Core Insights - Western Digital has raised prices on hard disk drives due to "unprecedented demand" driven by the AI era and data-center growth [2][6] - Data storage stocks, including Western Digital and Seagate, have seen significant gains, with Seagate's stock doubling in value in 2025 and reaching an all-time high [3][4] - Analysts are bullish on data storage stocks, with a majority issuing "buy" ratings for companies like Seagate, Pure Storage, Western Digital, and Sandisk [6] Company Performance - Western Digital's stock has also doubled, performing well alongside Seagate, and both companies are outperforming AI software company Palantir year-to-date [4] - Seagate's stock increased nearly 8% to an all-time high, while Western Digital's shares added almost 5% to close at a record high [2][3] - Pure Storage has seen over a 40% gain since boosting its outlook in late August, with its stock also reaching a new high [5] Market Trends - Data storage stocks have had a strong September, with both Seagate and Western Digital adding more than 25% of their value this month alone [5] - Morgan Stanley has identified Western Digital as a "top pick," citing management meetings and relative valuation, while Wedbush has included it in its "best ideas" [6] - The demand for hard disk drives is outpacing limited supply, indicating a favorable trend for hard disk makers [6]

[Note About Forward-Looking Statements](index=3&type=section&id=Note%20About%20Forward-Looking%20Statements) This section outlines forward-looking statements in the Form 10-Q, emphasizing inherent risks and uncertainties in macroeconomic conditions, product demand, and investment plans - Forward-looking statements cover a wide range of topics including macroeconomic conditions, demand for products and subscription services (Evergreen//One), market share expansion, international investment plans, and the shift to as-a-Service offerings[9](index=9&type=chunk) - The company acknowledges that actual results may differ materially due to known and unknown risks, uncertainties, and assumptions, as detailed in the 'Risk Factors' section[9](index=9&type=chunk)[10](index=10&type=chunk) [PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the company's unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive income, stockholders' equity, and cash flows [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) | Metric | Fiscal 2025 (in thousands) | Q2 Fiscal 2026 (in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------- | :------- | | Total current assets | $2,567,279 | $2,524,738 | $(42,541) | -1.65% | | Total assets | $3,963,942 | $4,026,537 | $62,595 | 1.58% | | Total current liabilities | $1,596,541 | $1,534,408 | $(62,133) | -3.89% | | Total liabilities | $2,657,467 | $2,707,716 | $50,249 | 1.89% | | Total stockholders' equity | $1,306,475 | $1,318,821 | $12,346 | 0.94% | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) | Metric | Q2 Fiscal 2025 (in thousands) | Q2 Fiscal 2026 (in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------- | :------- | | Product revenue | $402,595 | $446,303 | $43,708 | 10.86% | | Subscription services revenue | $361,176 | $414,699 | $53,523 | 14.82% | | Total revenue | $763,771 | $861,002 | $97,231 | 12.73% | | Gross profit | $540,080 | $604,336 | $64,256 | 11.90% | | Income (loss) from operations | $24,878 | $4,871 | $(20,007) | -80.42% | | Net income | $35,674 | $47,118 | $11,444 | 32.08% | | Basic EPS | $0.11 | $0.14 | $0.03 | 27.27% | | Diluted EPS | $0.10 | $0.14 | $0.04 | 40.00% | | Metric | First Two Quarters Fiscal 2025 (in thousands) | First Two Quarters Fiscal 2026 (in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :------------------------------------ | :------------------------------------ | :-------------------- | :------- | | Product revenue | $749,979 | $818,447 | $68,468 | 9.13% | | Subscription services revenue | $707,271 | $821,040 | $113,769 | 16.09% | | Total revenue | $1,457,250 | $1,639,487 | $182,237 | 12.51% | | Gross profit | $1,035,786 | $1,140,489 | $104,703 | 10.11% | | Income (loss) from operations | $(16,896) | $(26,300) | $(9,404) | -55.66% | | Net income | $665 | $33,123 | $32,458 | 4880.90% | | Basic EPS | $0.00 | $0.10 | $0.10 | N/A | | Diluted EPS | $0.00 | $0.10 | $0.10 | N/A | [Condensed Consolidated Statements of Comprehensive Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) | Metric | Q2 Fiscal 2025 (in thousands) | Q2 Fiscal 2026 (in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------- | :------- | | Net income | $35,674 | $47,118 | $11,444 | 32.08% | | Change in unrealized net gains on available-for-sale securities | $8,291 | $85 | $(8,206) | -98.97% | | Comprehensive income | $43,965 | $47,203 | $3,238 | 7.37% | | Metric | First Two Quarters Fiscal 2025 (in thousands) | First Two Quarters Fiscal 2026 (in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :------------------------------------ | :------------------------------------ | :-------------------- | :------- | | Net income | $665 | $33,123 | $32,458 | 4880.90% | | Change in unrealized net gains on available-for-sale securities | $6,489 | $962 | $(5,527) | -85.17% | | Comprehensive income | $7,154 | $34,085 | $26,931 | 376.45% | [Condensed Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) | Metric | Q2 Fiscal 2025 (in thousands) | Q2 Fiscal 2026 (in thousands) | Change (in thousands) | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------- | | Balance at end of Q1 | $1,373,973 | $1,244,055 | $(129,918) | | Stock-based compensation expense | $106,861 | $119,509 | $12,648 | | Tax withholding on equity awards | $(76,183) | $(57,799) | $18,384 | | Repurchases of common stock | — | $(42,242) | $(42,242) | | Net income | $35,674 | $47,118 | $11,444 | | Balance at end of Q2 | $1,453,161 | $1,318,821 | $(134,340) | | Metric | First Two Quarters Fiscal 2025 (in thousands) | First Two Quarters Fiscal 2026 (in thousands) | Change (in thousands) | | :-------------------------------- | :------------------------------------ | :------------------------------------ | :-------------------- | | Balance at end of Fiscal 2024/2025 | $1,270,094 | $1,306,475 | $36,381 | | Stock-based compensation expense | $221,478 | $217,687 | $(3,791) | | Tax withholding on equity awards | $(88,661) | $(117,946) | $(29,285) | | Repurchases of common stock | — | $(162,178) | $(162,178) | | Net income | $665 | $33,123 | $32,458 | | Balance at end of Q2 | $1,453,161 | $1,318,821 | $(134,340) | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) | Cash Flow Activity | First Two Quarters Fiscal 2025 (in thousands) | First Two Quarters Fiscal 2026 (in thousands) | Change (in thousands) | % Change | | :--------------------------------

