Shares of the data center hardware company Pure Storage Inc. surged 20.7% in extended trading after it posted third-quarter financial results that breezed past analyst expectations and offered strong guidance for the current quarter.

The company reported third-quarter earnings before certain costs such as stock compensation of 50 cents per share, easily beating Wall Street’s target of 41 cents per share. Revenue increased 9% from a year earlier to $831.1 million, surpassing the analyst target of $815 million by a wide margin.

Pure Storage also reported strength in terms of its subscription services revenue, which increased 22% year-over-year to $376.4 million, while its subscription-based annual recurring revenue jumped 22% to $1.6 billion.

In addition, the company reported remaining performance obligations of $2.4 billion, up 16% from a year ago.

During the quarter, the company achieved a significant design win with a “top-four hyperscaler” regarding its DirectFlash technology. According to Pure Storage Chief Executive Charles Giancarlo (pictured), the win represents a “vanguard for Pure Flash technology to become the standard for all hyperscaler online storage.”

Hyperscalers are technology giants that require computing and storage resources on a massive scale, such as Amazon Web Services Inc., Google LLC and Microsoft Corp. Meta Platforms Inc., another hyperscaler, is already a big customer of Pure Storage.

The win is a significant result for Pure Storage and the all-flash storage technology it offers, and paves the way for a significant expansion. Traditionally, hyperscalers have always relied on traditional hard disk storage.

However, Pure Storage believes it has a significant opportunity to change that. In August, Giancarlo told theCUBE Research’s John Furrier and Dave Vellante during an interview that the rapid rise of artificial intelligence is forcing an evolution in data center storage. He said that traditional storage solutions, based on physical arrays and complex, fixed environments, are giving way to more flexible, virtualized, flash-based storage systems.

“We’re creating an environment where on our arrays, all of that data appears as a pool of data,” he said. “It’s accessible by AI — what AI wants is access to data. Now you have to have the proper security mechanisms in there, role-based access controls, but then you want to allow it to have access to the data where it sits instead of having to be able to replicate it.”

Pure Storage seems confident it can benefit from that hyperscaler momentum in the short term. Looking to the next quarter, it forecast revenue of $867 million, well ahead of Wall Street’s target of $856.9 million. For the full year, it’s eying sales of $3.15 billion, topping the analyst forecast of $3.13 billion.

“Our third-quarter results exceeded our expectations on revenue and operating income, demonstrating the sustaining strength of our business models,” said Pure Storage Chief Financial Officer Kevan Krysler.