for us, it's about penetration into what was for us a new market. And I think you're comparing us perhaps to companies that had a mature market in enterprise, and therefore are not, you know, probably are still waiting to see the secular growth in the enterprise segment. Secular growth in enterprise can only help us as we continue to expand in that space. Sidney Ho: Okay, great. Thank you. Charlie Giancarlo: Thanks. Operator: Your next question comes from Jason Ader of William Blair. Jason Ader: Yeah, thank you. Hey, Charlie, we've definitely heard in the last, let's say, 12 months to 18 months, there's been an inflection point in demand for microservices and Kubernetes technology, and I was just wondering, obviously you guys saw that, and that's why you bought Portworx, but how is this manifesting? I guess, in terms of activity pipeline, demand for Portworx? And then maybe, can you give us a sense of when do you think it's going to start to be more material for your business? Charlie Giancarlo: Yeah, well, as you know, it is a subscription based business and therefore, you know, it's a ratable – it takes a while for ratable products to make a big difference, you know, to the top line, but I have to say that, you know, both revenue growth is, you know, we're talking, you know, in and around, you know, doubling of revenue growth, and we've seen a much even larger expansion of pipeline. So, I'm been going out a little bit on the here, but it's, it's going very well. And the strategy of aligning, and having, you know, single management and single, you know, layer that is the Kubernetes layer, for customers to be able to manage both their traditional applications, as well as their modern applications, so-called cloud native applications, you're under one umbrella supported by everything from you know, a startup environment for or, you know, a new development environment, you know, with a small amount of storage under the original Portworx SDS layer. And then expanding into a full, you know, multi-petabyte production environment, you know, using a highly reliable arrays, either FlashArray or FlashBlade. And to have that all done non-disruptively, you know, it's a very powerful promise that we're able to deliver to our customers. So, you know, so far, so good, we're seeing a lot of interest, we're seeing, as I say, you know very fast expanding demand. But as we mentioned, in our last call or two, you know, it's probably going to be a year or two before it really becomes truly, you know, noticeable on a top line that's growing, even outside of Portworx. Kevan Krysler: Yeah, and Charlie, maybe just add on to that, you know, we're quite pleased with the integration that's going on there, right. We've got a new version of Portworx Enterprise that we're quite excited about. And, you know, the synergy that we're now seeing with our existing peer customers is pretty strong as well. And I don't know if you are Rob wanted to give a little color on that. Charlie Giancarlo: I'll talk a little bit about it. You know, just eight months, roughly after the close of the transaction, we've integrated all of our products now with, you know, with more to come. The customers, what we've seen in customers, and we've indicated this, but it bears repeating. You know, about half the customers are Pure customers that is the buyers are people that we've been talking to for years. And the other half of the buyers are new buyers for us, sometimes in the same account, sometimes new accounts, but on the development side. And it's a one, two punch of us being able to leverage what we already do and learn about a new area that makes you know, makes the acquisition a really compelling one, I think. Rob Lee: I’ll just jump in there. Part of what makes that one, two punch particularly powerful is, and this is a fast growing space. This is a significant and secular transition and how applications are built. Frankly, this is how most modern applications are being built today. And so we've really taken the strategy of investing in a full suite of data management capabilities, to be able to help a customer deploy, build, deploy and get to production in multiple environments, whether that's on-prem, in the cloud, hybrid cloud or multi-cloud and you know, across the whole spectrum of development lifecycle, whether they’re just getting started, you know, getting the staging or going to global production scale. So, early days, but really exciting. Jason Ader: Thank you. Operator: Your next question comes from the line of Rod Hall of Goldman Sachs. Rod Hall: Yeah, thanks for the question, guys. I guess I wanted to come back to the question of cost, not so much NAND, because I think that's fairly – seems like it's relatively predictable, but I'm wondering, Charlie, what are you guys seeing in other cost lines, like freight and things like that we hear a lot of people talking about various different upward pressure on, you know, cost into their businesses. And then, as a kind of add on to that, what do you think your pricing power is? If you were to continue to see upward pressure on, you know, on cost across the board? Thanks. Charlie Giancarlo: Yeah. Great question. Look, we're seeing, you know, there is pricing pressure on the supply side, you know, across the board, I'd say it's more acute on some of the component area, you know, NAND is seeing some, but it's true on all of the different components. You know, freight, you know, a bit, I can't say that that's been a tremendous driver for us, but I'm going to take your guidance, and I'll look at it, but it's, you know, the costs are going up. At the same time, as you probably know, Rod, a lot of our, most of our sales are competitive in nature. And so, our pricing is determined much more by the competitive environment in a particular deal than it is by our costs. And so, you know, there will be some balancing with ASPs, I'm sure. Exactly how much that is, we can't be, you know, 100% confident, but as Kevan mentioned, we've incorporated our best guess into the guide. So, we feel fairly good about it. It may have, there may be some effect on our margins. I don't expect it to be severe. You know, because again, we operate 100% of the time in a generally a competitive environment. Kevan Krysler: And then Rod, maybe I'll just add on a little bit more to that. So specific to what we saw in Q1, on the ASP front, we actually did see some improvement on ASPs, and, you know, I attribute that really to two factors. I think we're doing a really nice job continuing to sell the value of our solutions. But I also think the general inflationary issues we're seeing around the supply chain is playing into that. And so, we'll just have to see how that plays out for the remainder of the year. But I think broader as well, when we get back to the supply chain issues, look, you know, we've got very strong relationships with our suppliers. And so, we're very confident in terms of working with our suppliers in terms of making sure we can meet our customer’s needs. And, you know, we're just being very cautious and