Data storage solutions provider Pure Storage (NYSE: PSTG) missed Wall Street’s revenue expectations in Q1 CY2025, but sales rose 12.3% year on year to $778.5 million. Its non-GAAP EPS of $0.29 per share was 17.1% above analysts’ consensus estimates.
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Pure Storage (PSTG) Q1 CY2025 Highlights:
- Revenue: $778.5 million (12.3% year-on-year growth)
- Adjusted EPS: $0.29 vs analyst estimates of $0.25 (17.1% beat)
- Adjusted Operating Income: $82.74 million vs analyst estimates of $81.56 million (10.6% margin, 1.5% beat)
- Revenue Guidance for Q2 CY2025 is $845 million at the midpoint, roughly in line with what analysts were expecting
- Operating Margin: -4%, up from -6% in the same quarter last year
- Annual Recurring Revenue: $1.71 billion at quarter end, up 18.4% year on year
- Billings: $810.7 million at quarter end, up 15.7% year on year
- Market Capitalization: $18.04 billion
StockStory’s Take
Pure Storage’s first quarter performance was driven by increased adoption of its subscription-based storage offerings and expansion across both traditional and modern workloads. Management attributed growth to the strong uptake of solutions such as Evergreen//One and the launch of new platforms like Fusion 2.0 and FlashBlade//EXA. CEO Charlie Giancarlo emphasized how broad AI-related demand and modernization initiatives were central to the company’s momentum, citing customer interest in unified data management and real-time information access. He explained that customers are seeking ways to reduce complexity and enhance reliability, particularly as they migrate away from legacy systems and adopt modern virtualization strategies.
Looking forward, Pure Storage’s guidance is shaped by ongoing investment in high-performance storage for AI workloads, expansion of its service-based offerings, and continued collaboration with hyperscale cloud providers. Management acknowledged that macroeconomic uncertainty and tariff-related risks could impact visibility in the second half of the year. CFO Kevan Krysler stressed that the company’s pricing predictability and ability to absorb tariff costs through operational efficiencies position it to maintain customer subscription rates. Giancarlo added, “We remain confident in our ability to outpace the competition,” as the company focuses on growing market share and executing its hyperscale strategy.
Key Insights from Management’s Remarks
Management credited the quarter’s results to new product launches, deeper customer engagement in AI workloads, and the continued shift toward subscription revenue. The departure of CFO Kevan Krysler was also highlighted as a notable leadership transition.
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AI-driven customer wins: Pure Storage saw a significant increase in customer activity related to artificial intelligence (AI), notably supporting both public and private GPU-driven machine learning workloads. The company’s unified platform was cited as a differentiator for handling diverse AI use cases, including inference and data retrieval tasks, without requiring multiple products.
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Fusion 2.0 and FlashBlade//EXA rollout: The launch of Fusion 2.0, which enables software-defined data management across an enterprise, and the introduction of FlashBlade//EXA for high-performance computing and AI, were central to the quarter. Management noted strong early customer engagement with Fusion 2.0 and positioned FlashBlade//EXA as targeting large-scale, high-demand environments like GPU clusters.
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Expansion of subscription services: Evergreen//One, Pure Storage’s storage-as-a-service model, showed strong growth in total contract value sales and recurring revenue. The company highlighted customer demand for predictable pricing and robust service level agreements, especially as tariff uncertainties grew more prominent.
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Hyperscale and cloud partnerships: Pure Storage advanced its collaboration with Meta, progressing through production validation for large-scale deployments. The company also announced a new partnership with SK Hynix to optimize flash storage for energy-efficient hyperscale data centers, reinforcing its position in the evolving cloud infrastructure market.
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Leadership transition: CFO Kevan Krysler’s planned departure, after five years with the company, was announced. Management emphasized succession planning and Krysler’s contributions to the evolution of Pure’s subscription business and overall financial strategy.
Drivers of Future Performance
Pure Storage’s outlook is anchored by increased adoption of AI-driven storage, growth in subscription services, and continued expansion in the hyperscale segment.
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AI and high-performance computing demand: Management expects continued growth from organizations building large-scale GPU clusters and deploying AI models, driving demand for platforms like FlashBlade//EXA and unified data clouds.
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Subscription and service model resilience: The company’s Evergreen//One offering is positioned as a buffer against macroeconomic and tariff uncertainties, with management reiterating that customer rates will remain stable even if supply chain costs rise. This model is expected to support recurring revenue stability.
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Hyperscale customer ramp: Pure Storage’s work with Meta and other hyperscalers is anticipated to contribute meaningfully in the second half of the year, though management noted the long validation cycles and dependency on broader data center design timelines as sources of uncertainty.
Catalysts in Upcoming Quarters
As we monitor Pure Storage’s progress in coming quarters, our team will track (1) the pace of AI and hyperscale revenue contributions, especially from Meta and new cloud partnerships, (2) sustained growth in subscription and service-based offerings amid potential tariff pressures, and (3) customer adoption rates for recently launched platforms like Fusion 2.0 and FlashBlade//EXA. Execution on these fronts will signal whether Pure delivers on strategic priorities despite evolving macro conditions.
Pure Storage currently trades at a forward P/E ratio of 30.3×. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free).
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