Pure Storage Acquires Dedupe Tech Developer StorReduce, Reports Q2 19 Financials

Fast-growing all-flash storage vendor Pure Storage Tuesday unveiled the acquisition of StorReduce, a small developer of software for deduplicating, managing and migrating data.

Mountain View, Calif.-based Pure Storage also disclosed its second fiscal quarter 2019 financials, including revenue and gross margin growth that exceeded expectations.

Pure Storage CEO Charles Giancarlo told CRN in a meeting after the company's quarterly financial report was released that the acquisition of Sunnyvale, Calif.-based StorReduce is an exciting opportunity for his company.

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StorReduce develops cloud-first software that provides deduplication and data connection and migration to cloud-based or on-premises infrastructure, Giancarlo said. It deduplicates any type of file or object, but stores it in an object environment, he said.

"The best way to think about it is, we can take unstructured data, deduplicate it, and then record it on either our FlashBlade product, which is an object store, or into Amazon S3 or some other object store," he said. "It enables companies to have rapid recovery on-site, but also cold storage off-site."

Pure Storage already offers deduplication technology for its FlashArray//X block storage line, but had a minimal deduplication capability for its FlashBlade file and object storage arrays, Giancarlo said. "And so this is a really great enhancement to our FlashBlade story," he said.

While StorReduce is currently in the market, and will support existing customers, Pure Storage will no longer accept new customers until some time next year, Giancarlo said.

"We're not going to add new customers until next year while we, we call it, 'purify" the product," he said. "What I mean by that is making sure that it's hardened, has our ease of use integrated, our management system, and we feel confident that we can support the kind of large enterprise-scale customers that we have."

The StorReduce technology will be offered as stand-alone software and as an appliance, eventually on the Pure Storage platform, Giancarlo said. But whether the company makes it available to non-Pure Storage clients has yet to be determined, he said.

The primary differentiation between StorReduce and other deduplication technologies is that StorReduce was designed to be cloud-first, Giancarlo said.

"It integrates extraordinarily well into the cloud," he said. "The way to think about it is, the old way was to dedupe either to tape or to disk in order to be able to do recovery. And this will do it both to FlashBlade for rapid recovery as well as into the cloud for cold storage. It's a highly scalable architecture, which is also important. It scales very well, small to large. And we believe, based on our testing, that it has very competitive deduplication rates."

Giancarlo declined to discuss the value of the acquisition.

While StorReduce is the first acquisition for Pure Storage as a public company, it did make a small acquisition as a private company of Proton Digital Systems. "We didn’t actually buy technology [then]," he said. "We actually just bought a few people that were working at a startup. And the way to get them was to acquire the company."

For Pure Storage's second fiscal quarter of 2019, which ended July 31, the company reported revenue of $308.9 million, which was up 37 percent over the $224.7 million the company reported for its second fiscal quarter of 2018.

That included a rise in product revenue to $241.14 million, up from last year's $179.67 million, and a rise in support subscription revenue of $67.75 million, up from last year's $45.00 million.

On a GAAP basis, the company also reported a loss of $60.1 million, or 26 cents per share, compared with last year's loss of $58.4 million, or 28 cents per share. On a non-GAAP basis, Pure Storage reported net income of $2.4 million, or 1 cent per share, a significant improvement over last year's loss of $20.7 million, or 10 cents per share.