Everpure, Inc. Class A common stock

Good day, ladies and gentlemen. Thank you for standing by and welcome to the Peer Storage second quarter fiscal year 2022 earnings release conference call. At this time, all participants are in a listen-only mode. At the conclusion of our prepared remarks, there will be a question and answer session. If anyone should require assistance during the conference, please press the star zero on your touchtone pad at any time. As a reminder, this call is being recorded. I would now like to introduce your host for today's conference call, Mr. Sanjot Khurana. Mr. Khurana, please go ahead.

Thank you and good afternoon. Welcome to the Pure Storage second quarter fiscal 2022 earnings conference call. My name is Sanjot Khurana, Vice President of Investor Relations at Pure Storage. Joining me today are our CEO, Charlie Giancarlo, our CFO, Kevin Chrysler, and our CTO, Rob Lee. Before we begin, I would like to remind you that during this call, management will make some forward-looking statements which are subject to various risks and uncertainties. These include statements regarding the COVID-19 pandemic and related disruptions, our growth and sales prospects, competitive industry and technology trends, our strategy and its advantages, our current and future product offerings, and our business and operations. Any forward-looking statements that we make are based on facts and assumptions as of today, and we undertake no obligation to update them. Our actual results may differ materially from the results forecasted, and reported results should not be considered as an indication of future performance. A discussion of some of the risks and uncertainties related to our business is contained in our filings with the SEC, and we refer you to these public filings. During this call, we will discuss non-GAAP measures in talking about the company's performance and reconciliations to the most directly comparable GAAP measures provided in our earnings press release and slides. Additionally, when we refer to sales in our prepared remarks, we mean total bookings excluding cancelable orders. This call is being webcast live on the Pure Storage Investor Relations website and is being recorded for playback purposes. An archive of the webcast will be available on the IR website and is a property of Pure Storage. With that, I'll turn the call over to our CEO, Charlie Giancarlo.

