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): March 1, 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))	

Item 2.02. Results of Operations and Financial Condition.
 
On  March 1, 2018 , Pure Storage, Inc. (“Pure Storage”) issued a press release regarding its financial results for the quarter and fiscal year ended January 31, 2018 . A copy of the press release is furnished as Exhibit 99.1 to this Form 8-K.
 
This information, including the exhibits 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 exhibits are furnished herewith:

	
			
Exhibit No.	  	Description	
99.1
	  	Press Release entitled “Pure Storage Announces Record Fourth Quarter and Full Year Fiscal 2018 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	
March 1, 2018

Exhibit Index

	
			
Exhibit No.	  	Description	
99.1
	  	Press Release entitled “Pure Storage Announces Record Fourth Quarter and Full Year Fiscal 2018 Financial Results”

Exhibit 99.1
 
Pure Storage Announces Record Fourth Quarter and Full Year Fiscal 2018 Financial Results

MOUNTAIN VIEW, Calif., March 1, 2018 -- Pure Storage (NYSE: PSTG) today announced financial results for its fourth quarter and full year ended January 31, 2018 .

Key quarterly financial highlights include:

•	Record revenue: $338.3 million, up 48% Y/Y, 2% ahead of the midpoint of guidance; Record full year revenue: $1.023 billion, up 41% Y/Y.	
		
•	Record operating margin: -4.7% GAAP; 8.3% non-GAAP, up 13.9 ppts and 10.2 ppts Y/Y, respectively, marking Pure’s first profitable quarter on a non-GAAP basis.	
		
•	Record operating cash flow of $59.0 million and free cash flow of $38.3 million, and record full-year operating cash flow of $72.8 million and free cash flow of $7.7 million.	

"This quarter marks an important milestone for Pure surpassing $1 billion in annual sales and achieving non-GAAP profitability," said Charles Giancarlo, CEO of Pure Storage. "Momentum in the business is strong as we continue our drive to help customers turn data into intelligence and advantage."

Approximately 500 customers joined Pure Storage in the quarter, increasing the total to more than 4,500 organizations. A few new customer wins in the quarter include: Advance Financial Corporation, Jenny Craig, Mid America Pet Food, Portland Trail Blazers, Suzuki Motor of America and the Texas Rangers.

“Pure Storage delivered another outstanding quarter to finish the year, growing nearly 50% over the year-ago quarter” said Tim Riitters, CFO of Pure Storage. “As we look ahead to next year, we remain focused on driving both growth and leverage in our business, including achieving our first full-year of non-GAAP profitability. ”

Fourth Quarter Fiscal 2018 Financial Highlights

The following tables summarize our consolidated financial results for the fiscal quarters ended January 31, 2018 and 2017 (in millions except percentages and per share amounts, unaudited):

							
GAAP Quarterly Financial Information	
 	 	Three Months Ended January 31, 2018	 	Three Months Ended January 31, 2017	 	Y/Y Change	
Revenue	 	$338.3	 	$227.9	 	48%	
Gross Margin	 	65.1%	 	65.3%	 	-0.2 ppts	
Product Gross Margin	 	65.4%	 	66.5%	 	-1.1 ppts	
Support Gross Margin	 	63.9%	 	59.6%	 	4.3 ppts	
Operating Loss	 	-$15.8	 	-$42.5	 	$26.7	
Operating Margin	 	-4.7%	 	-18.6%	 	13.9 ppts	
Net Loss	 	-$11.9	 	-$42.9	 	$31.0	
Net Loss per Share (Basic and Diluted)	 	-$0.05	 	-$0.21	 	$0.16	
Weighted-Average Shares (Basic and Diluted)	 	218.0	 	201.0	 	N/A	
Headcount	 	> 2,100	 	> 1,700	 	~400	

1

	
							
