Flash storage pioneer Pure Storage Inc. missed Wall Street’s revenue target for the first time in years today and followed up with a soft forecast for the coming fiscal year.

The market reacted negatively, with Pure’s stock falling more than 10% in extended trading.

The company reported fourth-quarter net income of $74.5 million, up from a profit of just $14.9 million one year ago. Earnings before certain costs such as stock compensation came to 53 cents per share, ahead of Wall Street’s target of 39 cents per share. However, while Pure’s revenue rose 14%, to $810.2 million, that fell short of the analyst consensus estimate of $811.6 million.

For the full fiscal 2023, the company reported revenue rose 26%, to $2.753 billion.

Pure Storage is a leading provider of enterprise-grade flash-based data storage hardware and software that’s designed to replace traditional hard drives. The company sells flash-based capacity storage, entry-level storage, and file and object storage systems. In addition, it offers cloud-based storage-as-a-service, as well as software for managing data storage.

Pure Storage Chairman and Chief Executive Charles Giancarlo (pictured) said in a statement that his company once again grew faster than the overall storage market in fiscal 2023, thanks to its portfolio of advanced, reliable and energy-efficient products and services. “Despite current macro conditions, we remain confident in our ability to execute, manage costs, and maintain a strong innovation cycle,” he said.

The company did at least offer lots of encouraging numbers to back up those claims. Its subscription and services revenue for the quarter rose 23%, to $265.1 million, while product revenue increased 9%, to $545.1 million.

Pure also pointed to 30% growth in its subscription-based annual recurring revenue, which hit $1.1 billion. And it said it had $1.8 billion in remaining performance obligations, up 24% from a year earlier. RPO represents future obligations arising from contracts with customers, or the amount of cash the company is owed that has not yet been invoiced.

Steve McDowell, an analyst with NAND Research, told SiliconANGLE that despite narrowly missing its revenue targets, Pure Storage is likely to end up ahead of the overall storage market this quarter.

“We’ve heard from everyone in the enterprise infrastructure space that demand is down, including most of the flash memory suppliers,” he said. “What we’re seeing here is that Pure is also impacted by that. Even so, it managed double-digit growth yet again. None of Pure’s competitors will grow that much.”

McDowell also highlighted the growth in Pure’s subscription business growth. He said this most likely indicates remarkable growth for Pure’s Portworx and as-a-service offerings, and said those will continue to be a bright spot for the company going forward.

Perhaps the bigger news today from Pure was the launch of its new FlashBlade/EE product, which is designed to replace older hard drives in enterprise data lakes. FlashBlade/EE is described by the company as an “unstructured data repository.” It’s based on QLC NAND flash storage technology, which is more affordable than the TLC NAND that’s typically used in high-performance flash systems. Because of QLC NAND’s high storage density and low costs, enterprises now have an alternative to traditional disks when it comes to storing data that is predominantly read-only — which makes up the bulk of most enterprise’s data.

“Pure Storage is bringing affordable flash storage into the high-capacity data world for the first time,” McDowell said. “It’s the first vendor to target this space with flash storage, meaning that it is entering new markets with almost no direct competition. That gives Pure a substantial head start. It’s a good product — affordable, sustainable and with a lower TCO.”

Looking ahead, Pure Storage said it’s expecting mid-single-digit to high-single-digit growth in revenue for fiscal 2024, along with a 15% adjusted operating margin. The forecast is lower than Wall Street’s target of $3.125 billion in annual revenue, which implies growth of 13%.

“Pure has guided down, but so has every one of its competitors,” McDowell said. “It is doing the right things and has the right products, and its high NPS score shows that customers continue to like what it’s doing.”

In its press release, Pure said its board of directors has authorized an incremental stock buyback of an additional $250 million under its share repurchase program. During the fourth quarter, it bought back $67.5 million worth of shares.

“We are confident that we will navigate the current macro backdrop while focusing on our commitment to deliver long-term, profitable growth,” said Chief Financial Officer Kevan Krysler.

Photo: SiliconANGLE