Core Insights - Pure Storage has been recognized as a Leader in the 2025 Gartner Magic Quadrant for Enterprise Storage Platforms, marking the twelfth consecutive year of this recognition, positioned highest in execution and furthest in vision [1][2]. Company Overview - Pure Storage specializes in advanced data storage technology and services, providing a unified storage platform that supports diverse workloads across on-premises, public cloud, and hybrid environments [2][10]. - The company emphasizes its ability to deliver unmatched agility and risk reduction through its Enterprise Data Cloud (EDC), which allows organizations to manage their data effectively [3][10]. Market Context - The rise of AI is driving exponential growth in data volumes, creating challenges for traditional storage models that lead to fragmentation and data sprawl [3]. - The new Enterprise Storage Platforms category by Gartner highlights the importance of unified storage solutions in addressing these challenges [2]. Product Innovations - Key innovations in 2025 include the expansion of Pure Storage FlashArray and FlashBlade offerings, designed for high-performance workloads and scalability [6]. - The introduction of Pure Fusion enables workload automation and enhances performance for modern workloads, addressing the growth of unstructured data [6]. Customer Validation - Pure Storage has received an overall rating of 4.9 out of 5 from customers in the Enterprise Storage Platforms market, with 98% of reviewers willing to recommend the platform [5]. - Customer testimonials highlight the reliability and performance of Pure Storage solutions across various industries, including energy, healthcare, and banking [5][12].

Core Insights - Pure Storage, Inc's (PSTG) shares have gained 37.1% in the past month and 29.4% since strong quarterly results were announced on August 27 [1][8] - The stock has outperformed the Computer-Storage Devices industry, the Zacks Computer and Technology sector, and the S&P 500 composite, which grew by 12.7%, 2.9%, and 3.1% respectively [4] Price Performance - Closing at $78.73, PSTG is near its 52-week high of $80.68 reached on August 28, 2025 [4] Business Growth Drivers - Strong demand from large enterprises and ongoing momentum in FlashBlade, particularly FlashBlade//E, are key growth drivers [5] - Subscription services revenues rose 14.8% to $414.7 million, with annual recurring revenues (ARR) reaching nearly $1.8 billion, up 18% year-over-year [6][8] - The introduction of new storage systems in the Flash portfolio aims to address high-performance and scalable workloads [7] - The launch of the Enterprise Data Cloud (EDC) enhances data and storage management capabilities [8] Financial Health - Pure Storage exited the fiscal second quarter with cash and cash equivalents of $1.5 billion, and cash flow from operations was $212.2 million [9] - The company returned $42 million to shareholders through share repurchases [10] Future Outlook - For fiscal 2026, PSTG expects revenues between $3.6 billion and $3.63 billion, indicating a 14% year-over-year growth at the midpoint [11] - Analysts have revised earnings estimates upward, reflecting bullish sentiment [12] Competitive Landscape - Despite strong performance, Pure Storage faces competition in the flash-based storage market and potential delays in enterprise cloud migrations due to macroeconomic uncertainties [13][14] Valuation Concerns - PSTG is trading at a forward Price/Earnings ratio of 36.41X, significantly higher than the industry average of 19.47X, raising concerns about its valuation [15] Investment Recommendations - Current sentiment suggests that new investors should wait for a better entry point, while existing investors are advised to retain their holdings [16][17]

