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Pure Storage (PSTG)
NYSE:PSTG
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Pure Storage
(NYSE:PSTG)70Outperform
Positive Factors
Design Win and Market Position
Meta's confirmation as Pure's first hyperscale design win validates the increasing role of NAND in the datacenter, which Pure is well-positioned to address.
Revenue and Financial Performance
The company reported Q4’25 revenue of $880M, above consensus of $869M, driven by strong growth of Pure’s Flashblade, FlashArray//XL, Portworx, //E family, and renewals of Evergreen subscriptions.
Negative Factors
Product Gross Margins
Pure shares traded down 8% after market as softness in product gross margins overshadowed better than expected revenues and operating income.
Pure Storage (PSTG) vs. S&P 500 (SPY)
Market Cap
$17.03B
Dividend YieldN/A
Average Volume (3M)2.86M
Price to Earnings (P/E)161.9
Beta (1Y)1.94
Revenue Growth11.92%
EPS Growth74.08%
CountryUS
Employees5,600
SectorTechnology
Sector Strength48
IndustryHardware & Equipment
Share Statistics
EPS (TTM)0.30
Shares Outstanding326,236,970
10 Day Avg. Volume4,300,088
30 Day Avg. Volume2,862,403
Financial Highlights & Ratios
PEG Ratio2.19
Price to Book (P/B)N/A
Price to Sales (P/S)5.53
Price to Cash Flow (P/CF)43.90
P/FCF Ratio120.90
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$71.81Price Target Upside46.79% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering17
Pure Storage Business Overview & Revenue Model
Company DescriptionPure Storage, Inc. is a technology company that specializes in providing innovative data storage solutions. The company operates in the enterprise storage sector and offers flash-based storage systems designed to enhance the performance and efficiency of data management for businesses. Its core products include the FlashArray and FlashBlade systems, which are designed to deliver speed, agility, and scalability for a wide range of applications and workloads.
How the Company Makes MoneyPure Storage makes money primarily by selling its flash storage hardware and software solutions to customers across various industries. The company's revenue model is based on a combination of product sales and subscription services. Product sales include its high-performance storage systems, while its subscription services encompass software and support offerings, such as the Evergreen Storage program, which provides customers with continuous updates and upgrades. Additionally, Pure Storage has strategic partnerships with major cloud service providers and technology companies, which help expand its market reach and contribute to its earnings. These partnerships often involve joint solutions and integrations that enhance the value proposition for enterprise customers.
Pure Storage Financial Statement Overview
Summary
Pure Storage exhibits robust financial health with strong revenue growth, improved profitability, low leverage, and excellent cash flow generation. While balance sheet equity levels are slightly lower, the overall financial position is stable with significant positive trends in income and cash flow.Income Statement
The income statement of Pure Storage shows strong growth and improving profitability. Gross profit margin stands at approximately 70.3% for TTM, reflecting efficient cost management. Net profit margin improved significantly to 4.35% from previous losses, indicating a positive trend in net income. Revenue grew by 39.9% over the past year, showcasing robust business expansion. EBIT and EBITDA margins are at 4.43% and 8.21% respectively, showing stable operating performance with room for improvement.85
Very Positive
Balance Sheet
The balance sheet of Pure Storage is solid, with a debt-to-equity ratio of 0.21, indicating low leverage and financial stability. The return on equity (ROE) is at 13.18% for TTM, showing effective use of equity to generate profits. The equity ratio is 32.96%, suggesting a balanced capital structure. However, the relatively low equity percentage might limit financial flexibility in adverse conditions.78
Positive
Cash Flow
Cash flow analysis reveals strong liquidity and cash generation capabilities. The free cash flow grew by 50.77% year-over-year, highlighting effective cash management strategies. The operating cash flow to net income ratio is 5.79, indicating strong cash flow generation relative to reported profits. The free cash flow to net income ratio is 4.23, showing efficient conversion of profits into cash.88
Very Positive
| Breakdown | |||||
| TTM | Mar 2024 | Mar 2023 | Mar 2022 | Mar 2021 | Mar 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 3.96B | 2.83B | 2.75B | 2.18B | 1.68B | 1.64B | Gross Profit |
| 2.78B | 2.02B | 1.90B | 1.47B | 1.15B | 1.13B | EBIT |
| 175.39M | 53.55M | 83.51M | -98.40M | -230.03M | -191.28M | EBITDA |
| 325.06M | 222.49M | 183.94M | -8.67M | -168.72M | -77.06M | Net Income Common Stockholders |
| 172.18M | 61.31M | 73.07M | -143.26M | -282.08M | -200.99M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 1.52B | 1.53B | 1.58B | 1.41B | 1.25B | 1.30B | Total Assets |
| 3.96B | 3.66B | 3.55B | 3.14B | 2.82B | 2.36B | Total Debt |
| 280.77M | 272.25M | 750.69M | 915.36M | 908.41M | 597.25M | Net Debt |
| -442.82M | -430.28M | 169.83M | 449.16M | 571.26M | 234.61M | Total Liabilities |
| 2.66B | 2.39B | 2.60B | 2.38B | 2.07B | 1.53B | Stockholders Equity |
| 1.31B | 1.27B | 941.23M | 754.34M | 750.01M | 830.12M |
| Cash Flow | Free Cash Flow | ||||
| 727.23M | 482.56M | 609.10M | 307.84M | 92.67M | 92.73M | Operating Cash Flow |
| 997.52M | 677.72M | 767.23M | 410.13M | 187.64M | 189.57M | Investing Cash Flow |
| -259.53M | 3.25M | -221.41M | -153.28M | -418.11M | -324.71M | Financing Cash Flow |
| -539.39M | -560.24M | -431.17M | -127.79M | 200.24M | 49.25M |
Pure Storage Technical Analysis
Negative
48.92
Price Trends
64.45
Negative
59.84
Negative
59.01
Negative
Market Momentum
-4.37
Positive
26.64
Positive
13.20
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PSTG, the sentiment is Negative. The current price of 48.92 is below the 20-day moving average (MA) of 62.16, below the 50-day MA of 64.45, and below the 200-day MA of 59.01, indicating a bearish trend. The MACD of -4.37 indicates Positive momentum. The RSI at 26.64 is Positive, neither overbought nor oversold. The STOCH value of 13.20 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for PSTG.
