PSTG - Earnings call transcript Q1 2023

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Operator

Good day, ladies and gentlemen. Thank you for standing by, and welcome to the Pure Storage First Quarter Fiscal Year 2023 Earnings Release Conference Call. [Operator Instructions] As a reminder, this call is being recorded. I would now like to introduce your host for today’s conference call, Mr. Sanjot Khurana. ahead. go Please

Sanjot Khurana

at good Quarter and is to Pure and the Khurana, Thank XXXX afternoon. Earnings First Treasurer Relations Investor Fiscal President name Storage. Conference Storage Vice you, of Welcome Pure Call. Sanjot My

Giancarlo; Joining Krysler; CFO, and CEO, Lee. Kevan Rob our me CTO, our today are Charlie our

and based and technology and to the goals and and begin, forward-looking subject are and statements, like that facts disruptions, uncertainties. of include as this regarding on that remind operations. we related advantages, risks statements sustainability future our and These we our pandemic statements business and and macro no competitive Before growth them. would call, assumptions trends, and current update our during COVID-XX which sales to you and in I industry obligation strategy to benefits Any environment, management today, our make inflation are product undertake make various will offerings, our forward-looking its we prospects,

Our the not be refer materially actual to is our should performance. an uncertainties of indication of risks reported as to A filings. with we and contained from forecasted, future and public business the results filings relating the of considered SEC, results some results and our may discussion you in differ these

and the release During to press comparable directly most provided discuss company’s measures non-GAAP our we measures earnings performance this GAAP will call, and in talking reconciliations in the are slides. about

website the over Pure property that, of turn Storage. is Relations is we CEO, recorded webcast will total This is call for playback on call purposes. Additionally, the Storage archive An the live be and when sales our orders. Giancarlo. the website available castable I’ll being we Charlie With bookings, being excluding on prepared and to the to our Investor mean refer in broadcast IR remarks, Pure of

Charlie Giancarlo

a recognized U.S. international highly you revenue strong exceptional this and XX% drove We in Pure in dynamic today. expansion of delighted in year-over-year consideration. XG for in Enterprise Pure especially expanded continues, results environment. worldwide and strong that growth this highly brand customer line joining must-have quarter and again both the and markets. delivered both Pure, large product any everyone, quarter now their experiencing considered relationship is customers very were The for storage a midst their We us our selecting telecom is thank with enterprise highly deployments. with Hello, FlashArray year-over-year. once respected growth performance a

business year. Pure subscription industry-leading differentiate same as-a-Service and Our services the of Pure’s resonate with strongly last grew the models over XX% continue us unique Evergreen to industry. and quarter the rest from customers

we were and industry-leading also Evergreen data than able power, customers’ service released and analytics, improves X waste Arrays to Pure are e-waste. reduce reduce our conference Evergreen a deploy our our are producing Annual able environmental are strong will ago purchased Next very governance, social competitive that commit operational reducing less and which was Evergreen Pure contribution of systems. to share both to On positively this by make behavioral note, data how we and the usage. On by increased week X proud energy XX% report Systems], quarter. sustainability. yielding data and we They in our to to ESG time, while portfolio. continuing topic, past energy to XX%. the our in footprint XX% significant program, Customers further that past increased requiring emissions announce extend multigenerational in customers’ environmental which usage management. environmental, by particular actively our center’s still this effort. will e-waste from cooling quarter, than show of [Knight leadership provides direct reduction substantially report, first-ever center systems at profit further Angeles, costs products More predictive Customers XXXX. and by prudent Scope our very current less by huge of Pure or and our Operating ESG their years quarters //Accelerate trend stories scale immediate money lower our their storage space consumption, and we solutions combination per benefiting this In energy legacy expense have benefiting greater upgrades expansions lowered saving provided of as up including uptime reduces such and petabyte Los of by of from benefits and complexity, also

investment research invest management and our and as critical demonstrating level remains requires and storage belief that Too development of commitment and strong, is many and in data investment innovation other our in same Our promote industry in technology commodity. technologies. as the competitors a actively high to storage

the Pure milestone customers services to services SQL deliver databases solutions delivers no For end-to-end multiple Pure search, data to automate organizations. simplicity services more. for Portworx agility services private environments. click Fusion management services code modern for Portworx data as and single streaming, event achieved unified key allow by control delivering service deployments of create storages cloud as to cloud both providers, data applications, last model, availability. products well a model data simple and enterprise tasks operating plane. through and their releasing for to customized automating cloud required deliver X today’s and operations these Together, and platform was data and a and developers organizations operating want that general cloud customers and month create Pure Fusion we a and both flexibility, hybrid applications developing to data an A provides

performance data both FlashArray, taken as saw the and products, advanced center setting EDA, able operations, in FlashBlade costly growth FlashArray//C lead modernize avoiding will workloads. operations their to the that during object be AI and quarter, all highly customers recovery. has analytics data and strong and file file FlashBlade these and and traditional manual require majority object existing data the Unstructured of multiple and cloud-native the records. With makes and for up penetrating individual rapid such high worldwide, workloads

unstructured of lower on //Accelerate Please majority storage data our join for on at vast the to us exist systems. a continues FlashBlade. primarily cost conference game-changing next disk-based week However, announcement

