Pure Storage, Inc. has announced financial results for the second quarter of financial year 2025.  Revenue for the period is up 11% year-on-year at $764 million, of which $361 million is derived from subscription services.  Profit for the period was just under $25 million, compared to a $6 million loss in Q2 FY2024.  With the potential to snag a hyper-scale service provider by the end of the year, how is the business transforming?

Background

Pure Storage, Inc. announced financial results for Q2 FY2025 on 28^th August 2024.  The data shows a year-on-year increase of 10.9%, with 53% of income derived from products and 47% from subscriptions.  Gross margin remained consistent at 70.7% (the same as Q2 FY2024) but slightly down on previous sequential quarters.

We show the data in seven graphs, labelled Figures 1 to 7. 

Analysis

Yet again, Pure Storage had a positive quarter, with increased revenue, increased subscription ARR (24% year-on-year) and a 24% increase in remaining performance obligations at $2.3 billion (effectively future contracted business not yet fulfilled).  While margins are slightly down, the company still declared a small profit.  Guidance for Q3 FY2025 is set at $815 million in revenue, a YoY increase of 6.8%, with a FY2025 full-year forecast of $3.1 billion (YoY growth of 10.5%).

Pure Storage indicated that solid growth in the //E and //C products contributed to the rise in revenue.  You can find out more about these two product ranges with the following posts:

• Pure Storage Announces FlashBlade//E
• Pure Storage Announces FlashArray//C
• Pure Storage Announces FlashArray Product Family Updates at Accelerate 2023

The range of both FlashBlade and FlashArray products has contributed to a widening total available market (TAM) and the ability to target customers looking to replace legacy hybrid and disk-based systems.

Hyperscale

Of course, the news the market is waiting for is an announcement relating to the signing of a hyperscale cloud service provider (CSP).  Pure Storage has strongly indicated that it expects to sign a major CSP by the end of the year.  The current “lead prospect” is now at the stage of testing product integration (according to the post-announcement call transcript).  With 600 exabytes of HDDs expected to be purchased by hyper-scalers in 2024, the potential to displace disk-based systems is enormous and would represent a significant coup for the company.

Why is any CSP deal so important?  Pure Storage only supports flash-based media, so any large-scale deployment would displace hard drives.  The price/performance/cost ratio must be good enough for CSPs, where cost and efficiency are significant factors.  With 150TB DirectFlash modules (DFMs) due later this year, Pure Storage would have a massive advantage over generic storage media.  This is due to the software-based flash translation layer (FTL), which aggregates the management and operation of flash across all deployed DFMs within a single system.  You can learn more about the management of flash and its implications in these blog posts and podcasts.

• Solidigm solves the DRAM SSD issue with new D7-P5810 SLC SSD and CSAL software
• Pure Storage – Seeding the NVMe Market
• Dude, Here’s Your 300TB Flash Drive!
• Storage Unpacked 252 – A Vision of Storage Future with Coz from Pure Storage
• Storage Unpacked 245 – Design Strategies for 300TB Flash Drives with Shawn Rosemarin

Ultimately, any agreement with a hyper-scaler is a big deal and could be worth billions of dollars to Pure Storage’s top and bottom line. 

The Architect’s View®

While the revenue growth figures are positive news for Pure Storage, the ultimate prize is the CSP market.  NetApp was the first vendor to succeed with native storage in AWS, Azure and Google Cloud.  That implementation makes ONTAP a first-class citizen while other vendors are building solutions on virtual instances (see our paper on SANs in the Cloud, linked below). 

If Pure Storage can integrate FlashBlade and/or FlashArray within a public cloud, the company would gain parity with one of its biggest competitors.  The question is, what would this deployment look like, and would any implementation be obfuscated from the user or co-branded in the same way as NetApp ONTAP?  We should remember, though, that Purity (the FlashBlade and FlashArray O/S) is software, so could be deployed on custom hardware built and implemented with the hyper-scaler in mind.

Another aspect to consider is the recent investment by Pure Storage in Cerabyte, a company developing ceramic-based long-term storage that could act as a replacement for tape media.  Pure Storage founder John Colgrove has joined the board of the company.  Perhaps there is an intention to develop a future archive tier to complement Pure’s active storage solutions (a discussion for another post).  This concept could also be attractive for hyper-scale customers.

As usual, we are left pondering future direction, but with a positive outlook.  Pure Storage continues to be a successful and growing business, with a model of how data storage will be deployed in the future. 

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