Pure Storage, Inc. Q3 FY2026 earnings call

• Pure Storage delivered strong Q3 results, with revenue growing 16% year over year to $964 million and operating profit growing 17% to $196 million. • Continued strength in enterprise and hyperscaler business, with hyperscale shipments exceeding the full annual forecast of two exabytes. • Evergreen One and modern virtualization solutions, including Cloud Block Store and Portworx, showing strong traction. • Recognized in Gartner Magic Quadrants for enterprise storage platforms and infrastructure platform consumption services, and as a leader in IDC marketscape on support services. • Expanded enterprise data cloud into Azure with Pure Storage Cloud, enabling global data landscape unification. • Appointed Pat Finn as chief revenue officer, thanking Dan Fitzsimmons for his contributions.

In Q3, product revenue was $534 million, growing 18% year over year. TCV sales for storage as a service offerings grew 25% year over year to $120 million. Subscription services revenue in Q3 reached $430 million, up 14% year over year, accounting for 45% of total revenue. ARR grew 17% to $1.8 billion while total remaining performance obligations (RPO) grew 24% to $2.9 billion. US revenue was $683 million, growing 22%, and international revenue was $281 million, growing 4% year over year.

• For Q4, revenue is expected to be in the range of $1.02 to $1.04 billion, and operating profit in the range of $220 million to $230 million. • For fiscal year 2026, revenue is anticipated to be in the range of $3.63 to $3.64 billion (14.7% year over year growth) and operating profit in the range of $629 million to $639 million. • Plan to capitalize on hyperscaler revenues to invest in R&D and sales and marketing for fiscal year 2027, with evaluation of business model options for hyperscaler business in FY2027.

• Increased commodity pricing and excess demand putting pressure on global supply chains, with extended component lead times and higher component pricing anticipated. • Supply chain challenges affecting component availability and pricing, which could impact operations.

Q: How should we think broadly about the direct impact on P&L from memory price inflation on margin and revenue perspective, and indirect impact from competitors' pricing changes?

A: Charlie Giancarlo stated that in the dynamic pricing environment, commodity pricing has a greater effect on the overall market than gross margins, and higher prices generally translate to a rising tide in the storage market. His long-term expectation for product gross margins is in the 65 to 70% range.

Q: What is the reflection of a 76% sequential increase in inventory?

A: Tarek Robbiati said the increase was due to tariff mitigation purchases at the beginning of the year and taking positions in key parts to avoid supply chain disruption, with inventory levels still low compared to the business size.

Q: Was there a continued mix shift to higher end products in the quarter and ability to maintain product gross margin?

A: Tarek Robbiati mentioned higher configs bought by customers, Portworx licenses purchased on terms basis, and contribution from hyperscaler revenue as drivers of product gross margin, with continued growth expected.

Q: How has early feedback been on the enterprise data cloud with Pure Storage Cloud and its impact on storage architectures?

A: Charlie Giancarlo said response has been positive, with demand for software upgrades and the Pure Storage Cloud (cloud native in Azure) facilitating global estate management. Rob Lee added positive feedback from multiple persona sets, including CIOs and CISO, on governance and data security aspects.

Q: Update on hyperscaler engagements and investments?

A: Rob Lee said engagements with top hyperscalers are progressing well with POCs underway, and investments include direct flash road map, enterprise portfolio, and AI/NeoCloud initiatives to drive growth.