Pure Storage, Inc. revenue surged on 20.9% and EBITDA Margin increased on 3.1 pp from -7.2% to -4.1%
02/27/2020 • About Pure Storage, Inc. (
$PSTG) • By InTwits
Pure Storage, Inc. reported FY2020 financial results today. Here are the key drivers of the company's long term financial model:
- Pure Storage, Inc. is a fast growth stock: FY2020 revenue growth was 20.9%, 5 year revenue CAGR was 56.6% at FY2020 ROIC -14.0%
- The company operates at negative EBITDA Margin: -4.1%
- Pure Storage, Inc. spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for FY2016-FY2020 is 6.3%. Average EBITDA Margin for the same period was -11.9%
- Pure Storage, Inc. has medium CAPEX intensity: 5 year average CAPEX/Revenue was 7.7%. At the same time it's a lot of higher than industry average of 5.5%.
- CAPEX is quite volatile: $36m in FY2020, $26m in FY2019, $26m in FY2018, $16m in FY2017, $7m in FY2016
- The company has unprofitable business model: ROIC is -14.0%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue surged on 20.9%. Revenue growth showed slowdown in FY20Q4 - it was 16.5% YoY. Revenue decline was accelerating on average at -29.8 pp per annum in the last 5 years. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 3.1 pp from -7.2% to -4.1% in FY2020. EBITDA Margin grew at 8.8 pp per annum in FY2016-FY2020.
Gross Margin increased on 2.6 pp from 66.4% to 69.0% in FY2020. Gross Margin stuck to a growing trend at 1.5 pp per annum in FY2016-FY2020. SG&A as a % of Revenue increased slightly on 1.2 pp from 53.1% to 54.2% in FY2020. During the last 5 years SG&A as a % of Revenue bottomed in FY2019 at 53.1%.
Net Income margin increased slightly on 0.89 pp from -13.1% to -12.2% in FY2020. Net Income margin stuck to a growing trend at 8.9 pp per annum in the last 5 years.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 5.3% in FY2020. The company showed decline in CAPEX/Revenue of 5.0 pp from 10.4% in FY2017 to 5.3% in FY2020. For the last three years the average CAPEX/Revenue was 6.4%.
Return on investment
The company operates at negative ROIC (-14.0%) and ROE (-25.6%). ROIC increased on 5.1 pp from -19.0% to -14.0% in FY2020. ROE increased slightly on 1.5 pp from -27.2% to -25.6% in FY2020. ROIC stuck to a growing trend at 9.9 pp per annum in FY2016-FY2020.
Leverage (Debt)
Company's Net Debt / EBITDA is -3.0x and Debt / EBITDA is . Net Debt / EBITDA didn't change in FY2020. Debt surged on 32.8% while cash dropped on 19.1%.
Pure Storage, Inc. has no short term refinancing risk: cash is higher than short term debt (1,330.1%).
Management team
Pure Storage, Inc. 's CEO Charles H Giancarlo "Charlie" has spent 3 years with the company. The company's CFO is Kevan Krysler. Kevan Krysler has 1 year tenure at the company.
