Pure Storage, Inc. [PSTG] Filings

10-Q 1 pstg-20240804.htm 10-Q pstg-20240804

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM			10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended August 4, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-37570


Pure Storage, Inc.
(Exact Name of Registrant as Specified in its Charter)


Delaware						27-1069557
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

2555 Augustine Dr.

Santa Clara, California 95054

(Address of principal executive offices, including zip code)

(800) 379-7873

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Class A Common Stock, $0.0001 par value per share

PSTG

New York Stock Exchange LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

As of September 4, 2024, the registrant had 327,691,894 shares of its Class A common stock outstanding.

Table of Contents

PURE STORAGE, INC.

FORM 10-Q for the Quarter Ended August 4, 2024

Table of Contents


		Page
Note About Forward-Looking Statements		ii
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations	2
	Condensed Consolidated Statements of Comprehensive Income (Loss)	3
	Condensed Consolidated Statements of Stockholders' Equity	4
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	37
Item 4.	Controls and Procedures	38
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	39
Item 1A.	Risk Factors	39
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	60
Item 3.	Defaults Upon Senior Securities	60
Item 4.	Mine Safety Disclosures	60
Item 5.	Other Information	60
Item 6.	Exhibits	61
Signatures

Table of Contents

NOTE ABOUT FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this report, including statements regarding our future results of operations and financial condition, business strategy and plans and objectives of management for future operations, are forward-looking statements. In some cases, forward-looking statements may be identified by words such as “anticipate,” “believe,” “continue,” “could,” “design,” “estimate,” “expect,” “intend,” “may,” “plan,” “potentially,” “predict,” “project,” “should,” “will” or the negative of these terms or other similar expressions.

Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements regarding macroeconomic conditions, including, among other issues, high inflation, rising interest rates, and a slowdown in demand, our ability to sustain or manage our profitability and growth, our expectations regarding demand for our products and subscription services, including Evergreen//One, trends in the external storage market, our ability to expand market share, our expectations that sales prices may decrease or fluctuate over time, our plans to expand and continue to invest internationally, our plans to continue investing in marketing, sales, support and research and development, our shift to subscription services, including as-a-Service offerings, our expectations regarding fluctuations in our revenue and operating results, including the timing and magnitude of large customer orders, our expectations that we may continue to experience losses despite revenue growth, our ability to successfully attract, motivate, and retain qualified personnel and maintain our culture, our expectations regarding our technological leadership and market opportunity, including our ability to capture storage workloads for AI environments and hyperscalers, our ability to realize benefits from our acquisitions and investments, our ability to innovate and introduce new or enhanced products, our expectations regarding technology and product strategy and technology differentiation, specifically our sustainability goals, our customer priorities around sustainability, and the environmental and energy saving benefits to our customers of using our products, our competitive position and the effects of competition and industry dynamics, including alternative offerings from incumbent, emerging and public cloud vendors, the potential disruptions to our contract manufacturers or supply chain, our expectations about the impact of, and trends relating to, component pricing, our expectations concerning relationships with third parties, including our partners, customers, suppliers and contract manufacturers, the adequacy of our intellectual property rights, expectations concerning potential legal proceedings and related costs, and the impact of adverse economic conditions on our business, operating results, cash flows and/or financial condition.

We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, and financial needs. These forward-looking statements are subject to a number of known and unknown risks, uncertainties and assumptions, including risks described in the section titled “Risk Factors.” These risks are not exhaustive. Other sections of this report include additional factors that could harm our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time, and it is not possible for our management to predict all risk factors nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ from those contained in, or implied by, any forward-looking statements.

Investors should not rely upon forward-looking statements as predictions of future events. We cannot assure investors that the events and circumstances reflected in the forward-looking statements will be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason after the date of this report or to conform these statements to actual results or to changes in our expectations. Investors should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed as exhibits to this report with the understanding that our actual future results, levels of activity, performance and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.

Table of Contents

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

PURE STORAGE, INC.

Condensed Consolidated Balance Sheets

(in thousands, except per share data, unaudited)


	At the End of
	Fiscal 2024		Second Quarter of Fiscal 2025

ASSETS
Current assets:
Cash and cash equivalents	$	702,536	$	965,028
Marketable securities	828,557		855,453
Accounts receivable, net of allowance of $1,060 and $959	662,179		416,501
Inventory	42,663		43,548
Deferred commissions, current	88,712		87,424
Prepaid expenses and other current assets	173,407		185,072
Total current assets	2,498,054		2,553,026
Property and equipment, net	352,604		396,676
Operating lease right-of-use assets	129,942		138,781
Deferred commissions, non-current	215,620		210,755
Intangible assets, net	33,012		27,004
Goodwill	361,427		361,427
Restricted cash	9,595		14,779
Other assets, non-current	55,506		78,825
Total assets	$	3,655,760	$	3,781,273
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	82,757	$	68,104
Accrued compensation and benefits	250,257		176,553
Accrued expenses and other liabilities	135,755		119,430
Operating lease liabilities, current	44,668		49,575
Deferred revenue, current	852,247		869,332

Total current liabilities	1,365,684		1,282,994
Long-term debt	100,000		100,000
Operating lease liabilities, non-current	123,201		128,674
Deferred revenue, non-current	742,275		754,328
Other liabilities, non-current	54,506		62,116
Total liabilities	2,385,666		2,328,112
Commitments and contingencies (Note 7)
Stockholders’ equity:
Preferred stock, par value of $0.0001 per share— 20,000 shares authorized; no shares issued and outstanding	—		—
Class A and Class B common stock, par value of $0.0001 per share— 2,250,000 (Class A 2,000,000, Class B 250,000) shares authorized; 319,523 and 327,465 Class A shares issued and outstanding	32		33
Additional paid-in capital	2,749,595		2,925,507
Accumulated other comprehensive income (loss)	(3,782)		2,707
Accumulated deficit	(1,475,751)		(1,475,086)
Total stockholders’ equity	1,270,094		1,453,161
Total liabilities and stockholders’ equity	$	3,655,760	$	3,781,273

See the accompanying notes to condensed consolidated financial statements.

