Pure Storage CEO Sees $1B In Sales Next Fiscal Year

All-flash storage array vendor Pure Storage on Wednesday reported that it is on its way to its first billion-dollar sales year based on the strength of its channels and on its ability to compete against Dell EMC and NetApp.

The Mountain View, Calif.-based company said it expects little headwind from the on-going tight supply of NAND memory, which is a key component to all-flash storage, and that it expects updates to its software to make its solution set applicable to the entire breadth of enterprise workloads.

David Hatfield, Pure Storage president, said during Wednesday's earnings conference call that Pure Storage planned to add synchronous replication and enhanced cloud data protection to the company's product line, including the FlashArray, the new FlashBlade all-flash array for unstructured data, and the FlashStack converged infrastructure solution done in conjunction with its compute and networking partner Cisco Systems.

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The company also expects to start introducing the new high-performance NVMe PCIe-based non-volatile memory technology to its FlashArray line this year, according to Matt Kixmoeller, vice president of products.

Kixmoeller told analysts that the transition to NVMe would likely be more important to the storage industry, and harder to do, than the transition from traditional storage to all-flash. He said Pure Storage is leveraging its software capabilities to ensure the transition is non-disruptive.

Kixmoeller also said that synchronous replication was the last hurdle for Pure Storage to the high-end disaster recovery market. "We are confident of shipping it this year," he said.

Scott Dietzen, Pure Storage CEO, told analysts that NAND memory supplies are tight across the industry, but that his company is in better shape than competitors such as Hewlett Packard Enterprise and NetApp, which recently reported impacts from the shortage.

"Keep in mind that Pure's software gives us an advantage compared to our competition," he said. "We get double the capacity from the same amount of NAND, and we can use a mix of consumer grade and enterprise technologies."

While Pure Storage released its FlashBlade all-flash solution for unstructured data last month and it is already starting to compete well against Dell EMC's Isilon solution and NetApp, Kixmoeller said.

Isilon was designed at a time when the focus of unstructured data was on streaming video, while FlashBlade was designed in the age of IoT, he said. The Isilon architecture is not built for the new unstructured workloads customers are running today, he said.

When asked by an analyst if FlashBlade could be used to develop hyper-converged infrastructure solutions, Hatfield said both FlashArray and FlashBlade were designed to be the best solutions for connecting different applications to the same data set, which is important for cloud infrastructures.

"Hyper-converged infrastructure's sweet spot has been in the single-tier applications farther away from the cloud," he said.

Dietzen said that Cisco has continued to grow as an important partner of Pure Storage thanks to the two company's combined FlashStack converged infrastructure solution.

Pure Storage has had a strong win rate with FlashStack against its primary competitor, Dell EMC, Dietzen said.

"We have a strong alignment with Cisco on FlashStack," he said. "Dell EMC is seen as a primary competitor of Cisco by our channel."

Pure Storage's channel has been key for competing with Dell EMC and others, said Tim Riitters, the company's chief financial officer.

Pure Storage is seeing Dell EMC incenting its channel reps to go after Cisco's business which helps cement Pure Storage's relations with its channel and with Cisco's channel, Riitters said.

"Cisco has been very consistent with its channel partners, while Dell EMC is [less so]," he said.

Hatfield said that Pure Storage is relying heavily on its channel partners and on Cisco's channel partners to grow its business, and is focused on working with quality partners who can drive business with new customers.

"We knew and recognized when we start the company that we would rely on the channel," he said.

For the fourth fiscal quarter 2017, which ended January 31, Pure Storage reported revenue of $227.9 million, up 52 percent over the fourth fiscal quarter of 2016. That was about 2.2 percent over the midpoint of Pure Storage's previous guidance, the company said.

On a GAAP basis, the company also reported a loss of $42.9 million, or 21 cents per share, in the fourth fiscal quarter, a slight improvement from the fourth quarter 2016 loss of $44.3 million, or 24 cents per share.

On a non-GAAP basis, Pure Storage reported a loss of $4.8 million, or 2 cents per share, down significantly from the $22.3 million, or 12 cents per share, in fiscal fourth quarter 2016.

For all of fiscal 2017, Pure Storage reported revenue of $728.0 million, up 65 percent over fiscal 2016.

On a GAAP basis, the company also reported a loss of $245.1 million, or $1.26 per share, for the full fiscal year 2017, compared to the full year 2016 loss of $213.9 million, or $2.59 cents per share.

Dietzen said Pure Storage added about 450 new customers during the fourth quarter, and about 1,400 new customers throughout fiscal 2017. The company now has over 3,000 customers, a fact that bodes well for the future, he said.

"We've got a pipeline full of innovation, and expect our first $1 billion in revenue this year," he said.

Looking forward, Pure Storage expects full year fiscal 2018 revenue to be in the range of $975 million to $1,025 million, or about $1 billion at the midpoint, Dietzen said.