Financial and operational results
FY ended 02/02/2020
Pure Storage, Inc. ($PSTG) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 440 | 739 | 1,025 | 1,360 | 1,643 | 20.9% |
| Gross Profit | 272 | 487 | 671 | 902 | 1,134 | 25.6% |
| SG&A | 316 | 432 | 559 | 722 | 891 | 23.5% |
| EBITDA | -178 | -171 | -106 | -98 | -68 | |
| EBIT | -210 | -221 | -167 | | | |
| Tax | 2 | 2 | 4 | | | |
| Net Income | -214 | -222 | -160 | -178 | -201 | |
| Stock Based Compensation | 58 | 117 | 151 | | | |
Balance Sheet
|
|---|
| Cash | 605 | 184 | 244 | 448 | 363 | -19.1% |
| Accounts Receivable | 126 | 169 | 243 | | | |
| Inventory | 21 | 23 | 34 | | | |
| Accounts Payable | 38 | 53 | 84 | | | |
| Short Term Debt | 0 | 0 | 0 | 0 | 27 | |
| Long Term Debt | 0 | 0 | 0 | 450 | 570 | 26.7% |
Cash flow
|
|---|
| Capex | 39 | 77 | 65 | 100 | 88 | -12.4% |
Ratios
|
|---|
| Revenue growth | 152.4% | 67.9% | 38.6% | 32.7% | 20.9% | |
| EBITDA growth | 7.8% | -3.9% | -38.2% | -6.9% | -31.1% | |
|
|---|
| Gross Margin | 61.9% | 65.9% | 65.5% | 66.4% | 69.0% | 2.6% |
| EBITDA Margin | -40.4% | -23.1% | -10.3% | -7.2% | -4.1% | 3.1% |
| EBIT Margin | -47.7% | -29.9% | -16.3% | | |
| SG&A, % of revenue | 71.8% | 58.5% | 54.6% | 53.1% | 54.2% | 1.2% |
| SBC, % of revenue | 13.2% | 15.8% | 14.7% | | |
| Net Income Margin | -48.5% | -30.0% | -15.6% | -13.1% | -12.2% | 0.9% |
| CAPEX, % of revenue | 8.9% | 10.4% | 6.3% | 7.4% | 5.3% | -2.0% |
|
|---|
| ROIC | -51.8% | -42.2% | -31.5% | -19.0% | -14.0% | 5.1% |
| ROE | | -42.5% | -30.4% | -27.2% | -25.6% | 1.5% |
People
|
|---|
| Insider ownership | 8.6% | 8.6% | 8.6% | | | |
| Employees | 1,300 | 1,700 | 2,100 | | | |
| Revenue/Employee, th. $ | 339 | 435 | 488 | | | |
Pure Storage, Inc. ($PSTG) key quoterly financial indicators
| mln. $ | FY20Q1 | FY20Q2 | FY20Q3 | FY20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 327 | 396 | 428 | 492 | | 27.6% | 28.3% | 14.9% | 16.5% |
| EBITDA | -68 | -34 | 3 | 31 | | - | - | - | - |
| Net Income | -100 | -66 | -30 | -5 | | - | - | - | - |
Balance Sheet
|
|---|
| Cash | 287 | 269 | 304 | 363 | | -60.9% | -27.4% | -25.2% | -19.1% |
| Short Term Debt | 26 | 26 | 27 | 27 | | - | - | - | - |
| Long Term Debt | 557 | 558 | 570 | 570 | | 29.6% | 27.8% | 28.6% | 26.7% |
Ratios
|
|---|
| Gross Margin | 66.2% | 67.7% | 70.2% | 70.8% | | 1.3% | 1.0% | 3.3% | 4.3% |
| EBITDA Margin | -20.8% | -8.6% | 0.8% | 6.3% | | -3.0% | 3.7% | 3.3% | 7.6% |
| Net Income Margin | -30.7% | -16.7% | -7.0% | -0.9% | | -5.6% | 2.8% | 0.6% | 5.2% |
Peers in Technology Hardware, Storage & Peripherals
Below we provide Pure Storage, Inc. benchmarking against other companies in Technology Hardware, Storage & Peripherals industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Ionix Technology Inc ($IINX) | - | 246.0% | -5.8% | 92.3% | 66.8% |
| Veritec Inc ($VRTC) | - | -52.2% | 53.1% | -38.5% | 42.9% |
| USA Technologies, Inc. ($USAT) | - | 34.5% | - | - | 12.9% |
