Pure Storage(US:PSTG) The Motley Fool·2025-12-03 17:22Core Viewpoint - Pure Storage reported strong earnings but experienced a significant stock price drop due to modest guidance for the next quarter [1][5]. Financial Performance - Q3 revenues increased by 16% year over year to $964.5 million, with adjusted earnings per diluted share rising from $0.50 to $0.58 [3]. - Both revenues and operating income surpassed the upper end of management's guidance, aligning with analyst expectations [3]. Market Reaction - The stock fell by 26% following the earnings report, reflecting investor concerns over slower growth in recurring sales compared to total revenues [1][5]. - Analyst reactions included downgrades and adjustments to price targets, indicating a lack of confidence in the company's long-term growth prospects [5]. Future Outlook - Pure Storage raised its full-year projections for all metrics, suggesting a positive outlook for Q4 [4]. - Despite the positive projections, the slower growth in recurring sales raised concerns about long-term visibility and pricing power [5]. Valuation Context - The stock had previously reached an all-time high of $100.59, trading at a high valuation of 233 times trailing earnings, driven by expectations from AI partnerships [6]. - The current earnings report did not meet the high expectations set by the market, leading to a reassessment of the stock's value [7].