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): May 21, 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)
 
(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):

		
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  May 21, 2019 , Pure Storage, Inc. (“Pure Storage”) issued a press release and will hold a conference call regarding its financial results for the quarter ended  April 30, 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 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 First 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	
May 21, 2019

Exhibit 99.1
 
Pure Storage Announces First Quarter Fiscal 2020 Financial Results
 
MOUNTAIN VIEW, Calif., May 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 first quarter ended April 30, 2019 .

“Pure continues to gain market share with innovation, a differentiated business model, and our laser focus on customer delight,” said Charles Giancarlo, Chairman and CEO, Pure Storage. “As enterprises embark on their hybrid cloud journeys, Pure is excited to play a role in modernizing their business.”

Q1 Key Business and Financial Highlights: 

•	Revenue: $326.7 million , up 28% year over year	
		
•	Gross margin: GAAP 66.2% ; non-GAAP 68.1%	
		
•	Operating margin: GAAP -29.8 %; non-GAAP -9.6 %	

Recent Company Highlights:

During Pure’s first quarter of fiscal year 2020, the Company:

•	Announced the acquisition of Compuverde - a leading developer of file software solutions for enterprises and cloud providers. The acquisition will expand Pure Storage’s file capabilities by providing a unified storage offering, as well as empowering customers to implement true hybrid architectures.	
		
•	Released ObjectEngine TM for General Availability - the industry’s first data protection platform purpose-built for flash and cloud. ObjectEngine unifies cloud and on-premises with seamless, rapid backup and recovery across both on-prem and the cloud and enables customers to modernize their entire data protection strategy to a “flash-to-flash-to-cloud” model.	
		
•	Announced expansion of Evergreen TM Storage Service (ES2) - to enable a unified subscription model across hybrid environments. This allows organizations to leverage Pure’s best-in-class storage-as-a-service model on-premises, hosted and in the cloud, without the need to manage multiple subscriptions or purchase separate or overlapping capacity.	

“Q1 was a solid beginning of the year for Pure," said Tim Riitters, CFO, Pure Storage. “We continued to demonstrate strong growth, industry-leading margins, and innovation across our product portfolio."

First Quarter Fiscal 2020 Financial Highlights
 
The following tables summarize our consolidated financial results for the fiscal quarters ended April 30, 2019 and 2018 (in millions except percentages, per share amounts and headcount, unaudited):

	
							
GAAP Quarterly Financial Information	
 	 	Three Months Ended April 30, 2019	 	Three Months Ended April 30, 2018	 	Y/Y Change	
Revenue	 	$326.7	 	$255.9	 	28%	
Gross Margin	 	66.2%	 	65.0%	 	1.2 ppts	
Product Gross Margin	 	67.9%	 	66.0%	 	1.9 ppts	
Support Subscription Gross Margin	 	61.7%	 	61.6%	 	0.1 ppts	
Operating Loss	 	$(97.4)	 	$(61.9)	 	$(35.5)	
Operating Margin	 	-29.8%	 	-24.2%	 	-5.6 ppts	
Net Loss	 	$(100.3)	 	$(64.3)	 	$(36.0)	
Net Loss per Share – Basic and Diluted	 	$(0.41)	 	$(0.29)	 	$(0.12)	
Weighted-Average Shares	 	245.3	 	223.8	 	21.5	
Headcount	 	>3,150	 	>2,300	 	~850	

1

 

							
Non-GAAP Quarterly Financial Information	
 	 	Three Months Ended April 30, 2019	 	Three Months Ended April 30, 2018	 	Y/Y Change	
Gross Margin	 	68.1%	 	66.3%	 	1.8 ppts	
Product Gross Margin	 	68.7%	 	66.3%	 	2.4 ppts	
Support Subscription Gross Margin	 	66.3%	 	66.3%	 	0.0 ppts	
Operating Loss	 	$(31.2)	 	$(15.3)	 	$(15.9)	
Operating Margin	 	-9.6%	 	-6.0%	 	-3.6 ppts	
Net Loss	 	$(27.6)	 	$(16.2)	 	$(11.4)	
Net Loss per Share	 	$(0.11)	 	$(0.07)	 	$(0.04)	
Weighted-Average Shares	 	245.3	 	223.8	 	21.5	

