SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________________________________
FORM 8-K
_____________________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 21, 2018
_____________________________________
Pure Storage, Inc.
(Exact name of Registrant as Specified in Its Charter)
_____________________________________

	
					
Delaware	 	001-37570	 	27-1069557	
 	 	 	 	 	
(State or Other Jurisdiction
of Incorporation)	 	(Commission
File Number)	 	(IRS Employer Identification No.)	
 
650 Castro Street, Suite 400
Mountain View, California 94041
(Address of Principal Executive Offices)
 
(800) 379-7873
(Registrant’s Telephone Number, Including Area Code)
 
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
_____________________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):

		
o	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)	

		
o	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)	

		
o	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))	

		
o	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))	
 	 	
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company   ¨

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

Item 2.02. Results of Operations and Financial Condition.
 
On  August 21, 2018 , Pure Storage, Inc. (“Pure Storage”) issued a press release regarding its financial results for the quarter ended  July 31, 2018 . A copy of the press release is furnished as Exhibit 99.1 to this Form 8-K.
 
This information, including the exhibit(s) hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
 
Pure Storage is making reference to non-GAAP financial information in the press release and the conference call. A reconciliation of these non-GAAP financial measures to the comparable GAAP financial measures is contained in the attached press release.  These non-GAAP financial measures are reported in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.

 
Item 9.01. Financial Statements and Exhibits.
 
(d) Exhibits.
The following exhibit is furnished herewith:

	
			
Exhibit No.	  	Description	
99.1	  	Press Release entitled “Pure Storage Announces Second Quarter Fiscal 2019 Financial Results”	

SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	
						
 	Pure Storage, Inc.	
 	(Registrant)	
 	 	 	 	 	
 	 	 	By:	 	/s/ TIMOTHY RIITTERS	
 	 	 	 	 	Timothy Riitters	
 	 	 	 	 	Chief Financial Officer	
August 21, 2018

Exhibit Index

	
			
Exhibit No.	  	Description	
99.1	  	Press Release entitled “Pure Storage Announces Second Quarter Fiscal 2019 Financial Results”	

Exhibit 99.1
 
Pure Storage Announces Second Quarter Fiscal 2019 Financial Results
 
MOUNTAIN VIEW, Calif., August 21, 2018 – Pure Storage (NYSE: PSTG), the all-flash storage leader that helps innovators build a better world with data, today announced financial results for its second quarter ended July 31, 2018 .

Key quarterly business and financial highlights include: 
		
•	Revenue: $308.9 million , up 37% Y/Y, exceeding the high end of our guidance;	
		
•	Gross margin: 66.7% GAAP; 68.0% non-GAAP, all-time high in history;	
		
•	Operating margin: -17.9 % GAAP; 0.3 % non-GAAP, up 9.2 ppts and 10.6 ppts Y/Y, respectively;	
		
•	Acquired StorReduce, Inc., a cloud-first software-defined storage solution.	

“Pure has delivered another exceptional quarter, with all measures exceeding our Q2 guidance ranges," said Charles Giancarlo, CEO, Pure Storage. “Our continued focus on enabling customers to succeed in a data-centric world is working and validated, maintaining Pure's lead in the data storage market.”

Nearly 400 new customers joined Pure Storage in the quarter, increasing the total to more than 5,150 organizations. New customer wins in the quarter include: Dustin Sverige, Honda Federal Credit Union, Fresenius Medical Care, Lufthansa Aero Alzey Gmbh, New York Genome Center, Syntax, TaxSlayer, The University of Texas MD Anderson Cancer Center, and Zeiss Vision Care France. 

“Q2 was another strong quarter for Pure,” said Tim Riitters, CFO, Pure Storage. “Growth was strong, gross margins were the highest in history, and we achieved another profitable quarter.”

Second Quarter Fiscal 2019 Financial Highlights
 
The following tables summarize our consolidated financial results for the fiscal quarters ended July 31, 2018 and 2017 (in millions except percentages, per share amounts and headcount, unaudited):

	
							
