Pure Storage Earnings: Guidance Up, Stock Falls

Pure Storage earnings showed stronger revenue and an upgraded outlook when the company reported results on Dec. 2, 2025. However, the stock declined after management signaled changes to its sales approach for large cloud customers, prompting analysts to revise forecasts.

Quarter Results and Guidance

Pure Storage said in a press release on Dec. 2, 2025, that third-quarter fiscal 2026 revenue reached $964.5 million, a 16% year-over-year increase. Non-GAAP earnings per share were $0.58, meeting consensus. Operating profit rose 17% to a record $196 million, producing an operating margin of 20.3%.

Product revenue totaled $534.8 million, up 18% year-over-year, while subscription services generated $429.7 million, a 14% increase. Annual recurring revenue (ARR), a measure of predictable subscription income, rose 17% to $1.8 billion. Remaining performance obligation (RPO), representing contracted future revenue, increased 24% to $2.9 billion.

U.S. revenue grew 22% to $683 million, while international revenue rose 4% to $281 million. The company added 258 new customers and said its technology now reaches 63% of the Fortune 500.

Gross margin was 74.1%, with product gross margin at 72.9% and subscription gross margin at 75.5%. Pure Storage raised its full-year fiscal 2026 revenue guidance to $3.63 billion to $3.64 billion and operating profit guidance to $629 million to $639 million. Fourth-quarter revenue is expected between $1.02 billion and $1.04 billion, with non-GAAP operating income guidance of $220 million to $230 million. The company anticipates product gross margin for the full year will be closer to 70%, with quarterly variability.

Management Shift and Market Reaction

Management said it will increase investments in research and development and sales and marketing to sustain momentum and capture profitable growth aligned with its long-term strategy. The company plans to reinvest gains from AI hyperscaler deals into these areas as it adjusts its AI hyperscaler sales strategy. Charles Giancarlo, chief executive and chairman, said, "Pure Storage delivered another strong quarter as global customers increasingly choose Pure to solve their toughest data management challenges."

Despite the strong results and raised guidance, Pure Storage’s stock fell sharply in extended trading at 2025-12-02 17:29 ET. Analysts revised forecasts and ratings after the release, with some downgrades citing uncertainty about how the revised hyperscaler sales model could affect future margin structure.