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Pure Storage (PSTG) Posts Narrower-than-Expected Q4 Loss
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Pure Storage Inc. (PSTG - Free Report) reported non-GAAP loss (including stock-based compensation) of 21 cents per share in the fourth-quarter of fiscal 2017, which was narrower than the Zacks Consensus Estimate by 3 cents.
Excluding stock-based compensation, non-GAAP loss was a couple of cents narrower than loss of 12 cents reported in the year-ago quarter.
Following the results, shares of the company were down 6.9% in after-hours trading. Also, we note that the shares of the company have underperformed the Zacks Computer- Storage Devices industry over the last one year. While the industry gained 44.7%, the stock declined 34.1%.
The underperformance of the stock could be primarily attributed to an intensifying competitive landscape with the presence of major players such as Amazon’s (AMZN - Free Report) AWS Microsoft’s (MSFT - Free Report) Azure in the cloud storage and NetApp.
Quarter Details
Pure Storage has two reportable segments namely, Product and Support.
In the fourth quarter, Product revenues of $186.8 million surged 46.7% on a year-over-year basis, primarily driven by a record 450 customer additions and renewed business from existing customers.
Support revenues of $41.0 million increased a whopping 79.4% on a year-over-year basis as a result of revenue recognition on ongoing support contracts.
Total revenue was $227.9 million, which was up a significant 51.7% year over year and ahead of the Zacks Consensus Estimate of $224 million. Notably, 77% of the revenues came from the U.S. while the remaining 23% was contributed by other international markets taken together.
During the quarter, Pure Storage added 450 new customers, bringing the total additions for the year to 1,400. We note that this takes the total count of Pure Storage’s existing customer base to over 3,000, which includes over 100 of the Fortune 500 companies.
Some notable companies that adopted Pure Storage’s technology during the quarter were Hulu (streaming video service provider), Subway (restaurant chain), Royal Philips, Konami, Phreesia, National Hockey League, Keker Van Nest & Peters (law firm) and Ion (a geosciences company).
Notably, the storage market is currently going through a rapid transition with more and more customers opting for cloud-capable storage for data integrity and predictive analytics. Hence,
Pure Storage continues to focus on the All-Flash Array and cloud segments, which are in great demand and augur well for the company in the long run.
Moreover, the company’s end-to-end platforms such as FlashBlade and FlashArray as well as FlashStack which was developed in association with Cisco have been made cloud capable and are witnessing growing adoption rates. Additionally, the company’s NVNe Flash is capable of improving the performance and efficiency of organizations, which are likely to help improve Pure Storage’s top line in the coming years.
We also note that during the last quarter, the company replaced the traditional storage devices, which required 20 racks of spinning discs, for two of its customers with a single 4U FlashBlade, which is more compact and only the size of a microwave oven.
With the passage of time, as technology becomes more and more developed, the space required to store data will shrink. Hence, Pure Storage’s compact storage technology is likely to gain further traction in the future.
Reported R&D expenses as a percentage of revenues decreased 390 basis points (bps) while reported sales and marketing expenses as a percentage of revenues decreased 290 bps. On the other hand, general and administrative expenses as a percentage of revenues decreased 320 bps.
Non-GAAP gross margin was 66.1%, which expanded 10 basis points (bps) on a year-over-year basis.
Non-GAAP operating loss was $4.4 million compared with a loss of $22.1 million in the year-ago quarter.
Non-GAAP net loss came was $4.8 million that narrowed down from the year-ago loss of $22.3 million.
Pure Storage, Inc. Price, Consensus and EPS Surprise
As of Dec 31, 2017, cash and cash equivalents were $183.6 million that decreased 69.6% on a year-over-year basis.
Guidance
Pure Storage expects first-quarter fiscal 2018 revenues in a range of $171–$179 million. Non-GAAP gross margin is anticipated to be in a range of 63.5% to 66.5%. Non-GAAP operating margin is projected to remain in a range of -27% to -23%.
Notably, the Zacks Consensus Estimate for Applied Optoelectronics’ current year has improved to $3.14 from $1.45 over the last 60 days.
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Pure Storage (PSTG) Posts Narrower-than-Expected Q4 Loss
Pure Storage Inc. (PSTG - Free Report) reported non-GAAP loss (including stock-based compensation) of 21 cents per share in the fourth-quarter of fiscal 2017, which was narrower than the Zacks Consensus Estimate by 3 cents.
