Facts and Figures on Pure Storage

Valued at $3 billion by private investors, Pure Storage, Inc. is a start-up being one of the leaders of the all-flash system market with annual revenue of $175 million far behind EMC claiming to see its XtremIO SSD machines reaching sales of $1.2 billion this year, as well as IBM.

A company trying to be public is obliged to reveal about all its facts and figures, publishing Form S-1. We have condensed here the main ones from this massive document of more than 160 pages to help our loyal StorageNewsletter.com’s visitors.

Founded in Delaware in October 2009 as OS76, Inc., and changing the name to Pure Storage in January 2010, the firm filed with the SEC to raise up to $300 million in its IPO and to become public under the symbol PSTG.

Pure Storage is headquartered in Mountain View, CA and maintains offices in Europe, Asia, Australia, South America and Africa.

It raised a total of $470 million in several rounds:

• $5 million in 2009
• $20 million in 2010
• $30 million in 2011
• $40 million in 2012
• $150 million in 2013
• $225 million in 2014

Principal stockholders are:

• VCs Sutter Hill Ventures (27.4%), Greylock (17.3%) and Redpoint Ventures (5.7%)
• Directors Mike Speiser    (20.1%), Aneel Bhusri (16.8%) and Michelangelo Volpi (4.3%)
• Executives John Colgrove (8.5%), Scott Dietzen (4.6%) and David Hatfield (1.5%)

Main executives are:

In term of products, Pure Storage launched:

• its first FlashArray with all software included model in 2012, which entitles customers to all Purity Operating Environment functionality in the base purchase price of the SSD system;
• Purity 3.0 in 2013, which included writable snapshots, and a 30-day return guarantee program;
  expanded product family in 2014 to address broader customer requirements and workloads, and Purity 4.0, which included replication as well as Forever Flash program to provide ongoing hardware upgrades as part of maintenance and support agreements;
• FlashArray//m and Pure1 in 2015, hardware and cloud-based management and support, respectively.

200 patents and 150 patent applications were issued in USA and other countries.

The firm sells predominantly through a channel-fulfilled model but no channel partner represented over 10% of revenue.

Since launching FlashArray in May 2012, customers grew to 1,100 large and mid-size organizations. They include over 10% of the Fortune 500, and more than 100 have purchased over $1 million of products and support, but no individual client represents more than 10% of global revenue.

At the end of last fiscal year, more than half of customers had made additional purchases within 12 months of their initial purchase. For all customers that have been with Pure Storage for at least 12 months as of January 31, 2015, for every $1 of initial product purchase, top 25 customers on average spent $4 on new product purchases in the next 12 months, and across all customers it’s greater than $1.

For the fiscal year ended January 31, 2015 and the three months ended April 30, 2015, 77% and 79% of revenue was from the United States, and 23% and 21% from the rest of the world, respectively.    

To manufacture assemble, test and package its products, the start-up is working with contract manufacturers Avnet, Inc. and Hon Hai Precision Industry Co., Ltd., known as Foxconn.

Headcount increased from 100 employees in January 31, 2013 to 350 employees as in January 31, 2014, to 800 employees two years later, and then to 1,100 employees in July 31, 2015, which means a low rate of one employee per customer.

Revenue grew rapidly from $6.1 million in FY13 to $174.5 million in FY15 with a slower increase, 12% Q/Q, in last known quarter ended April 30, 2015. But the real problem of Pure Storage is profitability as the company prefers to invest massively to get market shares rather than to be profitable. The firm has an accumulated deficit of $391 million and it’s not going to decrease. Net loss is up regularly the last three fiscal quarters.

Revenue of Pure Storage in $ thousand
(FY ended January 31)

Nevertheless total gross margin increased from 43% during FY14 to 56% during FY15.

Cash and cash equivalents amount $173 million.

In November 2013, EMC filed a complaint against Pure Storage in the US District Court for the District of Massachusetts, alleging that hiring of EMC employees evidences a scheme to misappropriate EMC’s confidential information and trade secrets and to unlawfully interfere with EMC’s business relationships with its customers and contractual relationships with its employees. In addition, the same month, EMC filed another complaint in the US District Court for the District of Delaware, alleging infringement of five patents. The start-up intends to defend itself in these lawsuits.

Pure Storage faces intense competition with 59 firms in all-flash subsystems that include number of established companies (EMC, IBM, NetApp, HP, Dell) and new entrants including Violin Memory, SolidFire, Kaminario and Tintri. A VAR of Pure Storage told us that FlashArray was a good product but with a relatively young OS.