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Pure Storage (PSTG) Up 8.2% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Pure Storage (PSTG - Free Report) . Shares have added about 8.2% 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 catalysts.
Pure Storage Q3 Earnings & Revenues Beat Estimates
Pure Storage reported non-GAAP earnings per share (EPS) of 50 cents in third-quarter fiscal 2024, which beat the Zacks Consensus Estimate by 21.9%. The company reported non-GAAP EPS of 31 cents in the prior-year quarter.
Total revenues increased 13% from the year-ago reported quarter to $762.8 million, which surpassed the Zacks Consensus Estimate by 0.2%. Strong uptake of the FlashBlade portfolio (including FlashBlade//E) coupled with robust Evergreen//One subscription sales acted as catalysts amid macroeconomic weakness.
Quarter in Detail
Product revenues (contributing 59% to total revenues) amounted to $453.2 million, up 5.1% on a year-over-year basis.
Subscription services revenues (41% of total revenues) of $309.5 million rose 26.5% on a year-over-year basis.
Subscription annual recurring revenues (ARR) amounted to nearly $1.3 billion, up 26% 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 $536 and $227 million, respectively.
Margin Highlights
The non-GAAP gross margin expanded 310 basis points (bps) from the year-ago reported quarter to 74%.
The non-GAAP Product gross margin expanded 300 bps from the year-ago reported quarter to 73.1%. The non-GAAP Subscription gross margin was 75.4%, which expanded 310 bps on a year-over-year basis.
Non-GAAP operating expenses, as a percentage of total revenues, were 51.9% compared with 55% reported in the prior-year quarter.
Pure Storage reported a non-GAAP operating income of $169 million compared with $107 million reported in the year-ago quarter. The non-GAAP operating margin was 22.2% compared with 15.9% reported in the prior-year quarter.
Balance Sheet & Cash Flow
Pure Storage exited the fiscal third quarter that ended on Nov 5 with cash and cash equivalents and marketable securities of $1.35 billion, up from $1.21 billion as of Aug 6, 2023.
Cash flow from operations amounted to $158.4 million in the fiscal third quarter compared with $154.6 million reported in the prior-year quarter. Free cash flow was $113.3 million compared with $114.7 million reported in the year-ago quarter.
In the fiscal third quarter, the company returned $22.4 million to shareholders by repurchasing 0.6 million shares. The company has $167 million left from its previously announced $250 million share-repurchase plan.
Deferred revenues increased 19.9% to $1.497 billion in the quarter under review.
The remaining performance obligations at the end of the fiscal third quarter totaled $2.046 billion, up 30% year over year. The metric represents total committed non-cancelable future revenues.
Guidance
The company expects fiscal 2024 revenues to be $2.82 billion, representing a rise of 2.5% year over year amid volatile macroeconomic conditions. The non-GAAP operating margin is expected to be 16%.
Pure Storage expects revenues to be $782 million for fourth-quarter fiscal 2024, representing a decline of 3.5% from the year-ago reported figure.
The non-GAAP operating income for the fiscal fourth quarter is expected to be $150 million. The non-GAAP operating margin is expected to be 19%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -38.79% due to these changes.
VGM Scores
Currently, Pure Storage has a great 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 broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. 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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Pure Storage (PSTG) Up 8.2% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Pure Storage (PSTG - Free Report) . Shares have added about 8.2% 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 catalysts.
Pure Storage Q3 Earnings & Revenues Beat Estimates
Pure Storage reported non-GAAP earnings per share (EPS) of 50 cents in third-quarter fiscal 2024, which beat the Zacks Consensus Estimate by 21.9%. The company reported non-GAAP EPS of 31 cents in the prior-year quarter.
Total revenues increased 13% from the year-ago reported quarter to $762.8 million, which surpassed the Zacks Consensus Estimate by 0.2%. Strong uptake of the FlashBlade portfolio (including FlashBlade//E) coupled with robust Evergreen//One subscription sales acted as catalysts amid macroeconomic weakness.
Quarter in Detail
Product revenues (contributing 59% to total revenues) amounted to $453.2 million, up 5.1% on a year-over-year basis.
Subscription services revenues (41% of total revenues) of $309.5 million rose 26.5% on a year-over-year basis.
Subscription annual recurring revenues (ARR) amounted to nearly $1.3 billion, up 26% 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 $536 and $227 million, respectively.
Margin Highlights
The non-GAAP gross margin expanded 310 basis points (bps) from the year-ago reported quarter to 74%.
The non-GAAP Product gross margin expanded 300 bps from the year-ago reported quarter to 73.1%. The non-GAAP Subscription gross margin was 75.4%, which expanded 310 bps on a year-over-year basis.
Non-GAAP operating expenses, as a percentage of total revenues, were 51.9% compared with 55% reported in the prior-year quarter.
Pure Storage reported a non-GAAP operating income of $169 million compared with $107 million reported in the year-ago quarter. The non-GAAP operating margin was 22.2% compared with 15.9% reported in the prior-year quarter.
Balance Sheet & Cash Flow
Pure Storage exited the fiscal third quarter that ended on Nov 5 with cash and cash equivalents and marketable securities of $1.35 billion, up from $1.21 billion as of Aug 6, 2023.
Cash flow from operations amounted to $158.4 million in the fiscal third quarter compared with $154.6 million reported in the prior-year quarter. Free cash flow was $113.3 million compared with $114.7 million reported in the year-ago quarter.
In the fiscal third quarter, the company returned $22.4 million to shareholders by repurchasing 0.6 million shares. The company has $167 million left from its previously announced $250 million share-repurchase plan.
Deferred revenues increased 19.9% to $1.497 billion in the quarter under review.
The remaining performance obligations at the end of the fiscal third quarter totaled $2.046 billion, up 30% year over year. The metric represents total committed non-cancelable future revenues.
Guidance
The company expects fiscal 2024 revenues to be $2.82 billion, representing a rise of 2.5% year over year amid volatile macroeconomic conditions. The non-GAAP operating margin is expected to be 16%.
Pure Storage expects revenues to be $782 million for fourth-quarter fiscal 2024, representing a decline of 3.5% from the year-ago reported figure.
The non-GAAP operating income for the fiscal fourth quarter is expected to be $150 million. The non-GAAP operating margin is expected to be 19%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -38.79% due to these changes.
VGM Scores
Currently, Pure Storage has a great 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 broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Pure Storage has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.