GAAP Quarterly Financial Information	
 	 	Three Months Ended July 31, 2018	 	Three Months Ended July 31, 2017	 	Y/Y Change	
Revenue	 	$308.9	 	$224.7	 	37%	
Gross Margin	 	66.7%	 	66.0%	 	0.7 ppts	
Product Gross Margin	 	67.5%	 	68.1%	 	-0.6 ppts	
Support Subscription Gross Margin	 	63.9%	 	57.4%	 	6.5 ppts	
Operating Loss	 	$(55.2)	 	$(60.9)	 	$5.7	
Operating Margin	 	-17.9%	 	-27.1%	 	9.2 ppts	
Net Loss	 	$(60.1)	 	$(58.4)	 	$(1.7)	
Net Loss per Share – Basic and Diluted	 	$(0.26)	 	$(0.28)	 	$0.02	
Weighted-Average Shares	 	229.4	 	209.2	 	20.2	
Headcount	 	>2,450	 	>1,900	 	~550	

1

	
							
Non-GAAP Quarterly Financial Information	
 	 	Three Months Ended July 31, 2018	 	Three Months Ended July 31, 2017	 	Y/Y Change	
Gross Margin	 	68.0%	 	67.2%	 	0.8 ppts	
Product Gross Margin	 	67.9%	 	68.3%	 	-0.4 ppts	
Support Subscription Gross Margin	 	68.4%	 	62.5%	 	5.9 ppts	
Operating Income (Loss)	 	$0.9	 	$(23.1)	 	$24.0	
Operating Margin	 	0.3%	 	-10.3%	 	10.6 ppts	
Net Income (Loss)	 	$2.4	 	$(20.7)	 	$23.1	
Net Income (Loss) per Share – Diluted	 	$0.01	 	$(0.10)	 	$0.11	
Weighted-Average Shares – Diluted	 	262.6	 	209.2	 	53.4	

A reconciliation between GAAP and non-GAAP information is provided at the end of this release.

Financial Outlook

Pure Storage’s third quarter fiscal 2019 guidance is as follows:

•	Revenue in the range of $361 million to $369 million	
		
•	Non-GAAP gross margin in the range of 64.5% to 67.5%	
		
•	Non-GAAP operating margin in the range of 4.0% to 8.0%	

Pure Storage’s full year fiscal 2019 guidance is as follows:

•	Revenue in the range of $1.350 billion to $1.380 billion	
		
•	Non-GAAP gross margin in the range of 65.5% to 67.5%	
		
•	Non-GAAP operating margin in the range of 2.5% to 4.5%	

All forward-looking non-GAAP financial measures contained in this section titled “Financial Outlook” exclude stock-based compensation expense, payroll tax expense related to stock-based activities, amortization of debt discount and debt issuance costs and any applicable anti-dilutive share count impact of our convertible debt hedge agreements and, as applicable, other special items. We have not reconciled guidance for non-GAAP gross margin and non-GAAP operating margin to their most directly comparable GAAP measures because the items that impact these measures are not within our control and/or cannot be reasonably predicted. Accordingly, a reconciliation of the non-GAAP financial measure guidance to the corresponding GAAP measures is not available without unreasonable effort.

Conference Call Information

Pure Storage will host a teleconference to discuss the second quarter fiscal 2019 results at 2:00 p.m. (PT) on August 21, 2018 . Pure Storage will post its supplemental earnings presentation to the investor relations website at investor.purestorage.com following the conference call.

Teleconference details are as follows:

•	To Listen via Telephone: (877) 201-0168 or (647) 788-4901 (for international callers).	
		
•	To Listen via the Internet: A live and replay audio broadcast of the conference call with corresponding slides will be available at investor.purestorage.com .	
		
•	Replay: A telephone playback of this conference call is scheduled to be available approximately two hours after the call ends on Tuesday, August 21, 2018 , through September 4, 2018. The replay will be accessible by calling (800) 585-8367 or (416) 621-4642 (for international callers), with conference ID 9794206.	

2

Upcoming Events

Management will participate in upcoming financial Q&A discussions at Deutsche Bank Technology Conference on September 13, 2018 at 10:00 a.m. (PT). Pure Storage will post a link to these events on the investor relations website at investor.purestorage.com for both the live and archived webcasts.

About Pure Storage

Pure Storage (NYSE: PSTG) helps innovators build a better world with data. Pure's data solutions enable SaaS companies, cloud service providers, and enterprise and public sector customers to deliver real-time, secure data to power their mission-critical production, DevOps, and modern analytics environments in a multi-cloud environment. One of the fastest growing enterprise IT companies in history, Pure Storage enables customers to quickly adopt next-generation technologies, including artificial intelligence and machine learning, to help maximize the value of their data for competitive advantage. And with a Satmetrix-certified NPS customer satisfaction score in the top one percent of B2B companies, Pure's ever-expanding list of customers are among the happiest in the world.

