FORM 10-Q
|
Pure Storage, Inc.
(Exact Name of Registrant as Specified in its Charter)
|
Delaware
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27-1069557
|
(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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650 Castro Street, Suite 400
Mountain View, California
94041
(Address of principal executive offices, including zip code)
(Zip Code)
(800) 379-7873
(Registrant’s telephone number, including area code)
|
Large accelerated filer
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x
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Accelerated filer
|
o
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Non-accelerated filer
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o
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(Do not check if a small reporting company)
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Smaller reporting company
|
o
|
|
|
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Emerging growth company
|
o
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Page
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PART I.
|
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Item 1.
|
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Item 2.
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Item 3.
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Item 4.
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PART II.
|
|
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Item 1.
|
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Item 1A.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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As of
January 31, 2017 |
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As of
October 31, 2017 |
||||
ASSETS
|
|
|
|
|
|
||
Current assets:
|
|
|
|
|
|
||
Cash and cash equivalents
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$
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183,675
|
|
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$
|
182,039
|
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Marketable securities
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362,986
|
|
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369,337
|
|
||
Accounts receivable, net of allowance of $2,000 and $2,073 as of January 31, 2017 and October 31, 2017
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168,978
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|
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202,006
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|
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Inventory
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23,498
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|
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37,208
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|
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Deferred commissions, current
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15,787
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|
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20,187
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|
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Prepaid expenses and other current assets
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25,157
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|
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24,522
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|
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Total current assets
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780,081
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|
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835,299
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|
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Property and equipment, net
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81,695
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84,264
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|
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Intangible assets, net
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6,560
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5,432
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Deferred income taxes, non-current
|
844
|
|
|
965
|
|
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Other assets, non-current
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30,565
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|
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36,596
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|
||
Total assets
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$
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899,745
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|
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$
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962,556
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LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
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|
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Current liabilities:
|
|
|
|
|
|
||
Accounts payable
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$
|
52,719
|
|
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$
|
66,664
|
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Accrued compensation and benefits
|
39,252
|
|
|
50,077
|
|
||
Accrued expenses and other liabilities
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21,697
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|
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24,945
|
|
||
Deferred revenue, current
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158,095
|
|
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183,889
|
|
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Liability related to early exercised stock options
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1,362
|
|
|
568
|
|
||
Total current liabilities
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273,125
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|
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326,143
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|
||
Deferred revenue, non-current
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145,031
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|
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173,641
|
|
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Other liabilities, non-current
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3,159
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|
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3,651
|
|
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Total liabilities
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421,315
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|
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503,435
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|
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Commitments and contingencies (Note 5)
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Stockholders’ equity:
|
|
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Preferred stock, par value of $0.0001 per share— 20,000 shares authorized as of January 31, 2017 and October 31, 2017; no shares issued and outstanding as of January 31, 2017 and October 31, 2017
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—
|
|
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—
|
|
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Class A and Class B common stock, par value of $0.0001 per share— 2,250,000 (Class A 2,000,000, Class B 250,000) shares authorized as of January 31, 2017 and October 31, 2017; 204,364 (Class A 87,027, Class B 117,337) and 216,016 (Class A 109,178, Class B 106,838) shares issued and outstanding as of January 31, 2017 and October 31, 2017
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20
|
|
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20
|
|
||
Additional paid-in capital
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1,281,452
|
|
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1,428,024
|
|