monitoring very actively, I think our supply chain team is doing a tremendous job navigating us through this, no different than what they did in the COVID environment. So, we're quite pleased with how things are progressing, but, you know, I think the themes are yet general inflationary concerns across the board, especially with some of the smaller componentry. And then we did see some improvement in ASPs. Charlie Giancarlo: Yeah, I do want to just underline that. Really, our suppliers have been wonderful to work with. You know, it's a tough environment out there. They're under a lot of pressure, but a, we have good relationships with them. But b, they've been – they've worked with us really well. And I couldn't be more pleased with the suppliers that that we work with. Rod Hall: Okay. Do you guys mind if I sneak another one in? I know it was a long answer, but … Kevan Krysler: Not at all, please. Rod Hall: Okay. The other one is just on, you know, your product revenue was clearly, you know, negatively impacted through COVID. I'm assuming that you've got exposures to some of these industries that were affected that I don't remember exactly what you said about that. I'm just curious, what you think your exposure to the reopening benefited industries are, travel, leisure, all that kind of stuff? You know, what sort of industrial exposure you think you have to reopening? Thanks. Kevan Krysler: Thanks, Rod. You know, in the past, when we talked about, you know, the COVID exposure, it had more to do with the fact that as a relatively new vendor, and one that was focused on growth, it was customers concern not being able to be in the office, and their lesser willingness to try new things, whether that's new products, new vendors, or new used cases for existing products. And so, the way we look at this is that as we return to, you know, an environment where customers are more willing to try new things, including, you know, maybe a new vendor, but it may just be one of our new products or maybe one of our existing products in a used case that where they currently use competitors products or it's a new used case entirely. They're going to be much more willing to do something new and different. And so that's what we're looking forward to. It was less about us being exposed to highly exposed segments and much more about reluctance to engage in new activities by our customers. Rod Hall: Great. All right. Thanks a lot, Charlie. Appreciate it. Operator: Your next call comes from the line of Wamsi Mohan of Bank of America. Wamsi Mohan: Yes. Thank you. Sorry to get back on this inflationary topic. But can you be more specific on whether how much of that potentially is logistics versus procurement versus increased pricing from your suppliers? And do you see that impacting revenue at all? It sounded like, you know, you guys alluded to sort of the cost impact of not all the upside flowing through in the back half, but what about revenue? And I have a follow-up. Charlie Giancarlo: Thank you, Wamsi. Well, Wamsi, look, in the context of it being a, you know, there being a lot of uncertainty in the supply chain. That being said, we feel reasonably confident about Q2. We feel reasonably good about Q2. It's very difficult to talk about Q3 and Q4 with high levels of confidence, but you know, we have a high degree of confidence in both our own operations team that have really performed from, you know, from a customer standpoint, flawlessly, you know, throughout COVID. And up until this day, and with our suppliers who we work with very closely. We think it's been, you know, there are situations where, you know, every day where components that one thought were available, suddenly become unavailable. Also component availability, you know changes every week. And then one is looking for those components elsewhere. So, it's both a supply issue as well as a cost issue, as we identified costs are going up largely on the supply side. I think less so on the logistic side, at least for us. And as I said, it's a bit of an uncertain world, but that being said, we feel reasonably confident on Q2 that it won't affect revenue on Q2. And I would just want to put that caveat there, reasonably confident. And Q3, and Q4, we're just going to keep, we'll update you, you know, every quarter and as to how we feel about this. Kevan Krysler: Yeah. And maybe I can go into a little bit more detail in terms of what we saw, specifically in Q1. So, we actually did see improvement in ASPs, as I mentioned previously. You know, that was more favorable in terms of what we were doing on discounting. And again, I think that's both what we saw with the supply chain, but I also think the – our field is doing a really nice job and selling the value of our products. And frankly, what we saw with product gross margin this quarter, I viewed as very favorable. Again, on the high-end of our expectations, despite kind of navigating through what we're seeing on the supply chain side, and then obviously, we had some really great traction, as we mentioned with FlashArray//C. And given that that's a newer product for us, you know, we had some gross margin pressure with FlashArray//C as well, which, you know, when you then look at the total gross margin profile is very positive for us. So, hopefully that is helpful for you. Wamsi Mohan: Yeah, no, it is. Thank you for that. And if I could follow-up, you know, we're seeing an increased proliferation in competitive offerings of as-a-service on-prem as-a-service, been around with , I think, Charlie, in your opening comments, you referred to some competitor offerings that are largely financing not necessarily technology enhancements, I was wondering how you would characterize, you know, the competitive landscape through the lens of these offerings? Thank you. Charlie Giancarlo : Yeah. Thanks. Thanks, Wamsi. So, largely, as you describe it, I'll put some additional detail behind that. You know, as you could tell from both the prepared remarks, I know that some of you perhaps have been attending our accelerate conferences well. What you see us are delivering is a true as-a-service experience from a technology perspective. The way that customers interact with it, the way that they're able to manipulate it, you know, through code and API. The fact that it is continually improving without disruption, very similar to any type of SaaS offering. You know, these are all service qualities. Whereas most of our competitors are very much focused on financial constructs to make it look like a service. And a , in my point of view, from my point of view is that when we provide Pure as-a-Service we're actually selling to our customer, an SLA, it's not an array, it doesn't have a product name, we are providing them a service level agreement that actually has . You know, we have to deliver the service level that we otherwise there are financial penalties to us. Our competitors tend to provide an objective with no teeth in it whatsoever, and there are named products in it. So, it really is a financing construct that they put together. You know, for