Pure Storage Underwhelms With IPO Debut

By Chris Lange Published Oct 7, 12:20PM EDT

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Pure Storage Inc. (NYSE: PSTG) quietly entered the market on Wednesday morning in its initial public offering (IPO). The company priced 25 million shares at $17, within the expected range of $16 to $18.There is an overallotment option for an additional 3.75 million shares. At the maximum price, the entire offering is valued up to $488.75 million.

The underwriters for the offering are Morgan Stanley, Goldman Sachs, Barclays, Allen & Co., Pacific Crest, Stifel, Raymond James, Merrill Lynch and Evercore.

The company has two classes of authorized common stock: class A and class B. The rights of the holders of each class of common stock are identical, except with respect to voting and conversion. Each share of class A common stock is entitled to one vote. Each share of class B common stock is entitled to 10 votes and is convertible into one share of class A common stock. Outstanding shares of class B common stock will represent approximately 98.5% of the voting power of the outstanding capital stock immediately following this offering, with directors, executive officers and principal stockholders representing approximately 59.9% of such voting power.

Pure Storage delivers data storage with an increase in performance and with lower complexity and lower costs. Revenue growth and financial disclosures were as follows:

Revenue increased from $6.1 million for the fiscal year ended January 31, 2013, to $42.7 million for the fiscal year ended January 31, 2014, and to $174.5 million for the fiscal year ended January 31, 2015, representing year-over-year revenue growth of 603% and 308% for its two most recent fiscal years.
Revenue increased from $24.6 million for the three months ended April 30, 2014, to $74.1 million for the three months ended April 30, 2015, representing period-over-period growth of 201% for its most recent interim period.
Its net loss was $23.4 million, $78.6 million, $183.2 million, $30.0 million and $49.1 million for the fiscal years ended January 31, 2013, 2014 and 2015, and the three months ended April 30, 2014 and 2015, respectively.
For the fiscal year ended January 31, 2015, and the three months ended April 30, 2015, 77% and 79% of revenue was from the United States and 23% and 21% from the rest of the world.

Shares of Pure Storage were down about 3% to $16.30 midday Wednesday. So far on the day the range was $16.00 to $17.00, and about 13 million shares had moved on the day.

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About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.