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Pure Storage Announces Fiscal Fourth Quarter and Full Year 2023 Financial Results
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Pure Storage Announces Fiscal Fourth Quarter and Full Year 2023 Financial Results

Fiscal 2023 revenue growth of 26% year-over-year

Subscription services ARR of $1.1 billion, up 30% year-over-year

Introduction of FlashBlade//E: Delivering benefits of flash at better economics than disk

MOUNTAIN VIEW, Calif., March 1, 2023 /PRNewswire/ — Today Pure Storage (NYSE: PSTG), the IT pioneer that delivers the world’s most advanced data storage technology and services, announced financial results for its fiscal fourth quarter and full year 2023 ended February 5, 2023.

“Pure continued to grow faster than the market this year with the industry’s most advanced, reliable, and energy-efficient products and services,” said Charles Giancarlo, Chairman and CEO, Pure Storage. “Despite current macro conditions, we remain confident in our ability to execute, manage costs, and maintain a strong innovation cycle, highlighted by today’s introduction of FlashBlade//E.”

Fourth Quarter and Full Year Financial Highlights

  • Q4 revenue $810.2 million, up 14% year-over-year
  • Full-year revenue $2.8 billion, up 26% year-over-year



  • Q4 subscription services revenue $265.1 million, up 23% year-over-year
  • Full-year subscription services revenue $961.3 million, up 30% year-over-year



  • Q4 subscription annual recurring revenue (ARR) $1.1 billion, up 30% year-over-year
  • Remaining performance obligations (RPO) $1.8 billion, up 24% year-over-year



  • Q4 GAAP gross margin 69.3%; non-GAAP gross margin 70.8%
  • Full-year GAAP gross margin 68.9%; non-GAAP gross margin 70.7%



  • Q4 GAAP operating income $64.6 million; non-GAAP operating income $158.6 million
  • Full-year GAAP operating income $83.5 million; non-GAAP operating income $457.2 million



  • Q4 GAAP operating margin 8.0%; non-GAAP operating margin 19.6%
  • Full-year GAAP operating margin 3.0%; non-GAAP operating margin 16.6%



  • Q4 operating cash flow $233.0 million; free cash flow $172.8 million
  • Full-year operating cash flow $767.2 million; free cash flow $609.1 million



  • Total cash, cash equivalents, and marketable securities $1.6 billion



  • Returned approximately $67.5 million and $219.0 million in Q4 and FY23, respectively, to stockholders through share repurchases of 2.4 million shares and 7.8 million shares, respectively



  • Authorized incremental share repurchases of up to an additional $250 million under its stock repurchase program

“Pure delivered strong Q4 financial results growing revenue 14% and achieving record operating profit and margin,” said Kevan Krysler, CFO, Pure Storage. “We are confident that we will navigate the current macro backdrop, while focusing on our commitment to deliver long-term, profitable growth.”

Fourth Quarter and Full Year Company Highlights

  • Market-Leading Portfolio Innovation: In June 2022, Pure introduced the new FlashBlade//S family of products, built with a modular architecture that leverages a nearly unlimited scalable metadata architecture, offering more than double the density, performance, and power efficiency of previous versions. Additionally, Pure made two new offerings – Pure Fusion and Portworx Data Services – generally available in FY23. Today, Pure announced the addition of FlashBlade//E, an unstructured data repository priced under $0.20 per GB.
  • Strong Subscription Services Momentum: In FY23, Pure extended its as-a-Service model across the full suite of Portworx offerings and also advanced its portfolio of Evergreen offerings to include the new fleet-level Evergreen//Flex.
  • Leadership in Sustainability: Pure released the first environmental impact analysis of its portfolio, which found that Pure’s products can use as little as one-fifth the power of competitive storage offerings. Pure also introduced the first-of-it’s-kind Energy Efficiency SLA guarantee for Evergreen//One.
  • Industry Recognition: Pure was named a leader in the Gartner Magic Quadrants for both Primary Storage and Distributed File Systems & Object Storage, marking its 9th consecutive year as a leader. Pure was also named one of Fortune‘s Best Workplaces in Technology.

FY24 Guidance


FY24

Revenue

Mid to High Single Digit Y/Y Growth

Non-GAAP Operating Margin

15 %

Q1FY24 Guidance will be provided during the conference call beginning at 2:00 pm PT today, March 1, 2023.

