Pure Storage Inc. (PSTG - Free Report) reported non-GAAP earnings of 22 cents per share for third-quarter fiscal 2022, which beat the Zacks Consensus Estimate by 83.3%. In the prior-year quarter, the company reported earnings of 1 cent per share.
Total revenues increased 37% from the year-ago quarter’s level to $562.7 million. The top line surpassed the Zacks Consensus Estimate by 6.1%.
The upside can be attributed to growth in all product lines as well as revenue growth in the domestic and international segments.
Following the better-than-expected results, shares of Pure Storage are up 10.3% in the pre-market trading on Nov 24. The stock has gained 50.4% in the past year compared with the industry’s rally of 46.2%.
Quarter Details
Product revenues (contributed 66.6% to total revenues) amounted to $374.9 million, up 37% on a year-over-year basis. Product revenue benefitted from the sale of FlashArray//C to one of the top 10 hyperscalers in the quarter under review.
Subscription services revenues (33.4%) of $187.8 million surged 38% on a year-over-year basis. The upside can be attributed to robust adoption of Evergreen subscription services and Pure as-a-Service subscription and Portworx.
Subscription Annual Recurring Revenue (ARR) was $788 million, up 30% 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 plus annualized on-demand revenues, added Pure Storage.
Management reported that total revenues in the United States were up 35% and International revenues saw 42% year-over-year growth.
Pure Storage reported 12% increase (or 345 new customers) in new customer acquisition in the reported quarter. The company’s customer count stands at 9,500, which includes 50% of the Fortune 500 companies, noted Pure Storage.
Margin Highlights
Non-GAAP gross margin contracted 60 basis points (bps) from the year-ago quarter’s level to 68.5%.
Non-GAAP Product gross margin contracted 300 bps from the year-ago quarter’s level to 66.7%. Product gross margin was affected by the sale of FlashArray//C to one of the top 10 hyperscalers and increasing supply chain costs in the quarter under review. Non-GAAP Subscription gross margin came in at 72%, up 390 bps on a year-over-year basis.
Non-GAAP operating expenses, as a percentage of total revenues, came in at 56.2% compared with 68.3% reported in the prior-year quarter.
Pure Storage reported a non-GAAP operating income of $69.5 million in the fiscal third quarter compared with a non-GAAP income of 3.4 million reported in the year-ago quarter. Non-GAAP operating margin stood at 12.3% compared with 0.8% reported in the prior-year quarter.
Balance Sheet & Cash Flow
Pure Storage exited the quarter ended on Oct 31, 2021, with cash, cash equivalents and marketable securities of $1.363 billion compared with $1.285 billion as of Aug 1, 2021. As of Oct 31, long-term debt stood at $778 million compared with long-term debt of $771 million as of Aug 2, 2021
Cash flow from operations was $127 million compared with $123.4 million in the prior quarter. Free cash flow was $101.3 million compared with $95.7 million in the previous quarter.
During the fiscal third quarter, the company returned $56 million to shareholders via share repurchases of more than 2.3 million shares as part of the $200-million share repurchase authorization. The company has $70 million worth of shares left under repurchases.
Deferred revenues increased 24.5% to $950 million in the quarter under review.
The remaining performance obligations (RPO) at the end of the fiscal third quarter were $1.2 billion, up 27% on a year-over-year basis. The metric represents total committed non-cancelable future revenues.
Guidance
Pure Storage expects fourth-quarter fiscal 2022 revenues to be $630 million, indicating year-over-year growth of 25%. The Zacks Consensus Estimate is pegged at $601.11 million, suggesting year-over-year growth of 19.6%.
Non-GAAP operating income for the fiscal fourth quarter is expected to be $90 million, and the non- GAAP operating margin is expected to be nearly 14%.
Pure Storage expects fiscal 2022 revenues to be $2.1 billion, up from the previous guidance of $2.04 billion. The figure indicates year-over-year growth of 25%. The Zacks Consensus Estimate is pegged at $2.04 billion, suggesting year-over-year growth of 21.2%.
Non-GAAP operating income is expected to be $206 million and non- GAAP operating margin is expected to be nearly 10%.
Zacks Rank and Stock to Consider
Pure Storage currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks worth consideration in the broader technology space includes Arrow Electronics (ARW - Free Report) , Alphabet (GOOGL - Free Report) and Monolithic Power Systems (MPWR - Free Report) .
While Alphabet sport a Zacks Rank #1 (Strong Buy), Arrow Electronics and Monolithic carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Arrow Electronics’ shares have gained 33.2% on a year-to-date basis. The long-term earnings growth rate for the company is currently projected at 27.4%.
Alphabet’s shares have surged 66.4% on a year-to-date basis. The long-term earnings growth rate for the company is currently projected at 25.8%.
Monolithic’s shares have rallied 49.1% on a year-to-date basis. The long-term earnings growth rate for the company is currently projected at 25%.
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Pure Storage Inc. (PSTG - Free Report) reported non-GAAP earnings of 22 cents per share for third-quarter fiscal 2022, which beat the Zacks Consensus Estimate by 83.3%. In the prior-year quarter, the company reported earnings of 1 cent per share.
