Executive Summary
Pure Storage reported QQ2 2026 revenue of $861.0 million, with a robust gross margin of 70.2% and a near-breakeven operating profit of $4.9 million. Net income of $47.1 million and earnings per share of $0.14 reflect a mixed margin trajectory: strong gross profitability supported by a lean operating expense base, yet operating margins remain subdued due to sizeable selling, general and administrative (SG&A) and research and development (R&D) investments coupled with other income contributing to pretax profitability. EBITDA of $86.5 million and free cash flow of $150.1 million underscore durable cash-generation capability even as top-line growth softens versus prior year.
Cash position remains highly liquid with $1.54 billion in cash and short-term investments and a net cash position (net debt negative) of approximately $665 million. The balance sheet shows meaningful deferred revenue totaling roughly $1.9 billion (current and non-current), signaling strong subscription-based monetization and forward revenue visibility. Operating cash flow of $212.2 million during the quarter supports sustained capital-allocation flexibility, including modest capex and ongoing share activity. The result is a cash-generative, high-margins business that faces a flat-to-modestly down revenue base in the near term but is positioned to leverage AI-driven storage demand and cloud/enterprise transition themes over the medium term.
Key Performance Indicators
Key Insights
Revenue: $861.0M; YoY change: -2.14%, QoQ change: 0.00%
Gross Profit: $604.336M; YoY change: +1.74%, QoQ change: 0.00%
Operating Income: $4.871M; YoY change: -88.53%, QoQ change: 0.00%
Net Income: $47.118M; YoY change: +11.04%, QoQ change: 0.00%
EPS: $0.14; YoY change: +7.69%, QoQ changes: 0.00%
Gross Margin: 70.19%; Operating Margin: 0.57%; Net Margin: 5.47%
EBITDA: $86.499M; EBITDA Margin: 10.05%
Income Before Tax: $50.571M; Pretax Margin: 5.87%
Tax Expense: $3.453M; Effective Tax Rate: ~6.83%...
Financial Highlights
Revenue: $861.0M; YoY change: -2.14%, QoQ change: 0.00%
Gross Profit: $604.336M; YoY change: +1.74%, QoQ change: 0.00%
Operating Income: $4.871M; YoY change: -88.53%, QoQ change: 0.00%
Net Income: $47.118M; YoY change: +11.04%, QoQ change: 0.00%
EPS: $0.14; YoY change: +7.69%, QoQ changes: 0.00%
Gross Margin: 70.19%; Operating Margin: 0.57%; Net Margin: 5.47%
EBITDA: $86.499M; EBITDA Margin: 10.05%
Income Before Tax: $50.571M; Pretax Margin: 5.87%
Tax Expense: $3.453M; Effective Tax Rate: ~6.83%
Free Cash Flow: $150.13M; Free Cash Flow per Share: $0.458
Operating Cash Flow per Share: $0.648; Cash per Share: $4.69
Cash and Short-Term Investments: $1.537B; Total Debt: $222.713M; Net Debt: -$665.136M
Deferred Revenue (Current): $1.006B; Deferred Revenue (Non-Current): $904.867M; Current Ratio: 1.58; Quick Ratio: 1.55
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
861.00M |
-2.14% |
0.00% |
| Gross Profit |
604.34M |
1.74% |
0.00% |
| Operating Income |
4.87M |
-88.53% |
0.00% |
| Net Income |
47.12M |
11.04% |
0.00% |
| EPS |
0.14 |
7.69% |
0.00% |
Key Financial Ratios
operatingProfitMargin
0.57%
operatingCashFlowPerShare
$0.65
freeCashFlowPerShare
$0.46
priceEarningsRatio
103.46
Management Commentary
Note: The earnings transcript was not provided in the data set. As a result, no verbatim management quotes or theme-by-theme quotes can be drawn from the call. If you supply the transcript or key excerpts, I can extract quotes, group them by theme (strategy, operations, market conditions), and contextualize their significance for the investment thesis.
Forward Guidance
No explicit forward guidance is included in the provided data. Given the current mix of revenue, profitability, and cash flow, the base case suggests continued solid gross margins (driven by Purity software and storage hardware efficiency) with modest top-line growth converting to meaningful free cash flow as operating leverage improves. The AI/ML workload tailwinds and cloud adoption present a runway for higher storage demand (e.g., FlashBlade and Portworx adoption), but revenue growth remains exposed to enterprise IT budgeting cycles and macro uncertainty. If management reiterates a path to sustainable mid-single-digit revenue growth accompanied by margin expansion through SG&A optimization and higher mix of recurring revenue, the stock could re-rate on improved visibility. Potential catalysts include expansion of evergreen storage revenues, AI-ready infrastructure deployments, and partnerships that accelerate adoption of the Purity software suite. Key factors to monitor: trajectory of deferred revenue, conversion of backlog into realized revenue, progression of opex as a percentage of revenue, and the pace of new product cycles that monetize higher-margin software and services.