Analyst(s): Camberley Bates
Publication Date: February 28, 2025
Pure Storage reported record Q4 FY 2025 sales for FlashBlade, FlashArray//XL, Portworx, and the //E family, driving revenue up 11% YoY. Subscription services also saw strong growth but weaker-than-expected FY 2026 margin guidance weighed on shares.
What is Covered in this Article:
- Pure Storage’s Q4 FY 2025 financial results
- Evergreen subscription renewals drive recurring revenue growth
- Product innovations and strong adoption across key storage solutions
- Expansion in AI and enterprise data cloud initiatives
- Hyperscale deal progress, but revenue clarity remains a concern
The News: Pure Storage Inc. (NASDAQ: PSTG) reported its Q4 FY 2025 financial results, with revenue rising by 11% year-on-year (YoY) to $879.8 million (+1.3% above consensus estimates), driven by sales of FlashBlade, FlashArray//XL, Portworx, and the //E family, alongside strong Evergreen subscription renewals. Product revenue increased by 7% to a record $494.8 million, while Subscription services revenue increased 17% YoY to $385.1 million. Non-GAAP operating income stood at $153.1 million (+11.1% above consensus estimates), reflecting a 3% YoY decline, while the non-GAAP operating margin contracted to 17.4%, down from 20.0% in Q4 FY 2024. Net income for the quarter was $153.2 million (+7.7% above consensus estimates), compared to $166.0 million in Q4 FY 2024, while non-GAAP diluted earnings per share (EPS) came in at $0.45 (+8.5% above consensus), down from $0.50 in the prior period.
“We expect geopolitical uncertainty to contribute to a dynamic environment at least through this year,” said Charles Giancarlo, Chairman and CEO of Pure Storage. “In addition to our standard practice of operating with globally distributed and diversified supply and distribution chains, we have also developed contingency plans for a variety of tariff scenarios.”
Pure Storage Q4 FY 2025: Double-Digit Revenue Growth Amid Strong Subscription Momentum
Analyst Take: Pure Storage wrapped up Q4 FY 2025 on a high note, delivering record sales across its FlashBlade, FlashArray//XL, Portworx, and //E product lines. The company also continued its steady expansion in subscription services, pushing annual revenue past the $3 billion mark for the first time—a significant milestone in the enterprise storage market. However, rising NAND costs compared to traditional disk-based storage put pressure on profitability, leading to a dip in gross margins from 73.4% in FY 2024 to 69.2% in FY 2025. Adding to investor concerns, the company’s operating income guidance for FY 2026 came in below expectations, triggering a decline in stock value.
Subscription Growth and Evergreen Renewals Strengthen Revenue Base
A key highlight of Q4 was the strong growth in subscription services, with revenue climbing 17% year-over-year to $385.1 million, contributing to a full-year total of $1.5 billion (+22% YoY). This growth was fueled by Evergreen subscription renewals, showing continued customer retention and an uptick in the s-a-service model, some driven by the beginnings of AI enterprise POCs.
While we saw the growth in subscription, CFO Kevan Krysler, noted a slowdown with Evergreen in seeing longer sales cycles of large deals exceeding $5 million. This is to be expected in the enterprise, as more than IT is now involved in the decision process with both technology and financial CAPEX / OPEX decisions needing to be examined.
Product Portfolio Aids in Driving Strong Q4 Performance
Pure Storage’s portfolio performed very well in Q4, with record sales across the full portfolio. FlashBlade, The //E series, QLC systems designed as an alternative to traditional HDD storage, gained strong traction as we have seen with other vendors, particularly in price-sensitive workloads. For Pure Storage, higher QLC flash costs impacted product gross margins, which fell to 62.9% in Q4 FY 2025 from 73.4% the previous year. Management remains confident that margins will recover in FY 2026 as NAND prices stabilize.
A key innovation this year was the launch of 150-terabyte DirectFlash Modules (DFM), offering five times the capacity of standard HDDs and reinforcing Pure’s engineering expertise in high-density storage. The company is preparing to introduce a 300-terabyte DFM later in the year, which will likely strengthen its competitive position vs. HDD and with high-capacity storage.
