Q4 2025 Pure Storage Inc Earnings Call

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At this time I'd like to turn the call over to Paul Diets, Vice President of Investor Relations. Please go ahead.

Good day and welcome to the PeerStorage 4th Quarter and Full Year Fiscal 2025 Financial Results Conference Call.

Speaker Change: Thank you good afternoon, everyone and welcome to <unk> fourth quarter fiscal year 2025 earnings conference call on the call. We have Charlie Giancarlo Chief Executive Officer, Kevin Chrysler, Chief Financial Officer, and Rob Lee Chief Technology Officer, following Charlie's in Kevin's prepared remarks, we will take questions.

Speaker Change: Our press release was issued after close of market and is posted on our website, where this call is being simultaneously webcast slides that accompany this webcast can be downloaded at investor <unk> pure storage dot com on this call today, we will make forward looking statements, which are subject to various risks and uncertainties. These include statements regarding our financial outlook and operations are.

Speaker Change: Strategy technology, and its advantages are current and new product offerings and competitive industry and economic trends.

Release was issued after close of market and is posted on our website, where this call is being simultaneously webcast slides that accompany this webcast can be downloaded at investor day pure storage Dot com on this call today, we will make forward looking statements, which are subject to various risks and uncertainties. These include statements regarding our financial outlook in operations our strategy.

Any forward looking statements that we make today are based on facts and assumptions as of today and we undertake no obligation to update them. Our actual results may differ materially from the results forecasted and reported results should not be considered as an indication of future performance a discussion of some of the risks and uncertainties relating to our business is contained in our filings with the SEC.

<unk> technology and its advantages are current and new product offerings and competitive industry and economic trends any forward looking statements that we make today are based on facts and assumptions as of today and we undertake no obligation to update them actual results may differ materially from the results forecasted and reported results should not be considered as an.

Speaker Change: And we refer you to these public filings.

Speaker Change: During this call all financial metrics and associated growth rates are non-GAAP measures other than revenue remaining performance obligations or <unk> and cash and investments reconciliations to the most directly comparable GAAP measures are provided in our earnings press release and slides. This call is being broadcast live on the pure storage Investor Relations website.

Indication of future performance discussion of some of the risks and uncertainties relating to our business is contained in our filings with the SEC and we refer you to these public filings. During this call all financial metrics and associated growth rates are non-GAAP measures other than revenue remaining performance obligations or our P O and cash and investments.

Speaker Change: Is being recorded for playback purposes, an archive of the webcast will be available on the IR web site and is the property of pure storage.

Speaker Change: Our first quarter fiscal 2026 quiet period begins at the close of business Friday April 18, 2025 with that I'll turn it over to Charlie.

Reconciliations to the most directly comparable GAAP measures are provided in our earnings press release and slides. This call is being broadcast live on the pure storage Investor Relations website and is being recorded for playback purposes, an archive of the webcast will be available on the IR web site and is the property of pure storage.

Thank you Paul.

Charlie Giancarlo: Good afternoon, everyone and welcome to our Q4 and fiscal 2025 earnings call.

Charlie Giancarlo: We delivered a solid Q4 exceeding both revenue and earnings guidance and capping off a year marked by progress as our long term data platform strategy is changing how enterprises think about data storage and management.

Our first quarter fiscal 2026 quiet period begins at the close of business Friday April 18, 2025 with that I will turn it over to Charlie.

Charlie: Thank you Paul.

Charlie Giancarlo: In FY 'twenty five.

Charlie: Good afternoon, everyone and welcome to our Q4 and fiscal 2025 earnings call.

Charlie Giancarlo: We delivered on several key strategic initiatives.

Charlie Giancarlo: First we achieved a design win with a top four hyper scaler. This relationship is proceeding well in the next stages of both testing and deployment plans.

Charlie: We delivered a solid Q4 exceeding both revenue and earnings guidance and capping off a year marked by progress as our long term data platform strategy is changing how enterprises think about data storage and management.

We see continued progress on certifying our use across multiple price performance layers.

Charlie: In FY 'twenty five we delivered on several key strategic initiatives.

Charlie Giancarlo: Yours direct flash technology will enable this hyperscale or to deploy a consistent architecture across multiple performance tiers of their storage hierarchy.

Charlie: First we achieved a design win with a top four hyperscale or this relationship is proceeding well in the next stages of both testing and deployment plans we.

Charlie Giancarlo: It also allows them to redeploy significant amounts of power and space to new workloads and to increase their data storage performance reliability and lifetime.

Charlie: We see continued progress on certifying our use across multiple price performance layers.

Charlie: Yours direct flash technology will enable this hyperscale or to deploy a consistent architecture across multiple performance tiers of their storage hierarchy.

Charlie Giancarlo: We also launched our 150 terabyte direct flash module.

Charlie Giancarlo: Marking a five fold increase in capacity over standard hard disk and two and a half over the largest ssds.

Charlie: It also allows them to redeploy significant amounts of power and space to new workloads and to increase their data storage performance reliability and lifetime.

Charlie Giancarlo: We are on track to deliver a 300 terabyte DFM late this year.

Charlie Giancarlo: Next our expansion and growth of the <unk> family during the year signified a major advancement to address the expected 10 fold increase in unstructured data driven by AI over the next five years.

Charlie: We also launched our 150 terabyte direct flash module.

Charlie: Marking a five fold increase in capacity over standard hard disk and two and a half over the largest ssds.

Charlie Giancarlo: This offers businesses far better economics compared to desk, along with superior power and density efficiencies that will drive the displacement of disk and data centers.

Charlie: We are on track to deliver a 300 terabyte DFM late this year.

Charlie: Next our expansion and growth of the <unk> family during the year signified a major advancement to address the expected 10 fold increase in unstructured data driven by AI over the next five years.

Charlie Giancarlo: The <unk> family has become a strong competitor to existing hybrid and hard disk environments.

Charlie Giancarlo: The rise of NAND prices in 2024 relative to desk competition did affect gross margins negatively in the year, which we expect to abate in 2025.

Charlie: This offers businesses far better economics compared to desk, along with superior power and density efficiencies that will drive the displacement of disk and data centers.

Charlie Giancarlo: We also continue to invest and see success in our evergreen one program, which has attracted strong customer satisfaction and high existing customer growth.

Charlie: The family has become a strong competitor to existing hybrid and hard disk environments.

Charlie: Horizon NAND prices in 2024 relative to desk competition did affect gross margins negatively in the year, which we expect to abate in 2025.

Charlie Giancarlo: Perhaps our most significant and revolutionary technology Advancement last year was the G. A release of our fusion version two.

Charlie Giancarlo: Available as a non disruptive upgrade to all pure customers fusion V. Two transforms traditional enterprise data storage architectures from application data silos to enterprise data clouds.

Charlie: We also continue to invest and see success in our evergreen one program, which has attracted strong customer satisfaction and high existing customer growth.

Charlie: Perhaps our most significant and revolutionary technology advancement last year with the G. A release of our fusion version two.

Charlie Giancarlo: With fusion pure can now provide customers with data set in management services supporting their global data the state.

Charlie: Available as a non disruptive upgrade to all pure customers fusion V. Two transforms traditional enterprise data storage architectures from application data silos to enterprise data clouds.

Charlie Giancarlo: This is an area in the enterprise, which is largely managed manually if at all.

Charlie Giancarlo: Emmanuel management and isn't adequate traceability of datasets is a leading cause of data sprawl and cyber risk for enterprises worldwide fusion.

Charlie: With fusion pure can now provide customers with data set management services supporting their global data the state.

Charlie Giancarlo: Fusion opens up significant new opportunity and value for pure in this space.

Charlie Giancarlo: The best way for me to describe the transformational impact of fusion is with a familiar analogy.

Charlie: This is an area in the enterprise, which is largely managed manually if at all.

Charlie: Emmanuel management and isn't adequate traceability of datasets is a leading cause of data sprawl and cyber risk for enterprises worldwide fusion.

Charlie Giancarlo: A decade ago, many of us used an external hard drive to add storage to our computers.

Charlie Giancarlo: It provided additional storage and could back up our files. However, when it filled up we needed to replace it with a larger unit and migrate the data from the old unit to the new if.

Charlie: Fusion opens up significant new opportunity and value for pure in this space.

Charlie: The best way for me to describe the transformational impact of fusion is with a familiar analogy.

Charlie Giancarlo: If a colleague also had a hard drive which had spare capacity it couldn't easily be shared.

Charlie: A decade ago, many of us used an external hard drive to add storage to our computers.

Charlie Giancarlo: And file sharing between computers was difficult.

Charlie Giancarlo: Finally, if the external hard drive failed there is little that one could do to recover.

Charlie: It provided additional storage and could back up our files. However, when it filled up we needed to replace it with a larger unit and migrate the data from the old unit to the new if.

Charlie Giancarlo: Hey.

Speaker Change: You people use external drives we've all moved to personal cloud storage provided by many different cloud providers.

If a colleague also had a hard drive which had spare capacity it couldnt easily be shared.

Charlie Giancarlo: The benefits go well beyond just storage.

Charlie: And file sharing between computers was difficult.

Speaker Change: For example, <unk>.

Charlie Giancarlo: Personal cloud storage provides.

Charlie: Finally, if the external hard drive failed there is little that one could do to recover.

Charlie Giancarlo: Unlimited storage scalability, when one needs more one only needs to pay for more without having to migrate data.

Charlie: <unk>.

Charlie: You people use external drives we've all moved to personal cloud storage provided by many different cloud providers.

Charlie Giancarlo: Consistent updates to their infrastructure with non disruptive software and hardware improvements in other words, the service doesn't grow old and.

Charlie: The benefits go well beyond just storage.

Charlie Giancarlo: And guaranteed resiliency, one expect some never to lose your data.

Charlie: For example, <unk>.

Charlie: Personal cloud storage provides unlimited storage scalability wouldn't one needs more one only needs to pay for more without having to migrate data.

Charlie Giancarlo: Global access one can access their data from anywhere from any machine with search features defined content.

Charlie Giancarlo: And easy file sharing with just a few mouse clicks.

Charlie: Insistent updates to their infrastructure with non disruptive software and hardware improvements in other words the service doesn't grow old.

Charlie Giancarlo: This model has extended to how colleagues now work in our company.

Charlie Giancarlo: Corporate provisioning of personal data storage on services, such as Google Drive our Microsoft One drive further allows companies to place their corporate data policy on employee data management, such as controlling file sharing to meet corporate compliance requirements.

Charlie: And guaranteed resiliency, one expect some never to lose your data.

Charlie: Global access one can access their data from anywhere from any machine with search features defined content.

Charlie: And easy file sharing with just a few mouse clicks.

Charlie Giancarlo: Managing filed retention and deletion policies, enabling or disabling individual access when employees join change roles leave the company and.

Charlie: This model has extended to how colleagues now work in a company.

Charlie: Corporate provisioning of personal data storage on services, such as Google Drive our Microsoft Onedrive further allows companies to place their corporate data policy on employee data management, such as controlling file sharing to meet corporate compliance requirements.

Charlie Giancarlo: And providing administrative global search for all stored files.

Speaker Change: In Stark contrast, the surprising secret about enterprise I T data storage is that it works almost exactly like those old personal external disk drives.

Charlie: Managing file retention and deletion policies, enabling or disabling individual access when employees join change would leave the company and.

Speaker Change: <unk> storage arrays operate as external storage devices attached to a specific application stack.

Charlie: And providing administrative global search for all stored files.

Charlie: In Stark contrast, the surprising secret about enterprise I T data storage is that it works almost exactly like those old personal external disk drives.

Speaker Change: Two storage arrays in the same data center attached to two application stacks are managed separately and do not share performance or capacity.

