Pure Storage (PSTG 4.47%), a specialist in enterprise flash data storage solutions, reported its fiscal second quarter 2026 results on August 27, 2025. In this release, the company announced GAAP revenue of $861.0 million, up 13% year-over-year and ahead of the $845 million GAAP revenue guidance it previously issued. Subscription services revenue increased 15% year-over-year to $414.7 million. The company's non-GAAP operating margin saw some compression, landing at 15.1%, down from 18.1% in the year-ago quarter. Management also raised its outlook for both full-year revenue and non-GAAP operating income for FY26. The period highlighted robust top-line growth, continued expansion in recurring revenue streams, and higher future expectations, offset by rising expenses and moderating margins.
| Metric | Q2 FY26(ended Aug 3, 2025) | Q2 FY25(ended Aug 6, 2024) | Y/Y Change |
|---|---|---|---|
| EPS (Non-GAAP) | $0.43 | $0.44 | (2.3%) |
| Revenue | $861.0 million | $763.8 million | 13 % |
| Subscription Services Revenue | $414.7 million | $361.2 million | 14.8 % |
| Operating Margin (Non-GAAP) | 15.1 % | 18.1 % | (3.0) pp |
| Free Cash Flow (Non-GAAP) | $150.1 million | $166.6 million | (9.9 %) |
| Total Cash, Cash Equivalents,and Marketable Securities | $1.5 billion | $1.5 billion | 0.0 % |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2026 earnings report.
Business Overview and Areas of Focus
PSTG provides data storage products built around flash memory technology, designed to replace older disk-based storage in business and cloud environments. Its core portfolio includes flash-based hardware, intelligent software, and cloud management platforms, all aimed at improving speed, efficiency, and reliability for customers managing large, complex data workloads.
More recently, PSTG has focused on extending its all-flash solutions into cloud and hybrid environments and has developed new products powered by artificial intelligence (AI) capabilities. Its approach increasingly emphasizes recurring revenue streams, with subscription-based services and storage-as-a-service models growing rapidly. Key factors for success include maintaining technical leadership in both flash hardware and software, successfully scaling its subscription business, and meeting growing demand from AI and high-performance computing workloads.
Quarter Highlights and Performance Drivers
Revenue (GAAP) totaled $861.0 million, outpacing earlier company guidance. Product sales grew 10.8% year-over-year, and subscription services revenue saw a 15.0% increase. Subscription annual recurring revenue reached $1.8 billion, an 18% jump year-over-year.
PSTG continued its push into next-generation flash solutions, with releases like FlashArray//XL (high-capacity, all-flash storage system), FlashArray//ST, and FlashBlade//S (modular all-flash platform for scalable, high-performance workloads). These products support larger, more data-intensive applications found in enterprise, AI, and high-performance computing settings. The company highlighted ongoing efficiency advances, claiming energy consumption reductions of up to 85% versus competitors, according to recent analyst reports, furthering its environmental positioning and appeal for hyperscale and AI-heavy data centers.
Hybrid cloud and data service innovations advanced, notably with the introduction of the Enterprise Data Cloud architecture. This aims to give customers a unified and automated storage platform that simplifies and automates multi-cloud and on-premises data storage management. New releases like Portworx for KubeVirt—container-based virtualization software—address the growing trend toward cloud-native, orchestrated environments. PSTG also reported gains in storage-as-a-service, with total contract value sales for these offerings rising 24%. Remaining performance obligations, a measure of future contracted revenue, rose 22% to $2.8 billion.
leading to GAAP operating margin narrowing to 0.6% from 3.3% in the prior year. Non-GAAP measures, which exclude costs such as stock-based compensation ($117.4 million this quarter), put operating margin at 15.1%, still below last year’s 18.1%. Free cash flow (non-GAAP) decreased 9.9% year over year, landing at $150.1 million compared to $166.6 million a year ago.
Financial Outlook and What to Watch
PSTG raised its full-year FY2026 revenue guidance to $3.60–$3.63 billion, up from the previous outlook of $3.515 billion. The midpoint now suggests annual revenue growth between 13.5% and 14.5%. Non-GAAP operating income guidance was also raised, with full-year expectation now in the $605–$625 million range, compared to the previous $595 million. For Q3 FY2026, the company projects revenue in the $950–$960 million range—another acceleration—and non-GAAP operating income of $185–$195 million.
Looking forward, investors should pay close attention to how PSTG continues to convert new enterprise deals and the impact of upcoming hyperscaler projects, especially those involving large technology partners previously referenced in industry coverage. Execution risks remain tied to these high-stakes projects and successful scaling of the as-a-service model. Margin trends and expense discipline warrant monitoring, given the narrowing margins and ongoing expense growth. PSTG does not currently pay a dividend.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
