Pure Storage Stock Rallies as Earnings Top Estimates
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Pure Storage, a provider of flash memory-based enterprise storage products, beat quarterly earnings estimates.
Courtesy of Pure Storage
Pure Storage
shares are trading sharply higher Thursday after the provider of flash-memory- based enterprise storage products posted better-than-expected results for its fiscal second quarter ended Aug. 1.
For the quarter, Pure (ticker: PSTG) reported revenue of $496.8 million, up 23% from a year ago, and well ahead of both the company’s forecast of $470 million and the Street consensus at $469.5 million. The company had a non-GAAP profit in the quarter of 14 cents a share, ahead of consensus at 5 cents. Under generally accepted accounting principles, the company lost 16 cents a share.
Subscription revenue was $171.9 million, up 31% from a year ago. Operating cash flow improved to $123.4 million, from $95.7 million a year ago. Remaining performance obligations rose 25%, to $1.2 billion.
“It’s clear that our long-term strategy to provide customers with modern data services is working,” Pure CEO Charles Giancarlo said in a statement. “We are in a great innovation cycle with our portfolio and our sales momentum and execution have never been stronger.”
For the fiscal third quarter, Pure sees revenue of $530 million, well ahead of the old consensus at $495 million, with non-GAAP operating income of $40 million. For the January 2022 fiscal year, the company sees revenue of $2.04 billion, above consensus at $1.97 billion, with $150 million in non-GAAP operating income.
In an interview with Barron’s, Giancarlo said it was “an incredible quarter, one of the best ever clocked at the company.” He noted “strong contributions from all new products,” and 35% of overall revenue from the company’s expanding subscription business. Giancarlo says the company has benefitted from an expansion of enterprise IOT spending.
“Customers are just becoming more accustomed to operating in a Covid environment,” he said. While he notes that the Delta variant could slow things a little in the near-term, he expects the impact will be temporary.
Giancarlo says the company has not been meaningfully hampered by component shortages, though he agrees that “the supply chain is now more challenging to manage.”
On the news that
Western Digital
(WDC) is in talks to acquire Kioxia, a Japanese company that operates a large flash memory manufacturing business in a joint venture with Western, Giancarlo says he’s not worried about a narrowing of the market. He notes that Pure is “a very close partner of Kioxia, an important supplier to us.” But he doesn’t think the situation would change were the company to be acquired by
Western Digital.
In late trading,
Pure Storage
is up 9.6%, to $22.97.
Write to Eric J. Savitz at eric.savitz@barrons.com
