Storage industry pioneer Pure Storage Inc. delivered strong financial results today, with earnings and revenue both coming in ahead of Wall Street’s targets.

Moreover, bolstered by an optimistic outlook, Pure Storage’s stock rose more than 8% in extended trading.

The company reported fourth-quarter earnings before certain costs such as stock compensation of 50 cents per share, easily beating the Street’s forecast of a 44-cent-per-share profit. Revenue for the period dropped 3% from a year earlier, but the $789.8 million in sales still beat the $784 million consensus estimate.

Pure Storage delivered $157.8 million in operating income, ahead of its own forecast of $151 million. All told, net income came to $65.4 million, down from a profit of $74.4 million one year earlier.

The company 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 the company’s data platform strategy continues to revolutionize the storage industry. “It helps enterprises and service providers unify fragmented data environments into a seamless, modern, and efficient system – a system performance-ready for artificial intelligence,” he said. “And this can all be done now with flash reliability, performance and economics, even at hard disk system price levels.”

The company delivered strong numbers across the board, with subscription services revenue up 24% from a year earlier, to $328.9 million. Subscription-based annual recurring revenue came to $1.4 billion, representing a gain of 25%.

Officials even positioned the company’s decline in total revenue as a good thing, as it reflects its success in transitioning more of its customers to a subscription-based model, where revenue is recognized over time instead of up front. The company has been busy trying to get customers to avoid buying its hardware and instead sign up for its Evergreen One service, where they’re charged for storage based on their consumption, similar to how cloud infrastructure providers such as Amazon Web Services Inc. operate.

Giancarlo told Barron’s in an interview that the company is now focused on artificial intelligence trends, pitching its storage platforms as AI-ready. This strategy has been paying off, he added, as the company recently has a “strong eight-figure win” with a leading graphics processing unit cloud company.

The CEO also revealed that the company is on the verge of concluding a deal that will see it work with one of the large cloud infrastructure providers to replace its disk-based storage environments with its own, flash-based offerings. Furthermore, the company is expecting to sell more of its hardware and services to Meta Platforms Inc., as that company is now investing heavily in its AI infrastructure.

Giancarlo said Pure Storage’s flash-based systems are ideal for AI because they enable the broad availability of legacy data that would otherwise be trapped in backup systems. They also help to accelerate data access speeds, he said.

Steve McDowell of NAND Research told SiliconANGLE that Pure Storage has had considerable success in its aggressive focus on pushing customers to its cloud-like as-a-service model. “Customers like the flexibility of the model, and Pure enjoys what’s essentially a long-term annuity,” the analyst said. “Its ARR numbers are great, and storage-as-a-service is now approximately half of its business, and the area where it saw the most significant growth.”

For the first quarter of its fiscal 2025 year, Pure Storage is eyeing revenue of $680 million at the midpoint of its guidance range, above the Street’s consensus estimate of $670 million. It also sees operating income of $68 million, just above the analyst’s $66 million target.

For fiscal 2024, Pure Storage is forecasting sales of $3.1 billion, which would represent growth of 10%. That number is just shy of the Street’s forecast of $3.15 billion in sales.

Investors were willing to forgive the slight blip in the company’s long-term forecast, though, as its stock jumped more than 8% in the after-hours trading session, adding to a gain of 1% earlier in the day.

“It’s still very early in the recovery of the infrastructure market, and all signs are pointing to a strong year for the industry,” McDowell said. “Pure’s portfolio is where it needs to be to compete, and as the macro environment improves, I expect it will do well over the coming year.”

Pure Storage’s stock had already gained 18% in the year to date prior to today’s report, and is up 47% over the last 12 months.

Photo: SiliconANGLE