Pure Storage (PSTG) Q2 2026 Earnings Call August 27, 2025 05:00 PM ET Company ParticipantsPaul Ziots - VP - IRCharles Giancarlo - Chairman & CEOTarek Robbiati - CFOAmit Daryanani - Senior MD - Equity ResearchJason Ader - Co-Group Head - Technology, Media & CommunicationsEddy Orabi - Vice PresidentRob Lee - Chief Technology OfficerSimon Leopold - Managing DirectorErik Woodring - MD - Equity ResearchRuplu Bhattacharya - DirectorAsiya Merchant - Technology Equity ResearchDavid Vogt - Managing DirectorConferenc ...

Pure Storage (PSTG) Q2 2026 Earnings Call August 27, 2025 05:00 PM ET Speaker0Good day, and welcome to the Pure Storage Second Quarter Fiscal twenty twenty six Financial Results Conference Call. Today's conference is being recorded. At this time, I'd like to turn the call over to Paul Dyach, Vice President of Investor Relations. Please go ahead.Speaker1Thank you. Good afternoon, everyone, and welcome to Pure's second quarter fiscal year twenty twenty six earnings conference call. On the call, we have Charli ...

Q2 Fiscal 2026 Financial Results August 27, 2025 This presentation contains forward-looking statements regarding our products, business and operations, including but not limited to our views relating to our opportunity relating to hyperscale and AI environments, our ability to meet hyperscalers' performance and price requirements, our ability to expand with our current hyperscale customer and to land new hyperscale customers, our ability to meet the needs of hyperscalers for the entire spectrum of their onl ...

Financial Data and Key Metrics Changes - Q1 revenue grew 12% year-over-year, reaching $830 million, with an operating profit of $83 million and an operating margin of 10.6% [22][24] - Subscription services revenue increased 17% to $406 million, representing over half of total revenue, while annual recurring revenue (ARR) grew 18% to $1.7 billion [23][24] - Total remaining performance obligations (RPO) grew 17% to $2.7 billion, indicating strong renewals and new commitments [23][24] - Total gross margin improved to 70.9%, with subscription services margin at 77.2% [24][25] Business Line Data and Key Metrics Changes - Storage as a Service (SaaS) solutions saw a 70% increase in total contract value (TCV) sales, reaching $95 million, driven by large Evergreen One deals [22][23] - Product margin rose 1.1 points sequentially to 64%, with expectations for mid-60s product gross margin for the year [25][26] Market Data and Key Metrics Changes - U.S. revenue grew 9% to $531 million, while international revenue increased 21% to $248 million year-over-year [24] - The company added 235 new customers, achieving a penetration rate of 62% within the Fortune 500 [24] Company Strategy and Development Direction - The company is focused on modernizing IT infrastructure and breaking down data silos, with a strong emphasis on AI and high-performance computing solutions [7][9] - Strategic partnerships with companies like Nutanix and SK Hynix are aimed at enhancing virtualization and flash storage capabilities [10][15] - The company is committed to maintaining pricing predictability for customers amid tariff-related changes, leveraging its Evergreen model [17][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate macroeconomic uncertainties while maintaining strong performance [16][28] - The company anticipates continued growth in the second quarter, projecting revenue of $845 million, a 10.6% year-over-year increase [28] Other Important Information - Kevin Chrysler, the CFO, will be leaving the company, with a transition plan in place to ensure continuity [19][20] - The company reported a strong balance sheet with $1.6 billion in cash and investments, and operating cash flow of $284 million [26] Q&A Session Summary Question: Update on hyperscale opportunity with Meta - Management indicated that the evaluation process with Meta is on track, with expectations to deliver one to two exabytes in the second half of the year [36][38] Question: Size of the newly announced AXA offering - The company views the AXA offering as targeting niche markets, with expectations for margins to be at or above standard company margins [42][43] Question: Changes in buyer behavior during macro uncertainty - Management noted no significant changes in customer sentiment or purchasing behavior in Q1, with broad-based strength across sales [50][52] Question: Revenue contribution from Meta's project - Some de minimis revenue contribution from the Meta project has been included in the annual guidance, primarily through a licensing fee model [69][70] Question: Clarification on subscription margins amid tariff costs - Management expressed confidence that subscription gross margins would not be significantly impacted by potential tariff costs due to operational efficiencies [90][91] Question: Investment expectations for future hyperscaler wins - The company expects to see leverage in design and investment requirements as more hyperscalers are added, reducing costs for future projects [93][94] Question: Revenue linearity throughout the quarter - Management reported typical revenue linearity throughout the quarter, with strong performance sustained [97][98]