Core Viewpoint - Pure Storage (PSTG) shares have increased by approximately 3.7% since the last earnings report, underperforming the S&P 500 index [1] Group 1: Earnings Report and Market Reaction - The consensus estimate for Pure Storage has decreased by 6.02% over the past month, indicating a flatlining of fresh estimates [2] - The stock has received a Zacks Rank of 3 (Hold), suggesting an expectation of an in-line return in the upcoming months [4] Group 2: VGM Scores - Pure Storage has a strong Growth Score of A, but a low Momentum Score of D, indicating mixed performance across different investment strategies [3] - The stock has been assigned a grade of F on the value side, placing it in the fifth quintile for value investment strategy [3] - The overall aggregate VGM Score for Pure Storage is C, which is relevant for investors not focused on a single strategy [3]

Core Insights - Pure Storage, Inc. (PSTG) has partnered with TierPoint to launch an Imaging Storage-as-a-Service solution tailored for the healthcare sector, addressing challenges such as rising storage costs, performance limitations, and stringent security requirements [1][10] Group 1: Product Offering - The new solution integrates Pure Storage's high-performance infrastructure with TierPoint's HIPAA-compliant data centers, providing a scalable, cloud-enabled storage service that supports AI-driven imaging workloads and long-term data retention [2][10] - The per-study billing model enhances cost predictability for healthcare organizations while improving image retrieval speed and data protection for critical assets [2][10] Group 2: Market Impact - This service allows healthcare providers to align storage costs with patient care delivery models, enabling them to scale operations efficiently and focus on improving patient outcomes [3][4] - The collaboration aims to enhance diagnostic capabilities, boost operational efficiency, and support better patient outcomes in healthcare IT [4] Group 3: Technological Advancements - Pure Storage continues to innovate in enterprise storage, particularly for modern data workloads such as AI and high-performance computing, with the release of Portworx Enterprise 3.3 enhancing its Kubernetes-native storage capabilities [5] - The rollout of FlashBlade//EXA and the adoption of the //E family, which support AI and HPC workloads, indicate strong growth potential, with Storage-as-a-Service TCV sales increasing by 70% in the fiscal first quarter [6] Group 4: Strategic Partnerships - Pure Storage has partnered with Nutanix to provide a solution for managing virtual workloads, enhancing operational efficiency for IT teams in hybrid cloud environments [7] - The firm has also expanded its partnership with Rubrik to improve protection for unstructured data, enhancing threat detection and recovery capabilities in a ransomware-prone environment [8]

Core Viewpoint - TierPoint has launched a new Imaging Storage-as-a-Service solution tailored for healthcare organizations, addressing challenges related to medical imaging data management, including storage costs, performance, and security risks [1][2]. Group 1: Product Features - The new solution integrates Pure Storage's all-flash technology with TierPoint's managed services and secure, HIPAA-compliant data centers [2]. - It offers a per-study billing model, providing healthcare providers with cost predictability while enhancing image retrieval speed and data protection [2]. - The solution is scalable and cloud-enabled, supporting AI imaging workloads and long-term data retention, which aids in improving diagnostic speed and operational efficiency for healthcare organizations [2]. Group 2: Company Mission and Collaboration - TierPoint aims to transform how healthcare organizations utilize imaging data, enabling IT leaders to achieve cost predictability, enhance data security, and improve patient outcomes without complex storage infrastructure [3]. - Pure Storage emphasizes the collaboration with TierPoint to enhance performance, flexibility, and resilience in healthcare imaging, aligning costs with patient care delivery models to help providers scale efficiently [3]. Group 3: Company Overview - TierPoint is a prominent provider of secure, connected IT platform solutions, facilitating digital transformation for numerous clients across the U.S. [4]. - The company offers a wide range of services, including cloud, colocation, disaster recovery, security, and managed services, to address critical technology and business challenges [4].

