Unlike the vast majority of financial stories we run, Pure Storage has been able to more or less report positive earnings since going public. Of course, it has only been publicly traded since October of last year. While this report was also positive, revenue and gross margin up, analysts don’t seem to regard Pure’s stock as they once did. Worse for Pure, they are now facing class action lawsuits from their shareholders over potential violations of federal securities law and focuses on whether misleading information about PSTG was provided to investors in connection with the company's October 2015 IPO. This is a similar problem that Nimble Storage is also struggling with.
Unlike the vast majority of financial stories we run, Pure Storage has been able to more or less report positive earnings since going public. Of course, it has only been publicly traded since October of last year. While this report was also positive, revenue and gross margin up, analysts don’t seem to regard Pure’s stock as they once did. Worse for Pure, they are now facing class action lawsuits from their shareholders over potential violations of federal securities law and focuses on whether misleading information about PSTG was provided to investors in connection with the company's October 2015 IPO. This is a similar problem that Nimble Storage is also struggling with.
Image courtesy of Yahoo Finance
As far as the earnings themselves, Pure is reporting GAAP revenue of $139.9 million up 89% year-on-year (YoY) but down from $150.2 million of last quarter. This actually marks the first time since IPO that Pure has show a decrease in revenue quarter-to-quarter. Their gross margin was also up to 66.5% GAAP and non-GAAP was 67.3%. While this does look very good for the company it is also reporting a net loss of $63.5 million GAAP which is higher than their previous net loss of $44.3 million GAAP last quarter. This quarter’s net loss translates into $0.34/share. Non-GAAP points a strikingly prettier picture with a net loss of only $40.8 million or $0.22/share.
The revenue and gross margin seem like good news, but their stock is taking a beating dropping nearly 20%. Part of the reason could be that while revenue is up it still fails to result in profits for the company. In fact Pure’s costs seem to be rising right along with its revenue. There seems to be quite the discrepancy between non-GAAP and GAAP. While the numbers vary and generally are more favorable as non-GAAP, Pure is reporting net loss difference of $22 million. Some analysts are stating that Pure’s stock is overvalued, which can hurt stock performance in some cases. But one of the larger problems in the investigation into Pure’s potential violations of federal securities law and a second lawsuit focused on whether the company was experiencing pricing pressure from competitors or not.
Pure Storage is expecting next quarter’s revenue to be between $153 million to $157 million.
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