UNITED STATES
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 15, 2019
_____________________________________
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)	 	 	 	 	(Zip Code)	
 
( 800 ) 379-7873
(Registrant’s Telephone Number, Including Area Code)
 
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
________________________________________
Securities registered pursuant to Section 12(b) of the Act:

					
Title of each class	 	Trading symbol(s)	 	Name of each exchange on which registered	
Class A Common Stock, $0.0001 par value per share	 	PSTG	 	New York Stock Exchange LLC	
________________________________________

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):

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

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

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

		
☐	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, 2019 , Pure Storage, Inc. (“Pure”) issued a press release and will hold a conference call regarding its financial results for the quarter ended  July 31, 2019 . 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 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 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On August 21, 2019 , Pure announced that Timothy Riitters, Pure’s Chief Financial Officer, will be departing the company later this year for personal reasons. Mr. Riitters will remain on during a period of transition as Pure undergoes the search for his replacement. Mr. Riitters' departure is not related to any issues regarding the integrity of the company’s financial statements or accounting policies and practices.

Item 8.01 Other Events.

On August 15, 2019 , Pure's board of directors approved the repurchase of up to $150.0 million of the company’s Class A common stock. The authorization allows Pure to repurchase shares of its Class A common stock opportunistically and will be funded from available working capital. Repurchases may be made at management’s discretion from time to time on the open market through privately negotiated transactions, transactions structured through investment banking institutions, block purchase techniques, 10b5-1 trading plans, or a combination of the foregoing. The authorization for share repurchases is effective immediately, with no end date. The repurchase program does not obligate Pure to acquire any of its common stock, and may be suspended or discontinued by the company at any time without prior notice.

Cautions Concerning Forward-Looking Statements

This report contains “forward-looking statements,” as defined in the Private Securities Litigation Reform Act of 1995, related to the share repurchase and the factors that will impact the amount and timing of purchases, if any, thereunder. The reader is cautioned not to rely on these forward-looking statements. These statements are based on current expectations of future events. If underlying assumptions prove inaccurate or known or unknown risks or uncertainties materialize, actual results could vary materially from the expectations and projections of the company. Risks and uncertainties include, but are not limited to, those described under the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Pure’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on June 7, 2019, and Pure’s subsequent filings with the Securities and Exchange Commission. Copies of these filings are available online at www.sec.gov, investors.purestorage.com or on request from the company. Pure does not undertake to update any forward-looking statements as a result of new information or future events or developments.
 
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 2020 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, 2019

Exhibit 99.1
 
Pure Storage Announces Second Quarter Fiscal 2020 Financial Results
 
MOUNTAIN VIEW, Calif., August 21, 2019 – Pure Storage (NYSE: PSTG), the data solutions leader that helps innovators build a better world with data, today announced financial results for its second quarter ended July 31, 2019 .

“ Our significant growth this quarter and continued market share gains are the result of creating a modern data experience for our customers,” said Charles Giancarlo, Chairman and CEO, Pure Storage. “Pure frees enterprises to leverage their data rather than locking it away. ”

Key Financial Highlights: 

•	Revenue: $396.3 million , up 28% Year-over-Year	
		
•	Gross margin: GAAP 67.7% ; non-GAAP 69.4%	
		
•	Operating margin: GAAP -16.4 %; non-GAAP -0.8 %	

Recent Company Highlights:

Pure’s second quarter yielded strong momentum as customers are selecting Pure’s modern approach that enables organizations to better utilize all data today and for the future direction of their hybrid IT environments.

•	Customer Traction: Added more than 450 new customers in Q2, the highest number in any Q2 of our history.	
		
•	Technology Momentum: The subscription-based Cloud Block Store beta as part of Pure Cloud Data Services, is oversubscribed and early customer feedback has been overwhelmingly positive.	
		
•	Repurchase Program: Pure’s board of directors authorized a $150 million share buy-back program.	

