>> from Austin, Texas. It's Theo Cube, covering your storage. Accelerate 2019. Brought to you by pure storage. >> Welcome to Austin, Texas. This is the Cube. Live at the fourth annual pure accelerate. I'm Lisa Martin with David, Dante, Dave or in Texas, >> Texas again. >> Austin, Texas. Very interesting venue for this fourth annual hear stories. >> A lot of construction, >> music, a >> lot of music. >> So we just came from the keynote and news announcements, customers on stage. But the first thing to point out is, this is here is about to celebrate their 10th anniversary. Charlie Giancarlo, CEO and chairman who's coming on the program with us, and just a few minutes talking about what they have innovated and delivered these 10 X improvements and 10 years kind of this overnight success in 10 years and what's coming? What was with the things that really stuck out at you, Nicky Note. >> Well, first of all, ironically, this is the 10th year of the Cube, not our 10th anniversary, but it's the 10th year of doing the Cube. And so our fourth year, I think it's pure accelerate about what 3000 people here, >> you know, the keynotes >> pure was laying out what their vision is of the modern data experience and that I felt like the keynotes least there were sort of, ah, speed date of what's coming. There was a couple of major announcements that we'll talk about, >> Uh, but >> they really are trying to differentiate as the modern storage company turn a deep position. The competition, as the old guard is to use this term that Andy Jassy uses pure, didn't use that term. But they really talked about it's time to go Modern. And so they were an overnight success. It took him 10 years, was one of the comments that was on stage. So I think this is worth pointing out. A couple of things. I mean, let me lay out. Sort of my thoughts on Pure is a company. They were the only storage company Ah, in the past. Let's call a decade to reach what I'll call escape velocity. They achieved a billion dollars a couple years ago. They're doing their due about a billion and 1/2 on a trailing 12 month basis. They'll do 1.7 billion this year and evaluations about 4.5 billion. So they got a a three ex valuation in that fluctuates. That's pretty good for a storage company. Billy on Lee major storage company. That's really growing rapidly. They got 28% growth. I did a breaking analysis on Lincoln, and I'll just share with you some of the numbers. Dallas flat at 0%. So Del is actually gaining share with no growth has got a scary NetApp minus 16% in the quarter H P E minus 3% IBM minus 21%. And so it is pure A 28%. So they're really crushing it in terms of growth. They've also got a 69% gross gross margin, even if it's in its heyday. E emcees gross margins weren't that high, you know. They were in the sort of mid sixties, and so, and they've also got a good balance sheet. About a billion dollars in cash A little. A little more than that, they got some debt. They're shifting their model to a deferred revenue model. Now the only thing is, you know they're growing much, much faster than the competition. But they're throwing off a lot less cash because they're much smaller. Just as an example, they probably throw off 5 to 6% of their revenues in cash. Netapp probably throws about 23% of its revenues, often catch the big Delta there, so the point is long winded. But but pure storage is in growth mode. And until the market rewards more consistent with a cash flow, they're gonna, I think, stay in huge growth mode. >> There was a great analysis. Dave and I saw an analysis that you did with some spends data, just a couple of your reverence. A little bit of that. There's there seems to be a tailwind behind here you mention the 28% wrote that they announced in Q two, and some of the things that also they talked about were there. Adding about in Q two of F Y 2020 about seven net new customers every business day, adding about 450 new customers just in that quarter. Like you said, 3000 folks expected here today. The momentum is behind them, but they're also a company of firsts. You talked about this a number of times. The first, with all flashed the first with envy me on the back and a couple of additional firsts announced today. Talk about the as a service model and how that youth, in your opinion, you think might continue that trajectory that they're on. >> Yes, so basically pure laid out today, said that vast majority are Pouliot Portfolio is gonna be available as a service. That's the cloud consumption mall is important because pure has about $600 million in deferred revenue, largely coming from their evergreen service. But there they are, slowly shifting their model to a subscription model. It's gonna be very interesting to see how that plays out. Um, we've seen a number of companies do a tableau in Adobe kind of pulled the band Aid off and did it Splunk has taken years to do. It will be interesting to see how how pure goes. For that. I'll >> bring it >> back to the cloud up yours largely an on Prem storage company. That's where most of the revenues come from. But we heard the gentleman from Amazon today. I think it was E ethan whiner, not Ethan, anyway, Mr Whiner, he said. That gardener did A survey last year showed 88% of customers said they have a cloud for a strategy, but 86% of those