Wall Street’s initial skepticism about Pure Storage Inc. may have been misplaced. Shares of the flash storage vendor are up over seven points from their post-IPO slump in October following the release of its first earnings call since becoming a public company, which paints a markedly better picture than the last report. Revenue increased a massive 167 percent in the third quarter to $131 million on the back of more than 250 new customers wins and an even more substantial demand increase from existing buyers.  

Pure Storage boss Scott Dietzen claims that the company now makes about nine dollars in the 18 months following a sale for every one dollar spent on the initial purchase, a 12 percent improvement over the last quarter. A sizable portion of the new revenue came from the FlashArray//m series that started shipping in August, which the chief executive also credited for contributing to the impressive 61.7 percent gross margin that the vendor recorded for the period. But the metric that really caught Wall Street’s attention was its income.

Pure Storage earned $0.18 per outstanding share in the third quarter, triple the average analyst estimate. The company still ended up with a net loss of $56.5 million, but Dietzen pointed out that revenue increased 170 percent faster than operational expenses, which puts its balance sheet on track to leave the red in the not-so-distant future assuming the current growth rate is maintained. That gives public investors who have been burned by unprofitable startups before reason to be more optimistic about the vendor, especially as the chief executive and his team work to further streamline operations.

Pure Storage expects to achieve a gross margin of between 62 and 65 percent next quarter on revenue of $134-$139 million. Hitting even the midpoint of the estimate will enable the company to close the year with over $420 million, which would represent a roughly 50 percent increase over the previous 12-months. Its momentum is reflective of a growing demand for flash among enterprises that is only set to accelerate as manufacturers keep pushing down the technology’s cost per gigabyte with innovations like 3D NAND. 

Image via Pure Storage