| CPI Card Group Inc. ($PMTS) | - | -17.4% | 0.4% | 8.7% | 12.3% |
| Apple Inc. ($AAPL) | - | 6.3% | 15.9% | -2.0% | 5.5% |
| |
|---|
| Median (20 companies) | 1.4% | 1.5% | 4.3% | -3.7% | -10.2% |
|---|
| Pure Storage, Inc. ($PSTG) | - | 67.9% | 38.6% | 32.7% | 20.9% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Immersion Corporation ($IMMR) | 99.7% | 99.4% | 99.8% | 99.5% | 99.4% |
| Datasea Inc ($DTSS) | - | 39.3% | 54.4% | - | 89.7% |
| Avid Technology, Inc. ($AVID) | 65.0% | 57.8% | 57.9% | 60.5% | 63.3% |
| Socket Mobile, Inc. ($SCKT) | 50.2% | 53.5% | 51.4% | 52.5% | 53.1% |
| Veritec Inc ($VRTC) | 52.6% | 19.9% | 50.4% | 25.0% | 52.1% |
| |
|---|
| Median (21 companies) | 38.5% | 38.9% | 38.3% | 32.7% | 37.4% |
|---|
| Pure Storage, Inc. ($PSTG) | 61.9% | 65.9% | 65.5% | 66.4% | 69.0% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Apple Inc. ($AAPL) | 32.7% | 31.2% | 30.8% | 29.4% | 28.7% |
| CPI Card Group Inc. ($PMTS) | 14.9% | -0.0% | 9.0% | 15.2% | 17.9% |
| Immersion Corporation ($IMMR) | -25.1% | -127.0% | 48.6% | -50.4% | 17.4% |
| Avid Technology, Inc. ($AVID) | 17.5% | 6.6% | 8.4% | 13.5% | 13.6% |
| Western Digital Corporation ($WDC) | 12.5% | 21.4% | 27.5% | 11.5% | 11.7% |
| |
|---|
| Median (19 companies) | 4.9% | 4.5% | 7.9% | 7.9% | 7.9% |
|---|
| Pure Storage, Inc. ($PSTG) | -40.4% | -23.1% | -10.3% | -7.2% | -4.1% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Datasea Inc ($DTSS) | - | 0.0% | 0.0% | - | 20.9% |
| Hewlett Packard Enterprise Company ($HPE) | 10.8% | 10.9% | 9.6% | 9.8% | 8.8% |
| Stratasys, Ltd. ($SSYS) | 6.7% | 3.3% | 3.5% | 3.5% | 5.2% |
| Western Digital Corporation ($WDC) | 4.5% | 3.0% | 4.0% | 5.3% | 3.9% |
| Intevac, Inc. ($IVAC) | 4.2% | 3.9% | 3.4% | 3.8% | 2.7% |
| |
|---|
| Median (19 companies) | 1.7% | 1.8% | 2.2% | 1.7% | 1.7% |
|---|
| Pure Storage, Inc. ($PSTG) | 8.9% | 10.4% | 6.3% | 7.4% | 5.3% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| HP Inc. ($HPQ) | 15.8% | 60.8% | 72.9% | 116.0% | 109.2% |
| Apple Inc. ($AAPL) | 27.0% | 23.8% | 28.0% | 29.5% | 33.0% |
| Avid Technology, Inc. ($AVID) | - | - | 252.4% | 42.1% | 30.0% |
| CPI Card Group Inc. ($PMTS) | 12.8% | -9.3% | 2.7% | 15.4% | 20.5% |
| NCR Corporation ($NCR) | 13.9% | 16.3% | 4.6% | 14.3% | 5.5% |
| |
|---|
| Median (21 companies) | 1.8% | 1.6% | 3.6% | 4.2% | 2.6% |
|---|
| Pure Storage, Inc. ($PSTG) | -51.8% | -42.2% | -31.5% | -19.0% | -14.0% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Diebold Nixdorf Incorporated ($DBD) | - | 8.3x | - | 6.6x | 7.3x |
| CPI Card Group Inc. ($PMTS) | 5.8x | - | 12.4x | 7.2x | 5.2x |
| Hewlett Packard Enterprise Company ($HPE) | 0.4x | 1.2x | 1.6x | 2.6x | 5.2x |
| NCR Corporation ($NCR) | 2.7x | 2.3x | 5.2x | 3.3x | 4.8x |
| Western Digital Corporation ($WDC) | 5.5x | 1.7x | 1.1x | 3.7x | 3.5x |
| |
|---|
| Median (12 companies) | 0.2x | 0.3x | 0.6x | 1.4x | 3.0x |
|---|