market. for getting is technology, and storage. ones. that the over build that And performing our way the in next unique close quarter, overtake and all-flash week. developments the of stronger creating the expanding impossible we’ll higher data customers leadership and for is center, Pure the continue performance we’re with in X gap progress in was and resuming workloads technology, better and It embraced, storage and ourselves strengthen it’s in also towards the brand advantage years. the solid-state our of competitors to with many that our the the we I into in while Middle a technology, our that opportunity this This multiyear effectiveness and is storage themselves have meetings expanding magnetic we We operating to Tier in to QLC wonderful the the experience. our believe of pleasure build latest market customers’ first in time and FlashArray//XL high messages using showcase QLC. had to and X and promote, overstate sophisticated With past their commodity face-to-face that high, with team requires a new cloud model data Europe We lower-cost not made clearly strong price can put, to Evergreen years clear magnetic our our are confidence East Simply These Using existing is relationships to differentiating are this software infrastructure. partners a our price buy members as delivering meet customers, QLC being that operate meetings. DirectFlash

aware and current We concerns. customer of also are industry

Pure’s industries components supplier of Of remains product the concerns fewer us as efficient course, simplified, customers focus means lower and a has around and less our across consistent lower challenge chain. cost, architecture waste supply on our across one a risk. and This line served well and these world. is

component relationships and disruptions multi-sourced design operations. way have we design continue worked extended Our invested our of team to we customer world-class together And in partners means quickly I’m before, with we’ve that with flexible, the modifications. meeting as address have global for our years supply proud architecture hardware demand minimal very strong stated supply and disruption. can team with

and its time inflation of fiscal on market. both as as economy this rebalancing market effects on We and demand. concern well our believe will and inflation effect monetary some is in And area have will economic responses. the cause for Another and be present stock also certainly will

on believe less for will However, even aggregate muted customer and be behavior we Pure. in its influence IT

success the top First, their organizations. enterprises transformation for made have on now digital their of list

and by portfolio enabled believe phase as Pure entered business highly commercial, products an second as and well enterprise has growth, leading differentiated models we customers. cloud of a sales spanning of Next, and expanding

coupled is inflation, so-called concern great of cost with resignation. area Another the

We have levels over the the of lower last for than a has reported seen whole. what been as but higher-than-average industry year, attrition

top reported own will, a as labor inflation. the is While Pure we professionals, expect space technology us hiring talent. to reduce the internal do recruit and both external that forward. we validated in tech the labor moderate costs attrition cost great demand this work turn, and We of increases the believe which higher year, for enabled return place by slowdowns beginning going expect to our of will retain somewhat to and this to which Recently marks in normal. wage a old surveys, has recognition soften

to and I’d especially the Russia’s strong general across near energy, item industries, to given hiring the are of and are The effects economy our inflation our Our projected of to European and in touch Inflation, is performance dampen the term. top we Ukraine. invasion planned targets. upon team brand is final economies in attracting European like talent acquisition

business energy positioned customer opportunity that overall to believe to now The Pure cycle up see of of this and that as is earlier. IT costs pick Furthermore, are share. European-based energy the now our indicated enterprise innovation in. Pure to largest for investment in one of We secular of strategy than market in business higher are efficient, less is European investment segments have may something and technology represents demand economic the the we And line loss required excels equipment somewhat noted that is force for competitors. While growth, reduce leader customers by this that affected We already for experience bottom increasing modalities, investment. driving is of up that other is that technology Pure this businesses, #X IT the capacity transformation. more believe make another

Our consideration growth and opportunity turmoil, Overall, prospects. these events into never Pure of the market views thrived full have pandemic, in about of Despite taken our we and Pure’s optimistic guidance. and been are impact all has more grown. war

these over stronger a several years, now and at more customers in Krysler, gotten expect our the numbers. to only have we years last ahead. I’ll over look turn the We ever CFO, for delight to call the deeper Kevan

Kevan Krysler

afternoon. Robust our be you, very portfolio key and momentum high performance strong demand Thank as of across and the our geographies. U.S. outstanding and our well international quarter. Charlie, our to solid again good to We constant, this demand our services as contributing continue saw execution across impressive resilience sustaining in portfolio, and the saw geographies solutions, We growth

the to challenging continue for deliver and not delays supply improved. our has chain backdrop We environment of as customers a minimize

subscription during from our inflationary business growth operational performance annual or cash discipline We recurring remaining in as revenue broad-based million, or to and the subscription increased pressures. grew XX% to $XXX profitability ARR, RPO despite billion. flows our achieved continues obligations quarter, strength The resulting continued of grew revenue, $X.XX also

reflects an RPO for year to last balance compared QX reduction X to relating global product outstanding a of approximately of integrators. when million our shipments $XX commitment of system with Our

our Excluding these shipments, XX% grew year-over-year. RPO product also

increase to improved focused We business, of very customer growth has we our our travel. which continue new be on as

Our count this acquisition the the of new reflects of approximately approximately customers quarter total XXX U.S. includes XX% and customer

our larger originally to of over million. this customers. revenue had with XXX forecasted Total exceptional, the was our $XXX Approximately our upside close $XX half growing over of in enterprise to million we that fiscal several customers XX% second the U.S. in year. revenue Fortune quarter product for quarter the of was

against services Revenue grew chain. and our XX%. solutions transactions growth this margins revenue XX% to strong and customers grew approximately year-over-year total approximately international and were which was XX% XX.X% Our our a the revenue is resilience XX% supply solid year-over-year. in still of Subscription these agility earlier very quarter. Non-GAAP U.S. represented XX% total revenue. gross at and testament grew we were deliver of schedule, pleased were to when Revenue technology able excluding a the the

very we product differentiator designs We this our the and close this were by be factors profit of services over further and and margins sustainability of solutions this occurred margins during quarter our hardware customers quarter. have of Non-GAAP our continue was simplicity, operating integrated value. High our of to of but with pleased resilience to non-GAAP the our earlier. non-GAAP margins XX.X% margin year I and As to continued mentioned improved achieving quarter were highlight, that gross we at $XX key operating strength to performance, quarter. appreciate gross software believe forecasted key subscription The during and be a the contributing quarter. profit XX.X% that transactions that million are in to also XX% later strong continue operating

