Pure Storage Stock Jumps Pre-Market Following Beat-And-Raise Q3, Kioxia Tie-Up: Retail Relishes Outperformance

Shares of Pure Storage, Inc. ($PSTG) jumped in Wednesday’s premarket session after the advanced data storage technologies and services provider announced its fiscal year 2025 third-quarter results and a partnership with Japan’s Kioxia to develop high-performance, scalable storage infrastructure for hyperscale data centers.

Pure Storage, based in Santa Clara, California, reported third-quarter non-GAAP earnings per share (EPS) of $0.50, flat with the year-ago quarter. The bottom line performance exceeded the $0.41 per share consensus estimate.

Revenue climbed about 9% year-over-year (YoY) to $831.07 million versus the $814.9 million consensus estimate. Product revenue, accounting for 55% of the total revenue, edged up 0.32% to $454.74 million, and subscription revenue improved about 22% to $376.34 million.

Among operational metrics, subscription annual recurring revenue rose 22% to $1.6 billion, and remaining performance obligations were up 16% to $2.4 billion. 

Non-GAAP operating margin was 20.1%.

Pure Storage ended the quarter with cash, cash equivalents and marketable securities of $1.6 billion. 

Commenting on the results, CEO Kevan Krysler said, “Our third quarter results exceeded our expectations on revenue and operating income, demonstrating the sustaining strength of our business models.”

“We remain focused on driving both near-term results and long-term value creation through disciplined investments and innovation that position Pure as the leader in transforming the data storage landscape.”

During the quarter, the company said it will be a certified storage solution for Nvidia DGX SuperPOD by the end of 2024, accelerating enterprise artificial intelligence adoption. 

Pure Storage said it expects fourth-quarter revenue of $867 million, and it upped its full-year revenue guidance from $3.1 billion to  $3.15 billion. This compares to the consensus of $855.18 million and $3.13 billion, respectively.

The collaboration announced with Kioxia, a dominant player in flash memory and solid-state devices, envisages combining Pure Storage’s advanced data storage platform with the former’s QLC flash memory. This will help hyperscalers keep pace with growing data demands without sacrificing performance, Pure Storage said.

Analysts were quick to lift their price targets for Pure Storage stock, with upward adjustments ranging from $5 to $15. Piper Sandler upgraded Pure Storage stock from Neutral to Overweight, citing the better-than-expected third-quarter results, underpinned by strong traditional sales. However, the firm said lead metrics struggled.

That said, Piper Sandler said a design win with a top four cloud hyperscaler, representing a $500 million revenue opportunity in 2026, removes risks and creates a catalyst for upside ahead.

PSTG sentiment and message volume December 4, 2024, premarket as of 8:18 am ET | Source: Stocktwits

Retail sentiment toward Pure Storage stock flipped from ‘bearish’ a day ago to ‘extremely bullish’ (97/100), with the reading marking the highest in over a year. Message volume spiked to ‘extremely high.

In premarket trading as of 8:18 a.m. ET, the stock surged 23.27% to $65.94, having gained over 50% this year. 

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