customers continue to spend on prim. So here you have the cloud. Amazon gorilla wants everybody to go to the cloud pure would much rather they make much more money on Prem? But they realize customers air pulling them in. So they have to move to that as a service model. One of the interesting things that pure is done, which, you know, that's not really a first. But it certainly is for the large storage companies they've announced. Ah, block storage on AWS. So basically what they're doing is they're taking the pure experience. It all looks like pure software, and they're front ending cheap s3 storage from Amazon with E. C. To compute instances, and they've architected using Amazon service. Is this basically a block storage array in the cloud so Amazon gets paid, pure, gets paid? It's a little bit of a premium, but you get higher availability. You get great right performance and you get the pure cloud experience pretty interesting strategy, >> and they're talking about it really as this. This positioning it rather as a bridge, a bridge to hybrid cloud. This numbers that the Amazon gentlemen, share that you mentioned Gardner were really interesting both sides recognizing there's a forcing function there and that forcing function is the customers from the enterprise to the small business who need to have data available immediately wherever it is people to extract this insights from it quickly so that those companies, whether it's a capital one or a Delta Airlines or a smaller organization, can act on it quickly to Dr Competitive Advantage. Same kind of challenge that your storage has. But really that forcing function of the customer, clearly bringing the giant AWS together with yet another story >> so pure as they say reached escape velocity. They and Nutanix were the only on a new entrance that reached a billion dollars Nutanix. I really don't consider a storage company. They're kind of hyper converged. And the way they did that as they drove a truck through E emcees install base with flash. So they were the first within all flash array. Maybe maybe they weren't the first, but they were the first to really drive it. They hired a bunch of DMC sales reps. They knew where all the skeletons were buried and they really took out a lot of old Symmetric Se's and Claire eons and V. Max is and all the old sort of GMC install base, and that helped them catapult their way there 1st 10 years. Now they got to do that again. They got to get to get They're on their way to two billion. But how did they get to five billion? Um, and and so the way they do that is they have to expand their tam. I mean, we'll talk to Charlie Jean Carlo about this. My feeling is a big job of the CEO is to expand the Tamil. How do they do that? They go after new workloads like a i. They go for cloud. They go from multi cloud. These are all very large markets in which they don't participate. Data protection. They'll partner with Lex, Kohi City and Rubric and Beam to to have data protection software running on their flash. A raise with very, very fast restores. That's something that's taking off. It's gonna be really interested in seeing as they say, they've got this subscription model that's coming in. They've got all this deferred revenue that in a way, it's going to slow him down a little bit just from an accounting standpoint, cause when you recognize deferred revenue, you recognize that, you know over 12 months over 36 months, so that's a little bit of a transition. The other thing that pure is facing in a tactical basis is Nande pricing. It's like this countervailing effects nan pricing is coming down, which means lower prices, lower costs but also lower revenue. But at the same time, it becomes more competitive with spinning disk. This is something else. We'll talk to Charlie Jean. Cholera right about it opens up new markets. So this tam expansion is critical for pure in terms of driving this modern data experience into these new workloads and fighting the competition, the competition is not sitting still. All those companies that I mentioned the H P ease, the the Delhi emcees, et cetera, are basically taking a page out of your swords narrative, talking about the cloud experience, talking about, you know, flexible pricing models, building cloud products on prime and hybrid cloud and multi cloud. So it's hard sometimes for customers to squint through that. And really, no, I guess the bottom line, the last thing I'll say is pure. Doesn't have as many feet on the street is these other guys. So it's gotta leverage the channel increasingly, and that's how it gets beyond two billion on its way to five billion. >> And that was one of the factors that they attributed the second quarter. 