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| 8-K - 8-K - Pure Storage, Inc. | pstg8kq42018.htm |
Exhibit 99.1
Pure Storage Announces Record Fourth Quarter and Full Year Fiscal 2018 Financial Results
MOUNTAIN VIEW, Calif., March 1, 2018 -- Pure Storage (NYSE: PSTG) today announced financial results for its fourth quarter and full year ended January 31, 2018.
Key quarterly financial highlights include:
• | Record revenue: $338.3 million, up 48% Y/Y, 2% ahead of the midpoint of guidance; Record full year revenue: $1.023 billion, up 41% Y/Y. |
• | Record operating margin: -4.7% GAAP; 8.3% non-GAAP, up 13.9 ppts and 10.2 ppts Y/Y, respectively, marking Pure’s first profitable quarter on a non-GAAP basis. |
• | Record operating cash flow of $59.0 million and free cash flow of $38.3 million, and record full-year operating cash flow of $72.8 million and free cash flow of $7.7 million. |
"This quarter marks an important milestone for Pure surpassing $1 billion in annual sales and achieving non-GAAP profitability," said Charles Giancarlo, CEO of Pure Storage. "Momentum in the business is strong as we continue our drive to help customers turn data into intelligence and advantage."
Approximately 500 customers joined Pure Storage in the quarter, increasing the total to more than 4,500 organizations. A few new customer wins in the quarter include: Advance Financial Corporation, Jenny Craig, Mid America Pet Food, Portland Trail Blazers, Suzuki Motor of America and the Texas Rangers.
“Pure Storage delivered another outstanding quarter to finish the year, growing nearly 50% over the year-ago quarter” said Tim Riitters, CFO of Pure Storage. “As we look ahead to next year, we remain focused on driving both growth and leverage in our business, including achieving our first full-year of non-GAAP profitability.”
Fourth Quarter Fiscal 2018 Financial Highlights
The following tables summarize our consolidated financial results for the fiscal quarters ended January 31, 2018 and 2017 (in millions except percentages and per share amounts, unaudited):
GAAP Quarterly Financial Information | ||||||
Three Months Ended January 31, 2018 | Three Months Ended January 31, 2017 | Y/Y Change | ||||
Revenue | $338.3 | $227.9 | 48% | |||
Gross Margin | 65.1% | 65.3% | -0.2 ppts | |||
Product Gross Margin | 65.4% | 66.5% | -1.1 ppts | |||
Support Gross Margin | 63.9% | 59.6% | 4.3 ppts | |||
Operating Loss | -$15.8 | -$42.5 | $26.7 | |||
Operating Margin | -4.7% | -18.6% | 13.9 ppts | |||
Net Loss | -$11.9 | -$42.9 | $31.0 | |||
Net Loss per Share (Basic and Diluted) | -$0.05 | -$0.21 | $0.16 | |||
Weighted-Average Shares (Basic and Diluted) | 218.0 | 201.0 | N/A | |||
Headcount | > 2,100 | > 1,700 | ~400 | |||
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Non-GAAP Quarterly Financial Information | ||||||
Three Months Ended January 31, 2018 | Three Months Ended January 31, 2017 | Y/Y Change | ||||
Gross Margin | 66.2% | 66.1% | 0.1 ppts | |||
Product Gross Margin | 65.7% | 66.6% | -0.9 ppts | |||
Support Gross Margin | 68.3% | 63.6% | 4.7 ppts | |||
Operating Income (Loss) | $27.9 | -$4.4 | $32.3 | |||
Operating Margin | 8.3% | -1.9% | 10.2 ppts | |||
Net Income (Loss) | $31.8 | -$4.8 | $36.6 | |||
Net Income (Loss) per Share (Diluted) | $0.13 | -$0.02 | $0.15 | |||
Weighted-Average Shares (Diluted) | 250.8 | 201.0 | N/A | |||
A reconciliation between GAAP and non-GAAP information is provided at the end of this release.
Financial Outlook
Our first quarter and full year fiscal 2019 guidance numbers are based on the new revenue standard (ASC 606) that is effective beginning February 1, 2018. Please refer to our earnings presentation on investor.purestorage.com for further information on the adoption impact of ASC 606 on our results of operations.
