PSTG - Earnings call transcript Q2 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

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

Sanjot Khurana

Treasurer Thank you second name the Storage Relations Welcome Sanjot good fiscal XXXX afternoon. and Investor quarter of My Vice to Pure earnings Storage. Khurana, Pure President and at conference is call.

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

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

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

slides. associated and are provided and in other or rates RPO, directly GAAP measures During investments. most comparable and all financial and Reconciliations remaining our performance this call, press metrics are measures cash revenues, non-GAAP growth than obligations to release the earnings

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

Charlie Giancarlo

strong us success you revenue results. Hello, demonstrated by for everyone we with XX% quarter’s continued year-over-year subscription Pure’s joining XX%. this as very grew our pleased by up today. with again, thank Pure’s Once and ARR are QX

portfolio. computational was modern S, in ability S annual U.S. customers. appeal during sustainable growth organization to highlighting and capacity, that generating between as increased solutions the every efficiency expands major electronic the was Pure’s portfolio management QX potential recognition, mid-QX, purchase providing our Flex, continuing environment of for In flexibility. disruption. customer such excellent. the Flex the FlashBlade and we without advancements continuously durable effects, and conference and balanced product its and additional across in FlashBlade markets, customer strong the FlashBlade file Evergreen provides inexpensive generation a of high-performance FlashBlade, international Our offering. they introduced customers performance, leader cases of comprised addition the ability with full protection. and including Accelerate the deliver customer’s as-a-Service their and our in a step capacity Evergreen is Evergreen transformation and and significant extended infrastructure. known simple, our Evergreen momentum, segments our Pure customers Forever joins level is We data a flexibility unveiled pay-as-you-go fleet of Evergreen media as in Flex designed number Pure With launch data design and of our portfolio investment. to available hardware of as storage One, QX, our Data FlashBlade FlashBlade image is and QX, and XX% on formerly and a in our be data next on upgraded a S of architecture was object enabling optimize first storage automation, capabilities, from pricing current our search AI, Evergreen portfolio units all innovation for for linchpin S It storage subscription provides to broad Pure installed consume excitement orders Building workloads, new wide density use across business experience needs. system feedback and evergreen price with largest significantly special and of a the this technology and range Evergreen performance and on utilization a modular model. with the line, is computing analytics entire forward the one

management this past industry storage service model Pure and operating Fusion data providers to enables this and also Fusion customers offer as offerings. for dramatically developer their We managed and cost orchestrate fleet service storage a infrastructure-as-code. reducing complexity and entire their Pure for general or also refers Customers can cloud providers The released corporate sometimes service cloud to customers, quarter. our and to APIs, manage implement increasing through and developers Pure availability use of services productivity to Pure agility. Storage, Fusion

Portworx’s it data developers Customers cloud multi-cloud and database simple many great the interest, MSP operations, and large valued yet for deliver management third reports our data hybrid generated public its and rapid for market for interest continues X has enterprise While to to Pure as from the segments, data Pure card every empower has and ability likewise highest models the drive shop a just strategy. and scores example support generated months leader the expanded and in on this its Radar is use released dramatically how credit storage Pure service Kubernetes that superior days, private, ago company early forward. outcomes a database data to and native modern consecutive the to to reason both first enterprise Their developers their compatibility. software analysis services storage. Pure’s deploy and due cloud their one-stop Fusion in ability evaluation in-depth including Portworx year by customers. POCs awarded deployment still avoid great chosen largest Portworx cloud, of Portworx sales among is to GigaOm Kubernetes Fusion industry to lock-in of metrics. is another for global cloud QX. its storage its its as time quarter scale us was all

As high critical believes we Pure and of in infrastructure a data accordingly. management storage I invest have is tech, and before, it fundamental said component

improvement We are their digital are and massive rave now down as now their quarter. we that and XXX environmental replace than a about Japan, simply enterprises more services the that in blown was this specifically ownership. of products a roadmaps they Tokyo a Asia-Pacific demand of our labor of Pure and for superior products, leading international uncertain to rewards reliability customer from in a and that cost product hosting customers total delivering away written a their tenfold installed hear energy our increasingly past the entire a Pure reaping weeks of customers all-flash that time, and speak experience Australia with legacy drive is top One customers I simplicity while customers visits new just performance, as consider also that they solutions market for customer of competitor’s Accelerate In expenses. elsewhere, successful for their significantly reported competitors. by Pure. the reducing performance, for ability macro while have solutions usage reducing international are commodity overhead first from in majority and mind environment, returned footprint this speed especially reduce transformation We who customers’ The by looking in I to. And energy In our and theater including e-waste. and very X partner of event. added actively to off

consumption we segments, to example center goals customers addition capacity. storage their which XX% with sustainability and their with footprint mode of By and performance, equal saw interest competitor’s this reduced Pure, targets. to In and strong reduced replacing San data dedicated also public power to their new energy data reduction XX%, of against their substantially sustained price PureX to by enabled in their Commercial reliability by infrastructure time increasing systems from threats. growth Many administration cyber them storage also safe department, cited Enterprise storage all-flash while County’s Luis very IT quarter. protect a Obispo as One they is customers and sector and

today. discuss of profit, without ability all strong supply to as chain while strategy on it prices. operating increasing inflationary the the navigating environments pleased while raising I our am growth with business deliver environment our Now, we and see will list I external

purchases Our by in and however confident customers enterprise to cycle. We expand of than continuing market resulting continue and of Overall, their take to to are data with remain we storage customers, base. expand of the to customer our diligence I faster in increased ability share signs sales grow lengthening some see market. Pure our do

strong. remains hiring our quarter, last reported As

highs the of attrition are industry rest the Our spring. are from this our and rates peers reduced past below experienced

plans we in As will central talented around will customer of that post-COVID success critical data to technology, companies Pure teams their our adjust investment enable a world the core normal, growth to the sales, market. that and infrastructure dedication other the and remain believe outperform to

work are our in increase office will have off hybrid our Many are review hand and CFO, at am Krysler, Like kicking come into development engagement. I we employee already policy, enhance about to teams spring. the Kevan the new days teams to our XX% which week, over numbers. will I’d specified detailed of together Silicon this for Next else full our be we campus officially on Valley collaborate, coming over in-office that of our moving to occupancy. Pure, like excited at a everyone new now creativity mic