Table of Contents

PURE STORAGE, INC.

Condensed Consolidated Statements of Operations

(in thousands, except per share data, unaudited)


	Second Quarter of Fiscal				First Two Quarters of Fiscal
	2024		2025		2024		2025

Revenue:
Product	$	399,738	$	402,595	$	708,701	$	749,979
Subscription services	288,933		361,176		569,277		707,271
Total revenue	688,671		763,771		1,277,978		1,457,250
Cost of revenue:
Product	120,605		129,723		216,818		230,476
Subscription services	81,473		93,968		161,220		190,988
Total cost of revenue	202,078		223,691		378,038		421,464
Gross profit	486,593		540,080		899,940		1,035,786
Operating expenses:
Research and development	182,492		195,490		367,823		389,310
Sales and marketing	232,732		250,267		465,178		501,239
General and administrative	60,831		69,445		128,215		146,232
Restructuring and impairment	16,766		—		16,766		15,901
Total operating expenses	492,821		515,202		977,982		1,052,682
Income (loss) from operations	(6,228)		24,878		(78,042)		(16,896)
Other income (expense), net	6,686		19,437		18,435		33,528
Income (loss) before provision for income taxes	458		44,315		(59,607)		16,632
Provision for income taxes	7,573		8,641		14,909		15,967
Net income (loss)	$	(7,115)	$	35,674	$	(74,516)	$	665
Net income (loss) per share attributable to common stockholders, basic	$	(0.02)	$	0.11	$	(0.24)	$	0.00
Net income (loss) per share attributable to common stockholders, diluted	$	(0.02)	$	0.10	$	(0.24)	$	0.00
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders, basic	309,510		326,326		307,687		324,458
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders, diluted	309,510		343,443		307,687		341,509

See the accompanying notes to condensed consolidated financial statements.

Table of Contents

PURE STORAGE, INC.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(in thousands, unaudited)


	Second Quarter of Fiscal				First Two Quarters of Fiscal
	2024		2025		2024		2025

Net income (loss)	$	(7,115)	$	35,674	$	(74,516)	$	665
Other comprehensive income (loss):
Unrealized net gains (losses) on available-for-sale securities	(1,685)		8,313		3,181		6,673
Less: reclassification adjustment for net gains on available-for-sale securities included in net income (loss)	(16)		(22)		(284)		(184)
Change in unrealized net gains (losses) on available-for-sale securities	(1,701)		8,291		2,897		6,489
Comprehensive income (loss)	$	(8,816)	$	43,965	$	(71,619)	$	7,154

See the accompanying notes to condensed consolidated financial statements.

Table of Contents

PURE STORAGE, INC.

Condensed Consolidated Statements of Stockholders' Equity

(in thousands, unaudited)


	Second Quarter of Fiscal 2024
	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders' Equity
	Shares	Amount
Balance at the end of the first quarter of fiscal 2024	306,453	$	31	$	2,521,145	$	(10,906)	$	(1,604,463)	$	905,807
Issuance of common stock upon exercise of stock options	2,610	—		25,263		—		—		25,263
Stock-based compensation expense	—	—		91,012		—		—		91,012
Vesting of restricted stock units	3,505	—		—		—		—		—

Tax withholding on vesting of restricted stock units	(134)	—		(5,068)		—		—		(5,068)

Repurchases of common stock	(595)	—		(21,970)		—		—		(21,970)

Issuance of common stock upon conversion of convertible senior notes	—	—		100		—		—		100
Other comprehensive loss	—	—		—		(1,701)		—		(1,701)
Net loss	—	—		—		—		(7,115)		(7,115)
Balance at the end of the second quarter of fiscal 2024	311,839	$	31	$	2,610,482	$	(12,607)	$	(1,611,578)	$	986,328


	Second Quarter of Fiscal 2025
	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders' Equity
	Shares	Amount
Balance at the end of the first quarter of fiscal 2025	325,181	$	33	$	2,890,284	$	(5,584)	$	(1,510,760)	$	1,373,973
Issuance of common stock upon exercise of stock options	373	—		4,545		—		—		4,545
Stock-based compensation expense	—	—		106,861		—		—		106,861
Vesting of restricted stock units	3,026	—		—		—		—		—
Tax withholding on vesting of restricted stock units	(1,115)	—		(76,183)		—		—		(76,183)





Other comprehensive income	—	—		—		8,291		—		8,291
Net income	—	—		—		—		35,674		35,674
Balance at the end of the second quarter of fiscal 2025	327,465	$	33	$	2,925,507	$	2,707	$	(1,475,086)	$	1,453,161

See the accompanying notes to condensed consolidated financial statements.

Table of Contents

PURE STORAGE, INC.

Condensed Consolidated Statements of Stockholders' Equity

(in thousands, unaudited)


	First Two Quarters of Fiscal 2024
	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders' Equity
	Shares	Amount
Balance at the end of fiscal 2023	304,076	$	30	$	2,493,769	$	(15,504)	$	(1,537,062)	$	941,233
Issuance of common stock upon exercise of stock options	3,400	—		29,882		—		—		29,882
Stock-based compensation expense	—	—		169,677		—		—		169,677
Vesting of restricted stock units	7,175	1		(1)		—		—		—
Tax withholding on vesting of restricted stock units	(415)	—		(11,827)		—		—		(11,827)
Common stock issued under employee stock purchase plan	1,069	—		21,219		—		—		21,219
Repurchases of common stock	(3,467)	—		(91,881)		—		—		(91,881)
Issuance of common stock upon conversion of convertible senior notes	1	—		(356)		—		—		(356)
Other comprehensive income	—	—		—		2,897		—		2,897
Net loss	—	—		—		—		(74,516)		(74,516)
Balance at the end of the second quarter of fiscal 2024	311,839	$	31	$	2,610,482	$	(12,607)	$	(1,611,578)	$	986,328


	First Two Quarters of Fiscal 2025
	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders' Equity
	Shares	Amount
Balance at the end of fiscal 2024	319,523	$	32	$	2,749,595	$	(3,782)	$	(1,475,751)	$	1,270,094
Issuance of common stock upon exercise of stock options	1,407	—		17,768		—		—		17,768
Stock-based compensation expense	—	—		221,478		—		—		221,478
Vesting of restricted stock units	6,705	1		(1)		—		—		—
Tax withholding on vesting of restricted stock units	(1,365)	—		(88,661)		—		—		(88,661)

Common stock issued under employee stock purchase plan	1,195	—		25,328		—		—		25,328



Other comprehensive income	—	—		—		6,489		—		6,489
Net income	—	—		—		—		665		665
Balance at the end of the second quarter of fiscal 2025	327,465	$	33	$	2,925,507	$	2,707	$	(1,475,086)	$	1,453,161

See the accompanying notes to condensed consolidated financial statements.

Table of Contents

PURE STORAGE, INC.

Condensed Consolidated Statements of Cash Flows

(in thousands, unaudited)


	First Two Quarters of Fiscal
		2024		2025

CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)		$	(74,516)	$	665
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		59,913		69,827

Stock-based compensation expense		167,277		217,884
Noncash portion of lease impairment and abandonment		16,766		3,270


Other		(3,029)		2,726
Changes in operating assets and liabilities:
Accounts receivable, net		87,231		245,721
Inventory		4,460		(6,661)
Deferred commissions		(9,560)		6,153
Prepaid expenses and other assets		(358)		(27,006)
Operating lease right-of-use assets		19,635		16,528
Accounts payable		26,311		(13,158)
Accrued compensation and other liabilities		(57,524)		(78,732)
Operating lease liabilities		(13,133)		(18,257)
Deferred revenue		51,392		29,137
Net cash provided by operating activities		274,865		448,097
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment		(106,529)		(108,853)



Purchases of marketable securities and other		(246,617)		(270,451)
Sales of marketable securities		48,748		48,424
Maturities of marketable securities		386,703		197,984


Net cash provided by (used in) investing activities		82,305		(132,896)
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from exercise of stock options		29,848		17,768
Proceeds from issuance of common stock under employee stock purchase plan		21,219		25,328

Proceeds from borrowing		100,000		—
Principal payments on borrowings and finance lease obligations		(577,067)		(3,935)
Tax withholding on vesting of equity awards		(11,827)		(86,686)
Repurchases of common stock		(91,881)		—
Net cash used in financing activities		(529,708)		(47,525)
Net increase (decrease) in cash, cash equivalents and restricted cash		(172,538)		267,676
Cash, cash equivalents and restricted cash, beginning of period		591,398		712,131
Cash, cash equivalents and restricted cash, end of period		$	418,860	$	979,807

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD
Cash and cash equivalents		$	408,900	$	965,028
Restricted cash		9,960		14,779
Cash, cash equivalents and restricted cash, end of period		$	418,860	$	979,807

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest		$	2,139	$	3,520
Cash paid for income taxes		$	13,988	$	23,154


SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING INFORMATION
Property and equipment purchased but not yet paid		$	18,406	$	14,214

See the accompanying notes to condensed consolidated financial statements.

Table of Contents

PURE STORAGE, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 1. Business Overview

Pure Storage, Inc. (the Company, we, us, or other similar pronouns) was originally incorporated in the state of Delaware in October 2009 under the name OS76, Inc. In January 2010, we changed our name to Pure Storage, Inc. We are headquartered in Santa Clara, California and have wholly owned subsidiaries throughout the world.

Note 2. Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

We operate using a 52/53 week fiscal year ending on the first Sunday after January 30, which for fiscal 2024 was February 4, 2024 and for fiscal 2025 will be February 2, 2025. The second quarter of fiscal 2024 and 2025 ended on August 6, 2023 and August 4, 2024. Unless otherwise stated, all dates refer to our fiscal year and fiscal quarters.

The condensed consolidated financial statements include the accounts of the Company and our wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Unaudited Interim Consolidated Financial Information

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (U.S. GAAP) and applicable rules and regulations of the Securities and Exchange Commission regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in our Annual Report on Form 10-K for fiscal 2024.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, comprehensive loss and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full fiscal year 2025 or any future period.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the financial statements and accompanying notes. Actual results could differ from these estimates and assumptions due to risks and uncertainties. Such estimates include, but are not limited to, the determination of standalone selling price for revenue arrangements with multiple performance obligations when the price at which the performance obligation sold separately or observable past transactions are not available, useful lives of intangible assets and property and equipment, the period of benefit for deferred contract costs for commissions, stock-based compensation, provision for income taxes including related reserves, fair value of leases and impairment of related right-of-use (ROU) assets, fair value of equity assumed, intangible and tangible assets acquired and liabilities assumed for business combinations. Management bases its estimates on historical experience and on various other assumptions which management believes to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.

Table of Contents

PURE STORAGE, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Recent Accounting Pronouncements Not Yet Adopted

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires disclosure of incremental segment information on an annual and interim basis. ASU 2023-07 will be effective for our fiscal year beginning February 5, 2024, and interim periods within our fiscal year beginning February 3, 2025, with early adoption permitted and requires application on a fully retrospective basis. We are currently evaluating the impact of this standard on our financial statement disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires greater disaggregation of tax information in rate reconciliation and income taxes paid by jurisdiction. ASU 2023-09 will be effective for our fiscal year beginning February 3, 2025, with early adoption permitted. We are currently evaluating the impact of this standard on our financial statement disclosures.