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Accumulated other comprehensive loss
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(562
|
)
|
|
(719
|
)
|
||
Accumulated deficit
|
(802,480
|
)
|
|
(968,204
|
)
|
||
Total stockholders’ equity
|
478,430
|
|
|
459,121
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|
||
Total liabilities and stockholders’ equity
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$
|
899,745
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|
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$
|
962,556
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|
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Three Months Ended
October 31, |
|
Nine Months Ended October 31,
|
||||||||||||
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2016
|
|
2017
|
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2016
|
|
2017
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
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|
||||||
Product
|
$
|
160,523
|
|
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$
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223,196
|
|
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$
|
403,181
|
|
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$
|
536,634
|
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Support
|
36,433
|
|
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54,478
|
|
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96,936
|
|
|
148,132
|
|
||||
Total revenue
|
196,956
|
|
|
277,674
|
|
|
500,117
|
|
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684,766
|
|
||||
Cost of revenue:
|
|
|
|
|
|
|
|
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|
||||||
Product
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54,725
|
|
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75,392
|
|
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131,618
|
|
|
179,289
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|
||||
Support
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14,597
|
|
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20,467
|
|
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41,531
|
|
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56,569
|
|
||||
Total cost of revenue
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69,322
|
|
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95,859
|
|
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173,149
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|
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235,858
|
|
||||
Gross profit
|
127,634
|
|
|
181,815
|
|
|
326,968
|
|
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448,908
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
||||||
Research and development
|
61,612
|
|
|
68,927
|
|
|
173,185
|
|
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203,716
|
|
||||
Sales and marketing
|
91,392
|
|
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129,299
|
|
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262,073
|
|
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346,896
|
|
||||
General and administrative
|
22,810
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25,406
|
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64,021
|
|
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67,664
|
|
||||
Legal settlement
|
30,000
|
|
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—
|
|
|
30,000
|
|
|
—
|
|
||||
Total operating expenses
|
205,814
|
|
|
223,632
|
|
|
529,279
|
|
|
618,276
|
|
||||
Loss from operations
|
(78,180
|
)
|
|
(41,817
|
)
|
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(202,311
|
)
|
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(169,368
|
)
|
||||
Other income (expense), net
|
(192
|
)
|
|
1,138
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|
|
1,127
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|
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6,399
|
|
||||
Loss before provision for income taxes
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(78,372
|
)
|
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(40,679
|
)
|
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(201,184
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)
|
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(162,969
|
)
|
||||
Provision for income taxes
|
441
|
|
|
970
|
|
|
967
|
|
|
2,755
|
|
||||
Net loss
|
$
|
(78,813
|
)
|
|
$
|
(41,649
|
)
|
|
$
|
(202,151
|
)
|
|
$
|
(165,724
|
)
|
Net loss per share attributable to common stockholders, basic and diluted
|
$
|
(0.40
|
)
|
|
$
|
(0.20
|
)
|
|
$
|
(1.05
|
)
|
|
$
|
(0.79
|
)
|
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted
|
195,807
|
|
|
213,274
|
|
|
192,637
|
|
|
209,456
|
|
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Three Months Ended
October 31, |
|
Nine Months Ended October 31,
|
||||||||||||
|
2016
|
|
2017
|
|
2016
|
|
2017
|
||||||||
Net loss
|
$
|
(78,813
|
)
|
|
$
|
(41,649
|
)
|
|
$
|
(202,151
|
)
|
|
$
|
(165,724
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
||||||
Change in unrealized net gain (loss) on available-for-sale securities
|
(554
|
)
|
|
(439
|
)
|
|
298
|
|
|
(157
|
)
|
||||
Comprehensive loss
|
$
|
(79,367
|
)
|
|
$
|
(42,088
|
)
|
|
$
|
(201,853
|
)
|
|
$
|
(165,881
|
)
|
|
|
|
|
|
|
|
|
|
|
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Nine Months Ended October 31,
|
||||||
|
2016
|
|
2017
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|||
Net loss
|
$
|
(202,151
|
)
|
|
$
|
(165,724
|
)
|
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
|
|
|
|
|
|
||
Depreciation and amortization
|
35,978
|
|
|
45,525
|
|
||
Stock-based compensation expense
|
79,129
|
|
|
107,920
|
|
||
Other
|
1,051
|
|
|
879
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||
Accounts receivable, net
|
(38,186
|
)
|
|
(33,630
|
)
|
||
Inventory
|
(189
|
)
|
|
(14,314
|
)
|
||
Deferred commissions
|
1,844
|
|
|
(7,629
|
)
|
||
Prepaid expenses and other current assets
|
39
|
|
|
(112
|
)
|
||
Accounts payable
|
3,639
|
|
|
11,808
|
|
||
Accrued compensation and other liabilities
|
6,786
|
|
|
14,629
|
|
||
Deferred revenue
|
60,180
|
|
|
54,404
|
|
||
Net cash provided by (used in) operating activities
|
(51,880
|
)
|
|
13,756
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
||
Purchases of property and equipment
|
(64,602
|
)
|
|
(44,351
|
)
|
||
Purchase of intangible assets
|
(1,000
|
)
|
|
—
|
|
||
Purchases of marketable securities
|
(483,558
|
)
|
|
(151,998
|
)
|
||
Sales of marketable securities
|
79,815
|
|
|
46,067
|
|
||
Maturities of marketable securities
|
38,213
|
|
|
99,021
|
|
||
Net increase in restricted cash
|
(5,600
|
)
|
|
(2,029
|
)
|
||
Net cash used in investing activities
|
(436,732
|
)
|
|
(53,290
|
)
|
||
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
||
Net proceeds from exercise of stock options
|
10,725
|
|
|
15,761
|
|
||
Proceeds from issuance of common stock under employee stock purchase plan
|
25,606
|
|
|
22,137
|
|
||
Net cash provided by financing activities
|
36,331
|
|
|
37,898
|
|
||
Net decrease in cash and cash equivalents
|
(452,281
|
)
|
|
(1,636
|
)
|
||
Cash and cash equivalents, beginning of period
|
604,742
|
|
|
183,675
|
|
||
Cash and cash equivalents, end of period
|
$
|
152,461
|
|
|
$
|
182,039
|
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
|
|
|
|
|
|
||
Cash paid for income taxes
|
$
|
2,510
|
|
|
$
|
2,410
|
|
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING INFORMATION
|
|
|
|
|
|
||
Property and equipment purchased but not yet paid
|
$
|
5,956
|
|
|
$
|
9,831
|
|
Vesting of early exercised stock options
|
$
|
794
|
|
|
$
|
794
|
|
▪
|
Level I
—Observable inputs are unadjusted quoted prices in active markets for identical assets or liabilities;
|
▪
|
Level II
—Observable inputs are quoted prices for similar assets and liabilities in active markets or inputs other than quoted prices that are observable for the assets or liabilities, either directly or indirectly through market corroboration, for substantially the full term of the financial instruments; and
|
▪
|
Level III
—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. These inputs are based on our own assumptions used to measure assets and liabilities at fair value and require significant management judgment or estimation.
