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Why Is Pure Storage (PSTG) Down 1.3% Since Last Earnings Report?
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A month has gone by since the last earnings report for Pure Storage (PSTG - Free Report) . Shares have lost about 1.3% in that time frame, underperforming 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 Q4 Earnings & Revenues Beat Estimates
Pure Storage recorded non-GAAP earnings per share (EPS) of 50 cents in fourth-quarter fiscal 2024, which beat the Zacks Consensus Estimate by 11.1%. The company reported non-GAAP EPS of 53 cents in the prior-year quarter.
Total revenues decreased 3% year over year to $789.8 million. However, revenues beat the Zacks Consensus Estimate by 1%.
Strong demand for subscription-based offerings, particularly Evergreen//One and Portworx, acted as a catalyst amid macroeconomic weakness.
For fiscal 2024, the company reported revenues of $2.8 billion, up 3% year over year. Subscription services revenues of $1.2 billion rose 26% year over year. Management noted that TCV sales for Evergreen//One and Evergreen//Flex exceeded $400 million in fiscal 2024.
Quarter in Detail
Product revenues (contributing 58% to total revenues) amounted to $460.9 million, down 15.4% on a year-over-year basis.
Subscription services revenues (42%) of $328.9 million rose 24% on a year-over-year basis.
We expected Product and Subscription services revenues to be $502.8 million and $279.2 million, respectively, for the fiscal fourth quarter.
Subscription annual recurring revenues (ARR) amounted to nearly $1.374 billion, up 25% on a year-over-year basis. Subscription ARR includes the 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 $522 million and $268 million, respectively.
Margin Highlights
The non-GAAP gross margin expanded 290 basis points (bps) year over year to 73.7%.
The non-GAAP Product gross margin expanded 420 bps year over year to 73.4%. The non-GAAP Subscription gross margin was 74.1%, which contracted 10 bps on a year-over-year basis.
Non-GAAP operating expenses, as a percentage of total revenues, were 53.7% compared with 51.3% in the prior-year quarter.
Pure Storage reported non-GAAP operating income of $157.8 million compared with $158.6 million in the year-ago quarter. The non-GAAP operating margin was 20% compared with 19.6% in the prior-year quarter.
Balance Sheet & Cash Flow
Pure Storage exited the fiscal fourth quarter that ended on Feb 4, 2024, with cash, cash equivalents and marketable securities of $1.5 billion, up from $1.35 billion as of Nov 5, 2023.
Cash flow from operations amounted to $244.4 million in the fiscal fourth quarter compared with $158.4 million in the prior-year quarter. Free cash flow was $200.9 million compared with $113.3 million in the prior-year quarter.
In the fiscal fourth quarter, the company returned $21.4 million to shareholders by repurchasing 0.6 million shares. For fiscal 2024, it returned $135.7 million to shareholders by repurchasing 4.7 million shares. It has $145 million left from its previously announced $250 million share repurchase plan. Pure Storage also announced a new buyback authorization worth $250 million.
Deferred revenues increased 15.1% year over year to $1.595 billion in the quarter under review. The remaining performance obligations at the end of the fiscal fourth quarter totaled $2.3 billion, up 31% year over year. The metric represented total committed non-cancelable future revenues.
Guidance
Management expects fiscal 2025 revenues to be $3.1 billion, indicating a rise of 10.5% from the year-earlier levels. The company expects strengthening demand trends to drive performance but remains wary of the volatile macroeconomic conditions. The non-GAAP operating margin is suggested to be 17%. TCV sales for Evergreen//One & Evergreen//Flex subscription service offerings are forecast to be $600 million, implying 50% growth from a year ago.
Pure Storage expects revenues to be $680 million for first-quarter fiscal 2025, representing an increase of 15.4% from the year-ago reported figure. The non-GAAP operating income for the fiscal first quarter is expected to be $68 million. The non-GAAP operating margin is expected to be 10%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
The consensus estimate has shifted 33.74% due to these changes.
VGM Scores
At this time, Pure Storage has a strong Growth Score of A, a grade with the same score on the momentum front. However, 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 B. 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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Why Is Pure Storage (PSTG) Down 1.3% Since Last Earnings Report?
