Pure Storage Guidance Misses Street Estimates as Companies Cut IT Spending -- Barrons.com
4:25 pm ET March 1, 2023 (Dow Jones)
By Eric J. Savitz

Pure Storage posted solid fiscal fourth-quarter financial results, but the provider of flash-memory based enterprise storage products supplied revenue guidance for the January 2024 fiscal year that fell well short of Street expectations.

In late trading, Pure Storage shares were 8% lower at $26.50.

Pure (ticker: PSTG) is feeling the effects of slower enterprise spending, CEO Charlie Giancarlo said in an interview with Barron's. He said that customers have been re-evaluating budgets, and that Pure has seen slowing in particular from U.S. enterprise customers. He said that Europe has been stronger, with Asia "somewhere in between."

For the quarter, Pure reported revenue of $810.2 million, in line with the company's forecast, and just a tad below the Street consensus at $811.3 million. Subscription revenues were $265.1 million, up 23%.

Non-GAAP operating income was $158.6 million, above the company's forecast at $130 million, resulting in adjusted profits of 53 cents a share, above the Street at 39 cents. Giancarlo says the company's margins in the quarter benefited from both slower-than-planned hiring and travel expenses below historic levels.

Giancarlo also noted that Pure over the last two years has benefited from orders from Facebook parent Meta Platforms (ticker: META), but that it hasn't gotten any orders from Meta so far for the new fiscal year. He also notes that the company has no significant business from the three major hyperscalers -- Amazon.com, Microsoft, and Alphabet -- but he says that over time all three are likely to shift their approach to data-center storage from disk drives to primarily flash-based storage.

For the full year, Pure sees revenue growth in the "mid-to-high" single digits, falling short of the Street consensus forecast of 13% growth. The company sees full-year non-GAAP operating margin of 15%, about in line with estimates.

Wednesday afternoon, Pure also announced a new generation of its flagship storage product -- the FlashBlade/E. Giancarlo says the new product, which starts shipping in April, should be "very impactful" to the company's business, making flash storage more price competitive with hard drives for data center storage.