Hello, everyone, and thank you for joining us today. Pure had an outstanding Q2. As a growing, share-taking company, we expect every quarter to be record-breaking, but this quarter was extraordinary. Sales, revenue, and profitability were well above expectations. Revenue growth this quarter exceeded 23%, and we had the highest Q2 operating profit in our history. I was especially pleased with the growth of both our new and existing products, the balance of performance geographically, and our continuing penetration of cloud in large enterprise. These are all key parts of our long-term strategy that we've shared over the past several years. These results also show that our strategy of investing into the pandemic and specifically investing in our enterprise sales capability and expanding our product line was the right one. As we discussed in past calls, we predicted that Pure's growth would accelerate as businesses adjusted to the COVID environment. We believe that our growth will be even stronger as businesses return to an in-office environment. We estimated that this would start this past Q2, and we are obviously very pleased with the results. Looking ahead, we expect that businesses will continue to adjust to the effects of the pandemic while driving digital transformation. We believe that the Delta variant has slowed a return to the office environment only temporarily, and that large-scale global vaccinations will do much to enable a full return to normal by spring of next year. As we indicated last quarter, we believe that the current environment enables us to return to our historical double digit growth rates with increasing profitability. Our leadership and innovation of the data storage and management market continues to grow. Our strategy is focused on delivering a unified cloud operating and procurement model across all data storage use cases and environments, enabling modern cloud native applications built on containers, and driving the modernization of today's infrastructure with a focus on the all-flash future that modern applications will demand. Let's take a quick look at the results. This past quarter provided many areas of outstanding performance, highlighted by the highest total sales for any second quarter in the history of the company, growing more than 30% year-over-year. Continued strength and momentum in subscription services revenue up 31% year-over-year, with strong growth in pure-as-a-service, which almost doubled revenues compared to the prior year. And our success in large enterprise continues to grow, comprising over 50% of our sales, with our top 10 customers spending more than $100 million in total. As I mentioned, both our new and existing products achieve new sales milestones. Frankly, The superlatives from this quarter are too numerous to fully enumerate, but here are a few highlights. Growth of our subscription businesses were very strong this past quarter, with sales of both Pure as a Service and Portworx approximately tripling year-over-year. All subscription sales taken together, including Portworx, Pure as a Service, and Evergreen, increased almost 50% year-over-year in Q2. and is approaching one half of Pure's total sales. These results show both the continued attractiveness of our evergreen model and the market's excitement for our new subscription offerings. It has been nearly a year since we announced the acquisition of Portworx. Every quarter, as part of Pure, Portworx has beaten their targets. This past quarter, Portworx sales tripled year-over-year and continued to gain many new customers, both large and small. Financial services and service providers are particularly interested in the ability to easily scale container-based workflows with Portworx. Flasher AC continues to deliver tremendous growth, with sales tripling over last year. It remains the fastest growing new product in Pure's history and is enabling customers to transition to an all-Flash data center. Cloud customers in particular are making use of Flasher AC to improve their reliability, to reduce their environmental footprint and to lower their operational costs. For instance, a recent eight-figure win with a top 10 hyperscaler, which will begin to ship this Q3, was won against traditional magnetic disks based on our high performance, small space and power footprint, and superior total cost of ownership. Safe mode is another compelling reason why ever more customers are turning to Pure. This high-performance ransomware protection solution for both FlashArray and FlashBlade takes less than a millisecond to create an immutable copy of data for fast recovery. And customers can send these snapshots to a variety of destinations, such as FlashArray C, FlashBlade, or AWS, Microsoft Azure, and NFS shares. Only six months after introduction, over 500 customers have enabled Safe Mode. These examples demonstrate the success of our strategy to provide organizations with the modern data services they need to modernize their data infrastructure, to take advantage of modern applications, and to manage their data and infrastructure through code in a multi-cloud environment. Our focus on these goals has been rewarded with new and expanding customer relationships. For example, one of our enterprise customers, a global Fortune 500 financial services firm, recently chose a pure-as-a-service subscription to fuel the expansion of their core operating applications in a virtual hub. While increasing the performance, flexibility, and scale of this global platform, they were able to reduce their physical footprint by nearly 80%, to their environmental sustainability goals. They estimate that this will reduce their total cost of ownership by nearly 70% while providing significant performance increases. And with growing global concerns about ransomware attacks, a UK-based securities firm with sub-millisecond performance requirements found performance, simplicity, and safety in Pure's recovery capabilities. Using FlashArray Safe Mode with our FlashBlade FlashRecover solution on an evergreen gold subscription, they now have the data protection and unified fast file and object platform they need to scale safely. Our strategy since our founding is to focus on doing the right things for our customers and on doing things right. Our environmental goals dovetail with our customer first values. Part of ensuring that our products and services have the lowest total cost of ownership means designing products that use less energy, require less cooling, need less maintenance, take up less space, and produce less waste. With our customers increasing focus on their own environmental footprint, we will be providing more quantitative measures and sustainability programs going forward. Pure storage is advantaged by the major trends in our industry, We enable companies around the world to shift to a cloud operating model for their private and hybrid cloud infrastructure. We lead in driving the all flash data center, and we have the most advanced services and tools to automate data management for our modern cloud native application. As we entered the year, we stated that our customers would accelerate their investment in digital transformation with renewed confidence in economic recovery this year. This was clearly evident in our performance in the first half and especially this past Q2. In the current environment, we are confident that the momentum of our first half will continue into Q3 as evidenced by our Q3 guide and raised annual outlook. I want to thank our employees and our partners who have worked tirelessly to support our customers with great products and great service. throughout the uncertainty of COVID-19 and who have created our sustainable momentum. Everyone at Pure deserves to feel proud of the advancements we have made through this difficult period. One last note that I would like to add before I turn the call over to our CFO, Kevin Chrysler. I am very pleased to announce that Rob Lee, who many of you know, has just been promoted and will serve as Pure's Chief Technology Officer. Congratulations, Rob. John Coggrove, aka Coz, who in addition to his title as founder also served as CTO, will now take the title of Chief Visionary Officer. Rob will continue to report to him, and Coz will continue to serve Pure full time. Congratulations, Rob and Coz. Kevin, over to you.