Non-GAAP Quarterly Financial Information	
 	 	Three Months Ended January 31, 2018	 	Three Months Ended January 31, 2017	 	Y/Y Change	
Gross Margin	 	66.2%	 	66.1%	 	0.1 ppts	
Product Gross Margin	 	65.7%	 	66.6%	 	-0.9 ppts	
Support Gross Margin	 	68.3%	 	63.6%	 	4.7 ppts	
Operating Income (Loss)	 	$27.9	 	-$4.4	 	$32.3	
Operating Margin	 	8.3%	 	-1.9%	 	10.2 ppts	
Net Income (Loss)	 	$31.8	 	-$4.8	 	$36.6	
Net Income (Loss) per Share (Diluted)	 	$0.13	 	-$0.02	 	$0.15	
Weighted-Average Shares (Diluted)	 	250.8	 	201.0	 	N/A	
 
A reconciliation between GAAP and non-GAAP information is provided at the end of this release.

Financial Outlook

Our first quarter and full year fiscal 2019 guidance numbers are based on the new revenue standard (ASC 606) that is effective beginning February 1, 2018. Please refer to our earnings presentation on investor.purestorage.com for further information on the adoption impact of ASC 606 on our results of operations.

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

•	Revenue in the range of $246 million to $254 million	
		
•	Non-GAAP gross margin in the range of 63.5% to 66.5%	
		
•	Non-GAAP operating margin in the range of -13.0% to -9.0%	

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

•	Revenue in the range of $1.310 billion to $1.360 billion	
		
•	Non-GAAP gross margin in the range of 63.5% to 66.5%	
		
•	Non-GAAP operating margin in the range of 0% to 4%	

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 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 such 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 fourth quarter and fiscal year 2018 results at 2:00 p.m. (PT) on March 1, 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: (833) 245-9656 or (647) 689-4543 (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 two hours after the	

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call ends on Thursday, March 1, 2018, through March 15, 2018. The replay will be accessible by calling (800) 585-8367 or (416) 621-4642 (for international callers), with conference ID 8485299. The call runs 24 hours per day, including weekends.

Upcoming Investor Event

Pure Storage will be participating in an upcoming investor discussion on March 6, 2018 at 7:30am ET in Orlando, FL. Pure Storage will post a link to the live webcast on the investor relations website at investor.purestorage.com for both live and archived events.

About Pure Storage

Pure Storage (NYSE:PSTG) helps customers build a better world with data. The Pure Storage Data Platform, powered by all-flash storage, offers a simpler, more effective, and more flexible solution for cloud infrastructure and data-rich applications like artificial intelligence, machine learning and big data analytics. With Satmetrix-certified NPS performance in the top 1% of B2B companies, Pure has an ever-expanding range of customers who are some of the happiest in the world.

Connect with Pure Storage:
Read the blog
Converse on Twitter
Follow on LinkedIn

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 first quarter and full year fiscal 2019, including our first full-year of non-GAAP profitability, 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, including, 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 set forth in our Annual Report on Form 10-K for the year ended January 31, 2018. All information provided in this release and in the attachments is as of March 1, 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, and free cash flow as a percentage of revenue. In computing these non-GAAP financial measures, we exclude the effects of stock-based compensation expense and payroll tax expense related to stock-based activities. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial

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information prepared and presented in accordance with GAAP.

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 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 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 operating activities to free cash flow," included at the end of this release.

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

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

	
									
 	 	January 31, 2018	 	January 31, 2017	
 	 	(unaudited)	 	 	
Assets	 	 		 	 		
Current assets:	 	 		 	 		
Cash and cash equivalents	 	$	244,057		 	$	183,675		
Marketable securities	 	353,289		 	362,986		
Accounts receivable, net of allowance of $1,062 and $2,000 as of January 31, 2018 and 2017	 	243,001		 	168,978		
Inventory	 	34,497		 	23,498		
Deferred commissions, current	 	22,437		 	15,787		
Prepaid expenses and other current assets	 	47,552		 	25,157		
Total current assets	 	944,833		 	780,081		
Property and equipment, net	 	89,142		 	81,695		
Intangible assets, net	 	5,057		 	6,560		
Deferred income taxes, non-current	 	1,060		 	844		
Other assets, non-current	 	39,315		 	30,565		
Total assets	 	$	1,079,407		 	$	899,745		
 	 	 	 	 	
