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Pure Storage, Inc.  (NYSE:PSTG)
Q4 2018 Earnings Conference Call
Feb. 28, 2019, 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good afternoon. My name is Mike and I will your conference operator today. At this time I would like to welcome everyone to the Pure Storage Fourth Quarter Fiscal 2019 Earnings Conference Call. (Operator Instructions) I will now turn the call over to Matt Danziger, Head of Investor Relations. You may begin your conference.

Matt Danziger -- Vice President of Investor Relations

Thank you and good afternoon. Welcome to the Pure Storage Fourth Quarter Fiscal 2019 Earnings Conference Call. Joining me today are our CEO, Charlie Giancarlo; our CFO, Tim Ritters; our President David Hatfield; and our VP of products Matt Kixmoeller. Before we begin, I would like to remind you that during this call, management will make forward-looking statements which are subject to various risks and uncertainties. These include statements regarding competitive industry and and technology trends, our strategy, positioning and opportunity, our current and future products, business and operations including our operating model, growth prospects and revenue and margin guidance for future periods.

Any forward-looking statements that we make are based on assumptions as of today and we undertake no obligation to update them. Our actual results may differ materially from the results predicted and reported results should not be considered as an indication of future performance. A discussion of risks and uncertainties relating to our business is contained in our filings with the SEC and we refer you to these public filings.

During this call, we will discuss non-GAAP measures and talking about the Company's performance and reconciliations to the most directly comparable GAAP measures are provided in our earnings press release and slides. This call is being broadcast live on the Pure Storage Investor Relations website and is being recorded for playback purposes. And archive of the webcast will be available on the IR website for at least 45 days and is the property of Pure Storage.

With that I'll turn the call over to our CEO, Charlie Giancarlo.

Charlie Giancarlo -- Chairman and Chief Executive Officer

Thank you Matt and good afternoon everyone. Thank you for joining us on today's earnings call. I will begin the call with a summary of our fiscal year results, a look at Q4 and share our excitement for the future. Hat will provide our go-to market update and finally Tim will give a detailed review of our financials and updated outlook. Looking back at FY '19, I believe we made excellent progress on our key company initiatives outlined this time last year. We invested in key markets and growth areas. The Global 2000, the Cloud 1000 and Next Generation Analytics and AI. Our international revenue grew from 26% of sales in FY '18 to 28% of sales in FY '19. We achieved profitability for the first full year.

We continued our industry-leading delivery of important new products opening up new TAM. We now provide hybrid cloud offerings, solutions for rapid restore and over 80% of our system capacity now ships as NVMe. Lastly with our leading software and increasingly subscription-oriented business model, we continue to deliver industry-leading customer delight as evidenced by our NPS score of 86.6%.

Now our results. Full year results were strong with revenue of $1.36 billion, growing 33% year-over-year. Gross margin was 67.6% and operating margin was 3.7%. Gross margin remained at the high end of our long-term model and we delivered our first full year of profitability, which we will continue to grow in the years ahead.

Q4 was a good quarter. Revenue was $422 million, growing 24% year-over-year. Gross margin remained strong at 67.6% in Q4 and operating margin was 7.4%. While we were below our guided range on revenue and profits, these gaps were the result of two distinct unanticipated items. First, there was a process breakdown at one of our contract manufacturers. This resulted in a number of orders that were expected to ship in the quarter, not shipping until the days following our quarter end. We have now addressed these process deficiencies.

Second, as you know, we've launched our enterprise storage service or ES2 offering last year, focused on enabling our customers to have a cloud experience on premises with a true subscription-based model. We are pleased to say that in Q4, we exceeded our expectations with ES2. Increasing subscription services drives better economics and value for Pure in the long term, but of course creates less revenue in the quarter in which it is booked. Except for these two items, we would have been within our guided range.

As we look ahead to FY '20 and beyond, we're excited with Pure's market-leading momentum. We will continue to invest in the strategy we outlined last year, driving growth in our key markets, growing the contribution of international revenue, driving scale and efficiency, leading our market in important innovations and finally continuing to focus on delighting our customers, partners, employees and long-term investors. As one proof point for our optimism, I'm pleased to announce that just this week we signed a deal valued at over $100 million spread out over approximately two years.

Our new product and service offerings have positioned Pure strategically in front of four major growth trends, reshaping our industry and growing an importance for CIOs (ph). These are hybrid cloud, fast consolidated data architectures, AI and analytics, and the transition from slow data backup to rapid restore.

Importantly, most of our new offerings in these areas are based primarily on a subscription revenue model. Let me go into a little more detail on these growth trends. First hybrid cloud. Customers want a hybrid cloud solution that enables them to move mission-critical applications to and from the cloud with ease and agility. Customers also want to have the same data services and APIs available in the cloud that are common today on-prem. Our Cloud Data Services running Pure software natively on AWS are designed to enable our customers to do just that. The response from beta and perspective customers has been very positive. Second, fast consolidated compute and data architectures. As cloud and enterprise customers deploy modern data-centric applications they are demanding faster consolidated data architectures. They want hyperscale efficiency and performance.

Last week, we announced our direct flash fabric now available on FlashArray, which promises to revolutionize the way modern computing is deployed. Once again, Pure's leading the industry, first charting the path to all-flash and now transforming the compute stack enabling direct access performance with shared storage. This innovation brings hyperscale efficiency and performance to everyone. Third, AI and analytics. We continue to pioneer data solutions for AI across multiple use cases, thus broadening the accessibility of AI solutions in the market. With fast consolidated data as the key enabler of AI and analytics, we are well positioned to have the first mover in this $6 billion market.

Fourth, data protection or as we have now redefined it rapid restore. As announced last week, object engine, formerly store reduce, is the biggest architectural change to data protection in more than a decade, delivering on our vision that customers want immediate restoration of services rather than just back up. Object engine is built with a flash-to-flash-to-cloud approach, replacing disk and tape. Customers can now recover data in minutes rather than hours or days, by using object engine with FlashBlade. An object engine uses the cloud as a cost effective archive destination for data, eliminating tape and enabling additional uses of their data in the cloud.

Considering all of our new offerings introduced in the past year, we believe we have grown our addressable market from $35 billion to more than $50 billion. As we embark on our 10th year, we are focused on continuing industry-leading growth, expansion of our solutions and advancing what makes Pure great, unrelenting innovation and a laser focus on customer delight.

With that, I'll turn it over to Hat.

