Pure Storage(US:PSTG)2023-06-01 03:38Financial Data and Key Metrics Changes - In Q1, the company achieved revenue of $589 million and operating profit of nearly $20 million, exceeding expectations [15][17] - Subscription services annual recurring revenue grew 29% year-over-year to $1.2 billion, with subscription services revenue of $280 million representing 48% of total revenue [16][18] - Remaining performance obligations (RPO) grew 26% year-over-year to $1.8 billion [16] - U.S. revenue for Q1 was $427 million, and international revenue was $162 million [17] - The company reported a strong gross margin performance in Q1 of 72.2% [42] Business Line Data and Key Metrics Changes - The company set an all-time record for Evergreen//One subscription sales in Q1, indicating exceptional demand [15] - Product revenue was $309 million, with a year-over-year growth of approximately 5% when excluding the impact of $60 million of product revenue from the previous year [17] - FlashBlade//E sales began, experiencing the fastest first-quarter pipeline growth for any new product [31] Market Data and Key Metrics Changes - The company noted continuing caution by enterprise and cloud customers in Q1, similar to Q4, but experienced enhanced demand for cost-effective solutions, particularly Evergreen//One [13] - The U.S. enterprise business exceeded expectations, reflecting strong performance despite challenging macro conditions [40] Company Strategy and Development Direction - The company aims to become a complete storage partner for customers, addressing their entire storage estate with the introduction of the E product line [36] - The operational and economic benefits of the company's comprehensive storage portfolio are emphasized, focusing on sustainable technology and business model advantages [32] - The company is committed to maintaining a competitive edge through its direct flash technology and Evergreen program, which ensures products never become obsolete [39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continuing to increase market share and outgrow competitors, particularly as new products gain traction [13] - The company anticipates continued momentum in Evergreen subscription services, particularly Evergreen//One, and expects Q2 revenue of $680 million, representing a 5% year-over-year increase [20][19] - Management acknowledged the challenging macro environment but noted stabilization in customer demand and sales visibility [84] Other Important Information - The company repurchased 2.9 million shares of stock, returning nearly $70 million to shareholders [43] - The balance sheet remains strong with $1.2 billion in cash and investments, and the company reduced overall debt by paying off $575 million in convertible notes [18] Q&A Session Questions and Answers Question: How are customers thinking about their storage needs broadly and specifically around Pure's product portfolio? - Management highlighted that customers are increasingly looking to transition from hard disk systems to higher performance flash-based systems, particularly for AI applications [25][47] Question: Is there any impact from strategic buys in memory, particularly in NAND, on margins for the rest of fiscal '24? - Management indicated that while there is heightened competitiveness in pricing, they believe their direct flash technology provides a sustained competitive advantage [68][90] Question: What is the predominant storage solution for AI today? - The predominant solution for AI applications is all-flash systems, as they provide the necessary performance for machine learning and real-time AI-oriented tasks [94][115] Question: Can you clarify the impact of Evergreen//One strength on revenue growth? - Management noted that while Evergreen//One strength will contribute positively to top-line growth over time, they are cautious about potential headwinds from product sales corrections [64][96] Question: How does the company view the competitive landscape with new hard disk technologies? - Management expressed confidence that even with advancements in hard disk technology, their direct flash technology will maintain a significant performance and efficiency advantage [130][145]