Liabilities and stockholders' equity	 	 		 	 		
Current liabilities:	 	 		 	 		
Accounts payable	 	$	84,420		 	$	52,719		
Accrued compensation and benefits	 	59,898		 	39,252		
Accrued expenses and other liabilities	 	26,829		 	21,697		
Deferred revenue, current	 	209,377		 	158,095		
Liability related to early exercised stock options	 	320		 	1,362		
Total current liabilities	 	380,844		 	273,125		
Deferred revenue, non-current	 	196,632		 	145,031		
Other liabilities, non-current	 	4,025		 	3,159		
Total liabilities	 	581,501		 	421,315		
 	 	 	 	 	
Stockholders’ equity:	 	 		 	 		
Common stock and additional paid-in capital	 	1,479,905		 	1,281,472		
Accumulated other comprehensive loss	 	(1,917	)	 	(562	)	
Accumulated deficit	 	(980,082	)	 	(802,480	)	
Total stockholders' equity	 	497,906		 	478,430		
Total liabilities and stockholders' equity	 	$	1,079,407		 	$	899,745		

5

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

	
																	
 	 	Three Months Ended January 31,	 	Twelve Months Ended January 31,	
 	 	2018	 	2017	 	2018	 	2017	
 	 	(unaudited)	
Revenue:	 	 		 	 		 	 		 	 		
Product	 	$	277,351		 	$	186,820		 	$	813,985		 	$	590,001		
Support	 	60,902		 	41,040		 	209,034		 	137,976		
Total revenue	 	338,253		 	227,860		 	1,023,019		 	727,977		
 	 	 	 	 	 	 	 	 	
Cost of revenue:	 	 	 	 	 	 	 	 	
Product (1)	 	95,953		 	62,532		 	275,242		 	194,150		
Support (1)	 	21,970		 	16,598		 	78,539		 	58,129		
Total cost of revenue	 	117,923		 	79,130		 	353,781		 	252,279		
 	 	 	 	 	 	 	 	 	
Gross profit	 	220,330		 	148,730		 	669,238		 	475,698		
 	 	 	 	 	 	 	 	 	
Operating expenses:	 	 	 	 	 	 	 	 	
Research and development (1)	 	75,480		 	72,632		 	279,196		 	245,817		
Sales and marketing (1)	 	133,134		 	97,962		 	480,030		 	360,035		
General and administrative (1)	 	27,506		 	20,631		 	95,170		 	84,652		
Legal settlement (2)	 	—		 	—		 	—		 	30,000		
Total operating expenses	 	236,120		 	191,225		 	854,396		 	720,504		
 	 	 	 	 	 	 	 	 	
Loss from operations	 	(15,790	)	 	(42,495	)	 	(185,158	)	 	(244,806	)	
Other income, net	 	5,046		 	500		 	11,445		 	1,627		
Loss before provision for income taxes	 	(10,744	)	 	(41,995	)	 	(173,713	)	 	(243,179	)	
Provision for income taxes	 	1,134		 	920		 	3,889		 	1,887		
Net loss	 	$	(11,878	)	 	$	(42,915	)	 	$	(177,602	)	 	$	(245,066	)	
 	 	 	 	 	 	 	 	 	
Net loss per share attributable to common
   stockholders, basic and diluted	 	$	(0.05	)	 	$	(0.21	)	 	$	(0.84	)	 	$	(1.26	)	
Weighted-average shares used in computing net
   loss per share attributable to common
   stockholders, basic and diluted	 	218,009		 	201,024		 	211,609		 	194,714		
 
