10q10k10q10k.net

What changed in Pure Storage, Inc.'s 10-K — 2024 vs 2025

vs

Paragraph-level year-over-year comparison of Pure Storage, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+356 added−326 removedSource: 10-K (2025-03-27) vs 10-K (2024-04-01)

Top changes in Pure Storage, Inc.'s 2025 10-K

356 paragraphs added · 326 removed · 264 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

64 edited+29 added−20 removed33 unchanged
Biggest changeTo deliver on our 2022 commitment to set science based targets through the Science Based Targets Initiative (SBTi), a global collaboration that guides companies in setting scientifically grounded greenhouse gas emission (GHG) reduction targets to combat climate change, we began developing our targets for Scope 1, 2, and 3 GHG emissions reduction which included updating and verifying our GHG inventory through fiscal 2023 and collaborating with a leading global sustainability consultancy to identify reduction strategies with the latest climate science methodologies approved by the SBTi.
Biggest changeWe obtained third party verification of our greenhouse gas emissions (GHG) for fiscal 2024 and delivered on our 2022 commitment to set near-term science based targets through the Science Based Targets Initiative, a global collaboration that guides companies in setting scientifically grounded GHG reduction targets to combat climate change.
Our vision of an all-flash data center integrates our foundation of simplicity and reliability with four major market trends that are impacting all organizations large and small: (1) increasing demand to consume data storage as a service; (2) the shift to modernizing today's data infrastructure with all-flash; (3) the increase of modern cloud-native applications; and (4) increasing demand for data storage to support the acceleration in artificial intelligence (AI) adoption while managing rising energy costs.
Our vision of an all-flash data center integrates our foundation of simplicity and reliability with four major market trends that are impacting all organizations large and small: (1) the shift to modernizing today's data infrastructure with all-flash; (2) the increase of modern cloud-native applications; (3) increasing demand to consume data storage as a service; and (4) increasing demand for data storage to support the acceleration in artificial intelligence (AI) adoption while managing rising energy costs.
Our main competitors include legacy vendors, such as Dell EMC, Hitachi Vantara, HP Enterprise, IBM, and NetApp, each of which offer a broad range of systems targeting various use cases and end markets and have the technical and financial resources to bring competitive products to market. In addition, we compete against cloud providers and vendors of hyperconverged products.
Our main competitors include legacy vendors, such as Dell EMC, NetApp, Hitachi Vantara, HP Enterprise, and IBM, each of which offer a broad range of systems targeting various use cases and end markets and have the technical and financial resources to bring competitive products to market. In addition, we compete against cloud providers and vendors of hyperconverged products.
Our architecture includes several key technology elements that allow our arrays to be upgraded non-disruptively, which is a critical underpinning of delivering a full as-a-service experience: • Future-proof Hardware - We design and build each component (e.g. storage controllers, flash modules) of our hardware systems to be independently replaceable and upgradable, allowing our flash-optimized hardware to be more reliable and with longer service lifetimes. • Non-Disruptive Upgrades - We have the ability to upgrade both hardware and software completely non-disruptively, resulting in continuous online improvement, without creating disruption or affecting running production systems. • Telemetry and Pure1 - Continuous telemetry collection coupled with AI-driven intelligent analytics supported by machine learning models allows us deliver both predictive and proactive recommendations, targeted assessments, and workload planning based on knowledge accumulated across our entire fleet.
Our architecture includes several key technology elements that allow our arrays to be upgraded non-disruptively, which is a critical underpinning of delivering a full as-a-service experience: • Future-proof Hardware - We design and build each component (e.g. storage controllers, flash modules) of our hardware systems to be independently replaceable and upgradable, allowing our flash-optimized hardware to be more reliable and with longer service lifetimes. • Non-Disruptive Upgrades - We have the ability to upgrade both hardware and software non-disruptively, resulting in continuous online improvement, without creating disruption or affecting running production systems. • Telemetry and Pure1 - Continuous telemetry collection coupled with AI-driven intelligent analytics supported by machine learning models allows us to deliver both predictive and proactive recommendations, targeted assessments, and workload planning based on knowledge accumulated across our entire fleet.
Organizations can manage all of their data types and workloads, from the data center to the cloud with our single, consistent platform, true data mobility, and flexible consumption models. • No Downtime - Our Platform delivers all-flash storage for data spanning from Tier-0 workloads to cost-sensitive archives that is 10x more reliable than our all-flash competitors with our unique, vertically integrated hardware, controller and software.
Organizations can manage all of their data types and workloads, from the data center to the cloud with our single, consistent Pure Platform, true data mobility, and flexible consumption models. • No Downtime - Our Pure Platform delivers all-flash storage for data spanning from Tier-0 workloads to cost-sensitive archives that is 10x more reliable than our all-flash competitors with our unique, vertically integrated hardware, controller and software.
Our Platform integrates both software and hardware innovations, and accordingly, our research and development teams employ both software and hardware engineers in the design, development, testing, certification and support of our products. Our research and development teams are primarily based in Santa Clara, California, Prague, Czech Republic, Bangalore, India, Bellevue, Washington, and Vancouver, Canada.
Our Pure Platform integrates both software and hardware innovations, and accordingly, our research and development teams employ both software and hardware engineers in the design, development, testing, certification and support of our products. Our research and development teams are primarily based in Santa Clara, California, Prague, Czech Republic, Bangalore, India, Bellevue, Washington, and Vancouver, Canada.
Competition We operate in the intensely competitive data storage market that is characterized by constant change and innovation. Changes in the application requirements, data center infrastructure trends and the broader technology landscape result in evolving customer requirements for capacity, performance scalability and enterprise features of storage systems.
Competition We operate in the intensely competitive data storage market that is characterized by constant change. Changes in the application requirements, data center infrastructure trends and the broader technology landscape result in evolving customer requirements for capacity, performance scalability and enterprise features of storage systems.
We intend to continue to invest in our channel partners. Technology Alliances. We work closely with technology partners that help us deliver an ecosystem of world-class solutions to our customers and ensure the efficient deployment and support of their environments.
We intend to continue to invest in our channel partners. 9 Technology Alliances. We work closely with technology partners that help us deliver an ecosystem of world-class solutions to our customers and ensure the efficient deployment and support of their environments.
Our Platform increases reliability by ending unexpected and planned downtimes to keep an organization's data available 24/7 year-round through proactively managed SLAs that ensure 99.9999% uptime with predictive integrated support. • Never Obsolete - Our Platform provides scalable, on-demand storage through our Evergreen offerings that is never obsolete, continuously improving and without disruptive forklift upgrades.
Our Pure Platform increases reliability by ending unexpected and planned downtimes to keep an organization’s data available 24/7 year-round through proactively managed SLAs that ensure 99.9999% uptime with predictive integrated support. 5 • Never Obsolete - Our Pure Platform provides scalable, on-demand storage through our Evergreen offerings that is never obsolete, continuously improving and without disruptive forklift upgrades.
In addition, we work closely with our technology partners through co-marketing and lead-generation activities in an effort to broaden our marketing reach and help us win new customers and retain existing ones. 9 Marketing. Our marketing is focused on building our brand reputation and market awareness, communicating our Platform advantages and demand generation for our sales force and channel partners.
In addition, we work closely with our technology partners through co-marketing and lead-generation activities in an effort to broaden our marketing reach and help us win new customers and retain existing ones. Marketing. Our marketing is focused on building our brand reputation and market awareness, communicating our Pure Platform advantages and demand generation for our sales force and channel partners.
We are a global leader in data storage and management with a mission to redefine the storage experience by simplifying how people consume and interact with data.
We are a global leader in data management and storage with a mission to redefine the data experience by simplifying how people manage, consume, and interact with data.
The contents of our ESG report website are not incorporated by reference into this Annual Report on Form 10-K or any other report or document we file with the SEC, and any reference to our ESG website is intended to be an inactive textual reference only. Available Information Our website address is www.purestorage.com.
The contents of our sustainability website are not incorporated by reference into this Annual Report on Form 10-K or any other report or document we file with the SEC, and any reference to our sustainability website is intended to be an inactive textual reference only. Available Information Our website address is www.purestorage.com.
The CALO delivers human capital reports to our Board of Directors and compensation and talent committee on a quarterly basis. Attracting, Developing and Retaining Talent In fiscal 2024, we grew headcount to advance our innovation, customer experience, and sales coverage.
The CALO delivers human capital reports to our Board of Directors and compensation and talent committee on a quarterly basis. Attracting, Developing and Retaining Talent In fiscal 2025, we grew headcount to advance our innovation, customer experience, and sales coverage.
Based on TLC flash, our latest R4 edition released in June 2023 delivers up to 40% higher performance and over 80% increased memory speeds to support greater workload consolidation, a 30% inline compression boost to stretch storage capacity further, and new ransomware protection capabilities. • FlashArray//C delivers the benefits of NVMe flash, performance and consolidation to simplify Tier-2 application and storage estates.
Based on TLC flash, our latest R4 edition delivers up to 40% higher performance and over 80% increased memory speeds to support greater workload consolidation, a 30% inline compression boost to stretch storage capacity further, and new ransomware protection capabilities. • FlashArray//C delivers the benefits of NVMe flash, performance and consolidation to simplify Tier-2 application and storage estates.
Key benefits achieved through the adoption of our Platform include: • Simplified Infrastructure - Our Platform reduces the complexity and risks of traditional data infrastructure as our Purity Operating Software enables our customers to unify the majority of their fragmented block, file and object storage workloads onto a single storage and management environment that is simple to deploy, run and manage.
Key benefits of our Pure Platform include: • Simplified Infrastructure - Our Pure Platform reduces the complexity and risks of traditional data infrastructure as our Purity Operating Software enables customers to unify the majority of their fragmented block, file and object storage workloads onto a single storage and management environment that is simple to deploy, run and manage.
Our Customers Our global customer base is over 12,500 at the end of fiscal 2024. Both large enterprises and smaller organizations with limited IT expertise or budgets benefit from using our technology. We have deployed our products and subscription services to customers across multiple industry verticals and geographies.
Our Customers Our global customer base is over 13,500 at the end of fiscal 2025. Both large enterprises and smaller organizations with limited IT expertise or budgets benefit from using our technology. We have deployed our products and subscription services to customers across multiple industry verticals and geographies.
Our Life Cycle Analysis (LCA) is conducted across our data storage platform and is used in identifying opportunities to reduce the environmental impact of our solutions, and adhering to International Organization for Standardization (ISO) 14040 and 14044 standards.
Our Life Cycle Analysis (LCA) is conducted across our Pure Platform and is used in identifying opportunities to reduce the environmental impact of our solutions, and adhering to International Organization for Standardization (ISO) 14040 and 14044 standards.
We believe the principal competitive factors in the storage market are as follows: • Product and service innovation, features and enhancements, including ease of use, performance, reliability, scalability, and security; • Product and service pricing and total cost of ownership; • Product interoperability with customer networks and backup software; • Product designs that help customers reduce their carbon footprint and contribute to meeting their environmental sustainability and savings goals; • Global sales and distribution capability, including an ability to build and maintain incumbent customer relationships; • Ability to take advantage of improvements in industry standard components; and • Customer support and service. 10 We believe we compete favorably with our competitors on these factors as we continue to take market share.
We believe the principal competitive factors in the storage market are as follows: • Product and service innovation, features and enhancements, including ease of use, performance, reliability, scalability, and security; • Product and service pricing and total cost of ownership; 10 • Product interoperability with customer networks and backup software; • Product designs that help customers reduce their carbon footprint and contribute to meeting their environmental sustainability and savings goals; • Global sales and distribution capability, including an ability to build and maintain incumbent customer relationships; • Ability to take advantage of improvements in industry standard components; and • Customer support and service.
Expand All-Flash into new use cases served by disk today We continue to drive industry disruption by further expanding flash into historical disk use cases, leveraging our flash software leadership, currently with quad-level cell (QLC) flash. We see a tremendous growth opportunity as flash economics coupled with the growth in unstructured data disrupt the current hybrid and mechanical disk market.
We continue to drive industry disruption by further expanding flash into historical disk use cases, leveraging our flash software leadership, currently with quad-level cell (QLC) flash. We see a tremendous growth opportunity as flash economics coupled with the growth in unstructured data disrupt the current hybrid and mechanical disk market.
Through continual hardware and software upgrades that are delivered non-disruptively through our Evergreen program, our Platform includes the latest technology and features. • Cost Savings and Efficiency - Our Platform reduces storage costs, energy and labor by providing a range of Evergreen as-a-service consumption models, from self-managed to fully-managed, that enable organizations to choose how and when they consume and interact with their data.
Through continual hardware and software upgrades that are delivered non-disruptively through our Evergreen program, our Pure Platform includes the latest technology and features. • Cost Savings and Efficiency - Our Pure Platform reduces storage costs, energy and labor providing a range of business models, from self-managed to fully-managed, that enable organizations to choose how and when they consume and interact with their data.
Today, we are in approximately 60% of Fortune 500 companies, and the loyalty of our customers is reflected in our market-leading, certified customer Net Promoter Score (NPS) of 82 as of December 31, 2023. Sales and Marketing Sales. We sell our products and subscription services using a direct sales force and our channel partners.
Today, we are in approximately 62% of Fortune 500 companies, and the loyalty of our customers is reflected in our market-leading, certified customer Net Promoter Score (NPS) of 81 as of December 31, 2024. Sales and Marketing Sales. We sell our products and subscription services using a direct sales force and our channel partners.
For more information about our ESG priorities, alignment to Sustainability Accounting Standards Board (SASB), Global Reporting Initiative (GRI), United Nations Sustainable Development Goals, and our planned alignment to the Task Force on Climate-related Financial Disclosures (TCFD), please see our fiscal 2023 ESG report at www.purestorage.com/ESG.
For more information about our sustainability priorities, alignment to Sustainability Accounting Standards Board, Global Reporting Initiative, United Nations Sustainable Development Goals, and the Task Force on Climate-related Financial Disclosures, please see our fiscal 2024 ESG report at www.purestorage.com/ESG.
This reduction in power usage and space is proving critical in an environment driven by AI given the massive energy demands of AI. • Sustainability - We continue to invest in and innovate for a low carbon global economy and are committed to the continued delivery of an enterprise-grade storage platform and innovative services that empower our customers to operate sustainably and efficiently in pursuit of their emissions reduction goals and transition to greener data centers.
This reduction in power usage and space is proving critical in an environment driven by AI given the massive energy demands of AI. • Sustainability - We continue to invest in and innovate for a low carbon global economy and are committed to the continued delivery of an enterprise-grade storage platform and innovative services that empower our customers to operate sustainably and efficiently.
We use Purity Operating Software on all of our storage solutions and Cloud Block Store to deliver a consistent experience whether deployed in a cloud, on-premises or hybrid cloud environment.
We use Purity Operating Software across all of our storage solutions to deliver a consistent experience whether deployed in a cloud, on-premises or hybrid cloud environment.
We employ nearly 5,600 employees globally - approximately 3,500 in the U.S. and over 2,000 internationally as of the end of fiscal 2024. Our workforce is distributed across over 30 countries and we continue to expand our location strategy to ensure we can obtain the right skills and have a global mindset with diversity of thinking.
We employ nearly 6,000 employees globally - approximately 3,500 in the U.S. and over 2,400 internationally at the end of fiscal 2025. Our workforce is distributed across over 30 countries and we continue to expand our location strategy to ensure we can obtain the right skills and have a global mindset with diversity of thinking.
This single Platform environment makes accessing data easier and faster which is proving critical in an environment driven by AI that requires infrastructure that can handle high-performance data demands. • Operating like a Cloud - Powered by Purity , Pure1 cloud management, Evergreen architecture and Pure Fusion , the Platform operates like a cloud, delivering on-demand, self-service storage and managed data services backed by service level agreement (SLA) guarantees.
This single Pure Platform environment makes accessing data easier and faster which is proving critical in an environment driven by AI. • Operating like a Cloud - Powered by Purity , Pure1 cloud management, Evergreen architecture and Pure Fusion , the Pure Platform operates like a cloud, delivering on-demand, self-service storage and managed data services backed by SLA guarantees.
Our total rewards efforts include: • Support for all stages of life . From early career to retirement, we offer comprehensive and inclusive benefits to employees and their families for all stages including parental and adoption leave. • Wellness benefits and programs . We encourage employees to practice self-care and proactively manage their mental and physical health.
From early career to retirement, we offer comprehensive and inclusive benefits to employees and their families for all stages including parental and adoption leave. • Wellness benefits and programs . We encourage employees to practice self-care and proactively manage their mental and physical health.
Cloud Block Store running in Azure delivers the same cloud-like experience as public clouds built on VMware for storage by extending the data services and user experience of the Purity operating environment to AVS, simplifying cloud data mobility and help organizations optimize their AVS data storage costs.
Cloud Block Store leverages the same Purity software that powers FlashArray in on-premise environments, enabling customers to easily implement hybrid cloud workflows. • Cloud Block Store for Azure VMware Solution (AVS) - Cloud Block Store for AVS running in Azure delivers the same cloud-like experience as public clouds built on VMware for storage by extending the data services and user experience of the Purity operating environment to AVS, simplifying cloud data mobility and help organizations optimize their AVS data storage costs.