Speaker Change: Many enterprise customers have hundreds of storage arrays globally, each operating as an independent data silo.

Charlie: Standard storage arrays operate as external storage devices attached to a specific application stack to.

Speaker Change: The amazing advancement of pure fusion V. Two transforms pure storage arrays from individual storage arrays into an enterprise data cloud.

Charlie: <unk> raised in the same data center attached to two application stacks are managed separately and do not share performance or capacity.

Speaker Change: Your fusion allows all of an enterprise's pure raised to be managed as an integrated system.

Charlie: Many enterprise customers have hundreds of storage arrays globally, each operating as an independent data silo.

Speaker Change: Yet.

Speaker Change: It allows the store data to be managed as a data cloud rather than individual data silos.

Charlie: The amazing advancement of pure fusion V. Two transforms pure storage arrays from individual storage arrays into an enterprise data cloud.

Speaker Change: Fusion allows applications to utilize the total shared capacity and performance of all the arrays not just the ones that they are directly connected to.

Charlie: Your fusion allows all of an enterprise's pure raised to be managed as an integrated system.

Speaker Change: Fusion automates compliance policies for secure consistent data handling it enhances cyber security and it eliminates manual errors at.

Charlie: Yet.

Charlie: It allows the store data to be managed as a data cloud rather than individual data silos.

Speaker Change: It enables automated dataset management, enforcing and tracking corporate rules and policies.

Charlie: Fusion allows applications to utilize the total shared capacity and performance of all the arrays not just the ones that they are directly connected to it.

Speaker Change: It also allows stored data to be accessed across the global enterprise breaking down data silos, and enabling a true enterprise data cloud.

Charlie: Fusion automated compliance policies for secure consistent data handling it enhances cyber security and it eliminates manual errors.

Speaker Change: Early feedback from dozens of customers has been enthusiastically positive.

Charlie: It enables automated dataset management, enforcing and tracking corporate rules and policies.

Speaker Change: As enterprises face challenges like AI integration cyber security threats and hybrid cloud optimization the need to move beyond traditional manual storage management is clear.

Charlie: It also allows stored data to be accessed across the global enterprise breaking down data silos, and enabling a true enterprise data cloud.

Speaker Change: Operating as a data cloud fusion automated data management enhances security and simplifies hybrid on premise and cloud environments.

Charlie: Early feedback from dozens of customers has been enthusiastically positive.

Charlie: As enterprises face challenges like AI integration cyber security threats and hybrid cloud optimization the need to move beyond traditional manual storage management is clear.

Speaker Change: Supports real time, AI access eliminates the need for excessive copies of data and fosters API driven innovation.

Speaker Change: Sure fusion enables a fundamental shift from data silos to an enterprise data cloud model for data management.

Charlie: Operating as a data cloud fusion automated data management enhances security and simplifies hybrid on premise and cloud environments.

Speaker Change: With fusion enterprises have a universally accessible storage solution that can automate and simplify their data management across thousands of arrays as simply as managing one array.

Charlie: It supports real time, AI access eliminates the need for excessive copies of data and fosters API driven innovation.

Speaker Change: This enables enterprise to operate all of their data storage on a workflow basis, just like the cloud.

Charlie: Your fusion enables a fundamental shift from data silos with enterprise data cloud model for data management.

Speaker Change: This marks not just an evolution, but a revolution in it infrastructure redefining enterprise storage standards and data management.

Charlie: With fusion enterprises have a universally accessible storage solution that can automate and simplify their data management across thousands of arrays as simply as managing one array.

Speaker Change: The success of several large enterprise deals this quarter was largely due to this expanded platform strategy for.

Charlie: This enables enterprise to operate all of their data storage on a workflow basis, just like the cloud.

Speaker Change: For example, a financial services technology company re architected its entire storage environment with pure due to slow response times with legacy architecture.

Charlie: This marks not just an evolution, but a revolution in 90 infrastructure redefining enterprise storage standards and data management.

Speaker Change: By consolidating fragmented storage onto our unified platform. The company now turns data into a powerful asset while processing hundreds of billions of financial transactions a year.

Charlie: The success of several large enterprise deals this quarter was largely due to this expanded platform strategy.

Charlie: For example, a financial services technology company re architected its entire storage environment with cure due to slow response times with legacy architecture.

Speaker Change: One of the world's largest telcos selected pure to tackle its significant data center power consumption challenges and reduce energy usage and data storage by an impressive 89%.

Charlie: By consolidating fragmented storage onto our unified platform. The company now turns data into a powerful asset while processing hundreds of billions of financial transactions a year.

Our 150 terabyte Dfm's were foundational to the success driving substantial business impact.

Charlie: One of the world's largest telcos selected pure to tackle its significant data center power consumption challenges and reduce energy usage and data storage by an impressive 89%.

Speaker Change: Our solution enabled this provider to manage petabytes of data run in advanced analytics and archive data for extended periods with the same core architecture.

Speaker Change: Where it works our storage solution designed for containerized applications in kubernetes environments saw a strong increase during FY 'twenty five driven by significant growth in AI analytics and cloud native platform use cases.

Charlie: Our 150 terabyte Dfm's were foundational to the success driving substantial business impact.

Charlie: Our solution enabled this provider to manage petabytes of data run in advanced analytics and archive data for extended periods with the same core architecture.

Speaker Change: Last quarter, two fortune 50 companies decided to transition their vmware environments to a modern virtualization environment using port works and Red hat open shift.

Charlie: Well it works our storage solution designed for containerized applications in kubernetes environments saw a strong increase during FY 'twenty five driven by significant growth in AI analytics and cloud native platform use cases.

Speaker Change: One of these companies will significantly accelerate its application deployment speed and time to achieve results, while also reducing its cost by 30%.

Charlie: Last quarter, two fortune 50 companies decided to transition their vmware environments to a modern virtualization environment using port works and Red hat open shift.

Speaker Change: The other a major manufacturer is consolidating their containerized and virtualized application platforms in their manufacturing plants onto kubernetes.

Charlie: One of these companies will significantly accelerate its application deployment speed and time to achieve results, while also reducing its cost by 30%.

Speaker Change: It works enables them to reduce the cost of managing different infrastructures for Vms and containers and to simplify their operations.

Speaker Change: As I've indicated in recent quarters, our activity and AI continues to grow machine learning and training environments are increasingly utilizing our high performance storage and AI data preparation change increasingly utilizing port works.

Charlie: The other a major manufacturer is consolidating their containerized and virtualized application platforms in their manufacturing plants onto kubernetes.

Charlie: Well it works enables them to reduce the cost of managing different infrastructures for Vms and containers and to simplify their operations.

Speaker Change: We are looking forward to showcasing our latest AI advancements at the upcoming Nvidia GPU Technology Conference next month, we will unveil how flash blade will set a new bar for unmatched performance scalability and ease of deployment for large scale AI infrastructure deployments.

Charlie: As I've indicated in recent quarters, our activity and AI continues to grow machine learning and training environments are increasingly utilizing our high performance storage and AI data preparation change increasingly utilizing port works.

Speaker Change: Turning to the macro environment, we expect geopolitical uncertainty to contribute to a dynamic environment at least through this year.

Charlie: We are looking forward to showcasing our latest AI advancements at the upcoming Nvidia GPU Technology Conference next month.

Speaker Change: In addition to our standard practice of operating with globally distributed and diversified supply and distribution chains. We have also developed contingency plans for a variety of tariff scenarios.

Charlie: We will unveil how flash blade will set a new bar for unmatched performance scalability and ease of deployment for large scale AI infrastructure deployments.

Speaker Change: Overall, we are pleased with our performance in FY 'twenty, five and remain highly confident in our differentiated leaving data platform strategy and vision.

Charlie: Turning to the macro environment, we expect geopolitical uncertainty to contribute to a dynamic environment at least through this year in.

Charlie: In addition to our standard practice of operating with globally distributed and diversified supply and distribution chains. We have also developed contingency plans for a variety of tariff scenarios.

Speaker Change: We are excited to help our customers build their own enterprise data clouds across their distributed and hybrid it environments.

This confidence is reinforced by the four key competitive advantages of the pure platform.

Charlie: Overall, we are pleased with our performance in FY 'twenty, five and remain highly confident in our differentiated leaving data platform strategy and vision.

Speaker Change: Our unified purity operating system.

Speaker Change: Our evergreen technology and business model.

Charlie: We are excited to help our customers build their own enterprise data clouds across their distributed and hybrid it environments.

Speaker Change: Our purity direct flash technology.

Speaker Change: Our cloud operating model now enhanced with pure fusion V. Two which allows our customers to build their own enterprise data cloud.

This confidence is reinforced by the four key competitive advantages of the pure platform.

Speaker Change: With that I'll pass the mic to count.

Charlie: Our unified purity operating system.

Speaker Change: Thank you Charlie we closed the year on a high note exceeding guidance with double digit revenue growth generating 153 million in operating profit.

Charlie: Our evergreen technology and business model.

Charlie: Our purity direct flash technology and.

Charlie: Our cloud operating model now enhanced with pure fusion, <unk>, which allows our customers to build their own enterprise data cloud.

Speaker Change: And achieving an operating margin of 17, 4% in Q4 total revenue increased by 11% and we set a record for T. C V sales of evergreen one.

Kevin: With that I'll pass the mic to Kevin.

Kevin: Thank you Charlie we closed the year on a high note exceeding guidance with double digit revenue growth generating 153 million in operating profit.

Speaker Change: In FY 'twenty five we reached a major financial milestone by surpassing $3 billion in total revenue for the first time with.

Kevin: And achieving an operating margin of 17, 4% in Q4 total revenue increased by 11% and we set a record for T. C V sales of evergreen one.

Speaker Change: With total revenue of $3 2 billion growing 12%. We also delivered our highest annual operating profit of $559 million.

Sales of our solutions across our data storage platform contributed to our strong Q4 performance.

Kevin: In FY 'twenty five we reached a major financial milestone by surpassing 3 billion and total revenue for the first time with.

Speaker Change: <unk> sales in Q4 were achieved by Flash blade.

Speaker Change: Cash array XL Port works, our <unk> family and renewals of our evergreen subscriptions across our installed base.

Kevin: With total revenue of $3 2 billion growing 12%. We also delivered our highest annual operating profit of $559 million.

Speaker Change: Accelerating customers transition of cost sensitive workloads to our E family and Flash array C solutions remains a key strategic priority as customers are increasingly recognizing the superior economics over traditional desk solutions record sales of our <unk> family solutions.

Kevin: Sales of our solutions across our data storage platform contributed to our strong Q4 performance.

Kevin: <unk> sales in Q4 were achieved by Flash blade.

Kevin: Sure a XL port works, our <unk> family and renewals of our evergreen subscriptions across our installed base.

Speaker Change: Combined with higher Q O see flash costs and comparatively stable par dissolution pricing have contributed to temporarily lower product gross margins of 62, 9% in Q4.

Kevin: Accelerating customers transition of cost sensitive workloads to our E family and Flash array C solutions remains a key strategic priority as customers are increasingly recognizing the superior economics over traditional desk solutions.

Speaker Change: We also closed out the year with record quarterly T. C V sales of evergreen one of $140 million, a 20% increase FY 'twenty five T. C V sales for evergreen one and our other service based offerings reached $393 million, representing a three person.

Kevin: Record sales of our E family solutions combined with higher two I'll see flash costs and comparatively stable par dissolution pricing have contributed to temporarily lower product gross margins of 62, 9% in Q4.

Speaker Change: Cent decline.

Kevin: We also closed out the year with record quarterly T. C V sales of evergreen one of $140 million, a 20% increase FY 'twenty five T. C V sales for evergreen one and our other service based offerings reached $393 million, representing a three person.

