Pure Storage, Inc. PSTG will report its fourth-quarter fiscal 2025 results on Feb. 26.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
The Zacks Consensus Estimate for earnings in the to-be-reported quarter is pegged at 43 cents, indicating a decline of 14% from the year-ago reported quarter. The consensus estimate for total revenues is pegged at $869.9 million, implying 10.1% year-over-year growth.
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For the fiscal fourth quarter, Pure Storage expects revenues to be $867 million, implying an increase of 9.7% from the year-ago level.
PSTG delivered a trailing four-quarter earnings surprise of 22.16%, on average, beating estimates on each occasion. In the last reported quarter, the company pulled off an earnings surprise of 16.3%.
What Our Model Predicts for PSTG’s Q4
Our proven model does not conclusively predict 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 chances of an earnings beat. But that is not the case here. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
PSTG has an Earnings ESP of 0.00% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Factors to Focus Ahead of PSTG’s Q4 Earnings
PSTG’s fiscal fourth-quarter performance is likely to have gained from continued sales momentum witnessed for FlashArray//E, Flashblade//E and FlashArray//C solutions, along with robust renewals of Evergreen subscriptions. Increasing uptake of Pure Fusion among enterprise customers is another tailwind.
In the last reported quarter, Subscription services revenues (45.3%) of $376.4 million rose 22%, driven mainly by strong renewals of Evergreen subscriptions. We expect Subscription services revenues to be $399.1 million, up 21.3% year over year in the fiscal fourth quarter.
Also, PSTG deepened its partnership with Kioxia (December 2024), a global leader in NAND Flash technology, to accelerate the development of high-performance, scalable storage solutions amid increasing Flash demand for the hyperscale industry. PSTG’s efforts to penetrate the hyperscaler industry with its Purity-based DirectFlash technology bodes well.
The quick advances in AI technology are opening up several market opportunities for Pure Storage in various market segments. It has announced several critical new platform features aimed at addressing the evolving needs of enterprise customers amid a rapid proliferation of AI.
Pure Storage, Inc. Stock Price, Consensus and EPS Surprise
Pure Storage, Inc. Price, Consensus and EPS Surprise
Pure Storage, Inc. price-consensus-eps-surprise-chart | Pure Storage, Inc. Quote
The launch of Pure Storage GenAI Pod (November 2024) simplifies the deployment of generative AI projects by providing full-stack solutions that reduce the time, cost and expertise required for implementation. It’s useful for organizations looking to harness the potential of generative AI without the usual complexities. It also signed a deal with CoreWeave, providing its storage solutions as a standard option within CoreWeave’s dedicated cloud environment.
Backed by a rise in Evergreen//One opportunities valued at under $5 million and transitioning to traditional sales, management has tweaked its revenue forecast for fiscal 2025. It expects $3.15 billion in revenues, indicating 11.5% growth year over year, outpacing the prior estimate of $3.1 billion with 10.5% growth. However, this dynamic shift has affected Evergreen//One TCV’s sales outlook. Management has not updated its TCV sales guidance for 2025.
PSTG expects a modest sequential decline in product gross margin in the fiscal fourth quarter due to the strong growth of //E family and FlashArray //C solutions.
Stiff competition and muted IT spend remain concerns. Customers continue to face challenges with rising costs in software, SaaS and cloud services, along with uncertainty around AI spending, all of which are putting unexpected strain on operating budgets.
PSTG Stock Soars
PSTG shares have jumped 31.7% in the past three months. It has significantly outpaced the 24.3% growth of its Computer Storage Devices Industry and the S&P 500 composite’s gain of 3.6%.
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The increase is also better than some of its notable peers in the same space. NetApp NTAP, Netlist NLST and Teradata Corporation TDC have registered declines of 1.7%, 33.2% and 19.7%, respectively, in the same time frame.
PSTG’s Investment Considerations
PSTG’s strategic efforts to gain market share in the hyperscale and AI sector and its subscription-focused model bode well. Combined with its strong financial position, robust customer base, and positive outlook, Pure Storage presents a compelling investment case.
However, the overall macroeconomic environment remains a concern as customers wrestle with rising costs in software, SaaS, and cloud services, along with uncertainty around AI spending. This slow pace in IT spending could prove a drag on top line performance.
Margin compression due to higher sales of Flash solutions, along with intensifying competition in the space, are additional headwinds.
For now, holding PSTG stock remains the most prudent strategy. This allows investors to benefit from its growth prospects while navigating external risks.
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PSTG stock is trading at a premium, with a forward 12-month Price/Earnings of 35.12X compared with the industry’s 18.53X.
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