Note 3. Financial Instruments

Fair Value Measurements

We define fair value as the exchange price that would be received from sale of an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. We measure our financial assets and liabilities at fair value at each reporting period using a fair value hierarchy which requires us to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

Three levels of inputs may be used to measure fair value:

•Level 1 - Observable inputs are unadjusted quoted prices in active markets for identical assets or liabilities;

•Level 2 - Observable inputs are quoted prices for similar assets and liabilities in active markets or inputs other than quoted prices that are observable for the assets or liabilities, either directly or indirectly through market corroboration, for substantially the full term of the financial instruments; and

•Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. These inputs are based on our own assumptions used to measure assets and liabilities at fair value and require significant management judgment or estimation.

Cash Equivalents, Marketable Securities and Restricted Cash

We measure our cash equivalents, marketable securities, and restricted cash at fair value on a recurring basis. We classify our cash equivalents, marketable securities and restricted cash within Level 1 or Level 2 because they are valued using either quoted market prices or inputs other than quoted prices which are directly or indirectly observable in the market, including readily-available pricing sources for the identical underlying security which may not be actively traded. Our fixed income available-for-sale securities consist of high quality, investment grade securities from diverse issuers. The valuation techniques used to measure the fair value of our marketable securities were derived from non-binding market consensus prices that are corroborated by observable market data or quoted market prices for similar instruments. The following tables summarize our cash equivalents, marketable securities and restricted cash by significant investment categories and their classification within the fair value hierarchy at the end of fiscal 2024 and the second quarter of fiscal 2025 (in thousands):

Table of Contents

PURE STORAGE, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)


	At the End of Fiscal 2024
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Cash Equivalents		Marketable Securities		Restricted Cash
Level 1
Money market accounts	$	—	$	—	$	—	$	32,422	$	22,827	$	—	$	9,595
Level 2

U.S. government treasury notes	340,168		584		(1,374)		339,378		1,834		337,544		—
U.S. government agencies	4,397		2		—		4,399		—		4,399		—
Corporate debt securities	419,051		1,163		(2,262)		417,952		—		417,952		—
Foreign government bonds	1,290		6		(16)		1,280		—		1,280		—
Asset-backed securities	65,947		279		(316)		65,910		—		65,910		—
Municipal bonds	1,510		—		(38)		1,472		—		1,472		—
Total	$	832,363	$	2,034	$	(4,006)	$	862,813	$	24,661	$	828,557	$	9,595


	At the End of the Second Quarter of Fiscal 2025
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Cash Equivalents		Marketable Securities		Restricted Cash
Level 1
Money market accounts	$	—	$	—	$	—	$	36,676	$	21,897	$	—	$	14,779
Level 2
U.S. government treasury notes	334,054		1,658		(362)		335,350		—		335,350		—
U.S. government agencies	4,399		1		(1)		4,399		—		4,399		—
Corporate debt securities	435,932		3,218		(527)		438,623		—		438,623		—
Foreign government bonds	1,290		7		(3)		1,294		—		1,294		—
Asset-backed securities	73,751		582		(47)		74,286		—		74,286		—
Municipal bonds	1,510		—		(9)		1,501		—		1,501		—
Total	$	850,936	$	5,466	$	(949)	$	892,129	$	21,897	$	855,453	$	14,779

Table of Contents

PURE STORAGE, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

The amortized cost and estimated fair value of our marketable securities are shown below by contractual maturity (in thousands):


	At the End of the Second Quarter of Fiscal 2025
	Amortized Cost		Fair Value
Due within one year	$	350,834	$	350,374
Due in one to five years	499,102		504,066
Due in five to ten years	1,000		1,013
Total	$	850,936	$	855,453

Unrealized losses on our marketable securities have not been recorded into income because we do not intend to sell nor is it more likely than not that we will be required to sell these investments prior to recovery of their amortized cost basis. The fair value of our marketable securities is impacted by the interest rate environment and related credit spreads. The credit ratings associated with our marketable securities are highly rated and the issuers continue to make timely principal and interest payments. As a result, there were no credit or non-credit impairment charges recorded in the second quarter and the first two quarters of fiscal 2024 and 2025.

The following table presents gross unrealized losses and fair values for those investments that were in a continuous unrealized loss position at the end of fiscal 2024 and the second quarter of fiscal 2025, aggregated by investment category (in thousands):


	At the End of Fiscal 2024
	Less than 12 months				Greater than 12 months				Total
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
U.S. government treasury notes	$	166,565	$	(725)	$	47,842	$	(649)	$	214,407	$	(1,374)

Corporate debt securities	116,247		(260)		104,810		(2,002)		221,057		(2,262)
Foreign government bonds	—		—		573		(16)		573		(16)
Asset-backed securities	12,029		(34)		13,800		(282)		25,829		(316)
Municipal bonds	—		—		1,472		(38)		1,472		(38)
Total	$	294,841	$	(1,019)	$	168,497	$	(2,987)	$	463,338	$	(4,006)


	At the End of the Second Quarter of Fiscal 2025
	Less than 12 months				Greater than 12 months				Total
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
U.S. government treasury notes	$	10,626	$	(1)	$	117,120	$	(361)	$	127,746	$	(362)
U.S. government agencies	1,999		(1)		—		—		1,999		(1)
Corporate debt securities	21,492		(22)		86,536		(505)		108,028		(527)
Foreign government bonds	—		—		587		(3)		587		(3)
Asset-backed securities	127		—		12,055		(47)		12,182		(47)
Municipal bonds	—		—		1,501		(9)		1,501		(9)
Total	$	34,244	$	(24)	$	217,799	$	(925)	$	252,043	$	(949)

Realized gains or losses on sale of marketable securities were not significant for all periods presented.

Table of Contents

PURE STORAGE, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Other Financial Instruments

The investments held in our nonqualified deferred compensation plan (NQDC) trust are considered trading securities that are measured at fair value using Level 1 inputs. The fair value of these investments was $3.2 million and $5.8 million at the end of fiscal 2024 and the second quarter of fiscal 2025.

