Pure Storage (NYSE: PSTG) stock has dwindled 35% in the last 3 months after the company reported disappointing first quarter numbers in May. The company’s stock touched a new 52-week low of $12.6 mark last week ahead of the Q2 earnings. The storage provider is slated to report its second quarter results on August 21 after the bell.

Muted Expectations

For the second quarter, Pure Storage is anticipating revenue between $389-401 million ($395 million at the midpoint) and operating margins in the negative 5% to 1% (-3% at the midpoint).

On the flip side, the street is expecting revenue of $393.1 million and adjusted loss of 4 cents per share. As investors are aware of the muted performance, there won’t be any surprises to be expected on Wednesday.

Looking ahead for fiscal 2020 period, the company is guiding sales of $1.70-1.77 billion ($1.73 billion at the midpoint) and operating margin in the range of 1.5-5.5% (3.5% at the midpoint). Analysts are projecting top line of $1.73 billion and non-GAAP earnings of 23 cents per share.

Read: Pure Storage stock plunges on weak outlook

Pure Storage is anticipating more demand for its products and services as data analysis across businesses are witnessing huge adoption. Currently, organizations are moving towards flash-based storage devices from traditional disks, which offer huge potential for the company’s cloud-based flash-storage offerings.

The company also has been able to upsell its products to the existing clients. At the end of last quarter, total client base stood at 6,200, of which above 40% of the customers are Fortune 500 firms. As of April 30, the top 25 customers (who have been with the firm for a year) had spent about $10 on new product purchases from $1 of initial purchase within the first 1.5 years.

Pure Storage is currently focusing on improving its product offering attuned to the changing customer landscape. It is investing money on R&D, sales and marketing to broaden its reach and up-sell/cross-sell more products to its existing clients. This is going to weigh down on the earnings in the second quarter continuing the trend from the last quarter.

Looking Back

In the first quarter, due to increased demand for products and services, revenue rose 28% to $326.7 million. However, due to increased investments across the board, operating expenses jumped 38% resulting in a loss of $100 million. On an adjusted basis loss per share stood at 11 cents, 4 cents more than the prior year period, missing street estimates.

Earlier this week, NetApp (NTAP) Q1 earnings surpassed estimates, while revenues came in line with estimates. Revenue contracted 16% while adjusted earnings were down 38% due to drop in product and hardware maintenance services.

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