These statements are forward-looking and actual results may differ materially. Refer to the Forward Looking Statements section below for information on the factors that could cause our actual results to differ materially from these statements. Pure has not reconciled its guidance for non-GAAP operating margin to its most directly comparable GAAP measure because certain items that impact this measure are not within Pure’s control and/or cannot be reasonably predicted. Accordingly, a reconciliation of this non-GAAP financial measure guidance to the corresponding GAAP measure is not available without unreasonable effort.

Share Repurchase Authorization

Pure’s board of directors has authorized, and its audit committee has approved, incremental share repurchases of up to an additional $250 million under its stock repurchase program. The authorization allows Pure to repurchase shares of its Class A common stock opportunistically and will be funded from available working capital. Repurchases may be made at management’s discretion from time to time on the open market through privately negotiated transactions, transactions structured through investment banking institutions, block purchase techniques, 10b5-1 trading plans, or a combination of the foregoing. The repurchase program does not have an expiration date, does not obligate Pure to acquire any of its common stock, and may be suspended or discontinued by the company at any time without prior notice.

Conference Call Information

Pure will host a teleconference to discuss the fiscal fourth quarter and full year 2023 results at 2:00 pm PT today, March 1, 2023. A live audio broadcast of the conference call will be available at the Pure Storage Investor Relations website, investor.purestorage.com. Pure will also post its earnings presentation to this website in advance of the call and post its prepared remarks to this website within 24 hours following completion of the call.

A replay will be available following the call on the Pure Storage Investor Relations website or for two weeks at 1-866-813-9403 (or +44 204 525 0658 for international callers) with passcode 032614.

Upcoming Events

Pure is scheduled to participate at the following investor conference:

Susquehanna 12th Annual Technology Conference

Date: Friday, March 3, 2023

Time: 8:00 a.m. PT / 11:00 a.m. ET

Charles Giancarlo, Chairman and CEO and Kevan Krysler, CFO

The presentation(s) will be webcast live and archived on Pure’s Investor Relations website at investor.purestorage.com.

About Pure Storage

Pure Storage (NYSE: PSTG) uncomplicates data storage, forever. Pure delivers a cloud experience that empowers every organization to get the most from their data while reducing the complexity and expense of managing the infrastructure behind it. Pure’s commitment to providing true storage as-a-service gives customers the agility to meet changing data needs at speed and scale, whether they are deploying traditional workloads, modern applications, containers, or more. Pure believes it can make a significant impact in reducing data center emissions worldwide through its environmental sustainability efforts, including designing products and solutions that enable customers to reduce their carbon and energy footprint. And with the highest Net Promoter Score in the industry, Pure’s ever-expanding list of customers are among the happiest in the world. For more information, visit www.purestorage.com.

Analyst Recognition

Leader in the 2022 Gartner Magic Quadrant for Primary Storage

Leader in the 2022 Gartner Magic Quadrant for Distributed File Systems & Object Storage

Connect with Pure

Blog 

LinkedIn

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Facebook

Pure Storage, the Pure P Logo, Portworx, and the marks on the Pure Trademark List at www.purestorage.com/legal/productenduserinfo.html are trademarks of Pure Storage, Inc. Other names are trademarks of their respective owners. 

Forward Looking Statements

This press release contains forward-looking statements regarding our products, business and operations, including but not limited to our views relating to future period financial results, our technology and product strategy, specifically customer priorities around sustainability, our ability to adjust to current macro conditions and expand market share, our sustainability goals and benefits, the timing and magnitude of large orders, the impact of inflation, economic or supply chain disruptions, the pandemic and its lingering impacts, demand for our products and subscription services, including Evergreen//One, our expectations regarding our product and technology differentiation, including FlashBlade//E, new customer acquisition, the continued success of the Portworx technology, and other 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 caption “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 February 6, 2022. All information provided in this release and in the attachments is as of March 1, 2023, and Pure undertakes no duty to update this information unless required by law.

Key Business Metric

Subscription ARR is a key business metric that refers to total annualized contract value of all active subscription agreements on the last day of the quarter, plus on-demand revenue for the quarter multiplied by four.

Non-GAAP Financial Measures

To supplement our unaudited condensed consolidated financial statements, which are prepared and presented in accordance with GAAP, Pure uses 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, and free cash flow.

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, payments to former shareholders of acquired companies, payroll tax expense related to stock-based activities, amortization of debt discount and debt issuance costs related to long-term debt, amortization of intangible assets acquired from acquisitions, acquisition-related transaction and integration expenses, and costs associated with the exit of certain operations that may not be indicative of our ongoing core business operating results. Pure believes 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.

