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Pure Storage's Q1 Earnings & Revenues Beat, Bottom Line Declines Y/Y
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Pure Storage (PSTG - Free Report) reported first-quarter fiscal 2026 non-GAAP earnings per share (EPS) of 29 cents, which beat the Zacks Consensus Estimate by 16%. The company had posted non-GAAP EPS of 32 cents in the prior-year quarter.
Quarterly revenues grew 12% from the prior-year quarter to $778.5 million, surpassing the Zacks Consensus Estimate by 0.95%. Continued strong demand for Pure's unique data storage offerings, especially the //E family solutions, drove the top line. TCV sales for its Storage-as-a-Service surged 70% to $95 million, fueled by both large Evergreen//One transactions of more than $5 million and higher-velocity transactions under $5 million.
The company reaffirmed its fiscal 2026 outlook, announced major new products and partnerships, and showed strong growth in subscription revenues. During the quarter, it expanded its FlashBlade portfolio with the introduction of FlashBlade//EXA, the industry’s fastest storage platform for AI and high-performance computing. Recently, PSTG partnered with SK hynix to engineer cutting-edge QLC flash storage solutions for the next generation of data-intensive, hyperscale environments.
Pure Storage, Inc. Price, Consensus and EPS Surprise
Despite ongoing macroeconomic uncertainties anticipated in the second half, management remains confident in healthy growth trends. It continues to predict an 11% year-over-year revenue growth of $3.5 billion for fiscal 2026. It still expects product gross margins to stabilize around the mid-60s, aiming for its long-term target of 65–70%. This is supported by strong demand for the E family and FlashArray C, along with easing QLC flash prices. PSTG forecasts a 17% operating margin, with an expected operating profit of $595 million.
Product revenues (contributing 47.8% to total revenues) amounted to $372.1 million, up 7.1% on a year-over-year basis. Subscription services revenues (52.2%) of $406.3 million rose 17%.
We expected Product and subscription revenues to be $411.5 million and $358.8 million, respectively, for the fiscal first quarter.
Subscription annual recurring revenues (ARR) amounted to nearly $1.7 billion, up 18% 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 $531 million and $248 million, up 9% and 21%, respectively.
Margin Highlights
The non-GAAP gross margin came in at 70.9% compared with 73.9% in the prior-year quarter.
The non-GAAP product gross margin was 64%, down from 72.8% in the prior year. The non-GAAP subscription gross margin was 77.2% compared with 74.9% a year ago.
Pure Storage reported a non-GAAP operating income of $82.7 million compared with $100.4 million in the year-ago quarter.
The non-GAAP operating margin was 10.6% compared with 14.5% in the prior-year quarter.
Balance Sheet & Cash Flow
Pure Storage exited the fiscal first quarter, which ended on May 4, with cash and cash equivalents and marketable securities of $1.6 billion, up from $1.5 billion as of Feb 2, 2025.
Cash flow from operations amounted to $283.9 million in the fiscal first quarter compared with $221.5 million reported in the prior-year quarter. Free cash flow was $211.6 million compared with $172.7 million in the year-ago quarter.
In the fiscal first quarter, the company returned $120 million to shareholders by repurchasing 2.5 million shares. It has $152 million left under its current authorization plan.
The remaining performance obligations at the end of the fiscal first quarter totaled $2.7 billion, up 17% year over year.
Fiscal Q2 Guidance
Pure Storage expects revenues to be $845 million, implying an increase of 10.6% from a year ago level. The Zacks Consensus Estimate is pegged at $844.5 million, up 10.6% year over year.
The non-GAAP operating income is expected to be $125 million. The non-GAAP operating margin is projected to be 14.8%.
Western Digital Corporation (WDC - Free Report) reported third-quarter fiscal 2025 non-GAAP earnings of $1.36 per share, which surpassed the Zacks Consensus Estimate of $1.17. The company reported earnings of 63 cents per share in the prior-year quarter. Management anticipated fiscal third-quarter non-GAAP earnings per share to be between 90 cents per share and $1.20.
In the past year, WDC shares have declined 30.7%.
Teradata (TDC - Free Report) reported first-quarter 2025 non-GAAP earnings of 66 cents per share, which beat the Zacks Consensus Estimate by 15.79%. The bottom line increased 15.8% year over year.
TDC shares have plunged 31.6% in the past year.
Seagate Technology Holdings plc (STX - Free Report) reported third-quarter fiscal 2025 non-GAAP earnings of $1.90 per share, beating the Zacks Consensus Estimate by 7.95%. The bottom line was in the upper end of STX’s guidance of $1.70 per share (+/- 20 cents), highlighting operational discipline and effective cost management. The company reported non-GAAP earnings of 33 cents per share in the year-ago quarter. The expansion reflects the benefits of a more resilient and optimized business model, along with robust supply-demand dynamics in mass capacity storage.
In the past year, STX has gained 25.2%.
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Pure Storage's Q1 Earnings & Revenues Beat, Bottom Line Declines Y/Y
Pure Storage (PSTG - Free Report) reported first-quarter fiscal 2026 non-GAAP earnings per share (EPS) of 29 cents, which beat the Zacks Consensus Estimate by 16%. The company had posted non-GAAP EPS of 32 cents in the prior-year quarter.
