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Pure Storage Posts Strong Revenue Despite EPS Decline

Pure Storage (PSTG) reports Q4 results with revenue surpassing expectations but EPS sees a decline. The company's strong performance in subscription services may support its stock price moving forward.

Date: 
AI Rating:   6

Revenue Growth and EPS Analysis
Pure Storage reported a revenue of $879.8 million for Q4 2025, exceeding management's guidance of $867 million and illustrating a strong revenue growth of 11.4% compared to the previous year. This positive growth reflects the company’s strong market position, particularly in subscription services, which generated $385.1 million, representing a significant 17% increase year-over-year.

However, the non-GAAP earnings per share (EPS) of $0.45 exhibited a 10% decline from the previous year's $0.50. While the EPS still surpassed the estimate of $0.41, the year-over-year decrease may lead to concerns among investors about profitability trends.

Operating Margin and Free Cash Flow Insights
The reported non-GAAP operating margin for Q4 was 17.4%, which exceeded management's expectations of 15.6%. This is a positive indicator of operational efficiency, although it is still lower compared to the previous fiscal year’s margin of 20.0%. The operating margin decline could influence investor sentiment regarding future profitability potential.

Free cash flow also saw a significant decrease to $151.9 million, down 24.3% from $200.9 million a year prior. This decline may raise questions regarding the sustainability of cash generation and whether the company could face liquidity challenges moving forward.

Outlook and Projections
Looking ahead, Pure Storage anticipates revenue for FY 2026 to reach $3.515 billion, maintaining an 11% growth projection. This aligns with their previous growth pattern and suggests a consistent strategy and market demand. The forecasted non-GAAP operating margin of 17% for Q1 FY 26 is consistent, signaling management's confidence despite slight concerns around margins and cash flows.

Stocks:  PSTG