Financial Data and Key Metrics Changes - The meeting discussed the voting results on three proposals, but specific financial data and key metrics changes were not provided in the documents [8][10]. Business Line Data and Key Metrics Changes - No specific data or key metrics changes for various business lines were mentioned in the documents [8][10]. Market Data and Key Metrics Changes - The documents did not include any specific market data or key metrics changes [8][10]. Company Strategy and Development Direction and Industry Competition - The company is focused on maintaining strong stockholder engagement and has proposed the election of directors and the ratification of independent auditors, indicating a commitment to governance and oversight [8][10]. Management's Comments on Operating Environment and Future Outlook - Management did not provide specific comments on the operating environment or future outlook during the meeting, as no questions were received from stockholders [12]. Other Important Information - The meeting was conducted via live webcast to ensure broad stockholder access and participation, and the rules of conduct were outlined for orderly proceedings [3][4]. Summary of Q&A Session Question: Were there any questions from stockholders? - No questions were received during the Q&A session, leading to its conclusion [12].

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements (unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) Presents unaudited condensed consolidated financial statements for Q1 FY2026, covering balance sheets, operations, comprehensive loss, equity, and cash flows [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to **$3.81 billion** from **$3.96 billion** as of May 4, 2025, with liabilities and stockholders' equity also declining Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | End of Fiscal 2025 | End of Q1 Fiscal 2026 | | :--- | :--- | :--- | | **Total current assets** | $2,567,279 | $2,400,227 | | **Total assets** | **$3,963,942** | **$3,810,365** | | **Total current liabilities** | $1,596,541 | $1,494,511 | | **Total liabilities** | **$2,657,467** | **$2,566,310** | | **Total stockholders' equity** | **$1,306,475** | **$1,244,055** | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q1 FY2026 total revenue grew **12.3%** to **$778.5 million**, driven by subscription services, with net loss improving to **$14.0 million** Q1 Statement of Operations Summary (in thousands, except per share data) | Metric | Q1 Fiscal 2025 | Q1 Fiscal 2026 | Change (%) | | :--- | :--- | :--- | :--- | | Product Revenue | $347,384 | $372,144 | 7.1% | | Subscription Services Revenue | $346,095 | $406,341 | 17.4% | | **Total Revenue** | **$693,479** | **$778,485** | **12.3%** | | Gross Profit | $495,706 | $536,153 | 8.2% | | Loss from Operations | $(41,774) | $(31,171) | (25.4%) | | **Net Loss** | **$(35,009)** | **$(13,995)** | **(60.0%)** | | Net Loss Per Share | $(0.11) | $(0.04) | (63.6%) | [Condensed Consolidated Statements of Comprehensive Loss](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) Comprehensive loss for Q1 FY2026 significantly improved to **$13.1 million** from **$36.8 million**, driven by a smaller net loss and unrealized gains Comprehensive Loss Summary (in thousands) | Metric | Q1 Fiscal 2025 | Q1 Fiscal 2026 | | :--- | :--- | :--- | | Net loss | $(35,009) | $(13,995) | | Change in unrealized net gains (losses) on available-for-sale securities | $(1,802) | $877 | | **Comprehensive loss** | **$(36,811)** | **$(13,118)** | [Condensed Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Stockholders' equity decreased to **$1.24 billion** from **$1.31 billion**, primarily due to **$119.9 million** in common stock repurchases and net loss - The company repurchased and retired approximately **2.5 million shares** of its common stock for an aggregate price of **$119.9 million** during the first quarter of fiscal 2026[23](index=23&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow increased to **$283.9 million**, while investing activities used **$111.8 million**, and financing activities shifted to a **$149.8 million** outflow Cash Flow Summary (in thousands) | Activity | Q1 Fiscal 2025 | Q1 Fiscal 2026 | | :--- | :--- | :--- | | Net cash provided by operating activities | $221,500 | $283,936 | | Net cash used in investing activities | $(48,395) | $(111,782) | | Net cash provided by (used in) financing activities | $24,974 | $(149,762) | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Detailed notes explain accounting policies, financial components, and significant events, including a new **$500 million** unsecured credit facility in June 2025 - Total remaining performance obligations (RPO) were **$2.7 billion** at the end of Q1 FY2026, with approximately **48%** expected to be recognized as revenue over the next 12 months[69](index=69&type=chunk) - In June 2025, the company entered into a new five-year, **$500 million** senior unsecured revolving credit facility, terminating and repaying the previous **$300 million** facility[131](index=131&type=chunk) - During Q1 FY2026, the company repurchased and retired approximately **2.5 million shares** of common stock for **$119.9 million**. At the end of the quarter, **$151.6 million** remained available for future repurchases[98](index=98&type=chunk) - In February 2024, the company initiated a workforce realignment plan, reducing headcount by nearly **250 employees** and incurring restructuring costs of **$27.9 million**, of which **$9.9 million** was recognized in Q1 FY2025[93](index=93&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 FY2026 financial results, noting a **12%** revenue increase to **$778.5 million**, improved net loss, and shifts in gross margins Revenue Performance (in thousands) | Revenue Type | Q1 