Pure Storage’s first quarter fiscal 2019 guidance is as follows:
• | Revenue in the range of $246 million to $254 million |
• | Non-GAAP gross margin in the range of 63.5% to 66.5% |
• | Non-GAAP operating margin in the range of -13.0% to -9.0% |
Pure Storage’s full year fiscal 2019 guidance is as follows:
• | Revenue in the range of $1.310 billion to $1.360 billion |
• | Non-GAAP gross margin in the range of 63.5% to 66.5% |
• | Non-GAAP operating margin in the range of 0% to 4% |
All forward-looking non-GAAP financial measures contained in this section titled “Financial Outlook” exclude stock-based compensation expense, payroll tax expense related to stock-based activities and, as applicable, other special items. We have not reconciled guidance for non-GAAP gross margin and non-GAAP operating margin to their most directly comparable GAAP measures because such items that impact these measures are not within our control and/or cannot be reasonably predicted. Accordingly, a reconciliation of the non-GAAP financial measure guidance to the corresponding GAAP measures is not available without unreasonable effort.
Conference Call Information
Pure Storage will host a teleconference to discuss the fourth quarter and fiscal year 2018 results at 2:00 p.m. (PT) on March 1, 2018. Pure Storage will post its supplemental earnings presentation to the investor relations website at investor.purestorage.com following the conference call.
Teleconference details are as follows:
• | To Listen via Telephone: (833) 245-9656 or (647) 689-4543 (for international callers). |
• | To Listen via the Internet: A live and replay audio broadcast of the conference call with corresponding slides will be available at investor.purestorage.com. |
• | Replay: A telephone playback of this conference call is scheduled to be available two hours after the |
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call ends on Thursday, March 1, 2018, through March 15, 2018. The replay will be accessible by calling (800) 585-8367 or (416) 621-4642 (for international callers), with conference ID 8485299. The call runs 24 hours per day, including weekends.
Upcoming Investor Event
Pure Storage will be participating in an upcoming investor discussion on March 6, 2018 at 7:30am ET in Orlando, FL. Pure Storage will post a link to the live webcast on the investor relations website at investor.purestorage.com for both live and archived events.
About Pure Storage
Pure Storage (NYSE:PSTG) helps customers build a better world with data. The Pure Storage Data Platform, powered by all-flash storage, offers a simpler, more effective, and more flexible solution for cloud infrastructure and data-rich applications like artificial intelligence, machine learning and big data analytics. With Satmetrix-certified NPS performance in the top 1% of B2B companies, Pure has an ever-expanding range of customers who are some of the happiest in the world.
Connect with Pure Storage:
Read the blog
Converse on Twitter
Follow on LinkedIn
Analyst Recognition:
Gartner Magic Quadrant for Solid-State Arrays
IDC MarketScape for All-Flash Arrays
Pure Storage, Evergreen, FlashBlade, FlashStack and the "P" Logo mark are trademarks of Pure Storage, Inc. All other trademarks or names referenced in this document are the property of their respective owners.
Forward Looking Statements
This press release contains forward-looking statements regarding our products, business and operations, including our growth prospects and expectations regarding technology differentiation, and our outlook for the first quarter and full year fiscal 2019, including our first full-year of non-GAAP profitability, and statements regarding our products, business, operations and results. Forward-looking statements are subject to known and unknown risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements. Actual results may differ materially from the results predicted, and reported results should not be considered as an indication of future performance. The potential risks and uncertainties that could cause actual results to differ from the results predicted include, among others, those risks and uncertainties included under the captions "Risk Factors" and elsewhere in our filings and reports with the U.S. Securities and Exchange Commission, including, which are available on our investor relations website at investor.purestorage.com and on the SEC website at www.sec.gov. Additional information will also be set forth in our Annual Report on Form 10-K for the year ended January 31, 2018. All information provided in this release and in the attachments is as of March 1, 2018, and we undertake no duty to update this information unless required by law.
Non-GAAP Financial Measures
To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with GAAP, we use the following non-GAAP financial measures: non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income (loss), non-GAAP operating margin, non-GAAP net income (loss), non-GAAP net income (loss) per share, free cash flow, and free cash flow as a percentage of revenue. In computing these non-GAAP financial measures, we exclude the effects of stock-based compensation expense and payroll tax expense related to stock-based activities. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial
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information prepared and presented in accordance with GAAP.
We use these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. Our management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance and liquidity by excluding certain expenses and expenditures such as stock-based compensation expense 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," included at the end of this release.
