EPS of $0.12 increased by 18.2% from previous year
Gross margin of 67.5%
Net income of 42.44M
"Fusion opens up significant new opportunity and value for Pure in this space." - Charlie Giancarlo
Pure Storage Inc (PSTG) QQ4 2025 Earnings Review: Enterprise Data Cloud Momentum Accelerates with Fusion v2, Hyperscale Design Win, and Evergreen One Growth
Executive Summary
Pure Storage reported a solid QQ4 2025 quarter, topping revenue and earnings guidance with sustained demand for its data platform strategy. Q4 revenue of $879.8 million rose 15% year over year, contributing to FY25 revenue of $3.2 billion, up 12% for the year. The company delivered operating profit of $42.5 million in Q4 and an annual operating profit of $559 million, with an annual free cash flow of $526 million (FCF margin 16.6%). Despite a temporary press on product gross margins from the E family due to NAND pricing, management signaled a path to margin normalization as NAND pricing moderates and E family adoption broadens.
Key strategic milestones dominated the year: a hyperscaler design win underpinning a multi-year deployment plan, the GA release of Fusion v.2 converting Pure arrays into an enterprise data cloud, and a continued expansion of Evergreen One as-a-service offerings. Subscriptions and ARR rose meaningfully (subscription revenue up 17% in Q4; ARR up 21% to $1.7B), while RPO reached $2.6B, with subscription-only RPO up 15% YoY. Management underscored AI-driven opportunities across training and inference/in-context use cases, and highlighted customer momentum in Portworx migrations to Kubernetes/OpenShift, as well as large enterprise deals enabled by Fusion v.2.
Looking ahead, Pure reaffirmed FY26 guidance: approximately 11% revenue growth to just over $3.5 billion, with an operating margin near 17% and Q1 FY26 revenue around $770 million (YoY +11%). Management also noted that their hyperscale opportunity is embedded in the 12-month forecast horizon and that Evergreen One growth is expected to resume, though specific quarterly figures were not provided. The company remains focused on accelerating density gains in DirectFlash, advancing NAND/NAND supplier qualification, and expanding its hyperscaler ecosystem while monitoring macro headwinds and tariff dynamics.
Key Performance Indicators
Revenue
879.84M
QoQ: 0.00% | YoY:15.20%
Gross Profit
594.00M
67.51% margin
QoQ: 0.00% | YoY:9.98%
Operating Income
42.47M
QoQ: 0.00% | YoY:70.70%
Net Income
42.44M
QoQ: 0.00% | YoY:18.95%
EPS
0.13
QoQ: 0.00% | YoY:18.18%
Revenue Trend
Margin Analysis
Key Insights
QQ4 2025 Revenue: $879.8M, YoY +15.2%, QoQ 0.0% (resource: four-quarter data and income metrics).
QQ4 2025 Gross Profit: $594.0M; Gross Margin: 67.5% (per income data); Total gross margin reported by CFO narrative: 69.2% for Q4 (transcript variance noted).
QQ4 2025 Operating Income: $42.5M; Operating Margin: 4.83%; EBITDA: $42.5M (or $85.6M in some quarterly disclosures depending on basis).
Quarterly and full-year highlights:
- QQ4 2025 Revenue: $879.8M, YoY +15.2%, QoQ 0.0% (resource: four-quarter data and income metrics).
- QQ4 2025 Gross Profit: $594.0M; Gross Margin: 67.5% (per income data); Total gross margin reported by CFO narrative: 69.2% for Q4 (transcript variance noted).
- QQ4 2025 Operating Income: $42.5M; Operating Margin: 4.83%; EBITDA: $42.5M (or $85.6M in some quarterly disclosures depending on basis).
- FY25 Revenue: $3.20B, up 12% YoY.
- FY25 Operating Profit: $559M; FY25 Free Cash Flow: $526M; Free Cash Flow Margin: 16.6%.
- Subscription Services: Q4 Revenue $385M, +17% YoY; ARR $1.7B, +21% YoY; Subscription gross margin (SG&A/operating context) strong at 77.2% in Q4.
- RPO: Ending Q4 to $2.6B, +14% YoY; Excluding non-cancellable product orders, subscription-only RPO +15% YoY.
- RPO growth contributors: Evergreen One TCV reached a quarterly high of $140M, +20% YoY; FY25 Evergreen One TCV $393M, down 3% due to longer cycle times for >$5M deals and some conversion to traditional sales.
- U.S. vs international revenue: Q4 U.S. $619M; International $261M (International was down 3% YoY in Q4).
- Balance sheet and cash flow: Cash and investments approx. $1.5B; net debt of roughly -$442.8M (net cash); Operating cash flow Q4 $208M; Yearly operating cash flow $753M; Capex $56.1M in Q4; Free cash flow $152M in Q4; Full-year Capex $227M (~7.2% of revenue).
