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Pure Storage Q2 Earnings & Sales Top, Stock Rallies on Upbeat Forecast
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Key Takeaways
Pure Storage Q2 EPS of $0.43 beat estimates, with revenue up 13% to $861M.
Growth driven by FlashBlade, software adoption and subscription services momentum.
Fiscal 2026 revenue outlook raised to $3.6B-$3.63B, up 14% year over year at midpoint.
Pure Storage ((PSTG - Free Report) ) reported second-quarter fiscal 2026 non-GAAP earnings per share (EPS) of 43 cents, which beat the Zacks Consensus Estimate by 10.3%. The company had posted non-GAAP EPS of 44 cents in the prior-year quarter.
Quarterly revenues grew 13% from the prior-year quarter to $861 million, surpassing the Zacks Consensus Estimate by 1.8% and management’s guidance of $845 million. Growth was broad-based across the portfolio, driven by strong demand from large enterprises, ongoing momentum in FlashBlade, particularly FlashBlade//E, and accelerating adoption of its core software and services offerings, including Evergreen//One, Cloud Block Store and Portworx.
Pure Storage, Inc. Price, Consensus and EPS Surprise
PSTG has issued a range for financial guidance, moving away from the single-point targets of prior quarters. This approach, consistent with industry peers, provides greater flexibility to pursue incremental investments and transformational growth opportunities as it advances its strategy. For fiscal 2026, it now expects revenues in the range of $3.6 billion to $3.63 billion, suggesting 14% year-over-year growth at the midpoint—300 basis points (bps) higher than the previously guided 11% growth to $3.515 billion.
Non-GAAP operating income is now forecasted between $605 million and $625 million, implying about 10% year-over-year growth at the midpoint—more than 300 bps higher than its prior guidance of $595 million.
In response to a strong quarter and guidance, shares of PSTG jumped 15% in the pre-market trading today. In the past year, shares have gained 21% compared with the Zacks Computer-Storage Devices industry’s growth of 7.1%.
Image Source: Zacks Investment Research
PSTG’s Quarter in Detail
Product revenues (contributing 51.8% to total revenues) amounted to $446.3 million, up 10.6% on a year-over-year basis. Subscription services revenues (48.2%) of $414.7 million rose 14.8%.
We expected Product and subscription revenues to be $446.7 million and $398.3 million, respectively, for the fiscal second quarter.
Subscription annual recurring revenues (ARR) amounted to nearly $1.8 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 $577 million and $284 million, up 7% and 26%, respectively.
Margin Highlights
The non-GAAP gross margin came in at 72.1% compared with 72.8% in the prior-year quarter.
The non-GAAP product gross margin was 68%, in line with its long-term target range of 65% to 70%, but down from 69.5% in the prior-year quarter. The non-GAAP subscription services gross margin was 76.5% compared with 76.4% a year ago.
Pure Storage reported a non-GAAP operating income of $130 million compared with $138.6 million in the year-ago quarter, exceeding the outlook of $125 million.
The non-GAAP operating margin was 15.1% compared with 18.1% in the prior-year quarter. The metric was projected at 14.8%.
Balance Sheet & Cash Flow
Pure Storage exited the fiscal second quarter that ended on Aug. 3 with cash, cash equivalents and marketable securities of $1.5 billion compared with $1.6 billion as of May 4, 2025.
Cash flow from operations amounted to $212.2 million in the reported quarter compared with $226.6 million reported in the prior-year quarter. Free cash flow was $150.1 million compared with $166.6 million in the year-ago quarter.
In the fiscal second quarter, the company returned $42 million to shareholders by repurchasing 0.8 million shares. It has $109 million left under its current authorization plan.
The remaining performance obligations at the end of the fiscal second quarter totaled $2.8 billion, up 22% year over year.
Fiscal Q3 Guidance
Pure Storage expects revenues in $950-$960 million band, implying an increase of 15% at the midpoint from the year-ago level. The Zacks Consensus Estimate is pegged at $913.4 million, up 9.9% year over year.
The non-GAAP operating income is expected to be $185-$195 million, with around 14% year-over-year growth at midpoint.
Seagate Technology Holdings plc ((STX - Free Report) ) reported fourth-quarter fiscal 2025 non-GAAP earnings of $2.59 per share, beating the Zacks Consensus Estimate by 5.3%. The bottom line was in the upper end of STX’s guidance of $2.4 per share (+/- 20 cents), reflecting the outcome of structural improvements and strong cloud-driven demand. The company reported non-GAAP earnings of $1.05 per share in the year-ago quarter.
Western Digital Corporation ((WDC - Free Report) ) reported fourth-quarter fiscal 2025 non-GAAP earnings of $1.66 per share, which surpassed the Zacks Consensus Estimate by 12.2%. The company reported earnings of $1.44 per share in the prior-year quarter. Management anticipated fiscal fourth-quarter non-GAAP earnings per share to be $1.45 (+/- 20 cents).
Super Micro Computer ((SMCI - Free Report) ) reported fourth-quarter fiscal 2025 non-GAAP earnings of 41 cents per share, which missed the Zacks Consensus Estimate by 6.8%. The bottom line declined 34.9% on a year-over-year basis. For first-quarter fiscal 2026, SMCI’s non-GAAP earnings are expected in the range of 40-52 cents per share.