 

PURE STORAGE, INC.

Condensed Consolidated Balance Sheets

(in thousands, unaudited)




At the End of Fiscal



2023


2022






Assets





Current assets:





Cash and cash equivalents


$         580,854


$         466,199

Marketable securities


1,001,352


947,073

Accounts receivable, net of allowance of $1,057 and $945


612,491


542,144

Inventory


52,095


38,942

Deferred commissions, current


68,617


81,589

Prepaid expenses and other current assets


161,391


116,232

Total current assets


2,476,800


2,192,179

Property and equipment, net


272,445


195,282

Operating lease right-of-use assets


158,912


111,763

Deferred commissions, non-current


177,239


164,718

Intangible assets, net


49,222


62,646

Goodwill


361,427


358,736

Restricted cash


10,544


10,544

Other assets, non-current


38,814


39,447

Total assets


$      3,545,403


$      3,135,315






Liabilities and stockholders’ equity





Current liabilities:





Accounts payable


$           67,121


$           70,704

Accrued compensation and benefits


232,636


205,431

Accrued expenses and other liabilities


125,692


78,511

Operating lease liabilities, current


33,707


35,098

Deferred revenue, current


718,149


562,576

Debt, current


574,506


Total current liabilities


1,751,811


952,320

Long-term debt



786,779

Operating lease liabilities, non-current


142,473


93,479

Deferred revenue, non-current


667,501


517,296

Other liabilities, non-current


42,385


31,105

Total liabilities


2,604,170


2,380,979

Stockholders’ equity:





Common stock and additional paid-in capital


2,493,799


2,470,972

Accumulated other comprehensive loss


(15,504)


(8,365)

Accumulated deficit


(1,537,062)


(1,708,271)

Total stockholders’ equity


941,233


754,336

Total liabilities and stockholders’ equity


$      3,545,403


$      3,135,315

 

PURE STORAGE, INC.

Condensed Consolidated Statements of Operations

(in thousands, except per share data, unaudited)




Fourth Quarter of Fiscal


Fiscal Year Ended



2023


2022


2023


2022










Revenue:









Product


$   545,108


$   492,602


$ 1,792,153


$ 1,442,338

Subscription services


265,099


215,968


961,281


738,510

Total revenue


810,207


708,570


2,753,434


2,180,848

Cost of revenue:









Product (1)


174,471


167,964


569,793


477,899

Subscription services (1)


74,419


64,772


285,995


230,430

Total cost of revenue


248,890


232,736


855,788


708,329

Gross profit


561,317


475,834


1,897,646


1,472,519

Operating expenses:









Research and development (1)


185,557


162,639


692,528


581,935

Sales and marketing (1)


246,480


231,947


883,609


799,001

General and administrative (1)


64,696


51,481


237,996


189,981

Total operating expenses


496,733


446,067


1,814,133


1,570,917

Income (loss) from operations


64,584


29,767


83,513


(98,398)

Other income (expense), net


16,705


(10,008)


8,295


(30,098)

Income (loss) before provision for income taxes


81,289


19,759


91,808


(128,496)

Income tax provision


6,818


4,816


18,737


14,763

Net income (loss)


$     74,471


$     14,943


$     73,071


$ (143,259)










Net income (loss) per share attributable to common

  stockholders, basic


$         0.25


$         0.05


$         0.24


$       (0.50)

Net income (loss) per share attributable to common

  stockholders, diluted


$         0.22


$         0.05


$         0.23


$       (0.50)

Weighted-average shares used in computing net

  income (loss) per share attributable to common

  stockholders, basic


303,614


291,351


299,478


285,882

Weighted-average shares used in computing net

  income (loss) per share attributable to common

  stockholders, diluted


339,699


317,268


339,184


285,882


(1) Includes stock-based compensation expense as follows:


Cost of revenue — product


$       2,791


$       1,787


$     10,245


$       6,334

Cost of revenue — subscription services


5,652


6,142


22,630


21,240

Research and development


41,212


39,921


161,694


142,264

Sales and marketing


17,767


17,122


72,507


71,439

General and administrative


15,081


14,228


60,541


45,686

Total stock-based compensation expense


$     82,503


$     79,200


$   327,617


$   286,963

 

PURE STORAGE, INC.