Portworx, a container-based storage platform, maintained its momentum in Kubernetes-based deployments, driven by AI workload adoption and virtualization alternatives. Notably, two Fortune 50 companies successfully migrated from VMware to Red Hat OpenShift using Portworx, reducing infrastructure costs.
AI, the Enterprise and Data Management
Pure Storage gave a nod to a pending announcement prior to GTC on the technology of AI. This comes as the enterprise market is just starting to move from POC to deployments of AI applications. Still, in the early stages of adoption, Futurum Group sees the larger growth of this market coming in 2H25 and into 2026. Pure’s certification of FlashBlade//S500 with NVIDIA DGX SuperPOD and new validated reference architectures for NVIDIA OVX-ready solutions are targeted for these markets in a mode to simplify the delivery of these complex systems.
Additionally, Pure Storage released Fusion v2.0, a data management plane for cross-protocol and hybrid cloud environments. Fusion allows customers to unify data storage across hybrid cloud environments and streamline the management.
Hyperscale Deal Progressing, But Market Seeks More Visibility
Pure Storage’s partnership with a top-four hyperscaler for DFM is progressing, but significant work remains to advance the revenue impact. The company stated it is in the advanced stages of testing and deployment with the hyperscaler’s next-generation data center architecture.
This co-development process involves optimizing software performance, efficiency, and pricing across multiple performance tiers and NAND suppliers. While meaningful contributions are expected from FY 2027 onward, the extended qualification process means stakeholders will closely monitor updates on deployment scale and potential new partnerships.
Guidance and Final Thoughts
For FY 2026, Pure Storage projects revenue of $3.5 billion (+11% YoY), aligning with consensus estimates. However, non-GAAP operating income guidance of $595 million fell short of the $604 million expected by analysts, with an operating margin of 17.0% (vs. 17.2% consensus). For Q1 FY 2026, the company expects revenue of $770 million (+11% YoY), non-GAAP operating income of $80 million, and an operating margin of 10.4%. Management anticipates product gross margins stabilizing in the mid-60% range, supported by demand for the E family and FlashArray//C, along with more favorable NAND pricing.
Pure Storage continues to strengthen its position in enterprise storage through subscription-based revenue, AI-driven solutions, and innovative hardware. The investors definitely want to hear more about the timing and impact of the hyperscaler revenue and margin contributions.
See the complete press release on Pure Storage’s Q4 FY 2025 earnings on the Pure Storage website.
Daniel Newman and his co-host of The Six Five Webcast, Patrick Moorhead of Moor Insights and Strategy discusses Pure Storage’s earnings in their latest episode. Check it out here and be sure to subscribe to The Six Five Webcast so you never miss an episode.
Disclosure: The Futurum Group is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.
Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of The Futurum Group as a whole.
Other insights from The Futurum Group:
Pure Storage’s Q3 FY25: Innovations in Hyperscale, AI, and Enterprise Storage
Pure Accelerates in London on FlashBlade
Author Information
Camberley brings over 25 years of executive experience leading sales and marketing teams at Fortune 500 firms. Before joining The Futurum Group, she led the Evaluator Group, an information technology analyst firm as Managing Director.
Her career has spanned all elements of sales and marketing including a 360-degree view of addressing challenges and delivering solutions was achieved from crossing the boundary of sales and channel engagement with large enterprise vendors and her own 100-person IT services firm.
Camberley has provided Global 250 startups with go-to-market strategies, creating a new market category “MAID” as Vice President of Marketing at COPAN and led a worldwide marketing team including channels as a VP at VERITAS. At GE Access, a $2B distribution company, she served as VP of a new division and succeeded in growing the company from $14 to $500 million and built a successful 100-person IT services firm. Camberley began her career at IBM in sales and management.
She holds a Bachelor of Science in International Business from California State University – Long Beach and executive certificates from Wellesley and Wharton School of Business.
