Pure Storage(PSTG) - 2026 Q2 - Quarterly Results

Executive Summary & Highlights Second Quarter Fiscal 2026 Performance Overview Pure Storage reported strong second-quarter fiscal 2026 results, exceeding revenue and operating profit guidance, driven by customer confidence in its platform's value and successful strategic execution - Total revenue increased by 13% year-over-year[1] - Storage as a Service (SaaS) product TCV sales grew by 24%[1] - Full-year revenue and operating profit guidance were raised[1] - CEO Charles Giancarlo emphasized strong customer confidence in Pure Storage's platform for data storage and management, which unlocks data business value through the Enterprise Data Cloud[2] - CFO Tarek Robbiati noted robust customer adoption of the company's platform strategy, leading to revenue and operating profit exceeding guidance[4] Key Financial Highlights Pure Storage demonstrated strong performance in the second quarter of fiscal 2026, achieving significant year-over-year growth in total revenue, subscription services revenue, and Annual Recurring Revenue (ARR), while maintaining healthy gross and operating margins Second Quarter Fiscal 2026 Key Financial Highlights | Metric | Q2 Fiscal 2026 Amount | Year-over-Year Change | | :-------------------------------- | :------------------- | :--------- | | Revenue | $861.0 million | +13% | | Subscription Services Revenue | $414.7 million | +15% | | Subscription Annual Recurring Revenue (ARR) | $1.8 billion | +18% | | Remaining Performance Obligations (RPO) | $2.8 billion | +22% | | GAAP Gross Margin | 70.2% | | | Non-GAAP Gross Margin | 72.1% | | | GAAP Operating Income | $4.9 million | | | Non-GAAP Operating Income | $130.0 million | | | GAAP Operating Margin | 0.6% | | | Non-GAAP Operating Margin | 15.1% | | | Operating Cash Flow | $212.2 million | | | Free Cash Flow | $150.1 million | | | Total Cash, Cash Equivalents, and Marketable Securities | $1.5 billion | | - Approximately $42 million was returned to shareholders through the repurchase of 0.8 million shares[5] Company Operational Highlights In the second quarter of fiscal 2026, Pure Storage launched a new data and storage management architecture, expanded its next-generation storage portfolio, enhanced efficiency through virtualized storage, and received multiple industry recognitions - Launched the Enterprise Data Cloud (EDC), an industry-transforming architecture powered by Pure Fusion, designed to revolutionize organizational data management by simplifying and automating data and storage management[5] - Expanded the product portfolio with next-generation storage products including FlashArray//XL, FlashArray//ST, and FlashBlade//S, designed to support high-performance and scalable workloads across diverse enterprise use cases, offering unified block, file, and object storage capabilities[5] - Introduced Portworx for KubeVirt, a virtualization-centric storage solution for Kubernetes, enabling more cost-effective and simplified VM workload management via Red Hat OpenShift Virtualization Engine[5] - Received multiple industry recognitions, including being named to Fortune's 2025 Best Workplaces in the Bay Area™ and 25 Best Large Workplaces in the Bay Area, recognized by Newsweek as one of America's Greatest Workplaces 2025, and listed by DBTA as one of the 100 Most Important Companies in Data for 2025[10] Financial Guidance Third Quarter Fiscal 2026 Guidance Pure Storage provided guidance for the third quarter of fiscal 2026, projecting revenue between $950 million and $960 million, with a year-over-year growth rate of 14.3% to 15.5%, and non-GAAP operating income between $185 million and $195 million Third Quarter Fiscal 2026 Guidance | Metric | Q3 Fiscal 2026 Guidance | Year-over-Year Growth Rate | | :-------------------------- | :--------------- | :----------- | | Revenue | $950 million to $960 million | 14.3% to 15.5% | | Non-GAAP Operating Income | $185 million to $195 million | 10.6% to 16.6% | - These forward-looking statements are subject to risks, and actual results may differ materially[6] Full Year Fiscal 2026 Guidance Update Pure Storage raised its full-year fiscal 2026 guidance for revenue and non-GAAP operating income, reflecting a positive outlook for the year's performance Full Year Fiscal 2026 Guidance Update | Metric | Previous Guidance | New Guidance | Year-over-Year Growth Rate (New) | | :-------------------------- | :--------- | :------------- | :--------------- | | Revenue | $3.515 billion | $3.60 billion to $3.63 billion | 13.5% to 14.5% | | Non-GAAP Operating Income | $595 million | $605 million to $625 million | 8.2% to 11.7% | - The company has not reconciled non-GAAP operating income and its year-over-year growth rate to the most directly comparable GAAP measures, as certain items impacting these metrics are outside the company's control or cannot be reasonably predicted[6] Company Information & Investor Relations About Pure Storage Pure Storage is an IT pioneer offering the