Pure Storage(US:PSTG)2020-11-25 04:07Financial Data and Key Metrics Changes - Total revenue for Q3 was $410.6 million, down 4.2% year-over-year, slightly exceeding initial expectations [33] - Product revenue was $274.5 million, down 15.1% year-over-year, while Subscription Services revenue totaled $136.1 million, growing 29.5% year-over-year [33] - Subscription Services revenue represented approximately 33% of total revenue, up from approximately 25% in the same quarter of the prior year [33] - Non-GAAP gross margins for product and subscription services were 69.1%, compared to 71.7% in the prior year [38] - Non-GAAP net income for Q3 was $1.8 million, down from $34.2 million in the prior year [40] Business Line Data and Key Metrics Changes - Strong sales growth and demand were noted for Subscription Services, FlashBlade, and FlashArray//C offerings during the quarter [35] - FlashBlade and FlashArray//C achieved their highest sales levels during the quarter [35] - The remaining performance obligations (RPO) grew approximately 25% year-over-year, exceeding $1 billion at the end of the quarter [36] Market Data and Key Metrics Changes - Total revenue in the United States was $302.1 million, declining 4% year-over-year, while international revenue was $108.5 million, declining approximately 3% year-over-year [37] - The company acquired over 316 new customers in Q3, compared to 379 in the same quarter of the prior year [37] Company Strategy and Development Direction - The company is transitioning from a two-product company to a full multi-cloud data services platform, enhancing relevance to IT and application developers [11] - The acquisition of Portworx aims to expand data services capabilities for both traditional and cloud-native applications [12][13] - The introduction of the Pure Service Catalog aims to provide cloud-like transparency and improve customer experience in selecting storage services [21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strategy and execution despite ongoing COVID-19 challenges, noting improved visibility of business conditions [44][30] - The company anticipates a gradual return to growth as the pandemic abates, with expectations for new buying patterns emerging in 2021 [51][86] - Management highlighted the importance of digital transformation and the need for customers to simplify operations while providing efficient infrastructure [27] Other Important Information - The company returned $21.4 million to shareholders through share repurchases during Q3 [43] - Total cash and investments at the end of Q3 were approximately $1.2 billion [42] Q&A Session Summary Question: Is there any sense of pent-up demand going into 2021? - Management noted a positive momentum in Q3 and an improvement in customer plans, indicating optimism for future demand driven by digital transformation [50][51] Question: How is the new Head of Sales expected to impact revenue growth? - The focus will be on providing outcomes for customers through service offerings, which is expected to increase subscription sales as a percentage of total sales [58][62] Question: What is the impact of the recent acquisition of Portworx on subscription revenue? - The acquisition is expected to contribute incrementally to subscription revenue growth [63] Question: How is the competitive landscape evolving with the introduction of PowerStore? - Management indicated that PowerStore has not been a significant factor in competition, with consistent win rates against Dell products [67] Question: What is the outlook for international markets, particularly Europe? - Management expressed cautious optimism for Q4, noting that businesses are becoming more accustomed to operating in the COVID environment [84][85]