Note 4. Balance Sheet Components

Inventory

Inventory consists of the following (in thousands):


	At the End of
	Fiscal 2024		Second Quarter of Fiscal 2025
Raw materials	$	19,317	$	15,267
Finished goods	23,346		28,281
Inventory	$	42,663	$	43,548

Property and Equipment, Net

Property and equipment, net consists of the following (in thousands):


	At the End of
	Fiscal 2024		Second Quarter of Fiscal 2025
Test equipment	$	371,269	$	420,303
Computer equipment and software	319,636		350,805
Furniture and fixtures	12,547		13,322
Leasehold improvements	92,926		98,639
Capitalized software development costs	36,474		50,290
Total property and equipment	832,852		933,359
Less: accumulated depreciation and amortization	(480,248)		(536,683)
Property and equipment, net	$	352,604	$	396,676

Depreciation and amortization expense related to property and equipment was $27.2 million and $33.1 million for the second quarter of fiscal 2024 and 2025, and $53.8 million and $64.2 million for the first two quarters of fiscal 2024 and 2025.

Table of Contents

PURE STORAGE, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Intangible Assets, Net

Intangible assets, net consist of the following (in thousands):


	At the End of
	Fiscal 2024						Second Quarter of Fiscal 2025
	Gross Carrying Value		Accumulated Amortization		Net Carrying Amount		Gross Carrying Value		Accumulated Amortization		Net Carrying Amount
Technology patents	$	19,125	$	(16,107)	$	3,018	$	20,875	$	(16,794)	$	4,081
Developed technology	83,211		(56,589)		26,622		83,211		(63,200)		20,011
Customer relationships	6,459		(3,087)		3,372		6,459		(3,547)		2,912

Intangible assets, net	$	108,795	$	(75,783)	$	33,012	$	110,545	$	(83,541)	$	27,004

Intangible assets amortization expense was $4.1 million and $3.9 million for the second quarter of fiscal 2024 and 2025, and $8.3 million and $7.8 million for the first two quarters of fiscal 2024 and 2025. At the end of the second quarter of fiscal 2025, the weighted-average remaining amortization period was 1.1 years for technology patents, 1.5 years for developed technology, and 3.2 years for customer relationships. We record amortization of technology patents in general and administrative expenses due to their defensive nature, developed technology in cost of product revenue, and customer relationships in sales and marketing expenses in the condensed consolidated statements of operations.

At the end of the second quarter of fiscal 2025, future expected amortization expense for intangible assets is as follows (in thousands):


Fiscal Years Ending	Estimated Future Amortization Expense
Remainder of 2025	$	7,931
2026	13,266
2027	3,543
2028	1,498
2029	604
Thereafter	162
Total	$	27,004

Goodwill

As of the end of fiscal 2024 and the second quarter of fiscal 2025, goodwill was $361.4 million. There were no impairments to goodwill for the second and first two quarters of fiscal 2024 and 2025.

Table of Contents

PURE STORAGE, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities consist of the following (in thousands):


	At the End of
	Fiscal 2024		Second Quarter of Fiscal 2025
Taxes payable	$	13,097	$	8,971
Accrued marketing	18,438		18,356
Accrued cloud and outside services	5,973		5,752
Supply chain-related accruals (1)	25,962		17,657
Accrued service logistics and professional services	9,636		8,666

Finance lease liabilities, current	4,204		2,035
Customer deposits from contracts with customers	23,534		22,550
Other accrued liabilities	34,911		35,443
Total accrued expenses and other liabilities	$	135,755	$	119,430

_________________________________

(1) Primarily consists of warranty reserves and accruals related to inventory and inventory purchase commitments with our contract manufacturers.

Table of Contents

PURE STORAGE, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 5. Deferred Revenue and Commissions

Deferred Commissions

Deferred commissions consist of incremental costs paid to our sales force to obtain customer contracts.

Changes in total deferred commissions during the periods presented are as follows (in thousands):


	Second Quarter of Fiscal				First Two Quarters of Fiscal
	2024		2025		2024		2025
Beginning balance	$	248,188	$	296,626	$	245,856	$	304,332
Additions	45,028		39,415		80,129		69,040
Recognition of deferred commissions	(37,799)		(37,862)		(70,568)		(75,193)
Ending balance	$	255,417	$	298,179	$	255,417	$	298,179

Of the $298.2 million total deferred commissions balance at the end of the second quarter of fiscal 2025, we expect to recognize approximately 29% as commission expense over the next 12 months and the remainder thereafter.

There was no impairment related to capitalized commissions for the second quarter and first two quarters of fiscal 2024 and 2025.

Deferred Revenue

Deferred revenue primarily consists of amounts that have been invoiced but have not yet been recognized as revenue including performance obligations pertaining to subscription services.

Changes in total deferred revenue during the periods presented are as follows (in thousands):


	Second Quarter of Fiscal				First Two Quarters of Fiscal
	2024		2025		2024		2025
Beginning balance	$	1,395,670	$	1,601,476	$	1,385,650	$	1,594,522
Additions	326,173		367,722		606,441		709,511
Recognition of deferred revenue	(284,800)		(345,539)		(555,048)		(680,374)
Ending balance	$	1,437,043	$	1,623,660	$	1,437,043	$	1,623,660

Revenue recognized during the second quarter of fiscal 2024 and 2025 from deferred revenue at the beginning of each respective period was $255.9 million and $301.8 million. Revenue recognized during the first two quarters of fiscal 2024 and 2025 from deferred revenue at the beginning of each respective period was $430.3 million and $519.8 million.

Remaining Performance Obligations

Total remaining performance obligations (RPO) which is contracted but not recognized revenue was $2.3 billion at the end of the second quarter of fiscal 2025. Total RPO includes $49.0 million in remaining non-cancelable product orders, of which $13.5 million relates to a lessor arrangement that is further discussed in Note 8. 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. Of the $2.3 billion RPO at the end of the second quarter of fiscal 2025, we expect to recognize approximately 48% over the next 12 months, and the remainder thereafter.

