Flash storage device maker Pure Storage hires Morgan Stanley, Goldman Sachs and Barclays in preparation for IPO
Context & Ripple Effects
Pure Storage's move from venture-backed startup toward the public markets begins with banker selection: Morgan Stanley, Goldman Sachs and Barclays are now lined up as lead advisers, the classic signal that a listing is being actively prepared rather than merely discussed.
The hire pays off within months — by September the company files to raise $450M at $16-18 a share, implying a valuation of up to $3.33B — and the post-IPO record validates the window: quarterly revenue of $150.2M, up 128% YoY with customers up 120%, followed by continued beats even after growth decelerates into double digits by 2017.
First-order effects
- Pure Storage gains three bulge-bracket underwriters with the distribution to price a hot enterprise-infrastructure listing; the banks win league-table positioning and fees in one of the period's marquee tech offerings.
- Once public, Pure Storage inherits a quarterly disclosure cadence that turns each earnings print into a referendum on all-flash adoption — visible immediately in the stock's sharp after-hours swings on beats and on the weaker Q1 outlook alongside Q4 revenue of $227.9M.
Second-order effects
- Traditional storage vendors now compete against a rival with public-market currency and a growth narrative: Pure Storage's CEO explicitly says the company continues to take business from legacy storage incumbents after its Q1 beat with $182.6M revenue.
- Public listing forces the company to defend decelerating growth rates — from 128% YoY in early 2016 to roughly 31% by mid-2017 — shifting investor focus from land-grab metrics like customer adds toward profitability, as the near-breakeven Q4 net loss shows.
Third-order effects
- If the pattern holds, all-flash arrays move from niche disruption to the reference architecture for enterprise storage, with a publicly funded specialist setting the pace that legacy hardware vendors must match or cede share.
- A successful high-growth listing also establishes a template other venture-backed infrastructure-hardware startups can follow: scale first on private capital, then tap public markets while revenue growth still outruns the incumbents'.
The trend: Enterprise storage is consolidating around all-flash platforms as venture-backed specialists like Pure Storage convert hypergrowth into public-market capital and take share from traditional array vendors.