|
|
As of January 31, 2017
|
||||||||||||||||||||||||||
|
Amortized
Cost
|
|
Gross Unrealized
Gains
|
|
Gross Unrealized
Losses
|
|
Fair
Value
|
|
Cash Equivalents
|
|
Marketable Securities
|
|
Restricted Cash
|
||||||||||||||
Level 1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Money market accounts
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
12,734
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
12,734
|
|
Level 2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
U.S. government treasury notes
|
148,298
|
|
|
22
|
|
|
(289
|
)
|
|
148,031
|
|
|
13,226
|
|
|
134,805
|
|
|
—
|
|
|||||||
U.S. government agencies
|
40,398
|
|
|
2
|
|
|
(159
|
)
|
|
40,241
|
|
|
—
|
|
|
40,241
|
|
|
—
|
|
|||||||
Corporate debt securities
|
185,701
|
|
|
242
|
|
|
(379
|
)
|
|
185,564
|
|
|
—
|
|
|
185,564
|
|
|
—
|
|
|||||||
Foreign government bonds
|
2,377
|
|
|
2
|
|
|
(3
|
)
|
|
2,376
|
|
|
—
|
|
|
2,376
|
|
|
—
|
|
|||||||
Total
|
$
|
376,774
|
|
|
$
|
268
|
|
|
$
|
(830
|
)
|
|
$
|
388,946
|
|
|
$
|
13,226
|
|
|
$
|
362,986
|
|
|
$
|
12,734
|
|
|
As of October 31, 2017
|
||||||||||||||||||||||||||
|
Amortized
Cost
|
|
Gross Unrealized
Gains
|
|
Gross Unrealized
Losses
|
|
Fair
Value
|
|
Cash Equivalents
|
|
Marketable
Securities
|
|
Restricted Cash
|
||||||||||||||
Level 1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Money market accounts
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
14,763
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
14,763
|
|
Level 2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
U.S. government treasury notes
|
144,297
|
|
|
6
|
|
|
(419
|
)
|
|
143,884
|
|
|
6,374
|
|
|
137,510
|
|
|
—
|
|
|||||||
U.S. government agencies
|
44,517
|
|
|
—
|
|
|
(205
|
)
|
|
44,312
|
|
|
—
|
|
|
44,312
|
|
|
—
|
|
|||||||
Corporate debt securities
|
187,616
|
|
|
209
|
|
|
(310
|
)
|
|
187,515
|
|
|
—
|
|
|
187,515
|
|
|
—
|
|
|||||||
Total
|
$
|
376,430
|
|
|
$
|
215
|
|
|
$
|
(934
|
)
|
|
$
|
390,474
|
|
|
$
|
6,374
|
|
|
$
|
369,337
|
|
|
$
|
14,763
|
|
|
As of October 31, 2017
|
||||||
|
Amortized Cost
|
|
Fair Value
|
||||
Due within one year
|
$
|
173,537
|
|
|
$
|
173,413
|
|
Due in one to five years
|
196,519
|
|
|
195,924
|
|
||
Total
|
$
|
370,056
|
|
|
$
|
369,337
|
|
|
Less than 12 months
|
|
Greater than 12 months
|
|
Total
|
||||||||||||||||||
|
Fair
Value
|
|
Unrealized
Loss
|
|
Fair
Value |
|
Unrealized
Loss |
|
Fair
Value |
|
Unrealized
Loss |
||||||||||||
U.S. government treasury notes
|
$
|
122,530
|
|
|
$
|
(381
|
)
|
|
$
|
3,965
|
|
|
$
|
(38
|
)
|
|
$
|
126,495
|
|
|
$
|
(419
|
)
|
U.S. government agencies
|
31,914
|
|
|
(106
|
)
|
|
12,398
|
|
|
(99
|
)
|
|
44,312
|
|
|
(205
|
)
|
||||||
Corporate debt securities
|
81,288
|
|
|
(168
|
)
|
|
24,941
|
|
|
(142
|
)
|
|
106,229
|
|
|
(310
|
)
|
||||||
Total
|
$
|
235,732
|
|
|
$
|
(655
|
)
|
|
$
|
41,304
|
|
|
$
|
(279
|
)
|
|
$
|
277,036
|
|
|
$
|
(934
|
)
|
|
As of
January 31, 2017 |
|
As of
October 31, 2017 |
||||
Raw materials
|
$
|
3,003
|
|
|
$
|
5,926
|
|
Finished goods
|
20,495
|
|
|
31,282
|
|
||
Inventory
|
$
|
23,498
|
|
|
$
|
37,208
|
|
|
As of
January 31, 2017 |
|
As of
October 31, 2017 |
||||
Test equipment
|
$
|
105,955
|
|
|
$
|
135,497
|
|
Computer equipment and software
|
54,521
|
|
|
66,270
|
|
||
Furniture and fixtures
|
4,494
|
|
|
5,337
|
|
||
Leasehold improvements
|
10,332
|
|
|
13,815
|
|
||
Total property and equipment
|
175,302
|
|
|
220,919
|
|
||
Less: accumulated depreciation and amortization
|
(93,607
|
)
|
|
(136,655
|
)
|
||
Property and equipment, net
|
$
|
81,695
|
|
|
$
|
84,264
|
|
|
As of
January 31, 2017 |
|
As of
October 31, 2017 |