FlashArray has evolved through seven generations of controllers, a 100x increase in density, and a transition to all-NVMe flash - all delivered to customers non-disruptively through our Evergreen service. • FlashArray//X delivers next-gen performance for mission critical workloads.
FlashArray has evolved through seven generations of controllers, a 100x increase in density, and a transition to all-NVMe flash - all delivered to customers non-disruptively through our Evergreen service. • FlashArray//XL sets a new bar of higher performance, scale and capacity for the most demanding workloads and mission critical data-based applications. • FlashArray//X delivers next-gen performance for mission critical workloads.
Total Rewards We provide competitive and fair compensation and inclusive benefit offerings. We regularly benchmark our programs against the market to ensure we are delivering competitive salaries, variable pay and equity awards as well as health and welfare benefits to employees. We offer a comprehensive and tailored set of benefits to employees and their families.
We regularly benchmark our programs against the market to ensure we are delivering competitive salaries, variable pay and equity awards as well as health and welfare benefits to employees. We offer a comprehensive and tailored set of benefits to employees and their families. Our total rewards efforts include: • Support for all stages of life .
In fiscal 2024, we released our FlashBlade//E and FlashArray//E family of products, that significantly reduce power consumption compared to other flash and disk based alternatives. We also are leveraging renewable electricity for our Santa Clara headquarters campus.
In fiscal 2024, we released our FlashBlade//E and FlashArray//E family of products, that significantly reduce power consumption compared to other flash and disk based alternatives. We’ve expanded our procurement of renewable electricity, maintaining meaningful amounts of renewable electricity for our Santa Clara headquarters campus as well as our Prague and Bangalore campuses.
We pioneered the use of solid-state, All-Flash technology in enterprise storage with a clean-slate approach to building Flash-based systems and have continued to expand our leadership position and technology differentiation across our tightly integrated software and hardware. Purity Operating Software Our Purity Software was designed from the ground-up to maximize the benefits of solid-state storage.
Expand All-Flash into new use cases served by disk today We pioneered the use of solid-state, All-Flash technology in enterprise storage with a clean-slate approach to building Flash-based systems and have continued to expand our leadership position and technology differentiation across our tightly integrated software and hardware.
As most modern and new software development is shifting to cloud-native architectures, Portworx is the only data management platform that is able to provide robust enterprise-grade container storage, coupled with data-protection workflows such as Kubernetes backup, disaster recovery and migration, and enable portability between on-premise, hybrid cloud and multi-cloud environments.
As enterprises increasingly adopt cloud-native architectures and applications and AI/ML solutions, Portworx Enterprise is the only data management platform that is able to provide robust enterprise-grade container storage, coupled with data-protection workflows such as Kubernetes backup (PX-Backup), disaster recovery (PX-DR) and portability between on-premise, hybrid cloud and multi-cloud environments.
Managing each of these data services in a dynamic, Kubernetes world is complex and time-consuming. With Portworx Data Services , DevOps engineers can deploy managed, production-grade data services with the click of a button, on and across private and public clouds.
Today’s applications are composed of dozens or even hundreds of microservices, often supported by multiple data services. Managing each of these data services in a dynamic, Kubernetes world is complex and time-consuming. With Portworx Data Services , DevOps engineers can deploy, and manage production-grade data services with the click of a button, on and across private and public clouds.
We continually remind our employees that they are empowered to report concerns without fear of retaliation through our anonymous speak-up hotline and web portal or through their management chain, HR business partner, or Legal team. 12 Environmental, Social and Governance (ESG) We are committed to advancing our responsible ESG practices and impact across four key pillars: our technology, environmental, social, and governance.
We continually remind our employees that they are empowered to report concerns without fear of retaliation through our anonymous speak-up hotline and web portal or through their management chain, HR business partner, or Legal team. 12 Total Impact We are committed to advancing our responsible business practices, ensuring business operations and supply chain resilience and having a positive impact on the environment and society.
To establish and protect our proprietary rights, we rely on a combination of intellectual property rights, including patents, trademarks, copyrights, trade secret laws, license agreements, confidentiality procedures, employee disclosure and invention assignment agreements and other contractual rights. We have over 2,500 issued patents and patent applications in the United States and foreign countries.
Intellectual Property Our success depends in part upon our ability to protect our core technology and intellectual property. To establish and protect our proprietary rights, we rely on a combination of intellectual property rights, including patents, trademarks, copyrights, trade secret laws, license agreements, confidentiality procedures, employee disclosure and invention assignment agreements and other contractual rights.
A key tenant of our culture is our commitment to integrity, respect and a safe work environment which is supported by our Speak Up Policy, Code of Conduct, and annual Pure Ethics and Compliance Pulse survey.
It focuses on measuring employee engagement, organizational health, team and manager effectiveness, sense of community and belonging, career growth, and overall wellbeing. A key tenant of our culture is our commitment to integrity, respect and a safe work environment which is supported by our Code of Conduct, Speak Up Policy, and annual Pure Ethics and Compliance Pulse survey.
Our technology differentiators such as DirectFlash , provide significant environmental sustainability benefits by offering the most efficient and densest flash modules, leading to higher capacity storage with a smaller hardware footprint.
Our technology differentiators such as DirectFlash , provide significant environmental sustainability benefits by offering the most efficient and densest flash modules, leading to higher capacity storage with a smaller hardware footprint. This not only lowers the costs of our systems but also their environmental footprint. Pure Software Purity Our Purity Operating Software was designed from the ground-up.
Grow our subscription services business and drive differentiation with as-a-Service and Cloud operating model We are leading in the storage as-a-service market by leveraging our Evergreen upgradable architecture that brings the benefits of the cloud operating model to an on-premises storage purchase.
Grow our subscription services business and drive differentiation with as-a-Service and Cloud operating model We are leading in the storage as-a-service market with a robust set of service level agreements (SLAs) and guarantees in the industry, bringing the benefits of the cloud operating model to on-premises data storage.
File Services delivers simplicity of management to a broad set of scale-up file data workloads including user data and department shares, content repositories such as Picture Archiving and Communication System (PACS) and video data, file-based applications, and now Network File System (NFS) datashares for virtual infrastructure. • FlashBlade provides solutions for managing and processing unstructured data workloads of all types - from the most demanding modern "big data'' applications such as real-time log analytics and commercial High Performance Computing (HPC) to data protection and recovery.
File Services delivers simplicity of management to a broad set of scale-up file data workloads including user data and department shares, content repositories such as Picture Archiving and Communication System (PACS) and video data, file-based applications, and now Network File System (NFS) datashares for virtual infrastructure.
FlashBlade's scale, simplicity, and multiple protocols allows customers to consolidate a diverse set of modern workloads while benefiting from cost-effective all-flash performance. • FlashBlade//S , a flexible all-QLC system that delivers scalable and sustained high performance to handle the most demanding workloads including computational analytics and AI, image search and recognition, electronic design automation, media special effects, high performance computing and data protection. 7 • FlashBlade//E , released in April 2023 as the first product in our Pure//E family, is a scale-out unstructured data repository for 4 PB or more of data that makes the management of unstructured data growth more efficient, reliable, and sustainable with an user experience and economics that enable organizations to eliminate the last remnants of disk in their data center.
FlashBlade's scale, simplicity, and multiple protocols allows customers to consolidate a diverse set of modern workloads while benefiting from cost-effective all-flash performance. • FlashBlade//S , a flexible all-QLC system that delivers scalable and sustained high performance to handle the most demanding workloads including computational analytics and AI, image search and recognition, electronic design automation, media special effects, high performance computing and data protection.
We also have resources available for our employees to share our compensation philosophy. Our Culture as a Competitive Advantage Our customer-first culture and commitment to innovation create a thriving company that customers, partners, employees and investors love.
We empower leaders to make thoughtful, fair decisions, and we equip employees with the resources to understand how our compensation philosophy works in practice. Our Culture as a Competitive Advantage Our customer-first culture and commitment to innovation create a thriving company that customers, partners, employees and investors love.
Because our highly sophisticated flash management software requires less NAND, we drive significant efficiency advantages over SSDs by eliminating over-provisioning, extending endurance, requiring far less common equipment and reducing environmental impact. 3. Deliver hybrid cloud architecture and data services for modern applications We are extending our leadership position in delivering the cloud operating model and enabling cloud-native applications.
Because our highly sophisticated flash management software requires less NAND, we drive significant efficiency advantages over solid-state drives (SSDs) by eliminating over-provisioning, extending endurance, requiring far less common equipment and reducing environmental impact.
However, many of our competitors have substantially greater financial, technical and other resources, greater name recognition, larger sales and marketing budgets, broader distribution and larger and more mature intellectual property portfolios. Intellectual Property Our success depends in part upon our ability to protect our core technology and intellectual property.
We believe we compete favorably with our competitors on these factors as we continue to take market share. However, many of our competitors have substantially greater financial, technical and other resources, greater name recognition, larger sales and marketing budgets, broader distribution and larger and more mature intellectual property portfolios.
FlashBlade is a scale-out system built on Purity and DirectFlash Modules, combining integrated software-defined networking that delivers revolutionary performance and simplicity.
FlashBlade was the industry's first all-flash array optimized for modern unstructured file and object applications, and enables performance at multi-Petabyte scale. FlashBlade is a scale-out system built on Purity and DirectFlash Modules, combining integrated software-defined networking that delivers revolutionary performance and simplicity.
Portworx , along with Cloud Block Store , allows us to help customers operationalize their hybrid-cloud environment by enabling them to run and deploy both traditional and cloud-native apps on-premise and in-cloud with the same process and operations. 4 Pure Fusion and Portworx Data Services delivers a true hybrid cloud architecture to hybrid environments. and Pure Fusion extends the cloud operating model by automating the delivery of our storage offerings with a Kubernetes-delivered control plane.
Portworx , along with Cloud Block Store , allows us to help customers operationalize their hybrid-cloud environment by enabling them to run and deploy both traditional and cloud-native apps on-premise, in-cloud, and across multiple clouds with the same process and operations. 3.
We also license technology from third parties when we believe it will facilitate our product offerings or business.
We have over 2,500 issued patents and patent applications in the United States and foreign countries. We also license technology from third parties when we believe it will facilitate our product offerings or business.
Evergreen//Flex provides the flexibility and adaptability to move performance and stranded capacity to where data and applications need it most, with the security and control that comes from ownership of the solution. • Cloud Block Store is an enterprise-grade, virtual block storage array that provides customers the flexibility to operate a hybrid cloud model with seamless data mobility across on-premises and public cloud environments.
The entire Portworx suite, inclusive of Portworx Enterprise , PX-Backup , PX-DR and Portworx Data Services , is available as-a-service. Cloud Block Store is an enterprise-grade, virtual block storage array that provides customers the flexibility to operate a hybrid cloud model with seamless data mobility across on-premises and public cloud environments.
Our ESG governance model is structured to ensure the appropriate amount of oversight, assessment, and management of ESG risks and opportunities across our organization and supply chain.
Our Board of Directors receives an annual update on our environmental and social policies, programs and progress towards our commitments. Our governance model is structured to ensure the appropriate amount of oversight, assessment, and management of sustainability risks and opportunities across our organization and supply chain. Our Audit Committee oversees our sustainability efforts.
FlashArray//C extends the core technology of FlashArray and DirectFlash technology to incorporate QLC flash to modernize and replace hybrid-flash and Tier-2 disk arrays. The benefits of QLC delivered by FlashArray//C are only achievable through our DirectFlash integrated hardware and software approach, and places us in a unique and differentiated position to accelerate the transition from disk to flash.
The benefits of QLC delivered by FlashArray//C are only achievable through our DirectFlash integrated hardware and software approach, and places us in a unique and differentiated position to accelerate the transition from disk to flash. 7 • FlashArray//E extends the Pure//E family, to deliver the simplicity and efficiency of flash for all file and block data repositories for up to 4 petabytes (PB) of data, from content libraries to backup sets to active archives.
Pure Fusion allows administrators to offer storage through customized storage service classes providing storage consumers on-demand API-access to storage services, while automating previously complex tasks, such as storage provisioning, workload placement, workload mobility, and fleet rebalancing. • Evergreen Architecture Our differentiated Evergreen architecture enables our hardware storage systems to not become obsolete or require wholesale replacement like traditional systems.
Pure Fusion creates a highly intelligent and autonomous environment enabling data storage to be offered through customized storage service classes, providing storage consumers on-demand API-access to storage services, while automating previously complex tasks, such as storage provisioning, workload placement, workload mobility, and fleet rebalancing.
With Evergreen//One , customers have flexibility to choose performance and capacity needs as well as where they consume and pay for their storage needs.
We ship to the customer whatever infrastructure is needed to deliver on the outcomes we guarantee, and we pay customers for the power and rack space that our infrastructure takes in their data center. With Evergreen//One , customers have flexibility to choose performance and capacity needs as well as where they consume and pay for their storage needs.
FlashBlade//E provides the benefits of all-flash at an acquisition cost that is comparable to disk-based alternatives with lower operational costs, including up to five times less power consumption. Cloud-Native Storage • Portworx by Pure Storage is the market leader in cloud-native Kubernetes data management.
FlashBlade//E provides the benefits of all-flash at an acquisition cost that is comparable to disk-based alternatives with lower operational costs, including up to five times less power consumption. • FlashBlade//EXA , expected to be generally available in mid fiscal 2026, is a high performing data storage solution purpose-built to handle the most demanding requirements of large scale, GPU-intensive AI and HPC workloads.
In October 2023, we introduced a first-of-its-kind commitment to pay power and rack space costs for customers that activate an Evergreen//One or Evergreen//Flex subscription. • Evergreen//Flex Evergreen//Flex is a fleet-level Evergreen architecture that offers users the advantage of data storage hardware ownership with a lower upfront cost and a flexible pay-as-you-go subscription.
Evergreen//Flex is a fleet-level Evergreen architecture that offers users the advantage of data storage hardware ownership with a lower upfront cost and a flexible pay-as-you-go subscription. Evergreen//Flex provides the flexibility and adaptability to move performance and stranded capacity to where data and applications need it most, with the security and control that comes from ownership of the solution.
Pure Fusion is delivered through a Software-as-a-Service (SaaS) management plane and enables storage administrators to unify storage arrays and optimize storage pools.
Pure Fusion enables storage administrators to unify storage arrays and optimize storage pools to create their own EDC.
Further, FlashBlade can manage and process the massive amounts of data created for large scale AI training environments as well as support AI-connected applications. FlashBlade was the industry's first all-flash array optimized for modern unstructured file and object applications, and enables performance at multi-Petabyte scale.
FlashBlade provides solutions for managing and processing unstructured data workloads of all types - from the most demanding modern “big data” applications such as real-time log analytics and commercial HPC to data protection and recovery. Further, FlashBlade can manage and process the massive amounts of data created for large scale AI training environments as well as support AI-connected applications.
We have built a unified data storage and management platform (Platform) comprised of highly differentiated all-flash technology, products and subscription services that helps organizations reduce the complexity, increase reliability, and reduce costs of their data infrastructure.
The result is fully automated workflows that consistently manage enterprise data, removing the need to manage silos and instead, data management inside a large EDC. 4 EDC is made possible by our Pure Platform which delivers a cloud experience with one unified data management and storage solution, incorporating highly differentiated all-flash technology, products and subscription services that helps organizations reduce the complexity, increase reliability and cyber resiliency, and lower the costs of their data infrastructure.
Our increasing density roadmap for DirectFlash also substantially expands our cost and power efficiency advantages when compared to both disk and SSDs. 6 Integrated Hardware Systems • FlashArray provides solutions for block-oriented storage, addressing database, application, virtual machine and other traditional workloads. FlashArray was the industry’s first all-flash array and is driving the industry-wide transition from disk to Flash.
Pure1 , our AI-driven cloud-based management platform, allows us to target and focus the most relevant innovation and improvements to our customers. FlashArray provides solutions, addressing database, application, virtual machine and other traditional workloads. FlashArray was the industry’s first all-flash array and is driving the industry-wide transition from disk to Flash.
For instance, our Pure//E family of products delivers flash reliability and efficiency at prices now comparable to traditional hard disk systems. Our extended advantage stems from three technology differentiators: Our leadership with direct-to-NAND software, our integrated hardware/software direct flash modules, and our data reduction capabilities.
For instance, our //E family of products delivers flash reliability and efficiency at prices now comparable to traditional hard disk systems. In December 2024, we announced an industry-first design win with Meta to provide flash for its storage infrastructure.
Pure1 , our AI-driven cloud-based management platform, allows us to target and focus the most relevant innovation and improvements to our customers, delivered through Evergreen . 8 • Evergreen//One Evergreen//One offering delivers data storage services based on service-level-agreements (SLAs). Evergreen//One unifies on-premises and public-cloud data storage services in a single storage subscription service that delivers a true hybrid cloud experience.