Kerrisdale Capital is shorting Pure Storage Inc. PSTG as the firm believes the company is poorly positioned to capture any meaningful share of cloud and AI infrastructure spending.What To Know: Kerrisdale Capital released a bearish report on Pure Storage on Thursday, calling the company “a flash in the pan.” The short seller believes the company is going to be left behind in the AI revolution. “Since its core product has little chance of hyperscaler adoption, Pure has crafted a story suggesting its new quad ...

Group 1: Meta Platforms - Meta Platforms is positioned to benefit from the surge in artificial intelligence (AI) spending, with analysts estimating a more than 600% increase in AI spending across infrastructure and software by 2028 [1] - The company owns three of the four most popular social media networks, providing insights into consumer preferences and enhancing its advertising capabilities [4] - Meta has been investing heavily in AI technologies, including custom chips and machine learning models, leading to increased user engagement and higher ad conversion rates [5][6] - The company aims to automate the ad creation process by next year, which could significantly enhance its advertising efficiency [6] - Forecasts indicate that Meta could achieve double-digit revenue growth for several years, driven by a 14% annual increase in ad tech spending through 2032 [7] - Wall Street estimates earnings growth of 17% annually over the next three years, making its current valuation of 27 times earnings appear reasonable [8] Group 2: Pure Storage - Pure Storage specializes in enterprise data storage solutions, particularly all-flash arrays, which offer superior storage density and lower power consumption compared to traditional hard-disk drives [9] - The company has been recognized as a leader in primary block storage platforms by Gartner, with its FlashBlade systems noted for their high density and efficiency in supporting AI workloads [10] - Pure Storage's next-generation FlashBlade systems are expected to be the highest-performing storage platform for AI and high-performance computing [11] - Meta Platforms has selected Pure Storage for its data center storage infrastructure, indicating strong industry confidence in Pure Storage's technology [11] - Wall Street anticipates adjusted earnings growth of 27% annually through January 2027, making its current valuation of 46 times adjusted earnings reasonable [11]

Core Insights - Pure Storage (PSTG) reported second-quarter fiscal 2026 non-GAAP earnings per share (EPS) of 43 cents, exceeding the Zacks Consensus Estimate by 10.3% and slightly down from 44 cents in the prior-year quarter [1][8] - Quarterly revenues increased by 13% year-over-year to $861 million, surpassing both the Zacks Consensus Estimate by 1.8% and management's guidance of $845 million, driven by strong demand from large enterprises and growth in FlashBlade and core software offerings [2][8] Financial Performance - PSTG's product revenues, which accounted for 51.8% of total revenues, reached $446.3 million, reflecting a 10.6% year-over-year increase, while subscription services revenues (48.2%) rose by 14.8% to $414.7 million [5] - Subscription annual recurring revenues (ARR) were nearly $1.8 billion, marking an 18% increase year-over-year [6] - Non-GAAP operating income is forecasted between $605 million and $625 million, indicating about 10% year-over-year growth at the midpoint, which is an improvement from prior guidance [3][4] Guidance and Market Response - For fiscal 2026, PSTG expects revenues in the range of $3.6 billion to $3.63 billion, suggesting a 14% year-over-year growth at the midpoint, which is an increase from the previously guided 11% growth [3][4] - Following the strong quarterly performance and positive guidance, PSTG shares jumped 15% in pre-market trading, with a 21% increase over the past year compared to the industry growth of 7.1% [4] Margin and Cash Flow - The non-GAAP gross margin was reported at 72.1%, slightly down from 72.8% in the prior-year quarter, while the non-GAAP operating margin decreased to 15.1% from 18.1% year-over-year [10][11] - Cash flow from operations for the quarter was $212.2 million, down from $226.6 million in the prior-year quarter, with free cash flow at $150.1 million compared to $166.6 million [12] Shareholder Returns and Obligations - In the fiscal second quarter, the company returned $42 million to shareholders through share repurchases, with $109 million remaining under its current authorization plan [13] - Remaining performance obligations totaled $2.8 billion, reflecting a 22% year-over-year increase [13] Future Outlook - For fiscal Q3, PSTG anticipates revenues in the range of $950 million to $960 million, indicating a 15% increase at the midpoint from the previous year, with non-GAAP operating income expected to be between $185 million and $195 million [14]