Matthew Danziger - Investor Relations, Pure Storage
Tel: (650) 429-0456
ir@purestorage.com
Rena Fallstrom - Media Contact, Pure Storage
Tel: (408) 203-3945
pr@purestorage.com
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PURE STORAGE, INC.
Condensed Consolidated Balance Sheets
(in thousands)
January 31, 2018 | January 31, 2017 | |||||||
(unaudited) | ||||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 244,057 | $ | 183,675 | ||||
Marketable securities | 353,289 | 362,986 | ||||||
Accounts receivable, net of allowance of $1,062 and $2,000 as of January 31, 2018 and 2017 | 243,001 | 168,978 | ||||||
Inventory | 34,497 | 23,498 | ||||||
Deferred commissions, current | 22,437 | 15,787 | ||||||
Prepaid expenses and other current assets | 47,552 | 25,157 | ||||||
Total current assets | 944,833 | 780,081 | ||||||
Property and equipment, net | 89,142 | 81,695 | ||||||
Intangible assets, net | 5,057 | 6,560 | ||||||
Deferred income taxes, non-current | 1,060 | 844 | ||||||
Other assets, non-current | 39,315 | 30,565 | ||||||
Total assets | $ | 1,079,407 | $ | 899,745 | ||||
Liabilities and stockholders' equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 84,420 | $ | 52,719 | ||||
Accrued compensation and benefits | 59,898 | 39,252 | ||||||
Accrued expenses and other liabilities | 26,829 | 21,697 | ||||||
Deferred revenue, current | 209,377 | 158,095 | ||||||
Liability related to early exercised stock options | 320 | 1,362 | ||||||
Total current liabilities | 380,844 | 273,125 | ||||||
Deferred revenue, non-current | 196,632 | 145,031 | ||||||
Other liabilities, non-current | 4,025 | 3,159 | ||||||
Total liabilities | 581,501 | 421,315 | ||||||
Stockholders’ equity: | ||||||||
Common stock and additional paid-in capital | 1,479,905 | 1,281,472 | ||||||
Accumulated other comprehensive loss | (1,917 | ) | (562 | ) | ||||
Accumulated deficit | (980,082 | ) | (802,480 | ) | ||||
Total stockholders' equity | 497,906 | 478,430 | ||||||
Total liabilities and stockholders' equity | $ | 1,079,407 | $ | 899,745 | ||||
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PURE STORAGE, INC.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
Three Months Ended January 31, | Twelve Months Ended January 31, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
(unaudited) | ||||||||||||||||
Revenue: | ||||||||||||||||
Product | $ | 277,351 | $ | 186,820 | $ | 813,985 | $ | 590,001 | ||||||||
Support | 60,902 | 41,040 | 209,034 | 137,976 | ||||||||||||
Total revenue | 338,253 | 227,860 | 1,023,019 | 727,977 | ||||||||||||
Cost of revenue: | ||||||||||||||||
Product (1) | 95,953 | 62,532 | 275,242 | 194,150 | ||||||||||||
Support (1) | 21,970 | 16,598 | 78,539 | 58,129 | ||||||||||||
Total cost of revenue | 117,923 | 79,130 | 353,781 | 252,279 | ||||||||||||
Gross profit | 220,330 | 148,730 | 669,238 | 475,698 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research and development (1) | 75,480 | 72,632 | 279,196 | 245,817 | ||||||||||||
Sales and marketing (1) | 133,134 | 97,962 | 480,030 | 360,035 | ||||||||||||
General and administrative (1) | 27,506 | 20,631 | 95,170 | 84,652 | ||||||||||||
Legal settlement (2) | — | — | — | 30,000 | ||||||||||||
Total operating expenses | 236,120 | 191,225 | 854,396 | 720,504 | ||||||||||||
Loss from operations | (15,790 | ) | (42,495 | ) | (185,158 | ) | (244,806 | ) | ||||||||
Other income, net | 5,046 | 500 | 11,445 | 1,627 | ||||||||||||
Loss before provision for income taxes | (10,744 | ) | (41,995 | ) | (173,713 | ) | (243,179 | ) | ||||||||
Provision for income taxes | 1,134 | 920 | 3,889 | 1,887 | ||||||||||||
Net loss | $ | (11,878 | ) | $ | (42,915 | ) | $ | (177,602 | ) | $ | (245,066 | ) | ||||
Net loss per share attributable to common stockholders, basic and diluted | $ | (0.05 | ) | $ | (0.21 | ) | $ | (0.84 | ) | $ | (1.26 | ) | ||||
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted | 218,009 | 201,024 | 211,609 | 194,714 | ||||||||||||
(1) Includes stock-based compensation expense as follows:
Cost of revenue -- product | $ | 732 | $ | 176 | $ | 1,630 | $ | 601 | ||||||||
Cost of revenue -- support | 2,609 | 1,657 | 9,050 | 5,639 | ||||||||||||
Research and development | 19,597 | 22,620 | 71,229 | 63,495 | ||||||||||||
Sales and marketing | 13,518 | 9,598 | 47,687 | 34,317 | ||||||||||||
General and administrative | 6,297 | 3,488 | 21,077 | 12,616 | ||||||||||||
Total stock-based compensation expense | $ | 42,753 | $ | 37,539 | $ | 150,673 | $ | 116,668 | ||||||||
(2) Represents a one-time charge for our legal settlement with Dell, Inc.