Kevan Krysler

strong this good afternoon. and Charlie you, Thank We again once quarter. results financial delivered

recent introduction technology our of enables their enabled have and subscription productivity. models deliver leveraging increase Our innovation, accelerate Evergreen ongoing solutions and FlashBlade business our to our differentiated including are to power S us The customers software expanded and customers objectives. grow our commitment strategic our to to of that highly

others, environment. turbulent increase substantially their also why believe deliver solution demand and our customers our commitment factors, and for portfolio deeply with ability to times, be requirements. These not a our we prices energy Our short appreciate continues strong to are macro among lead despite products lower

and U.S. particular growth business deliver from to headwinds our both of growing XX% due growth, strengthening international continues this XX% strong sector. revenue Our with also dollar. Revenue to FX strength in strong, was quarter the with business even U.S. commercial of public the

pleased be from contributions We new meaningful business. continue with to

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

last of subscription or integrators. reflects XX% annual to Evergreen grew subscription $XX Portworx to XX% global relating product one of with Remaining we to approximately to QX performance quarter our RPO system businesses shipments of commitment remarks revenue, to of made XXX Performance growth our outstanding a were $XXX Fortune the for an reduction Similar $X.X recurring grew million. as million billion. solid compared our or last and ARR, year RPO customers. obligations

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

in investments and continue our headcount as our key to be around talent business disciplined Our to objectives. increased has X,XXX employees focused

Subscription specific services XX% to results grew and $XXX approximately financial revenue million. XX% and revenue total approximately to Total for discussion. revenue turning of approximately subscription XX%. Now services grew revenue revenue. the grew quarter represented XX% Product

reliability, drive this quarter. are solutions to margins our of this quarter. solid gross this factors continue XX% product our contributing We margin High subscription simplicity margins of strong of and gross sustainability at services quarter both gross XX% XX.X% and performance, to nearly

were of able deliver operating XX.X% price million gross on operating profits margins we achieved passing these increases Importantly, also We customers. quarter. of to margins to $XXX favorable this our without and

sales, million, sheet and strong $XXX over $XX increasing to the quarter. approximately resulting profitability. X.X million repurchase cash. the We with We during returned was billion million the the quarter. turn flow ended combination $XX operations from flows. expenditures approximately balance capital and during to of of in million quarter shares were Capital the from let’s collections Cash $X.XX over over Now, cash

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

guidance. Now, turning to

are approximately visibility profit of our established operating million solid We a and signals $XX growing margin. QX, challenging are approximately is be in in of We XX.X% strong for Demand we in pleased dynamic our be $XXX the healthy. to opportunities approximately track approximately expect performance operating estimate environments. revenue and to solutions record million, have representing to QX year-over-year and XX%

when close product quarter This the half $XX comparing of representing year. approximately guidance $X.XX be growing will operating annual that approximately our forecasted of of profit FY seasonality estimated Also, XX% our We quarter, compared ‘XX full in our this raising be our last approximately for also revenue for to reminder is to the margin. half our are from year-over-year. this second fiscal XX% rates revenue in as We now million, to was remarks first fiscal first year in expect $XXX a the year. back of Operating approximately half growth impacts year. billion, million

and flexible, our it to objectives. management quickly, Our Question-and-Answer solutions signals, conditions, despite not accelerating With raise to such to customers’ expect energy data that asset technologies needs to critical we reduced currency environment Session be and QX chain on our but a our time being and digital our their reduce our software us your to deliver lead to the for get prices are annual depend customers, Operator? short operator we and will can still updated guidance Customers foreign any with contemplates, closing, With demand waste. factors storage such inflation. have visibility, based critical continue to to challenges to I macro their and exist. innovate, on so meet consumption as to supply turn to that, questions. over continue slightly, times In including transformation

Operator

question Aaron first from Our is Instructions] Wells [Operator you. Rakers Fargo. with Thank

now is line open. Your

Aaron Rakers

Yes, the much very on and results. you thank congratulations solid

You guidance bit the clearly, in around full year, of quarter, guys for macro. kind little fiscal is the the a but the guidance strong commentary third of raised there

I maybe think, etcetera. sales Charlie, that cycles, you of did you had see lengthening some mentioned signs

can Just looking in clarity deal into provide can of hear, cycles? you hear environment extension coming Charlie? what in your you a So this Charlie. quarter? kind how of little exactly bit upon Have you a I if Can of any profile of factored incremental I you any am seeing you pipeline? of you now, from seen the this curious kind quarter demand you in macro currently are could kind expand kind out on

Charlie Giancarlo

could. You

Okay.