||||
Technology patents
|
$
|
10,125
|
|
|
$
|
10,125
|
|
Accumulated amortization
|
(3,565
|
)
|
|
(4,693
|
)
|
||
Intangible assets, net
|
$
|
6,560
|
|
|
$
|
5,432
|
|
Years Ending January 31,
|
Estimated
Future
Amortization
Expense
|
||
Remainder of 2018
|
$
|
376
|
|
2019
|
1,504
|
|
|
2020
|
1,504
|
|
|
2021
|
1,504
|
|
|
2022
|
544
|
|
|
Total
|
$
|
5,432
|
|
|
As of
January 31, 2017 |
|
As of
October 31, 2017 |
||||
Sales and use tax payable
|
$
|
540
|
|
|
$
|
1,256
|
|
Accrued professional fees
|
1,765
|
|
|
1,430
|
|
||
Accrued marketing
|
6,718
|
|
|
8,899
|
|
||
Accrued travel and entertainment expenses
|
2,235
|
|
|
4,112
|
|
||
Income tax payable
|
1,135
|
|
|
1,620
|
|
||
Other accrued liabilities
|
9,304
|
|
|
7,628
|
|
||
Total accrued expenses and other liabilities
|
$
|
21,697
|
|
|
$
|
24,945
|
|
|
Options Outstanding
|
|||||||||||
|
Number of
Shares
|
|
Weighted-
Average
Exercise Price
|
|
Weighted-
Average
Remaining
Contractual Life (In Years)
|
|
Aggregate
Intrinsic
Value (in thousands)
|
|||||
Balance as of January 31, 2017
|
56,840,189
|
|
|
$
|
7.15
|
|
|
7.0
|
|
$
|
315,502
|
|
Options granted
|
1,000,000
|
|
|
14.92
|
|
|
|
|
|
|
||
Options exercised
|
(5,502,179
|
)
|
|
2.86
|
|
|
|
|
|
|
||
Options forfeited/cancelled
|
(2,362,891
|
)
|
|
14.41
|
|
|
|
|
|
|
||
Balance as of October 31, 2017
|
49,975,119
|
|
|
$
|
7.43
|
|
|
6.4
|
|
$
|
457,252
|
|
Vested and exercisable as of October 31, 2017
|
30,500,061
|
|
|
$
|
4.84
|
|
|
5.9
|
|
$
|
355,871
|
|
|
Number of Restricted Stock Units Outstanding
|
|
Weighted-
Average
Grant Date
Fair Value
|
|
Aggregate
Intrinsic Value (in thousands) |
|||||
Unvested Balance as of January 31, 2017
|
8,783,024
|
|
|
$
|
13.06
|
|
|
$
|
99,863
|
|
Granted
|
14,315,164
|
|
|
11.65
|
|
|
|
|
||
Vested
|
(3,627,367
|
)
|
|
12.33
|
|
|
|
|
||
Forfeited
|
(1,292,330
|
)
|
|
11.75
|
|
|
|
|
||
Unvested Balance as of October 31, 2017
|
18,178,491
|
|
|
$
|
12.21
|
|
|
$
|
298,674
|
|
|
Three Months Ended
October 31, |
|
Nine Months Ended
October 31, |
||||||||||||
|
2016
|
|
2017
|
|
2016
|
|
2017
|
||||||||
Cost of revenue—product
|
$
|
138
|
|
|
$
|
143
|
|
|
$
|
425
|
|
|
$
|
898
|
|
Cost of revenue—support
|
1,178
|
|
|
2,422
|
|
|
3,982
|
|
|
6,441
|
|
||||
Research and development
|
15,241
|
|
|
18,073
|
|
|
40,875
|
|
|
51,632
|
|
||||
Sales and marketing
|
8,468
|
|
|
12,104
|
|
|
24,719
|
|
|
34,169
|
|
||||
General and administrative
|
3,210
|
|
|
6,121
|
|
|
9,128
|
|
|
14,780
|
|
||||
Total stock-based compensation expense
|
$
|
28,235
|
|
|
$
|
38,863
|
|
|
$
|
79,129
|
|
|
$
|
107,920
|
|
|
Three Months Ended
October 31, |
|
Nine Months Ended
October 31, |
||||||||||||
|
2016
|
|
2017
|
|
2016
|
|
2017
|
||||||||
Net loss
|
$
|
(78,813
|
)
|
|
$
|
(41,649
|
)
|
|
$
|
(202,151
|
)
|
|
$
|
(165,724
|
)
|
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted
|
195,807
|
|
|
213,274
|
|
|
192,637
|
|
|
209,456
|
|
||||
Net loss per share attributable to common stockholders, basic and diluted
|
$
|
(0.40
|
)
|
|
$
|
(0.20
|
)
|
|
$
|
(1.05
|
)
|
|
$
|
(0.79
|
)
|
|
Three Months Ended
October 31, |
|
Nine Months Ended
October 31, |
||||||||
|
2016
|
|
2017
|
|
2016
|
|
2017
|
||||
Stock options to purchase common stock
|
62,874
|
|
|
51,685
|
|
|
65,594
|
|
|
53,786
|
|
Restricted stock units
|
6,342
|
|
|
17,201
|
|
|
4,155
|
|
|
14,913
|
|
Early exercised stock options
|
2,246
|
|
|
196
|
|
|
2,451
|
|
|
287
|
|
Employee stock purchase plan
|
434
|
|
|
585
|
|
|
434
|
|
|
585
|
|
Total
|
71,896
|
|
|
69,667
|
|
|
72,634
|
|
|
69,571
|
|
|
Three Months Ended
October 31, |
|
Nine Months Ended
October 31, |
||||||||||||
|
