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Pure Storage Announces Third Quarter Fiscal 2020 Financial Results

Pure Storage Announces Third Quarter Fiscal 2020 Financial ResultsMOUNTAIN VIEW, Calif., November 21, 2019 – Pure Storage (NYSE: PSTG), the data solutions leader that helps innovators build a better world with data, today announced financial results for its third quarter ended October 31, 2019.“Our continued market-beating growth is a result of ever more customers realizing the superior value that our solutions offer,” said Charles Giancarlo, Chairman and CEO, Pure Storage. “With one integrated data platform, Pure’s Modern Data Experience frees our customers to benefit from infrastructure that enables them to better manage their applications and data to fuel their digital transformation.” KeyFinancialHighlights: •Revenue: $428.4 million, up 15%Year-over-Year•Gross margin: GAAP70.2%; non-GAAP71.7%•Operating margin: GAAP-6.6%; non-GAAP6.8% Recent Company Highlights:Pure’s third quarter yielded industry-leading growth as customers continued to select Pure’s modern approach that enables organizations to better utilize their data across both their private and public cloud infrastructures. Our product innovation performance continued this quarter as we released:•VM Analytics Pro - a new feature bundle offered within Pure1®, allowing customers to map out their infrastructure more efficiently and intelligently discover and resolve issues. •Cloud Block Store on AWS - enterprises can migrate applications to and from the public cloud with minimal re-architecture, and leverage public cloud economics for any use case.•FlashArray//C - the industry’s first capacity-optimized AFA, built to bring consistent all-flash performance with tier one reliability at disk economics with solid customer adoption including ServiceNow and European-based Idealista.•DirectMemory Cache - a combination of Purity and Intel Optane storage class memory providing FlashArray//X customers with a software-based accelerant that delivers dramatic performance improvement for applications that require the ultimate in high-performance storage.•Expanded FlashBladeTMcapacity and introduced the AI Data Hub and AIRI as-a-Service, extending traditional analytics and providing more performance and security at a lower cost.•Pure as-a-Service - Full portfolio of integrated solutions, giving customers choice of both CAPEX and OPEX business models. Organizational ChangesToday we announced that Kevan Krysler will be joining Pure as our new CFO. Most recently, Kevan serves as the Senior Vice President of Finance and Chief Accounting Officer at VMware and brings a wealth of experience both in finance and the industry. Prior to VMware, Kevan was a partner with KPMG, where he served both multi-national and emerging software and technology companies. Third Quarter Fiscal 2020 Financial HighlightsThe following tables summarize our consolidated financial results for the fiscal quarters ended October 31, 2019 and 2018(in millions except percentages, per share amounts and headcount, unaudited):1

GAAP Quarterly Financial InformationThree Months Ended October 31, 2019Three Months Ended October 31, 2018Y/Y ChangeRevenue$428.4$372.815%Gross Margin70.2%66.8%3.4 pptsProduct Gross Margin72.2%67.7%4.5 pptsSupport Subscription Gross Margin64.1%63.4%0.7 pptsOperating Loss$(28.3)$(27.2)$(1.1)Operating Margin-6.6%-7.3%0.7 pptsNet Loss$(30.0)$(28.2)$(1.8)Net Loss per Share – Basic and Diluted$(0.12)$(0.12)—Weighted-Average Shares 255.0235.219.8Headcount>3,350>2,650~700Non-GAAP Quarterly Financial InformationThree Months Ended October 31, 2019Three Months Ended October 31, 2018Y/Y ChangeGross Margin71.7%68.1%3.6 pptsProduct Gross Margin73.0%68.1%4.9 pptsSupport Subscription Gross Margin67.5%68.1%-0.6 pptsOperating Income$29.1$33.9$(4.8)Operating Margin6.8%9.1%-2.3 pptsNet Income$34.2$35.4$(1.2)Net Income per Share$0.13$0.13—Weighted-Average Shares272.2266.55.7A reconciliation between GAAP and non-GAAP information is provided at the end of this release.FinancialOutlookFourth quarter fiscal 2020 guidance:•Revenue in the range of $484 million to $496 million, or $490 million at the midpoint•Non-GAAP gross margin in the range of 67.5% to 70.5%, or 69.0% at the midpoint•Non-GAAP operating margin in the range of 10.0% to 14.0%, or 12.0% at the midpointFull year fiscal 2020 guidance:•Revenue in the range of $1.635 billion to $1.647 billion, or $1.641 billion at the midpoint•Non-GAAP gross margin in the range of 69.2% to 70.1%, or 69.6% at the midpoint•Non-GAAP operating margin in the range of 2.6% to 3.9%, or 3.2% at the midpointAll forward-looking non-GAAP financial measures contained in this section titled “Financial Outlook” exclude stock-based compensation expense, payroll tax expense related to stock-based activities, amortization of debt discount and debt issuance costs, amortization of intangible assets acquired from acquisitions, any applicable anti-dilutive share count impact of our convertible debt hedge agreements and, as applicable, other special items. We have not reconciled guidance for non-GAAP gross margin and non-GAAP operating margin to their most directly comparable GAAP measures because the items that impact these measures are not within our control and/or cannot be reasonably predicted. Accordingly, a reconciliation of the non-GAAP financial measure guidance to the corresponding GAAP measures is not available without unreasonable effort.2