Pure Storage Inc.

Everpure reported Q1 FY27 revenue growth of 35% year over year, with operating profit up more than 90% to $159 million and operating margin at 15.1%. Product revenue grew 55% year over year to $577 million, while subscription services revenue was $476 million, up 17% year over year and 45% of total revenue. Total gross margin was 70.1%, subscription services margin was 75.6%, and product gross margin was 65.5%, up 150 basis points year over year and down 180 basis points sequentially. ARR grew 19% to over $2 billion, RPO grew 41% to $3.8 billion, and U.S. revenue was $739 million, up 39%, versus international revenue of $314 million, up 27%. The company ended the quarter with over $1.5 billion in cash and investments, generated $180 million of cash from operations, $112 million of free cash flow, and repurchased 1.3 million shares for about $84 million. For Q2 FY27, management guided revenue to $1.095 billion-$1.105 billion and operating profit to $195 million-$205 million. For full-year FY27, guidance was raised to revenue of $4.41 billion-$4.51 billion and operating profit of $820 million-$860 million; management said hyperscale shipments should rise significantly in Q3 and Q4, with product gross margins expected to improve gradually in the second half.

Charlie Giancarlo said the quarter was driven by broad-based demand, stronger win rates, and market share gains, not just pricing. He emphasized that the current environment is unusually unstable because of supply-chain shortages and rapid price increases, and said the company is choosing to be transparent with customers and to share cost pain rather than profit from the crisis. He also highlighted momentum in FlashBlade//EXA, enterprise data cloud adoption, Evergreen/One, and the 1touch acquisition, while stressing that hyperscale and AI remain important second-half opportunities.

Tarek Robbiati framed Q1 as exceptionally strong, citing revenue up 35%, operating profit up more than 90% to $159 million, product revenue up 55% to $577 million, and subscription revenue up 17% to $476 million. He said total gross margin was 70.1%, product gross margin was 65.5%, and subscription services margin was 75.6%, with the product margin decline sequentially driven mainly by commodity cost increases partly offset by pricing and mix. He also noted over $1.5 billion in cash and investments, $180 million of operating cash flow, $68 million of capital investments, $112 million of free cash flow, and $84 million returned via buybacks, and said 1touch should be about $12 million dilutive to FY27 operating profit before becoming accretive within 24 months on a post-synergies basis.

Analysts focused heavily on the back-half demand trajectory, how much of Q1 growth came from pricing and pull-ins, and whether the current supply crunch is distorting shipment timing. Management said about one-third of Q1 growth came from price increases and pull-ins, with the rest from volume, and said they are not building additional pull-forward into the second-half guide even though further price increases are expected. Questions also probed hyperscaler timing and AI adoption; management said hyperscaler orders are based on pre-agreed customer commitments and that enterprise AI adoption is still mostly cloud-based, with on-prem activity more relevant in sovereign clouds, large tech, and select industries. On Evergreen/One and 1touch, management said customer interest is positive, but 1touch is still early and will be discussed in more detail at upcoming events.