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Pure Storage (PSTG) Up 0.3% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Pure Storage (PSTG - Free Report) . Shares have added about 0.3% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Pure Storage due for a pullback? 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 drivers.
Pure Storage Q2 Earnings Beat Estimates
Pure Storage reported non-GAAP earnings per share (EPS) of 44 cents for second-quarter fiscal 2025, which beat the Zacks Consensus Estimate by 15.8%. The company reported non-GAAP EPS of 34 cents in the prior-year quarter.
Total revenues soared 11% from the year-ago quarter to $763.8 million and beat the Zacks Consensus Estimate by 1%. The top-line expansion stemmed from healthy demand trends across the data storage platform as customers shift cost-sensitive workloads to all-flash. Steady momentum in FlashBlade Solutions, including FlashArray//E, Flashblade//E, and FlashArray//C offerings, is propelling its growth amid macroeconomic headwinds.
For the third quarter of fiscal 2025, Pure Storage expects revenues to be $815 million, implying an increase of 6.8% from a year ago.
The non-GAAP operating income for the fiscal third quarter is expected at $140 million. The non-GAAP operating margin is estimated at 17.2%.
Management reiterated revenue guidance for fiscal 2025. It continues to expect revenues of $3.1 billion, indicating a rise of 10.5% from the year-earlier level. The non-GAAP operating margin is projected at 17%.
However, it lowered guidance for total contract value or TCV sales for Evergreen//One & Evergreen//Flex subscription service offerings. It now expects TCV sales to be $500 million, implying 25% growth from a year ago. Earlier, the company forecasted TCV sales to be $600 million, implying 50% growth from a year ago.
Quarter in Detail
Product revenues (contributing 52.7% to total revenues) amounted to $402.6 million, up 0.7% on a year-over-year basis.
Subscription services revenues (47.3%) of $361.2 million rose 25% on a year-over-year basis.
Subscription annual recurring revenues (ARR) amounted to nearly $1.5 billion, up 24% 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 internationally were $538 million and $226 million, respectively.
Margin Highlights
The non-GAAP gross margin was flat year over year at 72.8%.
The non-GAAP product gross margin was 69.5%, down from 71.5% in the prior year. The non-GAAP subscription gross margin was 76.4%, compared with 74.5% a year ago.
Non-GAAP operating expenses, as a percentage of total revenues, were 54.7% compared with 56.5% in the prior year quarter.
Pure Storage reported a non-GAAP operating income of $138.6 million compared with $111.8 million in the year-ago quarter. The non-GAAP operating margin was 18.1%, up from 16.2%.
Balance Sheet & Cash Flow
Pure Storage exited the fiscal second quarter that ended on Aug. 4 with cash, cash equivalents and marketable securities of $1.8 billion, up from $1.5 billion reported in the prior-year period.
Cash flow from operations amounted to $226.6 million in the fiscal second quarter compared with $101.6 million in the prior-year quarter. Free cash flow was $166.6 million compared with $46.5 million a year ago.
In the fiscal second quarter, the company did not repurchase any shares due to trading restrictions. It has $395 million left under its authorization plan.
The remaining performance obligations at the end of the fiscal second quarter totaled $2.3 billion, up 24% year over year.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -11.59% due to these changes.
VGM Scores
Currently, Pure Storage has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. 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) Up 0.3% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Pure Storage (PSTG - Free Report) . Shares have added about 0.3% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Pure Storage due for a pullback? 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 drivers.
Pure Storage Q2 Earnings Beat Estimates
Pure Storage reported non-GAAP earnings per share (EPS) of 44 cents for second-quarter fiscal 2025, which beat the Zacks Consensus Estimate by 15.8%. The company reported non-GAAP EPS of 34 cents in the prior-year quarter.
Total revenues soared 11% from the year-ago quarter to $763.8 million and beat the Zacks Consensus Estimate by 1%. The top-line expansion stemmed from healthy demand trends across the data storage platform as customers shift cost-sensitive workloads to all-flash. Steady momentum in FlashBlade Solutions, including FlashArray//E, Flashblade//E, and FlashArray//C offerings, is propelling its growth amid macroeconomic headwinds.
For the third quarter of fiscal 2025, Pure Storage expects revenues to be $815 million, implying an increase of 6.8% from a year ago.
The non-GAAP operating income for the fiscal third quarter is expected at $140 million. The non-GAAP operating margin is estimated at 17.2%.
Management reiterated revenue guidance for fiscal 2025. It continues to expect revenues of $3.1 billion, indicating a rise of 10.5% from the year-earlier level. The non-GAAP operating margin is projected at 17%.
However, it lowered guidance for total contract value or TCV sales for Evergreen//One & Evergreen//Flex subscription service offerings. It now expects TCV sales to be $500 million, implying 25% growth from a year ago. Earlier, the company forecasted TCV sales to be $600 million, implying 50% growth from a year ago.
Quarter in Detail
Product revenues (contributing 52.7% to total revenues) amounted to $402.6 million, up 0.7% on a year-over-year basis.
Subscription services revenues (47.3%) of $361.2 million rose 25% on a year-over-year basis.
Subscription annual recurring revenues (ARR) amounted to nearly $1.5 billion, up 24% 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 internationally were $538 million and $226 million, respectively.
Margin Highlights
The non-GAAP gross margin was flat year over year at 72.8%.
The non-GAAP product gross margin was 69.5%, down from 71.5% in the prior year. The non-GAAP subscription gross margin was 76.4%, compared with 74.5% a year ago.
Non-GAAP operating expenses, as a percentage of total revenues, were 54.7% compared with 56.5% in the prior year quarter.
Pure Storage reported a non-GAAP operating income of $138.6 million compared with $111.8 million in the year-ago quarter. The non-GAAP operating margin was 18.1%, up from 16.2%.
Balance Sheet & Cash Flow
Pure Storage exited the fiscal second quarter that ended on Aug. 4 with cash, cash equivalents and marketable securities of $1.8 billion, up from $1.5 billion reported in the prior-year period.
Cash flow from operations amounted to $226.6 million in the fiscal second quarter compared with $101.6 million in the prior-year quarter. Free cash flow was $166.6 million compared with $46.5 million a year ago.
In the fiscal second quarter, the company did not repurchase any shares due to trading restrictions. It has $395 million left under its authorization plan.
The remaining performance obligations at the end of the fiscal second quarter totaled $2.3 billion, up 24% year over year.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -11.59% due to these changes.
VGM Scores
Currently, Pure Storage has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Pure Storage has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.