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Pure Storage (PSTG) Down 4% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Pure Storage (PSTG - Free Report) . Shares have lost about 4% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Pure Storage due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Pure Storage Q2 Earnings Beat, Revenues Rise Y/Y
Pure Storage reported non-GAAP earnings per share (EPS) of 34 cents in second-quarter fiscal 2024, which beat the Zacks Consensus Estimate by 21.4%. The company reported non-GAAP EPS of 32 cents in the prior-year quarter.
Total revenues increased 6.5% from the year-ago reported quarter to $688.7 million, which surpassed the Zacks Consensus Estimate by 1.1%. Strong uptake of the FlashBlade portfolio (including FlashBlade//E) coupled with robust Evergreen//One subscription sales acted as catalysts amid macroeconomic weakness.
Quarter in Detail
Product revenues (contributing 58% to total revenues) totaled $399.7 million, down 3.6% on a year-over-year basis.
Subscription services revenues (42%) of $288.9 million rose 24.4% on a year-over-year basis.
Subscription annual recurring revenues (ARR) amounted to more than $1.216 billion, up 27% on a year-over-year basis. Subscription ARR includes annualized value of all active subscription contracts as of the last day of the quarter along with annualized on-demand revenues.
Total revenues in the United States and International were $495 million and $194 million, respectively.
Margin Highlights
Non-GAAP gross margin expanded 240 basis points (bps) from the year-ago reported quarter to 72.8%.
Non-GAAP Product gross margin expanded 250 bps from the prior-year reported quarter to 71.5%. Non-GAAP Subscription gross margin was 74.5%, which expanded 160 bps on a year-over-year basis.
Non-GAAP operating expenses, as a percentage of total revenues, were 56.5% compared with 54% reported in the prior-year quarter.
Pure Storage reported non-GAAP operating income of $111.8 million compared with $106 million reported in the year-ago quarter. Non-GAAP operating margin was 16.2% compared with 16.4% reported in the prior-year quarter.
Balance Sheet & Cash Flow
Pure Storage exited the fiscal second quarter that ended on Aug 6, with cash and cash equivalents and marketable securities of $1.2 billion, unchanged as of May 7, 2023.
Cash flow from operations amounted to $101.6 million compared with $159.4 million in the prior-year quarter. Free cash flow was $46.5 million compared with $134.2 million in the year-ago quarter.
In the fiscal second quarter, the company returned $22 million to shareholders by repurchasing 0.6 million shares. The company has $190 million left from its previously announced $250 million share-repurchase plan.
Deferred revenues increased 21.9% to $1.437 billion in the quarter under review.
The remaining performance obligations at the end of the fiscal second quarter totaled $1.886 billion, up 26% year over year. The metric represents total committed non-cancelable future revenues.
Guidance
The company has reiterated its revenue guidance for fiscal 2024. Amid current macroeconomic weakness, Pure Storage expects revenues to grow in the range of mid-to-high single digits on a year-over-year basis. Non-GAAP operating margin is anticipated to be 15.5%.
Management suggests revenues to be $760 million for third-quarter fiscal 2024, representing a rise of 12% from the year-ago reported figure.
Non-GAAP operating income for the fiscal third quarter is projected to be $135 million. Non-GAAP operating margin is estimated to be 17.8%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
The consensus estimate has shifted 10.48% due to these changes.
VGM Scores
At this time, Pure Storage has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Pure Storage has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Pure Storage (PSTG) Down 4% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Pure Storage (PSTG - Free Report) . Shares have lost about 4% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Pure Storage due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Pure Storage Q2 Earnings Beat, Revenues Rise Y/Y
Pure Storage reported non-GAAP earnings per share (EPS) of 34 cents in second-quarter fiscal 2024, which beat the Zacks Consensus Estimate by 21.4%. The company reported non-GAAP EPS of 32 cents in the prior-year quarter.
Total revenues increased 6.5% from the year-ago reported quarter to $688.7 million, which surpassed the Zacks Consensus Estimate by 1.1%. Strong uptake of the FlashBlade portfolio (including FlashBlade//E) coupled with robust Evergreen//One subscription sales acted as catalysts amid macroeconomic weakness.
Quarter in Detail
Product revenues (contributing 58% to total revenues) totaled $399.7 million, down 3.6% on a year-over-year basis.
Subscription services revenues (42%) of $288.9 million rose 24.4% on a year-over-year basis.
Subscription annual recurring revenues (ARR) amounted to more than $1.216 billion, up 27% on a year-over-year basis. Subscription ARR includes annualized value of all active subscription contracts as of the last day of the quarter along with annualized on-demand revenues.
Total revenues in the United States and International were $495 million and $194 million, respectively.
Margin Highlights
Non-GAAP gross margin expanded 240 basis points (bps) from the year-ago reported quarter to 72.8%.
Non-GAAP Product gross margin expanded 250 bps from the prior-year reported quarter to 71.5%. Non-GAAP Subscription gross margin was 74.5%, which expanded 160 bps on a year-over-year basis.
Non-GAAP operating expenses, as a percentage of total revenues, were 56.5% compared with 54% reported in the prior-year quarter.
Pure Storage reported non-GAAP operating income of $111.8 million compared with $106 million reported in the year-ago quarter. Non-GAAP operating margin was 16.2% compared with 16.4% reported in the prior-year quarter.
Balance Sheet & Cash Flow
Pure Storage exited the fiscal second quarter that ended on Aug 6, with cash and cash equivalents and marketable securities of $1.2 billion, unchanged as of May 7, 2023.
Cash flow from operations amounted to $101.6 million compared with $159.4 million in the prior-year quarter. Free cash flow was $46.5 million compared with $134.2 million in the year-ago quarter.
In the fiscal second quarter, the company returned $22 million to shareholders by repurchasing 0.6 million shares. The company has $190 million left from its previously announced $250 million share-repurchase plan.
Deferred revenues increased 21.9% to $1.437 billion in the quarter under review.
The remaining performance obligations at the end of the fiscal second quarter totaled $1.886 billion, up 26% year over year. The metric represents total committed non-cancelable future revenues.
Guidance
The company has reiterated its revenue guidance for fiscal 2024. Amid current macroeconomic weakness, Pure Storage expects revenues to grow in the range of mid-to-high single digits on a year-over-year basis. Non-GAAP operating margin is anticipated to be 15.5%.
Management suggests revenues to be $760 million for third-quarter fiscal 2024, representing a rise of 12% from the year-ago reported figure.
Non-GAAP operating income for the fiscal third quarter is projected to be $135 million. Non-GAAP operating margin is estimated to be 17.8%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
The consensus estimate has shifted 10.48% due to these changes.
VGM Scores
At this time, Pure Storage has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Pure Storage has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.