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Technology | Pure Storage Stock Soars 20% After Data Player Beats On Earnings, Touts Hyperscaler Cloud Win

 

• Technology

Pure Storage Stock Soars 20% After Data Player Beats On Earnings, Touts Hyperscaler Cloud Win

• RYAN DEFFENBAUGH
• 05:27 PM ET 12/03/2024

Pure Storage (PSTG) stock rocketed higher late Tuesday after the enterprise data storage company reported third-quarter earnings and sales that beat expectations. The company also said it had won a "design win" with a top-four hyperscale cloud provider for its DirectFlash data storage technology.

Pure Storage said in a news release that it earned an adjusted 50 cents per share on sales of $831 million for its quarter that ended Nov. 3. Analysts polled by FactSet projected the Santa Clara, Calif.-based company would post adjusted earnings of 41 cents per share on sales of $815 million.

For the same period a year earlier, Pure Storage posted adjusted earnings of 50 cents per share on sales of $763 million.

For the current quarter, Pure Storage guided for sales of $867 million. Analysts were previously projecting $856 million January-ending quarter, according to FactSet. The company now expects fiscal year sales of $3.15 billion, up from guidance for $3 billion it gave in August.

On the stock market today, Pure Storage stock rallied more than 23% to 65.93 in after-hours action.

Cloud Hyperscale Design Win

Along with posting better-than-expected results, Pure Storage stock is likely being helped by announcing what it called a design win with a top-four hyperscaler. Pure Storage did not name the company in its press release, but the term is typically applied to tech giants Amazon (AMZN), Microsoft (MSFT), Google (GOOGL) and Meta (META).

"Pure Storage has achieved another industry first in our journey of data storage innovation with a transformational design win for our DirectFlash technology in a top-four hyperscaler," CEO Charles Giancarlo said in a news release. "This win is the vanguard for Pure Flash technology to become the standard for all hyperscaler online storage, providing unparalleled performance and scalability while also reducing operating costs and power consumption."

Pure Storage teased the design win at an analyst presentation in June. Analysts viewed the news at the time as a positive step for the flash storage technology that Pure Storage offers. Hyperscalers typically rely on traditional hard disk storage.

Pure Storage Stock Up 53% This Year

Prior to earnings, Pure Storage gained 1% in Tuesday trading. Shares have gained 53% this year but are down about 12% since Pure Storage last reported earnings in late August. The company lowered its annual guidance for subscription-as-a-service contracts with its Q2 report. Before that, Pure Storage stock was gaining momentum as a potential AI play on the increased needs for data storage.

Coming into the report, Pure Storage stock had an IBD Composite Rating of 70 out of 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one rating. The best growth stocks have a Composite Rating of 90 or better.

August 28 2024 | Technology | Data Storage Stocks | Pure Storage And NetApp Fall Despite Posting Earnings Beats

Here is the link. 

• RYAN DEFFENBAUGH
• 05:49 PM ET 08/28/2024

Rival enterprise data storage firms NetApp (NTAP) and Pure Storage (PSTG) reported quarterly earnings late Wednesday. Pure Storage stock tumbled despite results that beat expectations, while NetApp stock also dipped lower despite posting earnings and sales ahead of consensus.

Pure Storage said it earned an adjusted 44 cents per share on sales of $763.8 million for its fiscal second quarter, which ended Aug. 4. Analysts were expecting earnings of 37 cents per share, according to FactSet, and sales of $756 million. Pure Storage stock is down more than 14% at 51.21 in after-hours trading.

NetApp, meanwhile, reported adjusted earnings of $1.56 per share on sales of $1.54 billion for its fiscal first quarter ended July 26. Analysts were expecting earnings of 1.45 per share from sales of $1.53 billion. NetApp stock is down more than 3% at 127.43 in after-hours action.

Pure Storage: Up 70% Heading Into Report

While its sales and earnings beat expectations, Pure Storage lowered its annual guidance for subscription-as-a-service related total contact value to $500 million, from $600 million. However, the company maintained its overall revenue projection of $3.1 billion for its January-ending fiscal year.

Pure Storage Chief Executive Charles Giancarlo said on a conference call with analysts that the company is seeing a "lengthening" of negotiations for large subscription deals.

For the current quarter, Pure Storage projects sales of $815 million. Analysts had previously projected the company would post $811 million in sales for the period.

Mountain View, Calif.-based Pure Storage offers flash-based data storage hardware, as well as software tools to manage data storage. Shares had gained more than 70% this year heading into the report. Ahead of its report, Pure Storage stock has formed a consolidation pattern with a buy point of 70.41, according to MarketSurge.