- Share repurchases: Q4 buybacks of 3.1M shares (~$192M); FY25 buybacks $374M (6.7M shares); New authorization for $250M additional.
- Guidance highlights: FY26 Revenuejust over $3.5B; Q1 FY26 Revenue $770M; OPM ~17%; Q1 Op Profit $80M; Hyperscale shipments modeled within the FY26 forecast (1–2 exabytes discussed by management as baked into the plan).
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
879.84M
15.20%
0.00%
Gross Profit
594.00M
9.98%
0.00%
Operating Income
42.47M
70.70%
0.00%
Net Income
42.44M
18.95%
0.00%
EPS
0.13
18.18%
0.00%
Key Financial Ratios
currentRatio
1.61
grossProfitMargin
67.5%
operatingProfitMargin
4.83%
netProfitMargin
4.82%
returnOnAssets
1.07%
returnOnEquity
3.25%
debtEquityRatio
0.22
operatingCashFlowPerShare
$0.64
freeCashFlowPerShare
$0.47
priceToBookRatio
15.35
priceEarningsRatio
118.16
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Key insights from the earnings call, grouped by themes:
- Strategy and platform transformation: Charlie Giancarlo emphasized that Fusion v2 transforms storage architectures from siloed arrays to an enterprise data cloud, enabling data set management, automated policies, improved cybersecurity, and cross-array governance. Quote: Fusion v.2 transforms traditional enterprise data storage architectures from application data silos to enterprise data clouds. “Fusion enables a fundamental shift from data silos to an enterprise data cloud model for data management.”
- Hyperscale opportunity and design win: The company announced a top-four hyperscaler design win with ongoing co-development and testing across multiple performance tiers. Management underscored acceleration in testing, joint development, and multiple NAND supplier qualifications. Quote: “We achieved a design win with a top four hyperscaler.”
- AI strategy and Portworx momentum: Portworx growth supported AI analytics and Kubernetes deployments; two Fortune 50 firms migrated from VMware to Portworx/OpenShift, illustrating demand for containerized and cloud-native data management. Quote: “Last quarter, two Fortune 50 companies decided to transition their VMware environments to a modern virtualization environment using Portworx and Red Hat OpenShift.”
- Fusion adoption and customer feedback: Early adoption was brisk with dozens of customers turning on Fusion, indicating a network effect; customers highlighted fleet-wide management benefits and policy presets. Quote: “The feedback has been not just positive, but enthusiastic. They find that the ability to manage all the systems… under Fusion as a fleet… makes life a lot easier.”
- Financials and margins: Q4 gross margins were pressured by E-family mix and NAND dynamics; management expects margins to normalize as NAND prices moderate. Quote: “The rise of NAND prices in 2024 relative to disk competition did affect gross margins negatively in the year, which we expect to abate in 2025.”
- Guidance and outlook: Pure reaffirmed FY26 revenue growth at ~11% and an operating margin near 17%; Q1 FY26 revenue guidance of $770M; hyperscaler shipments are embedded in the forecast. Quote: “We expect double-digit revenue growth, increasing by 11% to just over $3.5 billion.”
- Geopolitical and tariffs: Management cited tariff contingency planning and global supply chain diversification as ongoing strategic risk management. Quote: “We have developed contingency plans for a variety of tariff scenarios.”
Fusion opens up significant new opportunity and value for Pure in this space.
— Charlie Giancarlo
We close the year on a high note, exceeding guidance with double-digit revenue growth, generating $153 million in operating profit and achieving an operating margin of 17.4%.
— Kevan Krysler
Forward Guidance
Outlook and drivers:
- Revenue trajectory: FY26 guided revenue just over $3.5B, representing about 11% YoY growth, supported by sustained demand for the E family, FlashArray C, and growing Evergreen One and subscription-based services.
- Profitability: FY26 expected operating margin ~17% (Q1 FY26 margin guidance 10.4% vs. full-year target ~17%), implying continued operating leverage as higher-value software and services mix expands and hyperscaler deployments scale.
- Hyperscaler framework: Management indicated that the hyperscaler opportunity is embedded in the forecast (1–2 exabytes referenced) and that updates on rollout timing will be provided 3–6 months in advance of actual deployment; this cadence suggests near-term transparency on milestones as design-to-production transitions progress. The next phase of the design win is expected to ramp production toward FY27, with testing and validation occurring in FY26.
- Fusion and platform growth: Fusion v2 is central to the enterprise data cloud thesis; adoption pace will influence data-management software revenue, automation, and security outcomes. Expect continued acceleration in data-cloud management, with potential benefits to portfolio-wide utilization and cross-sell opportunities (Portworx, FlashBlade, FlashArray).
- Risks and monitoring: Key factors to monitor include NAND pricing trends (expected moderation), HDD/NAND pricing competition, international demand dynamics, and macro IT spend. Tariff dynamics and supply-chain resilience remain ongoing considerations; Pure maintains contingency plans and diversified sourcing to mitigate these risks.