us, the fact that its subscription, basically, is the fact that what we're all offering is a service. And so naturally it becomes a subscription. The last thing I'll mention is that it exists both on-prem and across the Cloud with CBS. The subscription – it doesn't matter where the customer puts their data. And they manage it all through the same management system. So, really is a pan Cloud true technical service, and therefore of course, a unified subscription very different than just the financial construct. Wamsi Mohan : Thanks Charlie. Operator: Your next question comes from Amit Daryanani with Evercore. Amit Daryanani: Good afternoon. Thanks for taking my questions. I have two as well. I guess first off, if I take your July quarter guide, the first half of the year, we're going to do, you know, 14.5% growth give or take. And you compare that to get fairly easy in the back half. And very simplistically, my tendency would be to say, simpler – easier compared with such as growth accelerates in the back half versus the first half. I would love to understand so what are the factors we should consider as we go into the back half because the compares would suggest we should see an acceleration, just what factors should we think about in the back half would be helpful? Kevan Krysler: Yeah, I'll start it more tactically. And Charlie, you know feel free to jump on in. And obviously, we are expecting some acceleration in second half, you know, with our – where we landed for Q1 in our guide for Q2, and then looking at what that plays out to for second half, we get some ramp on that. And obviously, just to highlight as well, that Q4 is generally our seasonally highest quarter in terms of sales, which is beneficial. But, you know, early signs of FlashArray//C, you know, I think that's going to parlay itself throughout the year. You know, and I think in particular, what was exciting across the board for us is what we saw from a broad based perspective. I mean, we saw really kind of everything driving with strength, whether that's enterprise, you know, commercial, you know, this is the first time we were really seeing some strength on commercial. And I think it's important to highlight that, we were very pleased to see that strength coming through this quarter, despite still being in a COVID environment. So that was great to see, obviously Pure as-a-Service and what we're seeing across the board with Portworx. So, it's really this balanced strength that we've seen in Q1 that we really do think that momentum, which really started in Q4 will continue throughout the year. But Charlie anything else you'd want to add to that? Charlie Giancarlo: Yeah, you know, I would say that, as we look at the year, Q1 was still – the quarter we've just had, a 100% under COVID rules. We're still, you know, while we might be kind of seeing maybe some green shoots come up, mostly around the promise of people getting back to the office, you know, we’re just three weeks into Q2, you know, we've yet to see any real pickup due to that phenomenon, where we believe we may see that in Q2, and then we'll be in a better position, you know, once we have our next quarter’s earnings of being able to say what the rest of the year, you know, might look like, but given that your all the experience we've had to date this year have been 100% under COVID rules, it a little bit hard to speculate as to the second half of the year. Amit Daryanani: Fair enough. Hopefully we don't have a third wave and for you folks. If I could follow-up on the commercial segment, I know you talked about seeing better momentum over there, can you just a bit what is driving the momentum here, is it just a better engagement with the channel or the sales something different? And then are the commercial customers now engaging with the different product set with PR versus what's your traditional enterprise customers have done? Charlie Giancarlo: I'd say there are a number of phenomenon’s that we're seeing at work. There's no question. I think we might have mentioned this in the prepared remarks that we're seeing increased – what we call partner sourced deals, and a large part of that is commercial. So, we will, we believe that that is going to only continue. We're really seeing good pickup by the partners overall. Second, we do think there's a bit of a resurgence of commercial that, you know, a number of them have gotten their feet underneath them, if you will, on this COVID environment, and are back in the market. We think that's just beginning, by the way. I don't think that's a big phenomena, but I think that was a large part of it. And I do think that, you know, our FlashArray//C, you know, is in fact selling not just into the enterprise, but into the commercial market as well. And so I think that also opens up a bit of that. So, I think it's a little bit of the three of those things, but I think a lot more to come. Kevan Krysler: Yeah. And I just had Pure as-a-Service too Charlie. Charlie Giancarlo: You know, that's right. I think the thought many may think that Pure as-a-Service largely appeals to large enterprise customers, but we have, you know, a set of programs for Pure as-a-Service specifically in the commercial market and it's doing very well there. Amit Daryanani: Perfect. Thank you very much. Charlie Giancarlo: Thank you. Operator: Your next question comes from Simon Leopold of Raymond James. Simon Leopold: Thanks for taking the question. I'm going to ask maybe a little bit of an odd one, but my perception on this call was that, Charlie, you sounded more upbeat on the FlashArray//C and my recollection is that on the prior call, you sounded more upbeat on FlashBlade, and I could be reading too much into it. But I guess I want to get a sense of whether that was intentional, and maybe how you think about, sort of the new product cycles here? Is something shifted in your thinking or how do we kind of separate these two trends? Thank you. Charlie Giancarlo: Yeah, yeah, no, we just like to share the wealth. And sometimes we'll spend a little bit more time on one than the other. So, you shouldn't take any, and I started to get – I was getting tired of hearing myself talk. So, I, you know, I didn't want to bore you all to death with, you know adding on even more. No, both products, we’re very excited about. They both fill different niches. The FlashBlade product, you know, a very highly scalable product, a scale out product, capable of supporting multiple, simultaneous workloads at unbelievable speed, you know, really good for scale out environments for AI, machine learning, analytics, you know, and rapid recovery all-in-one platform all at the same time. FlashArray//C, now, you know, with file. You know, a great what's called scale up platform now competitive with, you know, from a pricing level, with hybrid disk for that secondary tier. So, no. We're very proud of both platforms, you know, from quarter-to-quarter, you may hear us spend a little bit more time on, you know, with different products, you know, including Portworx rather, and FlashArray//X. So, you