Storage Vendors Last Quarter Financials: Sales Growth Slow, With One Big Exception

Not An Exceptional Quarter For Storage

Five of the six top storage vendors have in the last few weeks reported their latest storage numbers, and growth for the industry is anything but stellar. Of the five, only Pure Storage showed real growth, while Hewlett Packard Enterprise, Dell EMC, and NetApp showed slow growth. The sixth, Hitachi Vantara, does not publicly release its storage sales numbers.

Note that, while information from the vendors' latest reports was used, the vendors have different reporting periods. Dell, IBM, and Pure Storage all most recently reported their full fiscal year financials, but their fiscal years did not all end on the same date. Hewlett Packard Enterprise, on the other hand, most recently reported its first fiscal quarter of 2019, while NetApp reported its third fiscal quarter of 2019.

To see how the storage industry is faring as of the last quarter or so, turn the page.

But First, Here's Last Year For Comparison

By comparing the latest storage sales numbers from the five publicly-listed storage vendor with last year, note that there seems to be a slowing down in the growth of the storage industry.

For comparison, here are the fourth quarter 2018 revenue figures for external enterprise storage systems for the top six vendors, as reported March 1, 2018 by analyst firm IDC:

HPE -- $2.565 billion, up 2.9% year-over-year

Dell EMC -- $2.434 billion, down 11.4%

IBM -- $744.6 million, up 8.6%

NetApp -- $735.3 million, up 14.5%

Huawei -- $517.7 million, up 28.9%

Hitachi Vantara -- $453.1 million, down 2.1%

Now let's look at how the top six fared in the most recent quarter.

Pure Storage -- Most Recent Quarter: $422.2 Million, Up 24% Year-Over-Year

Pure Storage is finally a profitable company, in a non-GAAP-way, reporting its first-ever profitable year in business for its fiscal year 2019, which ended Jan. 31. Pure Storage President David Hatfield told investors on Feb. 8 that it is significant that Pure Storage is growing faster than not only the rest of the flash storage business, but than the rest of the overall storage business.

Pure Storage is now the sixth largest overall storage vendor, while flash storage accounts for only about one-third of overall storage, Hatfield said. "So there's an enormous part of the market for us to take over," he said.

For its fourth fiscal quarter 2019, Pure Storage vendor reported revenue of $422.2 million, up 24 percent from the $339.9 million the company reported for its fourth fiscal quarter 2018. It also reported GAAP loss for the quarter of $25.8 million and a non-GAAP net income of $37.0 million.

For its fiscal year 2019, Pure Storage reported total revenue of $1.360 billion, up 33 percent over last year's $1.025 billion. On a GAAP basis, full year net loss reached $178.4 million, or 77 cents per share, while on a non-GAAP basis, the company reported net income of $50.6 million.

Dell -- Most Recent Quarter: $4.636 Billion, Up 7% Year-Over-Year

Dell Technologies on Feb. 28 reported financials for its fiscal year 2019, which ended Feb. 1, with storage revenue reported as $16.767 billion, up 9 percent over fiscal 2018. Fourth fiscal quarter 2019 storage revenue was $4.636 billion, up 7 percent over the same period of last year.

Tom Sweet, Dell chief financial officer, said during the company's fiscal 2019 financial analyst conference call that storage revenue grew for the fourth consecutive quarter.

"We have more work to do but believe we have taken the right actions to drive meaningful long-term improvements in our storage business. … We have plenty of work to do, but clearly, we've stabilized the business," Sweet said.

Looking at the market as a whole, Dell gained market share for three straight quarters by over 300 basis points, which was more than anyone else, Sweet said, citing the most recent reports from analyst firm IDC.

"During Q1 to Q3 timeframe, industry revenue grew $2.5 billion and we have captured $1.3 billion of that growth," he said. We expect to grow share again in calendar Q4 and for the full year when IDC releases storage share results in March."

HPE -- Most Recent Quarter: $959 Million, Up 3% Year-Over-Year

Hewlett-Packard on Feb. 21 reported its first fiscal quarter 2019 financials, which ended Jan. 31. For the quarter, HPE reported overall storage revenue was up 3 percent to $959 million, and all-flash storage array revenue rose 20 percent year-over year.

Antonio Neri, president and CEO of HPE, said during the company's first quarter 2019 analyst conference call that the quarter marked its seventh consecutive quarter of growth, with all-flash array growth driven by its Nimble Storage offering, which it acquired in early 2017.

"We have also seen significant margin expansion as our customers embraced our intelligent storage offerings," Neri said. "Looking forward, we expect storage revenue to ramp, targeting $1 billion per quarter."

For its full fiscal year 2018, which ended October 31, HPE reported total storage revenue of $3.706 billion, which was up 13 percent year-over-year.

"As we move into our fiscal year 2019, customers continue to see strong value in our nimble and 3PAR platforms with HPE InfoSight, enabling customers to operate more efficiently in our autonomous data center," Neri said at the time.

NetApp -- Most Recent Quarter: Up 2%

NetApp seems to be firing on all cylinders, with all-flash storage, hybrid cloud, and cloud data services contributing to continued growth, CEO George Kurian told financial analysts on Feb. 14. However, he said, macroeconomic conditions outside the company's control, including trade concerns, slowed growth to below what was expected.

"Regardless of the headwinds, we remain confident in the future. … [But] we did not see any real change in the competitive environment," Kurian said.

For its third fiscal quarter 2019, which ended Jan. 25, NetApp reported revenue of $1.56 billion, up about 2 percent from the $1.54 billion the company reported in its third fiscal quarter 2018. Analysts had been expecting revenue of $1.6 billion. However, the company's flash storage business grew 19 percent over last year to an annual run rate of $2.4 billion.

Income on a GAAP basis for the quarter reached $249 million, compared with last year's GAAP loss of $479 million. On a non-GAAP basis, NetApp reported income of $305 million, compared with last year's $289 million.

IBM -- Most Recent Quarter: Down 7% Year-Over-Year

IBM, when it reported its full year 2018 financials on Jan. 22, did not break out storage revenue. However, the company said its storage hardware revenue for the full year fell 7 percent over the prior year.

Jim Kavanaugh, IBM's chief financial officer, called out storage during the company's financial analyst conference call without providing revenue figures.

"Storage hardware was down with declines in midrange mitigated by continued strong growth in all-flash arrays," Kavanaugh said. "The storage market remains very competitive, with ongoing pricing pressures. We're continuing to introduce new innovations and functionality. For example, in December, we extended our next-generation NVMe technology into the midrange, with strong initial client adoption. We will continue to roll out NVMe across the storage portfolio in the first half of 2019."