Fiscal 2025 | Q1 Fiscal 2026 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Product revenue | $347,384 | $372,144 | $24,760 | 7% | | Subscription services revenue | $346,095 | $406,341 | $60,246 | 17% | | **Total revenue** | **$693,479** | **$778,485** | **$85,006** | **12%** | - Subscription Annual Recurring Revenue (ARR) grew **18%** year-over-year to **$1.71 billion** at the end of Q1 FY2026[158](index=158&type=chunk) - Total Remaining Performance Obligations (RPO) grew **17%** year-over-year to **$2.7 billion** at the end of Q1 FY2026[160](index=160&type=chunk) Gross Margin Performance | Margin Type | Q1 Fiscal 2025 | Q1 Fiscal 2026 | | :--- | :--- | :--- | | Product gross margin | 71% | 62% | | Subscription services gross margin | 72% | 75% | | **Total gross margin** | **71%** | **69%** | - Net cash provided by operating activities increased to **$283.9 million** in Q1 FY2026, up from **$221.5 million** in Q1 FY2025, driven by lower net loss and improved working capital management[183](index=183&type=chunk)[184](index=184&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=37&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from interest rate fluctuations on its **$1.6 billion** in marketable securities and foreign currency volatility, without using derivatives - **Interest Rate Risk:** A hypothetical **1.00%** (**100 basis points**) increase in interest rates would result in a decrease of approximately **$8.8 million** in the fair value of the company's marketable securities[198](index=198&type=chunk) - **Foreign Currency Risk:** A hypothetical adverse **10%** change in foreign exchange rates would result in an adverse impact of approximately **$6.8 million** on income before income taxes[200](index=200&type=chunk) [Item 4. Controls and Procedures](index=38&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of May 4, 2025, with no material changes to internal controls - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the first quarter of fiscal 2026[201](index=201&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[202](index=202&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=39&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any legal proceedings deemed to have a material adverse effect on its business or financial position - The company is not presently party to any legal proceedings that, in the opinion of management, would have a material adverse effect on its business[205](index=205&type=chunk) [Item 1A. Risk Factors](index=39&type=section&id=Item%201A.%20Risk%20Factors) The company faces risks from macroeconomic conditions, intense competition, supply chain reliance, subscription model transition, security breaches, and new product adoption - The business is subject to risks from uncertain macroeconomic conditions, tariffs, and trade policies which can affect customer demand and costs[208](index=208&type=chunk)[209](index=209&type=chunk) - The company faces intense competition from established companies and cloud providers, which may have greater resources, brand recognition, and existing customer relationships[218](index=218&type=chunk)[220](index=220&type=chunk) - Significant resources are being devoted to developing solutions for hyperscalers, including a design win with Meta, but there is no assurance this will lead to successful sales[214](index=214&type=chunk)[215](index=215&type=chunk) - Reliance on a limited number of suppliers, including single-source suppliers, for key components exposes the company to risks of supply disruption, price volatility, and quality control issues[223](index=223&type=chunk) - A compromise of security measures could lead to data loss, reputational harm, loss of customers, and significant liabilities[254](index=254&type=chunk)[255](index=255&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=62&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) In Q1 FY2026, the company repurchased **2.5 million shares** for **$119.9 million**, with **$151.6 million** remaining for future repurchases Q1 FY2026 Stock Repurchase Activity (in thousands, except price) | Period | Average Price Paid per Share | Total Shares Repurchased | Value of Shares Remaining for Repurchase | | :--- | :--- | :--- | :--- | | Feb 3 - Mar 2, 2025 | $63.35 | 434 | $244,013 | | Mar 3 - Mar 30, 2025 | $49.77 | 954 | $196,516 | | Mar 31 - May 4, 2025 | $40.66 | 1,104 | $151,642 | [Item 3. Defaults Upon Senior Securities](index=62&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities for the period - No defaults upon senior securities were reported for the period[302](index=302&type=chunk) [Item 4. Mine Safety Disclosures](index=62&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) The company reported no mine safety disclosures for the period - No mine safety disclosures were reported for the period[303](index=303&type=chunk) [Item 5. Other Information](index=62&type=section&id=Item%205.%20Other%20Information) On June 10, 2025, the company entered a new **$500 million** senior unsecured revolving credit facility, and no directors or officers adopted or terminated Rule 10b5-1 trading plans - On June 10, 2025, the company entered into a new **$500 million** senior unsecured revolving credit facility, replacing its existing one. The new agreement matures on June 10, 2030[304](index=304&type=chunk)[305](index=305&type=chunk) - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the first quarter of fiscal 2026[309](index=309&type=chunk) [Item 6. Exhibits](index=64&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the 10-Q report, including the new Credit Agreement, CEO/CFO certifications, and XBRL data files - Key exhibits filed with this report include the new Credit Agreement (Exhibit 10.12) and CEO/CFO certifications (Exhibits 31.1, 31.2, 32.1)[311](index=311&type=chunk)