Excluding stock-based compensation, non-GAAP loss was a couple of cents narrower than loss of 12 cents reported in the year-ago quarter.
Following the results, shares of the company were down 6.9% in after-hours trading. Also, we note that the shares of the company have underperformed the Zacks Computer- Storage Devices industry over the last one year. While the industry gained 44.7%, the stock declined 34.1%.
The underperformance of the stock could be primarily attributed to an intensifying competitive landscape with the presence of major players such as Amazon’s (AMZN - Free Report) AWS Microsoft’s (MSFT - Free Report) Azure in the cloud storage and NetApp.
Quarter Details
Pure Storage has two reportable segments namely, Product and Support.
In the fourth quarter, Product revenues of $186.8 million surged 46.7% on a year-over-year basis, primarily driven by a record 450 customer additions and renewed business from existing customers.
Support revenues of $41.0 million increased a whopping 79.4% on a year-over-year basis as a result of revenue recognition on ongoing support contracts.
Total revenue was $227.9 million, which was up a significant 51.7% year over year and ahead of the Zacks Consensus Estimate of $224 million. Notably, 77% of the revenues came from the U.S. while the remaining 23% was contributed by other international markets taken together.
During the quarter, Pure Storage added 450 new customers, bringing the total additions for the year to 1,400. We note that this takes the total count of Pure Storage’s existing customer base to over 3,000, which includes over 100 of the Fortune 500 companies.
Some notable companies that adopted Pure Storage’s technology during the quarter were Hulu (streaming video service provider), Subway (restaurant chain), Royal Philips, Konami, Phreesia, National Hockey League, Keker Van Nest & Peters (law firm) and Ion (a geosciences company).
Notably, the storage market is currently going through a rapid transition with more and more customers opting for cloud-capable storage for data integrity and predictive analytics. Hence,
Pure Storage continues to focus on the All-Flash Array and cloud segments, which are in great demand and augur well for the company in the long run.
Moreover, the company’s end-to-end platforms such as FlashBlade and FlashArray as well as FlashStack which was developed in association with Cisco have been made cloud capable and are witnessing growing adoption rates. Additionally, the company’s NVNe Flash is capable of improving the performance and efficiency of organizations, which are likely to help improve Pure Storage’s top line in the coming years.
We also note that during the last quarter, the company replaced the traditional storage devices, which required 20 racks of spinning discs, for two of its customers with a single 4U FlashBlade, which is more compact and only the size of a microwave oven.
With the passage of time, as technology becomes more and more developed, the space required to store data will shrink. Hence, Pure Storage’s compact storage technology is likely to gain further traction in the future.
Reported R&D expenses as a percentage of revenues decreased 390 basis points (bps) while reported sales and marketing expenses as a percentage of revenues decreased 290 bps. On the other hand, general and administrative expenses as a percentage of revenues decreased 320 bps.
Non-GAAP gross margin was 66.1%, which expanded 10 basis points (bps) on a year-over-year basis.
Non-GAAP operating loss was $4.4 million compared with a loss of $22.1 million in the year-ago quarter.
Non-GAAP net loss came was $4.8 million that narrowed down from the year-ago loss of $22.3 million.
Pure Storage, Inc. Price, Consensus and EPS Surprise
Pure Storage, Inc. Price, Consensus and EPS Surprise | Pure Storage, Inc. Quote
Balance Sheet
As of Dec 31, 2017, cash and cash equivalents were $183.6 million that decreased 69.6% on a year-over-year basis.
Guidance
Pure Storage expects first-quarter fiscal 2018 revenues in a range of $171–$179 million. Non-GAAP gross margin is anticipated to be in a range of 63.5% to 66.5%. Non-GAAP operating margin is projected to remain in a range of -27% to -23%.
Zacks Rank & Key Pick
Pure Storage has a Zacks Rank #2 (Buy).
A better-ranked stock in the broader technology space includes Applied Optoelectronics, Inc. (AAOI - Free Report) sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Notably, the Zacks Consensus Estimate for Applied Optoelectronics’ current year has improved to $3.14 from $1.45 over the last 60 days.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>