David Hatfield -- President

Thanks Charlie. Momentum was strong for the fiscal year with 33% year-over-year annual revenue growth at scale. Nearly 1500 new customers, a productive and expanding partner ecosystem and excellent traction across our innovative and differentiated product portfolio. Let me dive into three areas that contributed to our progress in the year and the quarter. First, we finished the year with 5850 total customers, continuing our momentum with more than 400 additions in the quarter. We also made progress in the largest enterprises, governments and cloud-native organizations. We now have 40% of the Fortune 500. We added multimillion dollar government sector wins in both the U.S. and EMEA. And our cloud customers continue to contribute more than 30% of our total business. We're also seeing strong demand within our existing customer base as evidenced by a record number of $1 million expansion wins this quarter.

Second, our partner ecosystem continues to expand and deliver real value to our go-to market engine. During the quarter, we had excellent traction across our national channel partners, technology alliances and global systems integrators. Our largest national partners are increasingly choosing to lead with Pure. Most recently, Pure received a number of accolades including Data Center Partner of the Year from SHI, EDW (ph), UK Silver Partner of the Year, CRN's Data Center Vendor of the Year and Best Vendor Channel Program from SVC Awards. Additionally, we've made significant progress with a number of strategic alliances.

Our partnership with Splunk to advance big data analytics continues to thrive and our joint customer base more than doubled in the year. We signed RackSpace as one of the largest managed service providers and see continued advancement with Nvidia and Cisco including the expansion of our converged offerings to include FlashStack for AI and FlashStack as a service. Finally GSIs are growing rapidly and becoming an increasing contributor to our go-to market efforts. And Accenture DXE and HCL are all now working with Pure. Our leading technology together with our ever-green business model are a perfect fit for GSIs, enabling them to reduce costs while improving their service levels to customers.

As Charlie mentioned, the progress in and our commitment to this segment is underscored by our recent nine-figured multiyear agreement with one of the largest GSIs. Third, our relentless focus to drive value to our customers has changed the nature of our conversations we're having with them. Pure's new innovations in the areas of the hybrid cloud, next generation analytics and AI and rapid restore together with our unique subscription model has enabled us to become more relevant in their digital transformation journey. As Charlie noted, we launched our cloud data services to enable customers to make the most of their data whether they choose it to house it on-prem in the cloud or increasingly a mix of both.

Enterprises that benefited from Pure's differentiated approach of automation, simplicity and the evergreen business model can now seamlessly extend that experience to the cloud. In fact our 100% software subscription-based Cloud Block store offering, which we launched for beta access in Q4 is oversubscribed and early customer feedback has been overwhelmingly positive.

FlashBlade delivered another great quarter, as we've achieved consistent repeatability and grew our use cases around next generation analytics, AI and rapid restore. Looking forward, we're very excited about our recently announced object engine solution, a revolutionary subscription-based approach to data protection that we believe will enable Pure to capture a large portion of this roughly $8 billion market. This cloud first solution leverages FlashBlade to deliver 10x faster recovery for our customers most critical data while the deduplication and native cloud integration of object engine protects the entirety of our customer's data in the public cloud. All for less money than they are spending on legacy backup appliances.

Lastly, as customers are increasingly looking to consume data solutions as a service, our teams are seeing success in selling our core portfolio as a subscription with our Evergreen storage service or ES2. We are pleased with the momentum in this area which included several multimillion dollar deals globally. We believe that the continued momentum of ES2 together with our new subscription-based products uniquely positions Pure to deliver the industry's leading data solutions on-prem and in the cloud in the way that customers want.

In summary, the fundamentals of our business remain strong and with our customer, partner and employee momentum, we continue to take share in the overall storage market. Our portfolio has never been stronger and now includes new innovations across major growth trends including hybrid cloud, next generation analytics, AI and modern data protection. We had a great year. We're enthusiastic about 2019 and it truly feels like we're only just getting started.

With that, I'll now turn the call over to Tim. Tim?

Tim Riitters -- Chief Financial Officer

Thanks Hat. Fiscal 2019 was a strong year for Pure. As we continued our march toward $2 billion, growing 33% year-on-year and delivering our first full year of profitability. Before I dive into the specifics, I'll make my usual note that the gross margin, operating margin, OpEx, net income and free cash flow numbers I will use are are non-GAAP unless otherwise noted.

Reconciliations of these non-GAAP metrics to their GAAP comparables as well as our full Q4 results and presentation are available on our website at investor.purestorage.com. For the quarter, total revenue grew 24% year-on-year to $422 million. Product revenue grew 19.7% year-on-year to $340 million and support revenue grew 47% year-on-year to $82 million. As Charlie mentioned, we had two unanticipated items that adversely impacted our Q4 results.

The majority of the impact was due to an unexpected distribution issue with one of our contract manufacturers, which we have addressed. In combination with this issue, we lost our ES2 subscription offering last year to empower our customers to have more of a cloud-like experience on prem, and we over-performed this quarter relative to our original expectation, as we shift more business to his as a service consumption model.

While this resulted in lower revenue recognized this quarter due to the subscription nature of ES2, the long-term economics of our subscription-based model are compelling and we look forward to continuing to grow this business in the new fiscal year. Except for these two items, we would have been within our guided range on both revenue and products. Geographically, 71% of our sales came from the United States and 29% came from our international markets for the quarter.

We grew the overall proportion of our revenue that comes from international market as we continue to scale and build our brand awareness outside of the United States. Our gross margins continue to speak to the value in differentiation that our customers see in our solutions. Margins continue to be strong in Q4. Total gross margin for the quarter was 67.6% down 0.5 point sequentially, but remaining at the high end of our long-term model of between 63% and 68%.

Product gross margins were 67. 8%, down modestly 0.3 point quarter-on-quarter due to a mix shift to our lower margin FlashBlade business. Both FlashArray and FlashBlade maintain strong margin profile in the quarter. Support gross margins were 66. 8%, down 1.3 points quarter-on-quarter. Q4's decrease was driven primarily by investments we are making in our support and professional services teams to serve our largest enterprise customers as well as lower onetime support revenue items as compared to prior periods.

Moving to operating margin, we continue to make great progress toward our long-term profitability goals, achieving the key milestone of our first full year of profitability. In Q4, operating profit was positive $31.1 million or positive 7.4% of revenue and compares to an operating profit of $24.9 million or positive 7.3% in the year-ago quarter. Q4's profit results were directly impacted by the shipping and subscription items we discussed earlier. Excluding these items, our profits results would have been within our guided range of between 8% and 12%. We continue to invest given the positive momentum we are seeing in the business and the opportunity we have in front of us. Q4 net income for the quarter was positive $37.0 million or positive $0.14 per share. This compares to the year-ago period of $28.8 million or positive $0.11 per share. The weighted average shares used for the per share calculations were 264 million in Q4 and 251 million for the year-ago period.