Table of Contents

PURE STORAGE, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 6. Debt

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. The Credit Facility expires, absent default or termination by us, on August 24, 2025.

Effective April 1, 2023, the Credit Facility was amended to transition LIBOR to the Secured Overnight Financing Rate (SOFR). The annual interest rates applicable to loans under the Credit Facility are, at our option, equal to either a base rate plus a margin ranging from 0.50% to 1.25% or term SOFR (based on one, three or six-month interest periods), subject to a floor of 0%, plus a margin ranging from 1.50% to 2.25%. Interest on revolving loans is payable quarterly in arrears with respect to loans based on the base rate and at the end of an interest period in the case of loans based on term SOFR (or at each three-month interval if the interest period is longer than three months). 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 which remained outstanding at the end of the second quarter of fiscal 2025. The outstanding loan bore weighted-average interest at an annual rate of 6.53% and 6.83% during the second quarter of fiscal 2024 and 2025 and 6.49% and 6.83% during the first two quarters of fiscal 2024 and 2025 based on a one-month term SOFR period. Interest expense was not material for the second quarter and first two quarters of fiscal 2024 and 2025.

Borrowings under the Credit Facility are collateralized by substantially all of our assets and subject to certain restrictions and two financial ratios measured as of the last day of each fiscal quarter: a Consolidated Leverage Ratio not to exceed 4.5:1 and an Interest Coverage Ratio not to be less than 3:1. We were in compliance with all covenants under the Credit Facility at the end of the second quarter of fiscal 2025.

Note 7. Commitments and Contingencies

Letters of Credit

At the end of fiscal 2024 and the second quarter of fiscal 2025, we had outstanding letters of credit in the aggregate amount of $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.

Legal Matters

From time to time, we have become involved in claims and other legal matters arising in the normal course of business. We investigate these claims as they arise. Although claims are inherently unpredictable, we currently are not aware of any matters that we expect to have a material adverse effect on our business, financial position, results of operations or cash flows. Accordingly, no material loss contingency has been recorded on our condensed consolidated balance sheet as of the end of the second quarter of fiscal 2025.

Table of Contents

PURE STORAGE, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Indemnification

Our arrangements generally include certain provisions for indemnifying customers against liabilities if our products or services infringe a third party’s intellectual property rights. Other guarantees or indemnification arrangements include guarantees of product and service performance and standby letters of credit for lease facilities. It is not possible to determine the maximum potential amount under these indemnification obligations due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. To date, we have not incurred any material costs as a result of such obligations and have not accrued any liabilities related to such obligations in the condensed consolidated financial statements. In addition, we indemnify our officers, directors and certain key employees while they are serving in good faith in their respective capacities. To date, there have been no claims under any indemnification provisions.

Note 8. Leases

We lease office facilities under non-cancelable operating lease agreements expiring through July 2032. Our lease agreements do not contain any material residual value guarantees or restrictive covenants. During the first quarter of fiscal 2025, we entered into a data center lease with a seven-year duration, and aggregate lease payments of $32.7 million, commencing in the third quarter of fiscal 2025 and therefore is excluded from our future lease payments tabular disclosure below.

We also lease certain engineering test equipment under financing agreements. These finance leases have a lease term of three years and contain a bargain purchase option at the end of the respective lease term. It is reasonably certain that the bargain purchase option will be exercised.

The components of lease costs during the periods presented were as follows (in thousands):


	Second Quarter of Fiscal				First Two Quarters of Fiscal
	2024		2025		2024		2025
Fixed operating lease cost	$	12,652	$	11,548	$	26,653	$	22,537

Variable lease cost (1)	3,590		3,202		5,674		6,794
Short-term lease cost (12 months or less)	1,075		957		2,133		1,854

Finance lease cost:
Amortization of finance lease right-of-use assets	1,100		1,100		2,200		2,200
Interest on finance lease liabilities	128		62		257		125
Total finance lease cost	$	1,228	$	1,162	$	2,457	$	2,325

Total lease cost	$	18,545	$	16,869	$	36,917	$	33,510

____________________________________

(1) Variable lease cost predominantly included common area maintenance charges.

Table of Contents

PURE STORAGE, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Supplemental information related to leases is as follows (in thousands):


	At the End of
	Fiscal 2024			Second Quarter of Fiscal 2025
Operating leases:
Weighted-average remaining lease term (in years)	5.0			4.9
Weighted-average discount rate	7.1		%	7.3		%

Finance leases:
Finance lease right-of-use assets, gross	$	17,596		$	17,596
Accumulated amortization	(7,812)			(10,012)
Finance lease right-of-use assets, net (1)	$	9,784		$	7,584
Finance lease liabilities, current (2)	4,204			2,035
Finance lease liabilities, non-current (3)	180			64
Total finance lease liabilities	$	4,384		$	2,099
Weighted-average remaining lease term (in years)	2.4			1.9
Weighted-average discount rate	5.4		%	5.6		%

____________________________________

(1) Included in the condensed consolidated balance sheets within property and equipment, net.

(2) Included in the condensed consolidated balance sheets within accrued expenses and other liabilities.

(3) Included in the condensed consolidated balance sheets within other liabilities, non-current.

Supplemental cash flow information related to leases is as follows (in thousands):


	First Two Quarters of Fiscal
	2024		2025
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows for operating leases	$	18,643	$	22,916
Financing cash outflows for finance leases	$	1,540	$	3,337
Right-of-use assets obtained in exchange for lease liabilities:
Operating leases	$	10,840	$	28,636

Future lease payments under our non-cancelable leases at the end of the second quarter of fiscal 2025 were as follows (in thousands):


Fiscal Years Ending	Operating Leases		Finance Leases
The remainder of 2025	$	33,147	$	1,938
2026	48,630		183
2027	31,226		—
2028	32,896		—
2029	26,729		—
Thereafter	40,645		—
Total future lease payments	213,273		2,121
Less: imputed interest	(35,024)		(22)
Present value of total lease liabilities	$	178,249	$	2,099

Table of Contents

PURE STORAGE, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Lessor Arrangement

During the fourth quarter of fiscal 2024, we, as a lessor, entered into a non-cancelable arrangement with a customer ("lessee") to lease our data storage solutions and subscription services. The arrangement includes three seven-year leases that commence in the first, second and fourth quarters of fiscal 2025 with total net consideration of $76.6 million, and provides the lessee with an end-of-term option to purchase the leased assets for a pre-determined price.

