Everpure Beats Q2 Targets, Boosts Fiscal 2027 Outlook as Storage Demand Broadens
Everpure (NYSE:P) topped its second-quarter targets, with revenue jumping 38% year over year and operating profit up 77% to $230 million. CEO Charlie Giancarlo said the strength was broad-based across regions, products and customer segments, and the company raised its full-year outlook on continued demand and better visibility into component supply.
Giancarlo said revenue growth has accelerated for eight straight quarters and that management believes the higher pace can be sustained "for some time." He credited the company's expanded product portfolio, the Purity software platform, DirectFlash technology and the Evergreen//One storage-as-a-service offering. "We have entered into breakout territory in our core enterprise market," he said, citing product architecture, go-to-market expansion and stronger brand recognition among enterprise, mid-market and government customers.
Revenue in the fiscal second quarter was roughly $1.19 billion, with product revenue climbing 54% to $687 million. Subscription services revenue rose 20% to $499 million, representing 42% of total revenue. Annual recurring revenue increased 20% to more than $2 billion, while remaining performance obligations, a measure of contracted future revenue, grew 44% to more than $4 billion.
Chief Financial Officer Tarek Robbiati said the quarter marked Everpure's third consecutive period above the Rule of 40, a common software-company benchmark that combines revenue growth and profitability. Total gross margin was 69.9%, including product gross margin of 66.2% and subscription-services margin of 74.9%. Management said demand stayed resilient despite higher component costs and price increases. Growth reflected pricing, a mix shift toward higher-performance configurations and higher capacity per system, while overall system unit volumes declined.
Giancarlo said Everpure is deliberately operating at the lower end of its long-term 65% to 70% product gross-margin range to share component-cost pressure with customers and support market-share gains. Robbiati said margins should move toward the upper end once semiconductor costs stabilize closer to original levels.
The quarter also underscored the momentum behind Evergreen//One, Everpure's storage-as-a-service offering. Management said Evergreen//One total contract value reached an annualized run rate above $1 billion in fiscal 2027. The broader storage-as-a-service portfolio, which includes Evergreen//One, saw total contract value jump 121% year over year to $277 million in the second quarter. With traditional storage prices rising, the consumption-based model is gaining appeal because it gives customers more predictable spending and lower upfront capital requirements. Everpure said it did not raise Evergreen//One prices as much as traditional product pricing, and contracts typically run three to four years.
Beyond core storage, Everpure is positioning itself for growth in artificial intelligence, data management and virtualization. The Data Intelligence offering, including capabilities gained through the 1touch acquisition, is designed to help enterprises identify distributed data sources, understand their context and prepare data for AI applications. Management said more than 2,000 of the company's 15,000 customers now have enterprise data-cloud capabilities. Everpure also recorded first-quarter sales for DataStream, an offering built on NVIDIA's AI Data Platform, and continues to see adoption of FlashBlade//S and FlashBlade//EXA systems for enterprise AI and large-scale AI workloads.
In virtualization, Everpure said its alternatives to VMware, including Portworx with Red Hat OpenShift and Nutanix virtualization, have reached an annual run rate above $100 million.
On the hyperscaler front, Everpure said Aug. 10 it had secured a design win and supply agreement with a second top-five hyperscaler. The contribution to fiscal 2027 revenue should be minimal, with a meaningful ramp beginning in fiscal 2028. Management still expects significant hyperscale revenue in the third and fourth quarters from existing commitments. Rob Lee, Everpure's chief technology and growth officer, said DirectFlash is primarily replacing SSDs in hyperscale environments and offers better reliability, density and power efficiency than SSD-based deployments. He added that the second hyperscaler's implementation is substantially similar to the first customer's, including initial deployment in higher-performance storage tiers.
Everpure ended the quarter with more than $1 billion in cash and investments. Operating cash flow was negative $136 million, and free cash flow came in at negative $238 million after $101 million of capital expenditures. The outflows were driven by strategic purchases of NAND and other components intended to support demand and mitigate further cost inflation. Robbiati said operating cash flow should normalize over the next two quarters, and the company maintained its fiscal 2027 free-cash-flow forecast of $600 million to $800 million. Everpure also repurchased 932,000 shares for roughly $69 million during the quarter, leaving about $176 million under its buyback authorization.
For the fiscal third quarter, Everpure forecasts revenue of $1.325 billion to $1.335 billion, around 38% year-over-year growth at the midpoint, and operating profit of $265 million to $275 million. For full-year fiscal 2027, the company raised its revenue outlook to $5 billion to $5.7 billion, implying 38% growth at the midpoint, and projected operating profit of $940 million to $960 million, roughly 50% growth. Robbiati said the revised outlook reflects strong second-quarter execution, better short-term pipeline visibility, continued customer demand despite price increases, and strategic component purchases that provide supply coverage for the foreseeable future.
The results are likely to reinforce confidence in Everpure's strategy of pairing high-end flash storage with consumption-based subscription models at a time when enterprises are reworking their data infrastructure for AI. The second hyperscale win also suggests DirectFlash is gaining credibility beyond traditional enterprise storage, even if the financial payoff is still a year away.
Everpure provides data storage technologies, products and services. Its Purity software is shared across its product portfolio and delivers enterprise data services such as data reduction, data protection and encryption, as well as block, file and object storage protocols. The product lineup includes FlashArray for block-oriented workloads, FlashArray//XL and FlashArray//C, an all-QLC flash array.