Analyst Recognition

Gartner Magic Quadrant for Solid-State Arrays
IDC MarketScape for All-Flash Arrays
 
Pure Storage, Evergreen, FlashBlade, FlashStack and the "P" Logo mark are trademarks of Pure Storage, Inc. All other trademarks or names referenced in this document are the property of their respective owners.
 
Forward Looking Statements
This press release contains forward-looking statements regarding our products, business and operations, including our growth prospects and expectations regarding technology differentiation, and our outlook for the third quarter and full year fiscal 2019, and statements regarding our products, business, operations and results. Forward-looking statements are subject to known and unknown risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements. Actual results may differ materially from the results predicted, and reported results should not be considered as an indication of future performance. The potential risks and uncertainties that could cause actual results to differ from the results predicted include, among others, those risks and uncertainties included under the captions "Risk Factors" and elsewhere in our filings and reports with the U.S. Securities and Exchange Commission, which are available on our investor relations website at investor.purestorage.com and on the SEC website at www.sec.gov . Additional information will also be available in our Quarterly Report on Form 10-Q for the quarter ended July 31, 2018. All information provided in this release and in the attachments is as of August 21, 2018 , and we undertake no duty to update this information unless required by law.
 
Non-GAAP Financial Measures
To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with GAAP, we use the following non-GAAP financial measures: non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income (loss), non-GAAP operating margin, non-GAAP net income (loss), non-GAAP net income (loss) per share, free cash flow, free cash flow as a percentage of revenue, free cash flow without ESPP impact, and free cash flow without ESPP impact as a percentage of revenue.

We use these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. Our management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance and liquidity by excluding certain expenses and expenditures such as stock-based compensation expense and amortization of debt discount and debt issuance costs that may not be indicative of our ongoing core business operating results. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when analyzing historical performance and liquidity and planning, forecasting, and analyzing future periods. The presentation of these non-GAAP financial measures is not meant to be considered in isolation or as a substitute for, or superior to, our financial results prepared in accordance with GAAP, and our non-GAAP measures may be different from non-GAAP measures used by other companies.

For a reconciliation of these non-GAAP financial measures to GAAP measures, please see the tables captioned "Reconciliations of non-GAAP results of operations to the nearest comparable GAAP measures" and "Reconciliation from net cash provided by (used in) operating activities to free cash flow and free cash flow without ESPP impact," included at the end of this release.

3

Matthew Danziger – Investor Relations, Pure Storage
Tel: (650) 429-0456
ir@purestorage.com
 
Rena Fallstrom – Media Contact, Pure Storage
Tel: (408) 203-3945
pr@purestorage.com

4

PURE STORAGE, INC.
Condensed Consolidated Balance Sheets
(in thousands, unaudited)

	
									
 	 	As of
July 31, 2018	 	As of
January 31, 2018	
 	 	 	 	(As Adjusted*)	
Assets	 	 	 	 		
Current assets:	 	 	 	 		
Cash and cash equivalents	 	$	370,457		 	$	244,057		
Marketable securities	 	736,205		 	353,289		
Accounts receivable, net of allowance of $957 and $1,062	 	242,409		 	243,001		
Inventory	 	41,673		 	34,497		
Deferred commissions, current	 	23,521		 	21,088		
Prepaid expenses and other current assets	 	36,071		 	47,552		
Total current assets	 	1,450,336		 	943,484		
Property and equipment, net	 	101,718		 	89,142		
Intangible assets, net	 	4,305		 	5,057		
Deferred income taxes, non-current	 	1,534		 	1,060		
Restricted cash	 	15,778		 	14,763		
Deferred commissions, non-current	 	67,948		 	66,225		
Other assets, non-current	 	4,610		 	4,264		
Total assets	 	$	1,646,229		 	$	1,123,995		
 	 	 	 	 	
Liabilities and stockholders' equity	 	 		 	 		
Current liabilities:	 	 		 	 		
Accounts payable	 	$	68,058		 	$	84,420		
Accrued compensation and benefits	 	51,654		 	59,898		
Accrued expenses and other liabilities	 	27,049		 	26,829		
Deferred revenue, current	 	213,100		 	191,229		
Liability related to early exercised stock options	 	—		 	320		
Total current liabilities	 	359,861		 	362,696		
Convertible senior notes, net	 	436,687		 	—		
Deferred revenue, non-current	 	200,147		 	182,873		
Other liabilities, non-current	 	5,140		 	4,025		
Total liabilities	 	1,001,835		 	549,594		
 	 	 	 	 	
Stockholders’ equity:	 	 		 	 		
Common stock and additional paid-in capital	 	1,675,234		 	1,479,905		
Accumulated other comprehensive loss	 	(2,826	)	 	(1,917	)	
Accumulated deficit	 	(1,028,014	)	 	(903,587	)	
Total stockholders' equity	 	644,394		 	574,401		
Total liabilities and stockholders' equity	 	$	1,646,229		 	$	1,123,995		

* Prior period information has been adjusted to reflect the adoption impact of Accounting Standards Codification 606, Revenue from Contracts with Customers (ASC 606), which we adopted on February 1, 2018.