We determined, at inception of the arrangement, that each of the three seven-year leases included multiple components. These components include sales-type leases, an operating lease, and non-lease components. The total net consideration for each lease was allocated to these components based on relative standalone selling price. The amounts allocated to the lease and non-lease components are accounted for in accordance with ASC 842 and ASC 606, respectively. Lease income associated with sales-type leases are classified as product revenue and lease income associated with operating leases and non-lease components are classified primarily as subscription services revenue on our condensed consolidated statements of operations.

The total net consideration for two of the seven-year leases that commenced in the first and second quarters of fiscal 2025 ("First Two Leases") was $50.6 million. We recognized $8.0 million and $15.2 million in product revenue related to the sales-type lease components during the second quarter and first two quarters of fiscal 2025. The associated profit was $6.1 million and $11.4 million, based on the product revenue recognized less certain costs, during the second quarter and first two quarters of fiscal 2025. Subscription services revenue related to the operating lease and non-lease components recognized during the second quarter and first two quarters of fiscal 2025 were $1.9 million and $2.1 million.

Future minimum gross lease payments for the two seven-year leases allocated to the sales-type leases and operating lease components were as follows (in thousands). The remaining lease payments of $38.1 million allocated to the non-lease components, are excluded from the table below.


Fiscal Years Ending	Sales-Type Leases		Operating Lease
The remainder of 2025	$	1,835	$	1,483
2026	2,908		2,192
2027	2,908		2,192
2028	4,713		386
2029	5,100		—
Thereafter	10,966		—


Total future lease payments to be received	$	28,430	$	6,253

Table of Contents

PURE STORAGE, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 9. Restructuring and Impairment

Workforce Realignment

In February 2024, we initiated a workforce realignment plan (the Plan) that impacted nearly 250 employees globally, resulting in total restructuring costs of $27.9 million associated with one-time severance and other termination benefits. We recognized $18.0 million in restructuring costs in the fourth quarter of fiscal 2024 and the remaining $9.9 million was recognized in the first quarter of fiscal 2025. Of the restructuring costs recognized in the first quarter of fiscal 2025, $9.5 million is presented in restructuring and impairment and $0.4 million is presented in cost of revenue in our condensed consolidated statement of operations for the first two quarters of fiscal 2025. The execution of the Plan was substantially completed by the end of the second quarter of fiscal 2025.

We paid $25.3 million of our liability related to the Plan during the first two quarters of fiscal 2025. The remaining liability was not material as of the end of the second quarter of fiscal 2025.

Facilities Abandonment and Impairment

During the second quarter of fiscal 2024, we ceased use of our former corporate headquarters and recorded an impairment charge to operating lease right-of-use assets of $15.9 million and an abandonment charge of $0.9 million related to these leases. The impairment charge represents the amount that the carrying value of the assets exceeded their estimated fair values, which were determined by utilizing a discounted cash flow approach that incorporated a sublease assumption. During the first two quarters of fiscal 2025, we recognized incremental abandonment and impairment charges of $3.9 million and $2.5 million, respectively, related to these leases. The incremental impairment charge was due to a revision to the underlying sublease assumptions.

Note 10. Stockholders’ Equity

Preferred Stock

We have 20.0 million authorized shares of undesignated preferred stock, the rights, preferences and privileges of which may be designated from time to time by our Board of Directors. At the end of the second quarter of fiscal 2025, there were no shares of preferred stock issued or outstanding.

Class A and Class B Common Stock

We have two classes of authorized common stock, Class A common stock, which we refer to as our "common stock", and Class B common stock. At the end of the second quarter of fiscal 2025, we had 2.0 billion authorized shares of Class A common stock and 250.0 million authorized shares of Class B common stock, with each class having a par value of $0.0001 per share. At the end of the second quarter of fiscal 2025, 327.5 million shares of Class A common stock were issued and outstanding.

Share Repurchase Program

In February 2024, our Board of Directors authorized an additional $250.0 million to repurchase shares of our common stock. We did not repurchase shares of our common stock during the second quarter and first two quarters of fiscal 2025. At the end of the second quarter of fiscal 2025, $395.4 million remained available for future share repurchases under our current repurchase authorization.

Table of Contents

PURE STORAGE, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 11. Equity Incentive Plans

Equity Incentive Plans

We maintain two equity incentive plans: the 2009 Equity Incentive Plan (the 2009 Plan) and the 2015 Equity Incentive Plan (the 2015 Plan). The 2015 Plan serves as the successor to our 2009 Plan and provides for grants of incentive stock options to our employees and non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units, performance-based stock and cash awards, market-based stock awards, and other forms of stock awards to our employees, directors and consultants. Our equity awards generally vest over a two to four year period and expire no later than ten years from the date of grant.

In June 2024, we extended the net-share settlement of equity awards to the majority of our employees by withholding shares upon vesting to satisfy tax withholding obligations whereas previously, shares were sold to cover such tax withholding obligations. Approximately 1.1 million shares and 1.4 million shares were withheld to cover $76.2 million and $88.7 million in tax withholding obligations during the second quarter and first two quarters of fiscal 2025. The shares withheld to satisfy employee tax withholding obligations are returned to our 2015 Plan and will be available for future issuance. Payments for employees’ tax obligations to the tax authorities are recognized as a reduction to additional paid-in capital and reflected as a financing activity in our condensed consolidated statements of cash flows.