with $X.XX and the We Cash million profitability from flow this also contributing in Higher cash balance benefited approximately $XX operations billion ended quarter. both factor. was employees. quarter over quarter. collections X,XXX robust both approximately the during to from sales turn over million were Capital QX in Now was let’s High QX. expenditures $XXX and the flows. and cash sheet a

the credit outstanding the to paid our balance X.X million $XXX was returned We approximately this at fiscal quarter, $XX million during quarter. shares of of revolver capital over beginning last mentioned of As slightly quarter. repurchase million

our $XXX repurchase million $XXX remaining have from We program. million approximately share

strong strategy growth profitability. Clearly, Now guidance. turning improvement and are well to of we continued against executing our in driving revenue

estimated XX%. approximately million, expect in We revenue demand be continued QX approximately strength growing to with $XXX

approximately QX, approximately in representing be $XX margin. operating operating million expect We non-GAAP XX.X% profit to non-GAAP

estimated but to as that performance closed for original results projected non-GAAP our In profits Non-GAAP approximately environment, included deliver as were XX%. ‘XX partners expect full the FY we closing, Given estimated QX, that to during now our approximately guidance. of annual and operating guidance quarter the $X.XX representing the approximately transactions annual later year. consideration QX margin. is are and growing were million, from XX% QX well and operating outlook close current be profit $XXX Revenue will to were as for macro the exceptional. revenue We our year, raising for in fiscal team our in continue be this billion,

fewer your customers our operator energy storage demand turn than waste commitment sustained produce it, to our storage to customers consume solutions On our innovation the leading space software substantially components so and and get when need annual solutions Our our and integrated in provides XX% and with in that supply and margins. market-leading us highly our data to performing to are chain, With with the I providing along less reliable. for it operating that to hardware and growth, Strong require help non-GAAP flash excellent alternatives they less and execution, solutions market. revenue other that, Operator? will we XX% will where can questions. management deliver over particular

Operator

Raymond James. Simon from The Leopold with first of the is Instructions] line question [Operator

Simon Leopold

that of to Pure little like acknowledging macro. you Snowflake. you about a And be hear recent you us like little on, more of I’d that like really acknowledgment a I more more understanding your these the a put What announcement I’d you’re of as as give well. of regarding yet a Charlie, the And confidence made us upbeat. how together? first what with challenging. environment informing do bit quick view better quite than -- guys It partnership we follow-up, wanted get are very that macro essentially, kind sounds your difficult, if a telling what’s peers? you’re how giving customers with help is its insight yet to the comments should could just around the essentially you help is things you sound resilient give that the your -- to

Charlie Giancarlo

I hope Very well. good. you, Simon. Thank you’re

So seeing Simon, momentum overall. we’re our is the what market -- in strong

brought larger portfolio penetrate into brand new of and large buying set companies new All net that a now existing that’s in to fact greater net customers our larger opportunities customers with opportunities being logo. and products, and have as broader stronger logos a to us the penetrate allowing a more, in a of stronger much we

affecting or slowdown the forward. to, that to question, us actually going -- is affects can we’re bit of way different. your seen macro the seeing I blind -- strength. And say fact a would macro not looking little our So us the yet that we’re we customers macro say at the just possibility address not speak that we we the would economic I are affect to but the the and have

last strong seeing our we’re the then for say what seeing and through proposition Pure if quarter, IT and will, a on currently -- answer you to in our what Snowflake. our be breadth going customers And and by currently strengthening, I’m acceptance continues the just value So value Rob I market -- of would to greater demand our customers. the question I’m overall, to brand of proposition let the

Rob Lee

is this Rob. Simon, Yes,

want manage may their Snowflake. super to going compliance So multiple the reasons, well in sets. of would demand look, solution over for early -- the on customers or a environment, month. the tool are in really data across of and forging joint generating excited tightly want about is security be a power this data share that joint from also more security the of announced or hold customers to lot data This your as for And holding that first strategic that for question is operate and this benefit a think we’re see cloud need data solutions answer on-premise who Snowflake, analytics great manage on-premise as We benefit hybrid these earlier in that that partnership step we would warehousing, their fit cloud-based control solution from customer to types to that we but who with data data tighter the for environment. customers that either to we’re

days, we’re joint like and seeing we think to X early signs is just for this technologies so the bring said, but I customers. good solution great And a early interest, of together

Operator

the is line from Morgan. question of next The with Bora Pinjalim JP

Pinjalim Bora

not it an ask now, to Charlie, wanted Kevan has I supply twice, chain. I Pure quarter Charlie, like to solid obviously a had look seems guess, done But a row. you’re in number and the on managing for really at and at quarter. chain again, everyone in else, affected job you it all. the second like supply seems the until incredible I getting

all we However, the do see field. casualties over in

kind So this kind -- should which -- longer aware this time, or are on I investors should streams months of prolongs any are to as for Pure over chain environment you of side? be say, the that might impact elongates developing XX X if prolongs, the supply you a seeing of

