Pure Storage has increased its full-year forecast after beating its Q3 FY 2026 revenue guidance.
Revenues for the quarter ended November 2 were $964.5 million, up 16 percent year-on-year, with GAAP profits of $54.8 million, down 13.9 percent year-on-year.
CEO and Chairman Charles Giancarlo said: “Pure Storage delivered a strong Q3, continuing to expand revenue growth as customers increasingly look to Pure to solve their most pressing data management requirements. Our results were underpinned by continued strength in enterprise and sustained momentum in our Evergreen//One and modern virtualization solutions, which includes CBS and Portworx. During the quarter we also exceeded our full annual forecast of 2 exabytes of hyperscaler shipments and expect to ship more in Q4.”
Pure has licensed its DirectFlash hardware and software technology to a hyperscaler customer. Product revenues rose 17.6 percent to $534.8 million and included royalties from hyperscaler shipments.
CFO Tarek Robbiati said in the earnings call: “Sales across our portfolio remained robust, led by ongoing strength in the enterprise and our hyperscaler business. We also continue to see strong traction of our Evergreen//One and modern virtualization solutions, which includes Cloud Block Store.”
He added: “We expect momentum in our hyperscaler business to continue in Q4 and obviously for fiscal year ’27.” And: “We plan to grow our hyperscaler business,” meaning beyond having a single customer, which we understand to be Meta.
VP and CTO Rob Lee said: “As we continue to progress with our existing hyperscaler customer and work with additional ones, those activities are progressing well. We continue to be engaged with the majority of, let’s say, the top 10 hyperscalers in one way or another with multiple proofs of concept that are being undertaken and are underway.”
Pure is exploring additional hyperscaler revenue models, beyond license royalties, with details to come at the end of the next quarter. We would suggest that some sort of capacity-related scheme might be involved.
Financial summary
- Gross margin: 72.3 percent vs 70.2 percent last quarter and helped by high-margin hyperscaler royalties
- Operating cash flow: $116 million vs prior quarter’s $212 million
- Free cash flow: $52.6 million vs prior quarter’s $150.1 million
- Cash, restricted cash & investments: $1.53 billion vs year-ago $1.6 billion
Head count increased sequentially by 104 employees to approximately 6,200 employees.
Costs rose significantly, with R&D costs being $49.2 million a year ago compared to the third quarter’s $63.6 million, a 29.2 percent rise. General and admin expenses rose from $16.4 million last year to $26.3 million this year, an 88.1 percent increase, while sales and marketing costs rose just 7.8 percent from $24.4 million to $26.3 million. That’s a $26.2 million cost increase in total.
Robbiati said: “Capital investments of $63 million included test and infrastructure equipment to support data center expansion and funding of Evergreen//One subscription growth.”
“We generated strong revenue and record operating profit, exceeding the high end of our guidance. To sustain this momentum beyond FY26, we will continue to make significant incremental investments in both research and development and sales and marketing to capture additional profitable growth opportunities consistent with our long-term strategy.”
“Beyond fiscal year ’26, we are planning to capitalize on the financial benefits from hyperscaler revenues” to fund the R&D and sales and marketing investments.
Customer count rose by 258 in the quarter to take the total past 14,000, with 63 percent of the Fortune 500 included. It rose by 300 in the previous quarter.
Pure has hired Pat Finn as its new CRO, and he comes from being VP Americas at Cloudflare. He replaces Dan Fitzsimons, who is resigning after ten years in the role.
Next quarter’s revenue outlook is $1.03 billion ± $10 million, a 17.1 percent rise at the midpoint. The full-year outlook is now $3.635 billion ± $5 million, a 14.7 percent increase on last year at the midpoint, and a revision upward from the prior $3.615 billion ± $15 million.
Giancarlo ended the earnings call by saying: “Data is now becoming, we believe, the primary engine that’s going to drive economic growth in the decades ahead. And it needs to be elevated to be useful and available for a wide range of uses.”