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PURE STORAGE, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
Three Months Ended January 31, | Twelve Months Ended January 31, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
(unaudited) | ||||||||||||||||
Cash flows from operating activities | ||||||||||||||||
Net loss | $ | (11,878 | ) | $ | (42,915 | ) | $ | (177,602 | ) | $ | (245,066 | ) | ||||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||||||||||
Depreciation and amortization | 16,219 | 14,225 | 61,744 | 50,203 | ||||||||||||
Stock-based compensation expense | 42,754 | 37,539 | 150,674 | 116,668 | ||||||||||||
Other | 1,175 | 533 | 2,054 | 1,584 | ||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||
Accounts receivable, net | (40,875 | ) | (5,863 | ) | (74,505 | ) | (44,049 | ) | ||||||||
Inventory | 1,719 | (3,587 | ) | (12,595 | ) | (3,776 | ) | |||||||||
Deferred commissions | (4,368 | ) | (2,584 | ) | (11,997 | ) | (740 | ) | ||||||||
Prepaid expenses and other assets | (23,687 | ) | (6,172 | ) | (23,799 | ) | (6,133 | ) | ||||||||
Accounts payable | 17,470 | 7,005 | 29,278 | 10,644 | ||||||||||||
Accrued compensation and other liabilities | 11,992 | 12,595 | 26,621 | 19,381 | ||||||||||||
Deferred revenue | 48,479 | 26,742 | 102,883 | 86,922 | ||||||||||||
Net cash provided by (used in) operating activities | 59,000 | 37,518 | 72,756 | (14,362 | ) | |||||||||||
Cash flows from investing activities | ||||||||||||||||
Purchases of property and equipment | (20,709 | ) | (12,171 | ) | (65,060 | ) | (76,773 | ) | ||||||||
Purchases of intangible assets | — | — | — | (1,000 | ) | |||||||||||
Purchases of marketable securities | (50,658 | ) | (43,159 | ) | (202,656 | ) | (526,717 | ) | ||||||||
Sales of marketable securities | 20,422 | 34,539 | 66,489 | 114,354 | ||||||||||||
Maturities of marketable securities | 45,047 | 10,300 | 144,068 | 48,513 | ||||||||||||
Net increase in restricted cash | — | — | (2,029 | ) | (5,600 | ) | ||||||||||
Net cash used in investing activities | (5,898 | ) | (10,491 | ) | (59,188 | ) | (447,223 | ) | ||||||||
Cash flows from financing activities | ||||||||||||||||
Net proceeds from exercise of stock options | 8,916 | 4,187 | 24,677 | 14,912 | ||||||||||||
Proceeds from issuance of common stock under employee stock purchase plan | — | — | 22,137 | 25,606 | ||||||||||||
Net cash provided by financing activities | 8,916 | 4,187 | 46,814 | 40,518 | ||||||||||||
Net increase (decrease) in cash and cash equivalents | 62,018 | 31,214 | 60,382 | (421,067 | ) | |||||||||||
Cash and cash equivalents, beginning of period | 182,039 | 152,461 | 183,675 | 604,742 | ||||||||||||
Cash and cash equivalents, end of period | $ | 244,057 | $ | 183,675 | $ | 244,057 | $ | 183,675 | ||||||||
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Reconciliations of non-GAAP results of operations to the nearest comparable GAAP measures
The following table presents non-GAAP gross margins by revenue source before certain items (in thousands except percentages, unaudited):
Three Months Ended January 31, 2018 | Three Months Ended January 31, 2017 | ||||||||||||||||||||||||||||||||||
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) | ||||||||||||||||||||||||||
