Pure Storage Announces Second Quarter Fiscal 2022 Financial Results

Rhea-AI Summary

Pure Storage (NYSE: PSTG) reported strong financial results for Q2 fiscal 2022, ending August 1, 2021. Revenue reached $496.8 million, up 23% year-over-year, with subscription services revenue at $171.9 million, a 31% increase. The GAAP operating loss was $(33.9) million, while non-GAAP operating income stood at $46.6 million. Operating cash flow was $123.4 million and free cash flow $95.7 million. Guidance for Q3 is $530 million in revenue and $40 million in non-GAAP operating income.

Positive

• Revenue growth of 23% year-over-year.
• Subscription services revenue increased by 31%.
• Highest Q2 operating profit recorded.
• Total cash and investments reached $1.3 billion.
• Deferred revenue up 26% year-over-year.

Negative

• GAAP operating loss of $(33.9) million.
• GAAP operating margin at (6.8)%.

MOUNTAIN VIEW, Calif., Aug. 25, 2021 /PRNewswire/ -- Today Pure Storage (NYSE: PSTG), the IT pioneer that delivers storage as-a-service in a multi-cloud world, announced financial results for its fiscal second quarter ended August 1, 2021.

"With revenue growth exceeding 23%, and the highest Q2 operating profit in our history, it's clear that our long-term strategy to provide customers with modern data services is working," said Charles Giancarlo, Chairman and CEO, Pure Storage. "We are in a great innovation cycle with our portfolio and our sales momentum and execution have never been stronger."

Second Quarter Financial Highlights 

• Revenue $496.8 million, up 23% year-over-year
• Subscription services revenue $171.9 million, up 31% year-over-year
• GAAP gross margin 68.4%; non-GAAP gross margin 70.5%
• GAAP operating loss $(33.9) million; non-GAAP operating income $46.6 million
• GAAP operating margin (6.8)%; non-GAAP operating margin 9.4%
• Operating cash flow $123.4 million; free cash flow $95.7 million
• Total cash and investments $1.3 billion
• Deferred revenue $909.8 million, up 26% year-over-year
• Remaining performance obligations (RPO) $1.2 billion, up 25% year-over-year

"Our outstanding financial performance this quarter reflected strong sales execution and our long standing practice of providing leading edge solutions and best-in-class services to our customers," said Kevan Krysler, CFO, Pure Storage. "We saw strength from both our enterprise and commercial customers across our entire solutions portfolio."

Second Quarter Company Highlights and Achievements

• Industry Accolades: FlashArray was named a Gartner Peer Insights Customers' Choice for Primary Storage Arrays. Pure was named a Kubernetes storage leader in two GigaOm Radar Reports and recognized as leader in Enterprise Flash Array Storage and Object Storage categories by TrustRadius for the second consecutive year. 

• Pure achieved the highest total sales for any second quarter in the history of the company, growing more than 30% year-over-year.

• The company saw continued strength and momentum in Subscription Services revenue, up 31% year-over-year with strong growth in Pure as-a-Service, which almost doubled revenues compared to the prior year.

• Success in the large enterprise segment continues to grow, comprising over 50% of sales, with the top 10 customers spending more than $100 million in total.

Pure will host its next Financial Analyst Day on Tuesday, September 28, 2021, beginning at 10:00 am PT / 1:00 pm ET. The event has changed from in-person to live webcast and will feature presentations by Pure's executive leadership team, followed by a live Q&A session.

Details:

• Date: Tuesday, September 28, 2021
• Time: 10:00 am PT / 1:00 pm ET
• To register for the live virtual event, please visit:
  https://purestorage.com/company/events/financial-analyst-day-2021.html

The replay of the event and associated presentation materials will also be available at investor.purestorage.com for at least 90 days following the completion of the event.

Third Quarter and FY22 Guidance

	Q3 FY22	FY22
Revenue	$530 million	$2.04 billion
Non-GAAP Operating Income	$40 million	$150 million

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 to the most directly comparable GAAP measure because certain items that impact this measure are not within Pure's control and/or cannot be reasonably predicted. Accordingly, a reconciliation of this non-GAAP financial measure guidance to the corresponding GAAP measure is not available without unreasonable effort.

Conference Call Information

Pure will host a teleconference to discuss the second quarter fiscal 2022 results at 1:30 pm PT today, August 25, 2021. A live audio broadcast of the conference call will be available at the Pure Storage Investor Relations website, investor.purestorage.com. Pure will also post its earnings presentation to this website in advance of the call and post its prepared remarks to this website within 24 hours of completion of the call. A replay will be available following the call on the Pure Storage Investor Relations website and in addition, for two weeks at (800) 585-8367 (or 416-621-4642 for international callers) with passcode 5535534.

