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Pure Storage, Inc. (PSTG)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 FY25 revenue was $879.8M (+11% YoY), non-GAAP gross margin 69.2%, and non-GAAP operating income $153.1M; management said the quarter exceeded both revenue and earnings guidance .
  • Subscription metrics were strong: Q4 subscription services revenue $385.1M (+17% YoY), ARR $1.7B (+21% YoY), and RPO $2.6B (+14% YoY) .
  • Product gross margin compressed to 62.9% (non-GAAP) on record E-family mix and higher QLC costs vs stable HDD pricing; management expects moderation in QLC pricing and product GM settling mid-60s in FY26 .
  • FY26 guidance: revenue $3.515B (+11% YoY), non-GAAP operating income ~$595M (17.0% margin); Q1 FY26 revenue $770M and non-GAAP OI $80M (10.4% margin) .
  • Additional $250M buyback authorized, following $192M repurchased in Q4 and $374M in FY25; hyperscale design win progressing with production expected FY27, a key narrative catalyst .

What Went Well and What Went Wrong

What Went Well

  • “We delivered a solid Q4, exceeding both revenue and earnings guidance” and capped FY25 with $3.2B revenue (+12% YoY) .
  • Record TCV sales of Evergreen//One in Q4 at $140M (+20%), and strong platform sales across FlashBlade, FlashArray//XL, Portworx, E family, and Evergreen renewals .
  • Hyperscale momentum: industry-first design win with a top-4 hyperscaler; progressing through advanced testing and planning, with the opportunity to free substantial data center power and space .

What Went Wrong

  • Product gross margin declined to 62.9% (non-GAAP) on E-family mix shifts and higher QLC pricing vs HDD; total non-GAAP gross margin fell to 69.2% vs 73.7% in Q4 FY24 .
  • International revenue was $261M, down 3% YoY; overall RPO growth slowed to 14% given lower FY25 TCV in Storage-as-a-Service offerings .
  • Evergreen//One FY25 TCV declined 3% YoY despite a strong Q4, as larger deals required extended timelines or converted to traditional sales earlier in the year .

Financial Results

MetricQ4 FY24Q3 FY25Q4 FY25
Total Revenue ($USD Millions)$789.8 $831.1 $879.8
Diluted EPS ($USD)$0.20 $0.19 $0.12
GAAP Gross Margin %72.0% 70.1% 67.5%
Non-GAAP Gross Margin %73.7% 71.9% 69.2%
Non-GAAP Operating Income ($USD Millions)$157.8 $167.3 $153.1
Non-GAAP Operating Margin %20.0% 20.1% 17.4%

Segment revenue breakdown:

Segment Revenue ($USD Millions)Q4 FY24Q3 FY25Q4 FY25
Product$460.9 $454.7 $494.8
Subscription Services$328.9 $376.3 $385.1

KPIs and operating cash metrics:

KPI / Cash MetricQ3 FY25Q4 FY25
Subscription ARR ($USD Billions)$1.57 $1.70
RPO ($USD Billions)$2.4 $2.6
Subscription Services Revenue ($USD Millions)$376.3 $385.1
Product GM (Non-GAAP, %)67.4% 62.9%
Subscription GM (Non-GAAP, %)77.4% 77.2%
Operating Cash Flow ($USD Millions)$97.0 $208.0
Free Cash Flow ($USD Millions)$35.2 $151.9
Cash & Investments (approx.)$1.6B $1.5B