Summary of Pure Storage (PSTG) 2025 Conference Company Overview - **Company**: Pure Storage (PSTG) - **Event**: BFA's Global Tech Conference - **Date**: June 03, 2025 Key Industry Insights - **Industry**: Enterprise Storage - **Market Size**: The enterprise storage market is approximately $50 billion, with Pure Storage currently holding over $3 billion in revenue, indicating a significant growth opportunity of around $47 billion to $57 billion [12][13]. Core Points and Arguments 1. **Macro Environment Uncertainty**: The macroeconomic and geopolitical landscape is highly uncertain, affecting customer conversations and projections for the second half of the year [3][4]. 2. **AI's Impact on Storage**: AI is expected to transform the storage industry, with a shift in focus from software to data. Pure Storage's new product, FlashBlade Exa, is designed for high-performance environments, particularly for AI applications [5][6][10]. 3. **Enterprise vs. Hyperscale Opportunities**: While AI-related storage is currently a small segment (estimated at $2 billion), it is expected to grow. However, the larger opportunity lies in the enterprise environment, which may not require specialized storage [12][13]. 4. **Hyperscale Market Potential**: The top five hyperscalers account for 60-70% of the total hard disk market, representing a significant opportunity for Pure Storage. The company has secured a design win with Meta, aiming to ship 1-2 exabytes in the near term [15][16][17]. 5. **Total Cost of Ownership (TCO)**: Pure Storage emphasizes its competitive TCO compared to hard disk drives (HDDs), highlighting advantages in density, performance, and lower failure rates [25][32][34]. 6. **NAND Supply Chain Management**: The company is working closely with major suppliers (Micron, Kioxia, Hynix) to ensure adequate NAND supply for future growth, despite the ramp-up period required [36][37]. 7. **Investment Strategy**: Pure Storage is currently in an investment phase, focusing on R&D and market penetration, which may compress margins temporarily. The company aims to resume margin expansion in the following year [41][42]. 8. **Tariff Uncertainty**: Ongoing tariff changes create additional uncertainty in the market, but Pure Storage has a flexible supply chain to manage potential impacts [44][45]. Additional Important Insights - **Product Pricing Strategy**: The lower gross margins on the E Series product are part of a strategy to penetrate lower-tier storage markets aggressively [51][52]. - **Future Growth Confidence**: The introduction of PureFusion allows customers to manage their storage as a cloud, potentially creating a network effect in enterprise storage [56]. This summary encapsulates the key points discussed during the conference, providing insights into Pure Storage's strategic positioning and market opportunities.