Upcoming Events

Pure is scheduled to participate virtually at the following investor conference:

Deutsche Bank Technology Conference 2021
Date: Friday, September 10, 2021
Pure Presenters: Charles Giancarlo, Chairman and CEO, Kevan Krysler, CFO and Rob Lee, CTO
Pure Participants: Sanjot Khurana, VP of Investor Relations

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

About Pure Storage

Pure Storage gives technologists their time back. Pure delivers a modern data experience that empowers organizations to run their operations as a true, automated, storage as-a-service model seamlessly across multiple clouds. Pure helps customers put data to use while reducing the complexity and expense of managing the infrastructure behind it. And with a certified 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

Pure Storage has been named a Leader in the 2020 Gartner Magic Quadrant for Primary Storage Arrays.

Connect with Pure

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Pure Storage, the Pure P Logo, Portworx, and the marks on the Pure Trademark List at www.purestorage.com/legal/productenduserinfo.html are trademarks of Pure Storage, Inc. Other names are trademarks of their respective owners. 

Forward Looking Statements

This press release contains forward-looking statements regarding our products, business and operations, including but not limited to our views relating to future period financial results, our continued momentum and growth potential, the scope and duration of the COVID-19 pandemic and its impact on our business operations, liquidity and capital resources, employees, customers, supply chain, financial results and the economy, our expectations regarding product and technology differentiation, including our new offerings, strategy and adoption of subscription services, growing customer adoption, the continued success of the Portworx technology, and other statements regarding our products, business, operations and results. Forward-looking statements are subject to known and unknown risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements.

Actual results may differ materially from the results predicted, and reported results should not be considered as an indication of future performance. The potential risks and uncertainties that could cause actual results to differ from the results predicted include, among others, those risks and uncertainties included under the caption "Risk Factors" and elsewhere in our filings and reports with the U.S. Securities and Exchange Commission, which are available on our Investor Relations website at investor.purestorage.com and on the SEC website at www.sec.gov. Additional information is also set forth in our Annual Report on Form 10-K for the year ended January 31, 2021. All information provided in this release and in the attachments is as of August 25, 2021, and Pure undertakes no duty to update this information unless required by law.

Non-GAAP Financial Measures

To supplement our unaudited condensed consolidated financial statements, which are prepared and presented in accordance with GAAP, Pure uses the following non-GAAP financial measures: non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income (loss), non-GAAP operating margin, non-GAAP net income (loss), non-GAAP net income (loss) per share, and free cash flow.

We use these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. Our management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance and liquidity by excluding certain expenses and expenditures such as stock-based compensation expense, payments to former shareholders of acquired companies, payroll tax expense related to stock-based activities, amortization of debt discount and debt issuance costs related to long-term debt, amortization of intangible assets acquired from acquisitions, acquisition-related transaction and integration expenses, restructuring activities, and expenses directly related to the COVID-19 pandemic 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 2022				Fiscal 2021
Assets
Current assets:
Cash and cash equivalents		$	340,252			$	337,147
Marketable securities		944,285				916,388
Accounts receivable, net of allowance of $960 and $1,033		358,460				460,879
Inventory		47,169				46,733
Deferred commissions, current		58,003				57,183
Prepaid expenses and other current assets		111,390				89,836
Total current assets		1,859,559				1,908,166
Property and equipment, net		184,048				163,041
Operating lease right-of-use-assets		122,638				134,668
Deferred commissions, non-current		137,962				130,741
Intangible assets, net		68,279				76,648
Goodwill		358,736				358,736
Restricted cash		10,544				10,544
Other assets, non-current		41,918				36,896
Total assets		$	2,783,684			$	2,819,440
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable		$	54,686			$	67,530
Accrued compensation and benefits		126,589				160,817
Accrued expenses and other liabilities		53,043				61,754
Operating lease liabilities, current		34,482				32,231
Deferred revenue, current		485,927				438,321
Total current liabilities		754,727				760,653
Long-term debt		770,662				755,814
Operating lease liabilities, non-current		106,693				120,361
Deferred revenue, non-current		423,887				405,376
Other liabilities, non-current		30,271				27,230
Total liabilities		2,086,240				2,069,434
Stockholders' equity:
Common stock and additional paid-in capital		2,388,446				2,307,608
Accumulated other comprehensive income		3,481				7,410
Accumulated deficit		(1,694,483)				(1,565,012)
Total stockholders' equity		697,444				750,006
Total liabilities and stockholders' equity		$	2,783,684			$	2,819,440

