Exhibit 99.1

 
Pure Storage Announces Second Quarter Fiscal 2023 Financial Results
Q2 revenue growth of 30% year-over-year, record Q2 operating profit
Subscription services ARR $955 million, up 31% year-over-year
Raised FY23 revenue outlook to $2.75 billion
 
MOUNTAIN VIEW, Calif. – August 31, 2022 – 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 second quarter ended August 7, 2022.

"Pure saw continued growth and solid market share gains as our expanding portfolio of industry leading products and services are recognized and embraced by more and more enterprises around the world," said Charles Giancarlo, Chairman and CEO, Pure Storage. "Customers struggling with their ability to manage their exploding volumes of data look to Pure for simple, automated solutions."

Second Quarter Financial Highlights 

•Revenue $646.8 million, up 30% year-over-year
•Subscription services revenue $232.2 million, up 35% year-over-year
•Subscription Annual Recurring Revenue (ARR) $955.3 million, up 31% year-over-year
•Remaining Performance Obligations (RPO) $1.5 billion, up 25% year-over-year
•GAAP gross margin 68.6%; non-GAAP gross margin 70.4%
•GAAP operating income $14.4 million; non-GAAP operating income $106.0 million
•GAAP operating margin 2.2%; non-GAAP operating margin 16.4%
•Operating cash flow $159.4 million; free cash flow $134.2 million
•Total cash, cash equivalents, and marketable securities $1.4 billion
•Returned approximately $61 million in Q2 to stockholders, repurchased 2.4 million shares

"We are pleased to again deliver strong revenue growth and profitability in Q2," said Kevan Krysler, CFO, Pure Storage. "We are helping our customers navigate a dynamic and challenging environment as we continue our track record of delivering highly performant solutions within our normal lead times, requiring less energy and space than other data storage alternatives."

Second Quarter Company Highlights

•Market-Leading Portfolio Innovation: Pure introduced the new FlashBlade//S family of products, built with a modular architecture that shares components with Pure's industry leading FlashArray. The highly flexible, all-QLC system combines performance and cost effectiveness to address the demands of unstructured data and modern application growth. Pure also delivered AIRI//S, the next generation of its complete AI-ready infrastructure developed with NVIDIA.

•Expanded Storage Flexibility and as-a-Service Offerings: Pure advanced its portfolio of Evergreen offerings, including the new fleet-level Evergreen//Flex, extending leadership in Storage-as-a-Service (STaaS) while supporting customers where they are in their journey to embracing flexible delivery models.

•General Availability of Pure Fusion: Pure Fusion enables enterprises and MSPs to automate and orchestrate their data storage environment and offer storage services to customers and developers through APIs, dramatically accelerating developer workflow.

•Kubernetes Leadership Recognition: Portworx was named a leader and outperformer in the GigaOm Radar Reports for Enterprise Kubernetes Storage and Cloud-Native Kubernetes Data Storage for the third consecutive year. Additionally, in Q2, Portworx Data Services (PDS) became generally available and the company introduced portfolio advancements to its suite of Portworx offerings.

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Third Quarter and FY23 Guidance

Q3 FY23FY23
RevenueApprox. $670 MillionApprox. $2.75 Billion
Non-GAAP Operating Income$85 Million$390 Million
Non-GAAP Operating MarginApprox. 12.7%Approx. 14%

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 income and non-GAAP operating margin to their most directly comparable GAAP measures because certain items that impact these measures are not within Pure’s control and/or cannot be reasonably predicted. Accordingly, a reconciliation of these non-GAAP financial measures guidance to the corresponding GAAP measures is not available without unreasonable effort.

Conference Call Information

Pure will host a teleconference to discuss the second quarter fiscal 2023 results at 1:30 pm PT today, August 31, 2022. 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 367923.