Evergreen//One delivers a complete cloud operating model, allowing customers to consume storage-as-a-service, based entirely on guaranteed service level agreements, enabling them to store their data whenever and wherever they want with guaranteed reliability and performance. Evergreen//One unifies on-premises and public-cloud data storage services in a single storage subscription service that delivers a true hybrid cloud experience.
These elements form what we call the Cloud Operating Model delivered through our Pure Fusion , Evergreen architecture and Pure1 cloud management plane. • Pure Fusion Pure Fusion brings the simplicity of the cloud operating model anywhere with on-demand consumption and back-end provisioning, delivering an autonomous storage-as-code management platform.
Service capabilities include AI-driven management and full-stack analytics, predictive intelligence that forecasts capacity and performance needs in advance, and a customer-centric support system of humans and AI that continuously monitor and proactively resolve array issues. 6 Pure Fusion Pure Fusion brings the simplicity of the cloud operating model anywhere with on-demand consumption and back-end provisioning, delivering an autonomous storage-as-code management platform.
With DirectFlash , we are leading the industry, and accelerating the transition of disk to flash by replacing low-cost hybrid-flash and disk arrays. In close collaboration with key QLC flash partners, we intend to drive our density roadmap for DirectFlash from the current 75TB to 300TB, building a 5x density advantage over our competition who leverage SSDs.
With DirectFlash , we are leading the industry, and accelerating the transition of disk to flash by replacing low-cost hybrid-flash and disk arrays. Pure1 Pure1, our cloud-based data storage management plane, brings the convenience of cloud storage to on premises storage.
We are empowering our customers to run and operate storage as-a-service, for both traditional and modern applications. We are committed to delivering a hybrid cloud architecture which includes Portworx.
We empower our customers to run and operate storage as-a-service, for both traditional and modern applications. Our next-generation version of Pure Fusion TM v2 transforms traditional legacy enterprise data storage architectures by virtualizing data management and storage into a unified, cloud-like experience.
We also have global performance management and internal mobility programs to enable employee development, growth and performance. 11 Diversity, Equity, and Inclusion (DEI) We continue to make strides to advance DEI.
We also have global performance management and internal mobility programs to enable employee development, growth and performance. 11 Our Commitment to a Strong and Inclusive Team At Pure, we support fair and equitable hiring and promotion practices and greatly value a broad diversity of thought, experiences, backgrounds, cultures, and ideas.
Removed
Our data storage platform supports a wide range of structured and unstructured data, at scale and across any data workloads in hybrid and public cloud environments, and includes mission-critical production, test and development, analytics, disaster recovery, backup and restore, AI and machine learning.
Added
Our data storage platform (Pure Platform) supporting structured and unstructured data, at scale, and across any data workloads, on premises, in the cloud, and hosted environments, makes it possible for customers to construct their Enterprise Data Clouds (EDC).
Removed
Our Strategic Growth Pillars Our four strategic growth pillars, driven by the above four market trends, are as follows: 1.
Added
EDC allows customers to serve a variety of data workloads including mission-critical production, test and development, analytics, disaster recovery, backup and restore, AI, and machine learning (ML) with a single consistent, highly automated and agile cloud operating model. Our Strategic Growth Pillars Our four strategic growth pillars, driven by the above four market trends, are as follows: 1.
Removed
Evergreen//One extends the Evergreen architecture and subscription to deliver data storage to customers as capacity and performance SLAs in a much more flexible, optimized and efficient manner. We are focused on providing these services through our technology rather than merely creating a financial and professional services construct. 2.
Added
Meta’s use of our Purity software and integrated DirectFlash hardware technology is expected to free up significant amounts of power and space in its data centers, significantly reduce failure rates and maintenance costs associated with legacy disk storage—while doubling the expected lifetime of their storage infrastructure.
Removed
Portworx Data Services creates another first mover advantage as we enable IT departments to provide and manage sophisticated data services with rapid deployment, scaling, management and self-service onboarding for their line of business users. 4.
Added
This achievement represents the vanguard for flash storage providing all online storage in major hyperscale environments in the future. Our extended advantage stems from three technology differentiators: Our leadership with direct-to-NAND software, our integrated hardware/software direct flash modules, and our advanced flash management capabilities.
Removed
Meet the customer demand for AI with our energy efficient Data Storage Platform AI adoption is accelerating across industries, yet most organizations lack the necessary infrastructure to handle the high-performance data demands and energy requirements essential for maximizing its benefits.
Added
In close collaboration with key QLC flash partners, we continue to drive our density roadmap for DirectFlash , and in 2024, we released our 150 terabyte (TB) DirectFlash Module (DFM), marking a five-fold increase in capacity over standard hard drives and two-and-a-half increase over the largest SSDs. We are on track to deliver a 300TB DFM in late 2025.
Removed
We deliver unrivaled efficiency and performance at every step of the AI process, from data curation to model training to inference regardless of where customers sit in their AI adoption journey. Data Storage Platform Our data storage platform is revolutionizing the storage industry.
Added
Our increasing density roadmap for DirectFlash also substantially expands our cost and power efficiency advantages when compared to both disk and SSDs. 3 2. Deliver hybrid cloud architecture and data services for modern applications We continue to extend our leadership position in delivering the cloud operating model and enabling cloud-native applications.
Removed
This not only lowers the costs of our systems but also their environmental footprint. 5 Built upon a common architecture, a common operating system, and a single management plane, our Platform allows customers to operate their storage like a public cloud experience. The following diagram depicts our Platform and the underlying technology, storage systems and offerings.
Added
This will enable customers to store, manage, protect and access their data seamlessly across on premises, cloud and hosted environments. The result is fully automated workflows that consistently manages enterprise data.
Removed
In June 2023, we released our latest R4 edition that delivers up to 40% higher performance, a 30% inline compression boost to stretch storage capacity further, and new ransomware protection capabilities. • FlashArray//XL sets a new bar of higher performance, scale and capacity for the most demanding workloads and mission critical data-based applications. • FlashArray//E , released in November 2023, extends the Pure//E family, to deliver the simplicity and efficiency of flash for all file and block data repositories for up to 4 petabytes (PB) of data, from content libraries to backup sets to active archives.
Added
Our subscription offering, Evergreen//One , delivers outcome-oriented SLAs across every key dimension of the experience - capacity, performance, efficiency, availability, durability and more - all made possible by our differentiated Evergreen architecture and DirectFlash technology.

… 33 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

137 edited+33 added−18 removed103 unchanged
Biggest changeSome of the principal risks associated with our business include the following: • Our business, operating results, and cash flows may be adversely impacted by uncertain macroeconomic conditions and the uncertain geopolitical environment. • Our sales cycles can be long, unpredictable and expensive, particularly during a global economic slowdown, making it difficult for us to predict future sales. • We face intense competition from established companies and others. • If we do not manage the supply of our products and their components efficiently, our results of operation could be adversely affected. • If we fail to develop and introduce new or enhanced storage offerings successfully, our ability to attract and retain customers could be harmed. • If we fail to execute our transition to subscription offerings successfully, our revenues and results of operation may be harmed. • We expect sales of our Evergreen//One and Evergreen//Flex subscription and consumption offerings will continue to grow and represent a larger percentage of our total sales.
Biggest changeWe recently secured a design win with a major hyperscale customer, but there can be no assurance that our efforts will be successful or lead to any sales. • We face intense competition from established companies and others. • If we do not manage the supply of our products and their components efficiently, our results of operation could be adversely affected. • If we fail to develop and introduce new or enhanced storage offerings successfully, our ability to attract and retain customers could be harmed. • If we fail to execute our transition to subscription offerings successfully, our revenues and results of operation may be harmed. • Sales of our subscription and consumption offerings as a percentage of our total sales are difficult to predict, and we expect they will fluctuate over time.
These pressures create a great deal of uncertainty and affect customer demand and our margins, costs and operations. Macroeconomic conditions can and do further exacerbate other risks discussed in this “Risk Factors” section, such as risks related to our sales and marketing efforts.
These pressures create a great deal of uncertainty and affect our customer demand, margins, costs and operations. Macroeconomic conditions can and do further exacerbate other risks discussed in this “Risk Factors” section, such as risks related to our sales and marketing efforts.
As a result, our revenue and operating results have and may continue to fluctuate from quarter to quarter. A substantial portion of our quarterly sales typically occurs during the last several weeks of the quarter, which we believe largely reflects customer buying patterns of products similar to ours and other technology products generally.
A substantial portion of our quarterly sales typically occurs during the last several weeks of the quarter, which we believe largely reflects customer buying patterns of products similar to ours and other technology products generally. As a result, our revenue and operating results have and may continue to fluctuate from quarter to quarter.
Sales to governmental agencies may in the future account for a significant portion of our revenue and sales to governmental agencies pose additional challenges and risks to our sales efforts. Governments have and may continue to impose restrictions or requirements that must be complied with in order for us to sell to certain governmental customers.
Sales to governmental agencies may in the future account for a significant portion of our revenue and pose additional challenges and risks to our sales efforts. Governments have and may continue to impose restrictions or requirements that must be complied with in order for us to sell to certain governmental customers.
Such disclosures are costly and the disclosures or the failure to comply with such requirements could lead to material adverse impacts such as negative publicity, loss of customer confidence in our services our security measures, investigations and private or government claims.
Such disclosures are costly and the disclosures or the failure to comply with such requirements could lead to material adverse impacts such as negative publicity, loss of customer confidence in our services or security measures, investigations and private or government claims.
Our culture fosters innovation, creativity, teamwork, passion for customers and focus on execution, and facilitates critical knowledge sharing. In particular, we believe that the difference between our sales, support and engineering cultures and those of incumbent vendors, is a key competitive advantage and differentiator for our customers and partners.
Our culture fosters innovation, creativity, teamwork, passion for customers, focus on execution, and facilitates critical knowledge sharing. In particular, we believe that the difference between our sales, support and engineering cultures and those of incumbent vendors, is a key competitive advantage and differentiator for our customers and partners.
Some of the factors, many of which are beyond our control, affecting our volatility may include: • price and volume fluctuations in the overall stock market from time to time; 31 • significant volatility in the market price and trading volume of technology companies in general and of companies in our industry; • actual or anticipated changes in our results of operations or fluctuations in our operating results; • whether our operating results meet the expectations of securities analysts or investors; • issuance or new or updated research or reports by securities analysts, including the publication of unfavorable reports or change in recommendation or downgrading of our common stock; • actual or anticipated developments in our competitors’ businesses or the competitive landscape generally; • litigation involving us, our industry or both; • general economic conditions and trends, including the impact of interest rates on the overall stock market and the market for technology company stocks; • major catastrophic events; • sales of large blocks of our stock; or • departures of key personnel.
Some of the factors, many of which are beyond our control, affecting our volatility may include: • price and volume fluctuations in the overall stock market from time to time; • significant volatility in the market price and trading volume of technology companies in general and of companies in our industry; • actual or anticipated changes in our results of operations or fluctuations in our operating results; • whether our operating results meet the expectations of securities analysts or investors; • issuance or new or updated research or reports by securities analysts, including the publication of unfavorable reports or change in recommendation or downgrading of our common stock; • actual or anticipated developments in our competitors’ businesses or the competitive landscape generally; • litigation involving us, our industry or both; • general economic conditions and trends, including the impact of interest rates on the overall stock market and the market for technology company stocks; • major catastrophic events; • sales of large blocks of our stock; or • departures of key personnel.
These provisions: • establish a classified Board of Directors so that not all members of our Board of Directors are elected at one time; 32 • authorize the issuance of “blank check” preferred stock that our Board of Directors could issue to increase the number of outstanding shares to discourage a takeover attempt; • prohibit stockholder action by written consent, which requires all stockholder actions to be taken at a meeting of our stockholders; • prohibit stockholders from calling a special meeting of our stockholders; • provide that the Board of Directors is expressly authorized to make, alter or repeal our bylaws; and • establish advance notice requirements for nominations for elections to our Board of Directors or for proposing matters that can be acted upon by stockholders at stockholder meetings.
These provisions: • establish a classified Board of Directors so that not all members of our Board of Directors are elected at one time; • authorize the issuance of “blank check” preferred stock that our Board of Directors could issue to increase the number of outstanding shares to discourage a takeover attempt; • prohibit stockholder action by written consent, which requires all stockholder actions to be taken at a meeting of our stockholders; • prohibit stockholders from calling a special meeting of our stockholders; • provide that the Board of Directors is expressly authorized to make, alter or repeal our bylaws; and • establish advance notice requirements for nominations for elections to our Board of Directors or for proposing matters that can be acted upon by stockholders at stockholder meetings.
If we are unable to manage our growth successfully, we may not be able to take advantage of market opportunities or release new Platform offerings in a timely manner, and we may fail to satisfy customer expectations, maintain product quality, execute on our business plan or adequately respond to competitive pressures, each of which could adversely impact our growth and affect our business and operating results.
If we are unable to manage our growth successfully, we may not be able to take advantage of market opportunities or release new Pure Platform offerings in a timely manner, and we may fail to satisfy customer expectations, maintain product quality, execute on our business plan or adequately respond to competitive pressures, each of which could adversely impact our growth and affect our business and operating results.
Any failure to preserve our culture could also negatively affect our ability to retain and recruit personnel, continue to perform at current levels or execute on our business strategy. 26 Our long-term success depends, in part, on sales outside of the United States, which subjects us to costs and risks associated with international operations.
Any failure to preserve our culture could also negatively affect our ability to retain and recruit personnel, continue to perform at current levels or execute on our business strategy. Our long-term success depends, in part, on sales outside of the United States, which subjects us to costs and risks associated with international operations.
Such operational changes could have a material adverse effect on our business, financial condition, results of operations or cash flows. 17 As a result of these risks, we cannot assure investors that we will be able to obtain a sufficient supply of key product components in the future or that the cost of these components will not increase.
Such operational changes could have a material adverse effect on our business, financial condition, results of operations or cash flows. As a result of these risks, we cannot assure investors that we will be able to obtain a sufficient supply of key product components in the future or that the cost of these components will not increase.
Although we monitor our use of open source software, the terms of many open source licenses have not been interpreted by U.S. or foreign courts, and there is a risk that such licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to market our Platform.
Although we monitor our use of open source software, the terms of many open source licenses have not been interpreted by U.S. or foreign courts, and there is a risk that such licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to market our Pure Platform.
Our customers’ renewal rates may decline or fluctuate as a result of a number of factors, including their available budget and the level of their satisfaction with our Platform, customer support and pricing compared to our competitors. If our customers renew their contracts, they may renew on terms that are less economically beneficial to us.
Our customers’ renewal rates may decline or fluctuate as a result of a number of factors, including their available budget and the level of their satisfaction with our Pure Platform, customer support and pricing compared to our competitors. If our customers renew their contracts, they may renew on terms that are less economically beneficial to us.
These claims could result in litigation and could require us to make our software source code freely available, seek licenses from third parties in order to continue offering our Platform for certain uses or cease offering the implicated solutions unless and until we can re-engineer them to avoid infringement.
These claims could result in litigation and could require us to make our software source code freely available, seek licenses from third parties in order to continue offering our Pure Platform for certain uses or cease offering the implicated solutions unless and until we can re-engineer them to avoid infringement.
Reduced demand for our Platform caused by technological challenges, alternative technologies and products or any other reason would result in a lower revenue growth rate or decreased revenue, either of which would negatively impact our business and operating results. We face intense competition from established companies and others.
Reduced demand for our Pure Platform caused by technological challenges, alternative technologies and products or any other reason would result in a lower revenue growth rate or decreased revenue, either of which would negatively impact our business and operating results. We face intense competition from established companies and others.
Governments routinely investigate and audit government contractors’ administrative processes, and any unfavorable audit could result in the government refusing to continue buying our Platform, which would adversely impact our revenue and results of operations, or institute fines or civil or criminal liability if the audit uncovers improper or illegal activities.
Governments routinely investigate and audit government contractors’ administrative processes, and any unfavorable audit could result in the government refusing to continue buying our Pure Platform, which would adversely impact our revenue and results of operations, or institute fines or civil or criminal liability if the audit uncovers improper or illegal activities.
The potential effects of new or modified privacy laws may be far-reaching and require us to modify our data processing practices and policies and to incur substantial costs and expenses. Customers may choose to implement technological solutions to comply with such laws that impact the performance and competitiveness of our Platform.
The potential effects of new or modified privacy laws may be far-reaching and require us to modify our data processing practices and policies and to incur substantial costs and expenses. Customers may choose to implement technological solutions to comply with such laws that impact the performance and competitiveness of our Pure Platform.
In addition, failure to comply with such regulations could result in penalties, costs and restrictions on export privileges, which could harm our business, operating results and financial condition. 30 We may acquire other businesses which could require significant management attention, disrupt our business, dilute stockholder value, and adversely affect our operating results.
In addition, failure to comply with such regulations could result in penalties, costs and restrictions on export privileges, which could harm our business, operating results and financial condition. We may acquire other businesses which could require significant management attention, disrupt our business, dilute stockholder value, and adversely affect our operating results.
