Pure Storage Q1 fiscal 2026 slides: revenue beats guidance, subscription services surge

Pure Storage (NYSE:PSTG) reported first quarter fiscal 2026 financial results that exceeded guidance across key metrics, while demonstrating continued momentum in its subscription business. The data storage company’s stock traded down 2.14% in aftermarket trading despite the positive results.

Quarterly Performance Highlights

Pure Storage delivered total revenue of $778.5 million in Q1, representing 12% year-over-year growth and exceeding its guidance of $770 million. The company reported non-GAAP operating income of $82.7 million and an operating margin of 10.6%, both slightly above guidance.

As shown in the following chart of key performance metrics, Pure Storage continues to expand its customer base while maintaining strong satisfaction ratings:

"Our Q1 results reflect sustained demand for Pure’s differentiated data-storage portfolio, particularly our //E family solutions," the company noted in its presentation. Pure Storage now serves over 13,500 customers globally, including approximately 62% of Fortune 500 companies, adding 235 new customers during the quarter.

Detailed Financial Analysis

The company’s financial summary reveals performance that exceeded expectations across multiple metrics:

Pure Storage’s revenue mix continues to shift toward subscription services, which reached $406 million in Q1, compared to $372 million in product revenue. This represents a significant shift from Q1 fiscal 2025, when product revenue slightly exceeded subscription services.

The company’s gross margin performance showed some pressure compared to the previous year:

Non-GAAP gross margin was 70.9% in Q1 fiscal 2026, down from 73.9% in the same quarter last year. This decline was primarily driven by product gross margin, which decreased while subscription gross profit continued to grow.

Operating expenses as a percentage of revenue increased slightly to 60.2% from 59.4% in Q1 fiscal 2025, contributing to lower operating margins compared to the same period last year:

Despite the year-over-year margin decline, Pure Storage’s operating cash flow remained strong at $283.9 million, with free cash flow of $212 million after accounting for $72 million in capital expenditures.

The company’s subscription annual recurring revenue (ARR) continued its steady growth trajectory:

Subscription ARR reached $1.71 billion, representing 18% year-over-year growth. This metric is particularly important as it indicates the company’s success in building a stable, recurring revenue base.

Similarly, remaining performance obligations (RPO) grew 17% year-over-year to $2.69 billion, providing visibility into future revenue:

Strategic Initiatives

Pure Storage highlighted several strategic initiatives during the quarter, including the launch of FlashBlade//EXA, which the company positions as "the industry’s highest-performing storage platform for AI and high-performance computing." This product launch aligns with growing market demand for AI-optimized infrastructure.

The company also announced integration of the Nutanix (NASDAQ:NTNX) Cloud Platform with the Pure Storage platform and a new collaboration with SK Hynix to deliver flash storage optimized for energy-efficient hyperscale environments.

Pure Storage emphasized its sustainability advantages, noting that its flash storage consumes 80% less power than traditional solutions, addressing growing concerns about data center energy consumption.

Forward-Looking Statements

For the second quarter of fiscal 2026, Pure Storage provided the following guidance:

The company expects Q2 revenue of $845 million, representing 10.6% year-over-year growth, with non-GAAP operating income of $125 million and an operating margin of 14.8%.

For the full fiscal year 2026, Pure Storage projects continued growth:

Annual revenue is expected to reach $3.515 billion, an 11% increase over fiscal 2025, with non-GAAP operating income of $595 million and an operating margin of 17.0%.

These projections suggest that while Pure Storage anticipates continued growth, the pace may moderate slightly compared to previous periods. The company’s focus on subscription services and strategic initiatives in AI and sustainability appear designed to maintain competitive differentiation in an evolving storage market.

Full presentation:

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