Upcoming Events

Pure is scheduled to participate at the following investor conferences:

Deutsche Bank’s 2022 Technology Conference
Date: Thursday, September 1, 2022
Fireside Chat Time: 1:15 pm PDT
Pure Presenters: Ajay Singh, Chief Product Officer and Sanjot Khurana, VP, Investor Relations & Treasurer

Evercore ISI 2nd Annual TMT Conference
Date: Wednesday, September 7, 2022
Pure Participants: Sanjot Khurana, VP, Investor Relations & Treasurer

Citi’s 2022 Global Technology Conference
Date: Thursday, September 8, 2022
Pure Participants: Sanjot Khurana, VP, Investor Relations & Treasurer

Goldman Sachs Communacopia + Technology Conference
Date: Monday, September 12, 2022
Fireside Chat Time: 4:30 pm - 5:10 pm PDT
Pure Presenters: Charles Giancarlo, Chairman and CEO and Kevan Krysler, CFO
Pure Participants: Sanjot Khurana, VP, Investor Relations & Treasurer

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

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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 a certified customer satisfaction score in the top one percent of B2B companies, 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 2021 Gartner Magic Quadrant for Primary Storage Arrays
Leader in the 2021 Gartner Magic Quadrant for Distributed File Systems & Object Storage

Connect with Pure

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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 sustainable growth strategy, our continued momentum and growth potential, particularly within our enterprise customer segment, our sustainability goals and benefits, the timing and magnitude of large customer orders, the potential for supply chain disruptions, the scope and duration of the COVID-19 pandemic and its impact on our business operations, liquidity and capital resources, employees, customers, inflation, financial results and the economy, demand for our products and subscription services, including Evergreen//One, our expectations regarding our product and technology differentiation, 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 August 31, 2022, 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.
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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.

Contacts

Sanjot Khurana -- Investor Relations, Pure Storage
ir@purestorage.com
 
Rena Fallstrom -- Global Communications, Pure Storage
pr@purestorage.com

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PURE STORAGE, INC.
Condensed Consolidated Balance Sheets
(in thousands, unaudited)
 
At the End of
Second Quarter of Fiscal 2023
Fiscal 2022
 
Assets 
Current assets: 
Cash and cash equivalents$652,567 $466,199 
Marketable securities709,889 947,073 
Accounts receivable, net of allowance of $1,077 and $945
402,007 542,144 
Inventory52,265 38,942 
Deferred commissions, current70,918 81,589 
Prepaid expenses and other current assets133,360 116,232 
Total current assets2,021,006 2,192,179 
Property and equipment, net219,559 195,282 
Operating lease right-of-use-assets172,392 111,763 
Deferred commissions, non-current164,763 164,718 
Intangible assets, net57,537 62,646 
Goodwill361,427 358,736 
Restricted cash 10,544 10,544 
Other assets, non-current42,631 39,447 
Total assets$3,049,859 $3,135,315 
Liabilities and Stockholders' Equity  
Current liabilities:  
Accounts payable$64,005 $70,704 
Accrued compensation and benefits150,924 205,431 
Accrued expenses and other liabilities93,752 78,511 
Operating lease liabilities, current33,872 35,098 
Deferred revenue, current609,549 562,576 
Debt, current573,205 — 
Total current liabilities1,525,307 952,320 
Long-term debt— 786,779 
Operating lease liabilities, non-current150,711 93,479 
Deferred revenue, non-current569,142 517,296 
Other liabilities, non-current43,341 31,105 
Total liabilities2,288,501 2,380,979 
Stockholders’ equity:  
Common stock and additional paid-in capital2,392,203 2,470,972 
Accumulated other comprehensive loss(20,099)(8,365)
Accumulated deficit(1,610,746)(1,708,271)
Total stockholders' equity761,358 754,336 
Total liabilities and stockholders' equity$3,049,859 $3,135,315 

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PURE STORAGE, INC.
Condensed Consolidated Statements of Operations
(in thousands, except per share data, unaudited)
 