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Pure Storage Q2 Earnings & Sales Top, Stock Rallies on Upbeat Forecast
Key Takeaways
Pure Storage ((PSTG - Free Report) ) reported second-quarter fiscal 2026 non-GAAP earnings per share (EPS) of 43 cents, which beat the Zacks Consensus Estimate by 10.3%. The company had posted non-GAAP EPS of 44 cents in the prior-year quarter.
Quarterly revenues grew 13% from the prior-year quarter to $861 million, surpassing the Zacks Consensus Estimate by 1.8% and management’s guidance of $845 million. Growth was broad-based across the portfolio, driven by strong demand from large enterprises, ongoing momentum in FlashBlade, particularly FlashBlade//E, and accelerating adoption of its core software and services offerings, including Evergreen//One, Cloud Block Store and Portworx.
Pure Storage, Inc. Price, Consensus and EPS Surprise
Pure Storage, Inc. price-consensus-eps-surprise-chart | Pure Storage, Inc. Quote
PSTG has issued a range for financial guidance, moving away from the single-point targets of prior quarters. This approach, consistent with industry peers, provides greater flexibility to pursue incremental investments and transformational growth opportunities as it advances its strategy. For fiscal 2026, it now expects revenues in the range of $3.6 billion to $3.63 billion, suggesting 14% year-over-year growth at the midpoint—300 basis points (bps) higher than the previously guided 11% growth to $3.515 billion.
Non-GAAP operating income is now forecasted between $605 million and $625 million, implying about 10% year-over-year growth at the midpoint—more than 300 bps higher than its prior guidance of $595 million.
In response to a strong quarter and guidance, shares of PSTG jumped 15% in the pre-market trading today. In the past year, shares have gained 21% compared with the Zacks Computer-Storage Devices industry’s growth of 7.1%.
Image Source: Zacks Investment Research
PSTG’s Quarter in Detail
Product revenues (contributing 51.8% to total revenues) amounted to $446.3 million, up 10.6% on a year-over-year basis. Subscription services revenues (48.2%) of $414.7 million rose 14.8%.
We expected Product and subscription revenues to be $446.7 million and $398.3 million, respectively, for the fiscal second quarter.
Subscription annual recurring revenues (ARR) amounted to nearly $1.8 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 $577 million and $284 million, up 7% and 26%, respectively.
Margin Highlights
The non-GAAP gross margin came in at 72.1% compared with 72.8% in the prior-year quarter.
The non-GAAP product gross margin was 68%, in line with its long-term target range of 65% to 70%, but down from 69.5% in the prior-year quarter. The non-GAAP subscription services gross margin was 76.5% compared with 76.4% a year ago.
Pure Storage reported a non-GAAP operating income of $130 million compared with $138.6 million in the year-ago quarter, exceeding the outlook of $125 million.
The non-GAAP operating margin was 15.1% compared with 18.1% in the prior-year quarter. The metric was projected at 14.8%.
Balance Sheet & Cash Flow
Pure Storage exited the fiscal second quarter that ended on Aug. 3 with cash, cash equivalents and marketable securities of $1.5 billion compared with $1.6 billion as of May 4, 2025.
Cash flow from operations amounted to $212.2 million in the reported quarter compared with $226.6 million reported in the prior-year quarter. Free cash flow was $150.1 million compared with $166.6 million in the year-ago quarter.
In the fiscal second quarter, the company returned $42 million to shareholders by repurchasing 0.8 million shares. It has $109 million left under its current authorization plan.
The remaining performance obligations at the end of the fiscal second quarter totaled $2.8 billion, up 22% year over year.
Fiscal Q3 Guidance
Pure Storage expects revenues in $950-$960 million band, implying an increase of 15% at the midpoint from the year-ago level. The Zacks Consensus Estimate is pegged at $913.4 million, up 9.9% year over year.
The non-GAAP operating income is expected to be $185-$195 million, with around 14% year-over-year growth at midpoint.
PSTG’s Zacks Rank
Pure Storage currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1(Strong Buy) Rank stocks here
Recent Performance of Other Companies
Seagate Technology Holdings plc ((STX - Free Report) ) reported fourth-quarter fiscal 2025 non-GAAP earnings of $2.59 per share, beating the Zacks Consensus Estimate by 5.3%. The bottom line was in the upper end of STX’s guidance of $2.4 per share (+/- 20 cents), reflecting the outcome of structural improvements and strong cloud-driven demand. The company reported non-GAAP earnings of $1.05 per share in the year-ago quarter.
Western Digital Corporation ((WDC - Free Report) ) reported fourth-quarter fiscal 2025 non-GAAP earnings of $1.66 per share, which surpassed the Zacks Consensus Estimate by 12.2%. The company reported earnings of $1.44 per share in the prior-year quarter. Management anticipated fiscal fourth-quarter non-GAAP earnings per share to be $1.45 (+/- 20 cents).
Super Micro Computer ((SMCI - Free Report) ) reported fourth-quarter fiscal 2025 non-GAAP earnings of 41 cents per share, which missed the Zacks Consensus Estimate by 6.8%. The bottom line declined 34.9% on a year-over-year basis. For first-quarter fiscal 2026, SMCI’s non-GAAP earnings are expected in the range of 40-52 cents per share.