The speculation has been rife for some time, but finally news has broken that Pure Storage has filed for IPO. The S1 Filing doesn’t tell us any detail about the share volume, funds to be raised or share price (yet), but does shed some light on the way in which private company revenue gets measured and reported through the likes of Gartner. Pure’s revenue figures were much lower than those stated by the analysts, with many crying foul that Pure didn’t choose to correct Gartner & Co when the numbers were shared with them. Caveat Emptor, I say, when reading/trusting analyst numbers.
To my mind there are a couple of interesting points in the S1 documentation that are worthy of review. First is the amount of money spent on marketing, which in FY2015 was just over $152 million, or almost $500,000 a day. This is clearly an unsustainable figure and is inflated at this stage to get Pure’s name in the mind of every IT purchaser. To a certain degree that will be seen as money well spent. Second is the gross margin on product, which stands at 60%. Rudimentary calculations indicates Pure isn’t the cheapest all-flash storage around and competition is getting tight from the likes of Kaminario and HP 3PAR. Margins may have to be squeezed or hardware will have to be released that uses cheaper flash media.
Pure had to come to the table with an IPO at some stage. Looking back, we see that some recent flotations we see that Violin Memory was less than successful, whereas Nimble Storage has managed to increase revenues but the share price remains flat. The race is now on to build that revenue pipe, as all their future financials will be well and truly under the spotlight.