Summary of Pure Storage Conference Call Company Overview - **Company**: Pure Storage - **Industry**: Data Storage Solutions Key Opportunities and Strategic Focus - **Enterprise Growth**: Pure Storage sees significant growth potential in the enterprise sector, focusing on expanding its portfolio and addressing a full suite of enterprise storage needs [4][5] - **AI Integration**: The company is positioned as a leader in providing a comprehensive suite of AI storage solutions, catering to both small and large-scale environments [5] - **Hyperscaler Engagement**: Pure Storage has been actively engaging with hyperscalers, transitioning from initial discussions to design wins and production [5][6] Hyperscaler Market Insights - **Infrastructure Design**: Hyperscalers design their infrastructure stacks holistically, integrating compute, networking, storage, and software, which differs from traditional enterprise environments [6][7] - **Flash Adoption Lag**: Historically, hyperscalers have lagged in adopting flash technology compared to enterprises, but are now recognizing the limitations of hard disk drives and the need for flash solutions [8][9] - **Transition to Flash**: The transition from hard disk drives to flash is driven by the need for improved performance, capacity, and efficiency, particularly in light of power and space constraints [10][11] Design Win with Meta - **Collaboration with Meta**: Pure Storage has been working with Meta for several years, culminating in a design win that emphasizes cost savings, power efficiency, and seamless integration into Meta's existing technology stack [12][14][17] - **Technology Licensing Model**: The business model involves technology licensing and royalties rather than direct hardware sales, allowing Meta to leverage its supply chain [24][25] Competitive Landscape - **Limited Competition**: Pure Storage faces minimal competition from third-party vendors, primarily competing against hyperscalers' internal development efforts and existing technologies [28][46] - **Value Proposition**: The value of Pure's solutions is framed around total cost of ownership (TCO) compared to SSD and hard disk drive systems, emphasizing simplicity, reliability, and efficiency [29][31] Storage as a Service (STaaS) - **Growth of STaaS**: Pure Storage has pioneered storage as a service models, which have gained traction due to their flexibility and adaptability to changing customer needs [34][39] - **Outcome-Based Sales**: The approach focuses on SLA-based sales rather than traditional product sales, allowing for ongoing adjustments to meet customer requirements [35][38] Enterprise Storage Market Outlook - **Market Growth**: The enterprise storage market is expected to grow at low to mid-single-digit rates over the next few years, with Pure Storage aiming to capture a larger market share [41][42] - **Strategic Positioning**: The company is well-positioned to engage in strategic conversations with enterprises, offering a comprehensive solution that spans various storage needs [43] Additional Insights - **Storage Tiers**: Hyperscalers design storage solutions across multiple tiers, from high-performance to archival storage, and Pure's technology aims to provide a unified architecture for these diverse needs [50][52] - **Operational Margin Accretion**: The licensing model is expected to be accretive to operating margins, with potential improvements in gross margins as well [32][33]

Core Viewpoint - The investment outlook for Pure Storage (NYSE: PSTG) remains positive due to strong demand and attractive valuation, with no signs of growth slowdown [1] Company Analysis - Pure Storage continues to demonstrate robust growth, indicating a solid demand for its products and services [1] - The company is positioned well for medium to long-term investments, focusing on fundamental strengths and sustainable competitive advantages [1] Investment Strategy - The investment approach emphasizes bottom-up analysis to identify companies with strong fundamentals and growth potential [1] - The strategy includes a mix of long-term investments and short-term shorts to uncover alpha opportunities [1]

Group 1 - The Q1 earnings season has been characterized by significant volatility, influenced by unstable stock markets and fluctuating headlines regarding tariffs [1] Group 2 - Gary Alexander has extensive experience in covering technology companies and has been a contributor to Seeking Alpha since 2017, providing insights into industry trends [2]

Core Insights - Pure Storage (PSTG) reported revenue of $778.49 million for the quarter ended April 2025, reflecting a year-over-year increase of 12.3% [1] - The earnings per share (EPS) for the quarter was $0.29, down from $0.32 in the same quarter last year [1] - The reported revenue exceeded the Zacks Consensus Estimate of $771.15 million, resulting in a surprise of +0.95% [1] - The company achieved an EPS surprise of +16.00%, with the consensus EPS estimate being $0.25 [1] Financial Performance Metrics - Product revenue was $372.14 million, slightly above the nine-analyst average estimate of $370.97 million, representing a year-over-year change of +7.1% [4] - Subscription services revenue reached $406.34 million, exceeding the average estimate of $391.59 million, with a year-over-year increase of +17.4% [4] - Non-GAAP Gross profit from subscription services was $313.60 million, surpassing the average estimate of $297.86 million [4] - Non-GAAP Gross profit from product sales was $238.11 million, slightly below the average estimate of $241.54 million [4] Stock Performance - Shares of Pure Storage have returned +22% over the past month, outperforming the Zacks S&P 500 composite's +7.4% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]