Pure Storage CEO Giancarlo Talks Cloud, Exec Changes, And Having '56 Billion More Dollars Than Dell'
‘We have no debt, a billion on the balance sheet, and continue to generate cash,’ says Pure Storage CEO Charles Giancarlo.
Pure Storage: Doing Very Well, Thank You For Asking
Mountain View, Calif.-based Pure Storage late last month said it did not meet its third fiscal quarter expectation and which reduced its fourth fiscal quarter guidance because of softening storage prices and new macroeconomic headwinds. The company also said its longtime president, David "Hat" Hatfield will transition to a new role as vice chairman and president emeritus. He also introduced the company's first-ever chief operating officer, as well as its new chief financial officer.
But none of that should be looked at in a negative way, Giancarlo said. He told CRN that Pure Storage is continuing to generate cash, and has no debt, which he said combined means the company has "$56 billion" more in net cash compared to rival Dell Technologies. In addition, he said, the company is continuing to advance its cloud capabilities in such a way that differentiates it from rival NetApp.
For more on Pure Storage's financial situation, competitive situation, cloud situation, and executive situation, and to learn about the search for Giancarlo's one-syllable nickname to bring him in line with other "Puritans," turn the page.
You lowered guidance for the quarter. That brings up a question that channel partners have been asking. What is the path to profitability for Pure Storage? Can you generate enough cash to be viable three years from now?
We were at the top of our profit guides this quarter, at 6.8 percent. We're guiding a total year profitability of over 3 percent. We're adding cash to our balance sheet. We increased cash this past quarter by $60 million. Yeah, we've been cash flow positive for three years now. And we were profitable last year. We're profitable this year. As I like to say, we've got 56 billion more dollars than Dell, in terms of free cash. We have no debt, a billion on the balance sheet, and continue to generate cash. So I'm not quite sure where that commentary came from.
When you say you're profitable, that's non-GAAP profit, right?
It is non-GAAP. But from a cash standpoint, cash is cash, and we're cash flow positive.
One thing with GAAP accounting, as you may know, is that most analysts now don't use GAAP accounting. They use cash generation because cash, as they always say, doesn't lie. And we are cash flow positive under any and all circumstances.
You and Pure Storage have been talking a lot about the cloud, particularly at the recent Pure Accelerate conference. How important is seamless connectivity between on-premises and the cloud to Pure?
We think it's all important. If you have to have each of your applications written differently, depending on what cloud it's on, you can become trapped to that provider. And it also means that you can't move things around. You can't have disaster recovery. In our environment, customers have one interface, one management system, across any cloud. Customers with Pure Storage Cloud Block Store, for example, can place disaster recovery in Amazon, or in the future in Azure, and not have to have a central data center for disaster recovery, and not even be paying a lot of money because if the disaster doesn't occur, you're not using the resources. So it's a tremendous set of flexibilities.
And secondly, you can imagine this: You place your workload in a hyperscaler and it works there because you've written the application for that environment, and now you need to renegotiate your contract with them the following year and they have you renegotiate when you can't remove the application without a lot of expense. In our case, the application can easily be moved from one cloud to another or to on-prem. So it's a tremendous resource. It's lower costs than the native cloud services. It provides more features and capabilities. It's a great setup for the customer, and a profitable business for us.
How would you compare what you're doing on the cloud with NetApp, which has been talking about its Data Fabric for five years and at their recent NetApp Insight conference showed a lot of advances in terms of where it's going on the cloud?
Well, we actually have a different strategy. You have to dig down a layer. They're both cloud. And I'm not going to be critical about what they do. They're offering what would generally be viewed as a tier-two set of file capabilities in the cloud. By the way, that's a big market. So that's what they do.
We're offering a primary tier set of block services on the cloud. So actually, we don't even go after exactly the same market or use cases. But they're both great markets. So we're highly differentiated. They do well, we can do well. And you know, they've been at it for longer than we have. But we're getting great interest and uptake in what we're doing.
We recently saw Dell Technologies introduce what could be termed its first real cloud strategy, one which focuses less on its own hardware and which is moving towards a seamless connection between on-premises and cloud. How do you see Dell's cloud moves?
I think they're still largely [focused on] vSAN and the VMware Cloud. So it's largely on the back of VMware. What they've announced so far is not terribly competitive. We're not seeing that as being terribly significant, or a headwind for us, if you will.
But there's still time for that to change...
Yeah, there is. But they've been promising a new midrange [array] now for two years and it's yet to come out. I think, frankly, Dell is not an R&D company. I think they struggle to innovate. They're known as a one-stop shop, while we're best-of-breed. I see some very different positioning of the two companies.
As you look at the competitive environment, would you say your biggest competitors are the traditional storage vendors or who?
No doubt, on a day to day basis, our biggest competitors go by market share. So Dell, NetApp, HPE, those are our biggest competitors. I think looking forward, that's probably still the case for a while. I don't see that changing anytime soon. The small storage players really just don't have the scale, I think, to be able to compete at a significant level.
On the call, there was a question about competitors giving Pure Storage price competition, and you said there's really only one. Who were you referring to there?
If you listen to their calls, I think they describe themselves, right? So I'm not going to mention competitors by name. I think you know who it is.
The fact that 'Hat' (pictured) is changing roles, and that Pure Storage has a new chief operating officer and chief financial officer, are these changes at the executive level indicative of any major changes going on in terms of Pure Storage's organization or executive team? Should we read anything into this?
These are our two largest positions, I would say, in the company. So it is a significant change. It doesn't forecast new changes to take place. I've been speaking to both Tim and to 'Hat' for several quarters because they're good 'Puritans' and they certainly weren't going to leave us hanging. And it [gave us] an opportunity to think about, OK, what do we need for the future. And so we were very thoughtful about the kinds of executives we're bringing on into each of those roles, and made sure that they had the background, the maturity, the experience that we need for what we see ahead of us the next decade.
With 'Hat' changing his role, that brings up a question I've asked several times and you have yet to come up with a good answer: Have you come up with your one-syllable nickname like most Pure Storage executives have?
I haven't. It's still Charlie. They tried. Several have been suggested, and I'm not going to grace you with what those suggestions have been, in case they might stick. But several have been suggested. Fortunately or unfortunately, maybe fortunately for me, none have stuck. I guess I defy nicknames. I don't know.
I'll ask you again next year. Just so you're warned.
I will say this. I did get a naming gift at my alma mater. There was another naming gift that was given by David Rockefeller. He gave the Rockefeller library, and it's known as 'the Rock.' And I certainly did not want the same thing to happen to my name. So I'm being very careful.
What was the naming gift?
It was a sculpture in a plaza at Brown University.
CRN note: For details about the sundial sculpture that was set this year in the Giancarlo Plaza at Brown University, click here