We intend to continue investing in our business growth and may require additional funds to support business initiatives, including the need to develop new Platform offerings or enhance our existing Platform offerings, enhance our operating infrastructure and acquire complementary businesses and technologies. Accordingly, we may need to engage in equity or debt financings to secure additional funds.
We intend to continue investing in our business growth and may require additional funds to support business initiatives, including the need to develop new Pure Platform offerings or enhance our existing Pure Platform offerings, enhance our operating infrastructure and acquire complementary businesses and technologies. Accordingly, we may need to engage in equity or debt financings to secure additional funds.
If we are unable to effectively respond to our competitors' marketing efforts and protect our brand and customer goodwill now or in the future, our business will be adversely affected. 18 Sales to governments are subject to a number of challenges and risks that may adversely impact our business.
If we are unable to effectively respond to our competitors’ marketing efforts and protect our brand and customer goodwill now or in the future, our business will be adversely affected. Sales to governments are subject to a number of challenges and risks that may adversely impact our business.
Our brand name and business may be harmed by our competitors' marketing strategies. Building and maintaining brand recognition and customer goodwill is critical to our success. On occasion, our competitors' marketing efforts have included negative or misleading statements about us and our Platform.
Our brand name and business may be harmed by our competitors’ marketing strategies. Building and maintaining brand recognition and customer goodwill is critical to our success. On occasion, our competitors’ marketing efforts have included negative or misleading statements about us and our Pure Platform.
To the extent that these disruptions result in delays or cancellations of customer orders or the deployment of our products, our business, operating results and financial condition could be harmed. 33 Item 1B. Unresolved Staff Comments. Not applicable.
To the extent that these disruptions result in delays or cancellations of customer orders or the deployment of our products, our business, operating results and financial condition could be harmed. Item 1B. Unresolved Staff Comments. Not applicable.
If we are unable to sell our Platform to new customers or persuade existing customers to continue purchasing our Platform, we will not be able to maintain or increase our market share and revenue, which would adversely affect our business and operating results.
If we are unable to sell our Pure Platform to new customers or persuade existing customers to continue purchasing our Pure Platform, we will not be able to maintain or increase our market share and revenue, which would adversely affect our business and operating results.
These challenges related to acquisitions or investments could harm our business and financial condition. Risks Related to Our Credit Facility Restrictive covenants in the agreement governing our senior secured revolving credit facility may restrict our ability to pursue business strategies.
These challenges related to acquisitions or investments could harm our business and financial condition. 31 Risks Related to Our Credit Facility Restrictive covenants in the agreement governing our senior secured revolving credit facility may restrict our ability to pursue business strategies.
Government demand and payment for our Platform may be impacted by public sector budgetary cycles and funding reductions or delays, such as an extended federal government shutdown, which may adversely affect public sector demand for our Platform.
Government demand and payment for our Pure Platform may be impacted by public sector budgetary cycles and funding reductions or delays, such as an extended federal government shutdown, which may adversely affect public sector demand for our Pure Platform.
If we do not successfully execute our subscription offering strategy, our financial results could be negatively impacted. 19 Our Platform is highly technical and may contain defects or bugs, which could cause data unavailability, loss, breach or corruption that might, in turn, result in liability and harm to our reputation and business.
If we do not successfully execute our subscription offering strategy, our financial results could be negatively impacted. Our Pure Platform is highly technical and may contain defects or bugs, which could cause data unavailability, loss, breach or corruption that might, in turn, result in liability and harm to our reputation and business.
As a company headquartered in the United States, conducting and expanding international operations subjects us to costs and risks that we may not face in the United States, including: • exposure to foreign currency exchange rate risk; • difficulties in collecting payments internationally; • managing and staffing international operations; • establishing relationships with channel partners in international locations; • increased travel, infrastructure and legal compliance costs associated with international locations; • requirements to comply with a wide variety of laws and regulations associated with international operations, including taxes, customs and licensing requirements; • significant fines, penalties and collateral consequences if we or our partners fail to comply with anti-bribery laws; • heightened risk of improper, unfair or corrupt business practices in certain geographies; • potentially adverse tax consequences, including repatriation of earnings; • increased financial accounting and reporting burdens and complexities; • political, social and economic instability abroad, terrorist attacks, war (such as the conflicts in Israel and Ukraine) and security concerns in general; and • reduced or varied protection for intellectual property rights in some countries.
As a company headquartered in the United States, conducting and expanding international operations subjects us to costs and risks that we may not face in the United States, including: • exposure to foreign currency exchange rate risk; • difficulties in collecting payments internationally; • managing and staffing international operations; • establishing relationships with channel partners in international locations; • increased travel, infrastructure and legal compliance costs associated with international locations; • requirements to comply with a wide variety of laws and regulations associated with international operations, including taxes, customs and licensing requirements; • significant fines, penalties and collateral consequences if we or our partners fail to comply with anti-bribery laws; 27 • heightened risk of improper, unfair or corrupt business practices in certain geographies; • potentially adverse tax consequences, including repatriation of earnings; • increased financial accounting and reporting burdens and complexities; • political, social and economic instability abroad, terrorist attacks, war and security concerns in general; and • reduced or varied protection for intellectual property rights in some countries.
Our business is subject to regulation by various federal, state, local and foreign governmental agencies, including agencies responsible for monitoring and enforcing employment and labor laws, workplace safety, product safety, environmental laws, consumer protection laws, anti-bribery laws, import/export controls, federal securities laws and tax laws and regulations.
Our business is subject to regulation by various federal, state, local and foreign governmental agencies, including agencies responsible for monitoring and enforcing employment and labor laws, workplace safety, product safety, environmental laws, consumer protection laws, anti-bribery laws, import/export controls, data privacy, securities laws and tax laws and regulations.
If we do not manage the supply of our products and their components efficiently, our results of operation could be adversely affected. Managing the supply of our products and underlying components is complex and has become increasingly difficult, in part, due to supply chain constraints, component quality and inflationary pressure.
If we do not manage the supply of our products and their components efficiently, our results of operation could be adversely affected. Managing the supply of our products and underlying components is complex and has become increasingly difficult, in part, due to component quality and inflationary pressure.
If any of these types of security incidents occurs and we are unable to protect our products, systems and data, or if we are perceived to have such a security incident, our relationships with our business partners and customers could be materially damaged, our reputation and brand could be materially harmed, use of our products could decrease and we could be exposed to a risk of loss or litigation , including, without limitation, class action litigation, and other possible liabilities.
If any of these types of security incidents occurs and we are unable to protect our Pure Platform, systems and data, or if we are perceived to have such a security incident, our relationships with our business partners and customers could be materially damaged, our reputation and brand could be materially harmed, use of our Pure Platform could decrease and we could be exposed to a risk of loss or litigation , including, without limitation, class action litigation, and other possible liabilities.
Our competitors often leverage these existing relationships to discourage customers from evaluating or purchasing our Platform.
Our competitors often leverage these existing relationships to discourage customers from evaluating or purchasing our Pure Platform.
The occurrence of any one of these factors could negatively affect our operating results in any particular quarter. The sales prices of our Platform offerings may fluctuate or decline, which may adversely affect our gross margins and operating results.
The occurrence of any one of these factors could negatively affect our operating results in any particular quarter. 22 The sales prices of our Pure Platform offerings may fluctuate or decline, which may adversely affect our gross margins and operating results.
We devote significant resources to network security, authentication technologies, data encryption and other security measures designed to protect our systems and data, including to secure the transmission and storage of data and prevent third-party access to our data or accounts, but there can be no assurance that our security measures or those of our service providers, partners and other third parties upon whom we rely will be effective in protecting against a security incident or the materially adverse impacts that may arise from a security incident.
We devote significant resources to network security, authentication technologies, data encryption, employee training and other security measures designed to protect our systems and data, including to secure the transmission and storage of data and prevent third-party access to our data or accounts, but there can be no assurance that our security measures or those of our service providers, partners and other third parties upon whom we rely will be effective in protecting against a security incident or the material adverse impacts that may arise from a security incident.
Additionally, although we price our offerings predominantly in U.S. dollars, currency fluctuations in certain countries and regions may negatively impact actual prices that partners and customers are willing to pay in those countries and regions. Furthermore, we anticipate that the prices for our products will decrease over product life cycles.
Additionally, although we price our offerings predominantly in U.S. dollars, currency fluctuations in certain countries and regions may negatively impact actual prices that partners and customers are willing to pay in those countries and regions. Furthermore, we anticipate that our product prices will decrease over product life cycles.
Despite our efforts to detect and remediate actual and potential vulnerabilities in our systems, we cannot be certain that we will be able to address any such vulnerabilities, in whole or part, and there may be delays in developing and deploying patches and other remedial measures to adequately address vulnerabilities.
Despite our efforts to detect and remediate actual and potential vulnerabilities in our systems, we cannot be certain that we will be able to address any such vulnerabilities, and there may be delays in developing and deploying patches and other remedial measures to adequately address vulnerabilities.
Item 1A. Risk Factors. Investing in our Class A common stock, which we refer to as our "common stock", involves a high degree of risk.
Item 1A. Risk Factors. Investing in our Class A common stock, which we refer to as our “common stock”, involves a high degree of risk.
A variety of factors may cause our gross margins to fluctuate and make them difficult to predict, including, but not limited to: • sales and marketing initiatives, discount levels, rebates and competitive pricing; • changes in customer, geographic or product mix, including mix of product configurations; • the cost of components, including flash and DRAM, and freight; • new product introductions and enhancements with higher product costs; • excess inventory levels or purchase obligations as a result of changes in demand forecasts or product transitions; • an increase in product returns, product warranty, order rescheduling and cancellations; • the timing of technical support service contracts and contract renewals; • inventory stocking requirements to mitigate supply chain constraints, accommodate unforeseen demand or support new product introductions; and • inflation and other adverse economic pressures.
A variety of factors may cause our gross margins to fluctuate and make them difficult to predict, including, but not limited to: • sales and marketing initiatives, discount levels, rebates and competitive pricing; • changes in customer, geographic or product mix, including the relative sales of our lower product gross margin FlashBlade//E , FlashArray//E , and FlashArray//C solutions; • the cost of components, including flash and DRAM, and freight; • new product introductions and enhancements with higher product costs; • excess inventory levels or purchase obligations as a result of changes in demand forecasts or product transitions; • an increase in product returns, product warranty, order rescheduling and cancellations; • the timing of technical support service contracts and contract renewals; • inventory stocking requirements to mitigate supply chain constraints, accommodate unforeseen demand or support new product introductions; and • inflation and other adverse economic pressures.
We continue to expand and evolve our Platform to compete directly with hard disk systems, and that strategy may take longer than we anticipate or may not succeed due to unforeseen factors. We may be unable to continue capturing significant storage workloads for AI environments.
We continue to expand and evolve our Pure Platform to compete directly with hard disk systems, and that strategy may take longer than we anticipate or may not succeed due to unforeseen factors. We may be unable to capture significant storage workloads for AI environments and hyperscalers.
Factors that are difficult to predict and that could cause our operating results to fluctuate include: • the timing and magnitude of orders, shipments and acceptance of our products in any quarter, including product returns, order rescheduling and cancellations by our customers; • the impact on timing and amount of revenue recognized resulting from the cancellation of unfulfilled orders by our customers or our inability to fulfill orders; • fluctuations or seasonality in demand and prices for our products; • our ability to control the costs of the components we use or to timely adopt subsequent generations of components; • disruption in our supply chains, shipping logistics, component availability and related procurement costs; • reductions in customers’ budgets for IT purchases; • changes in industry standards in the data storage industry; • our ability to develop, introduce and ship new Platform offerings that meet customer requirements and to effectively manage product transitions; • changes in the competitive dynamics of our markets, including new entrants or price discounting; • our ability to control or mitigate costs, including our operating expenses, to support business growth and our continued expansion; • the impact on our revenue mix from changes in our customers' purchasing behavior due to their cost of capital; • the impact of inflation on labor and other costs, other adverse economic conditions and the impact of public health epidemics or pandemics; and • future accounting pronouncements and changes in accounting policies.
Factors that are difficult to predict and that could cause our operating results to fluctuate include: • the timing and magnitude of orders, shipments and acceptance of our products in any quarter, including product returns, order rescheduling and cancellations by our customers; • the impact on timing and amount of revenue recognized resulting from the cancellation of unfulfilled orders by our customers or our inability to fulfill orders; • fluctuations or seasonality in demand and prices for our products; • our ability to control the costs of the components we use or to timely adopt subsequent generations of components; • disruption in our supply chains, shipping logistics, component availability and related procurement costs; • reductions in customers’ budgets for IT purchases; • changes in industry standards in the data storage industry; • our ability to develop, introduce and ship new Pure Platform offerings that meet customer requirements and to effectively manage product transitions; • changes in the competitive dynamics of our markets, including new entrants or price discounting; • our ability to control or mitigate costs, including our operating expenses, to support business growth and our continued expansion; • the impact on our revenue mix from changes in our customers’ consuming our technology as a service rather than purchasing our solutions; • the impact of inflation on labor and other costs, other adverse economic conditions and the impact of public health epidemics or pandemics; and • future accounting pronouncements and changes in accounting policies.
Competition continues in the markets in which we participate, and we expect competition to increase in the future, thereby leading to increased pricing pressures. Larger competitors may reduce the price of products or services that compete with ours or may bundle them with other products and services.
We expect competition to increase in the future, thereby leading to increased pricing pressures. Larger competitors may reduce the price of products or services that compete with ours or may bundle them with other products and services.
With a traditional CapEx sale, a large portion of revenue is recognized as product revenue as the order is fulfilled. Revenue for our Evergreen//One and Evergreen//Flex offerings is recognized over a period of time, and the majority of revenue is included in subscription services revenue.
With a traditional CapEx sale, a large portion of revenue is recognized as product revenue as the order is fulfilled. Revenue for our subscription and consumption offerings is recognized over a period of time, and the majority of revenue is included in subscription services revenue.
Our products and software are highly technical and complex and are often used to store information critical to our customers’ business operations. Our Platform may contain errors, defects or security vulnerabilities that could result in data unavailability, loss, corruption or other harm to our customers.
Our Pure Platform is highly technical and complex and is often used to store information critical to our customers’ business operations. Our Pure Platform may contain errors, defects or security vulnerabilities that could result in data unavailability, loss, corruption or other harm to our customers.
If we are unable to successfully manage the effects of these pressures, our business, operating results, cash flows and financial condition may be adversely affected. Our sales cycles can be long, unpredictable and expensive, particularly during a global economic slowdown, making it difficult for us to predict future sales.
If we are unable to successfully manage the effects of these pressures, our business, operating results, cash flows and financial condition may be adversely affected. Our sales cycles can be long, unpredictable and expensive, making it difficult for us to predict future sales.
Similarly, supply chain attacks have increased in frequency and severity, and we cannot guarantee that third parties and infrastructure in our supply chain have not been compromised or that they do not contain exploitable defects or bugs that could result in a breach of or disruption to our platform, systems and network or the systems and networks of third parties that support us and our business.
We cannot guarantee that third parties and infrastructure in our supply chain have not been compromised or that they do not contain exploitable defects or bugs that could result in a breach of or disruption to our Pure Platform, systems and network or the systems and networks of third parties that support us and our business.
Even the perception of privacy concerns, whether or not valid, may harm our reputation and inhibit competitiveness and adoption of our Platform by current and future customers. In addition, environmental, social and governance (ESG) reporting and disclosure requirements continue to evolve, with increasing global regulation.
Even the perception of privacy concerns, whether or not valid, may harm our reputation and inhibit competitiveness and adoption of our Pure Platform by current and future customers. In addition, sustainability reporting and disclosure requirements continue to evolve, with increasing global regulation.
Some errors in our Platform may only be discovered after they have been installed and used by customers. We have, from time to time, identified vulnerabilities in our Platform.
Some errors in our Pure Platform may only be discovered after it has been installed and used by customers. We have, from time to time, identified vulnerabilities in our Pure Platform.
Risks Related to Our Operations If our security measures, or those maintained on our behalf, are compromised, or the security, confidentiality, integrity or availability of our information technology, software, services, networks, products, communications or data is compromised, limited, or fails, our business could experience a material adverse impact, including without limitation, a material interruption to our operations, harm to our reputation, a loss of customers, significant fines, penalties and liabilities, or breach or triggering of data protection laws, privacy policies or other obligations.
If we are unable to adequately control these risks, our business, operating results and financial condition could be harmed. 24 Risks Related to Our Operations If our security measures, or those maintained on our behalf, are compromised, or the security, confidentiality, integrity or availability of our information technology, software, services, networks, products, communications or data is compromised, limited, or fails, our business could experience a material adverse impact, including without limitation, a material interruption to our operations, harm to our reputation, a loss of customers, significant fines, penalties and liabilities, or breach or triggering of data protection laws, privacy policies or other obligations.
