Pure Storage Inc.

Second quarter revenue increased 38% year over year, with product revenue up 54% to $687 million and subscription services revenue up 20% to $499 million. Operating profit grew 77% to $230 million, and operating margin was 19.4%. Total gross margin was 69.9%; product gross margin was 66.2%; subscription services margin was 74.9%. U.S. revenue was $688 million, up 19%, and international revenue was $498 million, up 75%. Cash flow from operations was negative $136 million, capital expenditures were $101 million, free cash flow was negative $238 million, and cash and investments were over $1 billion. For Q3 FY27, management guided revenue to $1.325 billion to $1.335 billion and operating profit to $265 million to $275 million. For FY27, management raised revenue guidance to $5.030 billion to $5.070 billion and operating profit guidance to $940 million to $960 million. Management also said FY27 free cash flow is expected to be between $600 million and $800 million.

Charlie Giancarlo framed the quarter as evidence that Everpure has entered “breakout territory” in its core enterprise market, citing broad-based growth, pricing power, and momentum across geographies and products. He emphasized that higher growth now appears sustainable, pointing to a decade of product expansion, strength in Evergreen//One, new AI/data-management offerings, and a second top-5 hyperscaler design win. His tone was confident and expansive, while also stressing that supply constraints and pricing dynamics continue to shape the business.

Tarek Robbiati focused on the mechanics behind the beat and raise: pricing, mix shift, capacity growth, and disciplined margin management. He said product revenue increased 54% to $687 million, operating profit rose 77% to $230 million, total gross margin was 69.9%, and product gross margin was 66.2%, which he said is intentionally at the low end of the 65% to 70% range. He also highlighted over $1 billion in cash and investments, negative operating cash flow of $136 million due to strategic component purchases, capex of $101 million, negative free cash flow of $238 million, and FY27 free cash flow guidance of $600 million to $800 million.

Analysts pressed management on what changed in the last 90 days to justify the much higher full-year guide, and Charlie said the big shifts were reduced concern about component supply and better visibility into how customers respond to higher prices. Questions also focused on ASP versus volume, gross margin/OpEx trajectory, Evergreen contract duration, and the hyperscale opportunity; management said system units were down while pricing, mix, and capacity rose, and that pull-ins seen in Q1 did not recur in Q2. On hyperscale, management reiterated that the second top-5 customer is expected to contribute meaningfully only in FY28 and beyond, that the business will be discussed more generally going forward, and that direct flash is mainly displacing SSDs today.