Guidance Changes

MetricPeriodPrevious GuidanceCurrent Guidance / ActualChange
Revenue ($USD Millions)Q4 FY25$867 $879.8 Raised/Beat
Non-GAAP Operating Income ($USD Millions)Q4 FY25$135 $153.1 Raised/Beat
Non-GAAP Operating Margin %Q4 FY2515.6% 17.4% Raised/Beat
Revenue ($USD Billions)FY25$3.15 $3.168 Raised/Beat
Non-GAAP Operating Income ($USD Millions)FY25$540 $559.4 Raised/Beat
Revenue ($USD Billions)FY26N/A$3.515 New
Non-GAAP Operating Income ($USD Millions)FY26N/A$595 New
Non-GAAP Operating Margin %FY26N/A17.0% New
Revenue ($USD Millions)Q1 FY26N/A$770 New
Non-GAAP Operating Income ($USD Millions)Q1 FY26N/A$80 New
Non-GAAP Operating Margin %Q1 FY26N/A10.4% New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 FY25)Previous Mentions (Q3 FY25)Current Period (Q4 FY25)Trend
Hyperscale opportunityLead prospect advanced; aiming to secure design win by year-end Announced top-4 hyperscaler design win; production expected FY27 Engagement progressing; deeper testing; 1–2 exabytes contemplated for FY26 in guide structure Accelerating execution
Product margins & QLCAnticipated modest decline in 2H due to E-family/C mix and QLC volatility Sequential product GM decline expected into Q4 Product GM 62.9% on E-family strength and higher QLC vs HDD; mid-60s product GM expected in FY26 Pressure moderating ahead
Evergreen//One dynamicsFY25 TCV guided to $500M (+25%); large deals taking longer Velocity deals converted to CapEx; lower TCV in Q3 Record Q4 TCV $140M (+20%); FY25 TCV down 3%, expecting FY26 growth Reaccelerate in FY26
AI initiativesDGX SuperPOD certification by year-end; GenAI pod; SoftBank AI win CoreWeave partnership; training/inference/RAG narrative FlashBlade setting new bar; inference/RAG momentum; Fusion enables enterprise data cloud for AI Broadening enterprise adoption
Regional trendsU.S. strength; international steady U.S. $562M, International $269M U.S. $619M primary growth; International down 3% YoY Mixed; U.S. outperformed
Supply chain/tariffsDiversified supply chain; pursuing hyperscaler scale investments Building supply chain for hyperscale; CapEx investments Tariff contingencies; diversified supply chain; agile procurement Prepared; vigilant

Management Commentary

  • CEO: “We delivered a solid Q4, exceeding both revenue and earnings guidance” and FY25 was “marked by progress” with platform transformation .
  • CFO: “Record TCV sales of Evergreen//One of $140 million, a 20% increase” and FY25 operating profit of $559M; FY26 operating margin guided ~17% with continued hyperscale investments .
  • CEO on margins: E-family mix and QLC price increases vs disk suppressed product margins; expects moderation and normalization as QLC pricing eases .
  • CTO: Engagement with hyperscalers “moving forward through the more advanced phases” toward ramping significant scale; discussions with others accelerating .
  • CEO on Fusion: Fusion v2 transforms arrays into an enterprise data cloud, automating policies, enhancing security, and breaking down silos; early feedback from dozens of customers “enthusiastically positive” .

Q&A Highlights

  • Hyperscale model: Licensing Purity and DirectFlash designs; hardware not included; multiyear duration with volumes TBD; operating margin expansion expected over time (production from FY27) .
  • Product GM drivers: Decline attributable to E-family competing vs HDD while NAND rose; margins expected to recover as QLC moderates; long-term product GM mid-60s .
  • Evergreen//One: Larger deals require longer timelines; velocity business strong; FY25 TCV -3% with Q4 rebound; FY26 expected to grow .
  • Regional: U.S. led growth; international declined 3% YoY in Q4; longer-term expectation for faster international growth .
  • Tariffs/geopolitics: Diversified supply/distribution; contingency plans for various scenarios; cannot predict timing, will adjust as needed .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 FY25 and prior periods was not retrievable today due to S&P Global access limits; therefore, comparison vs consensus estimates is unavailable. Values retrieved from S&P Global were unavailable due to daily request limits.

Key Takeaways for Investors

  • Quality beat vs company guidance: Q4 revenue and non-GAAP OI exceeded guidance, and FY25 finished above prior revenue and OI targets—despite margin pressure—signaling resilient demand and execution .
  • Margin narrative is transitory: Product GM compression stemmed from E-family mix and QLC pricing; management sees FY26 product GM mid-60s as QLC moderates and E-family scales—supportive for earnings durability .
  • Subscription engine intact: ARR $1.7B (+21%) and record Q4 Evergreen//One TCV $140M point to robust subscription momentum; anticipate FY26 TCV growth after FY25’s large-deal timing headwinds .
  • Hyperscale optionality: The design win (software/licensing model) could be operating margin accretive over time with production expected in FY27; near-term FY26 investments are the trade-off .
  • Capital allocation supportive: $250M incremental buyback extends repurchase capacity; $1.5B cash/investments underpin flexibility amid hyperscale scaling and macro uncertainty .
  • FY26 setup: 11% top-line guide and 17% non-GAAP OI margin reflect confidence in E-family, subscription, and early hyperscale revenues (1–2 exabytes contemplated) while balancing investment needs .
  • Watch catalysts: NVIDIA GTC showcase for AI storage, Fusion v2 enterprise adoption, QLC price trajectory, Evergreen//One large-deal conversion cadence, and hyperscaler rollout updates (3–6 months before production) .