“Pure’s strong growth in Q2 has separated us from the legacy vendors,” said Tim Riitters, CFO, Pure Storage. “Our fundamentals remain strong, and our innovative product cycle is helping customers leverage their data in a powerful way.”

Organizational Update

Chief Financial Officer Tim Riitters will be departing the company this year after a successful five-year tenure. Riitters will remain on into the Fall as the company undergoes the search for a replacement CFO. Riitters first joined Pure in August 2014, assuming leadership of the company’s worldwide financial and accounting operations. In that time, he has helped drive an increase in revenue of nearly 10x, while also helping the company achieve profitability.

“Tim has been an integral part of the Pure Storage leadership team for the last five years. As our CFO, the success of his tenure is in the numbers and the numbers speak for themselves,” said Giancarlo. “Everyone at Pure has the utmost respect for what Tim has accomplished and we wish him well.”

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Second Quarter Fiscal 2020 Financial Highlights
 
The following tables summarize our consolidated financial results for the fiscal quarters ended July 31, 2019 and 2018 (in millions except percentages, per share amounts and headcount, unaudited):

	
							
GAAP Quarterly Financial Information	
 	 	Three Months Ended July 31, 2019	 	Three Months Ended July 31, 2018	 	Y/Y Change	
Revenue	 	$396.3	 	$308.9	 	28%	
Gross Margin	 	67.7%	 	66.7%	 	1.0 ppts	
Product Gross Margin	 	69.1%	 	67.5%	 	1.6 ppts	
Support Subscription Gross Margin	 	63.5%	 	63.9%	 	-0.4 ppts	
Operating Loss	 	$(64.9)	 	$(55.2)	 	$(9.7)	
Operating Margin	 	-16.4%	 	-17.9%	 	1.5 ppts	
Net Loss	 	$(66.0)	 	$(60.1)	 	$(5.9)	
Net Loss per Share – Basic and Diluted	 	$(0.26)	 	$(0.26)	 	—	
Weighted-Average Shares	 	251.3	 	229.4	 	21.9	
Headcount	 	>3,300	 	>2,450	 	~850	

	
							
Non-GAAP Quarterly Financial Information	
 	 	Three Months Ended July 31, 2019	 	Three Months Ended July 31, 2018	 	Y/Y Change	
Gross Margin	 	69.4%	 	68.0%	 	1.4 ppts	
Product Gross Margin	 	70.0%	 	67.9%	 	2.1 ppts	
Support Subscription Gross Margin	 	67.4%	 	68.4%	 	-1.0 ppts	
Operating Income (Loss)	 	$(3.2)	 	$0.9	 	$(4.1)	
Operating Margin	 	-0.8%	 	0.3%	 	-1.1 ppts	
Net Income	 	$2.5	 	$2.4	 	$0.1	
Net Income per Share	 	$0.01	 	$0.01	 	—	
Weighted-Average Shares	 	270.8	 	262.6	 	8.2	

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

Financial Outlook

Third quarter fiscal 2020 guidance:

•	Revenue in the range of $434 million to $446 million, or $440 million at the midpoint	
		
•	Non-GAAP gross margin in the range of 66.0% to 69.0%, or 67.5% at the midpoint	
		
•	Non-GAAP operating margin in the range of 3.0% to 7.0%, or 5.0% at the midpoint	

Full year fiscal 2020 guidance:

•	Revenue in the range of $1.645 billion to $1.715 billion, or $1.680 billion at the midpoint	
		
•	Non-GAAP gross margin in the range of 67.0% to 69.0%, or 68.0% at the midpoint	
		
•	Non-GAAP operating margin in the range of 2.25% to 4.75%, or 3.5% at the midpoint	

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, amortization of intangible assets acquired from acquisitions, 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

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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.

Share Repurchase Authorization

Pure’s board of directors has authorized a $150 million stock repurchase program. This authorization allows the company to repurchase shares of its common stock opportunistically and will be funded from working capital. Repurchases may be made at management's discretion from time to time on the open market, through privately negotiated transactions, transactions structured through investment banking institutions, block purchase techniques, 10b5-1 trading plans, or a combination of the foregoing. The authorization for share repurchases is effective immediately, with no end date. The repurchase program does not obligate Pure to acquire any of its common stock, and may be suspended or discontinued by the company at any time without prior notice.

