Pure Storage showed stable growth in its latest financial results, but net profit declined amid increased spending on AI and neocloud projects.

The IT operator, which specializes in flash-based data storage systems and services, saw results for the quarter ending November 2 serve slightly higher-than-projected revenue of $964.5 million, a 16% year-over-year growth, which surpassed the $956.5 million estimate.

CEO and chairman Charles Giancarlo touted “another strong quarter as global customers increasingly choose Pure to solve their toughest data management challenges," as he pointed out that "competitive advantage in the AI era demands data accessibility. Pure's Enterprise Data Cloud breaks data free from application silos, allowing enterprises to harness the power of AI, automation, and analytics.”

Meanwhile, the slip of net profit to $54.8 million during the quarter, down from the $63.6 million profit it recorded the year prior, caused Pure’s stock to fall after the results announcement.

Stock drop aside, the vendor's operating profit rose 17%, to $196 million, reflecting strong demand for its data management solutions and continued expansion in the hyperscale and cloud-native markets.

The annual recurring revenue (ARR) of $1.8 billion allowed it to strengthen its competitive position, particularly in the enterprise storage sector. Subscription services revenue reached $429.7 million, up 14% year-over-year. Remaining performance obligations (RPO) were also encouraging, up 24% year-over-year, to $2.9 billion.

Pure's CEO attributed the solid results to “continued strength in enterprise and sustained momentum in the Evergreen One and modern virtualization solutions, which include CBS and Portworx.

“During the quarter, we also exceeded our full annual forecast of two exabytes of hyperscale shipments and expect to ship more in Q4," Giancarlo told investors. "Our strong Q3 performance translates to an increased outlook for Q4 and improved guidance for FY26."

Raising full-year revenue guidance

Pure Storage increased its full fiscal 2026 guidance, with newly appointed CFO, Tarek Robbiati, who joined the company in June, pledging: “To sustain this momentum beyond FY26, we will continue to make significant incremental investments in both research and development and sales and marketing to capture additional profitable growth opportunities consistent with our long-term strategy.”

Pure increased its revenue projections to a range from $3.63 billion to $3.64 billion, up from the prior guidance of $3.6 billion to $3.63 billion. It also estimates that its adjusted operating income will be between $629 million and $639 million, up from its prior guidance of $605 million to $625 million.

The CEO reiterated that the projected increase in operating income for fiscal year 2026 reflects the strength of our business and the impact of hyperscaler revenues on gross and operating margins.

One key collaboration that contributed to the results this quarter was the Cisco partnership announced in October, which saw Pure Storage helping realize AI compute potential through Nvidia-based AI infrastructure.

“We plan to grow our hyperscaler business. In doing so, we will be evaluating additional business model options that may result in changes in gross margin economics for the hyperscaler business in fiscal year 2027 relative to fiscal year 2026.”