may hear us just spend different amounts of time, each quarter for color on each product. Kevan Krysler: And Simon, I'll just add that this was a quarter where we had strength across our business. And, you know, we had a plethora of options to choose from in terms of what we wanted to emphasize. And so the first thing is, is we just had strength across the board. And then, you know, obviously, see, we're very impressed with what's going on with C. And also say that, you know, flash player, acquired, you know, new unstructured data scale up customers at a much faster rate this quarter, that what we saw in the previous year-over-year quarter. So, good stuff happening all the way around in not meaning to ignore anyone in particular. Simon Leopold: Right. No, I appreciate it. And then follow ups, hopefully pretty easy, but where are you when you're thinking on your own organization, maybe returning to, sort of pre-COVID expense levels in the sense of reintroducing travel and items like that? How should we think about your own internal planning for those kinds of activity? Thanks. Charlie Giancarlo: Yeah, you can imagine that we are putting a lot of work and focus on that, you know, as we've discussed last quarter, we plan on adding to the bottom line of this year and years ahead. So, as we start to reintroduce some of those other expenses, obviously we’ll slow down other expenses. We do expect to grow into this. But I think you know, the annual guide we provided last quarter, you know, for modest bottom line growth, you know, and Kevan's addition to that commentary on this call, you should expect us to continue down that path. So, we expect overall that the percentage of your expenses to total will come down so that we add more to the bottom line. Simon Leopold: Thanks for taking the questions. Charlie Giancarlo: Thanks Simon. Operator: Your question comes from Tim Long of Barclays. Tim Long: Thank you. Tow if I could as well. First, can you talk a little bit about, kind of deal sizes and win rates, and you know, kind of some of those metrics? And if there's anything that's, kind of different when we're looking at, you know, the commercial side and the larger enterprise in those metrics view or any trends worth highlighting? And then second, I just wanted to dig into FlashArray//C a little bit more, it sounded pretty good in the quarter, double-digit, but overall was double-digits. So given as such a huge TAM, when we're thinking about this, as we go through the year and into next year, what's going to accelerate the growth rate there? Is it new used cases or, you know, pieces of your customer base that you got to penetrate further. So, what is it that kind of allows that product to really take on that much larger TAM? Thank you. Charlie Giancarlo: Sure, thanks. Win rates have stayed, you know, this is something we analyze all the time, win rates have stayed roughly steady. You know, it's very much in-line. You know, whenever our win rates get a bit too high, we worry, we're not in fights, and we did expand the number of fights that we’re in this quarter and win rates have held pretty steady and no big changes, vis-a-vis any one of our competitors. So, the win rate ones remains, you know, pretty much at historical rates. Kevan, do have any comment on deal size? I don't have that offhand. I think it's roughly the same, but I don't have any. Kevan Krysler: Yeah, overall deal size, where we were very pleased with what we saw on deal size now. Obviously, Q1 of last year, we were fortunate to get some really large deals, in part due to folks working on mission critical and addressing their needs on that front in terms of work for home. So, I would say that the significant larger deals were a little bit less this quarter, but I was really pleased with the balance we saw, you know, multitude of deals over a million dollars. So, nothing to highlight, you know, in terms of significance, other than it was broad based across the board. And in terms of what we saw in lesser larger deals that we saw. Charlie Giancarlo: C growth was, you’re right, double-digits is a very wide, wide range, but we also gave you a commentary that C has been and continues to be our fastest new product from a growth perspective. So, you can assume that it's a higher number – significantly higher number than our average than our growth overall as a company. It does open up that second tier market for us, both on the block side, but also somewhat on the file side. And as we add more and more features, we think is going to add even more market opportunity for us on the file side. So, it's still, you know, while on the block side, it's mature product. On the file side, it's still early days. And so, you know, we're going to see, I think we're going to see continued expansion of our opportunity there. Simon Leopold: Thank you. Charlie Giancarlo: Thank you. Operator: Your next question comes from Matt Sheerin of Stifel. Matt Sheerin: Yes. Thank you. I just wanted to ask regarding your commentary about the growth in the channel partners in the contribution to new customers, as well as the commercial market. What's behind that? I know that you put some new channel programs in place in the last couple of years, but what accounts for that traction? And do you see that that roster expanding further, particularly given the rollout of Azure where there’s some very strong support base in the channel? Charlie Giancarlo: Yeah. Thanks, Matt. We do. I think there's several reasons for it. One is, you know, we're a 100% partner model, meaning that we don't go direct. So, you know, one of the things that partners really like about us is that they know that we're fair and that we'll work with them and that when the going gets tough, you know, in a competitive environment, we're not going to just take it away from them. So, that loyalty is reciprocated by the partners themselves. I think we've continued to make it easier and easier for the partners to sell our product. First of all, the product itself is very straightforward, very simple requires relatively, you know, little busy work by the partners to set up and to be able to operate and to be able to service Of course, it's highly, highly reliable. And that also makes for a better customer experience, which, you know, partners care about the customer experience, because that's what gets the customer, the partner, more business from that same customer. So I think, you know, the values of the company itself that we represent high NPS, high reliability, the fact that we don't stray to a direct model when the going gets tough. And you're right, you know, we've worked a lot and will continue to work on our partner programs, especially aggressive growth programs, you know, in specialized expertise, programs with our partners to enable them to evolve as companies and enable them to, you know, provide a better experience overall for our customers. Matt Sheerin : Okay, thanks very much. Operator: Your next question comes from the line of Shannon Cross of Cross Research. Shannon Cross: Thank you very