Pure Storage Q2 Earnings & Sales Top, Stock Rallies on Upbeat Forecast

Pure Storage (PSTG) reported second-quarter fiscal 2026 non-GAAP earnings per share (EPS) of 43 cents, which beat the Zacks Consensus Estimate by 10.3%. The company had posted non-GAAP EPS of 44 cents in the prior-year quarter.Quarterly revenues grew 13% from the prior-year quarter to $861 million, surpassing the Zacks Consensus Estimate by 1.8% and management’s guidance of $845 million. Growth was broad-based across the portfolio, driven by strong demand from large enterprises, ongoing momentum in FlashBlade, particularly FlashBlade//E, and accelerating adoption of its core software and services offerings, including Evergreen//One, Cloud Block Store and Portworx.Pure Storage, Inc. Price, Consensus and EPS Surprise Pure Storage, Inc. price-consensus-eps-surprise-chart | Pure Storage, Inc. QuotePSTG has issued a range for financial guidance, moving away from the single-point targets of prior quarters. This approach, consistent with industry peers, provides greater flexibility to pursue incremental investments and transformational growth opportunities as it advances its strategy. For fiscal 2026, it now expects revenues in the range of $3.6 billion to $3.63 billion, suggesting 14% year-over-year growth at the midpoint—300 basis points (bps) higher than the previously guided 11% growth to $3.515 billion.Non-GAAP operating income is now forecasted between $605 million and $625 million, implying about 10% year-over-year growth at the midpoint—more than 300 bps higher than its prior guidance of $595 million.In response to a strong quarter and guidance, shares of PSTG jumped 15% in the pre-market trading today. In the past year, shares have gained 21% compared with the Zacks Computer-Storage Devices industry’s growth of 7.1%.Image Source: Zacks Investment ResearchPSTG’s Quarter in DetailProduct revenues (contributing 51.8% to total revenues) amounted to $446.3 million, up 10.6% on a year-over-year basis. Subscription services revenues (48.2%) of $414.7 million rose 14.8%.We expected Product and subscription revenues to be $446.7 million and $398.3 million, respectively, for the fiscal second quarter.Subscription annual recurring revenues (ARR) amounted to nearly $1.8 billion, up 18% 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 International were $577 million and $284 million, up 7% and 26%, respectively.Margin HighlightsThe non-GAAP gross margin came in at 72.1% compared with 72.8% in the prior-year quarter.The non-GAAP product gross margin was 68%, in line with its long-term target range of 65% to 70%, but down from 69.5% in the prior-year quarter. The non-GAAP subscription services gross margin was 76.5% compared with 76.4% a year ago.Pure Storage reported a non-GAAP operating income of $130 million compared with $138.6 million in the year-ago quarter, exceeding the outlook of $125 million.The non-GAAP operating margin was 15.1% compared with 18.1% in the prior-year quarter. The metric was projected at 14.8%.Balance Sheet & Cash FlowPure Storage exited the fiscal second quarter that ended on Aug. 3 with cash, cash equivalents and marketable securities of $1.5 billion compared with $1.6 billion as of May 4, 2025.Cash flow from operations amounted to $212.2 million in the reported quarter compared with $226.6 million reported in the prior-year quarter. Free cash flow was $150.1 million compared with $166.6 million in the year-ago quarter.In the fiscal second quarter, the company returned $42 million to shareholders by repurchasing 0.8 million shares. It has $109 million left under its current authorization plan.The remaining performance obligations at the end of the fiscal second quarter totaled $2.8 billion, up 22% year over year.Fiscal Q3 GuidancePure Storage expects revenues in $950-$960 million band, implying an increase of 15% at the midpoint from the year-ago level. The Zacks Consensus Estimate is pegged at $913.4 million, up 9.9% year over year.The non-GAAP operating income is expected to be $185-$195 million, with around 14% year-over-year growth at midpoint.PSTG’s Zacks RankPure Storage currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1(Strong Buy) Rank stocks hereRecent Performance of Other CompaniesSeagate Technology Holdings plc (STX) reported fourth-quarter fiscal 2025 non-GAAP earnings of $2.59 per share, beating the Zacks Consensus Estimate by 5.3%. The bottom line was in the upper end of STX’s guidance of $2.4 per share (+/- 20 cents), reflecting the outcome of structural improvements and strong cloud-driven demand. The company reported non-GAAP earnings of $1.05 per share in the year-ago quarter.Western Digital Corporation (WDC) reported fourth-quarter fiscal 2025 non-GAAP earnings of $1.66 per share, which surpassed the Zacks Consensus Estimate by 12.2%. The company reported earnings of $1.44 per share in the prior-year quarter. Management anticipated fiscal fourth-quarter non-GAAP earnings per share to be $1.45 (+/- 20 cents).Super Micro Computer (SMCI) reported fourth-quarter fiscal 2025 non-GAAP earnings of 41 cents per share, which missed the Zacks Consensus Estimate by 6.8%. The bottom line declined 34.9% on a year-over-year basis. For first-quarter fiscal 2026, SMCI’s non-GAAP earnings are expected in the range of 40-52 cents per share.Quantum Computing Stocks Set To SoarArtificial intelligence has already reshaped the investment landscape, and its convergence with quantum computing could lead to the most significant wealth-building opportunities of our time.Today, you have a chance to position your portfolio at the forefront of this technological revolution. In our urgent special report, Beyond AI: The Quantum Leap in Computing Power, you'll discover the little-known stocks we believe will win the quantum computing race and deliver massive gains to early investors.Access the Report Free Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Western Digital Corporation (WDC): Free Stock Analysis Report Seagate Technology Holdings PLC (STX): Free Stock Analysis Report Super Micro Computer, Inc. (SMCI): Free Stock Analysis Report Pure Storage, Inc. (PSTG): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks