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Why Is Pure Storage (PSTG) Up 13.4% Since Last Earnings Report?
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It has been about a month since the last earnings report for Pure Storage (PSTG - Free Report) . Shares have added about 13.4% in that time frame, outperforming 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 the most recent earnings report in order to get a better handle on the important drivers.
Pure Storage Q2 Earnings & Revenues Beat Estimates
Pure Storage reported non-GAAP earnings of 14 cents per share for second-quarter fiscal 2022, which beat the Zacks Consensus Estimate by 180% and increased 133% on a year-over-year basis.
Total revenues increased 23% from the year-ago quarter’s level to $497 million. Moreover, the top line surpassed the Zacks Consensus Estimate by 5.5%.
The upside can be attributed to growth in subscription services, led by momentum in Pure as-a-Service and Evergreen offerings.
Quarter Details
Product revenues (contributed 65.4% to total revenues) amounted to $324.9 million, up 19% on a year-over-year basis.
Subscription services revenues (34.6%) of $171.9 million surged 31% on a year-over-year basis. The upside can be attributed to ongoing support contracts and robust adoption of Evergreen subscription services and Pure as-a-Service subscription, which includes Cloud Block Store. Pure as-a-Service revenues almost doubled on a year-over-year basis, noted management.
Management reported that total revenues in the United States were up 25% and International revenues saw 18% year-over-year growth.
Pure Storage is also gaining from growing clout of its latest second-generation FlashArray//C, a cost-effective storage array solution. This provides customers with higher performance capabilities and enables them to run complex cloud workloads on a single platform. In the quarter under review, FlashArray//C sales more than tripled on a year-over-year basis.
Solid pipeline and synergies from Portworx acquisition, which strengthened capabilities for containerized and cloud-native applications, favored performance.
Pure Storage reported 10% increase (or 380 new customers) in new customer acquisition in the reported quarter, driven primarily by strength in new enterprise customers.
Margin Highlights
Non-GAAP gross margin expanded 70 basis points (bps) from the year-ago quarter’s level to 70.5%.
Non-GAAP Product gross margin expanded 20 bps from the year-ago quarter’s level to 70.3%. Non-GAAP Subscription gross margin came in at 70.7%, which expanded 150 bps on a year-over-year basis.
Non-GAAP operating expenses, as a percentage of total revenues, came in at 61.1% that contracted 590 bps on a year-over-year basis.
Pure Storage reported a non-GAAP operating income of $46.6 million in fiscal second quarter compared with non-GAAP income of 11.2 million reported in the year-ago quarter. Non-GAAP operating margin stood at 9.4% compared with 2.8% reported in the prior-year quarter.
Balance Sheet & Cash Flow
Pure Storage exited the quarter ended Aug 1, 2021, with cash, cash equivalents and marketable securities of $1.285 billion compared with $1.234 billion as of May 2, 2021. As of Aug 2, long-term debt stood at $771 million compare with long-term debt of $763 million as of May 2, 2021
Cash flow from operations were $123.4 million compared with $21.4 million in the prior quarter. Free cash flow was $95.7 million compared with free cash outflow of $6.4 million in the previous quarter.
During fiscal second quarter, the company returned $44 million to shareholders via share repurchases of more than 2.3 million shares, as part of the $200-million share repurchase authorization.
Deferred revenues increased 26% to $909.8 million in the quarter under review. Remaining performance obligations (RPO) at the end of fiscal second quarter were $1.2 billion, up 25% on a year-over-year basis. The metric represents total committed non-cancelable future revenues.
Guidance
Pure Storage expects third-quarter fiscal 2022 revenues to be $530 million, indicating year-over-year growth of 30%.
Non-GAAP operating income for fiscal third quarter is expected to be $40 million.
For fiscal 2022, Pure Storage expects revenues to be $2.04 billion, indicating year-over-year growth of 21%.
Non-GAAP operating income is expected to be $150 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month. The consensus estimate has shifted 9.85% due to these changes.
