Pure Storage, Inc. (PSTG), a leading data storage company, has reported a 29% YoY growth in Subscription Annual Recurring Revenue (ARR) reaching $1,156,857 in the first quarter of fiscal 2024. Despite a 5% decrease in total revenue compared to the first quarter of fiscal 2023, the company has demonstrated strong growth in its subscription services.
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In Q1 2024, total revenue stood at $589,307, down by $31,098 from Q1 2023.
Product revenue decreased by 23%, amounting to $308,963 in Q1 2024. This decline was attributed to lower sales and the recognition of $60 million revenue in Q1 2023 from orders placed by large U.S. enterprise customers that were expected later in fiscal 2023.
On the positive side, subscription services revenue increased by 28%, totaling $280,344 in Q1 2024.
The increase was primarily driven by the growth of Evergreen subscription services, particularly the Evergreen//One offering, as well as the recognition of revenue from previously contracted Evergreen services.
Geographically, total revenue in the United States declined by 8% ($427.2 million), while the rest of the world saw a growth of 4% ($162.1 million) in Q1 2024 compared to the same period in fiscal 2023.
The company reported a total remaining performance obligation (RPO) of $1.8 billion at the end of the first quarter of fiscal 2024, which represents total contracted but not yet recognized revenue. Approximately 47% of this RPO is expected to be recognized over the next 12 months, and the remainder thereafter.
In terms of cost of revenue and gross margin, product cost of revenue decreased by 24% in Q1 2024 compared to Q1 2023, largely due to lower product sales and component costs.
Subscription services cost of revenue increased by 17% in the same period, driven by the increased demands of the growing Evergreen installed base, including Evergreen//One and Portworx offerings.
Overall, Pure Storage showed an increase in subscription services gross margin from 69% in Q1 2023 to 72% in Q1 2024, demonstrating the company’s ability to scale and grow their subscription model.
As of Q1 2024, Pure Storage held cash, cash equivalents, and marketable securities of $1.2 billion. With the ongoing growth in subscription services and the strong cash position of the company, Pure Storage expects to maintain sufficient liquidity to fund its operating and capital needs for at least the next 12 months.
In conclusion, Pure Storage has reported promising growth in its subscription services during the first quarter of fiscal 2024, despite a decrease in total revenue.
The company’s strong subscription ARR growth and stable liquidity position indicate a potential for continued success in the data storage industry.
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