Sorry, we having trouble. are I guess technical

start let was a apparently while. I again. myself for So me to over talking

are obviously continue financial results signals We had we very the pleased quarter healthy. frankly, be and with demand this quite to

we sure we very the make to seeing. reflecting what we way were that in wanted we measured So are were

healthy. slight market we ability this a finance, very the seeing for what shouldn’t looks continue While but as and companies, lengthening of share and to we in very large market of changed in bit look that say, a closing perhaps grow are our is perturbations demand deal little later a The our sales looks sales affect let’s transform stepping cycles, second pipeline to this in some And of, of it’s process. in and a said, way deals growth the is by at not we pipeline at takers are enterprise the is second look the into market, pipeline. dramatically I the

positioned. we like we feel So well very are

a have portfolio. very We broad

differentiation right Our only is now. increasing

be can We And of the honestly, ability level, secondary in continues are a greater still tier take only player us. the growth worldwide on to to product more provide that our now on demand is basis. strong area hard disk a is for at a which sustainable now,

of bullish the are to from very some uncertainty. economic standpoint we being amount of So able weather

Aaron Rakers

does seeing – existing from momentum off you of there, prepared XX% some seen – that expansion your or then strong S as wanted The of portfolio you gate up sounds your expansion get seen points that I this good. for product out quick your maybe of of existing touch is And differentiation the have product? you very highlighting And – started I to the of FlashBlade FlashBlade like TAM I trying cannibalistic very your is are just am you Where to, how how product, volumes. it table brought what the guess, expansion. traction, any just portfolio Yes, exactly that a most Pure? has portfolio much at follow-up, on to effect and bring the remarks

Kevan Krysler

Yes. product. Well, is next generation it the

in the generation X the replacement Generation should for price right the product expansion several I it’s our But X of performance FlashBlade the that significant quarters, be it a very that existing, Gen that It’s word. know don’t the the So product. product range full cannibalization next is provided. former

the both up capacity both it’s in scales performance of as performance. better of multiple it same So, as And in in levels implementation. in down fact, and capable well

share original as it deal represents And broadening brought out. see really of our family we expanding the of a of really So, what it dramatically FlashBlade. TAM the

Aaron Rakers

Very Thank you. good.

Operator

Aaron. you, Thank

Raymond James. Our next comes from Leopold Simon from question

Simon Leopold

larger us larger there I from talked Is with if with profile businesses. smaller past change enterprises could is to imagine some offset in the and what up business moving about doing us you that customers? maybe I might could am be you weakening deals And how at of see share more and the getting could market customer your help wanted to your the some metrics I here evolving? us help have characterize base you understand in

Charlie Giancarlo

Well, business expand simply of those segments a in which is continue was among continue sector to continuing we all – commercial, player the model expand commercial optimize public enterprise years enterprise My a stars But continue no this commercial we each into. enterprise a to percentage we on we call that we quarter, process and is that continue market we segments is expectations, that to X into as think of was players. market little were and what to I our because something my fronts. of and enterprise but started There our each quarter, those and to to term, the we had forward. And the large over will our that is started to build go enterprise, expectations brand as out we longer the increase, over will those support sales of grow ago.

not public lack cloud of in of continue because So basis, frankly, our of the and to to success longer-term on the in in size commercial a those sales increase, just any because general. enterprise sector, of I’d percentage and expect markets of

Kevan Krysler

bit Kevan. new from meaningful saw with a contribution new quarter, new was of is add a in this – and terms little the And revenue to plus. all on business traction this customers Yes. getting some across And customers. customer segments we Simon, definitely which I’d I more we’re think just

Simon Leopold

And a quick just as follow-up.

buying Could raw flexibility smartphones, you. marketplace of Your you NAND because raw how that there even talk architecture, some from much may sort products, of about seeing whether maybe for of prices the verticals or is PCs capacity lower are seeing be basically shifting that fungibility than like you benefiting production leveraging in benefit rather though the any drives. which there in is weakness solid-state different is NAND of trends you’re manufacturing and or

Charlie Giancarlo

hallmark since building that Simon, Well, a started raw own – variety have modules, that’s beginning is we flash suppliers NAND. the our digital which ever the been this since something for very almost Pure wide for a we since is of

NAND able leverage the our for the of affecting competition. to levels to large it of advantage different the degree us faster quality also allow we take of well the supply. to NAND as on to pay NAND price costs as We’re customers. of gives that freedom deliver that quality in choice the be to the of rest that And than of that And we declines market able terms raw without tends us a of

– we chime it’s CTO, because tremendous require of power given But less to what better make this than energy to it’s I’m to advantage competition. yes, also is the produce the sort that mention products So given going Rob, in. Lastly, allows flash, our which I’ll that invite use of us far

Rob Lee

into NAND efficiency up be Yes, just us things to of drive out through others the of the We a menu would a do a Charlie of to technology. significant broader technology SSDs and direct incorporate to our couple direct flash evaluate definitely options for more and there. opens able products. flash Simon, go achieve Like than add efficiency, amount of much said,

future point platform, across from over thing the other this. as some same modules gone two, we intentionally, would the realize and we us to is significant the is certainly, going NAND development and than to flash the then have generation. of we The S standardized and allow on now navigate with entire direct bit intro technology the parts of also to going do FlashBlade this the we’re the years today but I is leverage our kind that pretty One out we’ve nimbly benefits technology, move so scale that more and as even of a number terms more in

advantage So net-net, significant for it’s a all us around.

Simon Leopold

Thank you very much.

Operator

Simon. Thanks,

go Suisse. next Shannon from from comes Credit Our please Cross Shannon, ahead. question

Shannon Cross

time, business growth much. and very margin? the strong investments Thank can where through Charlie, increase you sort But don’t very could a know to your a a good you very to is flows growth? because trying revenue your you regarding revenue go at wondering the more, rapid step drive margin product and And it higher of well I that a Thank versus over continue as the a received either talk about cash clearly, operating take you you I’m think operating even about thoughts accelerate maybe quickly leverageable back have obviously you. drive or to see up you if continue invest I the And follow-up. you flow then growth margin. model have revenue have that’s or least how in could

Charlie Giancarlo

Shannon. you, Thank Yes.

range to customers. product a the think winning ownership total Existing time over and I gives We where margin be think been actually in more, we especially say flexibility a last new do We’re in a we XX% received with really – for We looking happy in deliver us multiple always and and that we get margins growth. win of deliver in value accordingly. lot quarters. the the provide of would a believe the in the customers deals, and we in market of we’re that customers the we product. it the product a of our I we our we the product, able think get invest do fairly We return. at we’ve new or premium high-value and this Frankly, doubt. generally to very understand the pricing in without over cost terms – that value general

So point. add? balance at versus investment we I this the right margin have think to Kevan, do of want you

Kevan Krysler

those in from about year, full we we’re very we when of the an inflationary I seeing. think mean additional add couple expense well I’ll the things, objectives investment. right? And think the we a Yes, terms year haven’t as investment as And committed XX% of to disciplined So talking investment business some Shannon, about changed. when were really just we were operating I standpoint, much addressing entered impacts of

great team done in Now has job quarter. our hiring a success some this had talent. wonderful talent We

like not with frankly, we’d quota-carrying sellers, be, where our quota to We’re our sellers.

