Pure Storage Announces Q2 FY2024 Results

Pure Storage has announced financial results for the second quarter of FY2024. Revenue is up 6.5% year-on-year and 16.8% from the previous quarter. The company reported a slight loss, which would have been a profit when the impairment for the new headquarters is considered.

Background

Revenue for Q2 FY2024 was $688.7 million, with 42% of revenue from subscription services and 58% from product sales. It’s interesting to note that since the Pure Storage IPO in October 2015, subscription revenue has grown in every quarter compared to the previous one. In the current period, product sales were up sequentially (29.3%) but down 3.6% year-on-year as more revenue was shifted to the subscription model. Gross margin on Subscriptions is fractionally higher than Product, at 71.8% compared to 70.0%.

Figure 1 – Pure Storage Quarterly Revenue

In comparison to the rest of the market (based on data reported at the time of writing), NetApp was down 10.1% and HPE down 5% in its storage business (1% up overall due to Intelligent Edge).

Cloud Block Store

In the last quarter, Pure Storage announced the ability for Cloud Block Store to be used for persistent storage on Microsoft’s Azure VMware Solution (AVS). This represents the first block protocol-supported storage solution for the public cloud (the remainder only support NFS). This feature is important as it enables customers to easily replicate virtual instances in and out of the public cloud with a storage subscription model that aligns with on-premises solutions. There are also consolidation, resiliency and cost savings benefits. We see CBS support on AVS as another incremental step for increasing subscription revenue.

Figure 2 – Pure Storage Revenue by Quarter

Figure 3 – Pure Storage Subscription Revenue

The Architect’s View®

Pure Storage continues to execute well and outperform the primary storage market. The company is the leader in innovation and ability to execute while continuing to move up the ranks in terms of market positioning based on revenue. We don’t believe that ranking purely based on income makes much sense, as most of the vendors in this space now offer software-defined and other ancillary products that aren’t always itemised.

Instead, we think revenue growth and consistency are more important, as these reflect the value of the business, even in a downturned market. Of course, that puts demands on any company to keep the flow of innovation coming.

Pure Storage has delivered another robust set of results, and we expect to see no change in this direction anytime soon.

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