Numbers: Pure and Splunk

No matter what I compare it to, Pure is just a great value. I realize this is apples to cantaloupes…but I can’t seem to help myself. Check out each for the year ending Jan 2018:


**Revenue**
PSTG: 1.02B
SPLK: 1.27B

**Operating Loss**
PSTG: 185M
SPLK: 254M

**SBC**
PSTG: 151M
SPLK: 358M

**Market Cap**
PSTG:  5B
SPLK: 15B

Pure made almost as much revenue, lost (spent) a lot less, gave away less than half as much SBC, and is priced 66.7% lower. Yes please.

Bear

PS In fairness, the huge price discrepancy is because more of Splunk’s revenue is recurring and they have an incredible gross margin (80%+). I still think Pure is a great value.

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PS In fairness, the huge price discrepancy is because more of Splunk’s revenue is recurring and they have an incredible gross margin (80%+). I still think Pure is a great value.

And lest anyone fail to keep in mind that although at a glance Pure may seem to be just a hardware vendor, they have the Evergreen business model that is much more like a subscription business.

Also, as Charlie Giancarlo stated in his blog post this morning, “The billion-dollar mark is just the start.”

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I realize this is apples to cantaloupes…
Curious why this comparison then? Is it just based on revenue being ‘near’ $1B?

“…that is much more like a subscription business.”

humm…can you explain this to me? what is the Evergreen business model?

tj

Evergreen is a service that Pure describes as “as close to SaaS as you can get for storage”. And “storage as a service”.

https://www.purestorage.com/why-pure/evergreen-storage.html

It is another means of selling storage Flash Arrays to customers via 3 year subscription contracts. They get the original hardware and software and are guaranteed to have the newest of the same over the contract period. At some point I believe Pure replaces the hardware. And as you see it is recurring revenue. As the cost of flash array goes down over the next few years the value of those contracts will go up due to locked in subscription revenue but Pure will be replacing with a lower value hardware product.

There was some discussion on it here

http://discussion.fool.com/pure-storage-pstg-earnings-results-33…

It’s a promising business model. If you check out the earnings slide below Revenue for service (Evergreen) is growing faster than hardware and has grown every quarter sequentially and is now totaling 25% of sales.

https://s21.q4cdn.com/687136699/files/doc_financials/present…

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It’s a promising business model. If you check out the earnings slide below Revenue for service (Evergreen) is growing faster than hardware and has grown every quarter sequentially and is now totaling 25% of sales.

With you noting that (which I hadn’t previously looked at closely, I am tempted to refine my spreadsheet model to break apart the 2 main types of revenue to come up with a guess as to whether PSTG management’s guidance may be “overly sand-baggy”.

Thread about my spreadsheet model:
http://discussion.fool.com/pstg-future-evfcf-projections-3300352…

volfan84
who notes that PSTG will certainly not be lacking in substantial coverage here on Saul’s board

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