5

PURE STORAGE, INC.
Condensed Consolidated Statements of Operations
(in thousands, except per share data, unaudited)

	
																
 	Three Months Ended July 31,	 	Six Months Ended July 31,	
 	2018	 	2017	 	2018	 	2017	
 	 	 	(As Adjusted*)	 	 	 	(As Adjusted*)	
Revenue:	 	 	 	 	 		 	 		
Product	$	241,137		 	$	179,669		 	$	436,586		 	$	322,519		
Support subscription	67,747		 	45,001		 	128,243		 	84,796		
Total revenue	308,884		 	224,670		 	564,829		 	407,315		
 	 	 	 	 	 	 	 	
Cost of revenue:	 		 	 		 	 	 	 	
Product (1)	78,262		 	57,252		 	144,682		 	103,897		
Support subscription (1)	24,457		 	19,199		 	47,667		 	36,102		
Total cost of revenue	102,719		 	76,451		 	192,349		 	139,999		
 	 	 	 	 	 	 	 	
Gross profit	206,165		 	148,219		 	372,480		 	267,316		
 	 	 	 	 	 	 	 	
Operating expenses:	 		 	 		 	 	 	 	
Research and development (1)	84,031		 	69,361		 	162,523		 	134,789		
Sales and marketing (1)	143,749		 	117,552		 	266,116		 	209,315		
General and administrative (1)	33,591		 	22,162		 	60,921		 	42,258		
Total operating expenses	261,371		 	209,075		 	489,560		 	386,362		
 	 	 	 	 	 	 	 	
Loss from operations	(55,206	)	 	(60,856	)	 	(117,080	)	 	(119,046	)	
Other income (expense), net	(4,032	)	 	3,266		 	(5,031	)	 	5,261		
Loss before provision for income taxes	(59,238	)	 	(57,590	)	 	(122,111	)	 	(113,785	)	
Provision for income taxes	885		 	821		 	2,316		 	1,785		
Net loss	$	(60,123	)	 	$	(58,411	)	 	$	(124,427	)	 	$	(115,570	)	
 	 	 	 	 	 	 	 	
Net loss per share attributable to common
   stockholders, basic and diluted	$	(0.26	)	 	$	(0.28	)	 	$	(0.55	)	 	$	(0.56	)	
Weighted-average shares used in computing net
   loss per share attributable to common
   stockholders, basic and diluted	229,359		 	209,193		 	226,609		 	207,515		

* Prior period information has been adjusted to reflect the adoption impact of ASC 606, which we adopted on February 1, 2018.

(1) Includes stock-based compensation expense as follows:

																
Cost of revenue -- product	$	720		 	$	358		 	$	1,328		 	$	755		
Cost of revenue -- support subscription	2,929		 	2,245		 	5,613		 	4,019		
Research and development	22,232		 	17,971		 	43,322		 	33,559		
Sales and marketing	17,269		 	11,439		 	31,209		 	22,065		
General and administrative	10,504		 	4,825		 	16,137		 	8,659		
Total stock-based compensation expense	$	53,654		 	$	36,838		 	$	97,609		 	$	69,057		

6

PURE STORAGE, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands, unaudited)

	
																
