Rival enterprise data storage firms NetApp (NTAP) and Pure Storage (PSTG) released their quarterly earnings reports late Wednesday, with mixed reactions in the market. Despite exceeding expectations in earnings, Pure Storage’s stock experienced a significant decline.
For its fiscal second quarter, which ended August 4, Pure Storage reported adjusted earnings of 44 cents per share on sales of $763.8 million. Analysts had anticipated earnings of 37 cents per share and sales of $756 million, according to FactSet. Despite this positive performance, Pure Storage shares dropped over 14% to $51.21 in after-hours trading.
Revised Guidance and Current Quarter Projections
Although Pure Storage surpassed earnings expectations, the company revised its annual guidance for subscription-as-a-service-related total contract value down to $500 million from $600 million. However, it maintained its overall revenue forecast of $3.1 billion for the fiscal year ending in January.
Pure Storage CEO Charles Giancarlo noted on a conference call that the company is experiencing “lengthening” negotiations for large subscription deals. For the current quarter, Pure Storage projects sales of $815 million, slightly above the analysts’ estimate of $811 million.
The Mountain View, California-based company, which specializes in flash-based data storage hardware and management software, had seen its stock rise more than 70% this year before the report. Ahead of the earnings announcement, Pure Storage stock had formed a consolidation pattern with a buy point of $70.41, according to MarketSurge.
Giancarlo emphasized the energy efficiency of Pure Storage’s flash technology, stating, “In a world where energy demands are soaring, the power savings of Pure Storage alone make the move from hard disks to Pure technology a smart choice for both hyperscaler and enterprise data centers.”
Subscription Services and Sales Transition
Revenue from subscription services increased 25% year-over-year to $361.2 million. However, the shift toward subscription-based storage platforms created some sales growth challenges late last year.
NetApp Earnings Report
In contrast, NetApp reported strong earnings and sales, beating analyst expectations despite a slight dip in stock value. For its fiscal first quarter, ending July 26, NetApp posted adjusted earnings of $1.56 per share and sales of $1.54 billion. Analysts had projected earnings of $1.45 per share from sales of $1.53 billion. NetApp’s stock fell over 3% to $127.43 in after-hours trading.
Revenue Growth and Future Projections
NetApp reported an 8% year-over-year increase in sales and a 36% growth in adjusted EPS. Total billings for the fiscal first quarter rose 12% to $1.45 billion. For the current quarter, NetApp forecasts sales of $1.64 billion, aligning closely with the $1.63 billion projected by analysts. The company also raised its sales outlook for the fiscal year ending in April to $6.58 billion, up from the previous guidance of $6.55 billion.
CEO George Kurian highlighted the strong start to the fiscal year, stating, “We started fiscal year 2025 on a high note, delivering strong revenue growth and setting records for first quarter operating margin and EPS.”
Stock Performance and Buy Points
NetApp shares have risen more than 50% this year but saw a slight decline in trading on Wednesday, ending at $132.91. The stock has formed a consolidation pattern with a buy point of $135.01, according to MarketSurge.
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