As such, we expect the sales growth of our Evergreen//One and Evergreen//Flex offerings to have a near-term downward impact on both product and total revenue growth. • If our security measures are compromised, or the security, confidentiality, integrity or availability of our information technology or data is compromised, our business could experience a material adverse impact. • Our gross margins are impacted by a variety of factors and vary from period to period, making them difficult to predict with certainty. • Our operating results may fluctuate significantly, which could make our future results difficult to predict and could cause our operating results to fall below expectations. • The sales prices of our products and services may fluctuate or decline, which may reduce our gross profits, revenue growth, and adversely impact our financial results. 14 Risks Related to Our Business and Industry Our business, operating results, and cash flows may be adversely impacted by uncertain macroeconomic conditions and the uncertain geopolitical environment.
As such, we expect fluctuations in sales of our subscription and consumption offerings to impact both product and total revenue growth. • If our security measures are compromised, or the security, confidentiality, integrity or availability of our information technology or data is compromised, our business could experience a material adverse impact. • Adverse changes to tariffs, trade agreements, and trade policies may have a negative effect on our business and results of operations. • Our gross margins are impacted by a variety of factors and vary from period to period, making them difficult to predict with certainty. • Our operating results may fluctuate significantly, which could make our future results difficult to predict and could cause our operating results to fall below expectations. • The sales prices of our products and services may fluctuate or decline, which may reduce our gross profits, revenue growth, and adversely impact our financial results. 14 Risks Related to Our Business and Industry Our business, operating results, and cash flows may be adversely impacted by uncertain macroeconomic conditions, and the uncertain geopolitical environment.
As a result, our business could be harmed, and our operating results could suffer. Our strategy is to continue investing in marketing, sales, support and research and development. We believe continuing to invest heavily in our business is critical to our future success and meeting our growth objectives.
As a result, our business could be harmed, and our operating results could suffer. Our strategy is to continue investing in marketing, sales, support and research and development. We believe continuing to invest heavily in our business, including investments to scale operations to support our recent hyperscaler design win, is critical to our future success and meeting our growth objectives.
Our sales efforts involve educating our customers about the use and benefits of our Platform and often involves an evaluation process that can result in a lengthy sales cycle, particularly for larger customers and especially in an economic slowdown. We spend substantial time and resources on our sales efforts without any assurance that our efforts will produce any sales.
Our sales efforts involve educating our customers about the use and benefits across our data storage platform (Pure Platform) and often involve an evaluation process that can result in a lengthy sales cycle, particularly for larger customers. We spend substantial time and resources on our sales efforts without any assurance that our efforts will produce any sales.
An adverse determination also could invalidate our intellectual property rights, prevent us from manufacturing and selling our products and may require that we procure or develop substitute products that do not infringe, which could require significant effort and expense.
An adverse determination also could invalidate our intellectual property rights, prevent us from manufacturing and selling our products and may require that we procure or develop substitute products that do not infringe, which could require significant effort and expense. We are also incorporating AI into the operations of our business.
Similarly, if we fail to introduce new or enhanced Platform offerings, such as new or improved software features, that meet our customers' needs in a timely or cost-effective fashion, we may lose market share and our operating results could be adversely affected.
Similarly, if we fail to introduce new or enhanced Pure Platform offerings, such as new or improved software features, that meet our customers’ needs in a timely or cost-effective fashion, we may lose market share and our operating results could be adversely affected. 19 If we fail to execute our transition to subscription offerings successfully, our revenues and results of operation may be harmed.
Since shares of our common stock were sold in our initial public offering in October 2015 at a price of $17.00 per share, our closing stock price has ranged from $8.76 to $57.16, through March 26, 2024.
Since shares of our common stock were sold in our initial public offering in October 2015 at a price of $17.00 per share, our closing stock price has ranged from $8.76 to $72.37, through March 19, 2025.
If we fail to maintain compatibility of our products with these infrastructure components, our customers may not be able to fully utilize our Platform, and we may, among other consequences, lose or fail to increase our market share and experience reduced demand for our Platform, which may harm our business, operating results and financial condition.
If we fail to maintain compatibility of our Pure Platform with these infrastructure components, our customers may not be able to fully utilize our Pure Platform, and we may, among other consequences, lose or fail to increase our market share and experience reduced demand for our Pure Platform, which may harm our business, operating results and financial condition. 20 Our Pure Platform must conform to industry standards in order to be accepted by customers.
We expect our competitors to continue to improve their products, reduce their prices and introduce new offerings that may, or may claim to, offer greater value compared to our Platform. These developments may render our products or technologies obsolete or less competitive.
We expect our competitors to continue to improve their products, reduce their prices and introduce new offerings that may, or may claim to, offer greater value compared to our Pure Platform. These developments may render our products or technologies obsolete or less competitive. These and other competitive pressures may prevent us from competing successfully against our competitors.
If we are not able to successfully manage the development and release of new or enhanced Platform offerings, our business, operating results and financial condition could be harmed.
As we introduce new or enhanced Pure Platform offerings, we must successfully manage their launch and customer adoption. If we are not able to successfully manage the development and release of new or enhanced Pure Platform offerings, our business, operating results and financial condition could be harmed.
Moreover, applicable data protection laws, contracts, policies and other data protection obligations may require us to notify relevant stakeholders of security incidents, including affected individuals, customers, regulators, and credit reporting agencies.
Cybersecurity in this Annual Report on Form 10-K. Moreover, applicable data protection laws, contracts, policies and other data protection obligations may require us to notify relevant stakeholders of security incidents, including affected individuals, customers, regulators, and credit reporting agencies.
We depend on companies that provide other systems in this ecosystem to conform to prevailing industry standards. These companies are often significantly larger and more influential in driving industry standards than we are. Some industry standards may not be widely adopted or implemented uniformly and competing standards may emerge that our customers prefer.
These companies are often significantly larger and more influential in driving industry standards than we are. Some industry standards may not be widely adopted or implemented uniformly and competing standards may emerge that our customers prefer.
Our partners may choose to discontinue offering our Platform or may not devote sufficient attention and resources toward selling our Platform. We typically enter into non-exclusive, written agreements with our channel partners. These agreements generally have a one-year, self-renewing term, have no minimum sales commitment and do not prohibit our channel partners from offering competing products and services.
We typically enter into non-exclusive, written agreements with our channel partners. These agreements generally have a one-year, self-renewing term, have no minimum sales commitment and do not prohibit our channel partners from offering competing products and services.
If we are required to decrease our prices to be competitive and are not able to offset this decrease by increases in the volume of sales or the sales of new products with higher margins, our gross margins and operating results could be adversely affected. 22 We have experienced growth in prior periods, and we may not be able to sustain future growth effectively or at all.
If we are required to decrease our prices to be competitive and are not able to offset this decrease by increases in the volume of sales or the sales of new products with higher margins, our gross margins and operating results could be adversely affected.
These and other competitive pressures may prevent us from competing successfully against our competitors. 16 Many of our competitors have long-standing relationships with key decision makers at current and prospective customers, which may inhibit our ability to compete. Many of our competitors benefit from established brand awareness and long-standing relationships with key decision makers at our current and prospective customers.
Many of our competitors have long-standing relationships with key decision makers at current and prospective customers, which may inhibit our ability to compete. Many of our competitors benefit from established brand awareness and long-standing relationships with key decision makers at our current and prospective customers.
Recent macroeconomic and geopolitical events, including inflation, rising interest rates, supply chain constraints, labor shortages, geopolitical tensions such as those involving China and Israel, and political and fiscal challenges in the United States and abroad, have, and may continue to have, an adverse effect on the budgets, confidence and demand of our customers, particularly in the United States where we derive the majority of our revenue.
Recent macroeconomic and geopolitical events, including tariffs, inflation, elevated interest rates, geopolitical tensions, and political and fiscal challenges in the United States and abroad, have, and may continue to have, an adverse effect on the budgets, confidence and demand of our customers, particularly in the United States where we derive the majority of our revenue.
If we are unable to obtain adequate financing or financing on terms satisfactory to us, when we require it, our ability to support our business growth and to respond to business challenges could be significantly limited and our prospects and financial condition could be harmed. 23 We are exposed to the credit risk of some of our customers, which could harm our business, operating results and financial condition.
If we are unable to obtain adequate financing or financing on terms satisfactory to us, when we require it, our ability to support our business growth and to respond to business challenges could be significantly limited and our prospects and financial condition could be harmed.
The threats to information systems and information may include: traditional computer “hackers,” social engineering schemes (for example, attempts to induce fraudulent invoice payments or divert money from us), software bugs, malicious code (such as viruses and worms), personnel misconduct or error, faulty password management, theft, denial-of-service attacks (such as credential stuffing), advanced persistent threat intrusions, as well as attacks from nation-state and nation-state supported actors.
The threats to our information systems and information and those of third parties on whom we rely, include traditional computer “hackers,” social engineering schemes (for example, attempts to induce fraudulent invoice payments or divert money from us), phishing attacks, faulty password management, software bugs, malicious code (such as viruses and worms), malware installation, personnel misconduct or error, theft, denial-of-service attacks (such as credential stuffing), advanced persistent threat intrusions, server malfunction, software or hardware failures, loss of data or other computer assets, adware, as well as attacks from nation-state and nation-state supported actors.
Our investments may take longer to generate revenue or may generate less revenue than we anticipate. The introduction of new storage offerings by our competitors, or the emergence of alternative technologies or industry standards could render our Platform obsolete or less competitive. As we introduce new or enhanced Platform offerings, we must successfully manage their launch and customer adoption.
Our investments may take longer to generate revenue or may generate less revenue than we anticipate. The introduction of new storage offerings by our competitors, or the emergence of alternative technologies or industry standards could render our Pure Platform obsolete or less competitive.
Our reliance on a limited number of suppliers and the lack of any guaranteed sources of supply exposes us to several risks, including: • the inability to obtain, or delay in obtaining, an adequate supply of key components, including flash; • price volatility for the components of our products; • failure of a supplier to meet our quality or production requirements; • failure of a supplier of key components to remain in business or adjust to market conditions; and • consolidation among suppliers, resulting in some suppliers exiting the industry, discontinuing the manufacture of components or increasing the price of components.
Our reliance on a limited number of suppliers and the lack of any guaranteed sources of supply exposes us to several risks, including: • the inability to obtain, or delay in obtaining, an adequate supply of key components, including flash; • price volatility for the components of our products; • failure of a supplier to meet our quality or production requirements; • failure of a supplier of key components to remain in business or adjust to market conditions; and • consolidation among suppliers, resulting in some suppliers exiting the industry, discontinuing the manufacture of components or increasing the price of components. 17 Further, we source some of our product components from suppliers outside the United States, including from China, which subjects us to additional logistical risks and risks associated with complying with local rules and regulations in foreign countries.
Our Platform must conform to industry standards in order to be accepted by customers. Generally, our products comprise only a part of an IT environment. The servers, network, software and other components and systems deployed by our customers must comply with established industry standards in order to interoperate and function efficiently together.
Generally, our Pure Platform comprises only a part of an IT environment. The servers, network, software and other components and systems deployed by our customers must comply with established industry standards in order to interoperate and function efficiently together. We depend on companies that provide other systems in this ecosystem to conform to prevailing industry standards.
We may not be able to re-engineer our products to avoid infringement, and we may have to seek a license for the infringed technology, which may not be available on reasonable terms or at all, may significantly increase our operating expenses or may require us to restrict our business activities in one or more respects.
The intellectual property rights surrounding AI technologies are unsettled, and the use or adoption of AI technologies in our business could expose us to copyright infringement or other intellectual property misappropriation claims. 28 We may not be able to re-engineer our products to avoid infringement, and we may have to seek a license for the infringed technology, which may not be available on reasonable terms or at all, may significantly increase our operating expenses or may require us to restrict our business activities in one or more respects.
Any failure on our part to effectively identify, train and manage our channel partners and to monitor their sales activity, as well as the customer support and services provided to our customers, could harm our business, operating results and financial condition.
Any failure on our part to effectively identify, train and manage our channel partners and to monitor their sales activity, as well as the customer support and services provided to our customers, could harm our business, operating results and financial condition. 18 Our partners may choose to discontinue offering our Pure Platform or may not devote sufficient attention and resources toward selling our Pure Platform.
Further, some of our competitors offer their storage products either at significant discounts or even for free in competing against us.
In addition, some of our competitors offer bundled products and services in order to reduce the initial cost of their storage products. Further, some of our competitors offer their storage products either at significant discounts or even for free in competing against us.
Any failure to maintain or a market perception that we do not maintain, high-quality technical services and support could harm our reputation, our ability to sell our Platform to existing and prospective customers and our business.
We may need to provide customized installation and configuration services to our customers before our Pure Platform is fully operational in their environments. Any failure to maintain, or a market perception that we do not maintain, high-quality technical services and support could harm our reputation, our ability to sell our Pure Platform to existing and prospective customers and our business.
Acquisitions may also disrupt our ongoing business, divert our resources and require significant management attention that would otherwise be available for development of our business. Any acquisition or investment could expose us to unknown liabilities. We may not successfully evaluate or utilize the acquired technology or personnel, or accurately forecast the financial impact of an acquisition transaction.
Acquisitions and investments may also disrupt our ongoing business, divert our resources and require significant management attention that would otherwise be available for development of our business. Any acquisition or investment could expose us to unknown liabilities.
A security incident could also result in government enforcement actions that could include investigations, fines, penalties, audits and inspections, additional reporting requirements and/or oversight, temporary or permanent bans on all or some processing of personal information.
A security incident could also result in government enforcement actions that could include investigations, fines, penalties, audits and inspections, additional reporting requirements and/or oversight, temporary or permanent bans on all or some processing of personal information. For a description of our processes for assessing, identifying and managing material risks from cybersecurity threats, see Part 1. Item 1C.
The enhancement of all-flash storage products by incumbent vendors and changes or advances in alternative technologies or adoption of cloud storage offerings that do not utilize our Platform could adversely affect the demand for our Platform. Offerings from large public cloud providers are expanding quickly and serve as alternatives to our Platform for a variety of customer workloads.
The enhancement of all-flash storage products by incumbent vendors and changes or advances in alternative technologies or adoption of cloud storage offerings that do not utilize our Pure Platform could adversely affect the demand for our Pure Platform.
For example, the European Union has adopted certain directives to facilitate the recycling of electrical and electronic equipment sold in the European Union, including the Restriction on the Use of Certain Hazardous Substances in Electrical and Electronic Equipment directive and the Waste Electrical and Electronic Equipment directive. 29 Changes in applicable laws, regulations and standards could harm our business, operating results and financial condition.
For example, the European Union has adopted certain directives to facilitate the recycling of electrical and electronic equipment sold in the European Union, including the Restriction on the Use of Certain Hazardous Substances in Electrical and Electronic Equipment directive and the Waste Electrical and Electronic Equipment directive.
Our sales from our Evergreen//One and Evergreen//Flex subscription and consumption offerings have been increasing as a percentage of total sales, and we expect this trend to continue. With a traditional CapEx sale, a large portion of revenue is recognized as product revenue when the order is fulfilled.
Our sales from our Evergreen//One , Evergreen//Flex and Cloud Block Store subscription and consumption offerings as a percentage of our total sales are difficult to predict and we expect they will fluctuate over time. With a traditional CapEx sale, a large portion of revenue is recognized as product revenue when the order is fulfilled.
Our competitors may have: • greater name and brand recognition and longer operating histories; • larger sales and marketing and customer support budgets and resources; • broader distribution and established relationships with distribution partners and customers; • the ability to bundle storage products with other products and services to address customers’ requirements; • greater resources to make acquisitions; • larger and more mature product and intellectual property portfolios; and • substantially greater financial, technical and other resources.
Our competitors may have: • greater name and brand recognition and longer operating histories; • larger sales and marketing and customer support budgets and resources; • broader distribution and established relationships with distribution partners and customers; • the ability to bundle storage products with other products and services to address customers’ requirements; • greater resources to make acquisitions; • larger and more mature product and intellectual property portfolios; and • substantially greater financial, technical and other resources. 16 Many of our competitors have developed or acquired storage technologies with features or data reduction technologies that directly compete with our Pure Platform or have introduced business programs designed, among other things, to compete with our innovative programs, such as our Evergreen Storage model.
In future periods, we may not achieve similar percentage revenue growth rates as we have achieved in some past periods. If we are unable to maintain adequate revenue or revenue growth, our stock price could be volatile, and it may be difficult to achieve and maintain profitability.
If we are unable to maintain adequate revenue or revenue growth, our stock price could be volatile, and it may be difficult to achieve and maintain profitability.
As a result, it may be more difficult for us to ensure the proper delivery and installation of our Platform or the quality or responsiveness of the support and services being offered.
As a result, it may be more difficult for us to ensure the proper delivery and installation of our Pure Platform or the quality or responsiveness of the support and services being offered. Moreover, because our success depends on our partner relationships, we have recently increased our partner incentive compensation arrangements.
We must adapt our sales processes for new sales and marketing approaches, including those required by our shift to subscription services and the changes resulting from evolving economic and budgetary constraints.