Speaker Change: This was the result of both extended timelines needed to close evergreen one deals greater than $5 million and a higher conversion of evergreen one opportunities to a traditional sale that we experienced last quarter.

Speaker Change: We remain confident in the long term growth potential of our expanding as a service offerings. We expect T. C V sales of Evergreen wanted to grow next year and we will continue to provide quarterly updates those specific guidance will not be provided.

Kevin: Cent decline. This was the result of both extended timelines needed to close evergreen one deals greater than $5 million and a higher conversion of evergreen one opportunities to a traditional sale that we experienced last quarter.

Speaker Change: Q4 subscription services revenue of $385 million increased 17% and subscription services annual recurring revenue or <unk> grew 21% to $1 7 billion.

Kevin: We remain confident in the long term growth potential of our expanding as a service offerings. We expect T. C V sales of Evergreen wanted to grow next year and we will continue to provide quarterly updates those specific guidance will not be provided.

Speaker Change: Total remaining obligations, our RP O exiting Q4, encompassing both subscription and services and noncancelable product orders grew 14% to $2 6 billion. Excluding noncancelable product orders are P O related solely to our subscription services increased by 15.

Kevin: Q4 subscription services revenue of $385 million increased 17% and subscription services annual recurring revenue or <unk> grew 21% to $1 7 billion.

Speaker Change: Sent.

Kevin: Total remaining obligations or our P. O exiting Q4, encompassing both subscription and services and noncancelable product orders grew 14% to $2 6 billion.

Speaker Change: Overall RPM growth was impacted by the decline in <unk> sales for our storage as a service offerings during FY 'twenty five.

Speaker Change: Our subscription services net dollar retention or India or at the end of the year was 117% and continues to be aligned with our long term target of 115%.

Kevin: Excluding noncancelable product orders are P O related solely to our subscription services increased by 15%.

Speaker Change: In Q4 U S revenue of $619 million was the primary driver of growth.

Kevin: Overall, our <unk> growth was impacted by the decline in T. C V sales for our storage as a service offerings during FY 'twenty five.

Speaker Change: While international revenue reached $261 million down 3% year over year for FY 'twenty five U S revenue grew by 12% and international revenue increased by 13%.

Kevin: Our subscription services net dollar retention or N D or at the end of the year was 117% and continues to be aligned with our long term target of 115%.

Additionally, we acquired 334, new customers generally consistent with both Q4, FY 'twenty four and the previous quarter, we continue to serve 62% of the fortune 500.

Kevin: In Q4 U S revenue of $619 million was the primary driver of growth.

Kevin: International revenue reached $261 million down 3% year over year for FY 'twenty five U S revenue grew by 12% and international revenue increased by 13%. Additionally, we acquired 334, new customers generally consistent with both Q4 FY 'twenty four.

Speaker Change: In Q4 total gross margin was 69, 2%.

Speaker Change: Supported by a robust subscription services margin of 77, 2% while product gross margin influenced by record sales of our E family stood at 62, 9%.

Kevin: And the previous quarter, we continue to serve 62% of the Fortune 500.

Speaker Change: For the year total gross margin was 71, 8% compared to 73, 2% in FY 'twenty for <unk>.

Kevin: In Q4 total gross margin was 69, 2%.

Speaker Change: Looking ahead for the full year of FY 'twenty six we expect product gross margins to settle in the mid sixties, which is in the range of our long term expectation for product gross margins of 65% to 70%.

Kevin: Supported by our robust subscription services margin of 77, 2% while product gross margin influenced by record sales of our E family stood at 62, 9%.

Kevin: For the year total gross margin was 71, 8% compared to 73, 2% in FY 'twenty four.

Speaker Change: This outlook is driven by expected strong demand for E family and Flash array C solutions, alongside our expectation that ql's. He flash pricing will moderate an important factor as we compete against disk based solutions.

Kevin: Looking ahead for the full year of FY 'twenty six we expect product gross margins to settle in the mid sixties, which is in the range of our long term expectation for product gross margins of 65% to 70%.

Speaker Change: Our head count increased slightly to nearly 6000 employees at the end of the year.

Speaker Change: Our balance sheet remains robust with one 5 billion in cash and investments at the end of the year.

Kevin: This outlook is driven by expected strong demand for our <unk> family and Flash array C solutions, alongside our expectation that ql's he flash pricing will moderate.

Speaker Change: Cash flow from operations in Q4 was $208 million and 753 million for the year.

Kevin: An important factor as we compete against disk based solutions.

Speaker Change: Capital expenditures during the year were 227 million, representing approximately seven 2% of revenue for FY 'twenty five our capital investments during the year supported data center expansion to support expanded testing of new products and solutions, including a.

Kevin: Our head count increased slightly to nearly 6000 employees at the end of the year.

Kevin: Our balance sheet remains robust with $1 5 billion in cash and investments at the end of the year cash flow from operations in Q4 was $208 million and $753 million for the year.

Speaker Change: <unk> Hyperscale solution design win.

Kevin: Capital expenditures during the year were 227 million, representing approximately seven 2% of revenue for FY 'twenty five our capital investments during the year supported data center expansion to support expanded testing of new products and solutions, including a re.

Speaker Change: Accelerating density of our direct flash modules and software development of our fusion version two solution.

Speaker Change: Free cash flow for Q4 was $152 million and 526 million for the year.

Speaker Change: Free cash flow margin for the year was 16, 6%.

Kevin: Sent Hyperscale solution design win.

Speaker Change: In Q4, we repurchased three 1 million shares returning approximately $192 million to shareholders for FY 'twenty five share repurchases amounted to $374 million or a $6 7 million shares.

Kevin: Accelerating density of our direct flash modules and software development of our fusion version two solution.

Kevin: Free cash flow for Q4 was $152 million and 526 million for the year.

Speaker Change: Additionally, we paid 65 million in withholding taxes unemployment wards in Q4 offsetting dilution by about 1 million shares.

Kevin: Free cash flow margin for the year was 16, 6%.

Kevin: In Q4, we repurchased three 1 million shares returning approximately $192 million to shareholders for FY 'twenty five share repurchases amounted to $374 million or a $6 7 million shares.

Speaker Change: And $209 million for FY, 'twenty, five offsetting about $3 5 million shares.

Speaker Change: We currently have $21 million remaining under our existing repurchase authorization and are announcing a new share repurchase program for an additional $250 million.

Kevin: Additionally, we paid 65 million in withholding taxes on employee awards in Q4, offsetting dilution by about 1 million shares.

Speaker Change: Turning to our FY 'twenty six guidance, we again expect double digit revenue growth, increasing by 11% to just over $3 5 billion.

Kevin: And $209 million for FY, 'twenty, five offsetting about $3 5 million shares.

Kevin: We currently have $21 million remaining under our existing repurchase authorization and are announcing a new share repurchase program for an additional $250 million.

Speaker Change: Our annual revenue outlook considers an I T spending environment similar to FY 'twenty five.

Speaker Change: And a return to growth for our evergreen one and other service offerings.

Kevin: Turning to our FY 'twenty six guidance, we again expect double digit revenue growth, increasing by 11% to just over $3 5 billion.

Speaker Change: For Q1, we expect revenue of $770 million, representing an 11% year over year increase.

Speaker Change: Moving to operating profit.

Kevin: Our annual revenue outlook considers an it spending environment similar to FY 'twenty five.

Speaker Change: We remain committed to our bold strategic initiatives positioning ourselves for strong sustainable long term growth. This includes leveraging our recent hyperscale design win through incremental investments to scale operations for large production deployments starting in FY 'twenty seven as well.

Kevin: And a return to growth for our evergreen one and other service offerings.

For Q1, we expect revenue of $770 million, representing an 11% year over year increase.

Kevin: Moving to operating profit.

Speaker Change: As accelerating density and our direct flash modules.

Kevin: We remain committed to our bold strategic initiatives positioning ourselves for strong sustainable long term growth. This includes leveraging our recent hyperscale design win through incremental investments to scale operations for large production deployments starting in FY 'twenty seven as well.

Speaker Change: We expect an operating margin in FY 'twenty six of approximately 17% consistent with my remarks last quarter translating to an operating profit of around $595 million.

Speaker Change: For Q1, we are guiding operating profit of $80 million and operating margin of 10, 4%.

Kevin: As accelerating density and our direct flash modules.

Speaker Change: In closing we are pleased to have returned to double digit revenue growth and surpassing $3 billion in revenue for the first time.

Kevin: We expect an operating margin in FY 'twenty six of approximately 17% consistent with my remarks last quarter translating to an operating profit of around $595 million.

Speaker Change: This pivotal year has been marked by remarkable innovation and execution setting the stage for sustainable long term growth.

Kevin: For Q1, we are guiding operating profit of $80 million and operating margin of 10, 4%.

Paul Diets: With that I will turn it back to Paul for Q&A.

Thanks, Kevin before we begin the Q&A session I'll ask you to please limit yourselves to one question consisting of one part so we can get to as many people as possible.

Kevin: In closing we are pleased to have returned to double digit revenue growth and surpassing 3 billion in revenue for the first time.

Kevin: This pivotal year has been marked by a remarkable innovation and execution setting the stage for sustainable long term growth.

Speaker Change: You have additional questions. We kindly ask that you. Please rejoin the queue that we'll be happy to take those additional questions as time allows operator, let's get started.

Paul: With that I will turn it back to Paul for Q&A.

Paul: Thanks, Kevin before we begin the Q&A session I will ask you to please limit yourselves to one question consisting of one part so we can get to as many people as possible.

Speaker Change: Thank you if you would like to ask a question. Please press star followed by one on your telephone keypad.

Speaker Change: For any reason you would like to turn that question. Please press star followed by one.

Speaker Change: Again to ask a question Pat Star one.

Speaker Change: You have additional questions. We kindly ask that you. Please rejoin the queue that we'll be happy to take those additional questions as time allows operator, let's get started.

Speaker Change: As a reminder, if you are using a speaker phone. Please remember to pick up your handset before asking your question.

Speaker Change: A little pause here briefly ask questions are registered.

Speaker Change: Thank you if you would like to ask a question. Please press star followed by one on your telephone keypad.

Speaker Change: Our first question comes from Mike Cecos from Needham. Please go ahead. Your line is open.

Speaker Change: If for any reason you would like to terminate that question. Please press star followed by one.

Mike Cecos: Great. Thanks for taking the questions here guys.

Speaker Change: Again to ask a question Pat Star one.

Mike Cecos: Wanted to come back to some of the prepared commentary on fusion.

Speaker Change: As a reminder, if you are using a speaker phone. Please remember to pick up your handset before asking your question.

Mike Cecos: And really I know, it's early with the launch of fusion to Dot O.

Speaker Change: Well pause here briefly ask questions are registered.

Mike Cecos: But do we have signs yet of customers that have adopted fusion, showing either vince or expansions or stickiness or it's still too early.

Speaker Change: Our first question comes from Mike <unk> from Needham. Please go ahead. Your line is open.

Great. Thanks for taking the questions here guys.

Mike Cecos: These provide commentary on the go to market potentially in where we are in driving the adoption and awareness of what fusion enables thank you.

Speaker Change: Wanted to come back to some of the prepared commentary on fusion.

Speaker Change: And really I know, it's early with the launch of fusion <unk>.

Charlie Giancarlo: Thanks, Mike Charlie here. Thanks for the question. So what we've had now in order for a customer to experience fusion they have to.

Speaker Change: But do we have signs yet of customers that have adopted fusion, showing either vince or expansions or stickiness or it's still too early.

Charlie Giancarlo: Download the latest update to the software operating system and flash array. We've had dozens of companies do that and specifically turn on fusion and start operating with it and with less than a quarter of that being in the market.

Speaker Change: These provide commentary on the go to market potentially in where we are in driving the adoption and awareness of what fusion enables thank you.