In a news release, Giancarlo said the company's flash storage can save enterprises on energy costs.

"In a world where energy demands are soaring, the power savings of Pure Storage alone make the move from hard disks to Pure technology a smart choice for both hyperscaler and enterprise data centers," Giancarlo said.

Meanwhile, revenue from subscription services increased 25% year-over-year to $361.2 million. Pure Storage is transitioning more of its sales to subscription-based storage platforms. But that shift created some headwinds for its sales growth late last year.

Pure Storage is part of the IBD 50 flagship stock list. It also is included in the IBD Tech Leaders list.

Dec 3 2024 | After market | Gainers | Losers

 

PSTG stock | Earnings | Dec 3 2024

 

Pure Storage Inc (PSTG) Q3 FY2025 Earnings: EPS of $0.19 Beats Estimate, Revenue Hits $831.1 Million

Strong Revenue Growth and Strategic Wins Highlight Pure Storage's Performance

Summary

• Revenue: $831.1 million, surpassing the estimated $814.88 million and marking a 9% increase year-over-year.
• Earnings Per Share (EPS): $0.19, exceeding the estimated EPS of $0.11.
• Subscription Services Revenue: $376.4 million, up 22% year-over-year, highlighting strong growth in recurring revenue streams.
• Gross Margin: GAAP gross margin at 70.1% and non-GAAP gross margin at 71.9%, indicating robust profitability.
• Free Cash Flow: $35.2 million, reflecting effective cash management and operational efficiency.
• Share Repurchases: Approximately $182 million returned to stockholders through repurchase of 3.6 million shares, demonstrating commitment to shareholder value.

On December 3, 2024, Pure Storage Inc (PSTG, Financial) released its 8-K filing for the third quarter of fiscal year 2025, showcasing a robust financial performance that exceeded analyst expectations. The U.S.-based company, known for its innovative enterprise data storage solutions, reported a revenue of $831.1 million, surpassing the estimated $814.88 million and marking a 9% increase year-over-year.

Company Overview and Strategic Achievements

Pure Storage Inc is a leader in providing advanced data storage platforms that enhance business performance while reducing complexity and costs. The company generates revenue through product sales and subscription services, including Evergreen Storage subscriptions and Pure as-a-Service offerings.

In the third quarter, Pure Storage achieved a significant milestone by securing an industry-first design win for its DirectFlash technology with a top-four hyperscaler. This strategic victory positions Pure Storage as a frontrunner in the hyperscale market, offering unparalleled performance and scalability.

Financial Highlights and Performance Analysis

Pure Storage's financial results for the third quarter of fiscal 2025 reflect strong growth and operational efficiency:

• Revenue: $831.1 million, a 9% increase year-over-year.
• Subscription services revenue: $376.4 million, up 22% year-over-year.
• GAAP gross margin: 70.1%; non-GAAP gross margin: 71.9%.
• GAAP operating income: $59.7 million; non-GAAP operating income: $167.3 million.
• Operating cash flow: $97.0 million; free cash flow: $35.2 million.

The company's subscription annual recurring revenue (ARR) reached $1.6 billion, reflecting a 22% increase year-over-year, while remaining performance obligations (RPO) grew by 16% to $2.4 billion. These metrics underscore the company's successful transition towards a subscription-based model, which is crucial for sustained growth in the hardware industry.

Income Statement and Balance Sheet Insights

Pure Storage reported a net income of $63.6 million for the third quarter, with a diluted earnings per share of $0.19. This performance highlights the company's ability to generate profit while investing in growth initiatives. The balance sheet remains strong, with total assets of $3.85 billion and total liabilities of $2.44 billion, indicating a solid financial foundation.

Cash Flow and Shareholder Returns

Operating cash flow for the quarter was $97.0 million, and the company returned approximately $182 million to shareholders through share repurchases. This reflects Pure Storage's commitment to enhancing shareholder value while maintaining financial flexibility.

Strategic Commentary and Future Outlook

Our third quarter results exceeded our expectations on revenue and operating income, demonstrating the sustaining strength of our business models," said Kevan Krysler, Pure Storage CFO. "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."

Pure Storage's strategic initiatives, including its partnership with Kioxia and advancements in AI and platform innovation, position the company for continued success in the evolving data storage market. The company's focus on sustainability and operational efficiency further enhances its competitive edge.

Conclusion

Pure Storage Inc's third-quarter performance highlights its strong market position and growth potential. By exceeding revenue estimates and achieving strategic wins, the company demonstrates its capability to navigate industry challenges and capitalize on emerging opportunities. Investors and stakeholders will be keen to monitor Pure Storage's progress as it continues to innovate and expand its market presence.

