Enterprise data storage solutions provider Pure Storage (NYSE:PSTG) stock has been rallying to yearly highs on the heels of its Q3 2021 earnings report and raised guidance. The post-pandemic surge in both top and bottom line vindicates its strategy.
The Company enjoys much acclaim as a leading storage company in the Gartner Magic Quadrant. Pure Storage continues to convert and grow its subscription services as revenues climbed by 38%, with non-GAAP margins at 72.1%.
The Company experienced high demand across its portfolio during the reopening. The dynamic global chip and supply chain disruptions are well under control as the Company raised its fiscal 2022 full-year top-line guidance. Prudent investors seeking exposure to the data storage segment can watch for opportunistic pullbacks in shares of Pure Storage.
Q3 Fiscal 2021 Earnings Release
On Nov. 23, 2021, Pure Storage released its fiscal third-quarter 2021 results for the quarter ending October 2021. The Company reported an earnings-per-share (EPS) profit of $0.22 excluding non-recurring items versus consensus analyst estimates for $0.12, a $0.10 beat.
Revenues grew 37.1% year-over-year (YoY) to $562.74 million, beating analyst estimates for $530.66 million. Subscription service revenues rose 38% YoY to $187.8 million. Subscription annual recurring revenues grew 30% YoY to $788.3 million. The remaining performance obligations grew 27% YoY to $1.2 billion.
The Company closed the quarter with $1.4 billion in cash and investments. The Company has been a Gartner Magic Quadrant storage leader for eight consecutive quarters.
Raised Top Line Guidance
The Company raised its fiscal Q4 2021 revenues to around $640 million versus $602.34 consensus analyst estimates. Pure Storage expects full-year fiscal 2022 revenues to be about $2.1 billion versus $2.04 billion analyst estimates.
Conference Call Takeaways
Pure Storage CEO Charlie Giancarlo set the tone,
“With a sustained and steady growth across all key regions, products, and customer segments, Pure continues to take share in this large and growing market. Our strategy to deliver a modern data experience to our customers and partners continues to lead the industry with new firsts almost every quarter as we deliver on all aspects of the modern data experience.
Modernizing data infrastructure, operation, and application, this quarter we announced the latest additions to our product portfolio that brings storage and applications even closer together Pure Fusion, our new software-defined multi-cloud self-service storage environment is a major advance that will allow customers to better manage their data in a multi-cloud environment while enabling developers to deploy sophisticated data storage services on demand.
We also announced Portworx Data Services, which will further allow those self-same developers to quickly deploy production-grade data services on Kubernetes, together with advances and our Pure1 digital experience, Pure is enabling a cloud operating model for enterprises everywhere and engagement has been strong. Our next announcement on Dec. 8, will push infrastructure modernization even further and extend the breadth of our FlashArray platform.
Today all of Pure’s capabilities are available as a service, we continue to see strong growth across Evergreen, Pure as a service and Portworx, which together represent a third of our revenues, Gartner (NYSE:IT) has once again validated Pure’s leadership in both of their Storage Magic Quadrant, recognizing our execution and vision in primary storage and in the rapidly growing file and object market for unstructured data, given our speed and breadth of innovation, it should not be a surprise that more and more customers are purchasing the full Pure portfolio”.
Achieving Green and ESG Objectives
CEO Giancarlo addressed how Pure Storage has been helping clients achieve ESG goals,
“Our global customers and prospects are beginning to appreciate the power and green advantage of Pure and by power I am not referring to IOPS or throughput, and by green, I am not referring to our evergreen subscription. Simply speaking, Pure’s products use dramatically less energy and create far less waste than competitive offerings.
We take this expanded scope and responsibility very seriously and look forward to publishing our first environmental, social and governance report early next calendar year, when customers learn how much our solutions reduce energy, space, and waste in their environmental footprint.
Pure becomes a true partner in helping them achieve their ESG objectives. Supply chains are on everyone's mind, and no company is immune to this disruption. As we have reported in the past, Pure has built a very robust supply chain based on strong, open, and trusted relationships with our partners. Our strategy incorporates manufacturing and operations in multiple sites and on multiple continents to enable flexibility, resilience, and global responsiveness.”
PSTG Opportunistic Pullback Levels
Using the rifle charts on the weekly and daily time frames provides a precision view of the price action playing field for PSTG stock. The weekly rifle chart initially peaked off the $31.72 Fibonaccionacci (Fibonacci) level on the earnings reaction. The weekly 5-period moving average is catching uprising at $28.06 on the pup breakout, with 15-period MA rising at $26.27.
The weekly pup breakout has upper weekly Bollinger Bands (BBs) at $33.82. The weekly stochastic is stalling at the 90-band. The weekly market structure high (MSH) trigger forms on a breakdown below $26.73. The weekly market structure low (MSL) buy triggered above the $19.08 level.
The daily rifle chart has been in a BB compression going into earnings. This caused the BBs to expand on the gap while the daily 5-period MA attempts to catch up at $28.65. Shares overshot the daily upper BBs at $30.56 as the stochastic crosses back up.
A retest and bounce of the daily 5-period MA can trigger a stochastic mini pup. Prudent investors can watch for opportunistic pullback levels at the $28.34, $27.15, $25.57, $24.32, $22.58, $21.50, and the $20.59 Fibonacci levels. Upside trajectories range from the $36.55 Fibonacci up towards the $46.52 Fibonacci level.