Conference Call Information

Pure will host a teleconference to discuss the second quarter fiscal 2020 results at 2:00 p.m. (PT) on August 21, 2019 . Pure 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: (866) 393-4306 or (734) 385-2616 (for international callers) with passcode 7071658.	
		
•	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 call ends on August 21, 2019 , through September 4, 2019. The replay will be accessible by calling (855) 859-2056 or (404) 537-3406 (for international callers), with conference ID 7071658.	

Upcoming Events

In conjunction with Pure’s customer conference, Pure//Accelerate 2019 being held in Austin, Texas, Pure will be hosting an Investor Session on September 17th at 1 p.m. (CT). This event will be webcast and all information will be available on the Investor Relations website at investor.purestorage.com.

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 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.

Pure Storage, DirectFlash, Evergreen, FlashBlade, FlashStack, ObjectEngine 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 outlook for the third quarter and full year fiscal 2020, our momentum, growth prospects and expectations regarding product and technology differentiation, including our new products and innovative product cycle, and statements regarding our products, business, operations and results, including our plans with respect to our share repurchase authorization and possibility that share repurchases may be suspended or discontinued. 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,

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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 is also set forth in our Annual Report on Form 10-K for the year ended January 31, 2019. All information provided in this release and in the attachments is as of August 21, 2019 , 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, amortization of debt discount and debt issuance costs, and amortization of intangible assets acquired from acquisitions 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 and free cash flow without ESPP impact," included at the end of this release.

Matthew Danziger – Investor Relations, Pure Storage
ir@purestorage.com
 
Rena Fallstrom – Public Relations, Pure Storage
pr@purestorage.com

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

	
									
 	 	As of
July 31, 2019	 	As of
January 31, 2019	
 	 	 	 	 	
Assets	 	 	 	 		
Current assets:	 	 	 	 		
Cash and cash equivalents	 	$	268,938		 	$	447,990		
Marketable securities	 	913,521		 	749,482		
Accounts receivable, net of allowance of $614 and $660	 	352,617		 	378,729		
Inventory	 	35,820		 	44,687		
Deferred commissions, current	 	31,273		 	29,244		
Prepaid expenses and other current assets	 	47,776		 	51,695		
Total current assets	 	1,649,945		 	1,701,827		
Property and equipment, net	 	131,048		 	125,353		
Operating lease right-of-use-assets	 	114,339		 	—		
Deferred commissions, non-current	 	87,295		 	85,729		
Intangible assets, net	 	63,659		 	20,118		
Goodwill	 	36,420		 	10,997		
Deferred income taxes, non-current	 	939		 	1,060		
Restricted cash	 	15,425		 	15,823		
Other assets, non-current	 	16,904		 	12,118		
Total assets	 	$	2,115,974		 	$	1,973,025		
 	 	 	 	 	
Liabilities and stockholders' equity	 	 		 	 		
Current liabilities:	 	 		 	 		
Accounts payable	 	$	64,582		 	$	103,462		
Accrued compensation and benefits	 	70,753		 	99,910		
Accrued expenses and other liabilities	 	44,690		 	39,860		
Operating lease liabilities, current	 	26,005		 	—		
Deferred revenue, current	 	308,523		 	266,584		
Total current liabilities	 	514,553		 	509,816		
Convertible senior notes, net	 	463,118		 	449,828		
Operating lease liabilities, non-current	 	94,941		 	—		
Deferred revenue, non-current	 	298,740		 	269,336		
Deferred tax liabilities, non-current	 	5,697		 	—		
Other liabilities, non-current	 	1,386		 	6,265		
Total liabilities	 	1,378,435		 	1,235,245		
 	 	 	 	 	
