Pure Storage, Inc. has announced financial results for the third quarter of FY2024. Revenue is up 12.8% compared to the same period in FY2023 and 10.8% sequentially (compared to the previous quarter), with a profit declared for the period. So, everything looks good – but is the full year and Q4 guidance good enough?
Background
Pure Storage posted Q3 FY2024 financial data showing revenue of $763 million, of which 59% was product and 41% subscriptions. In our Q2 coverage, we noted that subscription revenue has risen every quarter since IPO in 2015, which continued in Q3. Expenses as a percentage of revenue continue to decline (Figure 4), resulting in a profit declared for the quarter.
Journey
Pure Storage continues to push the subscription side of the business, with a power and rack space rebate announced in October 2023. The company also introduced a new disaster recovery-as-a-service (DRaaS) feature. We believe that the Evergreen model is the driver of increased sales growth, which is made possible by standardised systems design and non-disruptive field upgrades.
One major differentiator with other vendors in this space is the extensive value built into Pure1 and the Evergreen SaaS portal. We’ve been provided with demonstrations that show comprehensive fleet management capabilities we believe are not matched by Pure’s competitors.
The Architect’s View®
Pure Storage continues to perform well, although Q4 and full year guidance look poor compared to the first three quarters of FY2024. If revenue hits the forecast numbers, then full year growth would be only 2%. However, remaining performance obligations (RPOs) are at $2 billion and up 30% year-on-year. Subscription revenue and ARR are both up 26%, year-on-year. This seems to indicate there is a significant pipeline of subscriptions business that just hasn’t been reported in the quarterly figures.
Irrespective of the nuances of financial reporting (which we’re not qualified to comment on), we continue to see Pure Storage delivering on innovation and new technology. We expect this theme to continue into 2024 as the company continues to grow where competitors are shrinking.
X-Ray: Pure Storage, Inc.
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