Yahoo Finance Why Is Pure Storage (PSTG) Up 3.1% Since Last Earnings Report?
It has been about a month since the last earnings report for Pure Storage (PSTG). Shares have added about 3.1% in that time frame, underperforming 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 the most recent earnings report in order to get a better handle on the important catalysts.
Pure Storage Q1 Earnings Beat Estimates
Pure Storage reported non-GAAP earnings per share (EPS) of 32 cents in first-quarter fiscal 2024, which beat the Zacks Consensus Estimate by 45.5%. The company reported non-GAAP EPS of 8 cents in the prior-year quarter.
Total revenues surged 18% from the year-ago quarter to $693.5 million and beat the Zacks Consensus Estimate by 1.8%.
The top-line performance was driven by higher sales to new and existing enterprise customers across the data storage platform. Robust demand for FlashBlade solutions, including FlashBlade//E and subscription-based offerings, acted as catalysts amid macroeconomic weakness.
Management reiterated guidance for fiscal 2025. PSTG continues to expect fiscal 2025 revenues to be $3.1 billion, indicating a rise of 10.5% from the year-earlier levels. The company expects strengthening demand trends to drive performance but remains wary of the volatile macroeconomic conditions.
The non-GAAP operating margin is projected at 17%. Total contract value or TCV sales for Evergreen//One & Evergreen//Flex subscription service offerings are forecast at $600 million, implying 50% growth from a year ago.
For second-quarter fiscal 2025, Pure Storage expects revenues to be $755 million, representing an increase of 9.6% from a year ago.
The non-GAAP operating income for the fiscal second quarter is expected at $125 million. The non-GAAP operating margin is expected at 16.6%.
Quarter in Detail
Product revenues (contributing 50.1% to total revenues) amounted to $347.4 million, up 12.4% on a year-over-year basis.
Subscription services revenues (49.9%) of $346.1 million rose 23.5% on a year-over-year basis.
We expected product and subscription services revenues to be $333.6 million and $346.4 million, respectively, for the fiscal first quarter.
Subscription annual recurring revenues (ARR) amounted to nearly $1.45 billion, up 25% 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 $489 million and $204 million, respectively.
Margin Highlights
The non-GAAP gross margin expanded 170 basis points (bps) year over year to 73.9%.
The non-GAAP product gross margin expanded 200 bps year over year to 72.8%. The non-GAAP subscription gross margin was 74.9%, which expanded 120 bps on a year-over-year basis.
Non-GAAP operating expenses, as a percentage of total revenues, were 59.4% compared with 68.9% in the prior year quarter.
Pure Storage reported a non-GAAP operating income of $100.4 million compared with $19.6 million in the year-ago quarter. The non-GAAP operating margin was 14.5% compared with 3.3% in the prior-year quarter.
Balance Sheet & Cash Flow
Pure Storage exited the fiscal first quarter that ended on May 5 with cash, cash equivalents and marketable securities of $1.7 billion, up from $1.5 billion as of Feb 4, 2024.
Cash flow from operations amounted to $221.5 million in the fiscal first quarter compared with $173.3 million in the prior-year quarter. Free cash flow was $172.7 million compared with $121.8 million in the prior-year quarter.
In the fiscal first quarter, the company did not repurchase any shares due to trading restrictions. It has $395 million left under its authorization plan.
Deferred revenues increased 14.7% year over year to $1.6 billion in the quarter under review.
The remaining performance obligations at the end of the fiscal first quarter totaled $2.3 billion, up 27% year over year. The metric represented total committed non-cancelable future revenues.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
The consensus estimate has shifted 21.13% due to these changes.
VGM Scores
At this time, Pure Storage has a great Growth Score of A, a grade with the same score on the momentum front. However, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly 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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Pure Storage, Inc. (PSTG): Free Stock Analysis Report