Charlie Giancarlo

Thank a Pinjalim. you, great question. It’s

but Obviously, to our Let me and and work bit, or if operations of means subassemblies decommits. see environment to characterize -- generally supply situation on like still the supply new rebalance gotten It’s shutting we in better. We background a find -- things you our would were surprises for forth. ask and tell various you Shanghai that chain not perhaps so to team down lot a of character engineering, they supply the changed now. sources has

lot. at point the customers. but constant of being to the that perspective. on us chain a it’s I of would a effect supply thrown almost say nonexistent, it’s we’ve certainly a us minimized So affecting our that from stream are challenges

and of this. remarks, fewer us as need in I to very, That a very because mentioned, want my prepared lot into as have our But are did off to parts we gives hat them more Kevan optionality. that I goes busy, take about. worry we to teams work Our that there’s

competitors hardware using we own have of rather choice, because our -- than less have design commodity our they parts, less flexibility. We are most

remains gives us have the Kevan be wood our fortunate supply of it we things on greater sure about minimum So our make accelerate actually as this some able as And knock to these and quarter, customers. talk shipments But chain noted. I because challenging. I the to a effect flexibility goal is we to on were

Kevan Krysler

the Two the that the chain doing I’d drives really the say we terrific factors is to. add is that other job I other with add supply risk have supply risks thing to. think, the X I’d sustainability even acknowledging combined, that it are to as And a alluded that confidence to high the around we’ve partners things well. Charlie the I’d confidence -- alluded our

we IC point NAND the The really challenges out is I’d and see types that same the other semiconductor is to -- thing subject side. of not and side across constraints around

of as And well. materials, BOM call-out important that’s so and biggest and our part obviously, that’s the an

Pinjalim Bora

decelerated side, When Understood. quick I to But for had line then I And it’s the you subscription sequential growth, Was I this want new ARR, I look it release. a at was ask squint unified the subscription in really it find the led? a revenue seems on follow-up [indiscernible] like quarter that at to bit. Kevan. of to to versus not seems look subscription And seems much. press consensus. like a growth it led when kind it’s CapEx net mainly

Kevan Krysler

variability way I good be it. that’s had to lot be coming strong. quarter-to-quarter. the we about look, right. I continues the a I growing That’s thinking But expecting XX%. on volume be subscription of side. would CapEx a business think ARR through mean to

Pure our takes where customer around And has services. for every We’re talking tuned, I’d roadmap data no some about accelerate our very a really say key Charlie there on got a imported energy and establishing matter and Fusion talked out with too. their that are operating identified that cloud availability really, that being looking for this workloads us general run. as-a-Service. we’ve and stay laid We’ve model lot growth Pure a ecosystem, forward around partner out milestones on around focused accelerating partners of to to great we’ve

//Accelerate announcements at We’re excited new as some with very of Evergreen well.

Operator

line the Fargo. Aaron Wells of Rakers from is question with next The

Aaron Rakers

that of line, with gross to on I And customers. your it ask congrats any at you’ve not hyperscale imply deployments your I first guess look question results. really cloud at the wanted margin large great one is product that incremental the the seen would I on XX% when

that on that of you deploying factored question are first is, fair And course year, how project fully heels assessment? So that Meta, how the into guess I through I expectations? is of the customer, AI the that, hyperscale a guess, their thinking this about

Charlie Giancarlo

Aaron. Thanks, Yes.

this about do So that you hyperscaler from -- you’re We making we’ve spoke correct. on quarter nature before. but We’ve also not substantial seen the the revenues good of progress been both has as the discounting the you as our standpoint market will, a from as overall. more the front well stabilized, ability value extract our pricing products if to -- as from

So I would take manage gross answer say I one. And Kevan let question. that actually, to we’ve been margin, I’ll the able Well, well. this very the think, I’ll

we discussed specific they As that as the the one started is quarters. we they build them. out data types when use be that continue with And this on speaking we before and name, win, episodic to first working of tend sales was these somewhat their of about we their but light the permitted Meta centers quarters, indicated of

time orders, future their it be frames. on optimistic will certainly We’re on but

Kevan Krysler

think be right? Yes. And I to was that clear, expected,

Charlie Giancarlo

expected. much Very

quarter. sales the That’s expecting correct. not Right. We’re this

Aaron Rakers

seen EMC curious, I’m growth that the your of you last Dell just That’s very business. last competitive reacted? changes curious, saw you’ve just have of how these has What Yes. momentum that I’m guess helpful. you only the seen the given saw quarters, seen? you quarter, have this but this competitive all? last at a growth, I landscape not on quarter landscape couple And bit little know in I X% any storage

Charlie Giancarlo

And in honest same same products as against minor with competing which of type It’s more very the thing. set customers. we and in more across sales Obviously, of be get be a Yes. the good. win a good set a greater tend same to are with our rates force, the We larger to of we’re of of you. competing fights set is customers, expand bats. We at customers, relatively set environments our

we helping. So now brand customers that may think say and is that -- certainly we’re have to bake-off would performing. The be I fact that any -- be in our believe competitive they I

here, let but seen substantial haven’t and competitors that terribly would So I contribute I’ll the anything I space. -- in say this from Rob

Rob Lee

Aaron, Yes, add. I’ll just

that, as the the really innovation as we about technology prepared as to well think terms as, that expand technology. in remarks, at in we talked in standouts our investing differentiated thesis having of takeaway is differentiated view, I further biggest my set from competitive look really his those in -- remain Charlie

If at QLC you after to and go look with doing disk what we’re hybrid.

we’re with to doing Pure FlashArray Fusion, into at and look mention to you and that next with and family after now extending to Portworx go significantly performance, XL, week. higher what more Services, If with GA not Data come

competitive just ahead a lot is out us biggest the see a go set this any standout us, great of for where is we that area we see think I there opportunity I the more of runway And an to think materially of share. that announcements grab changing don’t market landscape.

