Pure Storage's Q4 2025: Hyperscale Hurdles and AI Demand Discrepancies Unveiled

These are the key contradictions discussed in Pure Storage's latest 2025 Q4 earnings call, specifically including: Hyperscale opportunity revenue impact, financial impact of E family sales, hyperscale opportunities, and AI's impact on demand:



Revenue and Earnings Growth:
- Pure Storage reported a revenue increase of 11% for Q4 and surpassed $3 billion in total revenue for fiscal 2025, growing 12% year-on-year.
- The growth was driven by strong sales of Flashblade, FlashArray XL, Portworx, and record sales in its E family, as well as higher QLC flash costs and stable hard disk solution pricing.

Evergreen//One and Subscription Services:
- Total remaining performance obligations (RPO) grew 14% to $2.6 billion, with subscription services revenue increasing 17% and ARR growing 21%.
- The decline in TCV sales for storage as a service offerings during FY '25 was due to extended timelines for closing Evergreen//One deals and higher conversion of Evergreen//One opportunities to traditional sales.

Hyperscale Design Win and AI Opportunities:
- Pure Storage achieved a design win with a top-four hyperscaler, with continued progress in certifying and deploying its solutions.
- The company is investing in its AI data preparation chains and plans to showcase its advancements at the NVIDIA GPU Technology Conference, emphasizing the Flashblade's role in AI infrastructure deployments.

Product Mix and Gross Margins:
- Record sales in the E family contributed to temporarily lower product gross margins of 62.9% in Q4 due to higher QLC flash costs relative to stable hard disk pricing.
- This decline is expected to abate as NAND prices moderate in 2025, with product gross margins projected to settle in the mid-60s.