Last week, Pure Storage announced some very impressive fourth quarter earnings results. Some highlights include:
- Q4 revenue $492.0 million, up 17% year-over-year.
- Full-year revenue $1.643 billion, up 21% year-over-year.
- Q4 GAAP gross margin 70.8%; Full-year GAAP gross margin 69.0%.
- Full-year free cash flow was $101.7 million, up 59% year-over-year.
- Pure added more than 500 new customers in the quarter, reaching over 7,500 total customers.
Pure Storage still reported a net loss for the quarter and the fiscal year (GAAP reporting), but with gross profit margins in the 70% range, profitability may be close at hand. And, free cash flow, a number which can play a significant role in determining the long-term value of the company, grew an impressive 59%. When combined with the addition of 500 net-new customers, Pure Storage had what I would consider a very successful past quarter and fiscal year.
And in light of these numbers, I am going to make a couple of speculations/assumptions about Pure Storage and why this success will likely continue.
- Pure Storage is transcending flash storage. Pure Storage made its mark on the storage industry by being all-flash and only flash. While novel at the time, every storage vendor leads with flash today. Pure Storage may have an argument that their commitment to flash storage gives them an edge, which might be true, but I would argue that Pure is not just a flash array vendor. With innovations in how storage technology is consumed, such as Pure Storage’s Evergreen program and its Pure as-a-service utility-based consumption model, Pure Storage is shifting the on-premises storage experience to something much closer to the public cloud experience, and that, I expect, is strongly resonating with its customers.
- Data center storage is a high growth area, in the right locations. In a recent ESG storage study, 25% of IT organizations identified that they expect to grow on-premises data storage by 50% or more year over year. These firms tended to be younger, digital organizations and tended to highly value the performance benefits of flash storage. These organizations are also growing data in the cloud, but they have data demands everywhere, both on- and off-premises. For these businesses, the data center isn’t dead, it is just one of multiple high data growth areas. Pure Storage’s recent earnings suggest that the company may have found some success catering to these digital organizations.
This earnings announcement was coupled with Pure Storage’s availability of its third-generation all-NVMe FlashArray//X. The system boasts a 25% performance improvement along with support for NVMe-oF and Storage Class Memory, innovations designed to further improve the low-latency performance benefits and sure to cater to the needs of their high-growth digital business customers.