Pure Storage : Q1 FY22 Earnings Conference Call Prepared Remarks

Q1 FY22 Earnings

Pure Storage prepared remarks

Sanjot Khurana - Investor Relations

Thank you, and good afternoon. Welcome to the Pure Storage First 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, Kevan Krysler, and our Vice President & Chief Architect, Rob Lee.

Before we begin, I would like to remind you all 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 relating 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 are provided in the earnings press release and slides.

This call is being broadcast 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 the property of Pure Storage.

With that, I'll turn the call over to our CEO, Charlie Giancarlo.

Q1 FY22 Earnings

Pure Storage prepared remarks

Charles Giancarlo - CEO

Hello everyone and thank you for joining us today. I hope you and your loved ones are healthy and looking forward to better days ahead as summer begins, vaccination rates increase, and the beginning of the end of Covid restrictions - in many parts of the world

• comes into view. Our hearts go out to our friends in India and other countries still suffering from this scourge and we pray that they will soon recover.

Pure delivered very strong results in Q1. We drove double digit growth against a strong comparison with Q1 of last year.

I am also happy to report that our strong quarter was broad based - with balanced contributions across every aspect of our business. We continue to see enterprise expansion, validating our investment in world-class enterprise products, services and our go-to-market teams over the past two years. In this quarter, we also saw our commercial segment strengthen its contribution, particularly in customer acquisition, where we increased net new customers year over year. Our US and our International teams both achieved double-digityear-over-year growth this quarter and our new products again saw significant annual growth.

Our industry leading subscription business saw fantastic growth, up 35% over the same quarter last year. Pure's unique Evergreen and as-a-service models continue to resonate strongly with customers and differentiate us from the rest of the industry. Competitors are attempting to recreate our capabilities through financing, marketing and professional services, but can not change their legacy systems to match our non- disruptive upgrades, API management or remote operations and support.

Pure has doubled the number of partners selling Pure as-a-Service year over year and our channel partner bookings are growing nicely. And, we recently announced new incentives and offerings to enhance subscription sales through our channel partners to build on this momentum.

Our operating profit exceeded expectations this quarter, reflecting our revenue over- performance paired with prudent expense management.

The strong growth this quarter was achieved during continued Covid restrictions and is based mostly on improvements in our operations and our customers' increasing confidence in our brand. We have been reasonably accurate in our predictions of our business environment since the pandemic started. I feel confident that as vaccination rates increase globally, and our markets return to some semblance of normal office culture, that our business momentum will increase even further.

Q1 FY22 Earnings

Pure Storage prepared remarks

This month, we kicked off our annual //Accelerate Digital event, and so far, we have connected with more than 17 thousand attendees, a new record for attendance, 60% higher than last year. The significant annual increase in customer, prospect and partner participation at our //Accelerate conference is an indicator of how strongly our Modern Data Experience strategy is resonating in the market.

We re-iterated our vision of Pure's Modern Data Experience and showed how leading organizations like Aegis Sciences, NASA, and Roblox are using Pure's data platform to modernize their infrastructure, modernize their operations and modernize their business applications. We announced updates to the Pure1 Digital Experience, our cloud-based management platform for all of Pure's products and services, and we released the latest version of Portworx Enterprise. We also provided greater details on our Bare Metal as- a-Service solution with Equinix and newest Purity software enhancements.

All of these new capabilities and more will continue to be featured in workshops throughout the entire, month-long //Accelerate event. Customers have shown excitement for our promise of leading edge, automated infrastructure that is continually improving without disruption. Pure's Modern Data Experience delivers modern infrastructure that enables modern operations supporting the needs of modern business applications. We believe that these three steps are fundamental in every company's digital transformation journey and are made possible by Pure's Modern Data Experience.

The first component of our Modern Data Experience is enabling our customers to modernize their infrastructure. A modern data infrastructure provides easy-to-deploy, reliable services, manageable by IT and developers alike, through APIs and code. We provide common services, interfaces and management across on-prem and cloud. And, with Pure as-a-Service, we provide customers a single unified contract across clouds. Customers can operate both existing business critical applications and next generation cloud-native applications in a hybrid cloud environment.

Our founding vision of the All Flash data center is being further realized with Pure's FlashArray//C -- the first all-QLC flash array that pushes flash to a new tier of workloads, where our competitors are stuck competing with disk. FlashArray//C saw double digit growth this quarter and continues to be our fastest growing new product ever. Just last week, Pure's FlashArray family was recognized as a Gartner Peer Insights Customers' Choice.