much. Just one for me, actually, and it's a little bit big picture. I'm curious, when you think about recurring revenue, which I believe is now at about 39% of revenue, and obviously growing given the mix shift that's going on, where do you see that topping out or how do you see the migration continuing? I'm just curious if we get to a certain point where customers would rather, you know, more of a CapEx kind of model or, you know, do you think this is something where eventually the entire model shifts there? Thank you. Kevan Krysler: It's a great question, Shannon and I'll start off. Look, our first big milestone that we're looking at is 50% of our revenue. It would be the big next milestone for us. And look, at the end of the day, though, it's still customer first in terms of what they prefer, with flexibility. So, we won't force a particular model on them in terms of how they want to consume our technology and drive their outcomes. But I do think 50% is a good target for us to have longer-term in terms of recurring revenue, especially with what we're seeing with the momentum around evergreen and Pure as-a-Service with our unified subscription coming on board, as we've talked about, with Cloud Block Store, both AWS and Azure I really will complement that, and then following that, and we've talked about that as well, which is Portworx, and our solutions around modern apps. Anything else you'd want to add, Charlie? Charlie Giancarlo: No. I think that covers it. Kevan Krysler: Okay. Shannon Cross: Curious what long-term sort of refers to? I mean, are you talking to a couple of years out or for…? Thank you. Kevan Krysler: Definitely. Yeah, that'd be a couple years out and how we're looking at that. And we'll give some more details on that in our Analyst Day, which we're contemplating in the month of September. Shannon Cross: Great, thank you. Kevan Krysler: Thank you, Shannon. Operator: Your next question comes from the line of Kathryn Huberty with Morgan Stanley. Kathryn Huberty: Thank you. Charlie, can you talk about some of the metrics that underscore your confidence in the second quarter? You know, for instance, what did pipeline growth look like? Where was backlog versus normal seasonality? What sort of linearity did you see in the quarter? Did some of those metrics and leading indicators that drive the confidence? And then I have a follow up? Charlie Giancarlo : Sure. Thank you, Katie. Great to speak to you. So, we saw a number of things. One is, you know, good linearity, but, frankly, improving, you know, through the quarter, so definitely seeing, you know, signs, as I said, green shoots and improvement, you know, as we went through the quarter, you know, we don't give specific details on pipeline, but, you know, pipeline that supports, you know, the Q2 guide that we've provided, you know, based on, you know, the kind of have metrics and analysis that we've done in the past, you know, and a hard look at that. We're not basing it tremendously on, you know, any kind of hope or dramatic improvement, you know, in the whole COVID situation in Q2. We think it's fairly balanced from the standpoint of, you know, not a lot of wishes, you know, or hopes, you know, for change to the positive. So, we think it's a, you know, sort of a prudent and a balanced guide. You know, good support from, you know, things that are, you know, near term deals, near term pipeline. So, you know, not nothing magic, I would say in the guide. You know, we believe we can get there with business as what we've seen over the last couple of quarters. Kathryn Huberty: Great, that's helpful. And then just a follow up, Kevan. As I think about NAND price inflation, in the past the industry and Pure in particular has been able to pass through the higher costs, you know, such that it's somewhat neutral to profit dollars, maybe some pressure on gross margin percentage, but it is typically fairly neutral. Is there a reason that you would expect it to play out differently this time? Or is it just a function that this is just getting started, and there's a lot of moving pieces within different cost buckets, and so you want to be conservative and assume that some of the upside you saw in the first quarter gets offset by this dynamic as you move through the year? Kevan Krysler: Katie, it's really much more of the latter that you articulated. And really, if this was just a NAND that we were looking at, I think we would follow that thesis perfectly in terms of how we think about NAND pricing be able to pass that off. But look, I think the issues we're seeing around the supply chain are much broader. And there's really, you know, broader, general inflationary concerns that we've talked about at a component level. I mean, the smallest components are driving, you know, our supply chain team, with a lot of work. And we do have inflation there. Now, the interesting thing in Q1 is we were successful, generally around increasing our ASPs. And I do think in part that's due to the inflation that we were seeing. The question is, can we maintain that with the broader supply chain constraints that we're seeing, and that remains to be seen. You know, obviously, we're confident in terms of our Q2 outlook, but that is the reason why we were only, you know, talking about taking half of our over achievement for operating profit for the annual view. Charlie Giancarlo: And if I might just insert, because I don't want there to be a confusion Katie, I know you're aware of this. But it's not as if we pass higher costs along, we've never raised prices. But what does happen is, because our deals are competitive, you know, we're competing every day against competition. And, you know, when their costs are higher like ours, you know, all the vendors become more cautious in terms of their discounting. And that's why the ASPs tend to float a little bit with cost, but it's never quite one for one and timing, you know, this quarter versus next quarter, you know, how long is people's supply contracts are in place for and so forth plays a role. So, there's always a little bit of movement because of timing. Kathryn Huberty: That makes perfect sense. Thank you. Kevan Krysler: Thank you, Katie. Operator: This concludes the question-and-answer session. At this time, I will turn the call back over to Charlie Giancarlo for closing remarks. Charlie Giancarlo: Thank you, operator. I want to thank everyone on the call again. I want to put out thanks to all of our customers and our prospects for the trust that they've put in the company and to our partners and suppliers for their really strong collaboration and their support. And also to all of our employees for the innovation hard work over the past many, many quarters and throughout the COVID period. We're excited to ourselves to be getting back to work later this summer. And we wish all of you on the call a very happy summer. Take care. Operator: This concludes today's conference call. You may now disconnect.
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Pure Storage (NYSE:PSTG) Targets Cyber Resilience with New Innovations