And that in in hiring an for be terms so will of the for focus of year area of remainder the investment. us

So expecting some the some higher quarter starting levels as our sales within with in their half. really of a seasonality our second we to sales investment organization fourth are to our see in And always the there is especially reps accelerators. result OpEx, earn

So you. hopefully, that’s helpful context for

Shannon Cross

did. Yes, you I’m I missed don’t sorry the if Thanks. I on it, And I other meta with us an hyperscalers? relationships think update opportunities Okay. thank give and you. Can

Charlie Giancarlo

Meta when are – the to Sure. this you’ll steady some hyperscalers. to and shipments, did solidify continues. assuming although wasn’t make significant be there We Obviously, actually relationship and first other terribly were we solid. able hear quarter, it – with slow progress to continue that we something

Shannon Cross

Thank you.

Operator

Shannon. Thanks,

question next Long from Our from ahead. Tim Tim, go please Barclays. comes

Tim Long

if Two I you. questions, Thank could.

subscription and another just some platforms nice the with us are as win customer. the pushbacks And transition quarter want large sounds what did before telco strong side, customers a a just subscription. What give are some pretty and are like the the I then you towards a that? secondly, the more to had of about Maybe solutions follow-up you – on really of kind of services like new working. First, sense it

think, XG. for I

also So Thank you just last seems on TAM new it go there for update larger to large any be other nice and you. us question, similar large to like are that that guys could opportunities after? the deal a

Charlie Giancarlo

the speak it subscription very customers much I’d buy. themselves. parts the Absolutely. that center Well, that be new very that to they CapEx. largest build think their for pretty a well with with other may data have just way build, we the of hurdle say And numbers, on I side, is it’s

So that different it’s a from standpoint. bit

new hurdle. the would it largest largely it’s and I is that different is say So

In the a of one any their of terms no And to CapEx a sellers well. channel. for economics channel like service adjust for as is adjust takes terms the how sell. pay – they OpEx way actually through time of additional to for the to and going also course, to capability, one It’s them new sellers the company their transition, it the

versus in of So is hurdle. general, the But see, both seeing the interest and with just probably it. it’s channel OpEx CapEx, say, we I can would steady that growth the as customers model and newness the biggest steady steady you are in

Kevan Krysler

want add Flex, well. expansion with to then of on FlashBlade Two jump think don’t commentary or some days if going that can to at And features Tim, that. now know S even additional the Evergreen as powerful But Rob, maybe and I this and additional we’ve going But Charlie things you I’d in. more you so add with early for be the I with opportunity that, Evergreen enabled, think, big us that’s it’s point. to to I pretty be a

Rob Lee

Yes, absolutely, this Rob. is

answer me that. Let

S, step lowering Charlie of impacts capacity of remarks, significant true. consumption. prepared the all biggest his I in density, That’s talked with one that about So in think performance forward we power have

that capacity to for now also we’ve performance allows and or on grow need us they that different separating covered evolve One point flexibility we’ve to additional that X, the introduced other products day as they the haven’t of performance the the and flexibility we now opened up this Evergreen really independently FlashBlade. impacts the at capacity of the full we of have allowed biggest the benefits customer is platform. family introduce configure to not yet storage compute only to as but elements, that levels By customers and to forever

definitely tailwind as that at look we so as And to forward. we a look going be

receiving the question, as The already are from – back being that made know, customer account commentary they XG excellent. that that the shipments we’re may is against you we’ve On deployed.

same the be future. in of – build tend they to the more expect But does I it So in ordered out. episodically as ordered

Tim Long

you. Thank Alright.

Operator

Thank you, Tim.

next Sankar ahead. Krish Krish, Company. from please go from Cowen & Our comes question

Krish Sankar

in well and very question. executing Hi, a thanks environment. Charlie for my taking Kevan, And really congrats on tough

you team. kudos your So and

Charlie Giancarlo

Krish. Thanks,

Krish Sankar

Charlie, How then the it’s quarter? about My you about that shoe to first question still the but should can beyond talk enterprise drop. know my – for concern first storage early, I could to the thanks we the January it. be think main next is be to that. seems investors demand with

of hearing IT kind spend falloff margins. from for your next I’m on their another wondering customer you’re operating year base Kevan budget what and for So about

Charlie Giancarlo

question. they optimism generally Well, enterprise questions question answer economy, tough I’ll see can general the around out the uniformly around What questions the around also around we’re crystal from is that’s I we ball. is a And recession. this pull meaning the think customers don’t world. that budget, my hearing the IT

new I UK and that particular, think digital their is in U.S., Asia-Pac need transformation companies the general the be the to to Europe for optimism from leverage able the compete to in the I being in IT that with able U.S. and and really investing environment. think different Data have the their core But from is in continue of world they data. that different to

important. infrastructure data so And is

seeing general we’re optimism So there.