Explore the complete 8-K earnings release (here) from Pure Storage Inc for further details.

PSTG stock | Earnings | UP 22% after market | Dec 3 2024

 My learning experience | August | Earnings dip | Buy dip 

PSTG earnings report | August 2024

SABR stock | W chart | Dec 3 2024

 

Black Friday | SKX stock | Holiday shopping | Skechers shares surge on upbeat holiday sales commentary

 

Skechers shares surge on upbeat holiday sales commentary

Stock Market

Published 2024-12-03, 10:28 a/m

Shares of Skechers USA (NYSE:SKX) rose as much as 6.2% in intraday trading, marking the largest rise since September 26. The boost in stock value came after the company's Chief Financial Officer, John Vandemore, expressed optimism about the recent holiday sales.

Vandemore noted the results thus far have been "very encouraging," pointing to a steady consumer interest in innovative footwear products.

During a fireside chat at the Morgan Stanley (NYSE:MS) Global Consumer & Retail Conference, Vandemore highlighted that despite the positive sales trends, the shorter shopping window between Thanksgiving and Christmas this year could impact the overall performance of the holiday period.

He emphasized the importance of assessing the complete results of the season to gauge the company's success accurately.

Investors reacted favorably to the CFO's comments, signaling confidence in Skechers' performance during a critical sales period for retailers.

SPMO ETF | The Invesco S&P 500® Momentum ETF (Fund) | YTD 2024 57.25%

 

The Invesco S&P 500® Momentum ETF (Fund) is based on the S&P 500 Momentum Index (Index). The Fund generally will invest at least 90% of its total assets in the securities that comprise the Index. The Index tracks the performance of stocks in the S&P 500® Index that have a high "momentum score". The Fund and Index are reconstituted and rebalanced twice a year on the third Fridays of March and September. Constituents are weighted by their market capitalization and their momentum score.

as of 10/31/2024

Morningstar Rating ™

Overall Rating - Large Growth Category    

As of 10/31/2024 the Fund had an overall rating of 5 stars out of 1073 funds and was rated 5 stars out of 1073 funds, 5 stars out of 1006 funds and N/A stars out of N/A funds for the 3-, 5- and 10- year periods, respectively.

AI | Earnings Report | Credo Technology Stock Soars 40%. Why It’s the Latest AI Data Center Darling.

1. AI

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2. Earnings Report

Credo Technology Stock Soars 40%. Why It’s the Latest AI Data Center Darling.

By Adam Clark

Updated Dec 03, 2024, 11:09 am EST / Original Dec 03, 2024, 7:47 am EST 

Credo Technology Group Holding stock was surging early Tuesday. It’s the latest company to benefit from a wave of data-center investment linked to artificial intelligence.

Credo 

CRDO

+47.01%

 shares were up 40% at $66.70 in morning trading after the provider of high-speed connectivity solutions for data centers reported second-quarter earnings ahead of expectations, and it gave a stronger-than-expected revenue forecast.

Credo’s stock price had already more than doubled so far this year as investors flock to invest in companies supplying components and power for AI data centers. However, its latest results indicate a stronger pace of investment from its customers such as Microsoft 

MSFT

-0.08%

 and Amazon.com 

AMZN

+0.87%

.

Credo reported adjusted earnings of seven cents a share after the market close on Monday—beating analysts’ expectations of five cents a share, according to FactSet. Revenue surged 64% to $72 million and came in ahead of the $66.8 million that analysts were looking for, according to FactSet.

“For the past few quarters, we have anticipated an inflection point in our revenue during the second half of fiscal 2025. I am pleased to share that this turning point has arrived, and we are experiencing even greater demand than initially projected, driven by AI deployments and deepening customer relationships,” said Chief Executive Bill Brennan in statement.

For its fiscal third quarter, Credo guided for revenue between $115 million and $125 million, compared with analyst expectations for sales of $104.6 million.

“We see Credo [as] an outsized beneficiary of AI-driven tailwinds while maintaining [its] cost/power competitive moat,” wrote Mizuho Securities analyst Vijay Rakesh in a research note.

Rakesh raised his target price on Credo stock to $70 from $49 and kept an Outperform rating on the shares.

Meanwhile, Credo won a rare double upgrade to Buy from Underperform from BofA Global Research analyst Vivek Arya, who raised his target price on the stock to $80 from $27.

“Our prior cautious view was based on limited total addressable market assumptions for AEC [Active Electrical Cable], but Credo’s earnings call addressed those concerns nicely, with 3x 10% customers (Microsoft, Amazon, Tesla), and growing momentum in other adjacent areas,” Arya wrote.

Write to Adam Clark at adam.clark@barrons.com

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