Pure Storage CEO: “We Remain Our Customers’ Preferred Partner For AI Deployments”
‘We remain our customers’ preferred partner for AI deployments, and have strengthened our innovation and leadership by earning NVIDIA BasePOD certification. AIRI, our complete AI-ready infrastructure, built on the NVIDIA DGX BasePOD reference architecture and the latest FlashBlade//S storage platform, makes AI scaling and deployments faster and easier for our customers,’ says Pure Storage CEO Charles Giancarlo.
Growth in its AI business and a push to treat data storage using a cloud model rather than as traditional on-premises technology are going to be Pure Storage’s growth drivers going forward, CEO Charlie Giancarlo told financial analysts Wednesday.
Giancarlo (pictured), in his prepared remarks during Pure Storage’s fiscal 2024 third quarter financial conference call, said customer momentum in the field of artificial intelligence continues for the Santa Clara, Calif.-based company, which saw a double-digit number of AI wins in the quarter across its portfolio.
“We remain our customers’ preferred partner for AI deployments, and have strengthened our innovation and leadership by earning NVIDIA BasePOD certification,” he said. “AIRI, our complete AI-ready infrastructure, built on the NVIDIA DGX BasePOD reference architecture and the latest FlashBlade//S storage platform, makes AI scaling and deployments faster and easier for our customers.”
When asked by an analyst about the opportunities for Pure Storage from AI going forward, Pure Storage Chief Technology Officer Rob Lee responded that both traditional AI and generative AI together continue to be a strong segment for the company.
AI-related opportunities for Pure Storage include customers’ training infrastructure environments, the inference and AI application environments, and some of the broader data environments that are being connected to AI workflows, Lee said.
“As we look at the opportunity around the broader data management and data preparation environments, these are equally important parts of AI deployments,” he said. And we saw some good wins in these areas as well, serving both customers’ database and data preparation applications, as well as some of their bulk data repositories that are connected to these environments.”
Net that out, Lee said, AI continues to be a strong segment for Pure Storage.
“And if we look at the opportunity in terms of both the GPU-connected environments as well as larger data environments being driven by AI technology, we’re well positioned across the entire portfolio to benefit these deployments,” he said.
On the cloud side, Giancarlo used his prepared remarks to say Pure Storage’s platform provides a consistent software and management environment across the full price-performance range for block, file, and object workloads, for both traditional and cloud-native applications.
That platform also guarantees that customers never experience change management downtime, while providing the lowest space, power, and e-waste in the industry, he said.
“The Pure Storage platform also promises a cloud operating model for our customers, enabling them to manage their data storage like the cloud providers, to reduce their storage costs in the cloud, to provide tailored storage services to their developers like the cloud, and to consume storage like the cloud, as-a-service,” he said. “This model is gaining traction with leading customers.”
Evergreen//One, Pure Storage’s storage-as-a-service consumption offering, saw more than double growth during the quarter over last year, despite the company also making its storage available as a capital expense, Giancarlo said.
“We believe the continued high demand for Evergreen//One is being driven by our sales activities, new customer buying behavior, and the current macro-environment,” he said. “Customers are attracted to the ability to manage and consume Evergreen storage as a cloud service, as they need it, but with the low cost, advanced capabilities, and data security of on-prem storage. The outperformance of Evergreen//One this year has been significantly above our prior expectations, and we now expect this strong level of demand to continue through Q4.”
Pure Storage is also seeing strong, early customer interest in its expanded partnership with Microsoft and the Pure Cloud Block Store integration with Azure VMware Solution, or AVS, which Giancarlo said provides customers with the advanced services that they experience with Pure’s enterprise systems.
“Despite the uncertainties of the current business environment, Pure’s superior low total cost of ownership and Evergreen offerings are making a difference in this challenging IT economy,” he said. “We are seeing a strong positive response to our position of having a consistent, unified flash platform for all storage needs, from the data center to the cloud. This position is enabling us to compete for ever larger footprints in large enterprise accounts. This, coupled with the strong overall demand for our platform, gives me the confidence in our continued ability to take share and outpace the market.”
For its fiscal 2024 third quarter, ended November 5, Pure Storage reported revenue of $762.8 million, up about 8 percent over the $676.1 million the company reported for its fiscal 2023 third quarter.
That included product revenue of $453.3 million, up from $431.3 million, and subscription services revenue of $309.6 million, up from $244.8 million.
Pure Storage revenue beat analyst expectations by $1.28 million, according to Seeking Alpha.
Pure Storage also reported GAAP net income of $70.4 million or 21 cents per share, significantly better than last year’s net loss of $787,000. On a non-GAAP basis, the company reported net income of $165.4 million or 50 cents per share, up from last year’s $98.1 million or 31 cents per share.
Non-GAAP net income beat analyst expectations by 10 cents per share, according to Seeking Alpha.
Looking ahead, Pure Storage reduced its guidance for fiscal year 2024.
Kevan Krysler, chief financial officer, said during his prepared remarks that the company had assumed the macro environment would not meaningfully improve or deteriorate throughout the year.
“This assumption is holding as the spending environment continues to be challenging, though despite these challenges we are seeing increasing demand in the second half of the year across our data storage platform, especially for our consumption and subscription service offerings,” Krysler said.
While Pure Storage expects demand to increase through the second half of the year, there are two important factors that are impacting its annual revenue expectation for fiscal 2024, which the company now expects to grow 2.5 percent to $2.82 billion, and fiscal fourth quarter revenue, which is expected to decline 3.5 percent to $782 million.
The first is the impact of the company’s Evergreen//One storage-as-service momentum, which while welcome to Pure Storage, will create a short-term impact on revenue growth. The second, he said, is the impact of a $41 million non-cancelable product order with a telco customer that is not expected to be fulfilled until next year. Both factors combined, Krysler said, represent approximately 4.5 points of incremental headwind when compared to the annual revenue guide provided at the beginning of the year.
As of 7:59 p.m. EST, Pure Storage shares were down $5.63 per share or nearly 15 percent in after-hours trading.