Stockholders’ equity:	 	 		 	 		
Common stock and additional paid-in capital	 	1,982,433		 	1,820,067		
Accumulated other comprehensive income (loss)	 	3,409		 	(338	)	
Accumulated deficit	 	(1,248,303	)	 	(1,081,949	)	
Total stockholders' equity	 	737,539		 	737,780		
Total liabilities and stockholders' equity	 	$	2,115,974		 	$	1,973,025		

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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,	
 	2019	 	2018	 	2019	 	2018	
 	 	 	 	 	 	 	 	
Revenue:	 	 	 	 	 		 	 		
Product	$	300,128		 	$	241,137		 	$	538,869		 	$	436,586		
Support subscription	96,199		 	67,747		 	184,158		 	128,243		
Total revenue	396,327		 	308,884		 	723,027		 	564,829		
 	 	 	 	 	 	 	 	
Cost of revenue:	 		 	 		 	 	 	 	
Product (1)	92,870		 	78,262		 	169,462		 	144,682		
Support subscription (1)	35,138		 	24,457		 	68,859		 	47,667		
Total cost of revenue	128,008		 	102,719		 	238,321		 	192,349		
 	 	 	 	 	 	 	 	
Gross profit	268,319		 	206,165		 	484,706		 	372,480		
 	 	 	 	 	 	 	 	
Operating expenses:	 		 	 		 	 	 	 	
Research and development (1)	107,020		 	84,031		 	212,095		 	162,523		
Sales and marketing (1)	186,188		 	143,749		 	352,814		 	266,116		
General and administrative (1)	40,016		 	33,591		 	82,126		 	60,921		
Total operating expenses	333,224		 	261,371		 	647,035		 	489,560		
 	 	 	 	 	 	 	 	
Loss from operations	(64,905	)	 	(55,206	)	 	(162,329	)	 	(117,080	)	
Other income (expense), net	(652	)	 	(4,032	)	 	(2,468	)	 	(5,031	)	
Loss before provision for income taxes	(65,557	)	 	(59,238	)	 	(164,797	)	 	(122,111	)	
Income tax provision	461		 	885		 	1,557		 	2,316		
Net loss	$	(66,018	)	 	$	(60,123	)	 	$	(166,354	)	 	$	(124,427	)	
 	 	 	 	 	 	 	 	
Net loss per share attributable to common
   stockholders, basic and diluted	$	(0.26	)	 	$	(0.26	)	 	$	(0.67	)	 	$	(0.55	)	
Weighted-average shares used in computing net
   loss per share attributable to common
   stockholders, basic and diluted	251,298		 	229,359		 	248,366		 	226,609		

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

																
Cost of revenue -- product	$	954		 	$	720		 	$	1,931		 	$	1,328		
Cost of revenue -- support subscription	3,633		 	2,929		 	7,584		 	5,613		
Research and development	29,108		 	22,232		 	57,353		 	43,322		
Sales and marketing	16,055		 	17,269		 	34,369		 	31,209		
General and administrative	8,654		 	10,504		 	19,324		 	16,137		
Total stock-based compensation expense	$	58,404		 	$	53,654		 	$	120,561		 	$	97,609		

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

	
																
 	Three Months Ended July 31,	 	Six Months Ended July 31,	
 	2019	 	2018	 	2019	 	2018	
 	 	 	 	 	 	 	 	