  • James Fish from Piper Sandler sets a new price target for Pure Storage (NYSE:PSTG) at $92, indicating an 11.4% potential increase.
  • Pure Storage unveils platform innovations at the Pure Accelerate event, focusing on cyber resilience through improved threat anticipation and recovery.
  • The company's strategy includes integrating native threat detection at the storage layer, distinguishing it from traditional cyber defense methods.

Pure Storage (NYSE:PSTG) is a prominent player in the data storage technology sector. The company is known for its innovative solutions that enhance data management and storage efficiency. Recently, James Fish from Piper Sandler set a new price target for PSTG at $92, which is an 11.4% increase from its current trading price of $82.59, as highlighted by TheFly.

Pure Storage is making strides in cyber resilience with new platform innovations. These advancements, revealed at the Pure//Accelerate event, focus on integrating with partners to improve threat anticipation and recovery. The company's strategy offers a unified defense system that detects and protects against cyber threats, ensuring organizations can recover confidently.

The stock's current price is $83.06, a slight decrease of 2.11% or $1.79. Today, PSTG has traded between $82.35 and $84.42. Over the past year, the stock has seen a high of $89.10 and a low of $34.51. Despite this fluctuation, the company's market capitalization stands at approximately $27.17 billion.

Pure Storage emphasizes the inadequacy of traditional cyber defense methods that exclude the storage platform. These methods often miss critical threat signals in data. By integrating native threat detection at the storage layer, Pure Storage enables quicker threat detection and remediation, setting it apart from competitors.

Today's trading volume for PSTG is 1,688,685 shares, indicating active investor interest. As Pure Storage continues to innovate and enhance its platform, the company's stock performance and market position remain closely watched by investors and analysts alike.