 
Second Quarter of Fiscal
First Two Quarters of Fiscal
 2023202220232022
 
Revenue:  
Product$414,603 $324,935 $815,764 $574,823 
Subscription services232,169 171,896 451,413 334,715 
Total revenue646,772 496,831 1,267,177 909,538 
Cost of revenue:  
Product (1)
134,292 101,150 259,776 180,214 
Subscription services(1)
68,912 55,654 137,407 107,431 
Total cost of revenue203,204 156,804 397,183 287,645 
Gross profit443,568 340,027 869,994 621,893 
Operating expenses:  
Research and development (1)
165,690 140,107 326,963 271,488 
Sales and marketing (1)
206,836 190,386 424,989 373,882 
General and administrative (1)
56,679 43,464 108,246 86,610 
Total operating expenses429,205 373,957 860,198 731,980 
Income (loss) from operations14,363 (33,930)9,796 (110,087)
Other income (expense), net585 (7,410)(5,596)(12,137)
Income (loss) before provision for income taxes14,948 (41,340)4,200 (122,224)
Income tax provision4,026 3,925 4,813 7,247 
Net income (loss)$10,922 $(45,265)$(613)$(129,471)
Net income (loss) per share attributable to common stockholders, basic$0.04 $(0.16)
$_____________________________(0.00)
$(0.46)
Net income (loss) per share attributable to common stockholders, diluted$0.03 $(0.16)
$_____________________________(0.00)
$(0.46)
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders, basic297,475 283,931 296,659 282,147 
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders, diluted312,720 283,931 296,659 282,147 


(1) Includes stock-based compensation expense as follows:
Cost of revenue -- product$2,607 $1,566 $4,470 $2,913 
Cost of revenue -- subscription services5,808 5,137 11,164 9,543 
Research and development41,575 35,125 78,092 65,546 
Sales and marketing17,954 18,358 36,299 35,166 
General and administrative15,620 10,243 28,110 18,595 
Total stock-based compensation expense$83,564 $70,429 $158,135 $131,763 
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PURE STORAGE, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands, unaudited)
 
 
Second Quarter of Fiscal
First Two Quarters of Fiscal
 2023202220232022
 
Cash flows from operating activities  
Net income (loss)$10,922 $(45,265)$(613)$(129,471)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization23,886 19,273 46,549 38,099 
Amortization of debt discount and debt issuance costs802 7,751 1,603 15,154 
Stock-based compensation expense83,564 70,429 158,135 131,763 
Other1,282 3,895 1,428 6,516 
Changes in operating assets and liabilities, net of effect of acquisition:
Accounts receivable, net(56,122)(30,874)140,007 102,506 
Inventory(10,793)266 (12,492)(3,242)
Deferred commissions(4,683)(10,090)10,626 (8,041)
Prepaid expenses and other assets(3,821)5,452 (15,563)(24,955)
Operating lease right-of-use assets9,071 7,237 16,820 14,818 
Accounts payable890 15,087 (6,529)(9,267)
Accrued compensation and other liabilities51,139 43,885 (37,824)(40,952)
Operating lease liabilities (12,962)(7,308)(21,442)(14,205)
Deferred revenue66,205 43,654 98,807 66,117 
Net cash provided by operating activities159,380 123,392 379,512 144,840 
Cash flows from investing activities
Purchases of property and equipment(1)
(25,184)(27,670)(57,994)(55,499)
Acquisition, net of cash acquired(1,989)— (1,989)— 
Purchases of marketable securities— (145,808)(17,251)(317,371)
Sales of marketable securities— 28,501 — 114,038 
Maturities of marketable securities 124,818 104,030 240,993 169,770 
Net cash provided by (used in) investing activities97,645 (40,947)163,759 (89,062)
Cash flows from financing activities
Net proceeds from exercise of stock options3,859 3,147 15,264 11,163 
Proceeds from issuance of common stock under employee stock purchase plan— — 19,396 17,726 
Principal payments on borrowings and finance lease obligations(182)(261)(251,577)(605)
Tax withholding on vesting of equity awards(2,793)(1,514)(12,987)(6,564)
Repurchases of common stock(60,579)(44,373)(126,999)(74,393)
Net cash used in financing activities(59,695)(43,001)(356,903)(52,673)
Net increase in cash, cash equivalents and restricted cash197,330 39,444 186,368 3,105 
Cash, cash equivalents and restricted cash, beginning of period465,781 311,352 476,743 347,691 
Cash, cash equivalents and restricted cash, end of period$663,111 $350,796 $663,111 $350,796 