A month has gone by since the last earnings report for Pure Storage (PSTG - Free Report) . Shares have lost about 1.3% in that time frame, underperforming 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 Q4 Earnings & Revenues Beat Estimates
Pure Storage recorded non-GAAP earnings per share (EPS) of 50 cents in fourth-quarter fiscal 2024, which beat the Zacks Consensus Estimate by 11.1%. The company reported non-GAAP EPS of 53 cents in the prior-year quarter.
Total revenues decreased 3% year over year to $789.8 million. However, revenues beat the Zacks Consensus Estimate by 1%.
Strong demand for subscription-based offerings, particularly Evergreen//One and Portworx, acted as a catalyst amid macroeconomic weakness.
For fiscal 2024, the company reported revenues of $2.8 billion, up 3% year over year. Subscription services revenues of $1.2 billion rose 26% year over year. Management noted that TCV sales for Evergreen//One and Evergreen//Flex exceeded $400 million in fiscal 2024.
Quarter in Detail
Product revenues (contributing 58% to total revenues) amounted to $460.9 million, down 15.4% on a year-over-year basis.
Subscription services revenues (42%) of $328.9 million rose 24% on a year-over-year basis.
We expected Product and Subscription services revenues to be $502.8 million and $279.2 million, respectively, for the fiscal fourth quarter.
Subscription annual recurring revenues (ARR) amounted to nearly $1.374 billion, up 25% on a year-over-year basis. Subscription ARR includes the 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 $522 million and $268 million, respectively.
Margin Highlights
The non-GAAP gross margin expanded 290 basis points (bps) year over year to 73.7%.
The non-GAAP Product gross margin expanded 420 bps year over year to 73.4%. The non-GAAP Subscription gross margin was 74.1%, which contracted 10 bps on a year-over-year basis.
Non-GAAP operating expenses, as a percentage of total revenues, were 53.7% compared with 51.3% in the prior-year quarter.
Pure Storage reported non-GAAP operating income of $157.8 million compared with $158.6 million in the year-ago quarter. The non-GAAP operating margin was 20% compared with 19.6% in the prior-year quarter.
Balance Sheet & Cash Flow
Pure Storage exited the fiscal fourth quarter that ended on Feb 4, 2024, with cash, cash equivalents and marketable securities of $1.5 billion, up from $1.35 billion as of Nov 5, 2023.
Cash flow from operations amounted to $244.4 million in the fiscal fourth quarter compared with $158.4 million in the prior-year quarter. Free cash flow was $200.9 million compared with $113.3 million in the prior-year quarter.
In the fiscal fourth quarter, the company returned $21.4 million to shareholders by repurchasing 0.6 million shares. For fiscal 2024, it returned $135.7 million to shareholders by repurchasing 4.7 million shares. It has $145 million left from its previously announced $250 million share repurchase plan. Pure Storage also announced a new buyback authorization worth $250 million.
Deferred revenues increased 15.1% year over year to $1.595 billion in the quarter under review. The remaining performance obligations at the end of the fiscal fourth quarter totaled $2.3 billion, up 31% year over year. The metric represented total committed non-cancelable future revenues.
Guidance
Management expects fiscal 2025 revenues to be $3.1 billion, indicating a rise of 10.5% from the year-earlier levels. The company expects strengthening demand trends to drive performance but remains wary of the volatile macroeconomic conditions. The non-GAAP operating margin is suggested to be 17%. TCV sales for Evergreen//One & Evergreen//Flex subscription service offerings are forecast to be $600 million, implying 50% growth from a year ago.
Pure Storage expects revenues to be $680 million for first-quarter fiscal 2025, representing an increase of 15.4% from the year-ago reported figure. The non-GAAP operating income for the fiscal first quarter is expected to be $68 million. The non-GAAP operating margin is expected to be 10%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
The consensus estimate has shifted 33.74% due to these changes.
VGM Scores
At this time, Pure Storage has a strong Growth Score of A, a grade with the same score on the momentum front. However, 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 B. 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.