Charlie Giancarlo

competitors. playing is let game Actually, Aaron, which we’re additional me a our also different answer X comment, than it with just

Our think, technology and different very game. it and customers it’s strategy, marketing storage them high technology. been a game. The to They’ve products. commodity. respond. a It’s only high should else. care an as a their be for I They’ve playing business nothing We And we’re in price marketing difficult, competitors commodity going play entirely been to invest like it’s about

Operator

the is line of Amit with The from Daryanani next Evercore. question

Amit Daryanani

expand? new I my talk when talked the bigger higher mean? a engagements in that Because frame Or for land quicker what with comments definitely growth Congrats prepared that phase additions, enterprises? of inflected on growth its that inflect one are of the at the Just a you what materially. could little Are Charlie, entered great quarter. you really, about of looking has And go Pure? your and you does you example, you second But is about pretty phase what in for seeing growth I’m journey. a second mean higher Pure bit customer guess hoping first potentially forward? is sort company? as maybe this a help seeing mean does does for

Charlie Giancarlo

to growth. was Yes. really environment several of compete What the years, investors with growth particular, a in continued we bit. to we were product growth allowed portfolio and more over very, an and of they know, greater the our We’ve as started award-winning with was investment use our in us mean as long-time R&D only a our years our slowed responded look very last is so effectively it focus the bear seeing product in by And early a an sales first sales larger type, we’re to we back, if its that investment and fruits support for such that their support where and rapid in building respond, enterprise could unique second phase competitors our us their larger of sales phase portfolio. able many therefore, and And customers and broadening out forces capabilities, with now out.

And so I to believe growth. products. second is and -- fact deploy of have penetrate And give of expanded to customers what that with any us scale, advantage our compete the that’s competitors runway, we’re to runway and going our the is we we growth if be can leadership now portfolio, a pretty a going more a now of phase to will, an larger you superior long second unfair into phase with continue the of and

So growth. of I how that’s phase phrased the second

Amit Daryanani

way Or share you simply Pure in you and you’re that of I’m on quick. pulling outgrowth fact resonating so of from -- the out, that if million more ability just million better supply think, is I’m have with supply seeing Charlie sorry, do was reflection peers. one upside is The it it the talked is organic. supply what are better then laid that, the better from is curious curious driven? about? and Got I $XX was quarter, market this that I’m the very a is fundamentally it, back getting are was you that growth more in half that saw sounding it. the the engagement the the in $XX you right? in you versus it better with I a incremental because it is like think call your probably really up outgrowth? playing And Kevan, we And revenues, part more fact follow Or customers could you

Kevan Krysler

it. our I’ll look and we our not I’m we’re That’s you from and of our It’s power an helping components, what standpoint, simple in a then that, makes supply decouple when with us how we’re ESG the leveraging architecture Charlie what some less portfolio our it’s require resonates Well, terms in And we’ve architecture lot sure technology reduction on performance, architecture. to -- really mean simpler terms resilient. technology. in -- architecture of portfolio. sustainability But of software is look, I leveraging and side. sense at and to it we’re the let obviously mean with report, I for terms stunning customers, got to that’s doing -- of I’ll kind It’s with the versus stats that our right? of the Kevan. this of just supply add start also and in how energy the use.

say So I Charlie, would that actually other together the from perspective. go my X thoughts? any

Charlie Giancarlo

do. That all, Mic Really drop. Kevan. it says

Operator

The line next Hall of Sachs. is from the question Rod Goldman with

Rod Hall

we we going, how understand In we of that." as and to HX. come customer and just we you thinking doing this should execution million? figure We and it? million have a about of are had $XX to about really Or and trying go about good coming that? I try the should a to back we were want follow-up. supply just to you were think that so sensically then wanted I out against to to able quick backlog be how back more deliver that you thinking And I’m it in "Hey, accelerate kind kind should ahead thinking about be -- words, go other to $XX

Kevan Krysler

it’s was -- terms of our We plan. latter. great question. in large very these we have much enterprise visibility Rod, a obviously, with customers the It

I they back requesting In environment, the us earlier delivery. to given appreciate those requests but discussions, could our to came the Rod. your terms really point, of it’s latter

Rod Hall

have great, the exciting And -- quarters? all interest think I Kind like like as noticed And that’s funnel of expressed? how What on a does ARR move what pretty portfolio. had of the I next kind the through Okay, GA mid-month. we announcements Portworx, you affect feel Charlie. Services of few then Portworx that just these I’m you the curious looks part there?

Charlie Giancarlo

is, new goes it’s out, we in still you it the Portworx point past, ratable into is a and as as product about because Well, ARR. and spoke relatively

overall. are very in We seeing product growth that line good

-- Europe my quarter our by East, in Middle the opening mentioned customers remarks, and partners actually in excitement I this lot quarter, quarter a over a As last spent and in of I’ve and or this of past and time the teams lot product. sales the

of forward. So a reportable if it take really little a we will -- strong a bit a ARR. time really you it we before starts difference, Obviously, I in think has will, it it what we’re our future making difference, has -- tangible go believe as

Operator

the question with William Ader next line from of Blair. comes Jason The

Jason Ader

on macro? close and or Yes. want to mean the any for you about on or behavior? I Does when baked understand, guess deal customer thought geographies Kevan, that sizes of your in guidance rates how the that changed on you I you comment you the -- year, assumptions or macro

Kevan Krysler

question, demand pretty I no we answer a to and to our our us continues and see great quite of half. was for impact in We our perspective year, standpoint that macro changes will that Yes, Obviously, guide demand and down saw terms when that any, and carefully digesting for if in a were obviously QX increasing simple there break guide a have is against significant lot QX. really think for annual But then the And that our from guide in the Jason. look first I it’s noise then demand We second understanding be signals. outperforming. a the compare the no. evaluated what, of year. initial Look, thing mentioned, for from we’re strong. as And it out There Charlie we’re assumptions.