We must design and implement effective sales incentive programs, and it can take time before new sales representatives are fully trained and productive. We must adapt our sales processes for new sales and marketing approaches, including those required by our shift to subscription services and the changes resulting from evolving economic and budgetary constraints.

… 108 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

10 edited+2 added−1 removed7 unchanged
Biggest changeSupporting our product teams’ security objectives by providing design review, certification management, penetration testing, and consulting services, as well as operating security vulnerability management and reporting dashboard capabilities. • Enterprise resiliency. Developing policies, procedures and practices for critical operations recovery and business continuity in the event of a cybersecurity incident.
Biggest changeMonitoring our critical systems and assets to identify and respond to security incidents in a timely manner. • Security Engineering & Architecture. Implementing risk-based security controls. • Product Security. Supporting our product teams’ security objectives by providing design review, certification management, penetration testing, and consulting services, as well as operating security vulnerability management and reporting dashboard capabilities. • Enterprise resiliency.
Risk Factors in this Annual Report on Form 10-K, including the risk factor entitled “If our security measures, or those maintained on our behalf, are compromised, or the security, confidentiality, integrity or availability of our information technology, software, services, networks, products, communications or data is compromised, limited, or fails, our business could experience a material adverse impact, including without limitation, a material interruption to our operations, harm to our reputation, a loss of customers, significant fines, penalties and liabilities, or breach or triggering of data protection laws, privacy policies or other obligations." Governance Our Board of Directors addresses the company’s cybersecurity risk management as part of its general oversight function.
Risk Factors in this Annual Report on Form 10-K, including the risk factor entitled “If our security measures, or those maintained on our behalf, are compromised, or the security, confidentiality, integrity or availability of our information technology, software, services, networks, products, communications or data is compromised, limited, or fails, our business could experience a material adverse impact, including without limitation, a material interruption to our operations, harm to our reputation, a loss of customers, significant fines, penalties and liabilities, or breach or triggering of data protection laws, privacy policies or other obligations.” Governance Our Board of Directors addresses the company’s cybersecurity risk management as part of its general oversight function.
Our cybersecurity program is integrated into our broader enterprise risk management framework. For example, certain members of our executive management evaluate material risks from cybersecurity threats against our overall business objectives and report to our Audit and Risk Committee (Audit Committee) of the Board of Directors, which evaluates our overall enterprise risk.
Our cybersecurity program is integrated into our broader enterprise risk management framework. For example, certain members of our executive management evaluate material risks from cybersecurity threats against our overall business objectives and report to our Risk Committee of the Board of Directors, which evaluates our overall enterprise risk.
For a description of the risks from cybersecurity threats that may materially affect our company and how they may do so, see our risk factors under Part 1. Item 1A.
For a description of the risks from cybersecurity threats that may materially affect our company in the future and how they may do so, see our risk factors under Part 1. Item 1A.
Potential responses for cybersecurity risks are: • Avoiding activities or situations that could lead to harm. • Engaging in preventative measures, safety protocols, and security enhancements. • Allocating risk through contract or insurance. • Developing contingency plans to address potential negative outcomes associated with cybersecurity risks if they occur.
Potential responses for cybersecurity risks are: 34 • Avoiding activities or situations that could lead to harm. • Engaging in preventative measures, safety protocols, and security enhancements. • Transferring risk through contract or insurance. • Developing contingency plans to address potential negative outcomes associated with cybersecurity risks if they occur.
The PSO includes individuals with expertise in the following areas and who continue to leverage such expertise at the company in the following manners: • Governance, Risk & Compliance (GRC). Maintaining cybersecurity policies, standards, and processes in place and providing training to our employees on them. • Security Operations.
The GISO includes individuals with expertise in the following areas and who continue to leverage such expertise at the company in the following manners: • Governance, Risk & Compliance (GRC). Maintaining cybersecurity policies, standards, and processes as well as providing training to our employees on them. • Security Operations.
The PSO reports to our Audit Committee and ESC on cybersecurity risks. Our Chief Information Security Officer (CISO) meets with the ESC and Audit Committee periodically in an effort to review the company’s cybersecurity risks, the company’s prevention, detection and remediation efforts of cybersecurity incidents (as appropriate), and key cybersecurity performance indicators.
Our Chief Information Security Officer (CISO) meets with the ESC and Risk Committee periodically in an effort to review the company’s cybersecurity risks, the company’s prevention, detection and remediation efforts of cybersecurity incidents (as appropriate), and key cybersecurity performance indicators.
The ESC oversees and governs our cybersecurity program. 34 Our cybersecurity program is implemented and maintained by the Pure Security Office (PSO), a team of security professionals responsible for developing and implementing an information security program designed to protect our assets, including data, networks, applications and people, from cyber threats.
Our cybersecurity program is implemented and maintained by Pure’s Global Information Security Office (GISO), a team of security professionals responsible for developing and implementing an information security program designed to protect our assets, including data, networks, applications and people, from cyber threats.
Item 1C. Cybersecurity. Risk Management and Strategy We have implemented and maintain various processes to identify, assess, prioritize, manage, and report on cybersecurity risks that could result in loss or other adverse consequences to Pure Storage.
Item 1C. Cybersecurity. Risk Management and Strategy We employ a defense-in-layers approach in our cybersecurity program that includes various processes to identify, assess, prioritize, manage, and report on cybersecurity risks that could result in loss or other adverse consequences to Pure Storage.
Our Audit Committee is responsible for overseeing the company’s cybersecurity risk management program, including mitigation of risks from cybersecurity threats. In addition, we have established an Executive Security Council (ESC).
Our Risk Committee is responsible for overseeing the company’s cybersecurity risk management program, including accepting, transferring, or mitigating cybersecurity risks as appropriate. In addition, we have established an Executive Security Council (ESC). The ESC oversees and governs our cybersecurity program.
Removed
Monitoring our critical systems and assets, and that we are able to identify and respond to security incidents in a timely manner. • Security Engineering & Architecture. Implementing risk-based security controls. • Product Security.
Added
As of the date of this report, we have not identified any risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, that we believe have materially affected us, our business strategy, results of operations, or financial condition.
Added
Developing policies, procedures and practices for critical operations recovery and business continuity in the event of a cybersecurity incident. 35 The GISO reports to our Risk Committee and ESC on cybersecurity risks.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

2 edited+0 added−0 removed0 unchanged
Biggest changeItem 3. Legal Proceedings. The information set forth under the "Legal Matters" subheading in Note 7 of our Notes to Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K is incorporated herein by reference.
Biggest changeItem 3. Legal Proceedings. The information set forth under the “Legal Matters” subheading in Note 7 of our Notes to Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K is incorporated herein by reference.
In addition, we may from time to time, be involved in various legal proceedings arising from the normal course of business, and an unfavorable resolution of any of these matters could materially affect our future results of operations, cash flows or financial position. Item 4. Mine Safety Disclosures. Not applicable. 35 PART II
In addition, we may from time to time, be involved in various legal proceedings arising from the normal course of business, and an unfavorable resolution of any of these matters could materially affect our future results of operations, cash flows or financial position. Item 4. Mine Safety Disclosures. Not applicable. 36 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+0 added−0 removed5 unchanged
Biggest changePurchases of Equity Securities by the Issuer The following table summarizes our stock repurchase activity for the fourth quarter of fiscal 2024 (in thousands except for price per share): Period Average Price Paid per Share Total Number of Shares Purchased as Part of Share Repurchase Program (1) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Program (1) November 6, 2023 - December 3, 2023 $ 32.96 15 $ 166,323 December 4, 2023 - December 31, 2023 $ 34.73 273 $ 156,838 January 1, 2024 - February 4, 2024 $ 38.67 296 $ 145,372 (1) In March 2023, our Board of Directors authorized additional share repurchases of up to $250.0 million of our outstanding common stock.
Biggest changePurchases of Equity Securities by the Issuer The following table summarizes our stock repurchase activity for the fourth quarter of fiscal 2025 (in thousands except for price per share): Period Average Price Paid per Share Total Number of Shares Purchased as Part of Share Repurchase Program (1) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Program (1) November 4, 2024 - December 1, 2024 $ 51.69 696 $ 177,479 December 2, 2024 - December 29, 2024 $ 62.68 1,212 $ 101,504 December 30, 2024 - February 2, 2025 $ 65.56 1,220 $ 21,529 (1) In February 2024, our Board of Directors authorized additional share repurchases of up to $250.0 million of our outstanding common stock.
The following graph compares the cumulative total return to stockholders on our common stock relative to the cumulative total returns of the NYSE Composite Index and NYSE Arca Tech 100 Index for the five years ended February 4, 2024.
The following graph compares the cumulative total return to stockholders on our common stock relative to the cumulative total returns of the NYSE Composite Index and NYSE Arca Tech 100 Index for the five years ended February 2, 2025.
In March 2024, our Board of Directors authorized additional share repurchases of up to $250.0 million of our outstanding common stock. See "Liquidity and Capital Resources—Share Repurchase Program" included under Part II, Item 7 in this Annual Report.
In February 2025, our Board of Directors authorized additional share repurchases of up to $250.0 million of our outstanding common stock. See “ Liquidity and Capital Resources—Share Repurchase Program ” included under Part II, Item 7 in this Annual Report.
The graph assumes that $100 (with reinvestment of all dividends) was invested in our common stock and in each index on January 31, 2019 and assumes the reinvestment of any dividends. The returns shown are based on historical results and are not intended to suggest future performance. 37 Item 6. [Reserved] 38
The graph assumes that $100 (with reinvestment of all dividends) was invested in our common stock and in each index on February 2, 2020 and assumes the reinvestment of any dividends. The returns shown are based on historical results and are not intended to suggest future performance. 38 Item 6. [Reserved] 39
The following table summarizes our shares of restricted common stock that were delivered by certain employees to satisfy tax withholding requirements of equity awards for the fourth quarter of fiscal 2024 (in thousands except for price per share): Period Average Price per Share Delivered Total Number of Shares Delivered to Satisfy Tax Withholding Requirements Approximate Dollar Value of Shares Delivered to Satisfy Tax Withholding Requirements November 6, 2023 - December 3, 2023 $ — — $ — December 4, 2023 - December 31, 2023 $ 36.71 133 $ 4,897 January 1, 2024 - February 4, 2024 $ 37.28 230 $ 8,504 36 Trading Plans Our insider trading policy permits directors, officers, and other employees covered under the policy to establish, subject to certain conditions and limitations set forth in the policy, written trading plans which are intended to comply with Rule 10b5-1 under the Exchange Act, which permits automatic trading of our common stock or trading of our common stock by an independent person (such as a stockbroker) who is not aware of material, nonpublic information at the time of the trade.
The following table summarizes our shares of restricted common stock that were delivered by certain employees to satisfy tax withholding requirements of equity awards for the fourth quarter of fiscal 2025 (in thousands except for price per share): Period Average Price per Share Delivered Total Number of Shares Delivered to Satisfy Tax Withholding Requirements Approximate Dollar Value of Shares Delivered to Satisfy Tax Withholding Requirements November 4, 2024 - December 1, 2024 $ — — $ — December 2, 2024 - December 29, 2024 $ 62.34 1,040 $ 64,811 December 30, 2024 - February 2, 2025 $ — — $ — 37 Trading Plans Our insider trading policy permits directors, officers, and other employees covered under the policy to establish, subject to certain conditions and limitations set forth in the policy, written trading plans which are intended to comply with Rule 10b5-1 under the Exchange Act, which permits automatic trading of our common stock or trading of our common stock by an independent person (such as a stockbroker) who is not aware of material, nonpublic information at the time of the trade.
Market Information for Common Stock Our Class A common stock, which we refer to as our "common stock", trades publicly on the New York Stock Exchange (NYSE) under the ticker symbol “PSTG.” Holders of Record As of March 26, 2024, there were 36 holders of record of our common stock.
Market Information for Common Stock Our Class A common stock, which we refer to as our “common stock”, trades publicly on the New York Stock Exchange (NYSE) under the ticker symbol “PSTG.” Holders of Record As of March 19, 2025, there were 29 holders of record of our common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

41 edited+28 added−23 removed21 unchanged
Biggest changeProvision for Income Taxes Fiscal Year Ended Change 2023 2024 $ % (in thousands) Provision for income taxes $ 18,737 $ 29,275 $ 10,538 56 % Provision for income taxes increased during fiscal 2024 compared to fiscal 2023 primarily due to an increase in U.S. income taxes driven by IRC Section 174 capitalization, as well as an increase in profits generated in foreign jurisdictions. 44 Liquidity and Capital Resources At the end of fiscal 2024, we had cash, cash equivalents and marketable securities of $1.5 billion.
Biggest changeOther Income (Expense), Net Fiscal Year Ended Change 2024 2025 $ (in thousands) Other income (expense), net $ 37,035 $ 62,576 $ 25,541 The increase in other income (expense), net during fiscal 2025 compared to fiscal 2024 was primarily due to an increase in interest income from a larger balance in cash, cash equivalents and marketable securities and a higher interest rate environment, partially offset by higher net foreign exchange losses as the U.S. dollar strengthened relative to certain foreign currencies. 45 Provision for Income Taxes Fiscal Year Ended Change 2024 2025 $ % (in thousands) Provision for income taxes $ 29,275 $ 41,095 $ 11,820 40 % The increase in provision for income taxes during fiscal 2025 compared to fiscal 2024 was primarily due to an increase in profits generated in our foreign jurisdictions. 46 Liquidity and Capital Resources At the end of fiscal 2025, we had cash, cash equivalents and marketable securities of $1.5 billion.
Our vision of an all-flash data center integrates our foundation of simplicity and reliability with four major market trends that are impacting all organizations large and small: (1) increasing demand to consume data storage as a service; (2) the shift to modernizing today's data infrastructure with all-flash; (3) the increase of modern cloud-native applications; and (4) increasing demand for data storage to support the acceleration in artificial intelligence (AI) adoption while managing rising energy costs.
Our vision of an all-flash data center integrates our foundation of simplicity and reliability with four major market trends that are impacting all organizations large and small: (1) the shift to modernizing today’s data infrastructure with all-flash; (2) the increase of modern cloud-native applications; (3) increasing demand to consume data storage as a service; and (4) increasing demand for data storage to support the acceleration in artificial intelligence adoption while managing rising energy costs.
Transaction price may be adjusted for variable consideration which we estimate by applying the expected value or most likely estimate and subsequently update at each reporting period as additional information becomes available. 47 To recognize revenue for the products and subscription services for which control has been transferred, we allocate the transaction price for the contract among the identified performance obligations on a relative standalone selling price (SSP) basis.
Transaction price may be adjusted for variable consideration which we estimate by applying the expected value or most likely estimate and subsequently update at each reporting period as additional information becomes available. 49 To recognize revenue for the products and subscription services for which control has been transferred, we allocate the transaction price for the contract among the identified performance obligations on a relative standalone selling price (SSP) basis.
Our foreign subsidiaries' sales and marketing expenses are expected to increase over time as we grow, resulting in higher pre-tax foreign earnings and higher foreign income taxes. 40 We have provided a full valuation allowance for U.S. deferred tax assets, which includes net operating loss carryforwards, capitalized research costs, and tax credits related primarily to research and development.
Our foreign subsidiaries’ sales and marketing expenses are expected to increase over time as we grow, resulting in higher pre-tax foreign earnings and higher foreign income taxes. 41 We have provided a full valuation allowance for U.S. deferred tax assets, which includes net operating loss carryforwards, capitalized research costs, and tax credits related primarily to research and development.
See also the section titled “Note Regarding Forward-Looking Statements” in this report. Our fiscal year end is the first Sunday after January 30. The following discussion of our financial condition and results of operations covers fiscal 2024 and fiscal 2023 items and year-over-year comparisons between fiscal 2024 and fiscal 2023.
See also the section titled “Note Regarding Forward-Looking Statements” in this report. Our fiscal year end is the first Sunday after January 30. The following discussion of our financial condition and results of operations covers fiscal 2025 and fiscal 2024 items and year-over-year comparisons between fiscal 2025 and fiscal 2024.
Our cash and cash equivalents primarily consist of bank deposits and money market accounts. Our marketable securities generally consist of highly rated debt instruments of the U.S. government and its agencies, debt instruments of highly rated corporations, debt instruments issued by foreign governments, asset-backed securities, and municipal bonds.
Our cash and cash equivalents primarily consist of bank deposits and money market accounts. Our marketable securities generally consist of highly rated debt instruments of the U.S. government and its agencies, debt instruments of highly rated corporations, debt instruments issued by foreign governments, and asset-backed securities.
Off-Balance Sheet Arrangements Through the end of fiscal 2024 , we did not have any relationships with any entities or financial partnerships, such as structured finance or special purpose entities established for the purpose of facilitating off-balance sheet arrangements or other purposes.
Off-Balance Sheet Arrangements Through the end of fiscal 2025 , we did not have any relationships with any entities or financial partnerships, such as structured finance or special purpose entities established for the purpose of facilitating off-balance sheet arrangements or other purposes.
This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed in the section titled” Risk Factors” and in other parts of this Annual Report on Form 10-K.
