Pure Storage Prices IPO At $17

Enterprise storage company Pure Storage has raised $425 million after pricing its IPO on the NYSE at $17 per share, as originally reported by the Wall Street Journal. The company is trading under the ticker, “PSTG.”

The Mountain View-based company competes with Dell, EMC, HP and others to provide flash storage products for businesses. Pure Storage warned in its filing that some of its competitors have “greater resources to make acquisitions” and larger marketing budgets.

Founded in 2009, the company has yet to achieve profitability and incurred a net loss of $183 million in its fiscal year ending in January. Yet Pure Storage is also experiencing rapid revenue growth, bringing in $175 million in the same period, more than triple the $43 million in sales the year before.

The company has raised over $530 million in funding and was valued at $3 billion in its June 2014 funding round, according to the Wall Street Journal.

That the firm has raised so much to date is not surprising when its cash losses are taken into account. While the firm’s eye-popping revenue growth is encouraging, its top-line is expensive. According to its S-1 document, Pure Storage burned net cash of $44.5 million during the first half of its current fiscal year. That cash deletion is predicated on a much larger $113 million loss recorded during the same period, including non-cash expenses.

Given its heroic burn rate, Pure Storage’s cash and equivalents total of $128.3 million is thin. The company initially reported that it expected to raise $395.2 million in its public offering. This is an IPO as much as it a recapitalization event for the company.

Sutter Hill Ventures, Greylock and Redpoint Ventures are principal shareholders, controlling 27.4 percent, 17.3 percent, and 5.7 percent respectively.

Pure Storage had over 1100 employees as of July of this year. Morgan Stanley and Goldman Sachs are lead underwriters on the offering.

After raising a massive $225 million round, Pure Storage joined TechCrunch on stage of Disrupt SF 2014. At the time, the firm downplayed short-term IPO goals, and discussed how being acquired “always suck[s], and suck[s] worse” than might be expected. At the time, TechCrunch predicted that for at least some time, Pure Storage would “continue to go it alone.”

That bore out, but now more than a year out from that interview, with the cash clock counting down, pulling the trigger is the responsible thing to do.

The question is simple: What will the market do with Pure Storage? Share price declines of recently public technology companies over the past few months have been notable, and discouraging. Add that fact to a dearth of IPO activity from the sector — something that is telling in and of itself — means the pressure is on Pure Storage.

If it stumbles, the technology IPO window could shut.