Pure Storage: Fiscal 1Q18 Financial Results

(in $ million)	1Q17	1Q18	Growth
Revenue	139.9	182.6	*31%*
Net income (loss)	(63.8)	(62.4)

Pure Storage, Inc. announced financial results for its first quarter ended April 30, 2017.

Quarterly business and financial highlights include:

Quarterly revenue: $182.6 million, up 31% Y/Y (and down 20% Q/Q), 4% ahead of midpoint of guidance
Quarterly gross margin: 65.2% GAAP; 66.4% non-GAAP, reflecting strength in core FlashArray business and a strong performance from FlashBlade business
Quarterly operating margin: -34.7% GAAP; -16.7% non-GAAP, up 11.5 ppts and 12.7 ppts Y/Y, respectively
First shipments of FlashArray//X lead next-gen industry transformation to NVMe

“Pure Storage has built the data platform for the cloud era,” said Scott Dietzen. “We are pursuing one of the biggest available markets in tech in supporting new data-driven applications including AI, the rapid adoption of cloud computing and the revamping of the enterprise data center. With our best year of innovation yet, we could not be more excited about the road ahead.”

“Q1 was a strong quarter for Pure, with our results notably exceeding both top line and bottom line guidance,” said CFO Tim Riitters. “We continue to drive strong year over year improvement in operating leverage as we drive to our $1 billion full year revenue target.”

In the quarter, approximately 300 new customers joined Pure Storage, increasing the total to more than 3,350 organizations, including nearly 25% of the Fortune 500. New customer wins in the quarter include: Churchill Downs Incorporated, Fujitsu Cloud Technologies, Henry Schein, Inc., telecommunications and Cloud IaaS service provider IP Telecom, MacStadium, Oppenheimer & Co. and Securitas Direct. New FlashBlade customer wins include: Black Duck Software, the City of Davenport and nuclear power plant KKG.

Second quarter fiscal 2018 guidance:

Revenue in the range of $214 million to $222 million
Non-GAAP gross margin in the range of 63.5% to 66.5%
Non-GAAP operating margin in the range of -16% to -12%

Full year fiscal 2018 guidance:

Revenue in the range of $975 million to $1.025 billion
Non-GAAP gross margin in the range of 63.5% to 66.5%
Non-GAAP operating margin in the range of -9% to -5%

Comments

Abstracts of the earnings call transcript:

David Hatfield, president:
"Pure's channel momentum continues with our partner's contributing more than 70% of net new logos in the quarter. In particular, we benefited from the increasing field engagement with Cisco and our shared partners."

Tim Riitters, CFO:
"Product revenue grew 24% year-on-year in Q1 to $138.4 million, driven by strong repeat purchases among our existing customers and new customer addition. Consistent with prior quarters, across our entire customer base, for every dollar that our customers originally spend, they spend an additional $2 on average over the next 24 months.
"Support revenue in Q1 grew 57$ year-on-year to $44.2 million, driven by revenue recognition of ongoing support contract. Looking at Q1 fiscal 2018 from a geographic perspective, 80% of our revenue came from the U.S. and 20% from international.
"Total headcount at the end of Q1 was over 1,800, up from over 1,700 at the end of Q4 and up from over 1,500 a year prior. Largely reflecting ongoing hiring in both our sales and R&D organization.
" (..) we finished the April quarter with cash and investments of $536 million."