PSTG Surpasses Q4 Earnings and Revenue Expectations, Begins FY27 With Strong Hyperscale Growth

Pure Storage Surpasses Q4 Earnings Expectations and Announces Rebranding

Pure Storage (NYSE: PSTG) delivered adjusted earnings per share of $0.69 for the fourth quarter of fiscal 2026, exceeding analyst forecasts of $0.65. This result represents a significant increase from the $0.45 per share reported in the same period last year.

Beginning March 5, 2026, the company will be known as Everpure on the New York Stock Exchange, continuing to trade under the PSTG ticker symbol.

Record-Breaking Revenue and Business Growth

Quarterly revenue climbed 20% year-over-year to reach $1.1 billion, outpacing consensus estimates by 2.5% and marking the company’s first billion-dollar quarter. For the full fiscal year, revenue totaled $3.7 billion, a 16% increase from the previous year. This robust growth was fueled by strong enterprise demand, modernization of legacy storage systems, expansion of AI workloads by hyperscalers, and adoption of hybrid and multi-cloud solutions. The company’s Enterprise Data Cloud (EDC) architecture is seeing rapid adoption, with over 600 customers implementing Fusion in its inaugural year.

Strategic Partnerships and Acquisitions

Everpure has enhanced its position in the hyperscale market through a collaboration with SK hynix, delivering advanced QLC flash storage tailored for large-scale data centers. This partnership supports Everpure’s expansion into major deployments. Additionally, the company has entered into an agreement to acquire 1touch, broadening its EDC capabilities to include data discovery, classification, contextualization, and enrichment. This move strengthens Everpure’s role in data governance, which is increasingly important for AI compliance and enterprise security. The acquisition is expected to close in the second quarter of fiscal 2027, pending customary approvals.

Pure Storage, Inc. Price, Consensus, and EPS Surprise

Market Performance and Industry Comparison

Despite ongoing challenges such as supply chain disruptions, fluctuating AI infrastructure investments, competition from hyperscaler-native storage, and pricing pressures in large deals, Pure Storage has maintained strong gross margins, indicating continued pricing strength.

Following the impressive quarterly results, PSTG shares rose 8.6% to close at $73.56 on February 25, with an additional 6% gain in pre-market trading. Over the past year, the stock has advanced 17.8%, while the broader Computer-Storage Devices industry surged 146.4%.

Image Source: Zacks Investment Research

Quarterly Segment Highlights

• Product Revenue: $618 million (58.4% of total), up 25% year-over-year. This segment now includes royalties from hyperscale shipments and a portion of Portworx software sales.
• Subscription Services: $440 million (41.6% of total), a 14% increase from the prior year.
• Annual Recurring Revenue (ARR): Nearly $1.9 billion, up 16% year-over-year. Storage-as-a-Service total contract value rose 28% to $179 million, driven by high-velocity deals under $5 million.
• Geographic Revenue: U.S. revenue reached $674 million (up 9%), while international sales grew 48% to $385 million, representing 36% of total revenue and highlighting the company’s global expansion efforts.

Profitability and Margins

• Non-GAAP Gross Margin: 71.4%, up from 69.2% a year ago.
• Product Gross Margin: 67.3%, an increase of over 400 basis points year-over-year, though down sequentially due to shipment mix and modest cost inflation. Pricing adjustments were implemented in early February 2026.
• Subscription Gross Margin: 77%, nearly unchanged from the previous year.
• Non-GAAP Operating Income: $226 million, up from $153 million last year, reflecting strong revenue and margin performance.
• Non-GAAP Operating Margin: 21.3%, compared to 17.4% a year earlier, demonstrating improved profitability from scale and recurring revenue streams.

Financial Position and Shareholder Returns

As of February 1, Pure Storage held $1.5 billion in cash, cash equivalents, and marketable securities, unchanged from November 2, 2025. Operating cash flow for the quarter was $268 million, up from $208.5 million a year ago. Free cash flow reached $201.5 million, compared to $152.4 million in the prior year.

During the quarter, the company repurchased 1.7 million shares for $127 million. For fiscal 2026, total buybacks amounted to $343 million for 5.6 million shares, with $329 million remaining under the current $400 million repurchase authorization. Buybacks accounted for 56% of free cash flow in fiscal 2026.

Remaining performance obligations (RPO) at quarter-end stood at $3.7 billion, up 40% year-over-year, driven by large deals and ongoing strength in Evergreen//Forever and Evergreen//One offerings. RPO, which includes Storage-as-a-Service and Evergreen subscriptions, grew 34%.

Outlook for Fiscal 2027

• For the first quarter of fiscal 2027, Pure Storage anticipates revenue between $990 million and $1.01 billion, representing approximately 28% growth at the midpoint.
• Non-GAAP operating income is projected at $125–$135 million, reflecting about 57% year-over-year growth at the midpoint.
• The company expects 47% of annual revenue to be generated in the first half of the year, up 2 percentage points from the prior year.
• Full-year revenue guidance is $4.3–$4.4 billion, implying 18.8% growth, with operating profit expected to rise 26% to $780–$820 million.

PSTG’s Zacks Rank

Peer Company Performance

• Western Digital (WDC): Reported adjusted earnings of $2.13 per share for Q2 fiscal 2026, beating estimates and up 78% year-over-year. Revenue reached $3.02 billion, a 25% increase, driven by strong data center demand and higher high-capacity HDD adoption.
• Sandisk (SNDK): Delivered Q2 fiscal 2026 adjusted earnings of $6.20 per share, surpassing expectations by over 75%. Revenue surged 61.2% year-over-year to $3.03 billion, with bit shipments up slightly and average selling prices per gigabyte rising in the mid-30% range.
• Teradata (TDC): Achieved Q4 2025 adjusted earnings of $0.74 per share, exceeding estimates by 35%. Revenue was $421 million, up 3% year-over-year, with total annual recurring revenue reaching $1.52 billion, a 3% increase.

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