Moving on to the balance sheet and cash flow. We finished Q4 with cash and investments of $1.2 billion, an increase of $53 million from the previous quarter. Free cash flow in Q4 was positive $51.4 million, which includes $17 million of impact related to our employee stock purchase plan. The solid performance at the end of the year enabled Pure to generate positive free cash flow of $64.3 million for the full year. As we wrap up our review of fiscal 2019, I'd like to highlight something that we haven't talked a lot about today. The increasing momentum we are seeing in our deferred revenue balance. Our customer-first strategy has led to the highest customer satisfaction in the industry. Happy customers stay with Pure and ultimately buy more from Pure. And we are seeing that in our accelerating deferred revenue balance.

We believe a growing deferred revenue balance is an indicator of the success we are having in executing on our strategy of building long-term relationships with our customers. As a result, deferred revenue grew 43% year-on-year to a record $536 million, an acceleration from 41% growth in Q3. And with the direct result of three key trends. Number one, significant year-on-year increases in our customer renewals. Number two, longer-term initial subscription commitments from customers. And number three, the shift we are seeing to our subscription-based products like ES2. These are important and positive trends for our business.

Now I will turn to our guidance. As we look into next year, we're excited about the opportunity ahead for a number of reasons. First, new products have allowed us to address new markets including hybrid cloud, data protection and web scale storage. Second, we had notably increased the amount of sales capacity we have as a company. And third, we are delighted about the new partners and roots to markets have developed over the last year. A proof point of this, is the recently signed $100 million plus deal that both Charlie and Hat talked about. These trends give us confidence that our strategy is working as we continue to invest. For the full year of fiscal 2020, we expect revenues in the range of between $1.735 billion and $1.805 billion, representing 30% year-over-year growth at the midpoint.

Non-GAAP gross margin in the range of between 65% and 68% and non-GAAP operating margin in the range of between 3% and 7%. For the first fiscal quarter of fiscal 2020, we expect revenues in the range of between $327 million to $339 million or 30% year-over-year growth at the midpoint. Non-GAAP gross margin in the range of between 65% and 68% and non-GAAP operating margin in the range of between negative 8.5% to negative 4.5%.

Our Q1 guidance is based on the consistent and deliberate strategy we have successfully executed on in each of the last several years. Namely to invest early in the year most notably in our go-to-market organization, which positions us well to capture significant revenue growth in our seasonally strong second half. This strategy has resulted in year-over-year operating leverage in the past and based on our full year guide, we anticipate year-on-year improvement in our operating margin again.

One final technical modeling note, as our guidance for Q1 cause for negative net income, we would move back to a basic share count number for EPS calculation purposes. We anticipate a basic Q1 EPS share count of between 240 million and 250 million shares. In FY '19, we continue to overachieve along our path to $2 billion and beyond, driving industry leading gross margin, taking share, driving strong operating leverage and developing long-term meaningful relationships with our customers.

With that, I will now turn the call back over to Charlie.

Charlie Giancarlo -- Chairman and Chief Executive Officer

Thanks Tim. Looking ahead, I'm excited about the tremendous opportunities in front of us. We have a $50 billion market TAM in key markets that are essential to powering the data of tomorrow's digital businesses. Hybrid cloud, AI and modern analytics scale out architectures and rapid recovery of mission-critical applications.

We continue to take market share with our world-class customer service, industry-leading innovation and differentiated business model. We're winning in the cloud with both the significant cloud customer base and our introduction of new Cloud Data Services. We're expanding our subscription-centric business model, driving retention and expansion into our growing portfolio while delivering industry leading customer delight.

And lastly, we're tracking to the financial and business goals we've outlined in the past. Since our founding almost 10 years ago, Pure has transformed the antiquated storage industry and helped customers drive business value from investing in their data. As we look forward to our next 10 years, we're positioned to deliver the industry's next set of innovations.

I will now open the call for questions. Operator?

Questions and Answers:

Operator

(Operator Instructions) Your first question comes from Aaron Rakers from Wells Fargo.

Aaron Rakers -- Wells Fargo -- Analyst

Yes, thanks for taking the questions. I guess just first from a housekeeping perspective. I was wondering if you could help kind of frame the effect between the two items that impacted the revenue results this quarter between the partner impact versus the ES2 impact? And how are you guys kind of modeling out the effect of increasing ES2 as we move forward? I have a follow-up.

Tim Riitters -- Chief Financial Officer

Aaron, this is Tim. We aren't disclosing the specific numbers, but the majority of the impact was from the contract manufacture issue and then obviously the remainder was from the ES2 topic. As it relates to guidance going forward, we're thrilled about what we're seeing in ES2 and naturally have developed new forecasts based on what we're seeing, and those are factored into the guidance that we offered here in our prepared remarks.

Aaron Rakers -- Wells Fargo -- Analyst

Perfect. And I guess the second quick question would be talk a little bit about how you characterize the current competitive landscape and particularly as we see the industry move kind of more toward NVMe and even NVMe over fabrics? Have you seen any signs of your ability to kind of separate yourself further from the competitors? Or just how would you characterize that? Thank you.

David Hatfield -- President

Aaron, this is Hat. No discernible difference in the competitive landscape. It's a competitive market, as we know, but our win rates are holding nicely against all of our competitors, so I think that's the key indication. You look at what some of our competitors are guiding, they're guiding 0% growth, we're guiding 30%.

So, I think where there are some successful, there are single-digit growth, other areas is not coming at our expense. Relative to the mode and our differentiation, I don't think our competitive positioning has ever been stronger from a product perspective. You look at what we're doing with NVMe over fabric, you look at the other innovations that we launched around Could Block Store, around our Object Engine, our hybrid cloud story, there is one area that we're getting a ton of traction with. I just feel like the combination of all of that in the portfolio has never been stronger. Kix anything you want to add?

