Data storage solutions provider Pure Storage (NYSE: PSTG) reported Q2 CY2025 results beating Wall Street’s revenue expectations, with sales up 12.7% year on year to $861 million. On top of that, next quarter’s revenue guidance ($955 million at the midpoint) was surprisingly good and 4.6% above what analysts were expecting. Its non-GAAP profit of $0.43 per share was 10.9% above analysts’ consensus estimates.

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"Our strong second quarter results demonstrate ever more customers' confidence in the value of the Pure Storage platform to advance their data storage and management now and into the future," said Pure Storage CEO and Chairman Charles Giancarlo.

Company Overview

Founded in 2009 as a pioneer in enterprise all-flash storage technology, Pure Storage (NYSE: PSTG) provides all-flash data storage hardware and software that helps organizations manage their data more efficiently across on-premises and cloud environments.

Revenue Growth

A company’s long-term sales performance is one signal of its overall quality. Any business can have short-term success, but a top-tier one grows for years.

With $3.35 billion in revenue over the past 12 months, Pure Storage is a mid-sized business services company, which sometimes brings disadvantages compared to larger competitors benefiting from better economies of scale. On the bright side, it can still flex high growth rates because it’s working from a smaller revenue base.

As you can see below, Pure Storage’s 14.7% annualized revenue growth over the last five years was exceptional. This is a great starting point for our analysis because it shows Pure Storage’s demand was higher than many business services companies.

We at StockStory place the most emphasis on long-term growth, but within business services, a half-decade historical view may miss recent innovations or disruptive industry trends. Pure Storage’s annualized revenue growth of 10.1% over the last two years is below its five-year trend, but we still think the results suggest healthy demand.

This quarter, Pure Storage reported year-on-year revenue growth of 12.7%, and its $861 million of revenue exceeded Wall Street’s estimates by 1.7%. Company management is currently guiding for a 14.9% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 12.4% over the next 12 months, an improvement versus the last two years. This projection is admirable and indicates its newer products and services will fuel better top-line performance.

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Operating Margin

Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after subtracting all core expenses, like marketing and R&D.

Pure Storage was roughly breakeven when averaging the last five years of quarterly operating profits, one of the worst outcomes in the business services sector.

On the plus side, Pure Storage’s operating margin rose by 14.4 percentage points over the last five years, as its sales growth gave it operating leverage.

In Q2, Pure Storage’s breakeven margin was down 2.7 percentage points year on year. This contraction shows it was less efficient because its expenses grew faster than its revenue.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Pure Storage’s EPS grew at an astounding 33.1% compounded annual growth rate over the last five years, higher than its 14.7% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

We can take a deeper look into Pure Storage’s earnings to better understand the drivers of its performance. As we mentioned earlier, Pure Storage’s operating margin declined this quarter but expanded by 14.4 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Pure Storage, its two-year annual EPS growth of 15.1% was lower than its five-year trend. We still think its growth was good and hope it can accelerate in the future.

In Q2, Pure Storage reported adjusted EPS of $0.43, down from $0.44 in the same quarter last year. Despite falling year on year, this print easily cleared analysts’ estimates. Over the next 12 months, Wall Street expects Pure Storage’s full-year EPS of $1.67 to grow 22.3%.

Key Takeaways from Pure Storage’s Q2 Results

We were impressed by Pure Storage’s optimistic revenue guidance for next quarter, which blew past analysts’ expectations. We were also glad its revenue and EPS both outperformed Wall Street’s estimates this quarter. Zooming out, we think this quarter featured some important positives. The stock traded up 13.8% to $69.30 immediately following the results.

Pure Storage put up rock-solid earnings, but one quarter doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.