Pure Storage beats expectations for Q1 2024 as it eyes ‘complete storage’ opportunity

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Pure Storage has announced solid first quarter 2024 earnings, with revenues beating expectations against an uncertain macroeconomic backdrop, sending the company’s share price ticking upwards in extended trading on Wednesday. The vendor’s recent all-flash storage announcements for its E product line are opening up new opportunities for Pure, with CEO Charlie Giancarlo stating that no new hard disks will be sold by the end of the decade. 

Giancarlo told analysts on a call this week that Pure’s all-flash pitch, alongside its other recent product announcements, is enabling the company to pitch itself as a ‘complete’ storage partner for customers. He said: 

We were pleased with our Q1 performance in what continues overall to be a challenging IT environment. Highlights for the quarter include the highest all-time sales for Evergreen//One and our first sales of FlashBlade//E, which is experiencing the fastest first quarter pipeline growth for any new pure product.

As I've stated in the past, the days of hard disks are coming to an end. We predict that there will be no new hard disks sold in 5 years. But beyond the benefits of the E product line itself, it enables Pure to now compete for our customers' entire storage environment.

It enables Pure for the first time to be our customers' complete storage partner. Something that our customers have been asking for, for years. The operational and economic benefits of Pure's comprehensive storage portfolio are clear and overwhelming and are based on sustainable technology and business model advantages.

The key numbers for the quarter include: 

• Revenue $589.3 million, a decrease of 5% year-over-year, and an increase of 5% year-over-year, when excluding the impact of $60 million of first quarter fiscal 2023 product revenue that was contemplated in the second half of last year

• Subscription services revenue $280.3 million, up 28% year-over-year

• Subscription annual recurring revenue (ARR) $1.2 billion, up 29% year-over-year

• Remaining performance obligations (RPO) $1.8 billion, up 26% year-over-year

• Acquired 276 new customers during the quarter

Further insights

Giancarlo explained that Pure gathered the company’s sales team for its annual sales kickoff in March of this year for the first time in person since 2020, with a key focus in honing sales skills for the company’s expansion into the secondary storage market, advancing its as-a-service offerings, as well as how to sell in today’s environments of constrained IT spending. He said: 

This valuable training is already bearing fruit and enabling us to reach new customers, better support the needs of current customers and reduce sales cycles, which have lengthened in this economic environment. 

It's clear that our continued innovation strongly resonates with our customers, whether it is for AI/machine learning, rapid recovery from ransomware, high-performance databases, electronic design automation and video editing traditional or cloud-native applications and now also for secondary storage environments such as content and media stores, enterprise imaging and even traditional backup and archive.

Giancarlo also highlighted the recent market hype around AI, particularly generative AI, and pointed to Pure’s long running artificial intelligence investments - arguing that the company will focus on more of the same. He said: 

Touching upon the most recent trends, generative AI and ChatGPT have brought artificial intelligence to the top of mind in all of our major customers and has become a focal part of literally every earnings script this quarter.

Pure saw the AI opportunity years ago and started innovating in this area with our introduction of FlashBlade in 2017 and then with our AI-ready infrastructure Aerie product co-developed with NVIDIA. We've continued to advance FlashBlade's high-performance parallel architecture, and Pure continues to be the go-to partner for storage on AI projects.

Pure is the chosen vendor for AI environments across a broad range of industries, including media and entertainment, pharma, health care, aerospace, transportation and financial services.

We expect our leading role in AI to continue to expand, but we are equally excited that the requirements for Big Data will drive even more use of high-performance flash for traditional bulk data.