in as that with business think usual it’s and the So we’re QX outperformance I QX. seeing

Jason Ader

the as gobs now just market quarters right been and Okay, much it to kind have the is some for that let’s understand year better the some of the here. And near-term spikiness in Charlie, there’s taking going couple great. just share? it, is business, just Or last are a guys I you the to call of, that just move while? then, you, And of you charts. you’re storage But off that through been have deceleration than it’s in been

Charlie Giancarlo

It’s speak numbers for the an themselves. interesting question, Jason. Obviously,

strong. taking market on. stayed strong It’s Prices is market at very benign a The going share. at That’s moment. ASPs clearly that’s have We’re helpful. always despite the everything

So it. benign I and we’re best taking market, been a to think put it’s share. It’s the way probably

Jason Ader

And for for from demand fiscal of is -- XXXX. tailwind of be pent-up lot XXXX demand be other expectations that will there the pandemic that’s of moderating sort helping? be a XXXX we In should -- because still words, our will in gone pent-up

Charlie Giancarlo

Honestly, we’ve expansions not usually the developments, here. new expansions, new fundamental really year, been playing over demand infrastructure, seeing pent-up pent-up demand. not role -- It’s last even a --

say pent-up has get a equipment. demand, for Remember, at us, playing So role. been refreshes we I not would don’t big of least

always And they Our they Evergreen regular additional upgraded means existing a that, that basis. the capacity. equipment on customers when is any of capacity, for pay don’t pay for but replacement need

the benefit some So by demand we get competitors we of don’t because replacements. get same maybe pent-up our have don’t that

Evergreen. have We

basically factor not again, say, demand for a is or existing has us. would of environments. I pent-up new really that been This so all And expansion demand

Kevan Krysler

you you tell kind alluded the million pre-COVID for pre-COVID rates interesting Jason, seasonality, that growth of days I’ll normalize is growth look that is $XX the It the rates. half, at of and us terms we in half and first Yes. matching when to. for too, seasonality you second

as data well. for another point that’s thoughts So

Operator

Stanley. line question of next The Meta the from with is Marshall Morgan

Meta Marshall

away -- Maybe customers. your bit do but macro, have you little micro it a cloud about exposure to more XX% Great. guys taking into from

environment, maybe $XX just trickled a additional saw anything in so down diving want just just quarter. kind from in of seeing that’s you to as set? sense of kind And then an changes guys that And million the to we’re some get the customer the you’re technology, hiring upside whether seeing that into

any Just enterprise like commercial that’s or of of indications more customers? from whether your

Charlie Giancarlo

I question seen customer overall, change I we than strong the and cloud that say Kevan think, of segments answer would past. just were a on the growth accelerated strong the the I us. revenues These So wouldn’t segments character say characterized growth across the overall what for enterprise, there’s in as the continuing set let all we’ve commercial demand of entire don’t in. other shipments. in exceptional dramatic coming the I’ll been And enterprise of

Kevan Krysler

that Yes. out would along And U.S. I actually international fantastic quarter a had with call

$XX I the point geography so from was on pleased saw performance, standpoint, side, of highlight well which we Charlie commercial, when normalize that tracking at saw look it. broad-based U.S., for about terms with the talked And with really, really in And international as as Public a growth it’s you million sector good the in how we we to a saw U.S. for Charlie’s was there. some us strength we really the in what rates.

$XX but a when power of So have. portfolio at seeing million we we’re board. the would, about again, the we outperformance, absolutely talk the look the us, Enterprise I of across workhorse again, for is it

Operator

Ho The is Bank. Deutsche line the with next question Sidney of from

Sidney Ho

be talked back account your Can of to by you second just second you raised your the you pulled is roughly through but revenue there? about. revenue into there imply would half operating second year XX% walk being your dollar for to And quarter? a that full will being seeing you little but the But look us the high process you the second if revenue guidance? up the in it. to first bit, the profit at maybe in are of want it in Or that pulling Obviously, year. is half thought in but half also I prudent you’re about guidance. half, follow-up the profit, I flat the operating go XX% year-over-year, Are more raised from

well. that Just can walk you through us as maybe dynamics

Kevan Krysler

great, sounds That Sidney. Yes.

we’re raise look, pleased XX%. with And to start me the revenue of Let growth. our guide annual with very

an that’s very think terms what of outlier I this seeing, in environment. in Obviously, strong. we’re especially

I that annual think which So strong. is away growth rate, not from backing very

you’re half, in moderation second first You’re and seeing strong in some half. seeing growth the the

half, the first Some of really was standpoint, growth getting strong. rates, couple about to is with which the alluded rate that again, for back that second from the kind we contemplated still you other what I Jason look a is days, half of back when And saw for that our A of we’re and then high But in million is when at to we quite as this great. seasonality growth forecasted in in half teens, pre-COVID is which the talked thoughts. expected seasonality. second normalizing $XX seasonality, half. The

