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Why Is Pure Storage (PSTG) Up 3.6% 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 3.6% 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 Q2 Earnings Beat Estimates
Pure Storage 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.
It 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.
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%.
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 non-GAAP operating income is expected to be $185-$195 million, with around 14% year-over-year growth at midpoint.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a upward trend in estimates revision.
The consensus estimate has shifted 23.75% due to these changes.
VGM Scores
At this time, Pure Storage has a nice Growth Score of B, a score with the same score on the momentum front. However, the stock has a score of F on the value side, putting it in the fifth quintile for value investors.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been 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 3.6% 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 3.6% 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 Q2 Earnings Beat Estimates
Pure Storage 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.
It 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.
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%.
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 non-GAAP operating income is expected to be $185-$195 million, with around 14% year-over-year growth at midpoint.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a upward trend in estimates revision.
The consensus estimate has shifted 23.75% due to these changes.
VGM Scores
At this time, Pure Storage has a nice Growth Score of B, a score with the same score on the momentum front. However, the stock has a score of F on the value side, putting it in the fifth quintile for value investors.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been 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.