Pure Storage: Fiscal 3Q19 Financial Results

(in $ million)	3Q18	3Q19	9 mo. 18	9 mo. 19
Revenue	277.6	372.8	684.9	937.6
*Growth*		34%		*37%*
Net income (loss)	(29.4)	(28.2)	(145.0)	(152.6)

Pure Storage, Inc. announced financial results for its third quarter ended October 31, 2018.

Key quarterly business and financial highlights:
• Revenue: $372.8 million, up 34% Y/Y, exceeding the high end of guidance;
• Gross margin: 66.8% GAAP; 68.1% non-GAAP, representing an all-time high;
• Operating margin: -7.3% GAAP; 9.1% non-GAAP, up 3.4 ppts and 5.4 ppts Y/Y, respectively.

“Pure delivered another excellent quarter, and today we’re announcing the extension of Pure’s data centric architecture to the cloud,” said Charles Giancarlo, chairman and CEO. “With the launch of our new Pure Storage Cloud Data Services, we’re bringing our storage software directly to the public cloud in partnership with AWS.”

“Q3 was a strong quarter for Pure with revenue and margins exceeding our expectations,” said Tim Riitters, CFO. “As we finish the fiscal year we are excited about the opportunities ahead, and have raised FY19 guidance to reflect the momentum we are seeing in our business.”

4FQ19 guidance:
• Revenue in the range of $438 million to $446 million
• Non-GAAP gross margin in the range of 64.5% to 67.5%
• Non-GAAP operating margin in the range of 8% to 12%

FY19 guidance:
• Revenue in the range of $1.376 billion to $1.384 billion
• Non-GAAP gross margin in the range of 66.6% to 67.6%
• Non-GAAP operating margin in the range of 3.9% to 5.3%

Comments

Revenue increased to a record of $372.8 million, up 34% Y/Y and 21% Q/Q, but once more with important net loss slightly diminishing Y/Y and much more Q/Q.

The company surpassed the upper end of guided measures for revenue, gross margin and operating margin.

It continues to invest to increase market share to approach its two main competitors, EMC and NetApp, rather than concentrating on net income.

Product revenue was $298.9 million up 31% Y/Y. Support subscription revenue was $73.9 million up 48% Y/Y.

Pure ended the quarter with cash and investments of $1.1 billion, which was up slightly from the previous three-month period.

Geographically, 71% of our revenues came from the United States and 29% from international markets.

Total headcount at the end of the period was 2,650 employees, an increase of 200 employees during the quarter.

It exited the quarter with 5,450 customers, representing 300 new additions. Fortune 500 represents now almost 40% of customers,

FlashBlade had one of the strongest growth quarters since its debut and NVMe represented more than two-thirds of all shipments this quarter.

The firm entered into a strategic partnership with IBM to deliver as a service solutions with the Pure portfolio.

For next quarter the AFA maker hopes to increase sales between 17% and 20%, and 35% and for the current fiscal year.