As strong comps. year had that’s with growing. also only mean, a year, last year, we we I progress through working we’re and the fantastic

had also We an extra in the quarter. fourth week

year. for well. So the a being with we’re our as well. we environment revenue macro But the that’s growth without thoughtful are outlook as a And doubt, consideration about pleased

and your innovation This Now move really view to if was out, is and about execution seeing that’s really good which feel and you’re absolutely time our we I profitability, operating at strategy that question, of the against is laid prioritizing growth our here. the what profitability. current piece Charlie profits, increasing which the second while same improving

moved Expect we’re operating profits into quite by our the for XX% quarter. the operating this So the obviously, year. helped QX. pleased profit in were the was And transactions quarter that with margin overachievement

the We’ve time progress of is leverage at continue that operating effects QX. hiring on we also discipline on doing continue to and We’re talent, in operating in we as very inflation thoughtfully well on. and focused hiring great we’ll to be and invest made monitor

that your question. answers hopefully, So

Sidney Ho

to a That’s margin NAND headwind quarter we pricing Maybe look the I follow-up. expected. QX, at gross how and the that. QX year? helpful. thinking more X and as quick the for gross are be expected If you products offset for it’s was of margin definitely you But question prices rest product improved Yes. is, than in But subscription able real about for may to both that the raise the services

Kevan Krysler

the the happy might very Yes, I’m XXs. margins term, Look, gross being a product longer be on high still record margins. broken product I think in gross with we

we’ve again, once pleased. very overachieved and I’m think I

our is the in of solution, doing average tremendous sales and selling that we navigated value seeing the a selling I think team as prices we’re the job QX.

it. on think I large a So that’s driver

subscription of consistent pretty is a XXs, of tracking margins. that been margins, in gross what of we’ve In kind subscription good the low terms like and terms corridor that’s in gross I

Operator

Northland line The Nehal Markets. of is the Capital from question Chokshi with next

Nehal Chokshi

subscription XX% revenue subscription quarter. I year-over-year Yes. And some there than from ARR tick growing mention this. a lumpiness. did decelerate Why to year-over-year XX% that did line? a why But is of I you growth also did that think prior And fantastic on take execution. happen? the the quarter slower growth then in

so helpful if that well. into as that And would be lumpiness why you go there’s

Kevan Krysler

think mean, Yes. time. you I sheet the really a coming when I I look, at I balance subscription the that’s growth, mean, late over indicator. mean look off revenue revenue that’s

as think of with how very I’m I our really subscription ARR at look well when that. pleased from I I’m the at health standpoint, we’re look, XX%. business, looking balance subscription which That’s And as our an doing very grew RPO growth. strong

well. good happening announcements in set a of of Evergreen. accelerated We’ve things on up terms lot our got We’re

line, to And top at in RPO going so the health the the -- to rolling think of I’m and But a again, sheet terms the revenue strong I you’re obviously, ARR as on of bit really off balance get indicator growth. if that’s looking and as a business. little not of subscription the well variability subscription

that build the well. the on Nehal, I is QX, as to highlight have got you’re would to a when you’ve other would which Now comparing you and in thing, quarter-to-quarter extra in bearing week that

Nehal Chokshi

Yes.

actually what sale that. mean doing sale. you technology doing a in do Can Pure on earlier then point an you Charlie, that? a good Okay. on All point. right. Understood That’s versus saying competitors commodity really Storage of question, a is by And made expand had you a

Charlie Giancarlo

R&D. we which that You back build heavily product We means the leads R&D, consistently a in bet. it market. to that I’ll take invest

on Our generally large a run than spend to largest our X% very shop. I used R&D. R&D less -- competitors competitors

at R&D. from for a accommodate R&D difficult It’s from technology them from the if advanced financial class with capability. top keep continuing And barely just to of business correct keep going They and -- that very to models their management up that development R&D, high lights but managing staff. data us standpoint be of tier we’re development higher standpoint, to not top a can requires perspective. storage is on can’t You the X% technology and a change

reputation. a You get

they very And with and very used game. different power and we to them superior all the quickly customers capability and than so less been to they’re have we require and experience less as -- space being that that product, a of that that as is assuming storage commodity, and I said, have far we’re support that a other now vendors overall require were Pure that used we And learning play that’s we our appreciated. cooling highly alike, automated, labor, a increasingly buying very substandard different

Rob Lee

now, been look that of results pretty out unmatched disk the if if the hybrid shipping going product we’ve market. the in FlashArray//C., across but that you completely apparent look after X.X years you think are for and portfolio, I at

this protection, rapid for whether at And doing and you there, You we less of technical FlashBlade. the some R&D products design, gives of //Accelerate. small have that hints at at of have recovery. use it’s and you analytics simulation, entire modernizing that chip that really high-value out results What to look and suite whether it’s data AI, just driving, look Portworx we’re focus some cases if we there, the on discuss next week the computing, is innovation much what

Operator

from line Bank is the The question Mohan America. of of with next Wamsi

Wamsi Mohan

also half second I has the I guide? if answered, lowering here. the was you half second guide amount. jumping calls million about effectively same to can the apologize implied forward, this about already across wondering but attributing -- by talk you’re been $XX pull But mean, I

there’s are demand issues, environment not the the mean, but supply saying demand So are remains that I that remains has robust. robust. companies are because actually There chain the demand saying you all changed

you’re So that thus pull your if you’re you in was like address macro customers demand to about few terms impacting of second forward? deals where talk the into could have forward? the is Was effectively you well broader? more just half it the I what’s actually I first methodology And the where broad-based a the obviously not if it million -- half? profit to want you was you far? saw as calculating an isolated in how relative much pull this in just visibility saying environment that clarify Can And $XX pipeline. know the seasonality

Charlie Giancarlo

bet. you Yes,

on we in recession. demand we’re remains and possible note economy, in slowdown are time, actually we’re same some At of the possible -- The increase we actually a the seeing seeing robust. report certainly So about what what inflation. around the debate is public even only taking discussion can

has more -- get keep bit not to our that to ourselves. -- we a so And and mind outlook I be of in have ahead

think Certainly, through in that exactly even were -- clouds cetera. budgets energy for strong even the strong. reflects in same et the investment at quarter, end I hearing thinking. the of warning time, customers and prices IT their so that respect on with their economies. And last though remains remaining we end our of But demand there our time, from -- that the without at IT -- and were horizon the At on forecast at focus that April, in Europe, to -- was the