Matt Kixmoeller -- Vice President of Product

Yes, this is regarding the NVMe. I would add on that, look I think our software-driven strategy for end-to-end NVMe is truly working. Two things to point to, first off over 80% of the shipment is leaving the factory with NVMe. I challenge any competitors anywhere near that. And then the second thing I'd say if you look at what we announced with Direct Flash Fabric and our approach of NVMe over RoCE Ethernet, we took a harder path here to go down the path of Ethernet, but we fundamentally believe that's where the real advantage will lie. And it's not just about making applications faster which of course it does, but it's about really redefining the architecture and bringing the hyperscale architecture on-prem. If you look at the hyperscale that is out there, they deliver their premium storage services with shared storage and with NVMe. And we are bringing that same market actually to the masses.

Aaron Rakers -- Wells Fargo -- Analyst

Perfect, thank you guys.

Operator

Your next question comes from Katy Huberty from Morgan Stanley.

Katy Huberty -- Morgan Stanley -- Analyst

Thank you. Good afternoon. Now that all the storage companies have reported as of tonight, what you see is a pretty meaningful slowdown across the vendors. So just curious, your thoughts as to whether there is anything macro that may hit your business and sounds like that's not the case, why not press your advantage and actually double down on spend over the next year in order to take meaningful share. And then I have a follow-up?

Charlie Giancarlo -- Chairman and Chief Executive Officer

Katy, thank you for that. That's exactly what we feel we're doing. I mean if you look at our guide, both in terms of our optimism for the future on the 30% growth that we're expecting as well as only a modest increase on the bottom line. It's because we've hired a record number of QBHs over the last quarter to start Q1 with, and we're continuing to hire at an aggressive rate. We are still taking market share. Our opportunity is not limited by macro, not that we're seeing any real change in the macro, but that's not our market opportunity. We can take share in any market. And maybe Hat -- you spend a couple of minutes on this?

David Hatfield -- President

Yes, no -- I thrilled with the capacity add that we had in Q4, which is seasonally a difficult quarter to hire and we did a great job there. Continuing to add velocity and capacity on the hiring front into Q1. So, I think that's a great indication of us doubling down. We look at the opportunity that we have with these new products. We've doubled the number of products that we put in our sellers bags in the last year and so, as those new products get traction and the combination of all those products individually make the portfolio motion really differentiated. We're absolutely investing for the future.

Katy Huberty -- Morgan Stanley -- Analyst

And then just as a follow-up, can you talk about the traction of the AI-ready storage products. Are you seeing that get pulled into new use cases -- new industry verticals?

Matt Kixmoeller -- Vice President of Product

This is Kix, I'll take this one. Yes, it was a great quarter for AI solutions on a couple of fronts. So, we continue to see strength with NVIDIA and our solutions there with AIRI. And we also introduced our new solution with Cisco FlashStack for AI. And this continues to underscore our strategy of really trying to make AI mainstream and bring it to a mainstream wire because that's paying off.

Katy Huberty -- Morgan Stanley -- Analyst

Thank you.

Operator

Your next question comes from Pinjalim Bora from JP Morgan.

Pinjalim Bora -- JP Morgan -- Analyst

Okay guys. (inaudible) thanks for taking my questions. Charlie about the direct flash fabric, I guess congrats on launching that. I think it's pretty early, but what has been the general feedback from customers? And more importantly as the innovation in the space I guess progresses from RDMA to support fiber channel to TCP, do you think you would see storage architectures basically transform more into the data hub architecture that you kind of laid out in the Analyst Day last year?

Charlie Giancarlo -- Chairman and Chief Executive Officer

Thank you for that question. So, we're very excited about the DirectFlash Fabric and in particular from the response that we've gotten really from our most advanced and largest users. They are looking this as a game changer in terms of their ability to deploy very efficient, very effective highly concentrated and faster operating compute environments in their data centers. So, the most advanced users are doing this and by advanced, I mean, the technology leaders. We feel that it's only a matter of time before it then goes into every customer. We're convinced that beyond (inaudible) this is the kind of architecture that next generation data centers the way they are going to constructed. Kix?

Matt Kixmoeller -- Vice President of Product

The only thing I would add is there, we're really seeing interest on both types of architectures. If you look at traditional classic applications, this helps deliver hundreds of microseconds of lower latency, which makes databases go faster. That's a win for everyone. On the flip side of the coin, it's really interesting for webscale applications. If you look at most of them, they're built around DAZ architectures today where individual flash is inside every server. This allows us to bring the efficiency of shared storage to those applications and opens up a whole new TAM for us to go after.

Pinjalim Bora -- JP Morgan -- Analyst

Understood. Thanks. One follow-up about the DR strength that we are seeing. Are we -- is it fair to assume that the guidance basically assumes a higher ratable portion going forward? And given the DR strength, does it make sense to start looking at some metrics like billings going forward?

Charlie Giancarlo -- Chairman and Chief Executive Officer

Yes, couple of things. Certainly the acceleration that you're seeing in the deferred revenue balance is indication that the percentage of ratable revenue is increasing. It's a very nice trend. It's a trend that's been happening now for a couple of quarters and we thought it was important to call it out. As we go forward and watch how the continued sort of growing of the ES2 business over the next couple of quarters, you definitely will hear us talk some more about additional measures, just to give the investing community more insight to how that part of the business is transforming. So stay tuned as our business continue to grow.

Pinjalim Bora -- JP Morgan -- Analyst

Okay, thank you guys.

Operator

Your next question comes from Wamsi Mohan from Bank of America.

Wamsi Mohan -- Bank of America -- Analyst

Yes, thank you. Sorry switching between the few calls here, so apologies, if I missed this. But can you talk a bit about your view of market growth into this calendar year? Obviously you're guiding 30% growth and you are projecting that but for the quarter -- for the year a lot of your competitors have seen deceleration and your seems like it might be more endogenous and exogenous, so can you just may be share your market view and I have a follow-up.

Charlie Giancarlo -- Chairman and Chief Executive Officer

Thank you Wamsi. Yes we've been asking this question to ourselves for quite some time. We really see the market as being pretty steady honestly. No dramatic moves up or down. It's probably best said it's -- no clear indication. If anything we get that it's going up slightly. But -- what gets us excited about our growth opportunity is -- as Hat mentioned, we doubled the number of products in our seller's bags. We've got a record number of new sellers and we're hiring very aggressively in that area. And we have a very large number of existing customers, new customers and partners indicating to us on a daily basis that they're going to be doubling their -- they're going to be doubling down on fewer this coming year. So, we're getting a lot of very very good buying signs. I'd have to say that from an overall market I think it's steady as she goes. There are signs in both directions, but for the most part we see, it is slightly up.