28% year on year growth is to not just innovation, but also to the channel. So they've done a good job of really pivoting. There's large enterprise deals to be covered, direct and then bringing in the channel for those smaller mid size business customers. Adding a lot of momentum in cute to you mentioned the nan pricing that in some of the political climate with the start of China, most of their businesses in the Americas so they're not facing as many of those challenges. So they did lower guidance for the rest of it is >> the second time they've >> lowered 20. However, they kind of attributed that thio the nan supply oversupply and they say happy Matt to flatten out quickly, say they're >> not worried about the macro. I mean, look, if if the economy is good and is booming and people are spending money on cap ex. That's good for even a high growth company. They're basically positioning to the street that if if the economy does turn down and there's a softness at the macro, they'll actually gain share more rapidly. Which, by the way, is probably true. But look at the rising tide lifts all boats. Nobody wants to see Ah recession. Having said that, well, it's interesting. When you saw Pure Lower, its guidance stock took a hit, and then net app, I'd be him. All these other company you have to see a deli emcee they announced in the market said, Wow, pure must be doing really well compared to these other guys. So it's come back in a big way. My opinion pure is going to in the e. T. Our data shows this from a spending intentions Pure is going to continue to gain share at a much, much more rapid pace of the other. The other guys, from a product standpoint, delicacies consolidating its product portfolio, trying to lower its cost. H. P E is really focused on limbo. IBM needs a mainframe product cycle to get back going, Ned APS facing its challenges and its kind of tweaking its go to market model. So all these other companies air dealing with sort of some structural changes. Where is pure is like put the put the foot on the gas and accelerate no pun intended. And so I think they're gonna continue to gain share for quite quite a number of quarters. >> I want to talk about sustainability before we break. And one of the things that Charlie talked about on his keynote is in terms of the modern data experience, he said. It was three things. It was simple, seamless and sustainable, an inch sustainable. You really started talking about the evergreen model that they launched a while ago that seems to be really sticky with organizations. He also talked about sustainability is a lot of other organization I need to adjust in terms of, you know, waste and carbon emissions and things like that. But I'm just curious, since Pierre is much smaller than the competitors that you mentioned and a lot more focus, obviously all in on flash. Where does the evergreen model, in your opinion, give them that tail winter? That advantage? >> Well, the Evergreen model was first of all brilliant marketing strategy and a business strategy Because if you think about the traditional storage vendors, they make so much money on maintenance, they would never have done this unless pure force them to do it. Because they're making so much cash on the maintenance. You know, it's it's you. You put the storage array in and we're just gonna charge you maintenance. And if you're not on the maintenance contract, sorry. You don't get all the software upgrades, everything else. So it's just this, you know, this lock in strategy, which is work brilliantly for two decades pure, comes along and says, Hey, where? Software driven. We're gonna allow you to get all the modern software. As long as you're got a subscription with us, we'll swap out your controller for free. You know, the competitors hate that. There's all kinds of nuances and stuff, but it worked, and customers love it. And so it's very strong, and it's a fundamental as they said, they got $600 million in deferred revenue, largely from that evergreen model. So they, you know, Charlie mentioned first for non disruptive upgrades. First for cloud management, first for a I ops first for always on que Os first with always on encryption, and if they're really the first, we're probably the first big company. They got a lot of attention there. Last thing, it's it's a four big announcements today. There's a I ready infrastructure, airy. They're doing some stuff they were first to announce with video. You know, a year or so ago, they got cloud offerings. Ah, block storage for AWS. And they've got clout Snap for Azure, which is actually pretty hot. It's backup on Azure, and they got product extensions. They got cheaper flash with a flash or a C for capacity. And then they have extended their all flashy raise their flash played etcetera with storage class, memory and and storage memory. And in this, this as a service model. Those are really the four big announcements that were gonna dig into all this week. >> We are, and we're gonna be talking with This is a great event. Two days. The cube is going to be here. We have seven pure customers to talk to you that I think kind of a record, at least in my cube experience of the last >> AWS always puts a lot of customers up too. You know. All >> right, well, there's no better validation than the success of a brand, whether we're talking about Evergreen or their first or the reaction of the market to bringing flash down to satya prices. So excited to dig into customer stories with you, Dave. Course we'll talk to some partners who got c'mon slung Cisco somebody else and probably forgetting. And, of course, some of the pure, exactly gonna be exciting two days with you and looking for two days >> looking forward to at least a great >> all right stick around. Dave and I will be right back with our first guest, Charlie Giancarlo, chairman and CEO of Pier Storage. Stick around, come back Mawston in just a minute.