Kevan Krysler

was these limited. Obviously, so enterprise terms then have very been customers, for that And $XX their your of Yes. closely a just it the would them to with couple demand with answer in question million, large planning. we’re large customers, of working

planning in put bucket, in with isolated us demand would of I second to that it customer the half. that, our was of the terms for easy So very more binary in understanding quantify, very

Wamsi, one it. amount looks as might in first shift I shift take strong. and profit to my detail terms It’s a And more of alluded do Revenue, half, can detail, that that’s nothing half first as I to It a Demand mind well. drop-off So half through well in has second as we seasonality. mentioned, in operating have seasonality. that’s half. how through you view revenue second a the I and of as went in in fair as second half, demand with simply in

Operator

Barclays. is with Tim Long next the The of question from line

Tim Long

Yes, as two, well. could, if I

of secondly, about new Charlie, kind FlashArray the XG. just just you over year. architecture? First, as but moves Could with growth, potential moving more revenue a on just a talk mentioned margin for this color as little wireless only little Op to XX% overall win margin, something world the give you basis Op about the And one of vertical. on for a more points a important How be application XXX a telco And large us data-centric this there? a little for bit a can

not revenue reason talk seeing you or office return that limiting -- a what’s to about Is leverage is much can So on and we’re growth as there that? other strong really just T&E here? any

Charlie Giancarlo

let I’ll handle Kevan part. Thanks, the second Tim.

telcos XG, were talking quarter. the able and an about orders and this other to I’m As this specific worked on this XG the opportunity first but of XG, to deployment. to one only what about top space. XG going They’re of far the it I’m more the -- us efficient talking as mentioned, as call-out other for generally Rob to deployments. this exciting make and more was the And about performance in The to an exciting not more tell opportunity this smaller, It’s products invite it’s market certainly few ones associated in world. with about little telcos I we quite think who environment. We than -- large bit we’re deployments. we we’re fact helped optimistic one are power in a great that get we’re to denser, have a

Rob Lee

Yes.

So In all hyperscale are mission-critical products like spoken validation ways, to our a those I serve. the to and and those go this well. environment, a just services really mentioned which positioned that automated requirements. the to products and and suitability really it’s think a same the deployments. Pure’s of many environments, lot are attributes think attributes share just the large to highly of And these performance of highly telecom testament well as previously In where environments, about. performance, is great I really demanding, XG all highly uniquely that They’re the and reliability the we’ve available, Charlie you very attributes quality

I super we’re the win. pleased so And with think

a environment, that when us the this to couldn’t as of turn I’d built and to open part environments. required and design were ease management tried they what customer back the really software also achieve think demanding environment to replace chosen out themselves custom -- around of was automation to mention I of we build really performance very then had particular these initially in reliability the and source

Kevan Krysler

to our just I’ll strategy this down just question And back hit paying again. and prioritizing innovation around the growth And that’s operating really, really profit comes off.

it And we’re time, profitability. We’ve it. same several at increasing been seeing We’re our for quarters. seeing the

that. Now We we’re balancing great mentioned. had as some hiring, I

new with. I really think worldwide, folks we XXX quarter-over-quarter, talent which hired we’re over pleased and

expected, while incorporated higher and and wage to be increasing as all profitability that’s some We costs for are being balanced the we’re navigating year.

context. So helpful hopefully, that’s a

Operator

The the of next question Lake is from Eric line Martinuzzi with Street.

Eric Martinuzzi

wanted there’s there on a curious, where layer good up deeper fees, Just tough relief I relief? up. margins. Curious go to the any chain product seeing anything if forecasting environment. a you’re Obviously, or putting expedited But you’re gross to in gross shipping supply see let margins

Charlie Giancarlo

seen hoped had To chain not supply in constraints not I be ease would nature supply seen better we’ve concerned QX QX and and ones And components about. worse, it’s not we’re but that supply seen the start closures, pointing as we’ve QX chain board. get the Unfortunately, the just problems, still but most ones the say get situation are after of everything not the you at of but One -- that we that, absorb back from or But moment. logistics availability shipping, by that problems. border that. components right? clear, across is because to the board, Those get ones would you’re the of extend. to across chain it’s us the changes concern the it extends can shut We It another can to that either. -- always or it all out, we’ve the it continues QX.

Kevan Krysler

have the navigate to fact that where we constraints well headwind. And side on the really the as that in as and against And how terms paying we’ve around off across have we to us that’s board. inflationary the comes that again both for of It’s is able exposure. less been advantage parts us, navigate really to supply

Operator

time, Giancarlo back for this I question-and-answer At over turn This the to the remarks. will call concludes Charlie session. closing

Charlie Giancarlo

operator. you, Thank

and around the their data strategy to deliver simple It turn our and to customers data Our companies Evergreen across world business. and enabling exceptional platform, deliver our to a innovation. continues results

transformation want and again their for for ahead. and listeners hopefully you. their trust, that’s our week leadership I growing as employees to suppliers critical customers of I’d their segments and all I We’re our thank sustain our once thank share next future, for our partners work. seeing their their collaboration like at and and hard to in all thank digital to innovation for to quarters a us -- forward you turn to of and Thank to quite years look our our in market few to this customers, promises our //Accelerate. today And

Operator

conference This call. today’s concludes

may You now disconnect.

Pure Storage (PSTG) 2 Jun 222023 Q1 Earnings call transcript