Pure Storage: Fiscal 4Q18 Financial Results

(in $ million)	4Q17	4Q18	FY17	FY18
Revenue	227.8	338.3	728.0	1,023.0
*Growth*		49%		*41%*
Net income (loss)	(42.9)	(11.9)	(245.1)	(177.6)

Pure Storage, Inc. announced financial results for its fourth quarter and full year ended January 31, 2018.

Key quarterly financial highlights:
• 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 company’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. “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 customers.

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. “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.”

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%

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%

Comments

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Quarterly and yearly revenue

Pure Storage achieved the $1 billion milestone in just over 8 years since founding.

It's first ever quarter of non-GAAP profitability.

It finished 4Q18 with cash and investments of $597.3 million, an increase of $45.9 million from the previous quarter.

Product revenue grew 48% Y/Y to $277.4 million and support revenue also grew 48% year-on-year to $60.9 million.

Geographically, 76% of sales came from the United States and 24% came from our international markets

The company finished our fiscal year 4,500 customers, up nearly 50% from the same period a year ago.

Purchase rates remain steady with approximately 70% of the business coming from existing customers. New customers that spent more than $1 million doubled versus last year.

In FlashArray, the all-flash firm is strong in NVMe, with approximately 20% of sales comprised of this technology, which it believes "is over 10x greater than any other competitor."

Next quarter is expected to see revenue down between 25% to 27%, and 33% and 34% for next fiscal year.