Core Insights - Pure Storage (PSTG.US) surged nearly 30%, reaching an all-time high of $78.41 following the release of its Q2 FY2026 earnings report [1] Financial Performance - The company reported revenue of $861 million for Q2 FY2026, a 13% year-over-year increase, exceeding analyst expectations of $846.8 million [1] - Earnings per share were $0.43, surpassing the anticipated $0.39 [1] - Subscription service revenue reached $414.7 million, reflecting a 15% year-over-year growth [1] - Annual recurring revenue from subscriptions hit $1.8 billion, up 18% year-over-year, contributing to an overall gross margin of 72.1% [1] Guidance and Projections - The company raised its sales guidance for FY2026 to between $3.6 billion and $3.63 billion, up from the previous guidance of $3.515 billion [1] - For Q3, sales are projected to be between $950 million and $960 million, exceeding the expected $913.1 million [1]

Core Viewpoint - Pure Storage (PSTG.US) experienced a nearly 30% surge, reaching an all-time high of $78.41 following the release of its Q2 FY2026 earnings report, which exceeded analyst expectations [1] Financial Performance - The company reported revenue of $861 million for Q2 FY2026, a 13% year-over-year increase, surpassing analyst expectations of $846.8 million [1] - Earnings per share were $0.43, exceeding the anticipated $0.39 [1] - Subscription service revenue reached $414.7 million, reflecting a 15% year-over-year growth [1] - Annual recurring revenue from subscriptions hit $1.8 billion, up 18% year-over-year, contributing to an overall gross margin of 72.1% [1] Guidance and Projections - Pure Storage raised its sales guidance for FY2026 to between $3.6 billion and $3.63 billion, up from the previous guidance of $3.515 billion [1] - The company anticipates Q3 sales to be between $950 million and $960 million, exceeding the expected $913.1 million [1]

Financial Data and Key Metrics Changes - Revenue for Q2 FY 2026 was $861 million, representing a 13% year-over-year growth, while operating profit was $130 million with an operating margin of 15.1% [22][28] - Subscription services revenue reached $415 million, up 15% year-over-year, accounting for 48% of total revenue [26] - Total remaining performance obligations (RPO) grew 22% to $2.8 billion, reflecting robust renewals and new commitments [26] - Total gross margin remained strong at 72.1%, with subscription services gross margin at 76.5% [27] Business Line Data and Key Metrics Changes - Strong performance was noted across the entire portfolio, particularly in FlashBlade and core software and services offerings like Evergreen One, Cloud Block Store, and Portworx [22][24] - Total contract value (TCV) sales for Storage as a Service offerings grew 24% year-over-year to $125 million [24] - The FlashBlade E family showed strength, contributing to overall product gross margin improvement [88] Market Data and Key Metrics Changes - U.S. revenue was $577 million, growing 7%, while international revenue was $284 million, growing 26% year-over-year [27] - More than 300 new customers were added, maintaining a 62% penetration rate in the Fortune 500 [27] Company Strategy and Development Direction - The company is focused on the enterprise data cloud architecture, which is transforming how organizations manage data, emphasizing the shift from traditional siloed storage to a software-defined model [9][11] - Continued investment in partnerships with hyperscalers, including Meta, to enhance direct flash technology and expand market presence [25][17] - The introduction of a guidance range for financial metrics aims to align with industry practices and provide flexibility for growth opportunities [30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to extend industry leadership despite a variable macro environment, citing strong execution and planning [20] - Positive momentum is expected in the second half of the fiscal year, driven by strong demand signals and an increasing pipeline of large deals [110] - The company anticipates revenue for FY 2026 to be in the range of $3.6 billion to $3.63 billion, representing a 14% year-over-year growth at the midpoint [31] Other Important Information - The company reported a strong free cash flow performance of $150 million, with a free cash flow margin of 17.4% [29] - A new partnership with Nutanix is expected to enhance customer interest and scalability in virtualization environments [58] Q&A Session Summary Question: What is driving the acceleration of growth in the back half of the fiscal year? - Management noted broad-based strength in product lines and improved visibility into the pipeline, contributing to confidence in growth forecasts [36] Question: How has the relationship with Meta evolved? - The relationship is progressing as expected, with deployments on track and revenue recognition beginning [42] Question: What factors contributed to the sequential gross margin improvement? - Management attributed the improvement to revenue mix, product mix, and pricing discipline, with Meta's contribution being less material than anticipated [48] Question: How is the engagement with other hyperscalers progressing? - Early-stage engagements are ongoing, with technology assessments and proofs of concept underway, but still in the initial phases [64] Question: What are the long-term expectations for Meta's contribution? - Management expects to achieve one to two exabytes of deployment this fiscal year, with potential for double-digit contributions in the next fiscal year [70] Question: How should the split between product versus subscriptions be viewed? - Management indicated that both product and subscription revenues are expected to grow, with subscription gross margins being higher than product gross margins [98]