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Why Is Pure Storage (PSTG) Up 5.4% 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 5.4% 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 its most recent earnings report in order to get a better handle on the important drivers.
Pure Storage Q1 Earnings Beat, Revenues Fall Y/Y
Pure Storage non-GAAP earnings of 8 cents per share in first-quarter fiscal 2024, which beat the Zacks Consensus Estimate by 100%. The company reported non-GAAP earnings of 25 cents per share in the prior-year quarter.
Total revenues decreased 5% from the year-ago reported quarter to $589.3 million, which surpassed the Zacks Consensus Estimate by 5.1%. Global macroeconomic weakness and cautious IT spending remain concerns.
However, revenues increased 5% year over year after excluding the impact of $60 million in the first quarter of fiscal 2023 product revenues, which was expected for the second half of last year.
Quarter in Detail
Product revenues (contributing 52.4% to total revenues) amounted to $308.9 million, down 23% on a year-over-year basis.
Subscription services revenues (47.6% of total revenues) of $280.3 million rose 27.9% on a year-over-year basis.
Subscription annual recurring revenues (ARR) amounted to more than $1.2 billion, up 29% 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 International were $427 and $162 million, respectively.
PSTG added more than 276 customers in the reported quarter. The company’s customer base has more than 11,500 customers and represents 58% of Fortune 500 companies.
Margin Highlights
The non-GAAP gross margin expanded 160 basis points (bps) from the year-ago reported quarter to 72.2%.
The non-GAAP Product gross margin expanded 80 bps from the year-ago reported quarter to 70.8%. The non-GAAP Subscription gross margin was 73.7%, which expanded 220 bps on a year-over-year basis.
Non-GAAP operating expenses, as a percentage of total revenues, were 68.9% compared with 56.8% reported in the prior-year quarter.
Pure Storage reported a non-GAAP operating income of $19.6 million compared with $85.4 million reported in the year-ago quarter. The non-GAAP operating margin was 3.3% compared with 13.8% reported in the prior-year quarter.
Balance Sheet & Cash Flow
Pure Storage exited the fiscal year ended May 7, with cash and cash equivalents and marketable securities of $1.2 billion compared with $1.6 billion as of Feb 6.
Cash flow from operations amounted to $173.2 million in the fiscal first quarter compared with $220.1 million reported in the prior-year quarter. Free cash flow was $121.8 million compared with $187.3 million reported in the previous-year quarter.
In the fiscal first quarter, the company returned $70 million to shareholders by repurchasing 2.9 million shares. The company has $211 million left from its previously announced $250 million share-repurchase plan.
Deferred revenues increased 25.5% to $1.396 billion in the quarter under review.
The remaining performance obligations at the end of the fiscal fourth quarter totaled $1.8 billion, up 26% year over year. The metric represents total committed non-cancelable future revenues.
Guidance
The company has reiterated its revenue guidance for fiscal 2024. Amid current macroeconomic weakness, 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%.
Pure Storage expects revenues to be $680 million for second-quarter fiscal 2024, representing a rise of 5% from the year-ago reported figure.
The non-GAAP operating income for the fiscal first quarter is expected to be $90 million. The non-GAAP operating margin is expected to be 13%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
The consensus estimate has shifted 116% 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 a C. 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly 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 5.4% 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 5.4% 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 its most recent earnings report in order to get a better handle on the important drivers.
Pure Storage Q1 Earnings Beat, Revenues Fall Y/Y
Pure Storage non-GAAP earnings of 8 cents per share in first-quarter fiscal 2024, which beat the Zacks Consensus Estimate by 100%. The company reported non-GAAP earnings of 25 cents per share in the prior-year quarter.
Total revenues decreased 5% from the year-ago reported quarter to $589.3 million, which surpassed the Zacks Consensus Estimate by 5.1%. Global macroeconomic weakness and cautious IT spending remain concerns.
However, revenues increased 5% year over year after excluding the impact of $60 million in the first quarter of fiscal 2023 product revenues, which was expected for the second half of last year.
Quarter in Detail
Product revenues (contributing 52.4% to total revenues) amounted to $308.9 million, down 23% on a year-over-year basis.
Subscription services revenues (47.6% of total revenues) of $280.3 million rose 27.9% on a year-over-year basis.
Subscription annual recurring revenues (ARR) amounted to more than $1.2 billion, up 29% 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 International were $427 and $162 million, respectively.
PSTG added more than 276 customers in the reported quarter. The company’s customer base has more than 11,500 customers and represents 58% of Fortune 500 companies.
Margin Highlights
The non-GAAP gross margin expanded 160 basis points (bps) from the year-ago reported quarter to 72.2%.
The non-GAAP Product gross margin expanded 80 bps from the year-ago reported quarter to 70.8%. The non-GAAP Subscription gross margin was 73.7%, which expanded 220 bps on a year-over-year basis.
Non-GAAP operating expenses, as a percentage of total revenues, were 68.9% compared with 56.8% reported in the prior-year quarter.
Pure Storage reported a non-GAAP operating income of $19.6 million compared with $85.4 million reported in the year-ago quarter. The non-GAAP operating margin was 3.3% compared with 13.8% reported in the prior-year quarter.
Balance Sheet & Cash Flow
Pure Storage exited the fiscal year ended May 7, with cash and cash equivalents and marketable securities of $1.2 billion compared with $1.6 billion as of Feb 6.
Cash flow from operations amounted to $173.2 million in the fiscal first quarter compared with $220.1 million reported in the prior-year quarter. Free cash flow was $121.8 million compared with $187.3 million reported in the previous-year quarter.
In the fiscal first quarter, the company returned $70 million to shareholders by repurchasing 2.9 million shares. The company has $211 million left from its previously announced $250 million share-repurchase plan.
Deferred revenues increased 25.5% to $1.396 billion in the quarter under review.
The remaining performance obligations at the end of the fiscal fourth quarter totaled $1.8 billion, up 26% year over year. The metric represents total committed non-cancelable future revenues.
Guidance
The company has reiterated its revenue guidance for fiscal 2024. Amid current macroeconomic weakness, 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%.
Pure Storage expects revenues to be $680 million for second-quarter fiscal 2024, representing a rise of 5% from the year-ago reported figure.
The non-GAAP operating income for the fiscal first quarter is expected to be $90 million. The non-GAAP operating margin is expected to be 13%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
The consensus estimate has shifted 116% 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 a C. 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly 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.