Pure Storage (PSTG - Free Report) reported non-GAAP earnings of 53 cents per share in fourth-quarter fiscal 2023, which beat the Zacks Consensus Estimate by 35.9% and increased 47% on a year-over-year basis.
Total revenues increased 14% from the year-ago reported quarter to $810.2 million. However, the top line missed the Zacks Consensus Estimate by 0.1%. Global macroeconomic weakness and cautious IT spending remain concerns.
The company provided muted revenue guidance for fiscal 2024. Amid current macroeconomic weakness and pressured IT spending, Pure Storage expects revenues to grow in the range of mid-to-high single digits on a year-over-year basis. The non-GAAP operating margin is expected to be 15%.
The company also debuted FlashBlade//E, which is an unstructured data repository solution for large capacity data stores. The solution will lower total operating cost compared with secondary tier disk for customers. The company will begin to ship FlashBlade//E in the first quarter of fiscal 2024.
Following the announcement, shares are down 11.1% in the pre-market trading on Mar 2. The stock has lost 8.7% of its value in the past year compared with the sub-industry’s decline of 14.5%.
Quarter in Detail
Product revenues (contributing 67% to total revenues) amounted to $545.1 million, up 11% on a year-over-year basis.
Subscription services revenues (33% of total revenues) of $265.1 million rose 23% on a year-over-year basis.
Subscription annual recurring revenues (ARR) amounted to more than $1.1 billion, 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.
Total revenues in the United States and in International moved up 6% and 39% year over year, respectively. The United States revenues were significantly affected by cautious IT spending.
PSTG added more than 490 customers in the reported quarter. The company’s customer base has more than 11,000 customers and represents 58% of Fortune 500 companies.
Margin Highlights
The non-GAAP gross margin expanded 200 basis points (bps) from the year-ago reported quarter to 70.8%.
The non-GAAP Product gross margin expanded 220 bps from the year-ago reported quarter to 69.2%. The non-GAAP Subscription gross margin was 74.2%, which expanded 120 bps on a year-over-year basis.
Non-GAAP operating expenses, as a percentage of total revenues, were 51.3% compared with 52% reported in the prior-year quarter.
Pure Storage reported a non-GAAP operating income of $158.6 million compared with $118.7 million reported in the year-ago quarter. The non-GAAP operating margin was 19.6% compared with 16.8% reported in the prior-year quarter.
Balance Sheet & Cash Flow
Pure Storage exited the fiscal year ended Feb 6, with cash and cash equivalents and marketable securities of $1.6 billion compared with $1.5 billion as of Nov 6.
Cash flow from operations amounted to $233 million in the fiscal fourth quarter compared with $138.2 million reported in the prior-year quarter. Free cash flow was $172.8 million compared with $117.2 million reported in the previous-year quarter.
In the fiscal fourth quarter, the company returned $67.5 million to shareholders by repurchasing 2.4 million shares. For fiscal 2023, PSTG returned $219 million to shareholders by repurchasing 7.8 million shares. The company authorized an incremental $250 million share-repurchase plan.
Deferred revenues increased 28.3% to $1.386 billion in the quarter under review.
The remaining performance obligations at the end of fiscal fourth quarter totaled $1.753 billion, up 24% year over year. The metric represents total committed non-cancellable future revenues.
Guidance
Excluding the seasonality impact to product revenues of $60 million, Pure Storage expects revenues to be $560 million for first-quarter fiscal 2024, unchanged from the year-ago reported figure.
The non-GAAP operating income for fiscal first quarter is expected to be $10 million. The operating income will be affected by increasing investment for the company’s first in person Sales Kick Off event after the pandemic and higher costs due to planned hiring in second half of last fiscal.
Zacks Rank and Stocks to Consider
Pure Storage currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology space are Arista Networks (ANET - Free Report) , Perion Network (PERI - Free Report) and Pegasystems (PEGA - Free Report) , each sporting a Zacks Rank #1 (Strong Buy), presently. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Arista Networks’ 2023 earnings is pegged at $5.76 per share, up 11% in the past 60 days. The long-term earnings growth rate is anticipated to be 14.2%.
Arista Networks’ earnings beat the Zacks Consensus Estimate in all the past four quarters, the average being 14.2%. Shares of ANET have improved 15.1% in the past year.
The Zacks Consensus Estimate for Perion’s 2023 earnings is pegged at $2.69 per share, up 16% in the past 60 days. The long-term earnings growth rate is anticipated to be 25%.
Perion’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 31.7%. Shares of PERI have gained 57.3% in the past year.
The Zacks Consensus Estimate for Pegasystems’ 2023 earnings is pegged at $1.31 per share, rising 111% in the past 60 days.
Pegasystems’ earnings beat the Zacks Consensus Estimate in two of the trailing four quarters, the average surprise being 11.2%. Shares of PEGA have declined 44.6% in the past year.