Pure Storage (NYSE:PSTG) Maintains Strong Position in Data Storage Industry

  • Pure Storage's stock price surged 26.56% post-earnings, reflecting strong financial performance and upward revision of full-year guidance.
  • Lake Street maintains a "Buy" rating, raising the price target from $70 to $80, indicating confidence in the company's growth trajectory.
  • Despite high valuation multiples, Pure Storage's expansion among Fortune 500 firms and development of high-margin businesses are key growth drivers.

Pure Storage (NYSE:PSTG) is a prominent player in the data storage industry, known for its innovative flash storage solutions. The company focuses on providing high-performance storage systems that cater to a wide range of customers, including large enterprises and hyperscalers. As of August 28, 2025, Lake Street maintained its "Buy" rating for PSTG, with the stock priced at $60.86. Lake Street also raised its price target from $70 to $80, as highlighted by TheFly.

Pure Storage's recent financial performance has been impressive. The company reported strong second-quarter results, exceeding both revenue and earnings per share expectations. This robust performance has led to an upward revision of its full-year guidance, contributing to a significant surge in its stock price post-earnings. The stock is currently priced at $77.03, reflecting a notable increase of 26.56% or $16.17.

The company's success in expanding its customer base, particularly among Fortune 500 firms, has been a key driver of its growth. Pure Storage is also developing a high-margin enterprise and hyperscaler business, which is expected to further enhance its profitability. Despite its operational strength and a solid net cash position, the current valuation multiples of Pure Storage are considered extremely high, which may pose a challenge for value-oriented investors.

PSTG's stock has experienced significant fluctuations, with today's trading range between a low of $69 and a high of $77.08, marking its highest price over the past year. The lowest price for the stock in the past year was $34.51. With a market capitalization of approximately $25.17 billion, Pure Storage continues to be a major player in the data storage industry. The trading volume for the stock today is 5,453,132 shares, indicating strong investor interest.

Pure Storage Beats Q4 Estimates but Shares Drop 10% on Disappointing Outlook

Pure Storage (NYSE:PSTG) delivered better-than-expected fourth-quarter results, but its stock tumbled more than 10% intra-day today as its full-year revenue forecast fell short of market expectations.

The enterprise data storage provider posted adjusted earnings per share of $0.45, surpassing analyst expectations of $0.41. Quarterly revenue climbed 11% year-over-year to $879.8 million, beating the projected $868.53 million.

For the full fiscal year 2025, Pure Storage achieved a milestone, generating $3.2 billion in revenue, marking a 12% YoY increase and surpassing the $3 billion mark for the first time.

However, its fiscal 2026 outlook failed to impress Wall Street. The company forecasts full-year revenue of $3.515 billion, just shy of the $3.52 billion consensus estimate.

Despite the market reaction, Pure Storage’s subscription services business continued its strong momentum, with fourth-quarter revenue rising 17% YoY to $385.1 million and full-year subscription revenue climbing 22% to $1.5 billion.

For the first quarter of fiscal 2026, the company expects revenue of $770 million, slightly ahead of analysts’ forecast of $768.29 million.

Pure Storage Beats Q4 Estimates but Shares Drop 10% on Disappointing Outlook

Pure Storage (NYSE:PSTG) delivered better-than-expected fourth-quarter results, but its stock tumbled more than 10% intra-day today as its full-year revenue forecast fell short of market expectations.

The enterprise data storage provider posted adjusted earnings per share of $0.45, surpassing analyst expectations of $0.41. Quarterly revenue climbed 11% year-over-year to $879.8 million, beating the projected $868.53 million.

For the full fiscal year 2025, Pure Storage achieved a milestone, generating $3.2 billion in revenue, marking a 12% YoY increase and surpassing the $3 billion mark for the first time.

However, its fiscal 2026 outlook failed to impress Wall Street. The company forecasts full-year revenue of $3.515 billion, just shy of the $3.52 billion consensus estimate.

Despite the market reaction, Pure Storage’s subscription services business continued its strong momentum, with fourth-quarter revenue rising 17% YoY to $385.1 million and full-year subscription revenue climbing 22% to $1.5 billion.

For the first quarter of fiscal 2026, the company expects revenue of $770 million, slightly ahead of analysts’ forecast of $768.29 million.

Pure Storage, Inc. (NYSE:PSTG) Surpasses Financial Expectations

  • Pure Storage reported earnings per share (EPS) of $0.50, beating the estimated $0.42, and a revenue of approximately $831 million, exceeding expectations.
  • Shares surged over 20% following the announcement, driven by the company's ability to exceed profit and sales expectations and an increase in subscription revenue.
  • The company's financial metrics, including a trailing twelve months (TTM) price-to-earnings (P/E) ratio of approximately 156.05 and a debt-to-equity ratio of 0.13, indicate strong investor confidence and a conservative capital structure.

Pure Storage, Inc. (NYSE:PSTG) is a company that specializes in data storage solutions, offering products and services that help businesses manage and store their data efficiently. The company competes with other tech giants in the storage industry, such as Dell Technologies and NetApp. On December 3, 2024, Pure Storage reported impressive financial results, with earnings per share (EPS) of $0.50, surpassing the estimated $0.42. The company also achieved a revenue of approximately $831 million, exceeding the estimated $815 million.

