Pure Storage shares are trading sharply lower in late trading Tuesday on investor disappointment with the company’s outlook for the October quarter.
For the fiscal second quarter ended Aug. 2, Pure (PSTG) reported revenue of $403.7 million, up 2% from a year ago, and ahead of the Wall Street analyst consensus forecast of $395.3 million. The company posted a non-GAAP profit of six cents a share; consensus was for a break-even quarter.
For the third quarter, the data-storage company expects revenue to be about flat with the second quarter; that would be well below the Street consensus at $443.8 million. The company sees operating margin in the third quarter to be slightly below break even “near negative 2%.” The Street has been looking for a non-GAAP profit of 7 cents a share.
“Through the first half of the year Pure has delivered solid results through execution, focus, and operating discipline,” the company said in a statement. “The core fundamentals of Pure’s business are strong, however, the significant global economic contraction caused by Covid-19 continues to create variability. Therefore, consistent with the prior quarter Pure is not providing formal guidance.”
CEO Charlie Giancarlo said in a statement that the company had “a solid quarter, reflecting Pure’s unmatched technology leadership, simplicity, performance and extraordinary reliability that makes us the right decision during this time.”
In a conversation with Barron’s this afternoon, Giancarlo said that the quarter showed “good operational discipline,” with results above consensus. He said it was a strong quarter internationally, and “a great quarter in terms of innovation.” Giancarlo noted that European business was up about 20%, pointing out that the economy there has begun to emerge from the lockdown. “It’s good sign that when the economy bounces back here that we can see strong growth,” he says.
Giancarlo said there was a slight pick up in the new business pipeline at the beginning of the current quarter compared with the previous quarter. He added that “it is very hard at this point to really forecast accurately.” He said some customers have retrenched in the face of the economic downturn but notes that he thinks there will be improved enterprise IT spending later in the year. “It’s very difficult to predict when that will occur,” he said.
In premarket trading, Pure is down 11%, to $14.89.
Write to Eric J. Savitz at eric.savitz@barrons.com
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August 26, 2020 at 05:41PM
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Pure Storage Topped Earnings Estimates. Here’s Why Its Stock Is Dropping. - Barron's
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