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Pure Storage Delivers Impressive Q2 Fiscal 2023 Results
by Ron Westfall and Daniel Newman | September 2, 2022

The News: Pure Storage (NYSE: PSTG), a supplier of data storage technology and services, announced financial results for its fiscal Q2 that ended on August 7, 2022. Q2 Fiscal 2023 highlights included revenue growth of 30% year-over-year (YoY), record Q2 operating profit, and subscription services annual recurring revenue (ARR) $955 million, up 31% YoY. Read the Pure Storage Press Release here.

Pure Storage Delivers Impressive Q2 Fiscal 2023 Results

Analyst Take: Pure Storage delivers another impressive quarter as the data storage and services player produced robust outcomes across several key fiscal categories in its latest earnings report, especially as market factors such as geopolitical tensions and supply chain uncertainties persist during the post-pandemic era. Here are Pure Storage Q2 Fiscal 2023 highlights:

  • Revenue $646.8 million, up 30% YoY
  • Subscription services revenue $232.2 million, up 35% YoY
  • Subscription Annual Recurring Revenue (ARR) $955.3 million, up 31% YoY
  • Remaining Performance Obligations (RPO) $1.5 billion, up 25% YoY
  • GAAP gross margin 68.6%; non-GAAP gross margin 70.4%
  • GAAP operating income $14.4 million; non-GAAP operating income $106.0 million
  • GAAP operating margin 2.2%; non-GAAP operating margin 16.4%
  • Operating cash flow $159.4 million; free cash flow $134.2 million
  • Total cash, cash equivalents, and marketable securities $1.4 billion
  • Returned approximately $61millionin Q2 to stockholders, repurchased 2.4M shares

Pure Storage’s Q2 2023 30% YoY revenue jump was demonstrative of the company’s performance for the quarter, underlining its ability to meet customer requirements for solutions that deliver data storage benefits such as energy and space savings and broader integration of automation. We view the significant increases in its YoY subscription ARR and subscription services revenue as validating Chairman and CEO Charles Giancarlo’s strategic vision and the company’s overall market direction. The enterprise data storage market segment is intensely competitive featuring major players, such as IBM, HPE, Dell EMC and NetApp, indicating Pure Storage’s ongoing market inroads and effective defense of market gains are hard-earned and deserved.

Pure Storage Raises Full Year 2023 Revenue Outlook, Advances Portfolio Capabilities

From our perspective what makes Pure Storage Q2 results impressive is the Q2 results of $646.8 million exceeding the quarter-over-quarter (QoQ) estimates the company provided in Q1 of $635 million projected. Moreover, Pure Storage raised its FY2023 revenue outlook to $2.75 billion, up from the Q1 outlook of $2.66 billion.

We see Pure Storage consistently providing the portfolio innovations needed to maintain its competitive edge across the data storage ecosystem. In June, Pure Storage the FlashBlade//S solution release confirms Pure Storage’s organization-wide ability to make smart product moves that better serve the company’s customers.

Pure Storage’s new FlashBlade//S offering builds on the company’s DirectFlash technology and unified fast file and object platform capabilities of the first-generation FlashBlade product that debuted in 2016. Now it’s an exabyte scale platform that blends flash-based performance storage with disk-based, capacity-oriented storage to fulfill the demands of rapidly evolving data workload and modern application development on a future-proof foundation.

As a result, today all Pure hardware platforms share a common set of DirectFlash Modules. Of key importance, FlashBlade//S uses the Purity//FB 4.0 scale out storage software OS to uphold Pure’s portfolio development and strategy of building both its own hardware and software to assure customer’s experience the best of both worlds throughout their data storage implementations.

From our perspective, the Pure Storage Model9 collaboration delivers a joint solution designed to transform the way mainframe customers manage mission-critical data. The solution is focused on delivering data management, recovery, and ransomware protection. It is outlined as enabling the integration of mainframe data with the powerful capabilities associated with AI, ML, and analytics associated with cloud-hosted object storage and provides Pure more data storage ecosystem credibility particularly across mainframe channels.

Also, in Q2 we view the expansion of Pure’s Evergreen solution set, including the new fleet-level Evergreen//Flex Storage-as-a-Service offering, and the launch of the Pure Fusion solution aimed at supporting MSPs and enterprises in the orchestration and automation of their data storage environments through expanded API flexibility, as further evidence of execution across its portfolio development goals.

Key Takeaways on Pure Storage’s Q2 FY23 Results

We view Pure Storage as executing on its portfolio development strategy of providing automated, streamlined data storage products and services resulting in better customer outcomes and sustaining its path of continued growth and solid market share gain. Now that Pure Storage delivered another strong beat this quarter, we believe it shows the company has the market momentum, portfolio foundation, and channel relations key to continuing revenue growth and maintaining progress in key metric areas such as ARR and subscription service increases.

Disclosure: Futurum Research is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.

Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of Futurum Research as a whole.

Other insights from Futurum Research:

Pure Storage Flashes Data Storage Advances with FlashBlade//S Debut

Model9 Pure Storage Collaboration Designed to Help Mainframe Enterprises Manage Data

Pure Storage Q1 2023 Revenue Rises to $620.4M, up 50.3% YoY

Image Credit: Pure Storage

About the Authors

Ron is an experienced research expert and analyst, with over 20 years of experience in the digital and IT transformation markets. He is a recognized authority at tracking the evolution of and identifying the key disruptive trends within the service enablement ecosystem, including software and services, infrastructure, 5G/IoT, AI/analytics, security, cloud computing, revenue management, and regulatory issues. Read Full Bio.

Daniel Newman is the Principal Analyst of Futurum Research and the CEO of Broadsuite Media Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise. Read Full Bio