But absent be is be bit us. energy to Europe And some And is through Asia-Pac for pricing of inflation. growth a and more. to different many with affected then geopolitical think a going of strong continue Asia-Pac issue somewhat different countries. I kind I’m tale expecting challenges engine that a could

Krish Sankar

I’m hypothetically raising Got to How look. figure up of guidance conversely, revenues sustainability if XX% op the how it. congrats on Kevan, kind key down operating if question for the just to on XX% And operating margin, margins and our op And for just I’m look? extend drivers margin out are further. this follow-up then a an understand off Very the what to XX%. it? margin If of helpful. the curious XX% from year, trying a are speaking, were little year. next can you margin. revenues will next will And Kevan,

Kevan Krysler

in And of year Yes. I our the around track the nice And I’ve able terms pleased margin. being in that. with both growing line we objectives, our it’s half. that, driving which beyond expansion a increasing to that, Krish. performance Thanks, we business a balancing sustainable more across organization, – out we this And forward not some as our with. And invest a we’re then about scale believe and work doing and that profitability sellers. we’re our job we’re doing area. way. little let’s really investment our our seeing and and our selling strategy view example line got got engineers. grow with about when invest margins, about op XX% operating continuing that is year. of without look bit in do to top really innovation talked with heavily. first sustainable a mean infrastructure, record And we we’re investing again, second that top and a while we’ve in We’ve I of very a in doing healthy, very talk think about and on look this in to to our feel and year, to fine that’s we comfortable This it’s increase that very yes,

that this have And details it’s say lot year, sustainable. I would beyond so just of without getting into confidence that a I

Krish Sankar

a lot, Kevan. Thanks

Kevan Krysler

Krish. Thanks,

Operator

Thank you, Krish.

go from please from question Northland Chokshi Capital Nehal Our Nehal, next ahead. Markets. comes

Nehal Chokshi

horse, you Yes. Thank to given Great A of you. and quarter dead I’m beat trends have. impressive that guidance quick citing. the very strong pipeline very is that not going really things. clearly everybody a couple that

you some couple of there on quarters dollar-based your on was ARR, give color any material been Has ago net So a that plus. change that? XXX% rate did a revenue retention

Kevan Krysler

we level, that, change, year. High material a and update once no Nehal,

Nehal Chokshi

the want do able sales your improve to you to be yet. material click I to expect things in do hiring It hiring And improved like forward? then double way does not on seem sales going that And but improving, Why that? is has Great. Okay. why are environment.

Charlie Giancarlo

our hiring where continuing caught are a plan. be bit to I we’d think been. up But behind. has scale. we’re improved, where Well, QX but to sales No behind bit behind And doubt, or we’re quite had a to in plan we a we bit like

I are we in that with if agree between plan. narrowing we’re do So will, you. where delta, you

bit I sales on think the the environment is hiring a getting better side.

Nehal Chokshi

that Is putting your very results been improving you’ve is been for massively. follow-up then sales here? that that productivity just sales up there further improvements imply productivity a And room Okay. finally, to strong clearly, has that

Charlie Giancarlo

is absolutely. Short answer

place sales a to us that go improve become still to are to have we continue in think to the we have there, plans and productivity. I best-in-class we will ways to that allow think elements

Nehal Chokshi

Congratulations. Great. Thank you.

Charlie Giancarlo

Thanks, Nehal.

Operator

David Our ahead. go next Vogt please from question comes from David, UBS.

David Vogt

just for guys the Thanks, to Great. If you Can go taking we guys hear back question. could my [Technical Difficulty]. me?

Charlie Giancarlo

Yes, us hear yes, Hello. we He can't can hear you. Go ahead, David. though.

will. on next on we we the if question, to While comes and he back move

David Vogt

Wait. here. guys, I'm Hey,

Charlie Giancarlo

go David, Yes. can ahead. hear you, Okay, We good.

David Vogt

Yes.

to just [Technical any to it and the just again, Difficulty] go So to conversation you out. you sales When around cycles. talk are customers, back – macro elongated the want seeing

Charlie Giancarlo

Amit, go ahead, Yes, let’s on Please move to can. we David. if

Operator

ahead. Our from next please from Amit, Daryanani question Amit go Evercore. comes

Amit Daryanani

July Thanks the by were million beat I raising is, $XX have so. versus what first you guess the my million folks initially like for quarter said, year taking you full but I questions. you’re about or $XX question

And what seeing? sort all it of love hyperscale back the up what bit gains? understand the So of I’d you’re the better or it the [indiscernible] expectations beyond clearly something and you are the to half only had, a well despite else? upside just [indiscernible]? are are Is ramps above fair beat? to what’s thinking I’d love the levers just you commentary happening numbers of understand beyond that of more share or you it’s meta Is macro

Charlie Giancarlo

from and up on really from and it’s of everything Yes. do forecasts I’m the I’ll forth, bottoms so in. to field start, a to join everything invite based fundamental to going Kevan deal We pipeline and analysis to that. very

mentioned $X.X continued would billion if might a were market. macro, a are have vendor say, share it billion still yes, it’s $XX $X.XX wood, in we So on as gains. knock And billion this roughly call, I more to in I up-level the a earlier of I towards

gaining share time. particular on market based is opportunity size any Our of the and the on less at overall

do Kevan, to. want you So

Kevan Krysler

I a little Yes. I’d here. think I bit add mean,

beyond continue to out. quarter visibility we have relatively just So one good

new be out within based existing business, traction our we’re expand customers the both team QX quarter. pipeline, pipeline one and what shapes and on is second what pulse beyond our think focusing demand continued gen the of to really combination a how around really customers on That, track the opportunities with good the like. ability with our a in now year. really right well out and business rest the as able convert I record, to our nice got seeing our looks QX the to that sales job done this on our has looking leadership as The exiting sales has team just half and existing with we saw

So hopefully, for helpful that’s you.