Wamsi Mohan -- Bank of America -- Analyst

Okay, great. Thanks for that, appreciate that. And just a quick clarification on the shortfall here in the quarter. Was it 100% from the two elements that you cited or was there anything else? And does contract manufacture issue just caused a delay of shipment into this current quarter? And what was the magnitude of that?

Charlie Giancarlo -- Chairman and Chief Executive Officer

I'll take the first part of that question. So between those two elements, we would have been within our guided range. And Tim do you want to take the other part?

Tim Riitters -- Chief Financial Officer

Yes, no, I guess -- yes, there was a delay from a contract manufacturer perspective that naturally will pick itself up and be shipped out here in the first part of the quarter.

Wamsi Mohan -- Bank of America -- Analyst

And what's the magnitude of that?

Charlie Giancarlo -- Chairman and Chief Executive Officer

With this, it is not something we're still talking about from a specific dollar amount, but it was the majority of the delta between our results and our guidance.

Wamsi Mohan -- Bank of America -- Analyst

Got it. Al right, thank you so much, very helpful.

Operator

Your next question comes from Jason Ader from William Blair.

Jason Ader -- William Blair -- Analyst

Yes, thank you. Just wanted to look at the FY '20 guidance of 30%. And I guess what really drives your confidence that you can see that type of growth in a market that is changing fast. You have some obviously big competitors that are pretty hungry right now. I guess it just doesn't seem conservative. So maybe help us understand the level of conservatism there?

Tim Riitters -- Chief Financial Officer

Yes, well, we're using the same methodology that we use every quarter to guide. And as you know, we've beaten 12 out of 13 quarters. The things that are giving us confidence is the new products. A record number of QBHs (ph) and we're starting the year really flushed with QBHs and are continuing to hire aggressively. And again, the new partners that we have, we have new global system integrators, new MSP partners, all buying and indicating that they're going to be buying at very very significant levels. So, we have the same degree of confidence in this guidance as we like to have in every quarter.

David Hatfield -- President

And I think the other thing I would add Jason, if you look at the market, the key markets that we're focused in from a storage perspective, where there is AFA or and some of things that are now happening in the cloud, those are the growth markets of storage as well. So, we're placing our strategic bets both in innovation and where we're putting our sales people in those parts of the market are growing. And obviously that bodes well for us too.

Matt Kixmoeller -- Vice President of Product

Jason, one last add, I certainly concur with those things $100 million deal over the next couple of years doesn't hurt either.

Jason Ader -- William Blair -- Analyst

Got you. Okay. And then one last -- one follow-up just on the new products especially the cloud services that you've launched. When you think that will be meaningful to revenue?

Tim Riitters -- Chief Financial Officer

We think that -- now of course they are all new products and so I don't want to indicate that they're going to be a very large part of our revenue. But we're expecting significant revenue from the Object Engine product this year. We're expecting the beginning of revenue traction with the Cloud Data Services set of products.

Jason Ader -- William Blair -- Analyst

Thank you.

Operator

Your next question comes from Steven Fox from Cross Research.

Steven Fox -- Cross Research -- Analyst

Thanks, good afternoon. First a quick clarification. So with the surprise on the subscription revenues. How did that change your fiscal '20 outlook relative to 90 days ago for subscription revenues? I know and you're not breaking out specifically, but may be directionally you can talk about the change? And then I have a follow-up.

Tim Riitters -- Chief Financial Officer

Yes, Steve, within our -- sort of internal numbers and then obviously that flows over to the guide. We have upped our forecast for ES2 quite simply. There's no question about it. We see good momentum in that business and we expect more coming from ES2 now than we did 90 days ago for the full year.

Charlie Giancarlo -- Chairman and Chief Executive Officer

And I'll add the following that until Q4, we had some governors on ES2. Let's think of it as wanted to make sure we have the product and the service properly managed and set up. And then beginning in Q4, we kind of took the governors off and it took off. And as of this year, it's an equal part of our product portfolio and the sales team is going to sell whatever the customer wants to buy. So, the leash is off.

Steven Fox -- Cross Research -- Analyst

That's helpful. And then just quickly on the Cloud Data Services. When you say early stage revenues this year. Is there any sort of thresholds we should be looking for either with specific cloud service providers or otherwise?

Charlie Giancarlo -- Chairman and Chief Executive Officer

Well, a couple of things. One is we're in beta now. we're in -- or beta-1 now. We expect to go into beta-2 some time late next month early, early following month. And we expect to go GA some time, let's say late summer or Q3, sometime in our Q3. And then revenues of course are ratable. And so from a Pure revenue perspective this year, it's not going to be a tremendously large amount. But of course, we're expecting a big pickup in the product, so hopefully on the -- hopefully, we'll see a good pickup on the booking side from a contract value.

David Hatfield -- President

Stephen, this is Hat. The only thing I'd add to that is, as this provide a nice halo for our core products. Customers want to partner with somebody over the long-term that are relevant in a multi-cloud or a hybrid cloud scenario. The fact that we have native software now embedded in delivering the Pure experience, which people have come to love, but 86.6 Net Promoter Score is legitimate, so now they can actually have that same experience in the public cloud and manage across it. And so, for us to be able to provide a direction and the strategy and capabilities to help them do that helps us sell products today.

Steven Fox -- Cross Research -- Analyst

I appreciate all that color, that's very helpful. Thanks.

Operator

Your next question comes from Rod Hall from Goldman Sachs.

Bala Reddy -- Goldman Sachs -- Analyst

Hi, this is Bala Reddy on for Rod. Thanks for taking my questions. So, FlashBlade had a strong quarter in Q3 and you said the mix has increased this quarter. So, just wanted to check on how the product has performed this quarter? Any color would be helpful and I got a follow-up.

David Hatfield -- President

Yes Bala. The -- we had a great FlashBlade quarter, the continued momentum in that business. I think as we -- at the beginning of the year started to see momentum around our rapid restore use case our Next Generation Analytics and AI use case and penetrating into EDA into the technical computing world. Those use cases have now crystallized as being very repeatable and scalable.

And so, as we get more and more of sellers comfortable with them, our participation rates go up. And they know this is a differentiator for them in their accounts. So continued momentum that we see in that business and we got the repeatable use cases. When you add the Object Engine kind of hybrid cloud solution for kind of redefining data protection even that much more enthusiastic, as it provides a really specific use case to extend the amount of data that we can store for our customers. The rapid restore FlashBlade use case takes the most critical data and improves that from a 10x perspective on-prem, but with the Object Engine capability natively implemented in AWS. You can now take the rest of the data and store that or archive that in the public cloud. So it just expands our TAM and our conversation.