Q1 FY22 Earnings

Pure Storage prepared remarks

You don't need to be in technology to know that data insecurity is not only a nuisance, but a matter of national security. In the last few years, we brought industry-leading data protection to our entire portfolio, allowing enterprises to protect their data from Ransomware with the ability to restore from protected copies within hours of a breach. Customers like Be The Match, which is operated by the National Bone Marrow Donor Program, have chosen Pure FlashArray//X and FlashBlade platforms, with SafeMode Data Protection and Rapid Restore capabilities, to protect their mission critical data in the event of a breach.

Meadville Medical Center in Pennsylvania is another customer who subscribes to Pure as-a-Service with SafeMode, so that if they ever need a SafeMode Snapshot to recover their data, they know that they can be back online within hours.

We launched a new SafeMode Dashboard in Pure1 this quarter, which provides a consolidated view of the ransomware protection of all Pure arrays in a customer's fleet - delivering peace-of-mind that an organization's data franchise is protected by this extra layer of Ransomware protection.

Pure's unique Evergreen capability is the cornerstone of a modern infrastructure, with the ability to continually update technology and services, without disruption to a customer's environment. In fact, 98% of our arrays that were deployed over 5 years ago are not onlystill in use, but have been modernized in many cases to our most recent models. Our systems, like most cloud services, are upgraded to the most modern technology, consistently, non-disruptively and transparently to the application.

Our Purity software, Evergreen model, and Pure1 management system uniquely position Pure to deliver a true as-a-Service, modern Infrastructure experience to our customers.

The second component of our Modern Data Experience is modernizing Operations - after all, the value of modern infrastructure is deeply diminished if you operate it with yesterday's manual processes. Modern Ops means standardizing service offerings and making them available to the organization via a service catalog and APIs. Doing that delivers DevOps, data science teams, and applications developers the storage-as-code experience they have come to expect.

Pure as-a-Service is a key element of our strategy for Modern Ops. Pure as-a-Service continues to be theindustry's storage-as-a-service benchmark and we're very pleased with its growth this quarter. Launched in 2018, it unifies block, file, and object storage

Q1 FY22 Earnings

Pure Storage prepared remarks

across all tiers of performance, and private and public clouds into a unified data-storage subscription and is the foundation of a true hybrid-cloud experience.

Customers such as the City of Denver use Pure as-a-Service to automate data management. They use Pure to monitor and deliver performance, upgrades, and even variable capacity for seasonal events like elections.

With the flexibility of Pure's Cloud Block Store for both AWS and Azure as an option in their Pure as-a-Service subscription, we are seeing strong interest from companies who want to simplify their data architecture with a proven solution while reaping the benefits of both private and hyper-scaler clouds.

Pure as-a-Service is differentiated not only by the inherent agility of the Evergreen architecture, but also by the as-a-Service user experience we deliver via Pure1, our META AI engine, and our proactive support experience. Pure1 has now broadened its predictive fault analysis and resolution using telemetry gathered from across Pure's ecosystem - including bare metal, VMs and containers. Our expanded AI-driven workload planner can now suggest the right service tier for Pure as-a-Service subscriptions or infrastructure purchases. The Pure1 service catalog was expanded this quarter, so customers can easily add, upgrade, suspend, resume, limit, and renew Pure as-a-Service capabilities as needed. These SaaS tools work together to give customers the insight and intelligence they need to confidently make storage subscription decisions.

The investments we've made to modernize infrastructure and operations supports our customers' desire to develop truly modern applications - which is the third pillar of the Modern Data Experience. Modernizing applications leverages cloud-native architectures, specifically containers and Kubernetes, to take advantage of more efficient computing, new programming models, hybrid-cloud architectures and new capabilities like real-time analytics and data streaming.

The latest version of Portworx Enterprise, announced at //Accelerate, gives customers an automated, Kubernetes-native storage experience for container-based applications wherever they live. Portworx Enterprise now delivers deeper integration across the Pure family, fully enabling both FlashArray and FlashBlade for enterprise scale and resiliency in production environments. It utilizes Pure1 for enhanced observability and proactive support, and complete provisioning automation on all Pure systems.

Customers are using Portworx to enable containerized workloads to run seamlessly across the cloud, including Pure Storage arrays, bare metal infrastructure, and even