This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed in the section titled “ Risk Factors” and in other parts of this Annual Report on Form 10-K.
We may continue to enter into arrangements to acquire or invest in complementary businesses, services and technologies, including intellectual property rights. We may seek additional equity or debt financing in the future.
We may continue to enter into arrangements to acquire or invest in complementary businesses, services and technologies, including intellectual property and other licensing rights. We may enter into equipment financing arrangements and seek additional equity or debt financing in the future.
We expect our subscription services revenue to increase and continue to grow faster than our product revenue as more customers choose to consume our storage solutions as a service and our existing subscription customers renew and expand their consumption and service levels. 39 Cost of Revenue Cost of product revenue primarily consists of costs paid to our third-party contract manufacturers, which includes the costs of our raw material components, and personnel costs associated with our supply chain operations.
We expect our subscription services revenue to increase and continue to grow faster than our product revenue as more customers choose to consume our storage solutions as a service and our existing Evergreen subscription customers renew and expand their offerings. 40 Cost of Revenue Cost of product revenue primarily consists of costs paid to our third-party contract manufacturers, which includes the costs of our raw material components, and personnel costs associated with our supply chain operations.
Discussions of fiscal 2022 items and year-over-year comparisons between fiscal 2023 and 2022 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended February 5, 2023, that was filed with the SEC on April 3, 2023.
Discussions of fiscal 2023 items and year-over-year comparisons between fiscal 2024 and 2023 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended February 4, 2024, that was filed with the SEC on April 1, 2024.
We generally recognize revenue from the fair value of subscription services provided ratably over the contractual service period or on a consumption basis for usage above a minimum usage commitment and professional services as delivered.
We generally recognize revenue from the fair value of subscription services provided ratably over the contractual service period or on a consumption basis based on the minimum usage commitment as well as usage above the commitment amount and professional services as delivered.
Components of Results of Operations Revenue We derive revenue primarily from the sale of our products and services that comprise our data storage platform. Our data storage platform includes our FlashArray and FlashBlade solutions , and our Evergreen and Portworx subscription services. Subscription services also include our professional services offerings such as installation and implementation consulting services.
Components of Results of Operations Revenue We derive revenue primarily from the sale of our products and services that comprise our Pure Platform. Our Pure Platform primarily includes our FlashArray and FlashBlade solutions , and our portfolio of Evergreen subscription services offerings. Subscription services also include our professional services offerings such as installation and implementation consulting services.
We expect our cost of product revenue to increase in absolute dollars as our product revenue increases. Cost of subscription services revenue primarily consists of personnel costs associated with delivering our subscription and professional services, part replacements, allocated overhead costs and depreciation of infrastructure used to deliver our subscription services.
We expect our cost of product revenue to increase in absolute dollars as our product revenue increases. Cost of subscription services revenue primarily consists of personnel costs associated with delivering our subscription and professional services, part replacements, allocated overhead costs, depreciation of infrastructure used to deliver our subscription services, and amortization of capitalized internal-use software.
Recent Accounting Pronouncements Refer to “Recent Accounting Pronouncements” in Note 2 of our Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K. 48
Recent Accounting Pronouncements Refer to Note 2 of our Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K. 50
Personnel costs consist of salaries, bonuses and stock-based compensation expense. Our cost of product revenue also includes allocated overhead costs, adjustments to inventory and purchase commitments, product warranty costs, amortization of intangible assets pertaining to developed technology and capitalized internal-use software, and freight. Allocated overhead costs consist of certain employee benefits and facilities-related costs.
Personnel costs consist of salaries, bonuses and stock-based compensation expense. Our cost of product revenue also includes allocated overhead costs, adjustments to inventory and purchase commitments based on forecasted demand, product warranty costs, amortization of intangible assets pertaining to developed technology, and freight. Allocated overhead costs consist of certain employee benefits and facilities-related costs.
General and administrative expenses consist primarily of employee compensation and related expenses for administrative functions including finance, legal, human resources, facilities, IT and fees for third-party professional services as well as amortization of intangible assets pertaining to defensive technology patents and allocated overhead.
General and administrative expenses consist primarily of employee compensation and related expenses for administrative functions including finance, legal, human resources, facilities, IT and fees for third-party professional services as well as amortization of intangible assets pertaining to defensive technology patents and allocated overhead. We expect our general and administrative expenses to increase in absolute dollars. Restructuring and Impairment.
During fiscal 2024 compared to fiscal 2023, total revenue in the United States remained consistent at approximately $2.0 billion while total rest of the world revenue grew by 9% from $781.7 million to $851.3 million. Subscription Annual Recurring Revenue (ARR) We use Subscription ARR as a key business metric to evaluate the performance of our subscription services.
During fiscal 2025 compared to fiscal 2024, total revenue in the United States grew by 12% from $2.0 billion to $2.2 billion, while total rest of the world revenue grew by 13% from $851.3 million to $960.8 million. Subscription Annual Recurring Revenue (ARR) We use Subscription ARR as a key business metric to evaluate the performance of subscription services.
The outstanding loan bore weighted-average interest at an annual rate of approximately 6.73% based on a one-month term SOFR period resulting in interest expense of $5.5 million during fiscal 2024.
The outstanding balance of $100.0 million at the end of fiscal 2025 bore weighted-average interest at an annual rate of approximately 6.59% based on a one-month term SOFR period resulting in interest expense of $6.6 million during fiscal 2025.
The Credit Facility expires, absent default or early termination by us, on August 24, 2025. In March 2023, we amended the Credit Facility to transition LIBOR to the Secured Overnight Financing Rate (SOFR) effective April 1, 2023.
Proceeds from the Credit Facility may be used for general corporate purposes and working capital. The Credit Facility expires, absent default or early termination by us, on August 24, 2025. In March 2023, we amended the Credit Facility to transition LIBOR to the Secured Overnight Financing Rate (SOFR) effective April 1, 2023.
We are also required to pay a commitment fee on the unused portion of the commitments ranging from 0.25% to 0.40% per annum, payable quarterly in arrears. In April 2023, we borrowed $100.0 million under the Credit Facility to fund the repayment of the Notes.
We are also required to pay a commitment fee on the unused portion of the commitments ranging from 0.25% to 0.40% per annum, payable quarterly in arrears.
Overview Data is foundational to our customers’ business transformation, and we are focused on delivering an innovative and disruptive data storage platform that enables customers to maximize the value of their data. We are a global leader in data storage and management with a mission to redefine the storage experience by simplifying how people consume and interact with data.
Overview Data is foundational to our customers, and we are focused on delivering innovative and differentiated data storage solutions and services that enable customers to fully realize the value of their data. We are a global leader in data management and storage with a mission to redefine the storage experience by simplifying how people manage, consume and interact with data.
Net cash used in investing activities during fiscal 2023 of $221.4 million was driven by capital expenditures of $158.1 million, and net purchases of marketable securities of $61.3 million. 46 Financing Activities Net cash used in financing activities of $560.2 million during fiscal 2024 was primarily driven by cash outflows related to the repayment of the principal amount of the Notes of approximately $575.0 million, share repurchases of $135.8 million, and tax withholdings on equity awards of $30.0 million, partially offset by proceeds from borrowing under the Credit Facility of $100.0 million, issuance of common stock under our employee stock purchase plan (ESPP) of $45.1 million, and exercise of stock options of $39.8 million.
Net cash used in financing activities during fiscal 2024 was primarily driven by cash outflows related to the repayment of the principal amount of the Convertible Senior Notes of approximately $575.0 million, share repurchases of $135.8 million, and tax withholding remittances on vested equity awards of $30.0 million, partially offset by proceeds from borrowing under the Credit Facility of $100.0 million, issuance of common stock under our ESPP of $45.1 million, and exercise of stock options of $39.8 million.
The authorization allows us to repurchase shares of our common stock opportunistically and will be funded from available working capital. Repurchases may be made at management’s discretion from time to time on the open market through privately negotiated transactions, transactions structured through investment banking institutions, block purchase techniques, 10b5-1 trading plans, or a combination of the foregoing.
Repurchases may be made at management’s discretion from time to time on the open market through privately negotiated transactions, transactions structured through investment banking institutions, block purchase techniques, 10b5-1 trading plans, or a combination of the foregoing.
During fiscal 2024, we repurchased and retired 4.7 million shares of common stock at an average purchase price of $28.96 per share for an aggregate repurchase price of $135.7 million.
During fiscal 2025, we repurchased and retired 6.7 million shares of common stock at an average purchase price of $55.57 per share for an aggregate repurchase price of $373.8 million.
Other Income (Expense), Net Other income (expense), net consists primarily of interest income related to cash, cash equivalents and marketable securities, interest expense related to our debt and gains (losses) from foreign currency transactions.
Restructuring and impairment expenses consist primarily of employee severance and termination benefits, and certain lease impairment and abandonment charges. Other Income (Expense), Net Other income (expense), net consists primarily of interest income related to cash, cash equivalents and marketable securities, interest expense related to our debt and gains (losses) from foreign currency transactions.
TCV sales for these offerings include recurring subscription fees, any non-recurring charges such as initial setup fees, and any other billable services directly tied to the execution of the underlying service contract. We expect in fiscal 2025 TCV sales for our Evergreen//One and Evergreen//Flex consumption and subscription based offerings will grow approximately 50 percent.
TCV sales for our storage-as-a-service offerings is a key business metric we use to evaluate the performance of our consumption and subscription based offerings. TCV sales for these offerings include recurring subscription fees, any non-recurring charges such as initial setup fees, and any other billable services directly tied to the execution of the underlying service contract.
We expect our research and development expenses to increase in absolute dollars and it may decrease as a percentage of revenue. Sales and Marketing . Sales and marketing expenses consist primarily of employee compensation and related expenses, sales commissions, marketing programs, travel and entertainment expenses as well as allocated overhead.
Sales and marketing expenses consist primarily of employee compensation and related expenses, sales commissions, marketing programs, travel and entertainment expenses as well as allocated overhead. Marketing programs consist of advertising, events, corporate communications and brand-building activities. We expect our sales and marketing expenses to increase in absolute dollars. General and Administrative.
We believe our existing cash, cash equivalents, marketable securities and revolving credit facility will be sufficient to fund our operating and capital needs for at least the next 12 months. The following table sets forth our non-cancelable contractual obligations and commitments associated with agreements that are enforceable and legally binding at the end of fiscal 2024.
We believe our existing cash, cash equivalents, marketable securities and revolving credit facility will be sufficient to fund our operating and capital needs for at least the next 12 months.
Investing Activities Net cash provided by investing activities during fiscal 2024 was driven by net maturities of marketable securities of $198.4 million, partially offset by capital expenditures of $195.2 million relating to test equipment for new product innovation, and equipment supporting our growing Evergreen//One offering, as well as the construction of our new headquarters facility.
Net cash provided by investing activities during fiscal 2024 was driven by maturities and net sales of marketable securities of $193.4 million, partially offset by capital expenditures of $195.2 million relating to test equipment for new product innovation, and equipment supporting our growing Evergreen//One offering, as well as the construction of our headquarters facility. 48 Financing Activities Net cash used in financing activities during fiscal 2025 was primarily driven by cash outflows related to share repurchases of $374.0 million, and tax withholding remittances on vesting of equity awards of $206.6 million, partially offset by issuance of common stock under our employee stock purchase plan (ESPP) of $51.7 million, and exercise of stock options of $27.2 million.
The following table sets forth our Subscription ARR for the periods presented (dollars in thousands): At the End of Year-over-Year Growth Fiscal 2023 Fiscal 2024 % Subscription annual recurring revenue $ 1,101,301 $ 1,373,506 25 % 41 Remaining Performance Obligations Total remaining performance obligations (RPO) which is total contracted but not recognized revenue was $2.3 billion at the end of fiscal 2024.
The following table sets forth our Subscription ARR for the periods presented: At the End of Year-over-Year Growth (in thousands) Fiscal 2024 Fiscal 2025 % Subscription annual recurring revenue $ 1,373,506 $ 1,657,806 21 % The year-over-year growth in our Subscription ARR at the end of fiscal 2025 was 21% compared to growth of 25% in fiscal 2024.
Our future capital requirements will depend on many factors including our sales growth, the timing and extent of capital spending to support development efforts, growth of our Evergreen//One offering, the addition or closure of office space, ongoing construction of our new headquarters facility, the timing of new product introductions, workforce realignment restructuring activities, and our share repurchases.
Our future capital requirements will depend on many factors including our sales growth, the timing and extent of capital spending to support development efforts including investments to scale operations in support of our recent hyperscale design win with Meta, growth of our Evergreen//One offering, the addition or closure of office space, the timing of new product introductions, our share repurchases, the timing of renewal and/or repayment of borrowings under the revolving credit facility, and cash payments for tax withholding obligations for equity awards held by employees.
Fiscal 2023 and 2024 were both 52-week years that ended on February 5, 2023 and February 4, 2024, respectively. Unless otherwise stated, all dates refer to our fiscal years.
Results of Operations Basis of Presentation We operate using a 52/53 week fiscal year ending on the first Sunday after January 30. Fiscal 2024 and 2025 were both 52-week years that ended on February 4, 2024 and February 2, 2025, respectively. Unless otherwise stated, all dates refer to our fiscal years.
Revolving Credit Facility In August 2020, we entered into a Credit Agreement with a consortium of financial institutions and lenders that provides for a five-year, senior secured revolving credit facility of $300.0 million (Credit Facility). Proceeds from the Credit Facility may be used for general corporate purposes and working capital.
We lease office and data center facilities under operating leases expiring through July 2032 and lease certain engineering test equipment under finance leases. Revolving Credit Facility In August 2020, we entered into a Credit Agreement with a consortium of financial institutions and lenders that provides for a five-year, senior secured revolving credit facility of $300.0 million (Credit Facility).
Letters of Credit At the end of fiscal 2023 and 2024, we had outstanding letters of credit in the aggregate amount of $8.0 million and $7.7 million in connection with our facility leases. The letters of credit are collateralized by either restricted cash or the Credit Facility and mature on various dates through September 2030.
We were in compliance with all covenants under the Credit Facility at the end of fiscal 2025. Letters of Credit At the end of fiscal 2024 and 2025, we had outstanding letters of credit in the aggregate amount of $7.7 million and $7.2 million in connection with our facility leases.
Total RPO includes $77.5 million in non-cancelable product orders that we expect to fulfill subsequent to fiscal 2024. RPO consists of both deferred revenue and non-cancelable amounts that are expected to be invoiced and recognized as revenue in future periods.
RPO consists of both deferred revenue and non-cancelable amounts that are expected to be invoiced and recognized as revenue in future periods. Product orders are generally cancelable until delivery has occurred, and as such, unfulfilled product orders that are cancelable are excluded from RPO. Cancelable orders will fluctuate depending on numerous factors.
Share Repurchase Program In March 2023, our Board of Directors authorized $250.0 million to repurchase shares of our common stock, of which $145.4 million remained available at the end of fiscal 2024. In February 2024, our Board of Directors authorized an additional $250.0 million to repurchase shares of our common stock, increasing the total authorization amount to $395.4 million.
In February 2025, our Board of Directors authorized an additional $250.0 million to repurchase shares of our common stock, increasing the total remaining authorization amount to $271.5 million. The authorization allows us to repurchase shares of our common stock opportunistically and will be funded from available working capital.
Cash Flows The following table summarizes our cash flows for the periods presented (in thousands): Fiscal Year Ended 2023 2024 Net cash provided by operating activities $ 767,234 $ 677,722 Net cash provided by (used in) investing activities (221,413) 3,246 Net cash used in financing activities (431,166) (560,235) Operating Activities The year-over-year decrease in net cash provided by operating activities was impacted by lower revenue growth and growth of our Evergreen//One sales that include flexible payment terms, employee compensation payments, and timing of certain vendor payments and receipt of rebates.
Cash Flows The following table summarizes our cash flows for the periods presented (in thousands): Fiscal Year Ended 2024 2025 Net cash provided by operating activities $ 677,722 $ 753,098 Net cash provided by (used in) investing activities $ 3,246 $ (217,700) Net cash used in financing activities $ (560,235) $ (509,779) Operating Activities Cash provided by operating activities consists of net income, adjusted for non-cash items and changes in operating assets and liabilities.
RPO is expected to increase as our subscription services business grows over time. Our RPO includes non-cancelable Total Contract Value (TCV) sales for our Evergreen//One and Evergreen//Flex consumption and subscription based offerings. TCV sales for Evergreen//One and Evergreen//Flex offerings is a key business metric we use to evaluate the performance of our consumption and subscription based offerings.
TCV sales of Evergreen//One was impacted by both extended closing timelines for larger Evergreen//One opportunities and increased conversion to a traditional sale of our higher velocity Evergreen//One opportunities . We expect to recognize approximately 48% of total RPO over the next 12 months, and the remainder thereafter. RPO is expected to increase as our subscription services business grows over time.
The decrease in product revenue during fiscal 2024 compared to fiscal 2023 was attributable to increasing sales of our Evergreen//One consumption and subscription based offering, as well as macro-economic conditions. Revenue for Evergreen//One is recognized over time and included in subscription services revenue.