- Investment thesis takeaway: Pure Storage is positioned to monetize AI and data-centric workloads through a unified platform (Fusion v2, Evergreen One, Portworx) with strong ARR and a robust balance sheet (net cash position, $1.5B+ in cash/investments). The combination of a large, recurring subscription base and high-value, capital-light software-driven offerings supports an attractive long-term free cash flow profile, though near-term gross margins may experience volatility around E-family mix until NAND pricing stabilizes.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
PSTG Focus
67.51%
4.83%
3.25%
118.16%
NTAP
70.10%
22.00%
25.40%
17.93%
ANET
63.80%
41.40%
8.01%
43.48%
DELL
24.30%
9.64%
-1.12%
10.90%
DDD
31.00%
-27.40%
-19.10%
-3.23%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Pure Storage remains well-positioned to capitalize on the AI-driven data-cloud opportunity through Fusion v2, Evergreen One, and Portworx. The QQ4 FY2025 results underscore solid execution and growing enterprise demand for a unified data platform that reduces data sprawl, enhances security, and enables real-time AI data access. The FY26 plan embeds an 11% revenue growth trajectory to just over $3.5B with a target operating margin near 17%, supported by continued ARR expansion, higher-value service contributions, and a potentially accelerating hyperscaler deployment. Key catalysts include: (1) Fusion v2-driven data-cloud adoption across Fortune 500 and hyperscalers, (2) expansion of Portworx in containerized AI/Cloud-native workloads, (3) density and performance gains in DirectFlash that improve price/performance, and (4) a favorable NAND pricing backdrop that restores product margins toward the 65%–70% long-run target. Investors should monitor hyperscaler rollout progress, Fusion adoption metrics (presets and fleet management) and the cadence of Evergreen One bookings, as these largely drive the revenue mix and profitability trajectory in FY26 and beyond. The company’s robust balance sheet and cash flow generation support prudent capital allocation, including the announced additional $250M share repurchase authorization, which complements the strategic optionality in capital deployment.
Key Investment Factors
Growth Potential
Catalysts include: (1) rapid Fusion v2 adoption and expansion across enterprise data estates, (2) faster-than-expected hyperscaler deployment leading to multiyear revenue visibility, (3) accelerating Portworx-driven AI and cloud-native deployments, (4) Evergreen One TCV growth and expansion into large-scale as-a-service offerings, and (5) E family market capture as higher-density NVMe/NAND solutions replace disk-based storage with improving unit economics as NAND pricing moderates.
Profitability Risk
Key risks include: (1) NAND price volatility and potential continued pressure on E-family margins if price/volume dynamics shift, (2) macro IT spend weakness or slower-than-expected hyperscaler deployment, (3) competition from incumbents and new entrants in data infrastructure, (4) integration risk and execution challenges as Fusion scales, and (5) tariff- and geopolitics-related supply-chain disruptions despite diversification efforts.
Financial Position
Financial health remains robust with a net cash position (net debt of approximately -$442.8M) and $1.52B in cash and short-term investments. QQ4 operating cash flow was $208M; FY25 operating cash flow $753M; capex of $56.1M in Q4 (FY25 capex total $227M, ~7.2% of revenue). Free cash flow for the year totaled $526M (FCF margin 16.6%). The balance sheet supports ongoing buybacks and strategic investments in hyperscaler capabilities and Fusion-related R&D.
SWOT Analysis
Strengths
Integrated enterprise data platform (Fusion v2) transforming storage silos into an enterprise data cloud
Hyperscaler design win provides long-term growth visibility and validation of scale-ready architecture
Growing Evergreen One and subscription ARR (ARR $1.7B; +21% YoY) supports durable revenue mix
Strong cash generation and net cash position, enabling share repurchases and strategic investments
Portworx growth and Kubernetes/OpenShift migrations demonstrate AI and cloud-native data management traction
Innovations in DirectFlash density (150TB DFMs; target 300TB) and Fusion ecosystem expansion
Weaknesses
Near-term product gross margins pressured by E-family mix and NAND pricing; OEM competition against disk-containing configurations
RPO growth decelerating (14% YoY in total; subscription-only up 15%), signaling project- and large-deal timing risks
Macro and tariff-driven supply-chain uncertainties could affect near-term visibility
Opportunities
AI-driven data workflows, real-time analytics, and RAG use cases across enterprise data clouds
Extended hyperscaler opportunities beyond the initial design win across additional data-center deployments
Broader adoption of Fusion v2 across global enterprises, expanding managed services and cross-sell within the Pure platform
Expansion of Portworx and FlashBlade as AI training/inference enablers, aligning with NVIDIA and cloud-native ecosystems
Threats
NAND price volatility and potential continued price pressure on E-family margins
RPE/annual contract timing risks in Evergreen One and large-scale deals
Competitive pressure from other storage incumbents and rising cloud-native data-management initiatives
Geopolitical and tariff dynamics impacting global supply chains