Speaker Change: Thanks, Mike Charlie here. Thanks for the question. So what we've had now in order for a customer to experience fusion they have to.

Charlie Giancarlo: As I said, we've had dozens of customers do that that's a very fast uptake and as I've mentioned in my prepared remarks.

Speaker Change: Download the latest update to the software operating system and flash array. We've had dozens of companies do that and specifically turn on fusion and start operating with it and with less than a quarter of that being in the in the market.

Charlie Giancarlo: Of course, we're getting feedback and the feedback has been not just positive but enthusiastic are they.

Charlie Giancarlo: They they find that the ability to manage all of the systems that they put under fusion as a as a fleet rather than as individual arrays to make life a lot easier there now experimenting with something we call presets, but presets allowed them to do is set policies for how the data is handled across the arrays.

Speaker Change: As I said, we've had dozens of customers do that that's a very fast uptake and as I've mentioned in my prepared remarks of course, we're getting feedback and the feedback has been not just positive but enthusiastic are they they find that the ability to manage all of the systems that they put under fusion as a as a fleet rather than as.

Charlie Giancarlo: That that for any specific storage class all of the data in that storage class will be handled the same way so as opposed to having to manage different.

Speaker Change: Dual arrays to make life, just a lot easier there now experimenting with something we call presets presets allowed them to do is set policies for how the data is handled across the arrays.

Charlie Giancarlo: Application use cases manually in terms of policy now the policy is carried out under software control. So the the feedback has been very positive. Obviously this creates a network effect. It creates a network effect for our products, meaning that if you have a you know all.

Speaker Change: Such that that for any specific storage class all of the data in that storage class will be handled the same way so as opposed to having to manage different.

Charlie Giancarlo: All or even some significant portion of your pure storage arrays under fusion the likelihood of you, adding another array that's not part of that I think is going to be pretty low but to your point. It is a bit early at this point, we're still in the early rollout phases I would expect that type of network effects.

Speaker Change: Application use cases are manually in terms of policy now the policy is carried out under software control. So the the feedback has been very positive. Obviously this creates a network effect and it creates a network effect for our products, meaning that if you have.

Charlie Giancarlo: To occur after several quarters of use.

Speaker Change: All or even some significant portion of your pure storage arrays under fusion the likelihood of you, adding another array that's not part of that I think is going to be pretty low but to your point. It is a bit early at this point, we're still in the early rollout phases I would expect that type of network effects.

Mike: Thank you Mike next question please.

Speaker Change: Our next question comes from Aaron Rakers from Wells Fargo. Please go ahead. Your line is open.

Aaron Rakers: Yes, thanks for taking the question I wanted to ask about the hyperscale opportunity and well while I can appreciate it's early to really unpack the announcement from last quarter I'm curious.

Speaker Change: To occur after several quarters of use.

Speaker Change: Thank you Mike next question please.

Aaron Rakers: Any progression of how maybe the model around this opportunity might be evolving and then on that same kind of narrative.

Speaker Change: Our next question comes from Aaron Rakers from Wells Fargo. Please go ahead. Your line is open.

Aaron Rakers: How would you characterize the discussions or the degree of discussions you might be having with other hyperscale opportunities. Thank you.

Aaron Rakers: Yes, thanks for taking the question I wanted to ask about the Hyperscale opportunity.

Speaker Change: Well I can appreciate it's early to really unpack the announcement from last quarter I'm curious.

Aaron Rakers: Yeah. The as you might imagine that we are early but the conversation continues to evolve and to expand frankly.

Speaker Change: Any progression of how maybe the model around this opportunity might be evolving and then on that same kind of narrative.

Aaron Rakers: In terms of the use cases for different types of of Oh.

Speaker Change: How would you characterize the discussions or the degree of discussions you might be having with other hyperscale opportunities. Thank you.

Aaron Rakers: Of data storage tiers inside that hyperscale or so we've been evolving and continuing in terms of the depth of that of the testing and the co development in particular, but also discussions around our future states and where that storage will go relative to.

Yeah.

Speaker Change: As you might imagine.

Speaker Change: Our early but the conversation continues to evolve and to expand frankly.

Speaker Change: In terms of the use cases for different types of of data storage tiers inside that hyperscale or so are we.

Speaker Change: Other vendors, we continue to expand our conversations I would say they've we indicated last time, we expected them to accelerate they have in fact accelerated through this quarter nothing to nothing to announce just yet, but certainly we're seeing increased interest Rob do you want to add anything no I think that summarizes it well you know the engagement is.

Speaker Change: <unk> been evolving and continuing in terms of the depth of that of the testing and the co development in particular, but also discussions around.

Speaker Change: Future states, and where that storage will go relative to.

Charlie Giancarlo: <unk> as we expect and as Charlie mentioned moving forward through the more advanced phases of completing their kind of implementation plans and detailed testing and the typical engineering process, we would expect to see leading to a more detailed field testing all the way to ramping the significant scale.

Speaker Change: Other vendors, we continue to expand our conversations I would say they've we indicated last time, we expected them to accelerate they have in fact accelerated through this quarter nothing to nothing to announce just yet, but certainly we're seeing increased interest Rob do you want to add anything no I think that summarizes it well you know the engagement has progressed.

Speaker Change: Yeah, I mean, the discussions are.

Speaker Change: As we expected and as Charlie mentioned moving forward through the more advanced phases of completing their kind of implementation plans and detailed testing and the typical engineering process, we would expect to see leading to a more detailed field testing on the way to ramping the significant scale and.

Charlie Giancarlo: Engagements.

Charlie Giancarlo: We are having with other hyperscale orders are definitely moving forward with a faster pace.

Aaron Rakers: Thank you Aaron next question please.

Speaker Change: Our next question comes from Amit <unk> from Evercore ISI. Please go ahead. Your line is open.

Amit: Thanks, Doug Good afternoon, everyone I guess, maybe just to follow up on the Hyperscale question from Aaron can you just talk about what investments are needed by pure at this point to get this from a design win and how it progressed through a production environment would love to understand kind of what investments do you need to make to get there and then just any clarity on what steps are needed.

Speaker Change: Yeah, I mean, the discussions and engagements.

We are having with other hyperscale are definitely moving forward with a faster pace.

Aaron Rakers: Thank you Aaron next question please.

Speaker Change: Our next question comes from Amit <unk> from Evercore ISI. Please go ahead. Your line is open.

Amit: It actually moves from designed today I think start of production in fiscal 2017, it would be helpful to understand thank you.

Speaker Change: Thanks, Doug Good afternoon, everyone I guess, maybe just to follow up on the Hyperscale question from Aaron can you just talk about what investments are needed by peer at this point to get this from a design win and how it progressed through a production environment.

Speaker Change: Yes. So this is a coda ongoing.

Speaker Change: <unk> co development with that with that hyperscale or meaning that they are developing new software new architectures, new infrastructure architectures for yes.

Speaker Change: What investments do you need to make to get there and then just any clarity on what steps are needed to actually move us from designed today.

Speaker Change: As we've discussed it's their next generation data center design and as they design that that software and those hardware architectures, we have to work alongside them to make sure that our software works closely with there is of course, we're constantly working together to try to improve both performance and price performance in that <unk>.

Speaker Change: Production in fiscal 2007 that would be helpful to understand thank you.

Speaker Change: Yes. So this is a coder.

Ongoing co development with that with that hyperscale or meaning that they are developing new software new architectures, new infrastructure architectures for you.

Speaker Change: As we mentioned we're working now on multiple.

Speaker Change: As we've discussed it's their next generation data center design and as they design that that software and those hardware architectures.

Speaker Change: Different performance tiers, each one of them requires its own set of tuning and of course, we have to also qualify several different scales of our direct flash modules along with several different flash partners. If you will different flash manufacturers board.

Speaker Change: We have to work alongside them to make sure that our software works closely with Theres of course, we're constantly working together to try to improve both performance and price performance in that environment. As we mentioned, we're working now on multiple different performance tiers. Each one of them requires its own set of tuning.

Speaker Change: Those are direct flash modules now all of that requires quite a bit of work and testing on our side as well.

Speaker Change: And of course, we have to also qualify.

Speaker Change: This is Kevin I'd, probably summarize it into four key areas just to summarize with Charlie's points are integrating the purity software and our direct flash technology with the hyper scaler hardware specifications accelerating our density roadmap with our direct flash modules qualifying additional NAND.

Speaker Change: Several different scales of our direct flash modules along with several different.

Speaker Change: Our flash partners, if you will different flash manufacturers for those direct flash modules now all of that requires quite a bit of work and testing on our side as well. So this is Kevin and that I'd, probably summarize it into four key areas just to summarize with Charlie's points are integrating the purity software.

Speaker Change: Flyers that Charlie alluded to expanding our supply chain capabilities and scale and really as well, there's investment and pursuing other opportunities a hyperscale opportunities as well.

Speaker Change: And our direct flash technology with the hyper scaler hardware specifications accelerating our density roadmap with our direct flash modules qualifying additional NAND suppliers that Charlie alluded to expanding our supply chain capabilities and scale and really.

Amit: Thank you Amit next question please.

Speaker Change: Our next question comes from Howard MA from Guggenheim. Please go ahead. Your line is open.

Howard Ma: Thank you.

Speaker Change: Charlie <unk>, Kevin can you help us understand how much of the product gross margin decline.

Speaker Change: As well, there's investment and pursuing other opportunities a hyperscale opportunities as well.

Howard Ma: How much of it is due to incremental sales of the E E.

Amit: Thank you Amit next question please.

Howard Ma: Families versus say higher coffee costs, or perhaps more aggressive pricing in other areas of your portfolio. Thanks.

Speaker Change: Our next question comes from Howard MA from Guggenheim. Please go ahead. Your line is open.

Howard Ma: So yeah, our gross margin performance on other areas of our portfolio have stayed has stayed relatively constant so no real change there. So it is entirely attributable to the <unk> family now there are two effects of that of that one is that the family now has a higher.

Howard Ma: Thank you.

Howard Ma: Currently <unk>, Kevin can you help us understand how much of the product gross margin decline.

Howard Ma: How much of it is due to incremental sales of the <unk>.

Howard Ma: And the families versus say higher coffee costs or perhaps more aggressive pricing in other areas of your portfolio. Thanks.

Howard Ma: <unk> of our overall mix, but the other effect is that the family because.

Howard Ma: So yes, our gross margin performance on other areas of our portfolio have stayed has stayed relatively constant so no real change there. So it is entirely attributable to the E family now there are two effects of the of that of that one is that the family now has a higher <unk>.

Howard Ma: Because it competes with disc that you know where the rise in NAND prices in the media prices did not affect the disc market. So in that case.

Howard Ma: When we compete with other flash pricing our margins have been have been very stable, but when we compete against disk solutions, where NAND prices have increased it affects that family more as you might imagine so we view that as a as somewhat temporary as NAND prices moderate this coming year, where are the margins for the <unk>.

Howard Ma: <unk> of our overall mix, but the other effect is that the <unk> family.

Howard Ma: Because it competes with disk that.

Howard Ma: The rise in NAND prices in the media prices did not affect the disc market. So in that case, whereas when we compete with other flash pricing our margins have been have been very stable, but when we compete against disk solutions, where NAND prices have increased it affects that family more as you might imagine so.

Howard Ma: Family will come back to what our longer term.

Howard Ma: Actually I shouldn't put it that way what our early stage E margins were because we do expect that.

Howard Ma: That as we gain market share in the family even the family will start to approach our normalized margins, but as we indicated many quarters ago, we were going to be aggressive with the family given that we're really the only player in the market right now that can compete with desk and we want to take advantage of that so we are being aggressive there the the more recent.

Howard Ma: We view that as a as somewhat temporary as NAND prices moderate this coming year, where are the margins for the family will come back to what our longer term.