 

 

PURE STORAGE, INC. Condensed Consolidated Statements of Operations (in thousands, except per share data, unaudited)
	Second Quarter of Fiscal								First Two Quarters of Fiscal
	2022				2021				2022				2021
Revenue:
Product	$	324,935			$	272,309			$	574,823			$	519,248
Subscription services	171,896				131,414				334,715				251,594
Total revenue	496,831				403,723				909,538				770,842
Cost of revenue:
Product (1)	101,150				84,731				180,214				154,016
Subscription services(1)	55,654				44,266				107,431				85,275
Total cost of revenue	156,804				128,997				287,645				239,291
Gross profit	340,027				274,726				621,893				531,551
Operating expenses:
Research and development (1)	140,107				114,652				271,488				227,098
Sales and marketing (1)	190,386				171,434				373,882				344,867
General and administrative (1)	43,464				44,471				86,610				85,596
Restructuring and other (2)	—				8,288				—				22,990
Total operating expenses	373,957				338,845				731,980				680,551
Loss from operations	(33,930)				(64,119)				(110,087)				(149,000)
Other income (expense), net	(7,410)				1,603				(12,137)				(1,813)
Loss before provision for income taxes	(41,340)				(62,516)				(122,224)				(150,813)
Income tax provision	3,925				2,451				7,247				4,748
Net loss	$	(45,265)			$	(64,967)			$	(129,471)			$	(155,561)
Net loss per share attributable to common stockholders, basic and diluted	$	(0.16)			$	(0.25)			$	(0.46)			$	(0.59)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted	283,931				264,799				282,147				263,867
(1) Includes stock-based compensation expense as follows:
Cost of revenue -- product	$	1,566			$	990			$	2,913			$	1,986
Cost of revenue -- subscription services	5,137				3,686				9,543				7,078
Research and development	35,125				29,839				65,546				58,550
Sales and marketing	18,358				16,848				35,166				33,120
General and administrative	10,243				10,089				18,595				19,412
Total stock-based compensation expense	$	70,429			$	61,452			$	131,763			$	120,146
(2) Includes expenses related to restructuring and incremental expenses directly related to COVID-19

 

 

PURE STORAGE, INC. Condensed Consolidated Statements of Cash Flows (in thousands, unaudited)
	Second Quarter of Fiscal								First Two Quarters of Fiscal
	2022				2021				2022				2021
Cash flows from operating activities
Net loss	$	(45,265)			$	(64,967)			$	(129,471)			$	(155,561)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	19,273				16,464				38,099				31,597
Amortization of debt discount and debt issuance costs	7,751				7,189				15,154				14,125
Stock-based compensation expense	70,429				61,452				131,763				120,146
Impairment of long-lived assets	—				7,505				—				7,505
Other	3,895				267				6,516				1,972
Changes in operating assets and liabilities:
Accounts receivable, net	(30,874)				(17,545)				102,506				91,896
Inventory	266				3,105				(3,242)				1,735
Deferred commissions	(10,090)				(2,324)				(8,041)				(5,483)
Prepaid expenses and other assets	5,452				(20,091)				(24,955)				(26,389)
Operating lease right-of-use assets	7,237				7,475				14,818				14,181
Accounts payable	15,087				(6,796)				(9,267)				(21,090)
Accrued compensation and other liabilities	43,885				46,426				(40,952)				(3,217)
Operating lease liabilities	(7,308)				(6,145)				(14,205)				(13,071)
Deferred revenue	43,654				18,691				66,117				27,463
Net cash provided by operating activities	123,392				50,706				144,840				85,809
Cash flows from investing activities
Purchases of property and equipment	(27,670)				(24,994)				(55,499)				(48,776)
Purchases of marketable securities	(145,808)				(193,076)				(317,371)				(291,237)
Sales of marketable securities	28,501				73,694				114,038				91,351
Maturities of marketable securities	104,030				110,799				169,770				206,174
Net cash used in investing activities	(40,947)				(33,577)				(89,062)				(42,488)
Cash flows from financing activities
Net proceeds from exercise of stock options	3,147				12,383				11,163				21,658
Proceeds from issuance of common stock under employee stock purchase plan	—				—				17,726				16,021
Proceeds from borrowings	—				—				—				4,950
Repayments of borrowings	(261)				—				(605)				—
Tax withholding on vesting of equity awards	(1,514)				(1,467)				(6,564)				(2,841)
Repurchases of common stock	(44,373)				(20,024)				(74,393)				(90,143)
Net cash used in financing activities	(43,001)				(9,108)				(52,673)				(50,355)
Net increase (decrease) in cash, cash equivalents and restricted cash	39,444				8,021				3,105				(7,034)
Cash, cash equivalents and restricted cash, beginning of period	311,352				362,867				347,691				377,922
Cash, cash equivalents and restricted cash, end of period	$	350,796			$	370,888			$	350,796			$	370,888

