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01/10 19:45
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary shows strong revenue and subscription growth, robust free cash flow, and high-margin opportunities with Meta. The Q&A section reinforces confidence with improved macroeconomic conditions, better pipeline visibility, and strong demand for large deals. The Nutanix partnership and Fusion 2.0 introduction are additional positives. Despite some lack of detail in responses about hyperscaler engagements, the overall sentiment remains positive due to strong financial metrics and optimistic guidance.
Revenue $861 million, grew 13% year-over-year. Reasons for growth include broad-based strength across the portfolio, led by large enterprises, and momentum in FlashBlade, Evergreen//One, Cloud Block Store, and Portworx.
Operating Profit $130 million, resulting in an operating margin of 15.1%. This was positively impacted by revenue strength and healthy gross margins.
Subscription Services Revenue $414.7 million, up 15% year-over-year, accounting for 48% of total revenue. Growth driven by robust renewals and new Evergreen//One commitments.
Annual Recurring Revenue (ARR) $1.8 billion, grew 18% year-over-year. Growth attributed to strong customer adoption of subscription services.
Remaining Performance Obligations (RPO) $2.8 billion, grew 22% year-over-year. Reflects robust renewals and new commitments for Evergreen//One and other subscription services.
U.S. Revenue $577 million, grew 7% year-over-year. Growth attributed to strong customer adoption and portfolio performance.
International Revenue $284 million, grew 26% year-over-year. Growth attributed to strong customer adoption and portfolio performance.
Total Gross Margin 72.1%, reflecting healthy subscription services gross margin of 76.5% and product gross margin of 68%.
Operating Cash Flow $212 million. Growth supported by strong revenue and subscription growth.
Free Cash Flow $150 million, with a free cash flow margin on revenue of 17.4%. Growth supported by strong revenue and subscription growth.
Enterprise Data Cloud (EDC): Introduced as an industry-changing architecture, enabling organizations to manage data as a strategic asset. Enhanced with Fusion V2, it automates storage and enables software-defined data management.
FlashArray//XL R5: New high-performance product consolidating diverse applications onto a single platform, delivering significant performance gains and reducing infrastructure needs by over 70%.
FlashBlade//EXA: Targeted for high-performance AI training environments, announced general availability.
Cloud Block Store: Provides enterprise-class storage services at lower costs, delivering at least 40% cost savings for a multinational food products company.
Hyperscale Engagements: Strategic co-engineering with Meta has started volume deployment, with revenue recognized in Q2. Other hyperscalers are showing increased interest in replacing hard disk and SSD-based environments with Pure's DirectFlash technology.
Geographic Revenue Growth: U.S. revenue grew 7% to $577 million, while international revenue grew 26% to $284 million.
Subscription Services: Revenue reached $414.7 million, up 15% year-over-year, accounting for 48% of total revenue. ARR grew 18% to $1.8 billion.
Operating Profit: Achieved $130 million in Q2, with an operating margin of 15.1%.
Modern Virtualization: A leading financial institution is modernizing its application environment with Pure's platform, reducing infrastructure needs by over 70% and enabling a fully automated, software-defined data environment.
Partnerships: Collaborations with global IT consultancies and system integrators to support cloud migrations and modern IT strategies.
Market Conditions: The global macro environment remains variable and uncertain, which could impact the company's ability to maintain its growth trajectory and financial performance.
Competitive Pressures: The company faces competitive pressures from other hyperscalers and storage providers, which could impact its market share and pricing strategies.
Regulatory Hurdles: No explicit mention of regulatory hurdles was made in the transcript.
Supply Chain Disruptions: No explicit mention of supply chain disruptions was made in the transcript.
Economic Uncertainties: Economic uncertainties could affect customer spending and investment in the company's products and services.
Strategic Execution Risks: The company is undergoing significant strategic initiatives, such as transitioning customers to modern virtualization and cloud-native architectures. Failure to execute these initiatives effectively could impact customer satisfaction and long-term growth.
Revenue Guidance for Fiscal Year 2026: Revenue is anticipated to be in the range of $3.6 billion to $3.63 billion, representing 14% year-over-year growth at the midpoint. This is a 300 basis point increase from the previously provided revenue guidance of 11% year-over-year growth.
Operating Profit Guidance for Fiscal Year 2026: Operating profit is expected to be in the range of $605 million to $625 million, representing approximately a 10% year-over-year increase at the midpoint. This is over a 300 basis points increase from the previously provided operating profit guidance.
Revenue Guidance for Q3 Fiscal Year 2026: Revenue is expected to be in the range of $950 million to $960 million, representing approximately a 15% year-over-year increase at the midpoint.
Operating Profit Guidance for Q3 Fiscal Year 2026: Operating profit is expected to be in the range of $185 million to $195 million, representing approximately a 14% year-over-year increase at the midpoint.
Hyperscale Deployments: The company expects to deploy 1 to 2 exabytes of DirectFlash technology with Meta by fiscal year-end, with potential for exceeding this range. Early-stage engagements with other hyperscalers are progressing well.
Subscription Services Growth: Subscription services revenue grew 15% year-over-year to $414.7 million in Q2, with ARR growing 18% to $1.8 billion. Total remaining performance obligations grew 22% to $2.8 billion, reflecting robust renewals and new commitments.
Shareholder Return: In Q2, Pure Storage returned $42 million to shareholders through 0.8 million share repurchases and offset 1.1 million shares in employee award withholding taxes. The company currently has $109 million of buyback authorization remaining.
Share Repurchase: Pure Storage repurchased 0.8 million shares, returning $42 million to shareholders in Q2. Additionally, $109 million of buyback authorization remains.
The earnings call summary shows strong revenue and operating profit guidance, significant subscription services growth, and positive feedback on new product offerings. The Q&A section highlights strategic engagements with hyperscalers and potential growth in high-margin areas. Despite some uncertainties, the overall sentiment is positive, with increased guidance and optimistic future growth prospects.
The earnings call summary shows strong revenue and subscription growth, robust free cash flow, and high-margin opportunities with Meta. The Q&A section reinforces confidence with improved macroeconomic conditions, better pipeline visibility, and strong demand for large deals. The Nutanix partnership and Fusion 2.0 introduction are additional positives. Despite some lack of detail in responses about hyperscaler engagements, the overall sentiment remains positive due to strong financial metrics and optimistic guidance.
The earnings call reflects strong financial performance with revenue and EPS growth, robust subscription services, and significant shareholder returns through buybacks. The guidance is optimistic, predicting double-digit revenue growth and a solid operating margin. Despite supply chain challenges and macroeconomic uncertainties, the Q&A section reveals steady progress with hyperscalers and no significant changes in customer sentiment. The company’s strong cash position and ongoing strategic initiatives, such as new product launches and market expansion, further support a positive outlook for the stock price over the next two weeks.
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