2016
|
|
2017
|
|
2016
|
|
2017
|
||||||||
United States
|
$
|
152,134
|
|
|
$
|
192,977
|
|
|
$
|
385,464
|
|
|
$
|
504,937
|
|
Rest of the world
|
44,822
|
|
|
84,697
|
|
|
114,653
|
|
|
179,829
|
|
||||
Total revenue
|
$
|
196,956
|
|
|
$
|
277,674
|
|
|
$
|
500,117
|
|
|
$
|
684,766
|
|
|
As of
January 31, 2017 |
|
As of
October 31, 2017 |
||||
United States
|
$
|
78,692
|
|
|
$
|
80,387
|
|
Rest of the world
|
3,003
|
|
|
3,877
|
|
||
Total long-lived assets
|
$
|
81,695
|
|
|
$
|
84,264
|
|
|
Three Months Ended
October 31, |
|
Nine Months Ended
October 31, |
||||||||||||
|
2016
|
|
2017
|
|
2016
|
|
2017
|
||||||||
|
(unaudited)
|
||||||||||||||
Consolidated Statements of Operations Data:
|
|
|
|
|
|
||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
||||||
Product
|
$
|
160,523
|
|
|
$
|
223,196
|
|
|
$
|
403,181
|
|
|
$
|
536,634
|
|
Support
|
36,433
|
|
|
54,478
|
|
|
96,936
|
|
|
148,132
|
|
||||
Total revenue
|
196,956
|
|
|
277,674
|
|
|
500,117
|
|
|
684,766
|
|
||||
Cost of revenue:
|
|
|
|
|
|
|
|
|
|
||||||
Product
(1)
|
54,725
|
|
|
75,392
|
|
|
131,618
|
|
|
179,289
|
|
||||
Support
(1)
|
14,597
|
|
|
20,467
|
|
|
41,531
|
|
|
56,569
|
|
||||
Total cost of revenue
|
69,322
|
|
|
95,859
|
|
|
173,149
|
|
|
235,858
|
|
||||
Gross profit
|
127,634
|
|
|
181,815
|
|
|
326,968
|
|
|
448,908
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
||||||
Research and development
(1)
|
61,612
|
|
|
68,927
|
|
|
173,185
|
|
|
203,716
|
|
||||
Sales and marketing
(1)
|
91,392
|
|
|
129,299
|
|
|
262,073
|
|
|
346,896
|
|
||||
General and administrative
(1)
|
22,810
|
|
|
25,406
|
|
|
64,021
|
|
|
67,664
|
|
||||
Legal settlement
|
30,000
|
|
|
—
|
|
|
30,000
|
|
|
—
|
|
||||
Total operating expenses
|
205,814
|
|
|
223,632
|
|
|
529,279
|
|
|
618,276
|
|
||||
Loss from operations
|
(78,180
|
)
|
|
(41,817
|
)
|
|
(202,311
|
)
|
|
(169,368
|
)
|
||||
Other income (expense), net
|
(192
|
)
|
|
1,138
|
|
|
1,127
|
|
|
6,399
|
|
||||
Loss before provision for income taxes
|
(78,372
|
)
|
|
(40,679
|
)
|
|
(201,184
|
)
|
|
(162,969
|
)
|
||||
Provision for income taxes
|
441
|
|
|
970
|
|
|
967
|
|
|
2,755
|
|
||||
Net loss
|
$
|
(78,813
|
)
|
|
$
|
(41,649
|
)
|
|
$
|
(202,151
|
)
|
|
$
|
(165,724
|
)
|
|
(1)
|
Includes stock-based compensation expense as follows:
|
|
Three Months Ended
October 31, |
|
Nine Months Ended
October 31, |
||||||||||||
|
2016
|
|
2017
|
|
2016
|
|
2017
|
||||||||
|
(unaudited)
|
||||||||||||||
Cost of revenue—product
|
$
|
138
|
|
|
$
|
143
|
|
|
$
|
425
|
|
|
$
|
898
|
|
Cost of revenue—support
|
1,178
|
|
|
2,422
|
|
|
3,982
|
|
|
6,441
|
|
||||
Research and development
|
15,241
|
|
|
18,073
|
|
|
40,875
|
|
|
51,632
|
|
||||
Sales and marketing
|
8,468
|
|
|
12,104
|
|
|
24,719
|
|
|
34,169
|
|
||||
General and administrative
|
3,210
|
|
|
6,121
|
|
|
9,128
|
|
|
14,780
|
|
||||
Total stock-based compensation expense
|
$
|
28,235
|
|
|
$
|
38,863
|
|
|
$
|
79,129
|
|
|
$
|
107,920
|
|
|
Three Months Ended October 31,
|
|
Change
|
|
Nine Months Ended
October 31, |
|
Change
|
||||||||||||||||||||||
|
2016
|
|
2017
|
|
$
|
|
%
|
|
2016
|
|
2017
|
|
$
|
|
%
|
||||||||||||||
|
(dollars in thousands, unaudited)
|
||||||||||||||||||||||||||||
Product revenue
|
$
|
160,523
|
|
|
$
|
223,196
|
|
|
$
|
62,673
|
|
|
39
|
%
|
|
$
|
403,181
|
|
|
$
|
536,634
|
|
|
$
|
133,453
|
|
|
33
|
%
|
Support revenue
|
36,433
|
|
|
54,478
|
|
|
18,045
|
|
|
50
|
%
|
|
96,936
|
|
|
148,132
|
|
|
51,196
|
|
|
53
|
%
|
||||||
Total revenue
|
$
|
196,956
|
|
|
$
|
277,674
|
|
|
$
|
80,718
|
|
|
41
|
%
|
|
$
|
500,117
|
|
|
$
|
684,766
|
|
|
$
|
184,649
|
|
|
37
|
%
|
|
Three Months Ended October 31,
|
|
Change
|
|
Nine Months Ended
October 31, |
|
Change
|
||||||||||||||||||||||
|
2016
|
|
2017
|
|
$
|
|
%
|
|
2016
|
|
2017
|
|
$
|
|
%
|
||||||||||||||
|
(dollars in thousands, unaudited)
|
||||||||||||||||||||||||||||
Product cost of revenue
|
$
|
54,725
|
|
|
$
|
75,392
|
|
|
$
|
20,667
|
|
|
38
|
%
|
|
$
|
131,618
|
|
|
$
|
179,289
|
|
|
$
|
47,671
|
|
|
36
|
%
|
Support cost of revenue
|
14,597
|
|
|
20,467
|
|
|
5,870
|
|
|
40
|
%
|
|
41,531
|
|
|
56,569
|
|
|
15,038
|
|
|
36
|
%
|
||||||
Total cost of revenue
|
$
|
69,322
|
|
|
$
|
95,859
|
|
|
$
|
26,537
|
|
|
38
|
%
|
|
$
|
173,149
|
|
|
$
|
235,858
|
|
|
$
|
62,709
|
|
|
36
|
%
|
Product gross margin
|
65.9
|
%
|
|
66.2
|
%
|
|
|
|
|
|
|
|
67.4
|
%
|
|
66.6
|
%
|
|
|
|
|
||||||||
Support gross margin
|
59.9
|
%
|
|
62.4
|
%
|
|
|
|
|
|
|
|
57.2
|
%
|
|
61.8
|
%
|
|
|
|
|
||||||||
Total gross margin
|
64.8
|
%
|
|
65.5
|
%
|
|
|
|
|
|
|
|
65.4
|
%
|
|
65.6
|
%
|
|
|
|
|
|
Three Months Ended October 31,
|
|
Change
|
|
Nine Months Ended
October 31, |
|
Change
|
||||||||||||||||||||||
|
2016
|
|
2017
|
|
$
|
|
%
|
|
2016
|
|
2017
|
|
$
|
|
%
|
||||||||||||||
|
(dollars in thousands, unaudited)
|
||||||||||||||||||||||||||||
Research and development
|
$
|
61,612
|
|
|
$
|
68,927
|
|
|
$
|
7,315
|
|
|
12
|
%
|
|
$
|
173,185
|
|
|
$
|
203,716
|
|
|
$
|
30,531
|
|
|
18
|
%
|
|
Three Months Ended October 31,
|
|
Change
|
|
Nine Months Ended
October 31, |
|
Change
|
||||||||||||||||||||||
|
2016
|
|
2017
|
|
$
|
|
%
|
|
2016
|
|
2017
|
|
$
|
|
%
|
||||||||||||||
|
(dollars in thousands, unaudited)
|
||||||||||||||||||||||||||||
Sales and marketing
|
$
|
91,392
|
|
|
$
|
129,299
|
|
|
$
|
37,907
|
|
|
41
|
%
|
|
$
|
262,073
|
|
|
$
|
346,896
|
|
|
$
|
84,823
|
|
|
32
|
%
|
|
Three Months Ended October 31,
|
|
Change
|
|
Nine Months Ended
October 31, |
|
Change
|
||||||||||||||||||||||
|
2016
|
|
2017
|
|
$
|
|
%
|
|
2016
|
|
2017
|
|
$
|
|
%
|
||||||||||||||
|
(dollars in thousands, unaudited)
|
||||||||||||||||||||||||||||
General and administrative
|
$
|
22,810
|
|
|
$
|
25,406
|
|
|
$
|
2,596
|
|
|
11
|
%
|
|
$
|
64,021
|
|
|
$
|
67,664
|
|
|
$
|
3,643
|
|
|
6
|
%
|
|
Three Months Ended October 31,
|
|
Change
|
|
Nine Months Ended
October 31, |
|
Change
|
||||||||||||||||
|
2016
|
|
2017
|
|
|
|
2016
|
|
2017
|
|
|
||||||||||||
|
(dollars in thousands, unaudited)
|
||||||||||||||||||||||
Other income (expense), net
|
$
|
(192
|
)
|
|
$
|
1,138
|
|
|
$
|
1,330
|
|
|
$
|
1,127
|
|
|
$
|
6,399
|
|
|
$
|
5,272
|
|
|
Three Months Ended October 31,
|
|
Change
|
|
Nine Months Ended
October 31, |
|
Change
|
||||||||||||||||
|
2016
|
|
2017
|
|
|
|
2016
|
|
2017
|
|
|
||||||||||||
|
(dollars in thousands, unaudited)
|
||||||||||||||||||||||
Provision for income taxes
|
$
|
441
|
|
|
$
|
970
|
|
|
$
|
529
|
|
|
$
|
967
|
|
|
$
|
2,755
|
|
|
$
|
1,788
|
|
|
Nine Months Ended October 31,
|
||||||
|
2016
|
|
2017
|
||||
Net cash provided by (used in) operating activities
|
$
|
(51,880
|
)
|
|
$
|
13,756
|
|
Net cash used in investing activities
|
$
|
(436,732
|
)
|
|
$
|
(53,290
|
)
|
Net cash provided by financing activities
|
$
|
36,331
|
|
|
$
|
37,898
|
|
•
|
maintain and extend our product leadership;
|
•
|
recruit, hire, train and manage additional personnel;
|
•
|
maintain and further develop our channel partner relationships;
|
•
|
enhance and expand our distribution and supply chain infrastructure;
|
•
|
expand our support capabilities;
|
•
|
forecast and control expenses;
|
•
|
enhance and expand our international operations; and
|
•
|
implement, improve and maintain our internal systems, procedures and controls.
