Pure Storage Earnings Preview: Data to drive Q3 results

The flash-based cloud-storage company Pure Storage (PSTG) is set to post third-quarter earnings on Monday after the bell. The top line is expected to rise driven by the increase in the new customers while the bottom line is likely to be hurt by the higher costs and expenses.

Analysts, on average, expect the company to report earnings of $0.09 per share on revenue of $367.36 million for the third quarter of 2019. In comparison, during the previous year quarter, the company posted a loss of $0.20 per share on revenue of $277.67 million. Majority of the analysts recommended a “strong buy” or “buy” rating on the stock with an average price target of $27.06.

The company is depending on the data storage market to provide revenue generation. Pure Storage is likely to increase its new customers from the previous total of more than 5,150 organizations. In the previous second-quarter, the company had raised the new customers by nearly 400.

For the second quarter, the company reported a wider loss due to higher costs and expenses. However, revenue jumped 37% helped by an increase in new customers. The results came in ahead of analysts’ expectations.

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For the third quarter, Pure Storage is expected to post a narrower loss aided by its marketing strategies and new customers accumulation. The top line is anticipated to be in the guidance range of $361 million to $369 million. The adjusted gross margin is predicted to be between 64.5% and 67.5% and the adjusted operating margin is projected to be in the range of 4% to 8% for the third quarter.

For the full year 2019, the company had expected revenue in the range of $1.35 billion to $1.38 billion and non-GAAP gross margin in the range of 65.5% to 67.5%. The adjusted operating margin is anticipated to be in the range of 2.5% to 4.5%.

Pure Storage seeks to empower its customers to maximize the value of their data. The company is replacing the mechanical disks with all flash systems optimized end to end for solid state memory. Market experts believe that revenue growth was quite impressive but the rest below the top line seems far less. The company has been struggling to curb the costs.

Shares of Pure Storage opened lower on Friday and is trading in the red territory. The stock has risen over 22% in the year so far and over 16% in the past year.

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