Pure Storage, Inc PSTG is scheduled to report third-quarter fiscal 2025 earnings on Dec. 3, after the closing bell.

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PSTG expects revenues to be $815 million for the quarter, implying an increase of 6.8% from the year-ago figure. The Zacks Consensus Estimate is pegged at $814.8 million, indicating an improvement of 6.8% from the prior-year level.

The Zacks Consensus Estimate for earnings is pegged at 43 cents per share, suggesting a decline of 14% from the prior-year level.

PSTG beat on earnings in each of the trailing four quarters, with the average surprise being 23.6%.

Factors at Play

Heightened customer demand, particularly for the FlashBlade portfolio, including the FlashBlade//E solution, is likely to have contributed to Pure Storage's revenue growth in the fiscal third quarter. FlashBlade//E is an unstructured data repository solution for large-capacity data stores. Customers can access this solution via a new service tier offered through PSTG's Evergreen//One Storage-as-a-Service subscription.

Subscription services, which accounted for 47.3% of total revenues in the previous quarter, are expected to continue driving growth. Our estimate for subscription services revenues is pegged at $365.5 million for the fiscal third quarter. The company’s ongoing investments in expanding its Evergreen portfolio are also noteworthy. Evergreen//One as-a-service business remained strong, showing significant pipeline growth and consistent success in capitalizing on opportunities valued at $5 million or less.

Another positive factor for Pure Storage is the growing demand for flash storage solutions driven by the rise of generative AI (artificial intelligence). Pure's FlashBlade and Portworx products are particularly well-positioned to benefit from these trends, as companies increasingly rely on high-performance storage to support AI workloads and large-scale data management.

Increased sales to new and existing enterprise customers across the data storage platform is a major driving force. At the end of the last reported quarter, the company’s customer count was more than 13,000, including 62% of the Fortune 500 companies.

Pure Storage, Inc. Price and EPS Surprise

Pure Storage, Inc. price-eps-surprise | Pure Storage, Inc. Quote

Elongated deal closure timeline for larger Evergreen//One deals is likely to affect the Total contract value (TCV) performance in the to-be-reported quarter. In the first half of 2024, it closed only three such deals compared to several in the same period last year. These delays are pushing deals into later quarters, leading the company to lower its forecast for Evergreen//One and Evergreen//Flex for fiscal 2025.  TCV sales for these services are expected to reach $500 million, indicating 25% year-over-year growth, down from the earlier estimate of $600 million, which implied 50% growth.

Management remains wary about the uncertain macroeconomic environment, while competitive pressures in the flash-based storage market pose additional headwinds.

Key Developments

In November, Pure Storage made a strategic investment in CoreWeave, an AI hyperscaler, to drive advancements in AI cloud services. The two companies have formed a partnership, allowing customers to utilize Pure Storage's platform as part of the CoreWeave Cloud infrastructure. PSTG’s alliance with CoreWeave is poised to fuel powerful AI performance, supporting large-scale deployments and driving innovation.

In addition, Pure Storage introduced the GenAI Pod, a full-stack solution to simplify and speed up generative AI projects. It also announced the FlashBlade//S500 certification with NVIDIA DGX SuperPOD, enabling faster AI deployments with Ethernet compatibility.

What Our Model Says

Our proven model predicts an earnings beat for PSTG this time around. The combination of a positive Earnings ESP  and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is exactly the case here.

Earnings ESP: PSTG has an Earnings ESP of +2.98%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: PSTG currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Stocks With Favorable Combination

Here are some other stocks you may consider, as our model shows that these have the right combination of elements to beat on earnings this season.

Hewlett Packard HPE currently has an Earnings ESP of +1.51% and a Zacks Rank #3. HPE is set to report its fourth-quarter 2024 results on Dec. 5.

The Zacks Consensus Estimate for HPE’s to-be-reported quarter’s earnings and revenues is pegged at 55 cents per share and $8.23 billion, respectively. Hewlett-Packard shares have gained 23% in the past year. 

Rubrik RBRK has an Earnings ESP of +0.42% and carries a Zacks Rank #2 at present. It is set to report third-quarter results on Dec. 5.

The Zacks Consensus Estimate for RBRK’s to-be-reported quarter’s bottom line and top line is pegged at a loss of 40 cents and $217.6 million, respectively. RBRK shares have risen 34.2% in the past year. 

Casey's General Stores, Inc. CASY has an Earnings ESP of +1.50% and a Zacks Rank #3 at present. CASY is scheduled to report quarterly figures on Dec. 9.  

The Zacks Consensus Estimate for CASY’s to-be-reported quarter’s earnings and revenues is pegged at $4.24 per share and $4.01 billion, respectively. Shares of CASY have surged 52.9% in the past year.

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