Pure Storage Risk Analysis
Pure Storage disclosed 48 risk factors in its most recent earnings report. Pure Storage reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Pure Storage Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
72 Outperform | $24.81B | 9.89 | 11.21% | 2.75% | 3.30% | 25.00% | |
71 Outperform | $19.30B | 17.56 | 114.33% | 2.17% | 5.46% | 23.49% | |
70 Outperform | $17.03B | 161.88 | 8.29% | ― | 11.92% | 74.08% | |
68 Neutral | $19.57B | 16.92 | -109.27% | 3.05% | 24.17% | ― | |
68 Neutral | $15.37B | 9.89 | 13.99% | ― | 38.59% | ― | |
67 Neutral | $233.07B | 39.11 | 24.14% | 2.66% | 1.45% | -20.56% | |
59 Neutral | $22.39B | 11.53 | -18.05% | 2.31% | 5.00% | -25.89% |
* Technology Sector Average
Performance Comparison
PSTG
Pure Storage
48.92
-6.43
-11.62%
IBM
International Business Machines
248.69
59.12
31.19%
NTAP
NetApp
91.86
-9.61
-9.47%
STX
Seagate Tech
86.64
-3.41
-3.79%
WDC
Western Digital
41.45
-6.15
-12.92%
HPE
Hewlett Packard Enterprise
17.96
0.44
2.51%
Pure Storage Earnings Call Summary
Earnings Call Date: Feb 26, 2025 | % Change Since: -21.65% | Next Earnings Date: May 28, 2025
Earnings Call Sentiment Neutral
The earnings call presented a balanced view with significant achievements in revenue growth, technological advancements, and strategic wins. However, these were offset by challenges in gross margins due to NAND price increases, a decline in Evergreen//One sales, and geopolitical uncertainties. The sentiment reflects a cautious optimism with an acknowledgment of existing challenges.Highlights
Record Revenue and Growth
Pure Storage surpassed $3 billion in total revenue for the first time, achieving $3.2 billion, representing a 12% growth year-over-year.
Evergreen//One TCV Sales Record
Quarterly TCV sales of Evergreen//One reached a record $140 million, marking a 20% increase.
Technological Advancements
The launch of Fusion v.2 has been positively received by customers, transforming enterprise data storage architectures into enterprise data clouds.
Hyperscale Design Win
Secured a design win with a top four hyperscaler, progressing well in testing and deployment plans.
Innovation in Product Offerings
Launched a 150 terabyte DirectFlash module and expanded the E family, addressing the increase in unstructured data driven by AI.
Lowlights
Impact of NAND Price Increase
Rising NAND prices negatively affected gross margins, particularly for the E family, which competes against disk-based solutions.
Challenges in Evergreen//One Sales
FY '25 TCV sales for Evergreen//One and other service offerings saw a 3% decline due to extended timelines needed to close large deals and higher conversion to traditional sales.
International Revenue Decline
International revenue decreased by 3% year-over-year in Q4, contrasting with U.S. growth.
Supply Chain and Geopolitical Risks
Geopolitical uncertainty and potential tariffs pose risks to the supply chain and overall business environment.
Company Guidance
During the Pure Storage Fourth Quarter and Full Year Fiscal 2025 Financial Results Conference Call, the company exceeded its revenue and earnings guidance, achieving a total revenue of $3.2 billion, marking a 12% increase from the previous year. The company also reported a record operating profit of $559 million, with a Q4 operating profit of $153 million and an operating margin of 17.4%. Pure Storage's subscription services revenue grew by 17% to $385 million, with annual recurring revenue reaching $1.7 billion, a 21% increase. The total remaining performance obligations (RPO) grew by 14% to $2.6 billion, with subscription services-related RPO increasing by 15%. The company acquired 334 new customers, maintaining service to 62% of the Fortune 500. Looking ahead, Pure Storage expects an 11% revenue growth for FY 2026, with a revenue target of over $3.5 billion and an operating profit of approximately $595 million, maintaining a 17% operating margin. The company plans to continue investments in expanding their DirectFlash modules and scaling operations for large production deployments, particularly in light of their recent hyperscale design win.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.