Q2 FY2027
Filed Aug 26, 2026Revenue $1.2 billion, up 38% year-over-year; product revenue $687 million, up 54% year-over-year; FY27 revenue and non-GAAP operating income guidance increased.
Everpure delivered 38% total revenue growth, 54% product revenue growth, substantially higher GAAP and non-GAAP operating income, and raised FY27 revenue and non-GAAP operating income guidance. The principal offset was negative operating cash flow and free cash flow during the quarter.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Total revenueGAAP | $1.2 billion | – | up 38% year-over-year |
| Product revenueGAAP | $687 million | – | up 54% year-over-year |
| Subscription services revenueGAAP | $499 million | – | up 20% year-over-year |
| Subscription annual recurring revenueother | $2.1 billion | – | up 20% year-over-year |
| Remaining performance obligationsother | $4.1 billion | – | up 44% year-over-year |
| Gross profitGAAP | $811,388 thousand | – | – |
| Gross marginGAAP | 68.4% | – | – |
| Gross profitnon-GAAP | $828,397 thousand | – | – |
| Gross marginnon-GAAP | 69.9% | – | – |
| Research and development expenseGAAP | $293,749 thousand | – | – |
| Sales and marketing expenseGAAP | $346,077 thousand | – | – |
| General and administrative expenseGAAP | $108,407 thousand | – | – |
| Total operating expensesGAAP | $748,233 thousand | – | – |
| Operating incomeGAAP | $63 million | – | – |
| Operating marginGAAP | 5.3% | – | – |
| Operating incomenon-GAAP | $230 million | – | – |
| Operating marginnon-GAAP | 19.4% | – | – |
| Net incomeGAAP | $74,149 thousand | – | – |
| Diluted net income per share attributable to common stockholdersGAAP | $0.21 | – | – |
| Net incomenon-GAAP | $240,730 thousand | – | – |
| Diluted net income per sharenon-GAAP | $0.70 | – | – |
| Operating cash flowGAAP | $(136) million | – | – |
| Free cash flownon-GAAP | $(238) million | – | – |
| Total cash, cash equivalents, and marketable securitiesother | $1.0 billion | – | – |
| Stock-based compensation expenseGAAP | $159,815 thousand | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| ProductThe release cited increasing momentum in AI and hyperscale products and announced a design win with a second top-five hyperscaler. | $687 million | – | up 54% year-over-year |
| Subscription servicesSubscription ARR was $2.1 billion, up 20% year-over-year. | $499 million | – | up 20% year-over-year |
Q3FY27 and FY27 outlook
- RevenueQ3FY27: $1.325B to $1.335B; FY27: $5.03B to $5.07B
- NoteQ3FY27 revenue YoY growth rate: 37% to 38%
- NoteQ3FY27 non-GAAP operating income: $265M to $275M
- NoteQ3FY27 non-GAAP operating income YoY growth rate: 35% to 40%
- NoteFY27 revenue YoY growth rate: 37% to 38%
- NoteFY27 non-GAAP operating income: $940M to $960M
- NoteFY27 non-GAAP operating income YoY growth rate: 48% to 51%
- NoteFY27 prior revenue guidance presented in the release: $4.41B to $4.51B
- NoteFY27 prior non-GAAP operating income guidance presented in the release: $820M to $860M
Capital returns
- Returned approximately $69 million to stockholders through share repurchases of 0.9 million shares.
- Repurchases of common stock were $(68,981) thousand during the second quarter of fiscal 2027.
What drove it
- Total revenue grew 38% year-over-year and product revenue grew 54% year-over-year.
- Subscription ARR was $2.1 billion, up 20% year-over-year, while RPO was $4.1 billion, up 44% year-over-year.
- The company announced a second top-five hyperscale design win leveraging DirectFlash® architecture.
- Management cited strong demand across the solutions portfolio despite historic industry price increases in the first half of FY27.
- The company announced Data Primacy architecture, Everpure Data Intelligence, general availability of Everpure Data Stream, and expanded hybrid-cloud and virtualization offerings.
Concerns
- GAAP gross margin was 68.4%, compared with 70.2% in the second quarter of fiscal 2026; non-GAAP gross margin was 69.9%, compared with 72.1%.
- Operating cash flow was $(136) million and free cash flow was $(238) million, compared with $212,157 thousand and $150,130 thousand, respectively, in the second quarter of fiscal 2026.
- The cash flow statement reported a $(577,229) thousand change in prepaid expenses and other assets, a $(137,350) thousand change in accounts receivable, and a $(33,795) thousand change in inventory.
- Forward-looking statements identify risks relating to component costs, supply availability, hyperscaler performance and price requirements, the timing and magnitude of large orders, and sales mix.
What to watch
- Execution against Q3FY27 revenue guidance of $1.325B to $1.335B and non-GAAP operating income guidance of $265M to $275M.
- Progress converting the second top-five hyperscale design win and AI and hyperscale momentum into revenue.
- Product revenue growth relative to subscription services revenue growth and the development of subscription ARR and RPO.
