Pure Storage: Fiscal 1Q21 Financial Results

(in $ million)	1Q20	1Q21	Growth
Revenue	326.7	367.1	*12%*
Net income (loss)	(100.3)	(90.6)

Pure Storage, Inc. announced financial results for its first quarter ended May 3, 2020.

“We are extremely proud of this quarter’s solid results and growth, especially during the current global crisis,” said Charles Giancarlo, chairman and CEO. “The entire company adapted quickly and delivered the technology and services that our customers needed to keep their organizations up and running. Pure continues to deliver on the Modern Data Experience to enable customers to transform their storage operations to be simple, reliable, fast, and flexible.”

1FQ21 Highlights
• Revenue $367.1 million, up 12% Y/Y
• Subscription Services revenue $120.2 million, up 37% Y/Y
• GAAP gross margin 70.0%; non-GAAP gross margin 71.9%
• GAAP operating loss $(84.9) million; non-GAAP operating loss $(5.4) million
• Operating cash flow was $35.1 million, up $28.5 million Y/Y
• Free cash flow was $11.3 million, up $29.0 million Y/Y
• Total cash and investments of $1.3 billion

“Pure delivered solid financial results during the quarter despite a very challenging environment created by Covid-19,” said Kevan Krysler, CFO. “We were pleased that our customers continue to depend on the simplicity and reliability of our solutions and our resilient global supply chain during this critical time. Subscription Services continue to reflect strength with our Evergreen, Pure as-a-Service and Cloud Block Store offerings.“

Guidance
Pure had a solid 1FQ21 and the core fundamentals of its business remain strong. However, the company is withdrawing its FY21 annual guidance and will not provide specific 2FQ21 guidance due to the global economic contraction caused by Covid-19.

The company’s current view of fiscal 2FQ21 outcomes, which should not be viewed as guidance, is that sales will be near flat Y/Y and operating profit will be near break-even.

As the company progresses through FY21, it expects to continue to see strength in sales and adoption of its subscription services. Pure as-a-Service and Cloud Block Store unified subscription offerings continue to gain momentum, increasing flexibility for customers by providing a cloud-like business model.

Comments

Total revenue for the quarter is down as much as 25% Q/Q (as expected) but up 12% Y/Y. Note that first financial quarter is usually the worst one of company's fiscal year.

Losses never stop since company's inception and increasing from 4.7 million to $9.6 million Q/Q, reaching a global sum of of around 1.2 billion as the company continues to focus essentially on market share vs. main rivals Dell and NetApp, not profitability. For example, NetApp announced much more, $656 million, for AFA revenue in its most recent three-month fiscal period.

Total deferred revenue for 1FQ21 is $706 million, compared to $697 million in 4FQ20 and $564 million 1FQ20.

Product revenue was $247 million growing 3% Y/Y and subscription services revenue was $120 million growing yearly 37%, which includes revenues from Evergreen subscriptions, Pure as-a-Service and Cloud Block Store.

Subscription services revenue represented 33% of total revenue during 1FQ21. Revenue in USA was $264 million growing at 15% Y/Y and international revenue was $103 million growing yearly 5%.

FlashBlade solution sales to both new and existing customers grew Y/Y and now represent approximately 15% of total sales with nearly 100 organizations to date each spending more than $1 million in FlashBlade.

New customers acquired during 1FQ21 were 300 compared to 350 during 1FQ20 and 500 in 4FQ20.

Total headcount at the end of the quarter was 3,500 employees, compared to 3,400 employees at the end of FY20 and 3,150 employees at the end 1FQ20.

Matt Danziger, company's head of investor relations, died unexpectedly last month from a non-Covid-related heart attack, due to an undiagnosed genetic cardiovascular disease.