Pure Storage(US:PSTG)2022-09-01 02:13Financial Data and Key Metrics Changes - Pure Storage's Q2 revenue grew by 30% year-over-year to approximately $647 million, with product revenue increasing by 28% and subscription services revenue rising by approximately 35% [11][29] - Subscription annual recurring revenue (ARR) grew 31% to $955 million, while remaining performance obligations (RPO) increased by 25% to $1.5 billion [28][29] - Gross margin stood at 70.4%, with product gross margins at 69% and subscription services gross margins nearly 73% [29][30] - Operating profit reached $106 million, resulting in an operating margin of 16.4% [30] Business Line Data and Key Metrics Changes - The U.S. business saw a revenue growth of 31%, with strong performance in both commercial and public sectors, while international revenue grew by 29% despite foreign exchange headwinds [27] - The Evergreen subscription portfolio was expanded with the introduction of Evergreen Flex, providing customers with additional flexibility in optimizing their data infrastructure [14] Market Data and Key Metrics Changes - The company added over 350 new customers in the quarter, including 56% of the U.S. Fortune 500 [28][20] - There was a notable increase in demand from public sector customers, with sustainability and energy reduction goals being prioritized alongside performance and reliability [20] Company Strategy and Development Direction - Pure Storage continues to focus on innovation and customer experience, introducing new products like FlashBlade S and Pure Fusion to enhance its portfolio [12][15] - The company aims to capture market share in a large market, emphasizing the importance of sustainability and energy efficiency in its offerings [17][19] - The management is optimistic about the long-term growth potential, particularly in the enterprise and cloud segments, as the brand continues to gain recognition [43] Management's Comments on Operating Environment and Future Outlook - Management noted signs of lengthening sales cycles among enterprise customers but emphasized that demand signals remain healthy [22][37] - The company is confident in its ability to grow faster than the market, despite macroeconomic uncertainties [23] - There is a strong focus on maintaining operational efficiency and profitability while navigating inflationary pressures and supply chain challenges [26][32] Other Important Information - The company ended the quarter with over $1.36 billion in cash and returned over $60 million to shareholders through share repurchases [31] - Guidance for Q3 revenue is approximately $670 million, representing a 19% year-over-year growth, with an annual revenue target of $2.75 billion for FY '23 [32][33] Q&A Session Summary Question: Demand profile and sales cycles - Management acknowledged some elongation in sales cycles due to increased diligence from enterprise customers but stated that demand and pipeline remain healthy [36][37] Question: FlashBlade S product traction - The FlashBlade S product has gained strong traction, accounting for 20% of FlashBlade orders, and is expected to expand the total addressable market significantly [39][40] Question: Customer base evolution - The company continues to expand across all customer segments, with a notable increase in enterprise sales as the brand gains recognition [43] Question: Raw NAND pricing benefits - Management confirmed that leveraging raw NAND provides flexibility in costs and allows for quicker adaptation to price declines in the NAND market [45][46] Question: Margin sustainability and investment - Management expressed confidence in maintaining healthy operating margins while continuing to invest in growth and innovation [50][67] Question: Energy consumption advantages - The company noted increasing demand for energy-efficient solutions from large enterprises and governments, particularly in Europe and Japan [92][93]