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

Financial Outlook

Second quarter fiscal 2020 guidance:

•	Revenue in the range of $389 million to $401 million, or $395 million at the midpoint	
		
•	Non-GAAP gross margin in the range of 65.0% to 68.0%, or 66.5% at the midpoint	
		
•	Non-GAAP operating margin in the range of -5.0% to -1.0%, or -3.0% at the midpoint	

Full year fiscal 2020 guidance:

•	Revenue in the range of $1.70 billion to $1.77 billion, or $1.735 billion at the midpoint	
		
•	Non-GAAP gross margin in the range of 65.5% to 68.0%, or 66.75% at the midpoint	
		
•	Non-GAAP operating margin in the range of 1.5% to 5.5%, 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 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 first quarter fiscal 2020 results at 2:00 p.m. (PT) on May 21, 2019 . 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: (866) 393-4306 or (734) 385-2616 (for international callers) with passcode 4955207.	
		
•	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 Tuesday, May 21, 2019 , through June 4, 2019. The replay will be accessible by calling (855) 859-2056 or (404) 537-3406 (for international callers), with conference ID 4955207.	

Upcoming Events

Management will participate in upcoming financial Q&A discussions at the Bank of America Global Technology Conference on June 4th at 3:50 pm PT, the William Blair 2019 Growth Stock Conference on June 6th at 6 am PT, and the Stifel Cross

2

Sector Insights Conference on June 11th at 12:35 pm PT. Pure Storage will post a link to each session on the investor relations website at investor.purestorage.com for both live and archived event s.

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 growth prospects and expectations regarding product and technology differentiation, and our outlook for the second quarter and full year fiscal 2020, 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 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 May 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

3

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

	
									
 	 	As of
April 30, 2019	 	As of
January 31, 2019	
 	 	 	 	 	
Assets	 	 	 	 		
Current assets:	 	 	 	 		
Cash and cash equivalents	 	$	287,192		 	$	447,990		
Marketable securities	 	878,958		 	749,482		
Accounts receivable, net of allowance of $642 and $660	 	311,843		 	378,729		
Inventory	 	45,936		 	44,687		
Deferred commissions, current	 	28,532		 	29,244		
Prepaid expenses and other current assets	 	54,570		 	51,695		
Total current assets	 	1,607,031		 	1,701,827		
Property and equipment, net	 	129,185		 	125,353		
Operating lease right-of-use-assets	 	120,446		 	—		
Deferred commissions, non-current	 	84,725		 	85,729		
Intangible assets, net	 	57,220		 	20,118		
Goodwill	 	36,407		 	10,997		
Deferred income taxes, non-current	 	1,118		 	1,060		
Restricted cash	 	16,286		 	15,823		
Other assets, non-current	 	16,771		 	12,118		
Total assets	 	$	2,069,189		 	$	1,973,025		
 	 	 	 	 	
Liabilities and stockholders' equity	 	 		 	 		
Current liabilities:	 	 		 	 		
Accounts payable	 	$	75,481		 	$	103,462		
Accrued compensation and benefits	 	48,166		 	99,910		
Accrued expenses and other liabilities	 	47,392		 	39,860		
Operating lease liabilities, current	 	25,761		 	—		
Deferred revenue, current	 	283,160		 	266,584		
Total current liabilities	 	479,960		 	509,816		
Convertible senior notes, net	 	456,318		 	449,828		
Operating lease liabilities, non-current	 	101,112		 	—		
Deferred revenue, non-current	 	281,070		 	269,336		
Other liabilities, non-current	 	6,753		 	6,265		
Total liabilities	 	1,325,213		 	1,235,245		
 	 	 	 	 	
Stockholders’ equity:	 	 		 	 		
Common stock and additional paid-in capital	 	1,924,972		 	1,820,067		
Accumulated other comprehensive income (loss)	 	1,289		 	(338	)	
Accumulated deficit	 	(1,182,285	)	 	(1,081,949	)	
Total stockholders' equity	 	743,976		 	737,780		
Total liabilities and stockholders' equity	 	$	2,069,189		 	$	1,973,025		

4

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

	
								