(1) Includes stock-based compensation expense as follows:

	
																	
Cost of revenue -- product	 	$	732		 	$	176		 	$	1,630		 	$	601		
Cost of revenue -- support	 	2,609		 	1,657		 	9,050		 	5,639		
Research and development	 	19,597		 	22,620		 	71,229		 	63,495		
Sales and marketing	 	13,518		 	9,598		 	47,687		 	34,317		
General and administrative	 	6,297		 	3,488		 	21,077		 	12,616		
Total stock-based compensation expense	 	$	42,753		 	$	37,539		 	$	150,673		 	$	116,668		
 
(2) Represents a one-time charge for our legal settlement with Dell, Inc.

6

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

	
																	
 	 	Three Months Ended January 31,	 	Twelve Months Ended January 31,	
 	 	2018	 	2017	 	2018	 	2017	
 	 	(unaudited)	
Cash flows from operating activities	 	 		 	 		 	 		 	 		
Net loss	 	$	(11,878	)	 	$	(42,915	)	 	$	(177,602	)	 	$	(245,066	)	
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:	 	 	 	 	 	 	 	 	
Depreciation and amortization	 	16,219		 	14,225		 	61,744		 	50,203		
Stock-based compensation expense	 	42,754		 	37,539		 	150,674		 	116,668		
Other	 	1,175		 	533		 	2,054		 	1,584		
Changes in operating assets and liabilities:	 	 	 	 	 	 	 	 	
Accounts receivable, net	 	(40,875	)	 	(5,863	)	 	(74,505	)	 	(44,049	)	
Inventory	 	1,719		 	(3,587	)	 	(12,595	)	 	(3,776	)	
Deferred commissions	 	(4,368	)	 	(2,584	)	 	(11,997	)	 	(740	)	
Prepaid expenses and other assets	 	(23,687	)	 	(6,172	)	 	(23,799	)	 	(6,133	)	
Accounts payable	 	17,470		 	7,005		 	29,278		 	10,644		
Accrued compensation and other liabilities	 	11,992		 	12,595		 	26,621		 	19,381		
Deferred revenue	 	48,479		 	26,742		 	102,883		 	86,922		
Net cash provided by (used in) operating activities	 	59,000		 	37,518		 	72,756		 	(14,362	)	
 	 	 	 	 	 	 	 	 	
Cash flows from investing activities	 	 	 	 	 	 	 	 	
Purchases of property and equipment	 	(20,709	)	 	(12,171	)	 	(65,060	)	 	(76,773	)	
Purchases of intangible assets	 	—		 	—		 	—		 	(1,000	)	
Purchases of marketable securities	 	(50,658	)	 	(43,159	)	 	(202,656	)	 	(526,717	)	
Sales of marketable securities	 	20,422		 	34,539		 	66,489		 	114,354		
Maturities of marketable securities	 	45,047		 	10,300		 	144,068		 	48,513		
Net increase in restricted cash	 	—		 	—		 	(2,029	)	 	(5,600	)	
Net cash used in investing activities	 	(5,898	)	 	(10,491	)	 	(59,188	)	 	(447,223	)	
 	 	 	 	 	 	 	 	 	
Cash flows from financing activities	 	 	 	 	 	 	 	 	
Net proceeds from exercise of stock options	 	8,916		 	4,187		 	24,677		 	14,912		
Proceeds from issuance of common stock under employee stock purchase plan	 	—		 	—		 	22,137		 	25,606		
Net cash provided by financing activities	 	8,916		 	4,187		 	46,814		 	40,518		
Net increase (decrease) in cash and cash equivalents	 	62,018		 	31,214		 	60,382		 	(421,067	)	
Cash and cash equivalents, beginning of period	 	182,039		 	152,461		 	183,675		 	604,742		
Cash and cash equivalents, end of period	 	$	244,057		 	$	183,675		 	$	244,057		 	$	183,675		

