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. 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. expects most fiscal 2027 hyperscale revenue in the third and fourth quarters.
Bull Case
Everpure, Inc. 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. 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..
Hyperscale could strengthen the second half. Everpure, Inc. 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. 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. 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..
Hedge Fund Data
The filings available so far reflect positions held before Everpure, Inc. reported fiscal second-quarter 2027 results. Insider Monkey’s database showed 51 hedge funds holding Everpure, Inc. 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.. 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. 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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This article is originally published at Insider Monkey.
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