Cash flows from operating activities	 	 	 	 	 		 	 		
Net loss	$	(66,018	)	 	$	(60,123	)	 	$	(166,354	)	 	$	(124,427	)	
Adjustments to reconcile net loss to net cash provided by operating activities:	 	 	 	 	 	 	 	
Depreciation and amortization	22,531		 	17,173		 	43,591		 	33,590		
Amortization of debt discount and debt issuance costs	6,800		 	6,434		 	13,290		 	7,889		
Stock-based compensation expense	58,404		 	53,654		 	120,561		 	97,609		
Other	1,138		 	(70	)	 	327		 	82		
Changes in operating assets and liabilities, net of effects of acquisition:	 	 	 	 	 	 	 	
Accounts receivable, net	(40,746	)	 	(46,436	)	 	26,553		 	707		
Inventory	8,875		 	(4,471	)	 	6,852		 	(8,900	)	
Deferred commissions	(5,311	)	 	(5,424	)	 	(3,595	)	 	(4,155	)	
Prepaid expenses and other assets	6,663		 	23		 	(635	)	 	11,134		
Operating lease right-of-use assets	7,229		 	—		 	13,438		 	—		
Accounts payable	(5,020	)	 	667		 	(30,827	)	 	(18,135	)	
Accrued compensation and other liabilities	18,289		 	22,423		 	(25,704	)	 	(7,458	)	
Operating lease liabilities	(7,049	)	 	—		 	(13,083	)	 	—		
Deferred revenue	43,032		 	24,634		 	71,045		 	39,144		
Net cash provided by operating activities	48,817		 	8,484		 	55,459		 	27,080		
 	 	 	 	 	 	 	 	
Cash flows from investing activities	 	 	 	 	 	 	 	
Purchases of property and equipment	(28,933	)	 	(20,437	)	 	(53,229	)	 	(42,733	)	
Acquisition, net of cash acquired	—		 	—		 	(47,881	)	 	—		
Purchase of intangible assets	(9,000	)	 	—		 	(9,000	)	 	—		
Purchases of marketable securities	(175,638	)	 	(412,805	)	 	(488,497	)	 	(494,507	)	
Sales of marketable securities	38,024		 	3,131		 	60,368		 	13,585		
Maturities of marketable securities	106,617		 	36,770		 	270,756		 	97,793		
Net cash used in investing activities	(68,930	)	 	(393,341	)	 	(267,483	)	 	(425,862	)	
 	 	 	 	 	 	 	 	
Cash flows from financing activities	 	 	 	 	 	 	 	
Net proceeds from exercise of stock options	2,499		 	19,453		 	19,260		 	29,067		
Proceeds from issuance of common stock under employee stock purchase plan	—		 	—		 	32,042		 	19,698		
Proceeds from issuance of convertible senior notes, net of issuance costs	—		 	—		 	—		 	562,062		
Payment for purchase of capped calls	—		 	—		 	—		 	(64,630	)	
Repayment of debt acquired from acquisition	—		 	—		 	(11,555	)	 	—		
Tax withholding on vesting of restricted stock	(1,501	)	 	—		 	(7,173	)	 	—		
Repurchase of common stock	—		 	—		 	—		 	(20,000	)	
Net cash provided by financing activities	998		 	19,453		 	32,574		 	526,197		
 	 	 	 	 	 	 	 	
Net increase (decrease) in cash, cash equivalents and restricted cash	(19,115	)	 	(365,404	)	 	(179,450	)	 	127,415		
Cash, cash equivalents and restricted cash, beginning of period	303,478		 	751,639		 	463,813		 	258,820		
Cash, cash equivalents and restricted cash, end of period	$	284,363		 	$	386,235		 	$	284,363		 	$	386,235		

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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 July 31, 2019	 	Three Months Ended July 31, 2018	
 	 	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)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	$	954		 	(c)	 	 	 	 	 	 	 	 	 	$	720		 	(c)	 	 	 	 	
 	 	 	 	 	 	27		 	(d)	 	 	 	 	 	 	 	 	 	36		 	(d)	 	 	 	 	
 	 	 	 	 	 	1,971		 	(e)	 	 	 	 	 	 	 	 	 	—		 	 	 	 	 	 	
Gross profit --
   product	 	$	207,258		 	69.1	%	 	$	2,952		 	 	 	$	210,210		 	70.0	%	 	$	162,875		 	67.5	%	 	$	756		 	 	 	$	163,631		 	67.9	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 		 	 		 	$	3,633		 	(c)	 	 		 	 		 	 		 	 		 	$	2,929		 	(c)	 	 		 	 		
 	 	 	 	 	 	98		 	(d)	 	 	 	 	 	 	 	 	 	137		 	(d)	 	 	 	 	
Gross profit --
   support subscription	 	$	61,061		 	63.5	%	 	$	3,731		 	 	 	$	64,792		 	67.4	%	 	$	43,290		 	63.9	%	 	$	3,066		 	 	 	$	46,356		 	68.4	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 		 	 		 	$	4,587		 	(c)	 	 		 	 		 	 		 	 		 	$	3,649		 	(c)	 	 		 	 		
 	 	 	 	 	 	125		 	(d)	 	 	 	 	 	 	 	 	 	173		 	(d)	 	 	 	 	
 	 	 	 	 	 	1,971		 	(e)	 	 	 	 	 	 	 	 	 	—		 	 	 	 	 	 	
Total gross profit	 	$	268,319		 	67.7	%	 	$	6,683		 	 	 	$	275,002		 	69.4	%	 	$	206,165		 	66.7	%	 	$	3,822		 	 	 	$	209,987		 	68.0	%	