Condensed Consolidated Statements of Cash Flows

(in thousands, unaudited)




Fourth Quarter of Fiscal


Fiscal Year Ended



2023


2022


2023


2022










Cash flows from operating activities









Net income (loss)


$       74,471


$        14,943


$        73,071


$    (143,259)

Adjustments to reconcile net income (loss) to net cash provided by

operating activities:









Depreciation and amortization


28,164


23,546


100,432


83,151

Amortization of debt discount and debt issuance costs


804


8,566


3,210


31,577

Stock-based compensation expense


82,503


79,200


327,617


286,963

Impairment of long-lived assets





471

Other


4,078


4,499


4,145


13,075

Changes in operating assets and liabilities, net of effects of

acquisition:









Accounts receivable, net


(176,940)


(188,035)


(70,724)


(81,247)

Inventory


3,779


4,080


(12,562)


4,118

Deferred commissions


(10,724)


(37,988)


451


(58,383)

Prepaid expenses and other assets


24,584


(13,505)


(31,580)


(25,788)

Operating lease right-of-use assets


7,740


7,891


33,813


29,952

Accounts payable


(29,611)


20,967


(7,075)


6,711

Accrued compensation and other liabilities


91,766


94,212


74,027


58,961

Operating lease liabilities


(5,020)


(10,257)


(33,359)


(32,351)

Deferred revenue


137,432


130,122


305,768


236,176

Net cash provided by operating activities


233,026


138,241


767,234


410,127

Cash flows from investing activities









Purchases of property and equipment(1)


(60,229)


(21,070)


(158,139)


(102,287)

Acquisition, net of cash acquired




(1,989)


Purchases of marketable securities


(409,306)


(114,605)


(501,435)


(617,043)

Sales of marketable securities


6,155


53,548


6,155


200,482

Maturities of marketable securities


81,700


63,007


433,995


366,165

Other





(600)

Net cash used in investing activities


(381,680)


(19,120)


(221,413)


(153,283)

Cash flows from financing activities









Net proceeds from exercise of stock options


5,647


14,966


24,778


48,709

Proceeds from issuance of common stock under employee stock

purchase plan




39,965


36,641

Principal payments on borrowings and finance lease obligations


(1,095)


(853)


(257,240)


(2,137)

Tax withholding on vesting of equity awards


(3,471)


(2,165)


(19,601)


(10,835)

Repurchases of common stock


(67,504)


(69,562)


(219,068)


(200,170)

Net cash used in financing activities


(66,423)


(57,614)


(431,166)


(127,792)

Net increase (decrease) in cash and cash equivalents and

restricted cash


(215,077)


61,507


114,655


129,052

Cash, cash equivalents and restricted cash, beginning of period


806,475


415,236


476,743


347,691

Cash, cash equivalents and restricted cash, end of period


$     591,398


$      476,743


$     591,398


$      476,743


(1) Includes capitalized internal-use software costs of $3.2 million and $2.5 million for the fourth quarter of fiscal 2023 and 2022 and $13.7 million and $8.8 million for fiscal 2023 and 2022.

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):


Fourth Quarter of Fiscal


Fourth Quarter of Fiscal


2023


2022


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)


























$      2,791

(c)









$      1,787

(c)









37

(d)









42

(d)









292

(e)


















3,306

(f)









3,462

(f)




Gross profit —

  product

$   370,637


68.0 %


$      6,426


$   377,063


69.2 %


$   324,638


65.9 %


$      5,291


$   329,929


67.0 %


























$      5,652

(c)









$      6,142

(c)









159

(d)









253

(d)









306

(e)


















16

(g)









24

(g)




Gross profit —

 subscription

 services

$   190,680


71.9 %


$      6,133


$   196,813


74.2 %


$   151,196


70.0 %


$      6,419


$   157,615


73.0 %


























$      8,443

(c)









$      7,929

(c)









196

(d)









295

(d)









598

(e)


















3,306

(f)









3,462

(f)









16

(g)









24

(g)




Total gross profit

$   561,317


69.3 %


$    12,559


$   573,876


70.8 %


$   475,834


67.2 %


$    11,710


$   487,544


68.8 %


(a) GAAP gross margin is defined as GAAP 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.

(e) To eliminate duplicate lease costs during the transition of our corporate headquarters.

(f) To eliminate amortization expense of acquired intangible assets.

(g) To eliminate payments to former shareholders of acquired company.