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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 January 31, 2018	 	Three Months Ended January 31, 2017	
 	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)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	$	732		(c)	 	 	 	 	 	 	 	 	$	176		(c)	 	 	 	
 	 	 	 	 	8		(d)	 	 	 	 	 	 	 	 	1		(d)	 	 	 	
Gross profit --
   product	$	181,398		 	65.4	%	 	$	740		 	$	182,138		 	65.7	%	 	$	124,288		 	66.5	%	 	$	177		 	$	124,465		 	66.6	%	
 	 		 	 		 	 	 	 	 	 		 	 		 	 		 	 	 	 		 	 		
 	 	 	 	 	$	2,609		(c)	 	 	 	 	 	 	 	 	$	1,657		(c)	 	 	 	
 	 	 	 	 	82		(d)	 	 	 	 	 	 	 	 	22		(d)	 	 	 	
Gross profit --
   support	$	38,932		 	63.9	%	 	$	2,691		 	$	41,623		 	68.3	%	 	$	24,442		 	59.6	%	 	$	1,679		 	$	26,121		 	63.6	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 		 	 		 	$	3,341		(c)	 	 	 		 	 		 	 		 	$	1,833		(c)	 		 	 	
 	 	 	 	 	90		(d)	 	 	 	 	 	 	 	 	23		(d)	 	 	 	
Total gross profit	$	220,330		 	65.1	%	 	$	3,431		 	$	223,761		 	66.2	%	 	$	148,730		 	65.3	%	 	$	1,856		 	$	150,586		 	66.1	%	
 
(a) GAAP gross margin is defined as 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.

8

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

	
																																				
 	Three Months Ended January 31, 2018	 	Three Months Ended January 31, 2017	
 	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)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	$	42,753		(c)	 	 	 	 	 	 	 	 	$	37,539		(c)	 	 	 	
 	 	 	 	 	973		(d)	 	 	 	 	 	 	 	 	601		(d)	 	 	 	
Income (loss) from operations	$	(15,790	)	 	-4.7	 %	 	$	43,726		 	$	27,936		 	8.3	%	 	$	(42,495	)	 	-18.6	 %	 	$	38,140		 	$	(4,355	)	 	-1.9	 %	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 		 	 		 	$	42,753		(c)	 		 	 		 	 		 	 		 	$	37,539		(c)	 	 	 		
 	 	 	 	 	973		(d)	 	 	 	 	 	 	 	 	601		(d)	 	 	 	
Net income (loss)	$	(11,878	)	 	 		 	$	43,726		 	$	31,848		 	 		 	$	(42,915	)	 	 		 	$	38,140		 	$	(4,775	)	 	 		
Net income (loss) per share -- diluted	$	(0.05	)	 	 		 	 		 	$	0.13		 	 		 	$	(0.21	)	 	 		 	 		 	$	(0.02	)	 	 		
Weighted-average shares used in per share calculation -- diluted	218,009		 	 		 	32,752		(e)	250,761		 	 		 	201,024		 	 		 	 		 	201,024		 	 		
 
(a) GAAP operating margin is defined as loss from operations divided by revenue.
(b) Non-GAAP operating margin is defined as non-GAAP income (loss) from operations divided by revenue.
(c) To eliminate stock-based compensation expense.
(d) To eliminate payroll tax expense related to stock-based activities.
(e) To include effect of dilutive securities (employee stock options, restricted stock units, and employee stock purchase plan).

Reconciliation from net cash provided by operating activities to free cash flow (in thousands except percentages, unaudited):

	
									
 	 	Three Months Ended January 31,	
 	 	2018	 	2017	
Net cash provided by operating activities	 	$	59,000		 	$	37,518		
Less: purchases of property and equipment	 	(20,709	)	 	(12,171	)	
Free cash flow	 	$	38,291		 	$	25,347		
Free cash flow as % of revenue	 	11.3	%	 	11.1	%	

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