Shares of Pure Storage fall on narrow revenue miss and lower guidance

Flash storage pioneer Pure Storage Inc. missed Wall Avenue’s income goal for the primary time in years at the moment and adopted up with a delicate forecast for the approaching fiscal 12 months. The market reacted negatively, with Pure’s inventory falling greater than 10% in prolonged buying and selling.

The corporate reported fourth quarter internet revenue of $74.5 million, up from a revenue of simply $14.9 million one 12 months in the past. Earnings earlier than sure prices resembling inventory compensation got here to 53 cents per share, forward of Wall Avenue’s goal of 39 cents per share. Nonetheless, whereas Pure’s income rose 14% to $810.2 million for the quarter, it fell in need of the analyst consensus estimate of $811.6 million.

For the complete 12 months fiscal 2023, Pure Storage reported income of $2.753 billion, up 26% from the earlier 12 months.

Pure Storage is a number one supplier of enterprise-grade flash-based information storage {hardware} and software program that’s designed to interchange conventional arduous drives. The corporate sells flash-based capability storage, entry-level storage and file and object storage techniques. As well as, it additionally gives cloud-based storage-as-a-service, and software program for managing information storage.

Pure Storage Chairman and Chief Govt Charles Giancarlo (pictured) stated in a press release that his firm as soon as once more grew sooner than the general storage market in fiscal 2023, due to its portfolio of superior, dependable and energy-efficient services. “Regardless of present macro circumstances, we stay assured in our capability to execute, handle prices, and preserve a robust innovation cycle,” he stated.

The corporate did no less than provide a lot of encouraging numbers to again up these claims. Its subscription and companies income for the quarter got here to $265.1 million, up 23% from a 12 months in the past, whereas product income elevated 9% to $545.1 million.

Pure additionally pointed to 30% progress in its subscription-based annual recurring income, which hit $1.1 billion. And it stated it had $1.8 billion in remaining efficiency obligations, up 24% from a 12 months earlier. RPO represents future obligations arising from contracts with prospects, or the amount of money the corporate is owed that has not but been invoiced.

Steve McDowell, an analyst with NAND Analysis, instructed SiliconANGLE that regardless of narrowly lacking its income targets, Pure Storage is more likely to find yourself forward of the general storage market this quarter.

“We’ve heard from everybody within the enterprise infrastructure house that demand is down, together with many of the flash reminiscence suppliers,” he stated. “What we’re seeing right here is that Pure can be impacted by that. Even so, Pure managed double-digit progress but once more. None of Pure’s opponents will develop that a lot.”

McDowell additionally highlighted the expansion in Pure’s subscription enterprise progress. He stated this more than likely signifies outstanding progress for Pure’s Portworx and as-a-service offerings, and stated these will proceed to be a brilliant spot for the corporate going ahead.

Maybe the larger information at the moment from Pure was the launch of its new FlashBlade/EE product, which is designed to interchange older arduous drives in enterprise information lakes. FlashBlade/EE is described by the corporate as an “unstructured information repository”, and is predicated on QLC NAND flash storage expertise, which is extra reasonably priced than the TLC NAND that’s sometimes utilized in high-performance flash techniques. Due to QLC NAND’s excessive storage density and low prices, enterprises now have a substitute for conventional disks in relation to storing information that’s predominately read-only – which makes up the majority of most enterprise’s information.

“Pure Storage is bringing reasonably priced flash storage into the high-capacity information world for the primary time,” McDowell stated. “It’s the primary vendor to focus on this house with flash storage, that means that Pure is coming into new markets with virtually no direct competitors. That offers Pure a considerable head begin. It’s a great product — reasonably priced, sustainable and with a decrease TCO.”

Wanting forward, Pure Storage stated it’s anticipating mid-single-digit to high-single-digit progress in income for fiscal 2024, together with a 15% adjusted working margin. The forecast is decrease than Wall Avenue’s goal of $3.125 billion in annual income, which suggests progress of 13%.

“Pure has guided down, however so has each certainly one of its opponents,” McDowell stated. “Pure is doing the suitable issues and has the suitable merchandise, and its excessive NPS rating exhibits that prospects proceed to love what it’s doing.”

In its press launch, Pure stated its board of administrators has licensed an incremental inventory buyback of a further $250 million underneath its share repurchase program. Throughout the fourth quarter, it purchased again $67.5 million price of shares.

“We’re assured that we are going to navigate the present macro backdrop whereas specializing in our dedication to ship long-term, worthwhile progress,” stated Pure Chief Monetary Officer Kevan Krysler.

Photograph: SiliconANGLE