Quarterly revenues grew 12% from the prior-year quarter to $778.5 million, surpassing the Zacks Consensus Estimate by 0.95%. Continued strong demand for Pure's unique data storage offerings, especially the //E family solutions, drove the top line. TCV sales for its Storage-as-a-Service surged 70% to $95 million, fueled by both large Evergreen//One transactions of more than $5 million and higher-velocity transactions under $5 million.
The company reaffirmed its fiscal 2026 outlook, announced major new products and partnerships, and showed strong growth in subscription revenues. During the quarter, it expanded its FlashBlade portfolio with the introduction of FlashBlade//EXA, the industry’s fastest storage platform for AI and high-performance computing. Recently, PSTG partnered with SK hynix to engineer cutting-edge QLC flash storage solutions for the next generation of data-intensive, hyperscale environments.
Pure Storage, Inc. Price, Consensus and EPS Surprise
Pure Storage, Inc. price-consensus-eps-surprise-chart | Pure Storage, Inc. Quote
Despite ongoing macroeconomic uncertainties anticipated in the second half, management remains confident in healthy growth trends. It continues to predict an 11% year-over-year revenue growth of $3.5 billion for fiscal 2026. It still expects product gross margins to stabilize around the mid-60s, aiming for its long-term target of 65–70%. This is supported by strong demand for the E family and FlashArray C, along with easing QLC flash prices. PSTG forecasts a 17% operating margin, with an expected operating profit of $595 million.
In the past year, shares of PSTG have declined 12.8% compared with the Zacks Computer-Storage Devices industry’s fall of 32%. (See the Zacks Earnings Calendar to stay ahead of market-making news.)
Image Source: Zacks Investment Research
PSTG’s Quarter in Detail
Product revenues (contributing 47.8% to total revenues) amounted to $372.1 million, up 7.1% on a year-over-year basis. Subscription services revenues (52.2%) of $406.3 million rose 17%.
We expected Product and subscription revenues to be $411.5 million and $358.8 million, respectively, for the fiscal first quarter.
Subscription annual recurring revenues (ARR) amounted to nearly $1.7 billion, up 18% 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 $531 million and $248 million, up 9% and 21%, respectively.
Margin Highlights
The non-GAAP gross margin came in at 70.9% compared with 73.9% in the prior-year quarter.
The non-GAAP product gross margin was 64%, down from 72.8% in the prior year. The non-GAAP subscription gross margin was 77.2% compared with 74.9% a year ago.
Pure Storage reported a non-GAAP operating income of $82.7 million compared with $100.4 million in the year-ago quarter.
The non-GAAP operating margin was 10.6% compared with 14.5% in the prior-year quarter.
Balance Sheet & Cash Flow
Pure Storage exited the fiscal first quarter, which ended on May 4, with cash and cash equivalents and marketable securities of $1.6 billion, up from $1.5 billion as of Feb 2, 2025.
Cash flow from operations amounted to $283.9 million in the fiscal first quarter compared with $221.5 million reported in the prior-year quarter. Free cash flow was $211.6 million compared with $172.7 million in the year-ago quarter.
In the fiscal first quarter, the company returned $120 million to shareholders by repurchasing 2.5 million shares. It has $152 million left under its current authorization plan.
The remaining performance obligations at the end of the fiscal first quarter totaled $2.7 billion, up 17% year over year.
Fiscal Q2 Guidance
Pure Storage expects revenues to be $845 million, implying an increase of 10.6% from a year ago level. The Zacks Consensus Estimate is pegged at $844.5 million, up 10.6% year over year.
The non-GAAP operating income is expected to be $125 million. The non-GAAP operating margin is projected to be 14.8%.
PSTG’s Zacks Rank
Pure Storage currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
Recent Performance of Other Companies
Western Digital Corporation (WDC - Free Report) reported third-quarter fiscal 2025 non-GAAP earnings of $1.36 per share, which surpassed the Zacks Consensus Estimate of $1.17. The company reported earnings of 63 cents per share in the prior-year quarter. Management anticipated fiscal third-quarter non-GAAP earnings per share to be between 90 cents per share and $1.20.
In the past year, WDC shares have declined 30.7%.
Teradata (TDC - Free Report) reported first-quarter 2025 non-GAAP earnings of 66 cents per share, which beat the Zacks Consensus Estimate by 15.79%. The bottom line increased 15.8% year over year.
TDC shares have plunged 31.6% in the past year.
Seagate Technology Holdings plc (STX - Free Report) reported third-quarter fiscal 2025 non-GAAP earnings of $1.90 per share, beating the Zacks Consensus Estimate by 7.95%. The bottom line was in the upper end of STX’s guidance of $1.70 per share (+/- 20 cents), highlighting operational discipline and effective cost management. The company reported non-GAAP earnings of 33 cents per share in the year-ago quarter. The expansion reflects the benefits of a more resilient and optimized business model, along with robust supply-demand dynamics in mass capacity storage.
In the past year, STX has gained 25.2%.