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August 13, 2015

Pure Storage files for $300m IPO

Financial analysts hail announcement from Flash storage firm as it says 'flash is the new disk'.

By Joao Lima

Pure Storage has this week filed a registration statement with the U.S. Securities and Exchange Commission (SEC) to become a public company.

The storage company, a direct competitor to EMC and NetApp, said it expects to raise up to $300 million and has tasked Morgan Stanley and Goldman with acting as lead book-running managers for the proposed offering.

Barclays, Allen & Company LLC and BofA Merrill Lynch will act as book-running managers, and Pacific Crest Securities, a division of KeyBanc Capital Markets, Stifel, Raymond James and Evercore ISI will act as co-managers.

Pure Storage was last year valued at $3 billion by private investors and has in the past raised over $470 million from venture capital investors such as Sutter Hill, Greylock, Wellington Management and others.

In its last yearly results ending January 31, the company posted revenues of $174.5 million, four times higher over the same period last year ($42.7 million), but net loss doubled to $183.2 million in 2015 (from $78.6 million in 2014).

Sabo Diab, Head of International Marketing at Infinidat, told CBR: "It is very important to see companies like Pure Storage heading to IPO as this reflects the market need for new disruptive technologies.

"Pity that flash technology still hasn’t solved the cost and capacity issues as there are hybrid products combining flash that can provide near-flash performance and address customers’ other pain points on capacity and cost."

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Marc Farley, Evangelist at Tegile, told CBR: "As the first all-flash vendor to file for an IPO, Pure is validating the technology for everybody else in the industry. So, thanks to Pure for increasing the size of the pie for enterprise flash arrays."

Josh Kopelman, Partner at First Round Capital, said in a blog post that he does not believe "we will fully understand or appreciate the impact of the "private IPO" phenomenon for another decade, or at least until a full cycle plays out."

He added: "One key benefit of low-frequency trading in private companies is a long-term focus. It removes arbitrary time constraints on growth and profits."

Alex McMullan, CTO at Pure Storage, told CBR: "[Our DNA] is very much based on web scale and large enterprise reliability performance."

The firm produces flash storage arrays, which McMullan said are the future. He added: "Flash is the new disk. Flash also offers more efficiency, as an array can be run at 99%, but the same thing cannot be done with disk."

Pure Storage has not revealed the number of shares it plans to sell or which exchange it plans to trade on but disclosed that it will list under PSTG.

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