|
•
|
greater name recognition and longer operating histories;
|
•
|
larger sales and marketing and customer support budgets and resources;
|
•
|
broader distribution and established relationships with distribution partners and customers;
|
•
|
the ability to bundle storage products with other products and services to address customers’ requirements;
|
•
|
greater resources to make acquisitions;
|
•
|
larger and more mature product and intellectual property portfolios; and
|
•
|
substantially greater financial, technical and other resources.
|
•
|
demand for our products;
|
•
|
sales and marketing initiatives, discount levels, rebates and competitive pricing;
|
•
|
changes in customer, geographic or product mix, including mix of product configurations;
|
•
|
the cost of freight and components, including NAND and DRAM flash;
|
•
|
new product introductions and enhancements, potentially with initial sales at relatively small volumes and higher product costs;
|
•
|
the timing and amount of revenue recognized and deferred;
|
•
|
excess inventory levels or purchase commitments as a result of changes in demand forecasts or product transitions;
|
•
|
an increase in product returns, order rescheduling and cancellations;
|
•
|
the timing of technical support service contracts and contract renewals;
|
•
|
inventory stocking requirements to mitigate supply constraints, accommodate unforeseen demand or support new product introductions; and
|
•
|
product quality and serviceability issues.
|
•
|
the timing and magnitude of orders, shipments and acceptance of our products in any quarter, including product returns, order rescheduling and cancellations by our customers;
|
•
|
fluctuations in demand and prices for our products;
|
•
|
seasonality in our business or the markets we serve;
|
•
|
our ability to control the costs of the components we use in our hardware products;
|
•
|
our ability to timely adopt subsequent generations of components into our hardware products;
|
•
|
disruption in our supply chains, component availability and related procurement costs;
|
•
|
reductions in customers’ budgets for IT purchases;
|
•
|
changes in industry standards in the data storage industry;
|
•
|
our ability to develop, introduce and ship in a timely manner new products and product enhancements that meet customer requirements;
|
•
|
our ability to effectively manage product transitions as we introduce new products;
|
•
|
any change in the competitive dynamics of our markets, including new entrants or discounting of product prices;
|
•
|
our ability to control costs, including our operating expenses; and
|
•
|
future accounting pronouncements and changes in accounting policies.
|
•
|
exposure to foreign currency exchange rate risk;
|
•
|
difficulties in collecting payments internationally, and managing and staffing international operations;
|
•
|
establishing relationships with channel partners in international locations;
|
•
|
the increased travel, infrastructure and legal compliance costs associated with international locations;
|
•
|
the burdens of complying with a wide variety of laws associated with international operations, including taxes and customs;
|
•
|
significant fines, penalties and collateral consequences if we or our partners fail to comply with anti-bribery laws;
|
•
|
heightened risk of improper, unfair or corrupt business practices in certain geographies;
|
•
|
potentially adverse tax consequences, including repatriation of earnings;
|
•
|
increased financial accounting and reporting burdens and complexities;
|
•
|
political, social and economic instability abroad, terrorist attacks and security concerns in general; and
|
•
|
reduced or varied protection for intellectual property rights in some countries.
|
•
|
the failure of our current products to achieve broad market acceptance;
|
•
|
any decline or fluctuation in demand for our products, whether as a result of product obsolescence, technological change, customer budgetary constraints or other factors;
|
•
|
the introduction of competing products and technologies that replace or substitute, or represent an improvement over, our products; and
|
•
|
our inability to release enhanced versions of our products, including any related software, on a timely basis.
|
•
|
the inability to obtain an adequate supply of key components, including solid-state drives;
|
•
|
price volatility for the components of our products;
|
•
|
failure of a supplier to meet our quality or production requirements;
|
•
|
failure of a supplier of key components to remain in business or adjust to market conditions; and
|
•
|
consolidation among suppliers, resulting in some suppliers exiting the industry or discontinuing the manufacture of components.
