On 25th August 2021, Pure Storage announced solid 2Q2022 financial data, with Q2 revenue up 23% year-on-year and a predicted $2.04 billion in revenue for FY22 overall. So, with strong momentum and a teaser for 28th September, what’s next for the company?
Pure Storage posted strong financials for the current quarter, as detailed in the company press release on 25th August (here). We’re not a financial analyst company and certainly don’t give financial advice, so we’ll leave the reader to make judgements in that area. Instead, we’ll look at the details and where the growth had occurred to see how that reflects in the broader market.
Growth
Pure CEO Charlie Giancarlo highlighted some of the important growth numbers in the earnings call following the financials announcement. Pure-as-a-Service growth tripled year on year, as did sales of Portworx. Sales of FlashArray//C saw sales triple over the past year, too. Now, all of these numbers are relative and could come from a small absolute base, so a more appropriate measure is to look at subscription revenue as a percentage of overall sales.
Figure 1 shows this data, from IPO to the current quarter, with a trend line showing the uptick in subscription growth. Obviously, this data is somewhat skewed, as Pure-as-a-Service wasn’t introduced until 2019. However, the Evergreen purchasing model has been available since mid-2015 and is therefore included in this data.
One interesting aspect about the split between product and subscription revenues is that (at this point), the cost of revenue for each component is roughly the same (31-32% in the current quarter). If subscription services are to be successful, then we’d expect to see an increasing divergence between the two lines. Presumably, this will become more apparent over time as customers go through product refresh cycles and consume more services that are purely software-based.
Acquisitions and Integrations
As we highlighted in this post, Pure Storage has continued to expand its total available market by introducing new products. The acquisition of Portworx provided a new avenue to customers that might not have chosen traditional enterprise storage. Incorporating the technology with FlashArray and FlashBlade (Portworx 2.8) starts a journey that brings enterprise-class features to Kubernetes environments.
The integration of Portworx offers exciting opportunities. For example, all existing CAS platforms need some metadata store and generally implement an etcd cluster separately to the production CAS platform. Pure could choose to implement etcd functionality directly into FlashArray, making the process of cluster management easier and providing greater flexibility when moving workloads between data centres and/or the public cloud.
TAM
Our Pure Storage timeline shows that another product or service is due for 2021. The scene has been set, with the announcement of Pure//Launch on 28th September 2021, which aligns with the latest Pure Storage financial analyst day.
I expect a lot of the Pure//Launch event to be focused on existing technologies and products, reframing them in a more modern context. It’s difficult to imagine where the existing hardware product set could be extended, as the existing FlashBlade and FlashArray solutions cover most use cases. These products have seen incremental improvements, with cheaper and higher capacity options.
In the public cloud part of the business, Pure recently announced a partnership with Equinix that enables Metal customers to use a FlashArray, FlashBlade or Portworx solution within their deployment. Currently, this option is based on dedicated hardware, so we could see a move to abstract this offering using Cloud Block Store. This direction would provide customers more granularity and align with the on-demand nature of Metal, especially for those businesses looking for a simplified DR strategy that minimises the footprint of infrastructure needed in the public cloud.
We may also see some new partnerships established with the hyper-scale cloud service providers. This market has already been attacked by the likes of NetApp, where products have been available for some time. It’s even possible we could see the option to deploy Purity on-premises, either directly or integrated into solutions like Outposts.
It’s also worth pointing out that FlashStack and AIRI have been quiet areas for Pure, so the //Launch event may be an opportunity to re-emphasise the existing solutions portfolio.
The Architect’s View™
In the first ten years of existence, Pure Storage focused almost exclusively on hardware. This strategy built a company that successfully challenged the likes of Dell and HPE in a market that was ready for the performance benefits of flash storage. Acquiring Portworx set the scene for a move toward software and services, where the details of the hardware are still essential but obfuscated from the customer. The growth of the public cloud has driven this strategy, so it seems entirely logical that Pure Storage will continue down this route. We have no crystal ball, but we will be tuning in on the 28th. Also, look out for an associated podcast at that time, where we may be able to reveal a little more information.
Related Information
- Pure Storage Microsite
- #209 – Discovering Unified Fast File and Object with Pure Storage
- #185 – Pure-as-a-Service 2.0
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