Key Takeaways:
Everpure reported fiscal Q2 revenue of $1.19 billion, beating consensus by 7.5 percent, yet shares fell 10 percent as free cash flow swung negative.
"While these purchases created a temporary headwind to operating cash flow in the quarter, we expect operating cash flow to normalize over the next two quarters," CFO Tarek Robbiati said.
Adjusted EPS came in at $0.70, above the $0.58 consensus, while EBIT jumped 76.7 percent year over year to $229.6 million. Product revenue rose 54 percent to $687 million and subscription services climbed 20 percent to $499 million. Free cash flow swung to negative $237.6 million against a consensus estimate of positive $226.6 million, a swing of more than $460 million, as the company front-loaded NAND purchases to lock in component supply.
The stock fell 10.35 percent to $97.63 in the session after the Aug. 26 release, extending a week-long decline of 14 percent. Everpure raised its full-year revenue target to $5.03 billion-$5.07 billion, implying 38 percent growth, and lifted operating income guidance to $940 million-$960 million.
Product gross margin held at 66.2 percent, the low end of the company's 65-70 percent target range, a choice management framed as prioritizing share gains over near-term margin capture. Overall gross margin came in at 69.9 percent.
Storage-as-a-service accelerated underneath the headline print. Evergreen//One's total contract value run rate crossed $1 billion after growing 121 percent year over year to $277 million in the quarter, remaining performance obligations rose 44 percent to more than $4 billion, and international revenue climbed 75 percent to $498 million.
CEO Charles Giancarlo tied the guidance raise to two quarters of pricing data and a second design win with a top-five hyperscaler, announced Aug. 10, that will start contributing revenue in fiscal 2028.
The guidance raise signals management expects AI-driven storage demand to accelerate, but the cash flow swing and a valuation above 148 times trailing earnings leave the stock exposed to further multiple compression. Investors will watch the next two quarters for operating cash flow to normalize as component pre-buys roll off, with analysts holding an average price target of $108.69.
This article is for informational purposes only and does not constitute investment advice.