Bala Reddy -- Goldman Sachs -- Analyst

Understood. Just wondering if the anticipation of a further drop in NAND prices is causing any kind of spending pause in the market? Do you see any of this in the market? Or just because lots of your competitors have missed (ph) in the quarter, just trying to understand what caused (ph) this sudden weakness?

Charlie Giancarlo -- Chairman and Chief Executive Officer

Yes, there's a very simple answer to that, no. We're not seeing any change whatsoever from an overall pricing standpoint. Part of the benefit that we have and this is really clearly shown in our gross margin, right. Is that -- what customers value in us is the software differentiation that we have in our product. 15 points of gross margin, higher than the rest of the market. So that indicates that it's really about more than just cheap NAND. It really is about the services that we're able to offer the density that we're able to provide, the ability for them to -- for customers to be able to get access to all of their data at fantastic rates. We -- but, we do see future decreases in NAND is helping us to start to penetrate the second tier. And we're starting -- that is also -- we think that's going to happen this year and that's also part of what makes us very optimistic about the year ahead.

Bala Reddy -- Goldman Sachs -- Analyst

Understood, thank you.

Operator

Your next question comes from Alex Kurtz from KeyBanc.

Alex Kurtz -- KeyBanc -- Analyst

Thanks guys, can you hear me OK.

Charlie Giancarlo -- Chairman and Chief Executive Officer

Oh, yes. Hi Alex.

Alex Kurtz -- KeyBanc -- Analyst

Hey Charlie. Just a clarification on a question. Does NAND price changes really have any effect on how customers think about signing POs at the end of a deal? I mean just for multiple years of looking at this adding the whole team, I know there's volatility in NAND, but the customers really care that much about it when it comes time to like sign the PO?

David Hatfield -- President

Hey Alex, this is Hat. No. I mean -- no (multiple speakers).

Alex Kurtz -- KeyBanc -- Analyst

Okay. We can move on to my question. The SaaS vertical and the contribution to the growth assumptions for this year. And I apologize I just jumped if you already answered this, but it seems to be growing very fast. What are the kind of assumptions in the annual number on the SaaS contribution versus the rest of the business?

Tim Riitters -- Chief Financial Officer

Yes, thanks. So, it continues to be north of 30% of our overall bookings and we added 400 customers and deliver the business at 33% year-over-year growth. And so, SaaS continues to be a really key driver of that. We're excited about the expanded solutions that we can provide in that segment, obviously playing in the block in the FlashBlade for next generation analytics. But we're also now kind of going after their DAZ environments and (inaudible) is there. When you get built into pods of these fast-growing SaaS companies, you are built into the architecture and the fact that we are delivering better service levels that dramatically higher density and lower cost enable them to deliver a better service online. So, SaaS will continue to be a key part of it.

Matt Kixmoeller -- Vice President of Product

Alex, this is Kix. One other thing to add on there. I'd remind you that when we talk about cloud business, it's the combination of both SaaS and MSP as well as IAS. And SaaS is a great business for us, but we've seen real strength in IS and MSP as well. We just announced a joined offering with Rackspace as an example where we're bringing a SSD-powered ultra high performance block service to their cloud and their customers. And so, we continue to see that business growth just as nicely.

Alex Kurtz -- KeyBanc -- Analyst

Okay, thanks Kix. Thanks guys.

Operator

Your next question comes from Karl Ackerman from Cowen and Company.

Karl Ackerman -- Cowen and Company -- Analyst

Hey good afternoon, gentleman. So going back to your guide as the word book holds in the quarter, I mean it would seem that the $20 million of revenue slip from Q4 into Q1, but that would suggest overall revenues will have decelerated to let's call it 22% year-over-year growth, and certainly below your full year outlook. Now it seems your ES2 service offering is doing quite well and adding ballast to your outlook. But having said that I guess at what point should we begin to consider you and your peers lowering prices in order to drive demand for the associated higher margin add on software and services of all-flash-arrays? And I guess what else gives you perhaps greater confidence in accelerating product revenue growth from here? And I have follow-up please.

Charlie Giancarlo -- Chairman and Chief Executive Officer

Yes, no, thank you for that. I'll start -- just talking about the general reduction over time with NAND and what it does for our guidance so forth. We saw -- I mean there was an overall reduction over this past year as there is almost every year in overall pricing to the tune of 10% to 15% or so. But despite that we had the growth that we have. We expect to roughly -- that's about the annual reduction rate in this market and our guide addresses that.

Karl Ackerman -- Cowen and Company -- Analyst

Understood. I guess going back set then Tim or Charlie. Looking at your outlook for gross margins. Why should we expect your margins to decelerate in fiscal 2020 when NAND ASPs are set to decline roughly 20% this quarter and the next, I would imagine that's a material tailwind for your margins in calendar '19? Thank you.

Tim Riitters -- Chief Financial Officer

Yes Karl, this is Tim. We've always talked about the 63% to 68% range, is really the sweet spot that we like to be in. And so, as we see NAND prices change reminding you what Charlie said it's all about the software. But it opens up additional sort of opportunities for us. And so, will you -- we will put those margin points to work. And it's the playbook we've run now for a quarter-after-quarter-after-quarter, and we like where we're at.

Operator

Your next question comes from Erik Suppiger from JMP Securities.

Michael Berg -- JMP Securities -- Analyst

Hi, this is Michael Berg on for Erik Suppiger. Thanks for taking my question. I have another one just on the same issue around ES2 and the guide. It sounds like it's coming off -- the manufacturing revenues coming off in Q1 before your guide seems to be fine. Is there another issue in Q1 because if you -- if you are assume the revenue does happen in Q4 the Q1 guide is little late. Is there some another factor to think about or how can I think about the guide?

Tim Riitters -- Chief Financial Officer

This is Tim again. I think there are some puts and takes there. I think the first of all is we're very proud of 30% in Q1 just like we're proud of 30% for the full year at scale. So make no bones about that. But I think as we saw the over performance in ES2, we wanted to factor more of that in the business. And I think you've seeing part of that memorialized in the guide as well. ES2 long-term great force, but as you know ratable business has a little bit lower or slower sort of revenue build than immediate recognition.

Michael Berg -- JMP Securities -- Analyst

Okay. And then a quick follow-up to that. I mean, would it make sense to start viewing billings as a reasonable metric, I mean now or at some point in 2019 -- or counter '19?

