Everpure, Inc. (NYSE:P) reported results for the fiscal second quarter. Revenue increased 37.7% year over year to $1.19 billion, product revenue climbed 53.9% to $686.8 million, and subscription services revenue grew 20.4% to $499.1 million. Remaining performance obligations reached $4.1 billion, up 44%.
GAAP operating income at Everpure, Inc. (NYSE:P) rose to $63.2 million from $4.9 million. Company-defined non-GAAP operating income increased 77% to $230 million, or 19.4% of revenue, after excluding stock-based compensation, related payroll taxes and acquired-intangible amortization. Yet operating cash flow swung from positive $212.2 million to negative $136.3 million.
Hyperscale revenue was minimal, so the quarter could not test hyperscaler cash conversion. It instead sets the baseline before Everpure, Inc. (NYSE:P) expects most fiscal 2027 hyperscale revenue in the third and fourth quarters.
Bull Case
Everpure, Inc. (NYSE:P) raised the fiscal 2027 revenue outlook from $4.41-$4.51 billion to $5.03-$5.07 billion, a $590 million midpoint increase. Everpure, Inc. (NYSE:P) also guided for third-quarter revenue of $1.325 billion to $1.335 billion, implying approximately 38% growth at the midpoint.
The acceleration was not dependent on hyperscale revenue. Product growth reflected pricing, a shift toward higher-performance configurations, and capacity growth, which offset lower system unit volumes. Deals above $5 million grew 59%, while deals above $20 million increased 385%. Storage-as-a-service total contract value rose 121% to $277 million, adding future recurring revenue for Everpure, Inc. (NYSE:P).
Hyperscale could strengthen the second half. Everpure, Inc. (NYSE:P) expects the second top-five hyperscaler agreement to contribute minimally this year before beginning a meaningful fiscal 2028 ramp. Management expects hyperscale deployments to carry product gross margins of 75% to 85%, potentially supporting margins as volume increases.
Bear Case
Cash conversion from the core business remained weak. Everpure, Inc. (NYSE:P) attributed negative operating cash flow primarily to strategic purchases of NAND and other components supporting core demand, securing supply and limiting cost inflation. Prepaid expenses and other assets used $577.2 million, but management did not quantify how much represented component purchases. Accounts receivable used $137.4 million and inventory absorbed $33.8 million. Higher accounts payable and deferred revenue partly offset these outflows.
Capital expenditures used $101.3 million and supported the scaling of hyperscale and Evergreen//One. Everpure, Inc. (NYSE:P) therefore reported company-defined non-GAAP free cash flow of negative $237.6 million, calculated as operating cash flow less capital expenditures, compared with positive $150.1 million a year earlier. Management expects operating cash flow to normalize over the next two quarters and forecasts $600 million to $800 million of fiscal 2027 free cash flow.
Stock-based compensation presents another quality concern. It reached $159.8 million, up from $117.4 million and more than twice GAAP net income of $74.1 million. Although non-cash compensation was added back in the operating cash-flow calculation, its scale widens the gap between GAAP and adjusted profitability for Everpure, Inc. (NYSE:P).
Hedge Fund Data
The filings available so far reflect positions held before Everpure, Inc. (NYSE:P) reported fiscal second-quarter 2027 results. Insider Monkey’s database showed 51 hedge funds holding Everpure, Inc. (NYSE:P) at the end of 2Q2026, up from 47 funds three months earlier.
Conclusion
The coming ramp will test whether hyperscaler growth converts into cash for Everpure, Inc. (NYSE:P). Strong demand, higher-margin deployments and working-capital normalization could lift cash generation. Further component purchases, rising receivables and elevated capital spending could keep cash flow below adjusted earnings. Everpure, Inc. (NYSE:P) has demonstrated accelerating demand; delivering the projected $600 million to $800 million of fiscal 2027 free cash flow is now the more important proof point.
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Disclosure: None. This article is originally published at Insider Monkey.
