Everpure, Inc. Q3 FY2025 earnings call

• Charlie announced a design win with a top four hyperscaler for Pure's DirectFlash technology, which is the first for flash in standard hyperscaler storage, expected to free up power and space in data centers and reduce failure rates. - AI opportunities: certified for NVIDIA DGX SuperPOD, partnership with CoreWeave, introduction of Pure Storage GenAI Pod, and a defense/aerospace customer using Pure's platform for AI. - Pure Fusion for enterprise data cloud, with version 2.0 released this quarter, and preview of Pure Storage Cloud for Microsoft Azure VMware Service. - Recognition in Gartner Magic Quadrants for primary and file/object storage platforms.

Pure Storage reported revenue of $831 million for the third quarter, which grew 9% year-over-year. Subscription services annual recurring revenue (ARR) grew 22% to $1.57 billion. Total remaining performance obligations (RPO) exiting Q3 was $2.4 billion, up 16% year-over-year. US revenue was $562 million and international revenue was $269 million. Total gross margin was 71.9%, with subscription services gross margin at 77.4% and product gross margin at 67.4%.

• Raised FY 2025 revenue expectation to $3.15 billion (11.5% year-over-year growth) due to Evergreen//One opportunities converting to traditional sales. - Q4 revenue expected at $867 million (9.7% year-over-year growth). - Raised FY 2025 operating profit expectation to ~$540 million (17% operating margin). - Q4 operating profit guided at $135 million (15.6% operating margin). - Hyperscale revenue contribution from the design win expected to begin in FY 2027.

• Energy availability is a global concern for hyperscalers, impacting their operations and leading some to seek alternative power sources.

Q: What drove the hyperscaler to choose Pure over building in-house?

A: Factors include unmatched reliability at scale (0.15% failure rate per year), massive power savings (5-10x improvement), accelerated time to value, fit with their architectures, and unparalleled price and performance.

Q: Can you unpack the financial mechanics of the hyperscaler deal?

A: It's a licensing engagement for software and hardware design, with the customer buying hardware from integrators. Revenue contribution starts in FY 2027.

Q: How does the Evergreen//One opportunity tie into enterprise decisions about storage?

A: Enterprises moving applications to cloud vs on-prem are separate decisions; Pure's storage for hyperscalers doesn't dramatically affect where enterprises place their storage, but Pure Fusion brings cloud-like attributes to enterprises.