Everpure, Inc. 2027 Q2 Earnings Call

Good afternoon, everyone, and welcome to Everpure's second quarter fiscal year 2027 earnings conference call. On the call, we have Charlie Giancarlo, Chief Executive Officer, Tarek Robbiati, Chief Financial Officer, and Rob Lee, Chief Technology and Growth Officer. Following Charlie's and Tarek's prepared remarks, we will take questions. Our press release was issued after close of market and is posted on our website, where this call is being simultaneously webcast. The slides that accompany this webcast can be downloaded at investor.everpuredata.com. On this call today, we will make forward-looking statements which are subject to various risks and uncertainties. These include statements regarding our financial outlook and operations, our strategy, technology and its advantages, our current and new product offerings, our ability to procure a sufficient supply of components and manage our supply chain, our hyperscaler opportunity, and competitive industry and economic trends.

Any forward-looking statements that we make are based on facts and assumptions as of today, and we undertake no obligation to update them. Our actual results may differ materially from the results forecasted, and reported results should not be considered as an indication of future performance. Discussion of some of the risks and uncertainties related to our business is contained in our filings with the SEC, and we refer you to these public filings. During this call, all financial metrics and associated growth rates are non-GAAP measures other than revenue, remaining performance obligations, or RPO, and cash and investments. Reconciliations to the most directly comparable GAAP measures are provided in our earnings press release and slides. This call is being broadcast live on the Everpure investor relations website and is being recorded for playback purposes.

An archive of the webcast will be available on the IR website and is the property of Everpure. Our third quarter fiscal 2027 quiet period begins at the close of business Friday, October 16, 2026. With that, I'll turn it over to Charlie.

Thank you, Paul. Good afternoon, everyone, and welcome to Everpure's Q2 fiscal 2027 earnings call. Q2 was another outstanding and remarkable quarter. We exceeded our guidance range and all key company metrics. Revenue growth of 38% year-on-year continued our 30-plus percent growth performance since Q4. Operating profit surged 77% to $230 million year-on-year. Growth was broad-based across all geographies, products, and business segments. Strong sales momentum carried over from Q1 and continued to build throughout the quarter. Additionally, TCV for Evergreen//One has accelerated to a billion-dollar run rate for fiscal year 2027, which indicates that our market share gain momentum is even greater than our revenue growth implies. We have seen our revenue growth accelerate consistently and steadily over the last eight quarters, and we now believe that this higher growth rate will be sustainable for some time.

Based on current demand signals and win rates, we believe we will see sales and market share strength continue into next year, as you will see in our revised full year guidance. Only some of our growth acceleration can be attributed to price increases, as our growth is far beyond that of our legacy competitors. We believe that we have entered into breakout territory in our core enterprise market because of the steady progress we have made in building out our product line and architecture. I am going to speak to you today about four areas that underpin our confidence in our long-term growth. First, the cause and foundation for the acceleration of our growth and market share in our core market. Second, how the current pricing environment advantages our technology and company.

Third, our growth opportunity in new areas of business, such as AI, data management, and modern apps and virtualization. Fourth, our growing hyperscale opportunity. First, let's look at what's driving our growth. Everpure has spent the last decade expanding beyond our groundbreaking FlashArray product to serve every storage segment, from backup to AI, from terabytes to exabytes, all on a single unified software foundation, Purity. Purity unifies block, file, and object. It drives DirectFlash and allows our customers to benefit from products that never grow old with its unique Evergreen capability that promises non-disruptive upgrades forever. For example, one of Europe's largest telecom operators, a long-standing customer, enjoys flexible scaling without disruptive hardware refreshes, significantly lowering their total cost of ownership.

During the last decade, we also invested in the ability to have our capabilities offered as a service with Evergreen//One and offered on the cloud with Everpure Cloud Storage. As a senior executive from a fast-growing global managed service provider stated, "We chose Evergreen//One because it gives us predictable, consumption-based economics and lets us expand capacity and performance as customers' demands change. With Everpure managing the underlying infrastructure and life cycle, our teams can spend less time maintaining storage and more time delivering reliable, high-value services to our customers." That's why they have fully embraced our SLA-backed Evergreen//One model. We alone allow our customers to operate our systems as their own global enterprise data cloud with Everpure Fusion. Now we are enabling our customers to contextualize their data to make it AI-ready with Data Intelligence from our 1touch acquisition.