|
•
|
selling to governmental agencies can be highly competitive, expensive and time consuming, often requiring significant upfront time and expense without any assurance that such efforts will generate a sale;
|
•
|
government certification requirements applicable to our products may change and in doing so restrict our ability to sell into the U.S. federal government sector until we have attained the revised certification;
|
•
|
government demand and payment for our products and services may be impacted by public sector budgetary cycles and funding authorizations, with funding reductions or delays adversely affecting public sector demand for our products and services;
|
•
|
we sell our products to governmental agencies through our channel partners, and these agencies may have statutory, contractual or other legal rights to terminate contracts with our distributors and resellers for convenience or due to a default, and any such termination may adversely impact our future results of operations;
|
•
|
governments routinely investigate and audit government contractors’ administrative processes, and any unfavorable audit could result in the government refusing to continue buying our products, which would adversely impact our revenue and results of operations, or institute fines or civil or criminal liability if the audit uncovers improper or illegal activities; and
|
•
|
governments may require certain products to be manufactured in the United States and other relatively high-cost manufacturing locations, and we may not manufacture all products in locations that meet these requirements, affecting our ability to sell these products to governmental agencies.
|
•
|
price and volume fluctuations in the overall stock market from time to time;
|
•
|
significant volatility in the market price and trading volume of technology companies in general and of companies in our industry;
|
•
|
actual or anticipated changes in our results of operations or fluctuations in our operating results;
|
•
|
whether our operating results meet the expectations of securities analysts or investors;
|
•
|
actual or anticipated changes in the expectations of investors or securities analysts;
|
•
|
actual or anticipated developments in our competitors’ businesses or the competitive landscape generally;
|
•
|
litigation involving us, our industry or both;
|
•
|
general economic conditions and trends;
|
•
|
major catastrophic events;
|
•
|
sales of large blocks of our stock; or
|
•
|
departures of key personnel.
|
•
|
provide for a dual class common stock structure, so that certain stockholders will have significant influence over all matters requiring stockholder approval, including the election of directors and significant corporate transactions, such as a merger or other sale of our company or its assets and which could discourage others from initiating any potential merger, takeover or other change of control transaction that other stockholders may view as beneficial;
|
•
|
establish a classified board of directors so that not all members of our board of directors are elected at one time;
|
•
|
authorize the issuance of “blank check” preferred stock that our board of directors could issue to increase the number of outstanding shares to discourage a takeover attempt;
|
•
|
prohibit stockholder action by written consent, which requires all stockholder actions to be taken at a meeting of our stockholders;
|
•
|
prohibit stockholders from calling a special meeting of our stockholders;
|
•
|
provide that the board of directors is expressly authorized to make, alter or repeal our bylaws; and
|
•
|
establish advance notice requirements for nominations for elections to our board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings.
|
|
|
PURE STORAGE, INC.
|
|
|
|
|
|
Date:
|
December 8, 2017
|
By:
|
/s/ CHARLES GIANCARLO
|
|
|
|
Charles Giancarlo
|
|
|
|
Chief Executive Officer and Director
(Principal Executive Officer)
|
|
|
|
|
Date:
|
December 8, 2017
|
By:
|
/s/ TIMOTHY RIITTERS
|
|
|
|
Timothy Riitters
|
|
|
|
Chief Financial Officer
(Principal Financial and Accounting Officer)
|
|
|
|
|
Incorporation By Reference
|
|
|
||||
Exhibit
Number
|
|
Description
|
|
Form
|
|
SEC File No.
|
|
Exhibit
|
|
Filing Date
|
|
|
10-Q
|
|
|
3.1
|
|
12/11/2015
|
|||
|
|
S-1
|
|
|
3.4
|
|
9/9/2015
|
|||
|
|
S-1
|
|
|
4.1
|
|
9/9/2015
|
|||
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
||
101.INS
|
|
XBRL Instance Document
|
|
|
|
|
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
|
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
|
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
|
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
|
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
|
|
|
|
|
I.
|
Employment Position and Duties
.
|
II.
|
Appointment to Board.
|
III.
|
Base Salary, Bonus and Benefits
.
|
IV.
|
Equity.
|
V.
|
Compliance with Confidential Information Agreement and Company Policies.
|
VI.
|
Outside Activities.
|
VII.
|
At-Will Employment Relationship.
|
VIII.
|
Severance Benefits.
|
IX.
|
Definition of Terms:
|
X.
|
Dispute Resolution.
|
XI.
|
Section 409A Compliance.
|
XII.
|
Parachute Payments
.
|
XIII.
|
Indemnification.
|
XIV.
|
Miscellaneous.
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Pure Storage, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: December 8, 2017
|
By:
|
/s/ CHARLES GIANCARLO
|
|
|
Charles Giancarlo
|
|
|
Chief Executive Officer
(Principal Executive Officer)
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Pure Storage, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: December 8, 2017
|
By:
|
/s/ TIMOTHY RIITTERS
|
|
|
Timothy Riitters
|
|
|
Chief Financial Officer
(Principal Financial Officer)
|
Date: December 8, 2017
|
By:
|
/s/ CHARLES GIANCARLO
|
|
|
Charles Giancarlo
|
|
|
Chief Executive Officer
(Principal Executive Officer)
|
Date: December 8, 2017
|
By:
|
/s/ TIMOTHY RIITTERS
|
|
|
Timothy Riitters
|
|
|
Chief Financial Officer
(Principal Financial Officer)
|