$ | 732 | (c) | $ | 176 | (c) | ||||||||||||||||||||||||||||||
8 | (d) | 1 | (d) | ||||||||||||||||||||||||||||||||
Gross profit -- product | $ | 181,398 | 65.4 | % | $ | 740 | $ | 182,138 | 65.7 | % | $ | 124,288 | 66.5 | % | $ | 177 | $ | 124,465 | 66.6 | % | |||||||||||||||
$ | 2,609 | (c) | $ | 1,657 | (c) | ||||||||||||||||||||||||||||||
82 | (d) | 22 | (d) | ||||||||||||||||||||||||||||||||
Gross profit -- support | $ | 38,932 | 63.9 | % | $ | 2,691 | $ | 41,623 | 68.3 | % | $ | 24,442 | 59.6 | % | $ | 1,679 | $ | 26,121 | 63.6 | % | |||||||||||||||
$ | 3,341 | (c) | $ | 1,833 | (c) | ||||||||||||||||||||||||||||||
90 | (d) | 23 | (d) | ||||||||||||||||||||||||||||||||
Total gross profit | $ | 220,330 | 65.1 | % | $ | 3,431 | $ | 223,761 | 66.2 | % | $ | 148,730 | 65.3 | % | $ | 1,856 | $ | 150,586 | 66.1 | % | |||||||||||||||
(a) GAAP gross margin is defined as gross profit divided by revenue.
(b) Non-GAAP gross margin is defined as non-GAAP gross profit divided by revenue.
(c) To eliminate stock-based compensation expense.
(d) To eliminate payroll tax expense related to stock-based activities.
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The following table presents certain non-GAAP consolidated results before certain items (in thousands, except per share amounts and percentages, unaudited):
Three Months Ended January 31, 2018 | Three Months Ended January 31, 2017 | ||||||||||||||||||||||||||||||||||
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) | ||||||||||||||||||||||||||
$ | 42,753 | (c) | $ | 37,539 | (c) | ||||||||||||||||||||||||||||||
973 | (d) | 601 | (d) | ||||||||||||||||||||||||||||||||
Income (loss) from operations | $ | (15,790 | ) | -4.7 | % | $ | 43,726 | $ | 27,936 | 8.3 | % | $ | (42,495 | ) | -18.6 | % | $ | 38,140 | $ | (4,355 | ) | -1.9 | % | ||||||||||||
$ | 42,753 | (c) | $ | 37,539 | (c) | ||||||||||||||||||||||||||||||
973 | (d) | 601 | (d) | ||||||||||||||||||||||||||||||||
Net income (loss) | $ | (11,878 | ) | $ | 43,726 | $ | 31,848 | $ | (42,915 | ) | $ | 38,140 | $ | (4,775 | ) | ||||||||||||||||||||
Net income (loss) per share -- diluted | $ | (0.05 | ) | $ | 0.13 | $ | (0.21 | ) | $ | (0.02 | ) | ||||||||||||||||||||||||
Weighted-average shares used in per share calculation -- diluted | 218,009 | 32,752 | (e) | 250,761 | 201,024 | 201,024 | |||||||||||||||||||||||||||||
(a) GAAP operating margin is defined as loss from operations divided by revenue.
(b) Non-GAAP operating margin is defined as non-GAAP income (loss) from operations divided by revenue.
(c) To eliminate stock-based compensation expense.
(d) To eliminate payroll tax expense related to stock-based activities.
(e) To include effect of dilutive securities (employee stock options, restricted stock units, and employee stock purchase plan).
Reconciliation from net cash provided by operating activities to free cash flow (in thousands except percentages, unaudited):
Three Months Ended January 31, | ||||||||
2018 | 2017 | |||||||
Net cash provided by operating activities | $ | 59,000 | $ | 37,518 | ||||
Less: purchases of property and equipment | (20,709 | ) | (12,171 | ) | ||||
Free cash flow | $ | 38,291 | $ | 25,347 | ||||
Free cash flow as % of revenue | 11.3 | % | 11.1 | % | ||||
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