2015 Amended and Restated Employee Stock Purchase Plan

Under our Amended and Restated 2015 Employee Stock Purchase Plan (2015 ESPP), our Board of Directors (or a committee thereof) has the authority to establish the length and terms of the offering periods and purchase periods and the purchase price of the shares of common stock which may be purchased under the plan. The current offering terms allow eligible employees to purchase shares of our common stock at a discount through payroll deductions of up to 30% of their eligible compensation, subject to a cap of 3,000 shares on any purchase date, a dollar cap of $7,500 per purchase period, or $25,000 in any calendar year (as determined under applicable tax rules). The current terms also allow for a 24-month offering period beginning March 16th and September 16th of each year, with each offering period consisting of four 6-month purchase periods, subject to a reset provision. Further, currently, on each purchase date, eligible employees may purchase our common stock at a price per share equal to 85% of the lesser of the fair market value of our common stock (1) on the first trading day of the applicable offering period or (2) the purchase date.

Under the reset provision currently authorized, if the closing stock price on the offering date of a new offering falls below the closing stock price on the offering date of an ongoing offering, the ongoing offering would terminate immediately following the purchase of ESPP shares on the purchase date immediately preceding the new offering and participants in the terminated offering would automatically be enrolled in the new offering (ESPP reset), resulting in a modification charge to be recognized over the new offering period. An ESPP reset occurred during the first quarter of fiscal 2024 that resulted in a modification charge of $16.7 million, which is being recognized over an offering period ending March 15, 2025.

Stock-based compensation expense related to our 2015 ESPP was $6.5 million and $8.3 million during the second quarter of fiscal 2024 and 2025, and $12.6 million and $16.3 million during the first two quarters of fiscal 2024 and 2025. At the end of the second quarter of fiscal 2025, total unrecognized stock-based compensation cost related to our 2015 ESPP was $24.1 million, which is expected to be recognized over a weighted-average period of 0.8 years.

Table of Contents

PURE STORAGE, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Stock Options

A summary of the stock option activity under our equity incentive plans and related information is as follows:


	Options Outstanding
	Number of Shares	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life (In Years)	Aggregate Intrinsic Value (in thousands)
Balance at the end of fiscal 2024	4,493,934	$	13.63	2.3	$	129,065

Options exercised	(1,407,323)	12.63
Options forfeited	(593)	1.95
Balance at the end of the second quarter of fiscal 2025	3,086,018	$	13.94	2.2	$	124,506
Vested and exercisable at the end of the second quarter of fiscal 2025	3,086,018	$	13.94	2.2	$	124,506

The aggregate intrinsic value of options vested and exercisable at the end of the second quarter of fiscal 2025 is calculated based on the difference between the exercise price and the closing price of $54.29 of our common stock on the last day of the second quarter of fiscal 2025.

Stock-based compensation expense recognized related to stock options was not material for all periods presented during fiscal 2024 and 2025. At the end of the second quarter of fiscal 2025, there was no unrecognized stock-based compensation cost remaining related to the outstanding options.

Restricted Stock Units (RSUs)

A summary of the RSU activity under our equity incentive plans and related information is as follows:


	Number of RSUs Outstanding	Weighted- Average Grant Date Fair Value		Aggregate Intrinsic Value (in thousands)
Unvested balance at the end of fiscal 2024	24,343,074	$	26.77	$	1,028,495
Granted	6,907,399	51.73

Vested	(5,816,362)	25.87
Forfeited	(1,470,857)	28.09

Unvested balance at the end of the second quarter of fiscal 2025	23,963,254	$	34.10	$	1,300,965

Stock-based compensation expense related to RSUs was $69.4 million and $79.7 million during the second quarter of fiscal 2024 and 2025, and $130.1 million and $147.4 million during the first two quarters of fiscal 2024 and 2025. At the end of the second quarter of fiscal 2025, total unrecognized stock-based compensation cost related to unvested RSUs was $772.0 million, which is expected to be recognized over a weighted-average period of 2.8 years.

Performance-based Restricted Stock Units (PRSUs)

The number of shares that could be earned under our PRSU grants ranges from 0% to 200% of the target number granted depending on the achievement of certain performance conditions with any unearned shares canceled. The number of earned shares vest over three years from the date of grant subject to continuous service.

Table of Contents

PURE STORAGE, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

A summary of the PRSU activity under our equity incentive plans and related information is as follows:


	Number of PRSUs Outstanding	Weighted-Average Grant Date Fair Value		Aggregate Intrinsic Value (in thousands)
Unvested balance at the end of fiscal 2024	2,270,597	$	25.64	$	95,933
Granted (1)	1,102,502	49.46
Vested and earned (2)	(888,487)	25.36
Unearned (3)	(297,864)

Pure Storage, Inc. [PSTG] Filings
10-Q	[2024-09-11]
10-Q	[2024-06-13]
10-K	[2024-04-01]
10-Q	[2023-12-15]
10-Q	[2023-09-14]
10-Q	[2023-06-16]
10-K	[2023-04-03]
10-Q	[2022-12-15]
10-Q	[2022-09-15]
10-Q	[2022-06-16]
10-K	[2022-04-07]
10-Q	[2021-12-07]
10-Q	[2021-09-08]
10-Q	[2021-06-08]
10-K	[2021-03-25]
10-Q	[2020-12-09]
10-Q	[2020-09-11]
10-Q	[2020-06-11]
10-K	[2020-03-27]
10-Q	[2019-12-09]
10-Q	[2019-08-30]
10-Q	[2019-06-07]
10-K	[2019-03-26]
10-Q	[2018-12-06]
10-Q	[2018-09-04]
10-Q	[2018-06-08]
10-K	[2018-03-26]
10-Q	[2017-12-08]
10-Q	[2017-09-05]
10-Q	[2017-06-07]
10-K	[2017-03-29]
10-Q	[2016-12-13]
10-Q	[2016-09-06]
10-Q	[2016-06-03]
10-K	[2016-03-25]
10-Q	[2015-12-11]
S-1	[2015-08-12]