Howard Ma: Actually I shouldn't put it that way what our early stage E margins were because we do expect that.

Howard Ma: Last year's uptick in NAND pricing.

Howard Ma: As we gained market share in the family even the family will start to approach our normalized margins, but as we indicated many quarters ago, we were going to be aggressive with the family given that we're really the only player in the market right now that can compete with desk and we want to take advantage of that so we are being aggressive there the the more recent loss.

Howard Ma: Affected us a bit more than.

Howard Ma: One would have hoped.

Howard Ma: Yeah, and so with that this is Kevin Howard I just to follow on to Charlie's point as we think about next year, we expect fully that the E family momentum will continue but with the moderation of QL see pricing. We do think we'll get back into a product gross margin range of around 65%.

Howard Ma: Last year's uptick in NAND pricing.

Howard Ma: <unk> is a bit more than.

Howard Ma: Which again is aligned with our long term product gross margin profile.

Howard Ma: One would have hoped.

Howard Ma: And so with that this is Kevin Howard I just to follow on to Charlie's point as we think about next year, we expect fully that the E family momentum will continue but with the moderation of QL see pricing. We do think we'll get back into a product gross margin range of around 65%.

Speaker Change: Thank you Howard next question please.

Speaker Change: Our next question comes from pendulum Boral from J P. Morgan. Please go ahead. Your line is open.

Speaker Change: Okay.

Speaker Change: Thanks for taking our questions can you just maybe provide a little color about some of the.

Howard Ma: Which again is is aligned with our long term product gross margin profile.

Speaker Change: Geographical theaters.

Speaker Change: Given the outperformance in the U S relative to international this quarter. Thank you.

Speaker Change: Thank you Howard next question please.

Speaker Change: Our next question comes from pendulum Boral from J P. Morgan. Please go ahead. Your line is open.

Speaker Change: Yeah. This is Kevin look I think a well one is we were actually quite pleased to see the performance in the U S and the growth.

Pendulum Boral: Hey, guys, who will own for Haynesville and thanks for taking our questions can you just maybe provide a little color about some of the gene.

Speaker Change: Driven by the U S not unusual to see variability in growth by geographies on a quarterly basis I think on balance.

Speaker Change: Geographically theaters.

Speaker Change: Given the outperformance in the U S relative to international this quarter. Thank you.

Speaker Change: The growth was actually relatively comparable for the year, both for our international markets as a whole.

Speaker Change: Yes. This is Kevin look I think a well one is we were actually quite pleased to see the performance in the U S and the growth.

Speaker Change: As well as the U S and look our international revenue growth was quite strong through the first three quarters of the year came down obviously in Q4, but nothing that I would call out specifically and we do expect our international markets and revenue to grow at a faster pace longer term than in the U S. Given the sizing of the market.

Speaker Change: Driven by the U S not unusual to see variability in growth by geographies on a quarterly basis I think on balance.

Speaker Change: The growth was actually relatively comparable for the year, both for our international markets as a whole.

Speaker Change: As an opportunity.

Speaker Change: Thank you next question please.

Speaker Change: As well as the U S and look our international revenue growth was quite strong through the first three quarters of the year came down obviously in Q4, but nothing that I would call out specifically and we do expect our international markets and revenue to grow at a faster pace longer term than in the U S. Given the sizing of the markets.

Speaker Change: Our next question comes from Chris Shankar from TD Cowen. Please go ahead. Your line is open.

Chris Shankar: Yes, hi, Thanks for taking my question a question for Charlie Kevin You know on our appeal it looks like the RPM growth rates decline for about 30 bps in the year ago to 14% in the last quarter I'm kind of curious is this just the law of large numbers or is there something else going on the IPO and what does it mean for your core enterprise business. Thank you.

Speaker Change: Opportunity.

Speaker Change: Thank you next question please.

Speaker Change: Our next question comes from Chris Shankar from TD Cowen. Please go ahead. Your line is open.

Chris Shankar: Yes. This is Kevin I'll start out and then have Charlie I mean, this is just really a derivative of what we saw in our evergreen one T. C V sales. This year, so obviously with a small drop in revenue for the year, that's impacting our RPM for the year as well at at 15% when you exclude.

Chris Shankar: Yes, hi, Thanks for taking my question a question for Charlie Kevin RVO. It looks like the IPO growth rate has declined from about 30% a year ago to 14, both in the last quarter I'm kind of curious is this just the law of large numbers or is there something else going on the IPO and what does it mean for your core enterprise business. Thank you.

Chris Shankar: Noncancelable product orders, but look we were quite pleased to see in Q4, a record evergreen one performance of 20%.

Chris Shankar: Yes. This is Kevin I'll start out and then have Charlie I mean, this is just really a derivative of what we saw in our evergreen one <unk> sales. This year. So obviously with a small drop in revenue for the year, that's impacting our our Po for the year as well at at 15% when you exclude.

Chris Shankar: We've certainly considered growth are in our revenue guide for this year <unk> evergreen one offering and we're very pleased and excited with that offering and the value realization that our customers are seeing with evergreen one as a whole.

Chris Shankar: Noncancelable product orders, but look we were quite pleased to see in Q4, a record evergreen one performance of 20% we've.

Speaker Change: I think that covers it Kevin. Thank you okay. Thank you Chris next question. Please.

Speaker Change: Our next question comes from Jason Ader from William Blair. Please go ahead. Your line is open.

Chris Shankar: We've certainly considered growth in our revenue guide for this year.

Speaker Change: Yes. Thanks, Good afternoon, guys I wanted to just follow up on <unk> question earlier I don't think Charlie you you answered the question on just the model and how.

Chris Shankar: If I ever Green, one offering and we're very pleased and excited with that offering and the value realization that our customers are seeing with evergreen one as a whole.

Speaker Change: Gross margin and operating margin might look for the hyperscale or business.

Chris Shankar: I think that covers that Kevin. Thank you. Okay. Thank you Chris next question. Please.

Speaker Change: And do you think youll be able to provide more specific guidance on.

Speaker Change: Our next question comes from Jason Ader from William Blair. Please go ahead. Your line is open.

Speaker Change: On revenue as we move through the year.

Jason Ader: Yes. Thanks, Good afternoon, guys I wanted to just follow up on on Rakers question earlier I don't think Charlie you you answered the question on just the model and how.

Speaker Change: The answer on that is yes, as we you know as.

As we understand it.

Speaker Change: Better the exact rollout of the hyperscale or as our deployment plans.

Jason Ader: Gross margin and operating margin might look for the hyperscale or business.

Speaker Change: And we assume that we should be able to understand that in the three to six months prior to the actual rollout yeah, we should be able to give an update on exactly where that stands all I'll tell you that right now.

Speaker Change: And do you think youll be able to provide more specific guidance on.

Jason Ader: On revenue as we move through the year.

Jason Ader: The answer on that is yes, as we you know as we understand it.

Speaker Change: It's fairly dynamic.

Speaker Change: So.

Jason Ader: Better the exact rollout of the hyperscale or as our deployment plans.

Speaker Change: Until we get a little bit on firmer footing dynamic just in the sense that we're still in the planning phase and you know.

Speaker Change: A lot of considerations in terms of the exact timing so as soon as we get into a place where we feel more confident about the exact timing and the rollout will be able to give more updates and Jason and the other thing too that I would add from a financial perspective is really nothing new from what we we just discussed last quarter in detail with that.

Jason Ader: And we assume that we should be able to understand that in the three to six months prior to the actual rollout yeah, we should be able to give an update on exactly where that stands all I'll say that right now.

Jason Ader: It's fairly dynamic.

Jason Ader: So.

Jason Ader: Until we get a little bit on firmer footing dynamic just in the sense that we're still in the planning phase and.

Speaker Change: Design win from a gross margin profile again hardware it would not be reflected as how were planning that obviously are longer term from an operating margin. We expect expansion over time with this opportunity, but again. These factors are very consistent with what we described it last quarter and.

Jason Ader: You know a lot of considerations in terms of the exact timing so as soon as we get into a place where we feel more confident about the exact timing and the rollout will be able to give more updates and Jason the other thing too that I would add from a financial perspective is really nothing new from what we are we just discussed last quarter in detail with.

Speaker Change: L.

Speaker Change: Thank you Jason next question please.

Jason Ader: That design win from a gross margin profile again hardware would not be reflected as how were planning that obviously are longer term from an operating margin. We expect expansion over time with this opportunity, but again. These factors are very consistent with what we described it last quarter.

Speaker Change: Our next question comes from Simon Leopold from Raymond James. Please go ahead. Your line is open.

Simon Leopold: I was hoping you could update us on your thinking of how enterprise adoption of AI initiatives could could affect your business.

Charlie Giancarlo: Charlie you you've highlighted this uplift phase.

Jason Ader: In detail.

Simon Leopold: If you could talk about how you think that could affect your business and win thank you.

Speaker Change: Thank you Jason next question please.

Speaker Change: Our next question comes from Simon Leopold from Raymond James. Please go ahead. Your line is open.

Speaker Change: Yeah, well you're at AI as we've talked in the past is a is a.

Simon Leopold: Thanks, I was hoping you could update us on your thinking of how enterprise adoption of AI initiatives could could affect your business.

Simon Leopold: Multifaceted subject.

Simon Leopold: One is there's the large scale machine learning environment, which is really just the top the top of the peak of the pyramid. If you will of enterprises that we will be doing their own machine learning environment.

Speaker Change: Charlie you you've highlighted this uplift they if.

Speaker Change: If you could talk about how you think that could affect your business and win thank you.

Simon Leopold: Hence I did hint that Oh, we've got a a nice a new announcement coming that will be demonstrating a G. T. C that really does relate to the largest scale of the AI opportunities.

Speaker Change: Yeah, well you'd add AI as we've talked in the past is a is a.

Speaker Change: Multifaceted subject.

Speaker Change: One is there's the large scale machine learning environment, which is really just the top the top of the peak of the pyramid. If you will of enterprises that we'll be doing their own machine learning environment. We did hint I did hint that we've.

Simon Leopold: Second is the inference opportunity we've had a number of conversations we continue to have conversations with with both customers as well as with Nvidia on the inference opportunity I still see that as a little ways out, but we're starting to build some momentum.

Speaker Change: We've got a.

Speaker Change: Nice.

Speaker Change: New announcements coming that will be demonstrating at GTC that really does relate to the larger scale of the AI opportunities.

Simon Leopold: Early on in terms of early conversations with customers, who plan on deploying in that area.

Speaker Change: <unk> is the inference opportunity we've had a number of conversations we continue to have conversations with with both customers as well as with Nvidia on the inference opportunity I still see that as a little ways out, but we're starting to build some momentum.

Simon Leopold: I'll I'll state once again that I think our biggest opportunity.

Simon Leopold: Is in reorganizing.

Simon Leopold: The way that customers manage their production data from data silos into an enterprise data cloud, we see that as a major we see AI as a major proud if you will towards customers rethinking the architecture of their data storage into something that is.

Speaker Change: Early on in terms of early conversations with customers, who plan on deploying in that area. All state once again that I think our biggest opportunity.

Speaker Change: Is in reorganizing.

A much friendlier, if you will to AI getting access to data for real time analysis, especially in inference in rag type environments. So that's we believe that our fusion couldn't be coming.

Speaker Change: The way that customers manage their production data from data silos into an enterprise data cloud, we see that as a major we see AI as a major proud if you will towards customers rethinking the architecture of their data storage into something that is.

Simon Leopold: You know too soon.

Simon Leopold: That it's a major opportunity for us not only in the.

Simon Leopold: And the management space in the compliance space to allow customers to have a better non manual automated method for managing their data, but frankly in the AI space, making all of that data available for AI analysis, yes.

