Pure Storage and Splunk: A Tale of Diverging Data-Storage Providers?

Publish date:
Video Duration:

Call it a diverging tale of two data-storage providers, and a tale of the economic divergence underway in corporate America.

Shares of data solutions provider Pure Storage (PSTG) - Get Report posted a double-digit plunge on Friday after the company reported a surprise fiscal third-quarter loss and revenue that missed analysts' forecasts amid a continued struggle to boost subscription growth of its software data services.

Meantime, shares of Splunk (SPLK) - Get Report surged after the data-focused cloud computing group posted stronger-than-expected third quarter earnings and also lifted its full-year sales outlook.

While Pure Storage and Splunk are more of an apples to apples and oranges comparison, the deep divide in both companies' quarterly results and investors' reactions to them reflects what companies are and are not spending money on when it comes to subscription-based data-focused software and systems.

On a post-earnings conference call, Pure Storage CEO Charles Giancarlo pointed to a tougher pricing environment for subscription-based software services including data storage coupled with hesitation among companies to change or upgrade their data management systems for the quarterly loss, and also for lower guidance for its fiscal fourth quarter.

For Splunk, meanwhile, rising demand for data-driven insights continues to drive demand, with the company's platform having "positioned it to leverage data proliferation into revenue growth," according to Oppenheimer analysts Hugh Cunningham and Shaul Eyal, who carry a $154 price target and an outperform rating on the stock.