Shares of Pure Storage (NYSE: PSTG) dropped 26% intra-day on Wednesday, even though the company reported fiscal third-quarter earnings that met expectations and slightly exceeded revenue forecasts.
Pure Storage posted adjusted EPS of $0.58, in line with analyst estimates. Revenue totaled $964.5 million, beating the $955.03 million consensus and rising 16% year over year. Subscription services revenue increased 14% to $429.7 million.
The company generated a non-GAAP operating margin of 20.3%, modestly above the 20.1% recorded in the same quarter last year. Despite the raised full-year outlook, investor reaction was sharply negative.
For the fourth quarter, Pure Storage guided revenue of $1.02–$1.04 billion, representing 16.5% to 17.6% annual growth. Full-year revenue expectations were increased to $3.63–$3.64 billion, up from the prior $3.60–$3.63 billion range.
Pure Storage also lifted its full-year non-GAAP operating income forecast to $629–$639 million, compared with earlier guidance of $605–$625 million, representing 12.4% to 14.2% year-over-year growth.