The following table presents non-GAAP gross margins by revenue source before certain items (in thousands except percentages, unaudited):


Fiscal Year Ended


2023


GAAP

results


GAAP gross

margin (a)


Adjustment




Non-

GAAP

results


Non-

GAAP

gross

margin (b)


















$       10,245


(c)










335


(d)










543


(e)










13,063


(f)





Gross profit — product

$  1,222,360


68.2 %


$       24,186




$  1,246,546


69.6 %


















$       22,630


(c)










1,210


(d)










575


(e)










135


(g)










88


(h)





Gross profit — subscription services

$     675,286


70.2 %


$       24,638




$     699,924


72.8 %


















$       32,875


(c)










1,545


(d)










1,118


(e)










13,063


(f)










135


(g)










$              88


(h)





Total gross profit

$  1,897,646


68.9 %


$       48,824




$  1,946,470


70.7 %


(a) GAAP gross margin is defined as GAAP 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.

(e) To eliminate duplicate lease costs during the transition of our corporate headquarters.

(f) To eliminate amortization expense of acquired intangible assets.

(g) To eliminate costs associated with the exit of certain operations.

(h) To eliminate payments to former shareholders of acquired company.

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


Fourth Quarter of Fiscal


Fourth Quarter of Fiscal


2023


2022


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)


























$    82,503

(c)









$    79,200

(c)









888

(d)









3,390

(d)









1,799

(e)









2,302

(e)









3,839

(f)









4,034

(f)









5,004

(g)













Operating

income

$   64,584


8.0 %


$    94,033


$  158,617


19.6 %


$ 29,767


4.2 %


$    88,926


$  118,693


16.8 %


























$    82,503

(c)









$    79,200

(c)









888

(d)









3,390

(d)









1,799

(e)









2,302

(e)









3,839

(f)









4,034

(f)









5,004

(g)


















804

(h)









8,566

(h)









357

(i)













Net income

$   74,471




$    95,194


$  169,665




$ 14,943




$    97,492


$  112,435



Net income

per share —

diluted

$       0.22






$     0.53




$     0.05






$     0.36



Weighted-

average

shares used in

per share

calculation —

diluted

339,699




(21,884)

(j)

317,815




317,268




(2,357)

(j)

314,911




(a) GAAP operating margin is defined as GAAP operating income divided by revenue.

(b) Non-GAAP operating margin is defined as non-GAAP operating income divided by revenue.

(c) To eliminate stock-based compensation expense.

(d) To eliminate payments to former shareholders of acquired companies.

(e) To eliminate payroll tax expense related to stock-based activities.

(f)  To eliminate amortization expense of acquired intangible assets.

(g) To eliminate duplicate lease costs during the transition of our corporate headquarters.

(h) To eliminate amortization expense of debt discount and debt issuance costs related to our long-term debt.

(i)  To eliminate net loss from legal settlement in connection with a facility abandoned in the second quarter of fiscal 2021.

(j)  To exclude the dilutive effect from convertible note due to the related capped call hedge.

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


Fiscal Year Ended


2023


GAAP

results


GAAP

operating

margin (a)


Adjustment


Non-GAAP

results


Non-GAAP

operating

margin (b)
















$     327,617

(c)









5,947

(d)









13,412

(e)









2,868

(f)









8,680

(g)









15,192

(h)




Operating income

$       83,513


3.0 %


$     373,716


$     457,229


16.6 %


(a) GAAP operating margin is defined as GAAP operating income divided by revenue.

(b) Non-GAAP operating margin is defined as non-GAAP operating income divided by revenue.

(c) To eliminate stock-based compensation expense.

(d) To eliminate payments to former shareholders of acquired companies.

(e) To eliminate payroll tax expense related to stock-based activities.

(f)  To eliminate costs primarily associated with the exit of certain operations.

(g) To eliminate duplicate lease costs during the transition of our corporate headquarters.

(h) To eliminate amortization expense of acquired intangible assets.

Reconciliation from net cash provided by operating activities to free cash flow (in thousands except percentages, unaudited):



Fourth Quarter of Fiscal


Fiscal Year Ended



2023


2022


2023


2022

Net cash provided by operating activities


$           233,026


$             138,241


$         767,234


$         410,127

Less: purchases of property and equipment(1)


(60,229)


(21,070)


(158,139)


(102,287)

Free cash flow (non-GAAP)


$           172,797


$             117,171


$         609,095


$         307,840


(1) Includes capitalized internal-use software costs of $3.2 million and $2.5 million for the fourth quarter of fiscal 2023 and 2022 and $13.7 million and $8.8 million for fiscal 2023 and 2022.

 

Cision View original content to download multimedia:https://www.prnewswire.com/news-releases/pure-storage-announces-fiscal-fourth-quarter-and-full-year-2023-financial-results-301759939.html

SOURCE Pure Storage

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