- Revenue & Profit Growth: Q3 FY2026 revenue rose 16% YoY to $964M, with operating profit up 17% to $196M, driven by enterprise and hyperscaler demand.
- Hyperscaler Momentum: Shipments surpassed 2 exabytes (exceeding annual forecast) and 90%+ gross margin from software licensing, with Q4 shipments expected to climb further.
- Revenue Composition: Product revenue grew 18% to $534M, while subscription services rose 14% to $430M, boosting ARR to $1.8B (+17%) and RPO to $2.9B (+24%).
- Gross Margin Strength: Overall margin hit 74.1% (Q4 FY2025: 71.3%), with subscription services at 75.5%, supporting 20.3% operating profit margin.
Revenue Growth and ARR Expansion
The company's revenue growth was driven by strength across its portfolio, particularly in enterprise and hyperscaler businesses. Annual recurring revenue (ARR) grew 17% to $1.8 billion, while total remaining performance obligations (RPO) increased 24% to $2.9 billion. Hyperscaler shipments exceeded the annual forecast of 2 exabytes, with the company expecting to ship more in Q4.
Guidance and Operating Profit
For Q4, Pure Storage expects revenue of $1.02-$1.04 billion, representing approximately 17% year-over-year growth, and operating profit of $220-$230 million, representing approximately 47% year-over-year growth. For fiscal year 2026, the company expects revenue of $3.63-$3.64 billion, representing 14.7% year-over-year growth, and operating profit of $629-$639 million, representing approximately 13.3% year-over-year growth.
Valuation Metrics
With a P/E Ratio of 162.04 and an EV/EBITDA of 69.62, the market appears to be pricing in significant growth expectations. The company's ROE stands at 10.55%, indicating a reasonable return on equity. Analysts estimate next year's revenue growth at 14.7%, which is in line with the company's guidance.
Business Outlook and Strategic Investments
Pure Storage plans to make significant incremental investments in R&D and sales and marketing to sustain momentum and capture additional growth opportunities. The company is exploring new revenue models with hyperscalers, which may impact gross margin economics in fiscal year 2027. Management remains committed to increasing operating profit on a year-over-year basis.