Charlie Giancarlo -- Chairman and Chief Executive Officer

Billings is one of series of metrics that we're looking at -- to take a look at as this business builds and reaches a sort of point of critical mass and certainly you'll hear us talk more about that over the course of the year.

Michael Berg -- JMP Securities -- Analyst

Al right, great. Thank you.

Operator

Your next question comes from George Iwanyc from Oppenheimer.

George Iwanyc -- Oppenheimer -- Analyst

Thank you for taking my question. In light of the strong sales expansion you had last year, can you give us a sense of your expectations for adding new hires this year? And how quickly last year's people are scaling and reaching full productivity?

Tim Riitters -- Chief Financial Officer

Yes, so two things there, Iwanyc. Q4 is I think we mentioned delivering in the call, was a very strong quarter for us. We'll have another strong quarter in Q1. The beginning of the year has always been an investment period of time for us. It's been that way since I have been here and it's no different here in this year. So again, look to see that and you saw that in the guide. In terms of productivity ramping, we're seeing productivity ramp very nicely as one of the key measures that we look at, to give us confidence to keep that making those investments and we like what we see there right now.

David Hatfield -- President

Yes, I just would add, we look at this as a capacity in advanced challenge and so I put in more feet on the street, provided to maintain that productivity, which we're seeing happen nicely. It's all about getting into more fights. And I said that before, but we really like the progress that we've made on our strategy throughout the year, getting into the right fights. And so Rackspace was a very intentional investment that we've made over the last year. So in the MSP space, that's one of the largest MSPs out there, and you've heard us talk about the DXC and Accenture and HCL. These are the kinds of organizations that have hundreds of petabytes of data under their own management and also on behalf of their other customers from a joint go-to-market perspective. So it takes a while to invest in those, but we see a really nice lift in our ability to compete more bass (ph) with them.

George Iwanyc -- Oppenheimer -- Analyst

Okay and Dave that $100 million contract with the system integrator. Over the two years is there something that you expect to just gain momentum from quarter-to-quarter? Is it a fairly linear contribution?

David Hatfield -- President

Yes, so, we haven't broken that out in terms of how we'll contribute. We think it underscores a great commitment both by the GSI and by us on really getting into a fight together and working together over multiple years. I do see upside with these relationships across the board, but like I said it take time to build. And so, I think we've got a good moderate view of where we are today and it's built into our forecast, but I do see some upside here in the years to come.

George Iwanyc -- Oppenheimer -- Analyst

Thank you.

Operator

Your next question comes from Eric Martinuzzi from Lake Street.

Eric Martinuzzi -- Lake Street -- Analyst

Yes, I also wanted to focus on the GSI when that you guys said, there is probably not a more sophisticated buyer out there because they're betting their own business on your business. To what extent can you enlighten us on the competitive landscape? I'm sure there -- they have install based customers with your competitors? And then why do you feel you are the winner?

David Hatfield -- President

Great question and you're right. They are very smart. They obviously work on behalf of some of the most complex customer environments in the world and they have some of the smartest architects out there. So -- and they do have existing relationships with their competitors. They don't move into these relationship lately.

I'll say that our core value proposition dramatically lower in cost while enabling next-generation applications and use cases and better service levels, is a sweet spot for GSIs. If you think about the amount of petabytes per FTE, our customers can manage on our equipment versus the legacy equipment. It can be 5 or 10x. And so that drives directly to their bottom line, but much more importantly it becomes an enablement platform for all the digital transformation work and all of the multi-cloud architecture work and all of the next generation analytics use cases that they want to serve their customers with.

And so, as I think about it, it's not only an enablement platform, but it's also a funding source for them to add more value -- value added services of the stack and change that 80-20 mix of run, 80% of IT budget -- to the change budget, 20, change that mix. CIOs don't want to give those dollars back and systems indicators have the capability of delivering solutions of driving digital transformation and change. And so we're that funding source in enablement platform.

Eric Martinuzzi -- Lake Street -- Analyst

And do you feel like -- unequal footing out of the gate or was it kind of they came to you and it was yours to lose with this particular GSI?

David Hatfield -- President

No, it's a big investment. We need to be able to work with them over years and gain their confidence, and so there's a lot of vetting from a technical perspective, a lot of wetting from a business perspective. But look, I think we're at size and scale now, we're very safe that our innovation roadmap is completely differentiated. And we don't have two hold onto the legacy business practices and the revenue what the other guys do. And the GSI's burdened with that. We can kind of remove the shackles a bit and actually drive them to deliver better services, but shift their revenue mix and the higher value differentiated offerings that they want to spend their time on us well. So, it took a while to get in and we're still kind of plugging away,

but very confident that once we get it going into their go-to-market engines and our own, there's great amount of velocity that can occur downstream.

Eric Martinuzzi -- Lake Street -- Analyst

Got it, thank you.

Operator

Your next question comes from Andrew Nowinski from Piper Jaffray.

Andrew Nowinski -- Piper Jaffray -- Analyst

Great, thanks. Just another follow-up question on the GSI contract. Is that a minimum commitment to purchase over the next few years? Or is that kind of a more of sense -- specific deal? I guess what I'm trying to get is whether that's just a starting point or couldn't there be up side of that $100 million over the next few years?

David Hatfield -- President

It's an extension of already existing relationships. It is binding minimum commitment over the two-year period, but there is upside on top of it.

Charlie Giancarlo -- Chairman and Chief Executive Officer

And I think the other important point that Hat had made there, that this customer that just made this relationship with us has already been a customer, been a happy customer.

Andrew Nowinski -- Piper Jaffray -- Analyst

Okay, very good and with regard to the Object Engine, I think you mentioned that there will be significant revenue this year from that. So just to clarify is that an organically developed solution by Pure? Or will there be some revenue sharing with any other technology partners that might be part of it?

Matt Kixmoeller -- Vice President of Product

This is a Kix. I'll take that one. That's the result of our acquisition with StorReduce with all the work we done around the FlashBlade already with rapid recovery. And so part of why we're so excited about this market is that we've already seen a great start to our rapid recovery business with FlashBlade on it's own and then adding the Object Engine solution in, just helps us address the wider range of workloads.

Charlie Giancarlo -- Chairman and Chief Executive Officer

I'll just add on to that, that again, we're offering Object Engine two ways. One is with a capital purchase and the other -- and a subscription service. And the other way is all subscription. So again, a lot of that revenue is going to be ratable.