Since our very first product, industry analysts have recognized Everpure as an innovation and customer leader. Just last week, Gartner validated that momentum, once again positioning Everpure highest in execution and furthest in vision in their 2026 Magic Quadrant for Enterprise Storage Platforms. Alongside that innovation, we have scaled and developed our go-to-market engine and strategy to become a top-tier competitor across mid-market, enterprise, and government markets globally. Our brand reputation has expanded to where every customer needs to consider Everpure as a supplier in every area of data storage. It is the combination of all of these factors that has brought us to this point where our growth has re-accelerated, and it gives us the confidence that this higher growth rate will endure for some time. Next, let's address the current pricing environment and why it directly advantages Everpure.

The rapid increase in semiconductor demand and cost continues to affect our industry in multiple and complex ways. This quarter, we saw the predicted effect of increasing prices on both sales and demand. Customers transacting now are paying more for less capacity while others are increasingly adopting our as-a-service model. For example, this quarter, The University of Western Australia expanded its Evergreen//One footprint with us, enjoying the ability to scale its storage on demand while managing costs efficiently. Evergreen//One has grown substantially in this environment and is now on a total contract value, or a TCV run rate, in excess of $1 billion this year. Everpure's advantages in flash technology, lower operational labor costs, and leadership in our storage-as-a-service offerings are providing us with outsized market share gains in this high-cost environment.

Our decision to honor our past and existing commitments, share the burden with our customers, and operate at the lower end of our product gross margin range while component costs escalate, has solidified our relationships with both customers and channel partners. Adjusting for the acceleration of Evergreen//One, which dilutes reported near-term revenue growth numbers, we are growing well above 40% year-over-year, far exceeding the market and our data storage competitors. Beyond our core portfolio, we're opening up major new avenues for growth and expanding our market opportunity. The growth of AI is focusing customers more than ever on how they manage their data. At our June Pure//Accelerate user conference, we introduced the concept of Data Primacy, which will be the future of IT architectures in the AI era.

Data Primacy posits that for organizations to streamline their operations and make their data AI-ready, they need to rationalize and structure their data into sources of truth and systems of record. Data Primacy will enable enterprises to take control of their own data, manage it strategically in their own data cloud, and provide governed access to their data and its context to their chosen AI service providers. Interest in Everpure Data Intelligence, which includes capabilities from our 1touch acquisition, is off the charts. Every customer we meet identifies with the core issue facing them in their use of AI, namely, that their internal data is far too fragmented to be immediately useful for the AI future. Fragmented and inconsistent data leads to lots of manual reconciliation and incorrect results.

While a 95% accurate answer to an AI search prompt can be considered a great result, a 95% accurate invoice is unacceptable. Businesses require 100% accuracy in their financial and business operations. 100% accuracy depends on data that is unambiguous. Everpure Data Intelligence allows enterprises to find their distributed sources of data, discover their semantics and context, and deliver a shared context between the different data sets. It can find both the similarities and the discrepancies between individual data elements and make this available explicitly to the organization. Most importantly, it allows the enterprise to control these capabilities themselves rather than trusting their data and context to third parties while enabling selective access to their AI service partners. This puts the enterprise in control and gives them full sovereignty over their own data.

It is the first step to Data Primacy, and it is an exciting new area of growth for Everpure. Our enterprise data cloud strategy continues to advance with over 2,000 of our 15,000 customers now enabled with the capability. Customers appreciate the ability to set policy for their global storage fleet and have the systems automatically and reliably configured to comply with their company policies without error. Our Pure1 AI Co-Pilot lets customers monitor, diagnose issues, and deploy changes fleet-wide, making global data management easier, more consistent, and more secure. We continue to scale sales of our products supporting the AI needs of both enterprise and large-scale AI Neoclouds. This quarter, Samsung Electronics chose FlashBlade//S to support its advanced AI and research initiatives. A major global bank selected FlashBlade//S to standardize their internal GPU-as-a-Service and agent development and deployment environments.