Pure Storage Inc. (PSTG) shares took a beating Wednesday, falling over 27% despite delivering quarterly results that checked all the right boxes. It's one of those head-scratching moments where good news somehow translates into a stock nosedive—a reminder that markets don't always follow the script.
The data storage company reported third-quarter earnings of 58 cents per share, matching analyst expectations and marking a 16% jump from 50 cents in the same quarter last year. Revenue came in at $964.45 million, topping the $956.13 million consensus estimate.
Breaking down the numbers further, revenue climbed 16% year-over-year to $964.5 million. Subscription services revenue hit $429.7 million, up 14% from last year. Subscription annual recurring revenue reached $1.8 billion (up 17%), while remaining performance obligations totaled $2.9 billion (up 24%)—all solid indicators of business momentum.
"Pure Storage delivered another strong quarter as global customers increasingly choose Pure to solve their toughest data management challenges," said CEO and Chairman Charles Giancarlo. "Competitive advantage in the AI era demands data accessibility. Pure's Enterprise Data Cloud breaks data free from application silos, allowing enterprises to harness the power of AI, automation, and analytics."
Looking ahead, Pure Storage guided fourth-quarter sales between $1.02 billion and $1.04 billion, slightly above the $1.023 billion analyst estimate, representing 16.5% to 17.6% year-over-year growth. The company also raised its fiscal 2026 sales outlook from a range of $3.6 billion to $3.63 billion to a new range of $3.63 billion to $3.64 billion, versus the $3.619 billion consensus.
What Analysts Are Saying
Analyst reactions following the report were mixed but generally positive, though target prices varied. Citigroup maintained its Buy rating on December 3 but lowered its price target to $105 from $110. Lake Street also kept a Buy rating while raising its target to $92 from $80.
Barclays maintained an Equal-Weight rating with a target of $77, up from $70. Wedbush stayed Outperform and bumped its target from $90 to $100. JP Morgan maintained an Overweight rating but trimmed its target from $110 to $105.
Pure Storage shares closed at $68.93 on Wednesday, down 27.22%—proving once again that sometimes beating estimates just isn't enough.