Speaker Change: A much friendlier, if you will to AI getting access to data for real time analysis, especially in inference and rack type environments. So that's we believe that our fusion couldnt be coming.

Simon Leopold: Simon This is Rob just to add onto that you know I think if we step back the AI segment and the opportunity I think it continues to be playing out much as we had expected as Charlie alluded to.

Speaker Change: Too soon.

Speaker Change: It's a major opportunity for us not only in the and the management space in the compliance space to allow customers to have a better non manual automated method for managing their data, but frankly in the AI space, making all of that data available for AI analysis, yes.

Simon Leopold: You've got the high performance training infrastructure environments that have.

Simon Leopold: Last year, or so I've gotten a lot of the attention of what we're starting to see a bit more driving our engagements are as enterprises move more towards the entrance of rag deployment.

Speaker Change: This is Rob just to add onto that I think if we step back the AI segment and the opportunity I think it continues to be playing out much as we had expected as Charlie alluded to.

Simon Leopold: Type phases or start considering how theyre going to connect their broader data environments.

Simon Leopold: Datasets in silos into those AI workflows coming to pure and pure fusion to go help them do that and so if we step back and we look at where we sit in the AI segment today a lot of that has been historically led by flash blade, but as the inference opportunity starts to play out and certainly as <unk>.

Speaker Change: You've got the high performance training infrastructure environments that have.

Speaker Change: Last year or so have gotten a lot of the attention of what we're starting to see a bit more driving our engagements are as enterprises move more towards the entrance of rag deployment.

Speaker Change: Type phases or start considering how theyre going to connect their broader data environments and and you know.

Simon Leopold: <unk> comes into play we're also now seeing more and more customers that are deploying our port works in flash array solutions really our entire portfolio and platform of solutions to help them drive their AI initiatives as they brought in a broaden out from a purely just looking at training to the entire gamut of those environments.

Speaker Change: Datasets in silos into those AI workflows.

Speaker Change: Coming to pure and pure fusion to go help them do that and so if we step back and we look at where we sit in the AI segment today, a lot of that has been historically led by flash blade, but as the inference.

Speaker Change: Fertility starts to play out and certainly as fusion comes into play. We're also now seeing more and more customers that are deploying our port works in flash array solutions really our entire portfolio and platform of solutions to help them drive their AI initiatives as they brought in a broaden out from purely just looking at training to the entire <unk>.

Simon Leopold: Thank you Simon next question please.

Speaker Change: Our next question comes from Ken Fish from Piper Sandler. Please go ahead. Your line is open.

Speaker Change: Hey, guys. This is clinton on for Jim Thanks for taking our question.

Speaker Change: Maybe to kind of interrelated ones on the margin side for you Kevin how if at all have you embedded tariffs into this guide and then I think I heard you say that investment for this year are to support other hyperscale opportunities. So should we assume that any potential incremental announcement this year wouldn't require the <unk>.

Speaker Change: <unk> of those environments.

Simon Leopold: Thank you Simon next question please.

Speaker Change: Our next question comes from Jim Fish from Piper Sandler. Please go ahead. Your line is open.

Speaker Change: Hey, guys. This is clinton on for Jim Thanks for taking our question.

Speaker Change: Incremental spend so our kind of 17% margins that we're establishing our roughly safe. Thank you.

Speaker Change: Two kind of interrelated ones on the margin side for you Kevin.

Speaker Change: If at all have you embedded tariffs into this guide and then I think I heard you say that investment for this year are to support other hyperscale opportunities. So should we assume that any potential incremental announcements. This year wouldn't require the incremental spend so our kind of 17% margins that we're establishing our.

Speaker Change: Yes that sounds great, which question would you like to pick.

Speaker Change: [laughter] [laughter].

Speaker Change: All right I appreciate it.

Speaker Change: Yeah, Yeah look I mean, we're building out the ecosystem on the hyperscale or environment that that includes enhancing for scale, our supply chain overall to absorb not only increase volume.

Speaker Change: Roughly safe thank you.

Speaker Change: Yes that sounds great, which question would you like to pick.

Speaker Change: From the one design win but also new wins as well, but that wouldn't preclude us from requiring investment to grow other opportunities I mean, each opportunity. We're looking at that has some customization.

Speaker Change: [laughter].

Speaker Change: All right I appreciate it.

Speaker Change: Yeah, Yeah look I mean, we're building out the ecosystem on the hyperscale or environment that that includes enhancing F for scale, our supply chain overall to absorb not only increase volume from from the one design win but also a new wins as well but.

Speaker Change: To it in terms of the integration of our purity software with hardware, but obviously a huge long term opportunity as we see it going forward.

Speaker Change: You wanted to just yeah, I'm in Ontario, it's a little bit.

Speaker Change: That wouldn't preclude us from requiring investment to grow our other opportunities I mean, each opportunity. We're looking at that has some customization attached to it in terms of the integration of our purity software with hardware.

Speaker Change: On the tariff side of things.

Speaker Change: First of all I think we've proved ourselves during the COVID-19 period with remarkable supply chain disruptions of being very flexible and capable and having a solid and reliable and diverse supply chain.

Speaker Change: But obviously a huge long term opportunity as we see it going forward.

Speaker Change: You may recall or for those that haven't followed us for as long.

Speaker Change: Terry do you want to just comment on tariffs.

Speaker Change: At most we went to a six week lead time, which was leadership in not just in our industry, but across the tech landscape.

Speaker Change: On the tariff side of things.

Speaker Change: First of all I think we've proved ourselves during the COVID-19 period with remarkable supply chain disruptions of being very flexible and capable and having a solid and reliable and diverse supply chain.

Speaker Change: We further diversified our since then our our supply chain and our distribution chain.

Speaker Change: Now.

Speaker Change: I cant predict nor do I think anybody can predict right now exactly what tariffs are going to occur and when and how long they'll last.

Speaker Change: You may recall or for those that haven't followed us for as long.

Speaker Change: At most we went through a six week lead time, which was you know leadership in not just in our industry, but across the tech landscape.

Speaker Change: We are developing.

Speaker Change: Contingency plans for many different scenarios.

Speaker Change: Hi.

Speaker Change: We further diversified our since then our our supply chain and our distribution chain.

Speaker Change: We will be monitoring tariffs and at the appropriate time, we will take the right action and we'll report back when we do.

Speaker Change: Now.

Speaker Change: I cant predict nor do I think anybody can predict right now exactly what tariffs are going to occur and when and how long they'll last.

Speaker Change: Next question please.

Speaker Change: Our next question comes from Wamsley Mohan from Bank of America. Please go ahead. Your line is open.

Speaker Change: We are developing.

Speaker Change: Contingency plans for many different scenarios.

Wamsley Mohan: Hi, Thank you so much.

Speaker Change: Carly and Kevin.

Speaker Change: Hi.

Speaker Change: We will be monitoring tariffs and at the appropriate time, we will take the right action and we'll report back when we do.

Speaker Change: You just noted that <unk> is becoming a larger piece of the minutes and you intend to be more aggressive E family.

Speaker Change: Thank you penetrate this opportunity what why are you not projecting a more meaningful reacceleration in revenues I mean, your exit rate. This year is 11% growth you're forecasting 11% growth all things equal from a macro standpoint.

Speaker Change: Next question please.

Speaker Change: Our next question comes from <unk> Mohan from Bank of America. Please go ahead. Your line is open.

Speaker Change: Yes. Thank you so much.

Speaker Change: Carly and Kevin.

You just noted that <unk> is becoming a larger piece of the mix and you intend to be more aggressive with the family.

Speaker Change: You're really rapidly attacking this opportunity so.

Speaker Change: Is there some other offset like how should we be thinking about sort of the lack of reacceleration.

Speaker Change: So as you penetrate this opportunity while why are you not projecting a more meaningful reacceleration in revenues I mean, your exit rate. This year is 11% growth you're forecasting 11% growth all things equal from a macro standpoint, but you're really rapidly attacking this opportunity.

Speaker Change: In revenue terms. Thank you.

Speaker Change: Yeah. If you consider the fact that we also are expecting a return to growth in the evergreen one area I think I'd say, we think it's a reasonable.

Speaker Change: The forecast or guide for the year, obviously, it will depend a lot on on the the overall buying and macro environment, but you know of course, we are still we are growing faster than the industry and growing faster than all of our competitors.

Speaker Change: No.

Speaker Change: Is there some other offset like how should we be thinking about sort of the lack of reacceleration.

Speaker Change: In revenue terms. Thank you.

Speaker Change: Yeah. If you consider the fact that we also are expecting a return to growth in the evergreen one area I think I'd say, we think it's a reasonable.

Speaker Change: So that's an important characteristic obviously, we'd like to grow even faster, but I think given the beginning of the year and the and the political uncertainties that exists right now I think it's a good guide yes.

Speaker Change: The forecast or guide for the year.

Speaker Change: Obviously, it'll depend a lot on the the overall buying and macro environment.

Speaker Change: Yeah, and lumps, yet I'd add a couple of other points to that from our view is obviously our guide for this year is contemplating in it spend environment, that's relatively consistent year over year. So we're not a we're not considering any significant or substantial change to that environment and I do want to remind you when we think about the.

You know of course, we are still we are growing faster than the industry and growing faster than all of our competitors.

Speaker Change: So that's an important characteristic obviously, we'd like to grow even faster, but I think given the beginning of the year and the and the political uncertainties that exists right now I think it's a good guide.

Speaker Change: The FY 'twenty five revenue growth, we did see some benefit as a result of higher evergreen one opportunities converting to a traditional sales in the back half of the year and I talked about that last quarter. When you normalize for that tailwind that's about a point and a half in FY 'twenty five so we are and then.

Speaker Change: Yeah, and <unk> I'd add a couple of other points to that from our view is obviously our guide for this year is contemplating in it spend environment, that's relatively consistent year over year. So we're not a we're not considering any significant or substantial change to that environment and I do want to remind you when we think about the.

Speaker Change: Combined with Charlie's point of expected growth of evergreen one.

Speaker Change: The FY 'twenty five revenue growth, we did see some benefit as a result of higher evergreen one opportunities converting to traditional sales in the back half of the year and I talked about that last quarter. When you normalize for that tailwind that's about a point and a half and in FY 'twenty five so we are and then.

Speaker Change: In FY 'twenty six we are seeing a bit of an uptick in revenue growth there year over year when normalizing for those two points.

Speaker Change: Thank you <unk> next question please.

Meta Marshall: Our next question comes from meta Marshall from Morgan Stanley. Please go ahead. Your line is open.

Speaker Change: Combined with Charlie's point of expected growth of evergreen one.

Meta Marshall: Great. Thanks.

Meta Marshall: On a kind of capex versus Opex dynamic.

Speaker Change: In FY 'twenty six we are seeing a bit of an uptick in revenue growth there year over year when normalizing for those two points.

Last year, when we were in a more constrained capex environment, you were talking about kind of seen an acceleration in evergreen just wanted to get a sense of you know do you feel like customers are kind of out there more for opex or sorry for Capex in this period as they kind of refresh a lot of data center equipment or just kind of.

Speaker Change: Thank you <unk> next question please.

Meta Marshall: Our next question comes from meta Marshall from Morgan Stanley. Please go ahead. Your line is open.

Meta Marshall: Great. Thanks.

Meta Marshall: On a kind of capex versus Opex dynamic.

Meta Marshall: Some of the dynamics that you're seeing just in terms of customers' appetite for capex versus opex purchases.

Meta Marshall: Last year, when we were in a more constrained capex environment and you were talking about kind of seen an acceleration in evergreen just wanted to get a sense of you know do you feel like customers are kind of out there more opex or sorry for capex in this period as they kind of refresh a lot of data center equipment or just kind of.

Meta Marshall: Yeah me too.