Total revenues increased 37% from the year-ago quarter’s level to $562.7 million. The top line surpassed the Zacks Consensus Estimate by 6.1%.
The upside can be attributed to growth in all product lines as well as revenue growth in the domestic and international segments.
Following the better-than-expected results, shares of Pure Storage are up 10.3% in the pre-market trading on Nov 24. The stock has gained 50.4% in the past year compared with the industry’s rally of 46.2%.
Quarter Details
Product revenues (contributed 66.6% to total revenues) amounted to $374.9 million, up 37% on a year-over-year basis. Product revenue benefitted from the sale of FlashArray//C to one of the top 10 hyperscalers in the quarter under review.
Subscription services revenues (33.4%) of $187.8 million surged 38% on a year-over-year basis. The upside can be attributed to robust adoption of Evergreen subscription services and Pure as-a-Service subscription and Portworx.
Subscription Annual Recurring Revenue (ARR) was $788 million, up 30% 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 plus annualized on-demand revenues, added Pure Storage.
Management reported that total revenues in the United States were up 35% and International revenues saw 42% year-over-year growth.
Pure Storage reported 12% increase (or 345 new customers) in new customer acquisition in the reported quarter. The company’s customer count stands at 9,500, which includes 50% of the Fortune 500 companies, noted Pure Storage.
Margin Highlights
Non-GAAP gross margin contracted 60 basis points (bps) from the year-ago quarter’s level to 68.5%.
Non-GAAP Product gross margin contracted 300 bps from the year-ago quarter’s level to 66.7%. Product gross margin was affected by the sale of FlashArray//C to one of the top 10 hyperscalers and increasing supply chain costs in the quarter under review. Non-GAAP Subscription gross margin came in at 72%, up 390 bps on a year-over-year basis.
Non-GAAP operating expenses, as a percentage of total revenues, came in at 56.2% compared with 68.3% reported in the prior-year quarter.
Pure Storage reported a non-GAAP operating income of $69.5 million in the fiscal third quarter compared with a non-GAAP income of 3.4 million reported in the year-ago quarter. Non-GAAP operating margin stood at 12.3% compared with 0.8% reported in the prior-year quarter.
Balance Sheet & Cash Flow
Pure Storage exited the quarter ended on Oct 31, 2021, with cash, cash equivalents and marketable securities of $1.363 billion compared with $1.285 billion as of Aug 1, 2021. As of Oct 31, long-term debt stood at $778 million compared with long-term debt of $771 million as of Aug 2, 2021
Cash flow from operations was $127 million compared with $123.4 million in the prior quarter. Free cash flow was $101.3 million compared with $95.7 million in the previous quarter.
During the fiscal third quarter, the company returned $56 million to shareholders via share repurchases of more than 2.3 million shares as part of the $200-million share repurchase authorization. The company has $70 million worth of shares left under repurchases.
Deferred revenues increased 24.5% to $950 million in the quarter under review.
The remaining performance obligations (RPO) at the end of the fiscal third quarter were $1.2 billion, up 27% on a year-over-year basis. The metric represents total committed non-cancelable future revenues.
Guidance
Pure Storage expects fourth-quarter fiscal 2022 revenues to be $630 million, indicating year-over-year growth of 25%. The Zacks Consensus Estimate is pegged at $601.11 million, suggesting year-over-year growth of 19.6%.
Non-GAAP operating income for the fiscal fourth quarter is expected to be $90 million, and the non- GAAP operating margin is expected to be nearly 14%.
Pure Storage expects fiscal 2022 revenues to be $2.1 billion, up from the previous guidance of $2.04 billion. The figure indicates year-over-year growth of 25%. The Zacks Consensus Estimate is pegged at $2.04 billion, suggesting year-over-year growth of 21.2%.
Non-GAAP operating income is expected to be $206 million and non- GAAP operating margin is expected to be nearly 10%.
Zacks Rank and Stock to Consider
Pure Storage currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks worth consideration in the broader technology space includes Arrow Electronics (ARW - Free Report) , Alphabet (GOOGL - Free Report) and Monolithic Power Systems (MPWR - Free Report) .
While Alphabet sport a Zacks Rank #1 (Strong Buy), Arrow Electronics and Monolithic carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Arrow Electronics’ shares have gained 33.2% on a year-to-date basis. The long-term earnings growth rate for the company is currently projected at 27.4%.
Alphabet’s shares have surged 66.4% on a year-to-date basis. The long-term earnings growth rate for the company is currently projected at 25.8%.
Monolithic’s shares have rallied 49.1% on a year-to-date basis. The long-term earnings growth rate for the company is currently projected at 25%.
Highest Returns for Any Asset Class
It’s not even close. Despite ups and downs, Bitcoin has been more profitable for investors than any other decentralized, borderless form of money.
No guarantees for the future, but in the past three presidential election years, Bitcoin’s returns were as follows: 2012 +272.4%, 2016 +161.1%, and 2020 +302.8%. Zacks predicts another significant surge in months to come.
Hurry, Download Special Report – It’s FREE >>
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