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Pure Storage's Q2 Earnings & Revenues Beat Estimates, Stock Tanks
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Pure Storage (PSTG - Free Report) reported non-GAAP earnings per share (EPS) of 44 cents for second-quarter fiscal 2025, which beat the Zacks Consensus Estimate by 15.8%. The company reported non-GAAP EPS of 34 cents in the prior-year quarter.
Total revenues soared 11% from the year-ago quarter to $763.8 million and beat the Zacks Consensus Estimate by 1%. The top-line expansion stemmed from healthy demand trends across the data storage platform as customers shift cost-sensitive workloads to all-flash. Steady momentum in FlashBlade Solutions, including FlashArray//E, Flashblade//E, and FlashArray//C offerings, is propelling its growth amid macroeconomic headwinds.
For the third quarter of fiscal 2025, Pure Storage expects revenues to be $815 million, implying an increase of 6.8% from a year ago. The Zacks Consensus Estimate is pegged at $810.9 million.
The non-GAAP operating income for the fiscal third quarter is expected at $140 million. The non-GAAP operating margin is estimated at 17.2%.
Pure Storage, Inc. Price, Consensus and EPS Surprise
Management reiterated revenue guidance for fiscal 2025. PSTG continues to expect revenues of $3.1 billion, indicating a rise of 10.5% from the year-earlier level. The non-GAAP operating margin is projected at 17%.
However, PSTG lowered guidance for total contract value or TCV sales for Evergreen//One & Evergreen//Flex subscription service offerings. It now expects TCV sales to be $500 million, implying 25% growth from a year ago. Earlier, the company forecasted TCV sales to be $600 million, implying 50% growth from a year ago.
Following the earnings announcement and TCV guidance revision, shares of PSTG declined 13.7% in the pre-market trading on Aug. 28. In the past year, shares have gained 64.5% compared with the sub-industry’s growth of 57.9%.
Image Source: Zacks Investment Research
PSTG’s Quarter in Detail
Product revenues (contributing 52.7% to total revenues) amounted to $402.6 million, up 0.7% on a year-over-year basis.
Subscription services revenues (47.3%) of $361.2 million rose 25% on a year-over-year basis.
We expected product and subscription services revenues to be $454.8 million and $356.1 million, respectively, for the fiscal second quarter.
Subscription annual recurring revenues (ARR) amounted to nearly $1.5 billion, up 24% 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 internationally were $538 million and $226 million, respectively.
Margin Highlights
The non-GAAP gross margin was flat year over year at 72.8%.
The non-GAAP product gross margin was 69.5%, down from 71.5% in the prior year. The non-GAAP subscription gross margin was 76.4%, compared with 74.5% a year ago.
Non-GAAP operating expenses, as a percentage of total revenues, were 54.7% compared with 56.5% in the prior-year quarter.
Pure Storage reported a non-GAAP operating income of $138.6 million compared with $111.8 million in the year-ago quarter. The non-GAAP operating margin was 18.1%, up from 16.2%.
Balance Sheet & Cash Flow
Pure Storage exited the fiscal second quarter that ended on Aug. 4 with cash, cash equivalents and marketable securities of $1.8 billion, up from $1.5 billion reported in the prior-year period.
Cash flow from operations amounted to $226.6 million in the fiscal second quarter compared with $101.6 million in the prior-year quarter. Free cash flow was $166.6 million compared with $46.5 million a year ago.
In the fiscal second quarter, the company did not repurchase any shares due to trading restrictions. It has $395 million left under its authorization plan.
The remaining performance obligations at the end of the fiscal second quarter totaled $2.3 billion, up 24% year over year.
PSTG’s Zacks Rank
Pure Storage currently has a Zacks Rank #3 (Hold).
Performance of Other Companies
BlackBerry’s (BB - Free Report) first-quarter fiscal 2025 adjusted loss per share of 3 cents was narrower than the company’s estimate of a loss of 4-6 cents. In the year-ago quarter, it reported non-GAAP earnings of 6 cents per share. The Zacks Consensus Estimate was pegged at a loss of 4 cents per share. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shares of BB have lost 57% in the past year.
Badger Meter, Inc (BMI - Free Report) reported earnings per share (EPS) of $1.12 for second-quarter 2024, beating the Zacks Consensus Estimate by 14.3%. Also, the bottom line compared favorably with the year-ago quarter’s EPS of 76 cents.
Shares of BMI have gained 23% in the past year.
SAP SE (SAP - Free Report) reported second-quarter 2024 non-IFRS earnings of €1.10 ($1.18) per share, climbing 59% from the year-ago quarter’s levels. The Zacks Consensus Estimate was pegged at $1.01.
In the past year, shares of SAP have gained 54.9%.