- Gross-margin performance following historic industry price increases in the first half of FY27.
- Operating cash flow and free cash flow following the quarter's negative cash generation and elevated changes in operating assets.
Balance sheet and cash flow
- Cash and cash equivalents were $385,694 thousand at the end of the second quarter of fiscal 2027, compared with $854,873 thousand at fiscal 2026 year-end.
- Marketable securities were $622,197 thousand at the end of the second quarter of fiscal 2027, compared with $692,446 thousand at fiscal 2026 year-end.
- Net cash used in operating activities was $(136,348) thousand, compared with net cash provided by operating activities of $212,157 thousand in the second quarter of fiscal 2026.
- Purchases of property and equipment were $(101,254) thousand, including capitalized internal-use software costs of $12.5 million.
- Acquisition cash outflow was $(125,308) thousand.
- Accounts receivable were $1,027,665 thousand at the end of the second quarter of fiscal 2027, compared with $944,844 thousand at fiscal 2026 year-end.
- Inventory was $106,300 thousand at the end of the second quarter of fiscal 2027, compared with $75,935 thousand at fiscal 2026 year-end.
- Deferred revenue, current and non-current, was $1,323,750 thousand and $1,197,521 thousand, respectively, at the end of the second quarter of fiscal 2027.
Analysis
Everpure reported a strong second quarter of fiscal 2027, led by $1.2 billion of revenue, up 38% year-over-year. Product revenue of $687 million grew 54% year-over-year, materially faster than subscription services revenue of $499 million, which grew 20%. The company also reported subscription ARR of $2.1 billion, up 20% year-over-year, and RPO of $4.1 billion, up 44% year-over-year. The release attributes momentum to the broader solutions portfolio, AI and hyperscale products, and a second top-five hyperscale design win.
Profitability improved substantially from the prior-year quarter. GAAP operating income was $63 million and GAAP operating margin was 5.3%, compared with $4,871 thousand and 0.6%, respectively. Non-GAAP operating income was $230 million and non-GAAP operating margin was 19.4%, compared with $129,964 thousand and 15.1%. GAAP net income was $74,149 thousand, or $0.21 per diluted share, while non-GAAP net income was $240,730 thousand, or $0.70 per diluted share.
Gross-margin performance requires attention. GAAP gross margin was 68.4%, compared with 70.2% in the second quarter of fiscal 2026, and non-GAAP gross margin was 69.9%, compared with 72.1%. Product GAAP gross margin was 65.3%, compared with 66.3%, while subscription-services GAAP gross margin was 72.7%, compared with 74.4%. The company stated that demand remained strong despite historic industry price increases in the first half of FY27.
Cash conversion was weak in the quarter despite higher earnings. Operating cash flow was $(136) million and free cash flow was $(238) million, versus $212,157 thousand and $150,130 thousand in the prior-year quarter. The cash flow statement included increases in prepaid expenses and other assets, accounts receivable, and inventory, as well as $101,254 thousand of property-and-equipment purchases and a $(125,308) thousand acquisition outflow. Everpure ended the quarter with total cash, cash equivalents, and marketable securities of $1.0 billion and repurchased approximately $69 million of shares.
The outlook was raised materially. Q3FY27 revenue is guided to $1.325B to $1.335B, with 37% to 38% year-over-year growth, and non-GAAP operating income is guided to $265M to $275M. FY27 revenue guidance is $5.03B to $5.07B, with 37% to 38% growth, and FY27 non-GAAP operating income guidance is $940M to $960M, with 48% to 51% growth. The release presents these FY27 ranges as increases from prior guidance of $4.41B to $4.51B for revenue and $820M to $860M for non-GAAP operating income.
Management, verbatim
Q2 marks eight straight quarters of accelerating revenue growth for Everpure, and confirmed our position as the most innovative and vital company in our industry. Our expansion into Data Intelligence, and our increasing momentum in AI and hyperscale products, ensures we are well-positioned to capture enduring long-term growth.
Charles Giancarlo, Chairman and CEO of Everpure
Q2 was another outstanding quarter for Everpure, where we delivered record revenue and operating profit, exceeding the high-end of our guidance. Demand remains strong across our solutions portfolio despite historic industry price increases in the first half of FY’27. We are raising guidance significantly for the second half of the year to reflect our confidence in continued revenue momentum.
Tarek Robbiati, Everpure CFO
Not in the filing
stated, not guessed- Previous-quarter outlook section was not provided; therefore, no comparison of reported results with prior guidance is included.
- Debt and borrowings balance at the end of the second quarter of fiscal 2027 were not reported in the provided balance sheet.
- Dividend declaration or payment information was not reported.
- GAAP revenue, gross-margin, operating-expense, tax-rate, net-income, EPS, operating-cash-flow, or free-cash-flow guidance was not reported.
- Q3FY27 gross margin, operating expenses, and tax rate guidance were not reported.
- FY27 gross margin, operating expenses, and tax rate guidance were not reported.
- Sequential revenue, profit, margin, ARR, RPO, and cash-flow comparisons were not reported.
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.