Following the announcement of these results, shares of Pure Storage surged over 20% on Wednesday. This significant increase was driven by the company's ability to exceed profit and sales expectations. Additionally, Pure Storage raised its future guidance, attributing this positive outlook to an increase in subscription revenue, as highlighted by the company's recent performance.

Pure Storage's financial metrics provide further insight into its market valuation. The company has a trailing twelve months (TTM) price-to-earnings (P/E) ratio of approximately 156.05, indicating that investors are willing to pay $156.05 for every dollar of earnings. This high P/E ratio suggests strong investor confidence in the company's future growth prospects. The price-to-sales ratio stands at 7.11, suggesting that the company's stock is valued at 7.11 times its sales.

The enterprise value to sales ratio is 6.88, reflecting the company's total valuation relative to its sales. This ratio helps investors understand how much they are paying for the company's sales. Additionally, the enterprise value to operating cash flow ratio is 24.33, providing insight into the company's valuation compared to its cash flow from operations. The earnings yield is 0.64%, representing the percentage of each dollar invested in the stock that was earned by the company.

Pure Storage maintains a conservative capital structure with a debt-to-equity ratio of 0.13, indicating a relatively low level of debt compared to its equity. This suggests that the company is not heavily reliant on borrowed funds, which can be a positive sign for investors. Furthermore, the current ratio is 1.99, implying that the company has nearly twice as many current assets as current liabilities, indicating good short-term financial health.

Pure Storage, Inc. (NYSE:PSTG) Surpasses Financial Expectations

  • Pure Storage reported earnings per share (EPS) of $0.50, beating the estimated $0.42, and a revenue of approximately $831 million, exceeding expectations.
  • Shares surged over 20% following the announcement, driven by the company's ability to exceed profit and sales expectations and an increase in subscription revenue.
  • The company's financial metrics, including a trailing twelve months (TTM) price-to-earnings (P/E) ratio of approximately 156.05 and a debt-to-equity ratio of 0.13, indicate strong investor confidence and a conservative capital structure.

Pure Storage, Inc. (NYSE:PSTG) is a company that specializes in data storage solutions, offering products and services that help businesses manage and store their data efficiently. The company competes with other tech giants in the storage industry, such as Dell Technologies and NetApp. On December 3, 2024, Pure Storage reported impressive financial results, with earnings per share (EPS) of $0.50, surpassing the estimated $0.42. The company also achieved a revenue of approximately $831 million, exceeding the estimated $815 million.

Following the announcement of these results, shares of Pure Storage surged over 20% on Wednesday. This significant increase was driven by the company's ability to exceed profit and sales expectations. Additionally, Pure Storage raised its future guidance, attributing this positive outlook to an increase in subscription revenue, as highlighted by the company's recent performance.

Pure Storage's financial metrics provide further insight into its market valuation. The company has a trailing twelve months (TTM) price-to-earnings (P/E) ratio of approximately 156.05, indicating that investors are willing to pay $156.05 for every dollar of earnings. This high P/E ratio suggests strong investor confidence in the company's future growth prospects. The price-to-sales ratio stands at 7.11, suggesting that the company's stock is valued at 7.11 times its sales.

The enterprise value to sales ratio is 6.88, reflecting the company's total valuation relative to its sales. This ratio helps investors understand how much they are paying for the company's sales. Additionally, the enterprise value to operating cash flow ratio is 24.33, providing insight into the company's valuation compared to its cash flow from operations. The earnings yield is 0.64%, representing the percentage of each dollar invested in the stock that was earned by the company.

Pure Storage maintains a conservative capital structure with a debt-to-equity ratio of 0.13, indicating a relatively low level of debt compared to its equity. This suggests that the company is not heavily reliant on borrowed funds, which can be a positive sign for investors. Furthermore, the current ratio is 1.99, implying that the company has nearly twice as many current assets as current liabilities, indicating good short-term financial health.

Pure Storage Stock Soars 22% After Strong Earnings and Optimistic Guidance

Pure Storage (NYSE:PSTG) experienced a surge in its stock price, climbing over 22% in pre-market today, following third-quarter earnings that exceeded expectations and the release of positive guidance for the fourth quarter and full fiscal year.

The company reported adjusted earnings per share of $0.50, surpassing analyst estimates by $0.09. Revenue for the quarter reached $831.1 million, beating the consensus forecast of $815 million and reflecting a 9% increase compared to the same period last year.

Subscription services emerged as a key growth driver, with revenue climbing 22% year-over-year to $376.4 million. Subscription annual recurring revenue (ARR) also rose 22%, reaching $1.6 billion, while remaining performance obligations (RPO) increased 16% year-over-year to $2.4 billion.

For the fourth quarter, Pure Storage projected revenue of $867 million, outpacing the Street consensus estimate of $856.9 million. The company also raised its full-year fiscal 2025 revenue forecast to $3.15 billion, exceeding analyst expectations of $3.13 billion.