Pure Storage Announces Third Quarter Fiscal 2020 Financial Results

MOUNTAIN VIEW, Calif., Nov. 21, 2019 /PRNewswire/ -- Pure Storage (NYSE: PSTG), the data solutions leader that helps innovators build a better world with data, today announced financial results for its third quarter ended October 31, 2019.

"Our continued market-beating growth is a result of ever more customers realizing the superior value that our solutions offer," said Charles Giancarlo, Chairman and CEO, Pure Storage. "With one integrated data platform, Pure's Modern Data Experience frees our customers to benefit from infrastructure that enables them to better manage their applications and data to fuel their digital transformation."

Key Financial Highlights: 

• Revenue: $428.4 million, up 15% Year-over-Year
• Gross margin: GAAP 70.2%; non-GAAP 71.7%
• Operating margin: GAAP -6.6%; non-GAAP 6.8%

Recent Company Highlights:

Pure's third quarter yielded industry-leading growth as customers continued to select Pure's modern approach that enables organizations to better utilize their data across both their private and public cloud infrastructures. Our product innovation performance continued this quarter as we released:

• VM Analytics Pro - a new feature bundle offered within Pure1®, allowing customers to map out their infrastructure more efficiently and intelligently discover and resolve issues.
• Cloud Block Store on AWS - enterprises can migrate applications to and from the public cloud with minimal re-architecture, and leverage public cloud economics for any use case.
• FlashArray//C - the industry's first capacity-optimized AFA, built to bring consistent all-flash performance with tier one reliability at disk economics with solid customer adoption including ServiceNow and European-based Idealista.
• DirectMemory Cache - a combination of Purity and Intel Optane storage class memory providing FlashArray//X customers with a software-based accelerant that delivers dramatic performance improvement for applications that require the ultimate in high-performance storage.
• Expanded FlashBlade^TM capacity and introduced the AI Data Hub and AIRI as-a-Service, extending traditional analytics and providing more performance and security at a lower cost.
• Pure as-a-Service - Full portfolio of integrated solutions, giving customers choice of both CAPEX and OPEX business models.

Organizational Changes

Today we announced that Kevan Krysler will be joining Pure as our new CFO. Most recently, Kevan serves as the Senior Vice President of Finance and Chief Accounting Officer at VMware and brings a wealth of experience both in finance and the industry. Prior to VMware, Kevan was a partner with KPMG, where he served both multi-national and emerging software and technology companies.

Third Quarter Fiscal 2020 Financial Highlights

The following tables summarize our consolidated financial results for the fiscal quarters ended October 31, 2019 and 2018 (in millions except percentages, per share amounts and headcount, unaudited):

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

Financial Outlook

Fourth quarter fiscal 2020 guidance:

• Revenue in the range of $484 million to $496 million, or $490 million at the midpoint
• Non-GAAP gross margin in the range of 67.5% to 70.5%, or 69.0% at the midpoint
• Non-GAAP operating margin in the range of 10.0% to 14.0%, or 12.0% at the midpoint

Full year fiscal 2020 guidance:

• Revenue in the range of $1.635 billion to $1.647 billion, or $1.641 billion at the midpoint
• Non-GAAP gross margin in the range of 69.2% to 70.1%, or 69.6% at the midpoint
• Non-GAAP operating margin in the range of 2.6% to 3.9%, or 3.2% at the midpoint

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, amortization of intangible assets acquired from acquisitions, any applicable anti-dilutive share count impact of our 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 the 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 will host a teleconference to discuss the third quarter fiscal 2020 results at 2:00 p.m. (PT) on November 21, 2019. Pure 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: (866) 393-4306 or (734) 385-2616 (for international callers) with passcode 8433329.
• 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 November 21, 2019, through December 5, 2019. The replay will be accessible by calling (855) 859-2056 or (404) 537-3406 (for international callers), with conference ID 8433329.

Upcoming Events

Pure will be presenting in the Credit Suisse 23rd Annual Tech Conference on December 3rd at 1:45 p.m. (MT), and the Raymond James Technology conference on December 9th at 3:00 p.m. (PT).  The presentations from these events will be webcast and all information will be available on the investor relation website at investor.purestorage.com

About Pure Storage

Pure Storage (NYSE: PSTG) helps modern organizations turn data into business advantage. Pure solutions enable a unified data experience that can adapt as customer needs evolve. One of the fastest-growing enterprise IT companies in history, Pure Storage helps customers put data to use while reducing the complexity and expense of managing the infrastructure behind it. Pure Storage provides a modern data experience that creates a common operating environment across multiple data centers and clouds, easing operations via APIs and intelligent AI-driven automation. And with a 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.

Pure Storage, Evergreen, FlashArray, FlashBlade, Pure1, 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 outlook for the fourth quarter and full year fiscal 2020, our momentum, growth prospects and expectations regarding product and technology differentiation, including our new products and innovative product cycle, 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, 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, 2019. All information provided in this release and in the attachments is as of November 21, 2019, 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 income (loss), non-GAAP operating margin, non-GAAP net income (loss), non-GAAP net income (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.

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, amortization of debt discount and debt issuance costs, and amortization of intangible assets acquired from acquisitions that may not be indicative of our ongoing core business operating results. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when analyzing historical performance and liquidity and planning, forecasting, and analyzing future periods. The presentation of these non-GAAP financial measures is not meant to be considered in isolation or as a substitute for, our financial results prepared in accordance with GAAP, and our non-GAAP measures may be different from non-GAAP measures used by other companies.

For a reconciliation of these non-GAAP financial measures to GAAP measures, please see the tables captioned "Reconciliations of non-GAAP results of operations to the nearest comparable GAAP measures" and "Reconciliation from net cash provided by operating activities to free cash flow and free cash flow without ESPP impact," included at the end of this release.

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):

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

Reconciliation from net cash provided by operating activities to free cash flow and free cash flow without ESPP impact (in thousands except percentages, unaudited):

SOURCE Pure Storage