Pure Storage PSTG reported third-quarter fiscal 2025 non-GAAP earnings per share (EPS) of 50 cents, which beat the Zacks Consensus Estimate by 16.3%. The company reported non-GAAP EPS of 50 cents in the prior-year quarter.

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Quarterly revenues jumped 9% from the year-ago quarter to $831.1 million, beating the Zacks Consensus Estimate by 2%. The top line outperformed management’s guidance owing to higher demand for FlashArray//E, Flashblade//E and FlashArray//C solutions that empower users to transition their cost-sensitive workloads to all-flash storage. Strong growth in renewals of Evergreen subscriptions further fueled the expansion. 

One of the major highlights for Pure Storage in the quarter is a transformational design win for its DirectFlash technology with a top-four hyperscaler. This milestone allows PSTG to become the standard for hyperscaler online storage, offering top performance, scalability, lower costs and reduced power use. It also deepened its partnership with Kioxia, a global leader in NAND Flash technology, to accelerate the development of high-performance, scalable storage solutions for the future.

Pure Storage, Inc. Price, Consensus and EPS Surprise

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

Driven by a surge in Evergreen//One opportunities valued at under $5 million, transitioning to traditional sales, management has raised its revenue forecast for fiscal 2025. PSTG now expects revenues of $3.15 billion, indicating a rise of 11.5% from the year-earlier level compared with the prior guidance of $3.1 billion with 10.5% growth. 

The company also increased non-GAAP operating income guidance to $540 million from $532 million projected earlier. It continues to estimate a non-GAAP operating margin of 17%.

Following the better-than-anticipated results and raised guidance, shares of PSTG jumped 23.7% in the pre-market trading on Nov. 4. In the past year, shares have gained 64.3% compared with the sub-industry’s growth of 42.8%.

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PSTG’s Quarter in Detail

Product revenues (contributing 54.7% to total revenues) amounted to $454.7 million, up 0.3% on a year-over-year basis. Subscription services revenues (45.3%) of $376.4 million rose 22%.
 
We expected Product and subscription revenues to be $449.4 million and $365.5 million, respectively, for the fiscal third quarter.

Subscription annual recurring revenues (ARR) amounted to nearly $1.6 billion, up 22% 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 internationally were $562 million and $269 million, respectively.

Margin Highlights

The non-GAAP gross margin came in at 71.9% compared with 74% in the prior-year quarter.

The non-GAAP product gross margin was 67.4%, down from 73.1% in the prior year. The non-GAAP subscription gross margin was 77.4% compared with 75.4% a year ago.

Non-GAAP operating expenses, as a percentage of total revenues, were 51.8% compared with 51.9% reported in the prior-year quarter.

Pure Storage reported a non-GAAP operating income of $167.3 million compared with $169.1 million in the year-ago quarter. The non-GAAP operating margin was 20.1% compared with 22.2% in the prior-year quarter.

Balance Sheet & Cash Flow

Pure Storage exited the fiscal third quarter, which ended on Nov. 3, with cash and cash equivalents and marketable securities of $1.6 billion, down from $1.8 billion as of Aug. 4, 2023.

Cash flow from operations amounted to $97 million in the fiscal third quarter compared with $158.4 million reported in the prior-year quarter. Free cash flow was $35.2 million compared with $113.4 million in the year-ago quarter.

In the fiscal third quarter, the company returned $182 million to shareholders by repurchasing 3.6 million shares. It has nearly $213 million left under its authorization plan.

The remaining performance obligations at the end of the fiscal third quarter totaled $2.4 billion, up 16% year over year.

Fiscal Q4 Guidance

Pure Storage expects revenues to be $867 million, implying an increase of 9.7% from a year ago level. The Zacks Consensus Estimate is pegged at $856.15 million, up 8.4% year over year.

The non-GAAP operating income is expected to be $135 million. The non-GAAP operating margin is projected to be 15.6%.

PSTG’s Zacks Rank

Pure Storage currently has a Zacks Rank #3 (Hold). You can see  the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Companies

NetApp, Inc. NTAP reported second-quarter fiscal 2025 non-GAAP earnings of $1.87 per share, which beat the Zacks Consensus Estimate by 4.5% and jumped 18.4% year over year. The bottom line also surpassed the company’s guided range of $1.73-$1.83.

Shares of NTAP gained 37.4% in the past year.

Western Digital Corporation WDC reported first-quarter fiscal 2025 non-GAAP earnings of $1.78 per share, surpassing the Zacks Consensus Estimate by 2.3%. The company incurred a loss of $1.76 per share in the prior-year quarter.

Shares of WDC surged 53.3% in the past year. 

Woodward, Inc. WWD reported fourth-quarter fiscal 2024 adjusted net earnings per share of $1.41, which jumped 6% year over year and beat the Zacks Consensus Estimate by 15.6%.

Shares of WWD have gained 33% in the past year. 

 

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