Amit Daryanani

top help will it. super moving know the a guess, here. low to over question half. know is implying year, folks And back the of helpful. bunch XX% I the first double-digit of to parts back decile. But just I in I In that That moving there perspective, kind I line compare there of versus you’re deceleration is the the first half a from the that driving the what’s maybe parts in probably have your versus growth the are contextualize half of Kevan, half? few sort think

Kevan Krysler

There here. think and deal deals half there half. leading a actually things we’ve delivered impacted growth for to in And XX% keep had we is right, you’re in couple the a a by that be to half we great It’s of thinking that really that few seasonality as in about mind second second mentioned raising obviously, Yes. we factors But is half, of few question. second QX, first a a annual to about around to year-over-year. One fantastic contemplated previously the is our is guidance $XX million. and

And so X that’s approximately going by half second growth to impact points.

that’s So to important consider.

next had consider in comps year. our much growth second the is the getting due and we factor substantial the last I think are the tougher to half to additional week

reminder, growth we as contemplated respectively, which XX% were cycle, year QX, of And the and headwinds and we’re QX elongation in we’ve then in the our incremental our in we about but a as terms XX%, mentioned, outstanding. just of last that lastly, sales some navigating just was Now think guide.

pretty FX, how feel So of terms second I looking that good we’re half with in terms growth. of in

Amit Daryanani

Perfect. Congrats Thank a you. great quarter. on

Charlie Giancarlo

it. Appreciate

Operator

Amit. you, Thank

please Meta question next from from comes Morgan go Marshall Meta, Our Stanley. ahead.

Meta Marshall

increase And of bit is maybe get to have but what Charlie, having are you You that quarter? of have most type call, on second, elongation Europe or mentioned any with wanted mentioned talked of Thanks. then little of advantages I the of type customers? prevalence with? acceptance or last where angle energy just Is Great. again sense deal you just customer power consumption having on a it green you it that success guys the a the cloud guys clearly cycle. about kind

they you make. seeing kind in more any customers wondering looking move of type towards you’re in we any of Just want at deal different purchasing is as kind to if grow whether model what types, or of pay to whatever there Thanks. changes were versus seen before? purchasing they looking are Evergreen Have

Charlie Giancarlo

Thanks, Great. Yes. Meta.

been part On the to customer their companies their now large environment, different our and be energy which pushed say of I would that’s operations, reporting to center report that data tends types on are a large are ESG energy One side, there energy. focused very own several that needing down are on their into utilization.

now would security. I in countries second, is say, with The energy

ethic data there. will, now it efficient, also fits you Japan, governments more of of that’s right is that a just and energy part reliable not It’s their focused their compact, to nervous it quite takes lot Europe if a perfectly. seeing it on more In was covers And causing now and energy I’d say third, them it’s how about at center. much energy, so again, is government. look worldwide of in now. that, a capabilities, So the the a quite up. and are which their smaller, big we’re the really lot then more also Government for Japanese very we forth. It’s energy palpable, certainly, availability so entire bills energy of of making take reduction, price But fit worldwide, them environment

and say than large well. surprising in growing audience, energy larger is U.S. to in internationally the it I’d currently is So as sensitivity not growing, the the but this U.S. probably

increased then see mid-quarter, see taking through would were deals The On the and all just I closed. we or starting around we deal those it the another started deal it weeks. to quarter. cycle standpoint, it Generally, to week cycles two say earlier, of started

So, a it demand issue. wasn’t

deal are the there far, average, process. on approvals a definitely of through, going so lengthening still was And the but

Kevan Krysler

say And Kevan. I I would would – this a is of couple Yes. things. add

to really think We larger lot that, frankly, I that of side. enterprise see didn’t more elongation enterprise, point public the and sector I would a the commercial the segment. on

think an that’s important I So, clarification.

having which for absolutely really are they bringing with customers I for our and And of structure we think And I want positioned our customers flexibility is might absolutely. and we would conversations is how we thing think more Flex technology to a solutions looking But the are Evergreen another asked, customers of you are in resonating. deals. for seeing had fair consume our say other they well option our and around I how their flexibility. timing amount

Meta Marshall

Thanks. Great.

Operator

Thanks Meta.

Our comes Wamsi from from America. Bank next Mohan please question ahead. of Wamsi, go

Wamsi Mohan

revenue grow than guidance plus really on here, solid a And you XX% or it Yes. growing becoming XX% congrats model, that software subscription look of of at your XX% look and more little we we implies your at sort and the at implies revenues. bit or If Thank higher. long-term product when results. about

I So, should growth meaningfully we look thinking and gains? next or be share out, product And year into have product decelerates, a further we sustainable is a that XX% follow-up. as revenue from

Charlie Giancarlo

are Wamsi, Yes. very player growth still a opinion, relatively is will a that large we market. continue. in small Again, product My

share item cracked And revenue or selling of that the hyperscalers. top sector gains be major be each environment, those start opportunity would to growth option whether continue gets And accelerant. the plus hyperscale for into is a so growth a the us or meaningful XX to more one if really the there

the side. So, product on

growth are factors us. meaningful both for we as no, looking at So,

Wamsi Mohan

you decelerating, your as the And but dollar you back us to multiple add And of but generally on profile sequential think margins, Okay. the your think just you. was Thanks your about top specifically relative a the growth to in beat. that at margin your is you speaking, around income know performance a Thank bridge call $XX I help about performance. half helpful. quarter, margin operating revenue anything you got we out we if the can line would anything would margin year, be the if you operating beat, look then had Charlie. there the there, on I’m like that operating the And delta wondering expectation, million when

Kevan Krysler

Yes. Thanks Wamsi.

our think our as But that I I I look continuing through for half. we area to an have of with around will growth side sellers. think that with when highlight arguably, before. then investments the are investments around where expenses we on where, to in confident want probably been will to feel QX, we sales we see our for the second factor we for that at operating really investment and would about liked terms primary on the the have year our in profile second – And further the that make overall, up. our is our you is But sellers. along that have half. the invest and mentioned And I

Wamsi Mohan

Thanks. Okay.