industry's most advanced data storage platform, delivering a cloud experience with extreme simplicity and flexibility across various environments through its Evergreen architecture, leading to high customer satisfaction - Provides the industry's most advanced data storage platform to store, manage, and protect global data at any scale, offering organizations extreme simplicity and flexibility, saving time, money, and energy[11] - Delivers a cloud experience across on-premises, cloud, and co-located environments through a unified Storage as-a-Service platform, built on the Evergreen architecture that evolves with business growth, guaranteeing zero planned downtime[11] - Achieved one of the highest Net Promoter Scores in the industry for years, indicating extremely high customer satisfaction[11] Investor Communications & Events Pure Storage will host a conference call to discuss second-quarter fiscal 2026 results and plans to participate in a financial analyst product and technology session at Pure//Accelerate NYC in September 2025 - A live audio webcast of the second-quarter fiscal 2026 earnings conference call was held on August 27, 2025, with a replay available on the Pure Storage investor relations website[7][8] - Scheduled to participate in a financial analyst product and technology session at Pure//Accelerate NYC in New York City on Thursday, September 25, 2025, which will be webcast and archived[9][10] Forward-Looking Statements & Risk Factors This press release contains forward-looking statements regarding Pure Storage's products, business, and operations, which are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from expectations - Forward-looking statements cover areas such as the company's opportunities in hyperscale and AI environments, ability to meet hyperscale customer performance and pricing requirements, future financial and business results, product and subscription service demand, technology and product strategy, and the impact of macroeconomic conditions[13] - Actual results may differ materially from projected outcomes, with potential risks and uncertainties including those listed in the 'Risk Factors' section of the company's filings and reports with the U.S. Securities and Exchange Commission (SEC)[14] Key Performance Metrics & Non-GAAP Measures Pure Storage defines key business metrics such as Subscription Annual Recurring Revenue (ARR) and Total Contract Value (TCV) sales, and utilizes non-GAAP financial measures to provide supplementary information for evaluating performance and liquidity while excluding certain expenses - Subscription Annual Recurring Revenue (ARR) is the annualized aggregate contract value of all active subscription agreements as of the last day of the quarter, plus four times the on-demand revenue for that quarter[15] - Total Contract Value (TCV) sales represent the value of orders received for Pure Evergreen//One and similar consumption and subscription offerings during the reporting period[15] - Non-GAAP financial measures, such as non-GAAP gross profit, non-GAAP operating income, and free cash flow, are used for financial and operational decision-making, providing meaningful supplemental information by excluding specific expenses like stock-based compensation, amortization of acquired intangible assets, and restructuring costs[16][17] Condensed Consolidated Financial Statements Condensed Consolidated Balance Sheets As of the end of the second quarter of fiscal 2026, Pure Storage's total assets slightly increased, with significant changes in cash and cash equivalents, marketable securities, and deferred revenue, alongside a modest rise in total liabilities Condensed Consolidated Balance Sheets Highlights (in thousands of USD) | Metric | Q2 Fiscal 2026 | Fiscal 2025 | Change (Q2 Fiscal 2026 vs. Fiscal 2025) | | :-------------------------------- | :--------------- | :--------------- | :----------------------------------- | | Total Assets | $4,026,537 | $3,963,942 | +$62,595 | | Cash and Cash Equivalents | $887,849 | $723,583 | +$164,266 | | Marketable Securities | $649,661 | $798,237 | -$148,576 | | Accounts Receivable, Net | $530,481 | $680,862 | -$150,381 | | Total Current Assets | $2,524,738 | $2,567,279 | -$42,541 | | Total Liabilities | $2,707,716 | $2,657,467 | +$50,249 | | Deferred Revenue (Current) | $1,006,197 | $953,836 | +$52,361 | | Deferred Revenue (Non-Current) | $904,867 | $841,467 | +$63,400 | | Total Stockholders' Equity | $1,318,821 | $1,306,475 | +$12,346 | Condensed Consolidated Statements of Operations In the second quarter of fiscal 2026, Pure Storage's total revenue grew, primarily driven by increased product and subscription services revenue, leading to higher gross profit and net income, despite an increase in operating expenses Condensed Consolidated Statements of Operations Highlights (in thousands of USD, except per share data) | Metric | Q2 Fiscal 2026 | Q2 Fiscal 2025 | Year-over-Year Change (Q2 Fiscal 2026 vs. Q2 Fiscal 