 

 

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 2022																				Second Quarter of Fiscal 2021
		GAAP results				GAAP gross margin (a)			Adjustment						Non- GAAP results				Non- GAAP gross margin (b)			GAAP results				GAAP gross margin (a)			Adjustment						Non- GAAP results				Non- GAAP gross margin (b)
									$	1,566			(c)																$	990			(c)
									63				(d)																15				(d)
									—																				297				(e)
									3,067				(f)																2,003				(f)
Gross profit -- product		$	223,785			68.9	%		$	4,696					$	228,481			70.3	%		$	187,578			68.9	%		$	3,305					$	190,883			70.1	%
									$	5,137			(c)																$	3,686			(c)
									196				(d)																47				(d)
									24				(g)																—
Gross profit -- subscription services		$	116,242			67.6	%		$	5,357					$	121,599			70.7	%		$	87,148			66.3	%		$	3,733					$	90,881			69.2	%
									$	6,703			(c)																$	4,676			(c)
									259				(d)																62				(d)
									—																				297				(e)
									3,067				(f)																2,003				(f)
									24				(g)																—
Total gross profit		$	340,027			68.4	%		$	10,053					$	350,080			70.5	%		$	274,726			68.0	%		$	7,038					$	281,764			69.8	%

 

(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 hazard pay premiums directly related to COVID-19 pandemic.

(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 2022																				Second Quarter of Fiscal 2021
	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)
								$	70,429			(c)																$	61,452			(c)
								4,229				(d)																2,009				(d)
								2,081				(e)																1,259				(e)
								—																				306				(f)
								—																				8,279				(g)
								3,600				(h)																2,003				(h)
								171				(i)																—
Operating Income (loss)	$	(33,930)			-6.8	%		$	80,510					$	46,580			9.4	%		$	(64,119)			-15.9	%		$	75,308				$	11,189			2.8	%
								$	70,429			(c)																$	61,452			(c)
								4,229				(d)																2,009				(d)
								2,081				(e)																1,259				(e)
								—																				306				(f)
								—																				8,279				(g)
								3,600				(h)																2,003				(h)
								171				(i)																—
								7,751				(j)																7,189				(j)
Net income (loss)	$	(45,265)						$	88,261					$	42,996						$	(64,967)						$	82,497				$	17,530
Net income (loss) per share -- diluted	$	(0.16)												$	0.14						$	(0.25)											$	0.06
Weighted- average shares used in per share calculation -- diluted	283,931							16,286				(k)		300,217							264,799							17,698				(k)	282,497

 

(a) GAAP operating margin is defined as GAAP operating loss divided by revenue.

(b) Non-GAAP operating margin is defined as non-GAAP operating loss divided by revenue.

(c) To eliminate stock-based compensation expense.

(d) To eliminate payments to former shareholders of acquired companies.

(e) To eliminate payroll tax expense related to stock-based activities.

(f) To eliminate marketing commitments no longer deemed to have value and hazard pay premiums directly related to COVID-19 pandemic.

(g) To eliminate restructuring expenses related to (1) impairment of long-lived assets associated with the cease-use of certain facilities and (2) workforce reduction.

(h) To eliminate amortization expense of acquired intangible assets.

(i) To eliminate acquisition-related integration expenses.

(j) To eliminate amortization expense of debt discount and debt issuance costs related to our long-term debt.

(k) 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
	2022				2021
Net cash provided by operating activities	$	123,392			$	50,706
Less: purchases of property and equipment	(27,670)				(24,994)
Free cash flow (non-GAAP)	$	95,722			$	25,712

 

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SOURCE Pure Storage

FAQ

What were Pure Storage's Q2 revenue results for fiscal 2022?

Pure Storage reported Q2 revenue of $496.8 million, up 23% year-over-year.

What is the guidance for Pure Storage's Q3 fiscal 2022?

Pure Storage has guided for Q3 revenue of $530 million.

How did subscription services perform for Pure Storage in Q2?

Subscription services revenue increased by 31% year-over-year, reaching $171.9 million.

What was Pure Storage's GAAP operating loss for Q2?

Pure Storage reported a GAAP operating loss of $(33.9) million for Q2.

What cash flow did Pure Storage generate in Q2?

Pure Storage generated $123.4 million in operating cash flow and $95.7 million in free cash flow.