Robust price competition led by Dell clipped the wings of storage high flyer Pure Storage in its fiscal Q3.
In the earnings call yesterday, Pure Storage CEO Charlie Giancarlo reported a double-digit drop in pricing each of the last two quarters. Thats just very unusual. It was obviously difficult to predict that sort of thing, because its not normal.
The company attributed the price falls largely to competitive pressures led by Dell and NetApp, vice chairman David Hatfield said, adding: We wont lose [deals] on price, particularly in large enterprises.
Pure posted $428.4m revs in Q3, up 15 per cent but less than its low-point guidance of $434m. Net loss was $30m, slightly worse than last years $28.2m.
Revenue guidance for the fourth quarter is $484m-$496m, with the $490m mid-point representing 16 per cent revenue growth. Pure said the guidance takes into account two quarters of pricing declines and a more challenging global large enterprise environment.
Pure said the UK due to Brexit and Japan were more difficult trading environments and it also faced some difficulties in the USA.
Full year guidance is $1.635bn to $1.647bn, $1.641bn at the mid-point and 21 per cent up 2018. Originally Pure had target $1.735bn, which was revised to $1.68bn in Q2. Now it has been lowered again.
The company said price competition was solely responsible for the Q3 revenue miss it shipped all the product units it expected to ship. Giancarlo claimed in prepared remarks the growth was significantly faster than our major competitors and the market as a whole [but] continued pricing declines, which were higher than we expected, accounted for the gap to our revenue expectations at the beginning of the quarter, although we are also seeing signs of a more challenging global business environment as commented on by other large infrastructure suppliers.
Sales progress in Q3 included 350 new customers taking total customer count to 7,000. Government segment revenues doubled and the newly-introduced FlashArray//C was the fastest-ever growth of any Pure product, admittedly in less than a quarters availability. Talking about FlashArray//C sales Giancarlo said: We have seven and eight digit deals in the pipeline for this product, so clearly its something that stands out.
Giancarlo thinks the price decline will stop: But now that pricing is where it is, that bodes well for volumes as we go forward and it cant continue to drop at that rate.
There is no doubt that when things turn were going to be very well positioned to capitalise that in the enterprise.
He also signalled a product launch is in the offing: We are anticipating our File Services coming out mid next year The expectation is that it will improve our growth.
Giancarlo echoed NetApps Data Fabric vision in his prepared remarks: Pure is transforming storage to a modern, more cloud-like model helping our customers to run their operations as a true, automated, storage-as-a-service cloud, delivering consistent data services seamlessly across on-prem and public cloud infrastructure.Read More..