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Pure Storage (PSTG - Free Report) reported non-GAAP earnings of 53 cents per share in fourth-quarter fiscal 2023, which beat the Zacks Consensus Estimate by 35.9% and increased 47% on a year-over-year basis.
Total revenues increased 14% from the year-ago reported quarter to $810.2 million. However, the top line missed the Zacks Consensus Estimate by 0.1%. Global macroeconomic weakness and cautious IT spending remain concerns.
The company provided muted revenue guidance for fiscal 2024. Amid current macroeconomic weakness and pressured IT spending, Pure Storage expects revenues to grow in the range of mid-to-high single digits on a year-over-year basis. The non-GAAP operating margin is expected to be 15%.
The company also debuted FlashBlade//E, which is an unstructured data repository solution for large capacity data stores. The solution will lower total operating cost compared with secondary tier disk for customers. The company will begin to ship FlashBlade//E in the first quarter of fiscal 2024.
Following the announcement, shares are down 11.1% in the pre-market trading on Mar 2. The stock has lost 8.7% of its value in the past year compared with the sub-industry’s decline of 14.5%.
Quarter in Detail
Product revenues (contributing 67% to total revenues) amounted to $545.1 million, up 11% on a year-over-year basis.
Subscription services revenues (33% of total revenues) of $265.1 million rose 23% on a year-over-year basis.
Subscription annual recurring revenues (ARR) amounted to more than $1.1 billion, 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.
Total revenues in the United States and in International moved up 6% and 39% year over year, respectively. The United States revenues were significantly affected by cautious IT spending.
PSTG added more than 490 customers in the reported quarter. The company’s customer base has more than 11,000 customers and represents 58% of Fortune 500 companies.
Margin Highlights
The non-GAAP gross margin expanded 200 basis points (bps) from the year-ago reported quarter to 70.8%.
The non-GAAP Product gross margin expanded 220 bps from the year-ago reported quarter to 69.2%. The non-GAAP Subscription gross margin was 74.2%, which expanded 120 bps on a year-over-year basis.
Non-GAAP operating expenses, as a percentage of total revenues, were 51.3% compared with 52% reported in the prior-year quarter.
Pure Storage reported a non-GAAP operating income of $158.6 million compared with $118.7 million reported in the year-ago quarter. The non-GAAP operating margin was 19.6% compared with 16.8% reported in the prior-year quarter.
Balance Sheet & Cash Flow
Pure Storage exited the fiscal year ended Feb 6, with cash and cash equivalents and marketable securities of $1.6 billion compared with $1.5 billion as of Nov 6.
Cash flow from operations amounted to $233 million in the fiscal fourth quarter compared with $138.2 million reported in the prior-year quarter. Free cash flow was $172.8 million compared with $117.2 million reported in the previous-year quarter.
In the fiscal fourth quarter, the company returned $67.5 million to shareholders by repurchasing 2.4 million shares. For fiscal 2023, PSTG returned $219 million to shareholders by repurchasing 7.8 million shares. The company authorized an incremental $250 million share-repurchase plan.
Deferred revenues increased 28.3% to $1.386 billion in the quarter under review.
The remaining performance obligations at the end of fiscal fourth quarter totaled $1.753 billion, up 24% year over year. The metric represents total committed non-cancellable future revenues.
Guidance
Excluding the seasonality impact to product revenues of $60 million, Pure Storage expects revenues to be $560 million for first-quarter fiscal 2024, unchanged from the year-ago reported figure.
The non-GAAP operating income for fiscal first quarter is expected to be $10 million. The operating income will be affected by increasing investment for the company’s first in person Sales Kick Off event after the pandemic and higher costs due to planned hiring in second half of last fiscal.
Zacks Rank and Stocks to Consider
Pure Storage currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology space are Arista Networks (ANET - Free Report) , Perion Network (PERI - Free Report) and Pegasystems (PEGA - Free Report) , each sporting a Zacks Rank #1 (Strong Buy), presently. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Arista Networks’ 2023 earnings is pegged at $5.76 per share, up 11% in the past 60 days. The long-term earnings growth rate is anticipated to be 14.2%.
Arista Networks’ earnings beat the Zacks Consensus Estimate in all the past four quarters, the average being 14.2%. Shares of ANET have improved 15.1% in the past year.
The Zacks Consensus Estimate for Perion’s 2023 earnings is pegged at $2.69 per share, up 16% in the past 60 days. The long-term earnings growth rate is anticipated to be 25%.
Perion’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 31.7%. Shares of PERI have gained 57.3% in the past year.
The Zacks Consensus Estimate for Pegasystems’ 2023 earnings is pegged at $1.31 per share, rising 111% in the past 60 days.
Pegasystems’ earnings beat the Zacks Consensus Estimate in two of the trailing four quarters, the average surprise being 11.2%. Shares of PEGA have declined 44.6% in the past year.
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Zacks predicts another significant surge. Click below for Bitcoin: A Tumultuous Yet Resilient History.
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