Meta Marshall: We saw a lot of change during the year.

Meta Marshall: Each quarter turned out to be a little different than the quarter before and different than the quarters last year, which you, which you pointed out to which we are.

Meta Marshall: We believe that the market is still quite immature in the area of what is a traditional product.

Meta Marshall: Some of the dynamics that you're seeing just in terms of customers' appetite for capex versus opex purchases.

Meta Marshall: Where the.

Meta Marshall: Where the Corp.

Meta Marshall: Yeah me too.

Meta Marshall: Corporate data centers the on Prem data Center has typically typically purchased.

Meta Marshall: We saw a lot of change during the year each.

Meta Marshall: Each quarter turned out to be a little different than the quarter before and different than the quarters last year, which you, which you pointed out to which we are.

Meta Marshall: Their products to where we are one of the first to really provide an as a service offering a SaaS offering.

Meta Marshall: We believe that the market is still quite immature in the area of what is a traditional where the where the.

Meta Marshall: <unk> on Prem.

Meta Marshall: What we find is that it's a more complex sale and the complexity involved the finance organization within within a customer where they have to get their heads around what it means to them not just from a total cost standpoint, but frankly from their own reporting and accounting.

Meta Marshall: Corporate data centers the on Prem data Center has typically typically purchased.

Meta Marshall: Their products to where we are one of the first to really provide an as a service offering a SaaS offering.

Meta Marshall: Standpoint.

Meta Marshall: Which makes it a longer and more challenging sale, whether thats for us or for our for our channel as well. So we see still quite a lot of misunderstanding in our maturity. If you will of the market overall, and we think thats still causing.

Meta Marshall: On on Prem.

Meta Marshall: And what we find is that it's a more complex sale and the complexity involved the finance organization within within a customer where they have to get their heads around what it means to them not just from a total cost standpoint, but frankly from their own reporting and accounting standpoint.

Meta Marshall: A greater difficulty.

Meta Marshall: In terms of getting consistency, if you will on a quarter by quarter basis. So it's something that we do expect that as the market matures, we'll start to stabilize more as we go forward, but it does make it a little bit difficult to project.

Meta Marshall: Which makes it a longer and more challenging sale, whether thats for us or for our for.

Meta Marshall: For our channel as well so we see still quite a lot of misunderstanding in our maturity. If you will of the market overall, and we think thats still causing.

Meta Marshall: If I break that down a little bit more to Q3, when we saw really a significant peak. If you will in terms of evergreen one opportunities converting 200, a traditional sale we saw that moderate in Q4 and I think that's in part contributing to the record sales that.

Meta Marshall: A greater difficulty.

Meta Marshall: In terms of getting consistency, if you will on a quarter by quarter basis. So it's something that we do expect that as the market matures, we'll start to stabilize more as we go forward, but it does make it a little bit difficult to project.

Meta Marshall: We saw in the quarter as well and then if I take a step back on our evergreen one performance as a whole in the year and look at what was the driver of the year over year decline. It really comes down to the timing of the larger deals, which we defined as over $5 million in the first half.

Meta Marshall: If I break that down a little bit more to Q3, when we saw really a significant peak. If you will in terms of evergreen one opportunities converting 200, a traditional sale we saw that moderate in Q4 and I think that's in part contributing to the record sales that.

Meta Marshall: Closing, because we pick that up in the second half closed the same out of the same amount of large deals in the second half as we did last year and our velocity business, which is below 5 million really picked up nicely. We saw a nice annual growth over that so I really do think that as we look through the year.

Meta Marshall: We saw in the quarter as well and then if I take a step back on our evergreen one performance as a whole in the year and look at what was the driver of the year over year decline. It really comes down to the timing of the larger deals, which we defined as over $5 million in the first half.

Meta Marshall: It was really coming down to the larger deals and the timing of closing of those larger deals in the first half.

Meta Marshall: Closing because we picked that up in the second half closed the same that same amount of large deals in the second half as we did last year and our velocity business, which is below 5 million really picked up nicely. We saw a nice annual growth over that so I really do think that as we look through the year.

Speaker Change: Thank you Amanda next question please.

Speaker Change: Our next question comes from ASEAN merchant from Citigroup. Please go ahead. Your line is open.

Speaker Change: Oh, great. Thanks for squeezing me in here on gross margins.

Speaker Change: Do you need to do some NAND pre buys here in order to kind of get to your guidance for improving product gross margins for the <unk> family. If you could walk us through the confidence and what's underpinning the confidence that product gross margins improve here from what you delivered in <unk>. Thank you.

Speaker Change: He was really coming down to the larger deals and the timing of closing of those larger deals in the first half.

Speaker Change: Thank you Amanda next question please.

Speaker Change: Our next question comes from ASEAN merchant from Citigroup. Please go ahead. Your line is open.

Speaker Change: Oh, great. Thanks for squeezing me in here on gross margins.

Speaker Change: Yes. Thank you I see a we actually believe that well first of all pre buys and managing if you will pricing in the market is something we really believe that we have a very high skill.

Speaker Change: Do you need to do some NAND pre buys here in order to kind of get to your guidance for improving product gross margins for the <unk> family. Just if you could walk us through the confidence and what's underpinning the confidence that product gross margins improve here from what you delivered in <unk>. Thank you.

Speaker Change: At now.

Speaker Change: Now we don't.

Speaker Change: I understand that some other companies have announced when they've done pre buys we've never really done that.

Speaker Change: We're in the market every day every month, we're quite skilled at buying ahead. When we believe it's advantageous to us or using the spot market. When we believe that's advantageous. So we probably won't start start here what I will say it is something that we are in the market all the time for such things and yes, we will take advantage of.

Speaker Change: Yes. Thank you I see a we actually believe that well first of all pre buys and managing if you will pricing in the market is something we really believe that we have a very high skill.

Speaker Change: At no we don't.

I understand that some other companies have announced when they've done pre buys we've never really done that we're in the market every day every month, we're quite skilled at buying ahead. When we believe it's advantageous to us.

Speaker Change: <unk>, let's say market opportunities when when we believe we have them.

Speaker Change: Thank you I'll see you next question please.

Speaker Change: Our next question comes from Tim Long from Barclays. Please go ahead. Your line is open.

Speaker Change: Using the spot market when we believe that's advantageous so and we probably won't start start here, what I will say it is that we're in the market all the time for such things and yes, we'll take advantage of let's say market opportunities when when we believe we have them.

Speaker Change: Yeah.

Speaker Change: Thank you.

Speaker Change: Sorry, just wanted to circle back on the kind of pricing keeps youre, saying that used to be NAND pricing. As you said everyone else has the same thing now that you are competing more with hdds.

Speaker Change: Thank you <unk> next question please.

Speaker Change: It's a different kind of calculus.

Speaker Change: Our next question comes from Tim Long from Barclays. Please go ahead. Your line is open.

Speaker Change: Curious, how you're thinking about like advancements in DD and it sounds like maybe you think this in 2024. It was kind of a one off year, where NAND increase than HDD didn't but how are you thinking about the potential for this happening again in the future and what that would need for the timeline.

Speaker Change: Yeah.

Speaker Change: Thank you.

Speaker Change: Sorry, just wanted to circle back on the kind of pricing it seems youre, saying that used to be NAND pricing. As you said everyone else has the same thing now that you're competing more with hdds.

Speaker Change: It's a different kind of calculus.

Speaker Change: For HDD replacement with with NAND, how does that change the ROI calculation or anything any color you could provide on that would be helpful. Thank you.

Speaker Change: Curious, how you're thinking about like advancements in DD and it sounds like maybe you think this in 2024. It was kind of a one off year, where NAND increased in HDD did in <unk>, but how are you thinking about the potential for this happening again in the future and what that would need for the timeline.

Speaker Change: Sure. Thank you Tim.

Speaker Change: Tim So you're very savvy in this market.

Speaker Change: Indeed, we are competing with HDD systems, right, So think of it as a.

Speaker Change: <unk> NAND based system versus an HDD based system I'd also say that there are although we don't want to get into all that detail on this on this call. There are multiple different layers of HDD systems, depending on depending on size and level of performance.

Speaker Change: For HDD replacement with with NAND, how does that change the ROI calculation or anything any color you can provide on that would be helpful. Thank you.

Speaker Change: Sure. Thank you Tim.

Speaker Change: Tim So you're very savvy in this market.

Speaker Change: Indeed, we are competing with HDD systems, right, So think of it as a.

Speaker Change: With the lowest level of performance, obviously being the cheapest that are out there.

Speaker Change: <unk> NAND based system versus an HDD based system I'd also say that there are although we don't want to get into all that detail on this on this call. There are multiple different layers of HDD systems, depending on depending on size and level of performance.

That being said, we believe that we are basically the HDD systems are basically at a system level about as lower prices. They can possibly get that is to say that the hdds themselves.

Speaker Change: Or not as much of a factor in the price of the total system compared to the amount of common equipment now that it takes to be able to run those environments. So that's a long way of saying that it really our pricing.

Speaker Change: With the lowest level of performance, obviously being the cheapest that are out there.

Speaker Change: That being said, we believe that we are basically the HDD systems are basically at a system level about as lower prices. They can possibly get that is to say that the hdds themselves are not as much of a factor in the price of the total system compared to the amount of common equipment now.

Speaker Change: And gross margins are going to depend a lot more on the NAND prices versus the HDD systems, then it's going to depend on the HDD price.

Speaker Change: In other words hammer a greater density of ACD is not going to make that much of a difference.

Speaker Change: That it takes to be able to run those environments. So.

At this point, it's really going to be determined by the NAND market.

Speaker Change: That's a long way of saying that it really our pricing.

Speaker Change: And once we get to a <unk>.

Speaker Change: Competitive both price as well as competitive gross margin then I think it's game over yeah and Tim. This is Rob just to add onto that I think the first part of your question was Hey, you know as you talk to the HDD vendors theyre laying out roadmaps, how does that factor in.

Speaker Change: And gross margins are going to depend a lot more on the NAND prices versus the HDD.

Speaker Change: <unk>, then it's going to depend on the HDD price.

Speaker Change: In other words hammer greater density of ACD is not going to make that much of a difference.

Speaker Change: As we've said, we really haven't seen nor do we foresee the pricing environment for hard disk drives to move very much we don't feel like the.

Speaker Change: At this point, it's really going to be determined by the NAND market and.

Speaker Change: And once we get to a <unk>.

Speaker Change: Competitive both price as well as competitive gross margin then I think it's game over yeah and Tim. This is Rob just to add onto that I think the first part of your question was hey, as you talk to the HDD vendors theyre laying out roadmaps, how does that factor in.

Speaker Change: The technology environment is going to move that much either.

<unk> are struggling to get larger but.

Speaker Change: But they're not getting any faster in fact, they are actually getting slower per unit capacity and that's really limiting their applicability.

Speaker Change: As we've said, we really haven't seen nor do we foresee the pricing environment for hard disk drives to move very much we don't feel like the you know.

Speaker Change: I think the other part of your question was hey, So how does this factor into the ROI or really the Tcl equation.

Speaker Change: And this is where as Charlie alluded to if you look at our solutions on a full system basis as compared to HDD base systems.

Speaker Change: The technology environment is going to move that much either.

Speaker Change: <unk> are struggling to get larger but.

Speaker Change: But they're not getting any faster in fact, they are actually getting slower per unit capacity and thats really limiting their applicability.

Speaker Change: We're already event.

Speaker Change: Give the disks away for free and on a TCE basis, our systems are already advantaged and so while you will see prices will fluctuate in the short term. The long term trajectory is clear they're going to continue to decline over time and as that does that's just going to continue to allow us to accelerate the replacement of desk.

Speaker Change: I think the other part of your question was hey, So how does this factor into the ROI or really the Tcl equation.