The increase in subscription services revenue during fiscal 2025 compared to fiscal 2024 was largely driven by renewals of our Evergreen subscription services across our installed base and increased revenue from our Evergreen//One offering.
Cost of Revenue and Gross Margin Fiscal Year Ended Change 2023 2024 $ % (in thousands) Product cost of revenue $ 559,548 $ 462,760 $ (96,788) (17) % Product stock-based compensation 10,245 9,670 (575) (6) % Total expenses $ 569,793 $ 472,430 $ (97,363) (17) % % of Product revenue 32 % 29 % Subscription services cost of revenue $ 263,365 $ 311,588 $ 48,223 18 % Subscription services stock-based compensation 22,630 25,412 2,782 12 % Total expenses $ 285,995 $ 337,000 $ 51,005 18 % % of Subscription services revenue 30 % 28 % Total cost of revenue $ 855,788 $ 809,430 $ (46,358) (5) % % of Revenue 31 % 29 % Product gross margin 68 % 71 % Subscription services gross margin 70 % 72 % Total gross margin 69 % 71 % Cost of revenue decreased by $46.4 million, or 5%, for fiscal 2024 compared to fiscal 2023.
Cost of Revenue and Gross Margin Fiscal Year Ended Change 2024 2025 $ % (in thousands) Product cost of revenue $ 462,760 $ 562,736 $ 99,976 22 % Product stock-based compensation 9,670 12,611 2,941 30 % Total expenses $ 472,430 $ 575,347 $ 102,917 22 % % of Product revenue 29 % 34 % Subscription services cost of revenue $ 311,588 $ 347,497 $ 35,909 12 % Subscription services stock-based compensation 25,412 32,611 7,199 28 % Total expenses $ 337,000 $ 380,108 $ 43,108 13 % % of Subscription services revenue 28 % 26 % Total cost of revenue $ 809,430 $ 955,455 $ 146,025 18 % % of Revenue 29 % 30 % Product gross margin 71 % 66 % Subscription services gross margin 72 % 74 % Total gross margin 71 % 70 % The decrease in product gross margin during fiscal 2025 when compared to fiscal 2024 was primarily due to increasing sales of our FlashBlade//E , FlashArray//E , and FlashArray//C solutions as customers’ transition their cost-sensitive workloads from traditional disk solutions to flash.
Removed
Our data storage platform supports a wide range of structured and unstructured data, at scale and across any data workloads in hybrid and public cloud environments, and includes mission-critical production, test and development, analytics, disaster recovery, backup and restore, AI and machine learning.
Added
Our Pure Platform supporting structured and unstructured data, at scale and across any data workloads in on premises, cloud and hosted environments makes it possible for customers to construct their Enterprise Data Clouds.
Removed
Marketing programs consist of advertising, events, corporate communications and brand-building activities. We expect our sales and marketing expenses to increase in absolute dollars and it may decrease as a percentage of revenue as we continue to realize efficiencies from scaling our business. General and Administrative.
Added
This allows them to serve a variety of data workloads including mission-critical production, test and development, analytics, disaster recovery, backup and restore, artificial intelligence and machine learning with a single consistent, highly automated and agile cloud operating model.
Removed
We expect our general and administrative expenses to increase in absolute dollars and it may decrease as a percentage of revenue. Restructuring, Impairment and Other. Restructuring, impairment and other consist primarily of employee severance and termination benefits, and certain lease impairment and abandonment charges.
Added
We expect our research and development expenses to increase in absolute dollars. Key incremental investments will focus on accelerating density of our direct flash modules, and increasing operational scale of our supply chain partners to support expected production deployment ramp in connection with our hyperscale design win for large production deployments starting in fiscal 2027. Sales and Marketing .
Removed
We expect to maintain this full valuation allowance for the foreseeable future as it is more likely than not that the assets will not be realized based on our history of losses. Results of Operations Basis of Presentation We operate using a 52/53 week fiscal year ending on the first Sunday after January 30.
Added
When considering our historical earnings trend, sufficient positive evidence may become available where we will release all or a portion of the valuation allowance within 12 months. Release of the valuation allowance would result in the recognition of certain deferred tax assets and a decrease to income tax expense for the period the release is recorded.
Removed
Year Over Year Comparisons Revenue Fiscal Year Ended Change 2023 2024 $ % (in thousands) Product revenue $ 1,792,153 $ 1,622,869 $ (169,284) (9) % Subscription services revenue 961,281 1,207,752 246,471 26 % Total revenue $ 2,753,434 $ 2,830,621 $ 77,187 3 % Total revenue increased in fiscal 2024 by $77.2 million, or 3%, compared to fiscal 2023.
Added
Year Over Year Comparisons Revenue Fiscal Year Ended Change 2024 2025 $ % (in thousands) Product revenue $ 1,622,869 $ 1,699,494 $ 76,625 5 % Subscription services revenue 1,207,752 1,468,670 260,918 22 % Total revenue $ 2,830,621 $ 3,168,164 $ 337,543 12 % The slight increase in product revenue during fiscal 2025 compared to fiscal 2024 was primarily driven by sales of our FlashBlade//E and FlashArray//E solutions.
Removed
As such, we expect continued growth of our Evergreen//One sales will negatively impact, in the near term, both product revenue growth and total revenue growth rates. The increase in subscription services revenue was largely driven by increases in sales of our Evergreen subscription services, including Evergreen//One , as well as recognition of revenue from previously contracted Evergreen subscription services .
Added
Year-over-year growth in subscription ARR to 21% was impacted by lower Total Contract Value (TCV) sales of Evergreen//One . 42 Remaining Performance Obligations Total remaining performance obligations (RPO) which is total contracted but not recognized revenue was $2.6 billion at the end of fiscal 2025, and includes non-cancelable TCV sales for our storage-as-a-service offerings, including Evergreen//One, Evergreen//Flex, and Cloud Block Store consumption and subscription based offerings, as well as $41.1 million of non-cancelable product orders.
Removed
Product orders are generally cancelable until delivery has occurred, and as such, unfulfilled product orders that are cancelable are excluded from RPO. Cancelable orders will fluctuate depending on numerous factors. Of the $2.3 billion RPO at the end of fiscal 2024, we expect to recognize approximately 47% over the next 12 months, and the remainder thereafter.
Added
The year-over-year growth in RPO to 14% at the end of fiscal 2025 compared to 31% at the end of fiscal 2024 was primarily due to lower TCV sales of Evergreen//One .
Removed
The decrease in product cost of revenue was primarily attributable to lower product sales and lower component costs, partially offset by higher excess and obsolete inventory charges. The increase in subscription services cost of revenue was primarily attributable to supporting our growing Evergreen subscription installed base, including Evergreen//One and Portworx .
Added
We also experienced higher QLC component costs that were partially offset by lower excess and obsolete charges. 43 The increase in subscription services gross margin during fiscal 2025 when compared to fiscal 2024 was primarily driven by (i) lower depreciation expense from increasing the estimated useful lives of assets supporting our Evergreen//One offering during the third quarter of fiscal 2025 and (ii) continued optimization and increased efficiencies in our technical services operations, combined with cost benefits from automating our service logistics workflows that support delivery of our Evergreen subscription services to our installed base.
Removed
Foundational to our strong product gross margins are the advantages created from our Purity software architecture that works natively with raw flash. One of the key advantages is we directly source our raw flash, both TLC and lower cost QLC.
Added
Our Evergreen//One offering, supported by our own infrastructure, demonstrate a longer estimated life as a result of deriving benefits from our technology and Evergreen support. These lower costs were partially offset by additional stock-based compensation resulting from a modification of our fiscal 2024 performance restricted stock units (PRSUs).
Removed
QLC flash represents the majority of the capacity we ship and is also a contributor to our higher product gross margin expansion when comparing fiscal 2024 to fiscal 2023.
Added
Operating Expenses Stock-based compensation expense in fiscal 2025 included $36.6 million relating to a modification of our fiscal 2024 PRSUs that was recognized in the first quarter of fiscal 2025, contributing to higher stock-based compensation expense when compared to fiscal 2024. Refer to Note 11 of Part II, Item 8 of this Annual Report on Form 10-K for further information.
Removed
Product and customer mix also was a driver in the year-over-year increase in product gross margins, including, sales of our FlashBlade//S solutions which have a higher gross margin when compared to our older generation FlashBlade solutions.
Added
In addition, operating expenses during fiscal 2025 were positively impacted as a result of the workforce alignment that we initiated in the fourth quarter of fiscal 2024.
Removed
Lower material pricing, including flash, has also favorably impacted gross margins. 42 The increase in subscription services gross margin for fiscal 2024 compared to fiscal 2023 was driven by higher subscription services revenue growth from sales of Evergreen//One and higher renewals in Evergreen subscriptions coupled with continued focus on operational efficiencies.
Added
Research and Development Fiscal Year Ended Change 2024 2025 $ % (in thousands) Research and development $ 569,470 $ 603,347 $ 33,877 6 % Stock-based compensation 167,294 201,058 33,764 20 % Total expenses $ 736,764 $ 804,405 $ 67,641 9 % % of Total revenue 26 % 25 % The increase in research and development expense during fiscal 2025 compared to fiscal 2024 was primarily driven by an increase in employee compensation and related costs, including stock-based compensation, and, to a lesser extent, an increase in outside services costs, and higher data center and cloud services costs.
Removed
Operating Expenses Research and Development Fiscal Year Ended Change 2023 2024 $ % (in thousands) Research and development $ 530,834 $ 569,470 $ 38,636 7 % Stock-based compensation 161,694 167,294 5,600 3 % Total expenses $ 692,528 $ 736,764 $ 44,236 6 % % of Total revenue 25 % 26 % Research and development expense increased by $44.2 million, or 6%, during fiscal 2024 compared to fiscal 2023, as we continue to innovate and develop technologies to enhance and expand our platform portfolio.
Added
Sales and Marketing Fiscal Year Ended Change 2024 2025 $ % (in thousands) Sales and marketing $ 870,275 $ 924,559 $ 54,284 6 % Stock-based compensation 74,746 96,355 21,609 29 % Total expenses $ 945,021 $ 1,020,914 $ 75,893 8 % % of Total revenue 33 % 32 % The increase in sales and marketing expense during fiscal 2025 compared to fiscal 2024 was primarily due to an increase in employee compensation and related costs, including stock-based compensation and, to a lesser extent, higher travel costs. 44 General and Administrative Fiscal Year Ended Change 2024 2025 $ % (in thousands) General and administrative $ 197,938 $ 207,560 $ 9,622 5 % Stock-based compensation 54,305 78,671 24,366 45 % Total expenses $ 252,243 $ 286,231 $ 33,988 13 % % of Total revenue 9 % 9 % The increase in general and administrative expense during fiscal 2025 compared to fiscal 2024 was primarily due to higher stock-based compensation.
Removed
The increase was primarily driven by a $26.1 million increase in employee compensation and related costs and a $19.0 million increase in equipment depreciation and facilities-related costs.
Added
Restructuring and Impairment Fiscal Year Ended Change 2024 2025 $ (in thousands) Restructuring and impairment $ 33,612 $ 15,901 $ (17,711) % of Total revenue 1 % 1 % During fiscal 2025, we recognized $15.9 million of restructuring and impairment costs.
Removed
Sales and Marketing Fiscal Year Ended Change 2023 2024 $ % (in thousands) Sales and marketing $ 811,102 $ 870,275 $ 59,173 7 % Stock-based compensation 72,507 74,746 2,239 3 % Total expenses $ 883,609 $ 945,021 $ 61,412 7 % % of Total revenue 32 % 33 % Sales and marketing expense increased by $61.4 million, or 7%, during fiscal 2024 compared to fiscal 2023, primarily due to an increase of $55.4 million in employee compensation and related costs relating to increasing sales capacity and a $6.0 million increase in outside services associated with our sales and marketing events.
Added
We recognized $9.5 million of incremental restructuring costs primarily related to one-time severance and other termination benefits associated with the workforce realignment plan discussed below. We also recognized $6.4 million in incremental abandonment and impairment charges related to certain leases associated with our former corporate headquarters.
Removed
General and Administrative Fiscal Year Ended Change 2023 2024 $ % (in thousands) General and administrative $ 177,455 $ 197,938 $ 20,483 12 % Stock-based compensation 60,541 54,305 (6,236) (10) % Total expenses $ 237,996 $ 252,243 $ 14,247 6 % % of Total revenue 9 % 9 % Restructuring, Impairment and Other During fiscal 2024, we recognized $33.6 million of restructuring, impairment and other costs related to severance and other termination benefits related to workforce realignment, and the cease use of our former corporate headquarters in Mountain View, California. 43 Other Income (Expense), Net Fiscal Year Ended Change 2023 2024 $ (in thousands) Other income (expense), net $ 8,295 $ 37,035 $ 28,740 Other income (expense), net increased during fiscal 2024 compared to fiscal 2023 primarily due to an increase in interest income due to a higher interest rate environment and, to a lesser extent, a decrease in net foreign exchange losses as the U.S. dollar weakened relative to certain foreign currencies and a decrease in interest expense following the full repayment of the convertible senior notes in April 2023.
Added
The incremental impairment charge was due to a revision to the underlying sublease assumptions during fiscal 2025.
Removed
These increases were partially offset by an increase in interest expense on the outstanding balance on our revolving credit facility.
Added
During fiscal 2024, we recognized $33.6 million of restructuring and impairment costs related to severance and other termination benefits associated with a workforce realignment that was initiated in the fourth quarter of fiscal 2024, and the cease use of our former headquarters during the second quarter of fiscal 2024.
Removed
Obligations under contracts that we can cancel without a significant penalty are not included.
Added
Purchase Obligations and Lease Commitments At the end of fiscal 2025, we had non-cancelable contractual purchase obligations of $540.1 million, of which $385.9 million is short-term. These purchase obligations primarily includes non-cancelable inventory purchase commitments with contract manufacturers and suppliers, software service contracts, and hosting arrangements.
Removed
Payment Due by Period Total Less Than 1 Year 1-3 Years 3-5 Years More Than 5 Years (in thousands) Debt obligations (1) $ 117,897 $ 11,057 $ 106,840 $ — $ — Future lease commitments (2) 206,088 59,660 65,193 49,008 32,227 Purchase obligations (3) 417,235 298,368 103,046 15,821 — Total $ 741,220 $ 369,085 $ 275,079 $ 64,829 $ 32,227 _________________________________ (1) Consists of (i) principal, interest, and unused commitment fees on our August 2020 revolving credit facility based on rates in effect on February 4, 2024, and (ii) principal and interest on a four year loan and a five year loan.
Added
At the end of fiscal 2025, aggregate future minimum lease payments under non-cancelable operating leases and finance leases were $219.2 million, of which $55.8 million is short-term. Non-cancelable operating leases include leases that have been executed, but not yet commenced.
Removed
(2) Represents aggregate future minimum lease payments under non-cancelable operating and finance leases. (3) Includes primarily non-cancelable inventory purchase commitments, software service contracts, and hosting arrangements. Purchase orders are not included as they represent authorizations to purchase rather than binding agreements.

… 12 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+0 added−0 removed7 unchanged
Biggest changeAt the end of fiscal 2023 and 2024, we had cash, cash equivalents and marketable securities of $1.6 billion and $1.5 billion. The carrying amount of our cash equivalents reasonably approximates fair value, due to the short maturities of these instruments.
Biggest changeAt the end of fiscal 2024 and 2025, we had cash, cash equivalents and marketable securities of $1.5 billion. The carrying amount of our cash equivalents reasonably approximates fair value, due to the short maturities of these instruments.
A hypothetical 1.00% (100 basis points) increase in interest rates would have resulted in a decrease in the fair value of our marketable securities of approximately $8.6 million as of the end of fiscal 2024. Foreign Currency Exchange Risk Our sales contracts are primarily denominated in U.S. dollars with a proportionally small number of contracts denominated in foreign currencies.
A hypothetical 1.00% (100 basis points) increase in interest rates would have resulted in a decrease in the fair value of our marketable securities of approximately $8.8 million as of the end of fiscal 2025. Foreign Currency Exchange Risk Our sales contracts are primarily denominated in U.S. dollars with a proportionally small number of contracts denominated in foreign currencies.
These reasonably possible adverse changes in exchange rates of 10% were applied to total monetary assets and liabilities denominated in currencies other than U.S. dollar at the end of fiscal 2024 to compute the adverse impact these changes would have had on our loss before income taxes in the near term.
These reasonably possible adverse changes in exchange rates of 10% were applied to total monetary assets and liabilities denominated in currencies other than U.S. dollar at the end of fiscal 2025 to compute the adverse impact these changes would have had on our income before income taxes in the near term.
These changes would have resulted in an adverse impact on income before provision for income taxes of approximately $12.3 million at the end of fiscal 2024. 49
These changes would have resulted in an adverse impact on income before provision for income taxes of approximately $9.0 million at the end of fiscal 2025. 51

Other PSTG 10-K year-over-year comparisons