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Pure Storage's Q2 Earnings & Revenues Beat Estimates, Stock Tanks
Pure Storage (PSTG - Free Report) reported non-GAAP earnings per share (EPS) of 44 cents for second-quarter fiscal 2025, which beat the Zacks Consensus Estimate by 15.8%. The company reported non-GAAP EPS of 34 cents in the prior-year quarter.
Total revenues soared 11% from the year-ago quarter to $763.8 million and beat the Zacks Consensus Estimate by 1%. The top-line expansion stemmed from healthy demand trends across the data storage platform as customers shift cost-sensitive workloads to all-flash. Steady momentum in FlashBlade Solutions, including FlashArray//E, Flashblade//E, and FlashArray//C offerings, is propelling its growth amid macroeconomic headwinds.
For the third quarter of fiscal 2025, Pure Storage expects revenues to be $815 million, implying an increase of 6.8% from a year ago. The Zacks Consensus Estimate is pegged at $810.9 million.
The non-GAAP operating income for the fiscal third quarter is expected at $140 million. The non-GAAP operating margin is estimated at 17.2%.
Pure Storage, Inc. Price, Consensus and EPS Surprise
Pure Storage, Inc. price-consensus-eps-surprise-chart | Pure Storage, Inc. Quote
Management reiterated revenue guidance for fiscal 2025. PSTG continues to expect revenues of $3.1 billion, indicating a rise of 10.5% from the year-earlier level. The non-GAAP operating margin is projected at 17%.
However, PSTG lowered guidance for total contract value or TCV sales for Evergreen//One & Evergreen//Flex subscription service offerings. It now expects TCV sales to be $500 million, implying 25% growth from a year ago. Earlier, the company forecasted TCV sales to be $600 million, implying 50% growth from a year ago.
Following the earnings announcement and TCV guidance revision, shares of PSTG declined 13.7% in the pre-market trading on Aug. 28. In the past year, shares have gained 64.5% compared with the sub-industry’s growth of 57.9%.
Image Source: Zacks Investment Research
PSTG’s Quarter in Detail
Product revenues (contributing 52.7% to total revenues) amounted to $402.6 million, up 0.7% on a year-over-year basis.
Subscription services revenues (47.3%) of $361.2 million rose 25% on a year-over-year basis.
We expected product and subscription services revenues to be $454.8 million and $356.1 million, respectively, for the fiscal second quarter.
Subscription annual recurring revenues (ARR) amounted to nearly $1.5 billion, up 24% 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 internationally were $538 million and $226 million, respectively.
Margin Highlights
The non-GAAP gross margin was flat year over year at 72.8%.
The non-GAAP product gross margin was 69.5%, down from 71.5% in the prior year. The non-GAAP subscription gross margin was 76.4%, compared with 74.5% a year ago.
Non-GAAP operating expenses, as a percentage of total revenues, were 54.7% compared with 56.5% in the prior-year quarter.
Pure Storage reported a non-GAAP operating income of $138.6 million compared with $111.8 million in the year-ago quarter. The non-GAAP operating margin was 18.1%, up from 16.2%.
Balance Sheet & Cash Flow
Pure Storage exited the fiscal second quarter that ended on Aug. 4 with cash, cash equivalents and marketable securities of $1.8 billion, up from $1.5 billion reported in the prior-year period.
Cash flow from operations amounted to $226.6 million in the fiscal second quarter compared with $101.6 million in the prior-year quarter. Free cash flow was $166.6 million compared with $46.5 million a year ago.
In the fiscal second quarter, the company did not repurchase any shares due to trading restrictions. It has $395 million left under its authorization plan.
The remaining performance obligations at the end of the fiscal second quarter totaled $2.3 billion, up 24% year over year.
PSTG’s Zacks Rank
Pure Storage currently has a Zacks Rank #3 (Hold).
Performance of Other Companies
BlackBerry’s (BB - Free Report) first-quarter fiscal 2025 adjusted loss per share of 3 cents was narrower than the company’s estimate of a loss of 4-6 cents. In the year-ago quarter, it reported non-GAAP earnings of 6 cents per share. The Zacks Consensus Estimate was pegged at a loss of 4 cents per share. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shares of BB have lost 57% in the past year.
Badger Meter, Inc (BMI - Free Report) reported earnings per share (EPS) of $1.12 for second-quarter 2024, beating the Zacks Consensus Estimate by 14.3%. Also, the bottom line compared favorably with the year-ago quarter’s EPS of 76 cents.
Shares of BMI have gained 23% in the past year.
SAP SE (SAP - Free Report) reported second-quarter 2024 non-IFRS earnings of €1.10 ($1.18) per share, climbing 59% from the year-ago quarter’s levels. The Zacks Consensus Estimate was pegged at $1.01.
In the past year, shares of SAP have gained 54.9%.