 	Three Months Ended April 30,	
 	2019	 	2018	
 	 	 	 	
Revenue:	 	 	 	
Product	$	238,741		 	$	195,449		
Support subscription	87,959		 	60,496		
Total revenue	326,700		 	255,945		
 	 	 	 	
Cost of revenue:	 		 	 		
Product (1)	76,592		 	66,420		
Support subscription (1)	33,721		 	23,210		
Total cost of revenue	110,313		 	89,630		
 	 	 	 	
Gross profit	216,387		 	166,315		
 	 	 	 	
Operating expenses:	 		 	 		
Research and development (1)	105,075		 	78,492		
Sales and marketing (1)	166,626		 	122,367		
General and administrative (1)	42,110		 	27,330		
Total operating expenses	313,811		 	228,189		
 	 	 	 	
Loss from operations	(97,424	)	 	(61,874	)	
Other income (expense), net	(1,816	)	 	(999	)	
Loss before provision for income taxes	(99,240	)	 	(62,873	)	
Income tax provision	1,096		 	1,431		
Net loss	$	(100,336	)	 	$	(64,304	)	
 	 	 	 	
Net loss per share attributable to common
   stockholders, basic and diluted	$	(0.41	)	 	$	(0.29	)	
Weighted-average shares used in computing net
   loss per share attributable to common
   stockholders, basic and diluted	245,334		 	223,768		

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

								
Cost of revenue -- product	$	977		 	$	608		
Cost of revenue -- support subscription	3,951		 	2,684		
Research and development	28,245		 	21,090		
Sales and marketing	18,314		 	13,940		
General and administrative	10,670		 	5,633		
Total stock-based compensation expense	$	62,157		 	$	43,955		

5

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

	
								
 	Three Months Ended April 30,	
 	2019	 	2018	
 	 	 	 	
Cash flows from operating activities	 	 	 	
Net loss	$	(100,336	)	 	$	(64,304	)	
Adjustments to reconcile net loss to net cash provided by operating activities:	 	 	 	
Depreciation and amortization	21,060		 	16,417		
Amortization of debt discount and debt issuance costs	6,490		 	1,455		
Stock-based compensation expense	62,157		 	43,955		
Other	(811	)	 	152		
Changes in operating assets and liabilities, net of effects of acquisition:	 	 	 	
Accounts receivable, net	67,299		 	47,143		
Inventory	(2,023	)	 	(4,429	)	
Deferred commissions	1,716		 	1,269		
Prepaid expenses and other assets	(7,298	)	 	11,111		
Operating lease right-of-use assets	6,209		 	—		
Accounts payable	(25,807	)	 	(18,802	)	
Accrued compensation and other liabilities	(43,993	)	 	(29,881	)	
Operating lease liabilities	(6,034	)	 	—		
Deferred revenue	28,013		 	14,510		
Net cash provided by operating activities	6,642		 	18,596		
 	 	 	 	
Cash flows from investing activities	 	 	 	
Purchases of property and equipment	(24,296	)	 	(22,296	)	
Acquisition, net of cash acquired	(47,881	)	 	—		
Purchases of marketable securities	(312,859	)	 	(81,702	)	
Sales of marketable securities	22,344		 	10,454		
Maturities of marketable securities	164,139		 	61,023		
Net cash used in investing activities	(198,553	)	 	(32,521	)	
 	 	 	 	
Cash flows from financing activities	 	 	 	
Net proceeds from exercise of stock options	16,761		 	9,614		
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	(5,672	)	 	—		
Repurchase of common stock	—		 	(20,000	)	
Net cash provided by financing activities	31,576		 	506,744		
 	 	 	 	
Net increase (decrease) in cash, cash equivalents and restricted cash	(160,335	)	 	492,819		
Cash, cash equivalents and restricted cash, beginning of period	463,813		 	258,820		
Cash, cash equivalents and restricted cash, end of period	$	303,478		 	$	751,639		