 	Three Months Ended July 31,	 	Six Months Ended July 31,	
 	2018	 	2017	 	2018	 	2017	
 	 	 	(As Adjusted*)	 	 	 	(As Adjusted*)	
Cash flows from operating activities	 	 	 	 	 		 	 		
Net loss	$	(60,123	)	 	$	(58,411	)	 	$	(124,427	)	 	$	(115,570	)	
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:	 	 	 	 	 	 	 	
Depreciation and amortization	17,173		 	15,175		 	33,590		 	30,000		
Amortization of debt discount and debt issuance costs	6,434		 	—		 	7,889		 	—		
Stock-based compensation expense	53,654		 	36,838		 	97,609		 	69,057		
Other	(70	)	 	346		 	82		 	797		
Changes in operating assets and liabilities:	 	 	 	 	 	 	 	
Accounts receivable, net	(46,436	)	 	(36,546	)	 	707		 	25		
Inventory	(4,471	)	 	5,618		 	(8,900	)	 	(10,487	)	
Deferred commissions	(5,424	)	 	(8,220	)	 	(4,155	)	 	(9,587	)	
Prepaid expenses and other assets	23		 	3,758		 	11,134		 	(186	)	
Accounts payable	667		 	4,183		 	(18,135	)	 	201		
Accrued compensation and other liabilities	22,423		 	21,201		 	(7,458	)	 	(2,993	)	
Deferred revenue	24,634		 	15,867		 	39,144		 	24,251		
Net cash provided by (used in) operating activities	8,484		 	(191	)	 	27,080		 	(14,492	)	
 	 	 	 	 	 	 	 	
Cash flows from investing activities	 	 	 	 	 	 	 	
Purchases of property and equipment	(20,437	)	 	(17,331	)	 	(42,733	)	 	(30,100	)	
Purchases of marketable securities	(412,805	)	 	(39,382	)	 	(494,507	)	 	(95,358	)	
Sales of marketable securities	3,131		 	28,145		 	13,585		 	33,529		
Maturities of marketable securities	36,770		 	27,360		 	97,793		 	73,681		
Net cash used in investing activities	(393,341	)	 	(1,208	)	 	(425,862	)	 	(18,248	)	
 	 	 	 	 	 	 	 	
Cash flows from financing activities	 	 	 	 	 	 	 	
Net proceeds from exercise of stock options	19,453		 	4,536		 	29,067		 	6,793		
Proceeds from issuance of common stock under employee stock purchase plan	—		 	—		 	19,698		 	14,166		
Proceeds from issuance of convertible senior notes, net of issuance costs	—		 	—		 	562,062		 	—		
Payment for purchase of capped calls	—		 	—		 	(64,630	)	 	—		
Repurchase of common stock	—		 	—		 	(20,000	)	 	—		
Net cash provided by financing activities	19,453		 	4,536		 	526,197		 	20,959		
 	 	 	 	 	 	 	 	
Net increase (decrease) in cash, cash equivalents and restricted cash	(365,404	)	 	3,137		 	127,415		 	(11,781	)	
Cash, cash equivalents and restricted cash, beginning of period	751,639		 	181,491		 	258,820		 	196,409		
Cash, cash equivalents and restricted cash, end of period	$	386,235		 	$	184,628		 	$	386,235		 	$	184,628		

* Prior period information has been adjusted to reflect the adoption impact of ASC 606 and ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which we adopted on February 1, 2018.

7

Reconciliations of non-GAAP results of operations to the nearest comparable GAAP measures
The following table presents non-GAAP gross margins by revenue source before certain items (in thousands except percentages, unaudited):

																																									
 	 	Three Months Ended July 31, 2018	 	Three Months Ended July 31, 2017 (As Adjusted*)	
 	 	GAAP
results	 	GAAP
gross
margin (a)	 	Adjustment	 	 	 	Non-
GAAP
results	 	Non-
GAAP
gross
margin (b)	 	GAAP
results	 	GAAP
gross
margin (a)	 	Adjustment	 	 	 	Non-
GAAP
results	 	Non-
GAAP
gross
margin (b)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	$	720		 	(c)	 	 	 	 	 	 	 	 	 	$	358		 	(c)	 	 	 	 	
 	 	 	 	 	 	36		 	(d)	 	 	 	 	 	 	 	 	 	8		 	(d)	 	 	 	 	
Gross profit --
   product	 	$	162,875		 	67.5	%	 	$	756		 	 	 	$	163,631		 	67.9	%	 	$	122,417		 	68.1	%	 	$	366		 	 	 	$	122,783		 	68.3	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 		 	 		 	$	2,929		 	(c)	 	 		 	 		 	 		 	 		 	$	2,245		 	(c)	 	 		 	 		
 	 	 	 	 	 	137		 	(d)	 	 	 	 	 	 	 	 	 	87		 	(d)	 	 	 	 	
Gross profit --
   support subscription	 	$	43,290		 	63.9	%	 	$	3,066		 	 	 	$	46,356		 	68.4	%	 	$	25,802		 	57.3	%	 	$	2,332		 	 	 	$	28,134		 	62.5	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 		 	 		 	$	3,649		 	(c)	 	 		 	 		 	 		 	 		 	$	2,603		 	(c)	 	 		 	 		
 	 	 	 	 	 	173		 	(d)	 	 	 	 	 	 	 	 	 	95		 	(d)	 	 	 	 	
Total gross profit	 	$	206,165		 	66.7	%	 	$	3,822		 	 	 	$	209,987		 	68.0	%	 	$	148,219		 	66.0	%	 	$	2,698		 	 	 	$	150,917		 	67.2	%	

 * Prior period information has been adjusted to reflect the adoption impact of ASC 606, which we adopted on February 1, 2018.