(1) Includes capitalized internal-use software costs of $3.9 million and $2.5 million for the second quarter of fiscal 2023 and 2022 and $6.8 million and $3.8 million for the first two quarters of fiscal 2023 and 2022.


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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):
 
Second Quarter of Fiscal 2023
Second Quarter of Fiscal 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)
$2,607 (c)$1,566 (c)
64 (d)63 (d)
3,252 (e)3,067 (e)
Gross profit --product$280,311 67.6 %$5,923  $286,234 69.0 %$223,785 68.9 %$4,696  $228,481 70.3 %
   $5,808 (c)    $5,137 (c)  
265 (d)196 (d)
24 (f)24 (f)
Gross profit -- subscription services$163,257 70.3 %$6,097  $169,354 72.9 %$116,242 67.6 %$5,357  $121,599 70.7 %
   $8,415 (c)    $6,703 (c)  
329 (d)259 (d)
3,252 (e)3,067 (e)
24 (f)24 (f)
Total gross profit$443,568 68.6 %$12,020  $455,588 70.4 %$340,027 68.4 %$10,053  $350,080 70.5 %


(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 amortization expense of acquired intangible assets.
(f) To eliminate payments to former shareholders of acquired company.

















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The following table presents certain non-GAAP consolidated results before certain items (in thousands, except per share amounts and percentages, unaudited):
 
Second Quarter of Fiscal 2023
Second Quarter of Fiscal 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)
$83,564 (c)$70,429 (c)
1,780 (d)4,229 (d)
2,518 (e)2,081 (e)
3,785 (f)3,600 (f)
— 171 (g)
Operating Income (loss)$14,363 2.2 %$91,647  $106,010 16.4 %$(33,930)-6.8 %$80,510  $46,580 9.4 %
   $83,564 (c)    $70,429 (c) 
1,780 (d)4,229 (d)
   2,518 (e)    2,081 (e) 
3,785 (f)3,600 (f)
— 171 (g)
802 (h)7,751 (h)
(1,767)(i)— 
Net income (loss)$10,922  $90,682 $101,604  $(45,265) $88,261  $42,996  
Net income (loss) per share -- diluted $0.03    $0.32  $(0.16)   $0.14  
Weighted-average shares used in per share calculation -- diluted312,720  — 312,720  283,931  16,286 (j)300,217 

(a) GAAP operating margin is defined as GAAP operating income (loss) 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 company.
(e) To eliminate payroll tax expense related to stock-based activities.
(f) To eliminate amortization expense of acquired intangible assets.
(g) To eliminate acquisition-related transaction and integration expenses.
(h) To eliminate amortization expense of debt discount and debt issuance costs related to our long-term debt.
(i) To eliminate net gain from legal settlements in connection with facilities abandoned in the second quarter of fiscal 2021.
(j) To include effect of dilutive securities (employee stock options, restricted stock, and shares from employee stock purchase plan).





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Reconciliation from net cash provided by operating activities to free cash flow (in thousands except percentages, unaudited):
 
Second Quarter of Fiscal
 20232022
Net cash provided by operating activities$159,380 $123,392 
Less: purchases of property and equipment(1)
(25,184)(27,670)
Free cash flow (non-GAAP)$134,196 $95,722 

(1) Includes capitalized internal-use software costs of $3.9 million and $2.5 million for the second quarter of fiscal 2023 and 2022.
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