Speaker Change: And this is where as Charlie alluded to if you look at our solutions on a full system basis as compared to HDD Bae systems.

Speaker Change: Thank you Tim next question please.

Speaker Change: We're already event.

Our next question comes from Max Mccanless from Lake Street Capital Markets. Please go ahead. Your line is open.

Speaker Change: Give the disks away for free and on a TCE basis, our systems are already advantaged.

Speaker Change: And so while you will see prices will fluctuate in the short term. The long term trajectory is clear they are going to continue to decline over time and as that does that's just going to continue to allow us to accelerate the replacement of desk.

Max Mccanless: Hey, guys. Thanks for taking my question you know you mentioned the dynamic of geopolitical environment as well as tariffs, but I was wondering if theres anything pure specific that might be.

Max Mccanless: You are seeing out in the market right now that may risk that 11% guide for next year. Thanks.

Speaker Change: Thank you Tim next question please.

Speaker Change: Our next question comes from Max Mccanless from Lake Street Capital Markets. Please go ahead. Your line is open.

Max Mccanless: Yeah.

Max Mccanless: Well.

Max Mccanless: Part of that part of the difficulty of answering the question is it's it's very difficult to predict anything specific.

Max Mccanless: Hey, guys. Thanks for taking my question you know.

Max Mccanless: You mentioned, the dynamic of geopolitical environment as well as tariffs, but I was wondering if theres anything pure specific you know that might be that youre seeing on the market right now that may risk that 11% guide for next year. Thanks.

Max Mccanless: The political environment is in fact, very dynamic and unpredictable at the moment. So I would say, we don't see anything specific that would artificially.

Max Mccanless: Yeah.

Max Mccanless: Block us from getting to the 11%.

Max Mccanless: Well.

Max Mccanless: Part of that part of the difficulty of answering the question is it's it's very difficult to predict anything specific.

Max Mccanless: If anything I would say that in a normalized market that is a market, where we didn't expect let's say a lot of political uncertainty over time, I'd expect the market to be improving a rather than rather than declining at this point, yes, and again are our guide. This is Kevin Our guide for next year on revenue growth again consider.

Max Mccanless: The political environment is in fact, very dynamic and unpredictable at the moment.

Max Mccanless: So I would say, we don't see anything specific that would.

Max Mccanless: Artificially.

Max Mccanless: Block us from getting to the 11%.

Max Mccanless: Third our consistent it spending environment year over year, so if that changes to the positive or negative in a substantial way that would be a consideration.

Max Mccanless: If anything I would say that in a normalized market that is a market, where we didn't expect let's say a lot of political uncertainty over time, I'd expect the market to be improving.

Max Mccanless: And the other thing we highlighted as well is that we are expecting our evergreen one our service offering to grow next year and that's built into our expectations of 11% as well.

Speaker Change: Rather than rather than declining at this point, yes, and again are our guide. This is Kevin Our guide for next year on revenue growth again considered a consistent it spending environment year over year. So if that changes to the positive or negative in a substantial way that would be a consideration.

Max Mccanless: Next question please.

Speaker Change: Our next question comes from <unk> <unk> from Cleveland Research. Please go ahead. Your line is open.

Speaker Change: Hello, Thanks for taking the question as to speak here just on the coming GTC conference like just any more color on the decision to enter here I mean, it seems a little bit different versus prior commentary in terms of pursuing.

The other thing we highlighted as well is that we are expecting our evergreen one our service offering to grow next year and that's built into our expectations of 11% as well.

Speaker Change: Next question please.

Our next question comes from <unk> <unk> from Cleveland Research. Please go ahead. Your line is open.

Speaker Change: The training opportunity and just curious.

Speaker Change: Hello, Thanks for taking the question as to speak here just on the coming GTC conference like just any more color on the decision to enter here I mean, it seems a little bit different versus prior commentary in terms of pursuing.

Speaker Change: How you hope to stand out in this market. Thank you.

Speaker Change: Okay.

Speaker Change: Well the the.

Speaker Change: The AI training market has traditionally been.

Speaker Change: H P C or high performance computing oriented in the past.

Speaker Change: We have traditionally sold into the standard enterprise market and the values. If you will by which purchases would make decisions in those two markets are actually quite different.

Speaker Change: The training opportunity and just curious.

Speaker Change: How you hope to stand out in this market. Thank you.

Speaker Change: Okay.

Speaker Change: We have always indicated that we have a.

Speaker Change: Well.

Speaker Change: The AI training market has traditionally been.

Speaker Change: Very superior technology by virtue of our purity operating environment and the unique advantages that we have with direct flash we've.

Speaker Change: H P C or high performance computing oriented in the past.

Speaker Change: Yeah, we have traditionally sold into the standard enterprise market and the values. If you will by which purchases would make decisions in those two markets are actually quite different.

Speaker Change: We've been able to make some modifications to our product that really allows it to address a lot of the.

Speaker Change: Performance characteristics that <unk> environments are specifically looking for and.

Speaker Change: We have always indicated that we have a you know.

Speaker Change: Very superior technology by virtue of our purity operating environment and the unique advantages that we have with direct flash.

Speaker Change: Kudos to our team to have been able to do that inside of our R&D spending budget.

Speaker Change: We've been able to make some modifications to our product that really allows it to address a lot of the.

Speaker Change: To be able to deliver that at a at GTC. So we're quite proud of it we think it's going to make a big splash in and you can you can all go visit a pure dot AI right now and start to be part of the the role the roll up to the to GTC.

Speaker Change: Performance characteristics that <unk> environments are specifically looking for <unk> and.

Speaker Change: Kudos to our team to have been able to do that inside of our R&D spending budget.

Speaker Change: Thank you Larry next question please.

Speaker Change: Our next question comes from David <unk> from UBS. Please go ahead. Your line is open.

Speaker Change: To be able to deliver that at a at GTC. So we're quite proud of it we think it's going to make a big splash in and you can you can all go visit a pure dot AI right now and start to be part of the the role the roll up to the to GTC.

Speaker Change: Great. Thanks, guys. Thanks, Charlie Thanks, Kevin I want to ask a question on Port works you referenced in your prepared remarks that you had two fortune 50 companies migrate from Vmware using port works too it looks like open chip can you maybe drive John a little bit detail on kind of what was kind of the <unk>.

Larry: Thank you Larry next question please.

David: Our next question comes from David <unk> from UBS. Please go ahead. Your line is open.

Speaker Change: Reason behind it what were the customers looking for a you mentioned a little bit in the release, but would love to get some more color on what work is successful.

Speaker Change: Great. Thanks, guys. Thanks, Charlie Thanks, Kevin I want to ask a question on Port works you referenced in your prepared remarks that you had two fortune 50 companies migrate from Vmware using port works too it looks like open chip can you maybe drive John a little bit detail on kind of what was kind of the <unk>.

Speaker Change: Sort of migrating those environments over from Vmware.

Speaker Change: Backdrop effectively thanks, Yeah, well you know consistent with our conversations in the past there are many many customers are looking towards kubernetes and containers as their solutions in the future.

Anything behind it what were the customers looking for a you mentioned a little bit in the release, but would love to get some more color on how what work is successful in.

Speaker Change: And if youre looking to kubernetes to manage your application environment in the future and you are.

Speaker Change: Sort of migrating those environments over from Vmware.

Speaker Change: Our customer today of Virtualized solutions, which most customers are they have a lot of virtualization why would you want to manage it any differently than the way you're managing your future container environments. So the attraction in the old lore, if you will of moving to kubernetes as your base application management environment is.

Speaker Change: Backdrop, effectively thanks, yeah, well consistent with our conversations in the past you know many many customers are looking towards kubernetes and containers as their solutions in the future.

Speaker Change: And if youre looking to kubernetes to manage your application environment in the future and do you.

Speaker Change: A very compelling and now that Oh, what's so called cube, Bert or kubernetes virtualization now that that exists. It's a it's a compelling future movement. If you will for companies looking to get to a consolidated integrated application management environment and I think that's what.

Speaker Change: Our customer today of Virtualized solutions, which most customers are they have a lot of virtualization why would you want to manage it any differently than the way you are managing your future container environments. So the attraction and the allure. If you will of moving to kubernetes as your base application management environment.

Speaker Change: Draw on both of these companies towards that direction now.

Speaker Change: It is very compelling and now that.

Speaker Change: What's so called cube hurt or kubernetes virtualization now that that exists. It's a compelling future movement. If you will for companies looking to get to a consolidated integrated application management environment and I think that's what draw on both of these companies towards that direction.

Very fair.

Speaker Change: It's really a Q Verde is still immature just like every other solution compared to Vmware, but on a long term basis, it's it's compelling because it is integrated with kubernetes.

Speaker Change: Thank you David we'll take our last question from a person who re entered the queue. Thank you for that.

Speaker Change: <unk> now.

Howard Ma: Our last question will come from Howard <unk> from Guggenheim. Please go ahead. Your line is open.

Speaker Change: Very fair.

Speaker Change: It's really a Q Verde is still immature just like every other solution compared to Vmware, but on a long term basis, it's it's compelling because it is integrated with kubernetes.

Howard Ma: Hey, Thanks for taking the follow up does your FY 2006 guidance the full year guidance bake in the that wanted to exit bites of Hyperscale a shipment that you mentioned last time.

Speaker Change: Thank you David we'll take our last question from a person who re entered the queue. Thank you for that.

Howard Ma: It does Howard we've contemplated that in terms of our guide for this year.

Howard: Our last question will come from Howard <unk> from Guggenheim. Please go ahead. Your line is open.

Howard Ma: So nothing additional to that we talked about last quarter.

Howard: Hey, Thanks for taking the follow up.

Charlie Giancarlo: Thank you Howard before we conclude I think Charlie has some final comments to make yes. Thank you Paul as we close out our last fiscal year I do want to reflect on the great progress that our team has made the platform strategy is continuing to drive transformation in the storage industry and we're helping enterprises address.

Howard: Does your FY 'twenty six guidance for full year guidance bake in the that wanted to exit bites of Hyperscale a shipment that you mentioned last time.

Howard: It does Howard we've contemplated that in terms of our guide for this year.

Howard: So nothing additional to that we talked about last quarter.

Charlie Giancarlo: Now, they're fragmented data environments and unlock the full potential of artificial intelligence and to build their own enterprise data cloud.

Howard: Thank you Howard before we conclude I think Charlie has some final comments to make yes. Thank you Paul as we close out our last fiscal year I do want to reflect on the great progress that our team has made the platform strategy is continuing to drive transformation in the storage industry and we're helping enterprises address.

Charlie Giancarlo: The Hyperscale design win has been a key milestone it's highlighted I think our role in solving large scale data management and growth of data.

Speaker Change: What drives energy usage in the Hyperscale.

Howard: Now, they're fragmented data environments and unlock the full potential of artificial intelligence and to build their own enterprise data cloud.

Speaker Change: I want to thank our customers, our investors, our employees and partners and our suppliers for supporting us throughout the year and we look forward to continuing the journey together in FY 'twenty six thank you.

Howard: The Hyperscale design win has been a key milestone it's highlighted I think our role in solving large scale data management and growth of data.

Speaker Change: That concludes the pure storage fourth quarter and full year fiscal 2025 financial results. Thank you for your participation you may now disconnect your lines.

Speaker Change: What drives energy usage in the Hyperscale.

Speaker Change: Want to thank our customers, our investors, our employees and partners and our suppliers for supporting us throughout the year and we look forward to continuing the journey together in FY 'twenty six thank you.

Speaker Change: That concludes the pure storage fourth quarter and full year fiscal 2025 financial results. Thank you for your participation you may now disconnect your lines.

Speaker Change: Yeah.

Speaker Change: Yeah.

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