6

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 April 30, 2019	 	Three Months Ended April 30, 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)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	$	977		 	(c)	 	 	 	 	 	 	 	 	 	$	608		 	(c)	 	 	 	 	
 	 	 	 	 	 	49		 	(d)	 	 	 	 	 	 	 	 	 	25		 	(d)	 	 	 	 	
 	 	 	 	 	 	922		 	(e)	 	 	 	 	 	 	 	 	 	—		 	 	 	 	 	 	
Gross profit --
   product	 	$	162,149		 	67.9	%	 	$	1,948		 	 	 	$	164,097		 	68.7	%	 	$	129,029		 	66.0	%	 	$	633		 	 	 	$	129,662		 	66.3	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 		 	 		 	$	3,951		 	(c)	 	 		 	 		 	 		 	 		 	$	2,684		 	(c)	 	 		 	 		
 	 	 	 	 	 	127		 	(d)	 	 	 	 	 	 	 	 	 	142		 	(d)	 	 	 	 	
Gross profit --
   support subscription	 	$	54,238		 	61.7	%	 	$	4,078		 	 	 	$	58,316		 	66.3	%	 	$	37,286		 	61.6	%	 	$	2,826		 	 	 	$	40,112		 	66.3	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 		 	 		 	$	4,928		 	(c)	 	 		 	 		 	 		 	 		 	$	3,292		 	(c)	 	 		 	 		
 	 	 	 	 	 	176		 	(d)	 	 	 	 	 	 	 	 	 	167		 	(d)	 	 	 	 	
 	 	 	 	 	 	922		 	(e)	 	 	 	 	 	 	 	 	 	—		 	 	 	 	 	 	
Total gross profit	 	$	216,387		 	66.2	%	 	$	6,026		 	 	 	$	222,413		 	68.1	%	 	$	166,315		 	65.0	%	 	$	3,459		 	 	 	$	169,774		 	66.3	%	

(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.

7

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

																																						
 	Three Months Ended April 30, 2019	 	Three Months Ended April 30, 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)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	$	62,157		 	(c)	 	 	 	 	 	 	 	 	 	$	43,955		(c)	 	 	 	
 	 	 	 	 	3,124		 	(d)	 	 	 	 	 	 	 	 	 	2,667		(d)	 	 	 	
 	 	 	 	 	922		 	(e)	 	 	 	 	 	 	 	 	 	—		 	 	 	 	
Operating loss	$	(97,424	)	 	-29.8	 %	 	$	66,203		 	 	 	$	(31,221	)	 	-9.6	 %	 	$	(61,874	)	 	-24.2	 %	 	$	46,622		 	$	(15,252	)	 	-6.0	 %	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 		 	 		 	$	62,157		 	(c)	 	 		 	 		 	 		 	 		 	$	43,955		(c)	 	 	 		
 	 		 	 		 	3,124		 	(d)	 	 		 	 		 	 		 	 		 	2,667		(d)	 	 	 		
 	 	 	 	 	922		 	(e)	 	 	 	 	 	 	 	 	 	—		 	 	 	 	
 	 	 	 	 	6,490		 	(f)	 	 	 	 	 	 	 	 	 	1,455		(f)	 	 	 	
Net loss	$	(100,336	)	 	 		 	$	72,693		 	 	 	$	(27,643	)	 	 		 	$	(64,304	)	 	 		 	$	48,077		 	$	(16,227	)	 	 		
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net loss per share -- basic and diluted	$	(0.41	)	 	 		 	 		 	 	 	$	(0.11	)	 	 		 	$	(0.29	)	 	 		 	 		 	$	(0.07	)	 	 		
Weighted-average shares used in per share calculation -- basic and diluted	245,334		 	 		 	 	 	 	 	245,334		 	 		 	223,768		 	 		 	 	 	223,768		 	 		

(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.

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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 April 30,	
 	2019	 	2018	
Net cash provided by operating activities	$	6,642		 	$	18,596		
Less: purchases of property and equipment	(24,296	)	 	(22,296	)	
Free cash flow (non-GAAP)	$	(17,654	)	 	$	(3,700	)	
Adjust: ESPP impact	21,960		 	12,252		
Free cash flow without ESPP impact (non-GAAP)	$	4,306		 	$	8,552		
 	 	 	 	
Free cash flow as % of revenue	-5.4	 %	 	-1.4	 %	
Free cash flow without ESPP impact as % of revenue	1.3	 %	 	3.3	 %	

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