2025) | | :-------------------------------- | :--------------- | :--------------- | :------------------------------------------------- | | Total Revenue | $861,002 | $763,771 | +$97,231 (+12.7%) | | Product Revenue | $446,303 | $402,595 | +$43,708 (+10.9%) | | Subscription Services Revenue | $414,699 | $361,176 | +$53,523 (+14.8%) | | Gross Profit | $604,336 | $540,080 | +$64,256 (+11.9%) | | Operating Income | $4,871 | $24,878 | -$20,007 (-80.4%) | | Net Income | $47,118 | $35,674 | +$11,444 (+32.1%) | | Net Income Per Share, Diluted | $0.14 | $0.10 | +$0.04 | | Total Stock-Based Compensation Expense | $117,393 | $104,890 | +$12,503 (+11.9%) | Condensed Consolidated Statements of Cash Flows In the second quarter of fiscal 2026, Pure Storage generated substantial cash from operating activities, investment activities turned positive due to sales and maturities of marketable securities, while financing activities resulted in net cash outflow from share repurchases and debt payments Condensed Consolidated Statements of Cash Flows Highlights (in thousands of USD) | Metric | Q2 Fiscal 2026 | Q2 Fiscal 2025 | Year-over-Year Change (Q2 Fiscal 2026 vs. Q2 Fiscal 2025) | | :-------------------------------- | :--------------- | :--------------- | :------------------------------------------------- | | Net Cash Provided by Operating Activities | $212,157 | $226,597 | -$14,440 (-6.4%) | | Net Cash Provided by (Used in) Investing Activities | $129,775 | ($84,501) | +$214,276 | | Net Cash Used in Financing Activities | ($192,384) | ($72,499) | -$119,885 | | Net Increase in Cash, Cash Equivalents, and Restricted Cash | $149,548 | $69,597 | +$79,951 | | Cash, Cash Equivalents, and Restricted Cash at End of Period | $909,690 | $979,807 | -$70,117 | - Common stock repurchases amounted to $42,242 thousand in the second quarter of fiscal 2026[25] - Principal payments on borrowings and finance lease obligations totaled $100,000 thousand in the second quarter of fiscal 2026[25] Non-GAAP Reconciliations Non-GAAP Gross Margins Reconciliation Pure Storage's non-GAAP total gross margin for the second quarter of fiscal 2026 was 72.1%, with product gross margin at 68.0% and subscription services gross margin at 76.5%, after adjustments for stock-based compensation, payroll taxes, and amortization of acquired intangible assets Non-GAAP Gross Margins Reconciliation (Q2 Fiscal 2026, in thousands of USD) | Metric | GAAP Gross Profit | GAAP Gross Margin | Adjustments | Non-GAAP Gross Profit | Non-GAAP Gross Margin | | :-------------------------- | :--------------- | :--------------- | :--------- | :--------------- | :--------------- | | Product | $296,007 | 66.3% | $7,582 | $303,589 | 68.0% | | Subscription Services | $308,329 | 74.4% | $9,025 | $317,354 | 76.5% | | Total | $604,336 | 70.2% | $16,607 | $620,943 | 72.1% | - Adjustments primarily include stock-based compensation expense, payroll tax expense related to stock-based activities, and amortization of acquired intangible assets[27] Non-GAAP Operating Income and Net Income Reconciliation In the second quarter of fiscal 2026, Pure Storage's non-GAAP operating income was $129.964 million (15.1% margin) and non-GAAP net income was $144.475 million ($0.43 diluted per share), significantly higher than GAAP figures due to adjustments for stock-based compensation, payroll taxes, amortization, debt issuance costs, and unrealized gains Non-GAAP Operating Income and Net Income Reconciliation (Q2 Fiscal 2026, in thousands of USD, except per share data) | Metric | GAAP Results | GAAP Margin | Adjustments | Non-GAAP Results | Non-GAAP Margin | | :-------------------------- | :--------- | :--------- | :--------- | :--------- | :--------- | | Operating Income | $4,871 | 0.6% | $125,093 | $129,964 | 15.1% | | Net Income | $47,118 | | $97,357 | $144,475 | | | Net Income Per Share, Diluted | $0.14 | | | $0.43 | | - Key adjustments include stock-based compensation expense ($117,393 thousand), payroll tax expense related to stock-based activities ($4,164 thousand), amortization of acquired intangible assets ($3,536 thousand), amortization of debt issuance costs related to debt ($230 thousand), and mark-to-market unrealized gain on strategic investments (-$27,966 thousand)[29][30] Free Cash Flow Reconciliation Pure Storage's free cash flow for the second quarter of fiscal 2026 was $150.130 million, calculated by subtracting capital expenditures for property and equipment from net cash provided by operating activities Free Cash Flow Reconciliation (Q2 Fiscal 2026, in thousands of USD) | Metric | Q2 Fiscal 2026 | Q2 Fiscal 2025 | | :-------------------------------- | :--------------- | :--------------- | | Net Cash Provided by Operating Activities | $212,157 | $226,597 | | Less: Purchases of Property and Equipment | ($62,027) | ($60,035) | | Free Cash Flow (Non-GAAP) | $150,130 | $166,562 | - Purchases of property and equipment include $8.7 million of capitalized internal-use software costs in the second quarter of fiscal 2026[32]