Operator

you, Thank Wamsi.

from Our Matt, comes Stifel. go ahead. Matt next from please question Sheerin

Matt Sheerin

and you comments progress on a forward? are Yes. the enterprises Thank regarding and within expansion particularly on existing your customer spend adds. you. opportunity comment services for the an increasing portfolio customers, you I the Can your logo Charlie, the products seeing in going have new to to expanding addition within follow-up, large that due

Charlie Giancarlo

large enterprise that simply is the major another have. for we logos is That us Absolutely. growth vector number of

for that. I big think of it opportunity hides us a in kind

because of ahead us. one And very, of opportunities are their our enterprises the average obviously, exceptional a very properties the us. get, lot handful still we think customers renewal. they those in storage relatively logos, with opportunity Our of enterprise that, another large on majority But wallet those I a good. is spend the of us of comes we know with still up area. in of their for where small. Pure storage experience vast is Their share majority love for I there mean still have frankly, every of them time to And are we

to us dividends to pay So, quite for major it and time. area growth a of is I for continue some expect that

Matt Sheerin

mean the you there? relative follow-up, components, really that my an managed haven’t Thank competitors. very or you to and got as smaller or But or on well. any you. of have terms you comment just called issue environment. I I supply could for sort hiccups that negatives And incremental Okay. pluses you your know just in out of have footprint a minuses

Charlie Giancarlo

hasn’t it’s it’s become other quite, would now And gotten are available, lead very – times, in general de-commits we on it’s many others situation say fact, better, ameliorated In gotten if little much a words, worse. still still has in I are but That average, it some anything, is that and components but then. widely every allocation uneven. that on shorter the and somewhat. not have more get that there and

being of down. a expect still that number are it’s are say little out of I it – we That improve. but the So, the yet. continue easier, Things said, bit wouldn’t are we de-commits woods to to

Kevan Krysler

about they Yes. critical kind to changing. our And are do clear I timely as of as our which the through record for to a confidence so them what accelerating think delivering outside, NAND they And need see to of it’s transformation in customers, having well. that and are be would and our is track all obviously, be challenges from standpoint DRAM again, we of we don’t working digital

Matt Sheerin

it. Got

Thank Okay. you.

Operator

Jason comes Jason, Ader Blair. please William Our from ahead. from go next question

Unidentified Analyst

just target customers Jason. to to that the it? initial afternoon. from is more the customer the wanted offering? Good morning. or little ask for what bit Good from that sort channel about has adopt I of on Evergreen offering. are been Sebastian the for Hey. a reaction And Flex What looking is This

Charlie Giancarlo

Thanks. Yes.

interested a pay-as-you-go but Flex are CapEx. Evergreen really based at really model, and targeted we is is So, model that a subscription financial was open internal on customers whose philosophy that those in

some think providers. you can in cases, managed So, of, service

buy think of just the is an enterprise the their make on things. the but large model center for for this to the to of where full there on to I rest really an a that – ability them CapEx. You it start data they had when couldn’t mentioned gives least is the spending CapEx, using over the several can gives reserve One ability of or earlier – at lot actually model not a gives they yet. question their them And And them jump OpEx product.

and is second a this data one And more rather environment customers. more they subtle on array many capability. full more fleet than calculated Flex them out it gives environment by as greater in The an that and their you across infrastructure. Rob, array and really is is [ph] Flex them flexibility, gives build much their it economics, to to what on means entire an greater efficiency, do Evergreen add? want important

Rob Lee

benefits Yes. I Evergreen here and time them for of wanted add really we of all offerings the the is jump of then be Flex the as formerly Evergreen would second. ways Evergreen spectrum subscription We a that and same and One, other that under the And Flex got, forever, of end the able did some we we in customers you software And known way traditional reasons one at our get renamed And that Pure-as-a-Service. just a to we We just all this non-disruptively, to hardware assets the at worry Evergreen that can it Evergreen introduced being the to look rebranded more get where the there. architecture umbrella. in bring and program, access are CapEx-oriented put customer, hardware without from one mentioned, more spectrum that’s Forever as evolution of they growth to the this sale and seeing future this deliver there. through and constantly have right. modernized, those benefits a services are where a to Charlie as perspective, is

model, to of On their just discussing run either cloud that and fully they on customers turn go but are manage benefits to see Flex have full consumption the say, spectrum, Pure then was have got offer “Hey, level to SLA, the based the into seeing stone upfront, get that redeploy hardware of model, terms as title the customers to grow, other you to operating performance to end Charlie owning in camp And and Flex as the evolve the to stepping the keys the in want to can cloud of basis over a want in a flexibility the we across operating more are that bought and flexibility.” middle, you assets capacity as effectively the benefits interact fleet. full where with well that

say, so enhanced model. And introducing family see that the core would what wherever to Evergreen this really customers for the on and of they ways more, cloud of consolidated is journey operating realize variety with we I the to architecture are a benefits

Unidentified Analyst

point, additions, I Got those going of the that something be help that guess or it. was were that really it’s quick helpful. this Maybe are just big think now be you of for this think you have expansions thinking Can asking That’s how a me driver accounts? sort to customers about within about those a going customer existing you big aspects? middle driver you follow-up of offering, on and is new a to

Charlie Giancarlo

now up new to Evergreen prospects model. do think so Yes. can think the past at on I with Evergreen the want for their and open as-you-go doubt, to this Flexes model. we a that really are we into that but that existing that in Pure, or us. buying get to that because certainly looking think it – that subscription it’s opportunities end, customers for an opportunity want to no unfamiliarity I at for capacity-oriented gives for customers them One, CapEx back of – but We And basis, try fell reported both have secondly, that

Unidentified Analyst

Very Great. you. helpful. Thank

Operator

you, Sebastian. Thank

comes please KeyBanc Markets. Capital Our ahead. go Tom next question Tom, from from Blakey

