Pure Storage revenue results rosy, guidance thorny
Pure Storage revealed two surprises during its fourth quarter earnings call.
One the plus side, the all-flash vendor exceeded its forecast and expectations for revenue during the quarter and all of last year. Pure Storage revenue for the fourth-quarter hit $228 million, representing 52% year-over-year growth and exceeding the high point of its previous guidance. Pure said it picked up 450 new customers in the quarter, bringing its total to more than 3,000. For the year, Pure Storage revenue of $728 million represented growth of 65% over the previous year. That’s impressive in an industry with little growth at all.
On the down side, Pure’s guidance for this quarter came in below Wall Street expectations. Pure forecasted from $171 million to $179 million, below analysts’ consensus of $201 million. That guidance represents about 17.5% of the vendor’s full year guidance of $975 million to $1.01 billion.
Pure executives on the Wednesday night call chalked up the low estimate to seasonality – the first quarter is traditionally the slowest for storage sales – and pointed out their full-year guidance met expectations. They say this will still be a strong year due to sales of the relatively new FlashBlade for early NVMe sales and coming synchronous replication software that will bolster Pure’s disaster recovery capabilities. The high end of the Pure Storage revenue guidance calls for $1 billion a year, and it could register its first profits by the end of 2017. (Pure lost $43 million last quarter and $245 million for the year.)
But analysts on the earnings call were not convinced, and kept asking Pure execs for a better explanation for the gloomy first-quarter forecast.
“We are convinced 2017 will be Pure’s best year yet,” CEO Scott Dietzen said. “We are thrilled that our data platform is in a position to drive $1 billion in revenue in just our sixth year of selling.”
Dietzen said the formula for Pure Storage revenue to reach $1 billion this year is to increase FlashArray SAN sales from 25% to 30% and generate close to $90 million in FlashBlade revenue. The goal is for FlashBlade to double the $43 million in revenue FlashArray had in its first full year of sales in 2013.
FlashBlade’s success depends on its ability to displace large NAS systems from NetApp and Dell EMC’s Isilon, which also now support all-flash configurations. Dietzen said competitors’ products were built for disk and retrofitted for flash, while Pure designed FlashBlade specifically for flash.
“This [FlashBlade] comes out of a design that’s built around silicon and fast networking and it doesn’t have the legacy holdbacks that are inherent in these 20 plus-year-old designs that we compete against,” he said.
Dietzen said while there is “some tightening in NAND supply,” the shortage had a minimal impact on Pure’s sales last quarter. So far, only Hewlett Packard Enterprise has claimed the shortage cut into sales significantly.