(a) GAAP gross margin is defined as GAAP gross profit divided by revenue.
(b) Non-GAAP gross margin is defined as non-GAAP gross profit divided by revenue.
(c) To eliminate stock-based compensation expense.
(d) To eliminate payroll tax expense related to stock-based activities.

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The following table presents certain non-GAAP consolidated results before certain items (in thousands, except per share amounts and percentages, unaudited):

																																						
 	Three Months Ended July 31, 2018	 	Three Months Ended July 31, 2017 (As Adjusted*)	
 	GAAP
results	 	GAAP
operating
margin (a)	 	Adjustment	 	 	 	Non-
GAAP
results	 	Non-
GAAP
operating
margin (b)	 	GAAP
results	 	GAAP
operating
margin (a)	 	Adjustment	 	Non-
GAAP
results	 	Non-
GAAP
operating
margin (b)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	$	53,654		 	(c)	 	 	 	 	 	 	 	 	 	$	36,838		(c)	 	 	 	
 	 	 	 	 	2,427		 	(d)	 	 	 	 	 	 	 	 	 	906		(d)	 	 	 	
Operating income (loss)	$	(55,206	)	 	-17.9	 %	 	$	56,081		 	 	 	$	875		 	0.3	%	 	$	(60,856	)	 	-27.1	 %	 	$	37,744		 	$	(23,112	)	 	-10.3	 %	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 		 	 		 	$	53,654		 	(c)	 	 		 	 		 	 		 	 		 	$	36,838		(c)	 	 	 		
 	 		 	 		 	2,427		 	(d)	 	 		 	 		 	 		 	 		 	906		(d)	 	 	 		
 	 	 	 	 	6,434		 	(e)	 	 	 	 	 	 	 	 	 	—		 	 	 	 	
Net income (loss)	$	(60,123	)	 	 		 	$	62,515		 	 	 	$	2,392		 	 		 	$	(58,411	)	 	 		 	$	37,744		 	$	(20,667	)	 	 		
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income (loss) per share -- diluted	$	(0.26	)	 	 		 	 		 	 	 	$	0.01		 	 		 	$	(0.28	)	 	 		 	 		 	$	(0.10	)	 	 		
Weighted-average shares used in per share calculation -- diluted	229,359		 	 		 	33,216		 	(f)	 	262,575		 	 		 	209,193		 	 		 	—		 	209,193		 	 		

 * Prior period information has been adjusted to reflect the adoption impact of ASC 606, which we adopted on February 1, 2018.

(a) GAAP operating margin is defined as GAAP operating income (loss) divided by revenue.
(b) Non-GAAP operating margin is defined as non-GAAP operating income (loss) divided by revenue.
(c) To eliminate stock-based compensation expense.
(d) To eliminate payroll tax expense related to stock-based activities .
(e) To eliminate the amortization expense of debt discount and debt issuance costs related to our convertible debt.
(f) To include effect of dilutive securities (employee stock options, restricted stock units, and shares from employee stock purchase plans (ESPP)).

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Reconciliation from net cash provided by (used in) operating activities to free cash flow and free cash flow without ESPP impact (in thousands except percentages, unaudited):

	
								
 	Three Months Ended July 31,	
 	2018	 	2017	
Net cash provided by (used in) operating activities	$	8,484		 	$	(191	)	
Less: purchases of property and equipment	(20,437	)	 	(17,331	)	
Free cash flow (non-GAAP)	$	(11,953	)	 	$	(17,522	)	
Adjust: ESPP impact	(6,982	)	 	(4,964	)	
Free cash flow without ESPP impact (non-GAAP)	$	(18,935	)	 	$	(22,486	)	
 	 	 	 	
Free cash flow as % of revenue	-3.9	 %	 	-7.8	 %	
Free cash flow without ESPP impact as % of revenue	-6.1	 %	 	-10.0	 %	

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