Andrew Nowinski -- Piper Jaffray -- Analyst

Got it, thanks.

Operator

Your next question comes from David Ryzhik from Susquehanna Financial.

David Ryzhik -- Susquehanna Financial -- Analyst

Hey, thanks so much for taking the question. Just going back to StorReduce. To what extent can hyperscale players be customers of FlashBlade with StorReduce IP. I think you've talked about 5x to 10x cost improvement using StorReduce on FlashBlade. It just sounds like that's something they'd be interested in specifically given all the investments they're making around AI and machine learning and I have a follow-up.

David Hatfield -- President

Yes, one of the great things about object engine is that it was built natively in the cloud to begin with. And so as we acquire StorReduce, they already had a great working relationship with Amazon. And so we see clearly deployment in the cloud as an absolute use case that we are going to invest in and that's for our cloud data customers that want to leverage it there. And then there's use cases for customers on-prem who want to back up on prem to flash and then use the cloud as their long-term repository for backup data. So, absolutely multiple take advantage of it and we expect a lot of volume in terms of using it in the cloud itself.

David Ryzhik -- Susquehanna Financial -- Analyst

Got it. And I just wanted to step back and talk about the future of all-flash arrays. To what extent do you see storage class of memory playing a role in flash array's? You have differentiated IP around optimizing flash, can you do the same optimizing cross point and can we see tiering of cross point as a cash with cheapen the flashes or stores, just wanted to get your views a few years out and how this evolves because it's certainly we keep hearing more and more. Thanks.

David Hatfield -- President

I think it's an area where if you look at our history of optimizing our software for solid-state memory, what is unmatched in the market and so if you look at our competitors who just take kind of package solutions, SSDs and plunk them in their existing platforms. We go far beyond interface our software directly with solid-state mediums and we've now had kind of multiple generations of adopting our software to flash over the years and we think that this puts us in a great position to look at the next generation of these technologies and there's both storage class memory coming out at the high end of the market and then the low end of the market there is QLC. And we're excited about taking advantage of both of them in our products, is it makes sense.

Charlie Giancarlo -- Chairman and Chief Executive Officer

And we expect to be doing that soon. So just to put a wrapper on that one. We are really expecting that the -- the new technologies that we've been coming out are unifying cloud non-prem. We haven't really talked about that, but cloud data services. What's fantastic about that? Is it's exactly the same in the cloud as it is on on-prem and what that means is , it makes it that much easier for our customers to be able to place their applications where they want them, whether it's on-prem or in the cloud, and to be able to choose between the two.

We're also consolidating data. Customers today are putting data on not only are they copying it multiple times for different applications, but every time they copy it, they putting in a different array that is tuned to that application. We are creating an environment where they can access the same data for multiple applications in the same array without having to repurchase the same storage two or three times. That data now is hot . We believe in no called data, meaning that data be available to any application at the performance that data -- that application requires. And increasingly as you can see with our new introductions of cloud data services, of object engine and even EF2, we're increasing the amount of software and subscription-based services that we have in our overall environment. So I just wanted to put a wrapper around that.

Operator

Your next question comes from Simon Leopold from Raymond James.

Charlie Giancarlo -- Chairman and Chief Executive Officer

And this will be last question, Simon.

Simon Leopold -- Raymond James -- Analyst

Thanks for taking the question. Hopefully you can hear me OK. I'm on a cellphone overseas. Nonetheless, I wanted to touch on how the competitive environment may be changing this with year. So clearly mathematically you're doing quite well and you had a big time to market advantage with NVMe, but the expectation is competitors will be launching products using this new protocol later this year. How do you think it plays out when you have competition with the implementation and you're not alone in the market? Thanks.

David Hatfield -- President

So I would just say the competitive environment, this is a competitive environment. We've known that, but we've done very well in it. The technology that we have is so different and you marry that with the business model of Evergreen in an increasing subscription suite of products and our customer satisfaction the moat that we've created, we have with our core products and NVMe is at the root of that. We have 80% of our core flash array products rough and tough already on NVMe and you ask any other competitor, what percentage of their state is there. So, we think we've got a lead. We think that direct Flash Fabric extends that. And then when you combine that with these new subscription services and new markets that we're pursuing, I feel like our competitive advantage actually just continues to grow .

Charlie Giancarlo -- Chairman and Chief Executive Officer

No, I'd say, if you just kind of top level up to the overall market, we moved into the number six position overall in the overall enterprise storage market and yet all flash is still just a third of the market. And so there is an enormous amount of the rest of the market for us to convert to flash and takeover and that's the NVMe position of our value prop, it is also just everything that makes pure grades and delivers 86.6 Net Promotor Score.

Simon Leopold -- Raymond James -- Analyst

Thanks for taking the question.

Operator

I will now turn the call back over to Charlie Giancarlo for closing remarks.

Charlie Giancarlo -- Chairman and Chief Executive Officer

Thank you. Towards a great FY '19 and we're very excited about the future as you can hear. We're proud of our progress and the opportunities ahead this year and actually in the years to come. I want to thank the entire Pure team and our global partners for their tireless efforts and dedication this past year, also want to thank our customers for their business and confidence in Pure and the solutions that we provide. And thank you all on this call for your time today.

Operator

This concludes today's conference call. You may now disconnect.

Duration: 63 minutes

Call participants:

Matt Danziger -- Vice President of Investor Relations

Charlie Giancarlo -- Chairman and Chief Executive Officer

David Hatfield -- President

Tim Riitters -- Chief Financial Officer

Aaron Rakers -- Wells Fargo -- Analyst

Matt Kixmoeller -- Vice President of Product

Katy Huberty -- Morgan Stanley -- Analyst

Pinjalim Bora -- JP Morgan -- Analyst

Wamsi Mohan -- Bank of America -- Analyst

Jason Ader -- William Blair -- Analyst

Steven Fox -- Cross Research -- Analyst

Bala Reddy -- Goldman Sachs -- Analyst

Alex Kurtz -- KeyBanc -- Analyst

Karl Ackerman -- Cowen and Company -- Analyst

Michael Berg -- JMP Securities -- Analyst

George Iwanyc -- Oppenheimer -- Analyst

Eric Martinuzzi -- Lake Street -- Analyst

Andrew Nowinski -- Piper Jaffray -- Analyst

David Ryzhik -- Susquehanna Financial -- Analyst

Simon Leopold -- Raymond James -- Analyst

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