VGM Scores
Currently, Pure Storage has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. 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 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) Up 13.4% Since Last Earnings Report?
It has been about a month since the last earnings report for Pure Storage (PSTG - Free Report) . Shares have added about 13.4% in that time frame, outperforming 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 the most recent earnings report in order to get a better handle on the important drivers.
Pure Storage Q2 Earnings & Revenues Beat Estimates
Pure Storage reported non-GAAP earnings of 14 cents per share for second-quarter fiscal 2022, which beat the Zacks Consensus Estimate by 180% and increased 133% on a year-over-year basis.
Total revenues increased 23% from the year-ago quarter’s level to $497 million. Moreover, the top line surpassed the Zacks Consensus Estimate by 5.5%.
The upside can be attributed to growth in subscription services, led by momentum in Pure as-a-Service and Evergreen offerings.
Quarter Details
Product revenues (contributed 65.4% to total revenues) amounted to $324.9 million, up 19% on a year-over-year basis.
Subscription services revenues (34.6%) of $171.9 million surged 31% on a year-over-year basis. The upside can be attributed to ongoing support contracts and robust adoption of Evergreen subscription services and Pure as-a-Service subscription, which includes Cloud Block Store. Pure as-a-Service revenues almost doubled on a year-over-year basis, noted management.
Management reported that total revenues in the United States were up 25% and International revenues saw 18% year-over-year growth.
Pure Storage is also gaining from growing clout of its latest second-generation FlashArray//C, a cost-effective storage array solution. This provides customers with higher performance capabilities and enables them to run complex cloud workloads on a single platform. In the quarter under review, FlashArray//C sales more than tripled on a year-over-year basis.
Solid pipeline and synergies from Portworx acquisition, which strengthened capabilities for containerized and cloud-native applications, favored performance.
Pure Storage reported 10% increase (or 380 new customers) in new customer acquisition in the reported quarter, driven primarily by strength in new enterprise customers.
Margin Highlights
Non-GAAP gross margin expanded 70 basis points (bps) from the year-ago quarter’s level to 70.5%.
Non-GAAP Product gross margin expanded 20 bps from the year-ago quarter’s level to 70.3%. Non-GAAP Subscription gross margin came in at 70.7%, which expanded 150 bps on a year-over-year basis.
Non-GAAP operating expenses, as a percentage of total revenues, came in at 61.1% that contracted 590 bps on a year-over-year basis.
Pure Storage reported a non-GAAP operating income of $46.6 million in fiscal second quarter compared with non-GAAP income of 11.2 million reported in the year-ago quarter. Non-GAAP operating margin stood at 9.4% compared with 2.8% reported in the prior-year quarter.
Balance Sheet & Cash Flow
Pure Storage exited the quarter ended Aug 1, 2021, with cash, cash equivalents and marketable securities of $1.285 billion compared with $1.234 billion as of May 2, 2021. As of Aug 2, long-term debt stood at $771 million compare with long-term debt of $763 million as of May 2, 2021
Cash flow from operations were $123.4 million compared with $21.4 million in the prior quarter. Free cash flow was $95.7 million compared with free cash outflow of $6.4 million in the previous quarter.
During fiscal second quarter, the company returned $44 million to shareholders via share repurchases of more than 2.3 million shares, as part of the $200-million share repurchase authorization.
Deferred revenues increased 26% to $909.8 million in the quarter under review. Remaining performance obligations (RPO) at the end of fiscal second quarter were $1.2 billion, up 25% on a year-over-year basis. The metric represents total committed non-cancelable future revenues.
Guidance
Pure Storage expects third-quarter fiscal 2022 revenues to be $530 million, indicating year-over-year growth of 30%.
Non-GAAP operating income for fiscal third quarter is expected to be $40 million.
For fiscal 2022, Pure Storage expects revenues to be $2.04 billion, indicating year-over-year growth of 21%.
Non-GAAP operating income is expected to be $150 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month. The consensus estimate has shifted 9.85% due to these changes.
VGM Scores
Currently, Pure Storage has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. 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 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.