(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.
(e) To eliminate amortization expense of acquired intangible assets.

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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, 2019	 	Three Months Ended July 31, 2018	
 	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)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	$	58,404		 	(c)	 	 	 	 	 	 	 	 	 	$	53,654		(c)	 	 	 	
 	 	 	 	 	1,355		 	(d)	 	 	 	 	 	 	 	 	 	2,427		(d)	 	 	 	
 	 	 	 	 	1,971		 	(e)	 	 	 	 	 	 	 	 	 	—		 	 	 	 	
Operating income (loss)	$	(64,905	)	 	-16.4	 %	 	$	61,730		 	 	 	$	(3,175	)	 	-0.8	 %	 	$	(55,206	)	 	-17.9	 %	 	$	56,081		 	$	875		 	0.3	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 		 	 		 	$	58,404		 	(c)	 	 		 	 		 	 		 	 		 	$	53,654		(c)	 	 	 		
 	 		 	 		 	1,355		 	(d)	 	 		 	 		 	 		 	 		 	2,427		(d)	 	 	 		
 	 	 	 	 	1,971		 	(e)	 	 	 	 	 	 	 	 	 	—		 	 	 	 	
 	 	 	 	 	6,801		 	(f)	 	 	 	 	 	 	 	 	 	6,434		(f)	 	 	 	
Net Income (loss)	$	(66,018	)	 	 		 	$	68,531		 	 	 	$	2,513		 	 		 	$	(60,123	)	 	 		 	$	62,515		 	$	2,392		 	 		
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net Income (loss) per share -- basic and diluted	$	(0.26	)	 	 		 	 		 	 	 	$	0.01		 	 		 	$	(0.26	)	 	 		 	 		 	$	0.01		 	 		
Weighted-average shares used in per share calculation -- basic and diluted	251,298		 	 		 	19,550		 	(g)	 	270,848		 	 		 	229,359		 	 		 	33,216		(g)	262,575		 	 		

(a) GAAP operating margin is defined as GAAP operating loss divided by revenue.
(b) Non-GAAP operating margin is defined as non-GAAP operating 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 amortization expense of acquired intangible assets.
(f) To eliminate amortization expense of debt discount and debt issuance costs related to our convertible debt.
(g) To include effect of dilutive securities (employee stock options, restricted stock, and shares from employee stock purchase plan (ESPP)).

9

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

	
								
 	Three Months Ended July 31,	
 	2019	 	2018	
Net cash provided by operating activities	$	48,817		 	$	8,484		
Less: purchases of property and equipment	(28,933	)	 	(20,437	)	
Free cash flow (non-GAAP)	$	19,884		 	$	(11,953	)	
Adjust: ESPP impact	(5,671	)	 	(6,982	)	
Free cash flow without ESPP impact (non-GAAP)	$	14,213		 	$	(18,935	)	
 	 	 	 	
Free cash flow as % of revenue	5.0	%	 	-3.9	 %	
Free cash flow without ESPP impact as % of revenue	3.6	%	 	-6.1	 %	

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