Pure Storage (NYSE:PSTG) shares gained more than 5% pre-market following the company’s better-than-expected Q1 earnings.
EPS of $0.08 came in better than the consensus estimate of $0.04. Revenue fell 5% year-over-year to $589.3 million, beating the consensus estimate of $559.78M.
Excluding the impact of $60M of Q1/23 product revenue that was contemplated in the second half of last year, revenue grew 5% year-over-year.
Subscription services revenue increased 28% year-over-year to $280.3M. Subscription annual recurring revenue (ARR) was $1.2B, representing a 29% year-over-year increase.
For Q2/24, the company expects revenue of $680M, above the consensus estimate of $657.4M. The non-GAAP operating margin is expected to be 13%.
For the full year, the company expects mid-to-high single-digit revenue growth year-over-year. Non-GAAP operating margin is expected to be 15%.
BofA analysts hiked the price target by 10% to $33 per share after witnessing "strong" results. Still, they remain "concerned that ASPs and revenue will be pressured as NAND prices continue to fall further."
The analysts reiterated a Neutral rating "on risk/reward balance as improving subscription revs, and higher mix of SaaS rev and next-generation Flash product is balanced by risk from weaker macro & potential competitive threats."
Wells Fargo analysts added:
"With positive F1Q24 results and F2Q24 guide upside, we think shares should positively react to the consideration that PSTG's maintained full-year guide has been de-risked."
Additional reporting by Senad Karaahmetovic