Tom Blakey

here. questions of Couple

of say software about I forward, Charlie, in in obviously it last model and seeing to that product holding more strengthen be a change from deferred subscription-based are the this fair strength gains, just the product listening back quarter. that so the will here, the talk I in Rob kind is just question long-term coming Maybe in precursor, here growth, we to sale. of share going products. think early mean

we side. that So, the going can out some have follow-up maybe in can on something going there, in revenue mechanisms the And expect Is expect product service ‘XX. the fiscal we forward, I a just of growth? terms

Kevan Krysler

call a fact, That’s system. CapEx that, our remind we the what believe in in an the customer definitely has replace of over believe. time attached it, to would outpace should our to is But also Evergreen plan replace reduce to growth. everybody CapEx certainly entire subscription, product and existing, an we – subscription fact, our range the existing does which And we even have been Evergreen that long-range Forever, never the on that’s I sale never so that’s sale. because Well,

subscription many product We – in sale their the just our replace in significant – a system of So, selling that a storage industry, that an a don’t you line. line. is in always see don’t We a system. to sales that new portion see see old

that You in in growth subscription. see

The different never So, sell a customer way sell buy to once. it time. has product. it’s We to a only it second

Tom Blakey

Great. sales then thought of the all-in. the Okay. I And so… upfront subscription portion product, was recognized in not

Kevan Krysler

right. are You subscription. It’s

obviously reflected product, would would entire the Evergreen but would the revenue. be Forever, be in consumption Hopefully, we Flex, that helpful reflected Evergreen subscription transaction, Forever hardware is you. Evergreen all subscription. subscription attached then an for Evergreen that’s be as a One of Evergreen, the subscription. when So, piece do for as portion value And in for the

Tom Blakey

of attach Very Thank it Any comfort be second commentary you a We on software guess portfolio is steep maybe services helpful. an terms side. of more give this related in workloads getting give overall is software Any clear, Kevan. as question, you. would of you the can type basically and then can line rate are your you can the know like to services like here? and strong new there. call And continued to in enterprise give of services of I now? more little you where the Thank Any to deals you. maybe relates type terms callouts can up-sell help us that growth here software data

Kevan Krysler

may a from channel increasing significant well. that would Absolutely. are fraction, amount that existing And new but are the even a are more to customers, as seeing large within would also, software probably than are customers Well, going to account. XX% a going say we of customers commercial say coming a that the be large within new buyer customer a and than small, I I it amount source. more fraction customers, enterprise on into existing but so side sales

Tom Blakey

Thank you. Kevan. Thanks Alright.

Operator

Thanks Tom.

Hall Our Sachs. Goldman Rod from please Rob, last question go comes from ahead.

Unidentified Analyst

me squeezing good for it’s Thanks Meta that could for up wondering looks the is then and know guys. be half. are this what telco lumpy the then Implied for thinking before. am on if ramp, This I Rod. business you strong said meaningfully quarter. Hey Bala do a QX there deal. didn’t I large guidance, like know quarter. it and is in. really it any on Congrats just deal you got Meta I on I guidance back guidance, much click you double second from mentioned

So, of in could those be I there have why deals large that’s follow-up. is a guidance? QX, helping And in one

Kevan Krysler

remarks Yes. you. Thank couple of A our things. in terms earlier. of changed Meta hasn’t

into we view the year I our and when Meta. on coming think were

changed how a of in we thinking about amount are second half, of terms then we terms So, are we that through how about walk thinking meaningfully. it. hasn’t the fair in And will that

Our approach hasn’t changed.

evaluate to analyze opportunities. our and continue pipeline We and

very leadership or on as quarters sales next just the are out have we falling staying call deals. about remainder we anything where have implied close pulse wouldn’t on QX we very over the particular the specific team It’s who I business. are think year. a the the We on the of out visibility good any based with two

Unidentified Analyst

Kevan. Thanks gross that slightly, Okay. product only Follow-up, S, FlashBlade I carry lower margins. margins down XX%, quarter. FlashBlade strong, last still from product, new at understand but very slightly could

wondering your terms list intensity that. seeing about So, in not am are are increase I just to you for maybe at all? just your it’s I you wondering, increase of competition, prices the in commentary what am seeing planning given products. But any

Charlie Giancarlo

is spot, winning and been terms on gross having the our consistent I Look, remarks we my do of getting and what our are bit are opportunities. product we we sweet very customers. some great to we our and in success I of with and with that margin margins. start said XXs, in of the continue those spot high-XXs sweet opportunities hot in have a the sustainability be into Frankly, gross terms when product can it’s in

I So, gross our in if are terms that’s margin we helpful. of actually where product like profile,

Unidentified Analyst

Thank Alright. you.

Charlie Giancarlo

you. Thank Okay.

Operator

Bala. time, you, session. question-and-answer call turn over Thank Alright. this closing End This remarks. Q&A for to Charlie At the of I back concludes the will

Charlie Giancarlo

have believe the we and I long-term. positioned to both hope we is in grow well as to in able Pure near been Well, convey, Storage the

cloud We this hybrid quarter. everywhere continue portfolio game cloud to we unique rigor infrastructure. to We product and We their improve organizations and for continue in of for combination data our build the a to and lead all-flash enable operating private have industry, operational every model our to solutions lead center.

services and their wonderful the have so ongoing their automate of applications. have to mission-critical management partners our closely all sustainability day. to us appreciative all traditional management am And for to our now. we to and you entrusting We Storage each cloud with tools innovation customers suppliers very advanced all rest for a your to and clear every needs the for much deeply of our modern that data and their and their are follow partnership Pure energy data Thank storage and you most and I and reduction and of definitely native for leader diligence employees both quarter.

Operator

call. That concludes conference today’s

You disconnect. now may

Pure Storage (PSTG) 1 Sep 222023 Q2 Earnings call transcript