Pure Storage: Fiscal 3Q16 Financial Results

(in $ million)	3Q15	3Q16	9 mo. 15	9 mo. 16
Revenue	49.2	131.4	108.6	290.1
*Growth*		167%		*167%*
Net income (loss)	(40.4)	(56.5)	(135.6)	(169.5)

Pure Storage, Inc. announced financial results for the third fiscal quarter ended October 31, 2015.

The company posted revenue of $131.4 million and GAAP net loss of $56.5 million for the third quarter of fiscal 2016.

These results compare to revenue of $49.2 million and a GAAP net loss of $40.4 million in the year-ago quarter.

GAAP gross margin for the third quarter of fiscal 2016 was 61.1% and GAAP product gross margin was 63.0%, compared to 58.3% and 61.9%, respectively, in the year-ago quarter. Non-GAAP net loss was $29.1 million for the third quarter of fiscal 2016, compared to $33.7 million in the year-ago quarter. Non-GAAP gross margin for the third quarter of fiscal 2016 was 61.7% and non-GAAP product gross margin was 63.1%, compared to 58.7% and 62.0%, respectively, in the year-ago quarter.

“We had an outstanding third quarter including record revenue, gross margin and operating margin,” said Scott Dietzen, CEO. “Pure delivers customers a storage platform that transforms their businesses and their IT environments through a dramatic increase in performance with flash, and a reduction in complexity and costs through a cloud-centric model. None of our primary competitors are properly enabling customers to reap the benefits of flash and cloud, the biggest changes to the storage market in decades, as we are. We believe this is why others in the storage space are stumbling while we are growing.”

“We achieved record revenue while improving operating leverage,” said Tim Riitters, CFO. “We will continue to drive growth and market share gains with a close eye on profitability over time.”

Pure Storage also grew its customer base to more than 1,350 organizations, adding more than 250 new customers in the third quarter, including Domino’s Pizza and The Boston Globe. Existing customers ConocoPhillips, LinkedIn and ServiceNow also expanded the scope of their relationships with Pure Storage, lending to a strong and continually growing customer base.

Fourth Quarter Fiscal 2016 Guidance:

Revenue in the range of $134 million to $139 million
Non-GAAP gross margin in the range of 62% to 65%
Non-GAAP operating margin in the range of (24%) to (18%)

Comments

It's the first time Pure Storage publicly publishes quarterly financial results following $425 million IPO last October.

The firm reported record revenue at $131.4 million, up 77% Q/Q and 167% Y/Y. Quarterly sales have always increased these last six quarters but a mere 2% to 6% quarterly increase is awaited for next three-month period.

For fiscal year ended next December, revenue will be more than a quarter billion of dollar, not so bad for a company born in 2009.

But it never was profitable with now an accumulated deficit of more than $447 million since its inception and profitability far from now.

Customer base of 1,350 organizations now includes 12% of the Fortune 500, up from 6% in third quarter of last year.

CEO also said: "For every $1 of initial product purchase, our top 25 customers on average spent more than $9 on new product purchases in the first 18 months following their initial purchase, up from $8 last quarter."

In all-flash subsystem, the war is now at the peak between storage giants (Dell/EMC, HP, NetApp, IBM, Oracle, HDS) and a number of smaller younger independent manufacturers, the biggest one being Pure Storage, the other ones including Kaminario, Nimble Storage, SolidFire, Tegile, Tintri, Violin Memory, etc.

Period

Revenue

Q/Q growth

Loss

2FQ15

24.6

(30.0)

3FQ15

34.8

41%

(65.2)

4FQ15

49.2

41%

(40.4)

1FQ16

65.9

34%

(47.6)

2FQ16

74,1

12%

(49.1)

3FQ16

131.4

77%

(56.5)