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Image source: The Motley Fool. Wednesday, Aug. 26, 2026 at 5:00 p.m. ET Vice President of Investor Relations - Paul Ziots Chief Executive Officer - Charles Giancarlo Chief Financial Officer - Tarek Robbiati Chief Technology and Growth Officer - Rob Lee Operator: Good day, and welcome to the Everpure Second Quarter Fiscal 2027 Financial Results Conference Call. Today's conference is being recorded. [Operator Instructions] At this time, I'd like to turn the call over to Paul Ziots, Vice President of Investor Relations. Please go ahead. Paul Ziots: Thank you. 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. A 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. Charles Giancarlo: 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-over-year continued our 30-plus percent growth performance since Q4. Operating profit surged 77% to $230 million year-over-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 $1 billion run rate for fiscal year '27, 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 8 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 4 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. And 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 lifecycle, our teams can spend less time maintaining storage and more time delivering reliable, high-value services to our customers. That's why they've 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. And 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 reaccelerated, 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 TCV, or Total Contract Value, 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. And 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 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 Copilot 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. And a major global bank selected FlashBlade//S to standardize their internal GPU-as-a-Service and agent development and deployment environments. Everpure Data Stream, our offering built on NVIDIA's AI data platform, was released for general availability and saw its first sales this quarter. One of the largest trial court systems in the U.S. selected Data Stream to streamline and automate AI-accelerated analysis of petabytes of unstructured data, saving hundreds of hours of specialized labor and transforming decades of court records into an AI-ready knowledge base while meeting the court's strict data privacy requirements. FlashBlade//EXA, designed for the highest performance needs of large-scale AI, continues to expand. An international high-performance and AI computing provider selected EXA for their high-performance AI training environments. And STN, a large AI managed service provider, expanded its FlashBlade//EXA investment to support growing customer demand. EXA gives STN the world's highest performance and scalability while simplifying operations. FlashBlade//S and FlashBlade//EXA in combination uniquely position Everpure to meet customers' AI needs from the smallest enterprise AI environments to the largest neoclouds and everything in between. We've seen a steady increase in GPU attachments for our FlashBlade products across this spectrum. We see growing traction in our virtualization solutions as customers evolve their VM estates. Everpure continues to help customers optimize their VMware footprint with VCF, while adoption for non-VMware modern virtualization solutions such as Portworx with Red Hat OpenShift and Nutanix Virtualization, Everpure has been named Technology Partner of the Year by both Red Hat and Nutanix, and our VMware alternative solutions have grown to well over a $100 million per year run rate. As we announced on August 10, we are pleased to have achieved a design win and signed a supply agreement with a second top 5 hyperscaler for our hyperscale products. This newly signed agreement will begin to generate significant revenue in fiscal year '28 and beyond. As discussed in previous quarters, we expect hyperscale product revenue to rise significantly in Q3, growing in Q4 and in the years ahead. This win confirms DirectFlash's value proposition in massive-scale environments with customers that build their own storage services. DirectFlash is software-defined flash, streamlined, efficient, advanced software, providing media management, resiliency, performance, quality, and reliability paired with reliable hardware. Moving the complexity out of black box SSDs and hard disks lets hyperscalers optimize storage for their workloads, delivering industry-leading density, power, cooling, and lifetime. DirectFlash provides customers the flexibility to evolve and qualify faster as their infrastructure scales and enables a resilient supply ecosystem across a range of flash technology. With the second top 5 hyperscaler signed and other prospects in progress, we will now refer to our sales and strength in this business in terms of our hyperscale solutions as a whole rather than referring to any specific customer, customer details, or prospect time frames. We expect large hyperscaler order commitments for our DirectFlash solution to extend into calendar 2028, powering tens of exabytes of capacity, representing a multiple of our expectations for this year. Our estimates and committed order volumes for total sales to hyperscalers through both fiscal year '27 and '28 continue to grow and will be incorporated and consolidated into our product revenue and guidance reporting. We look forward to providing more details on our product advancements, particularly our core growth and expansion into new areas, including advanced data management, at our upcoming international Accelerate conferences starting in September, as well as our Financial Analyst Meeting scheduled for September 23 here in Santa Clara. We continue to operate in a very dynamic macro environment and a tight supply market, yet demand for our products is strong even amid substantial price increases across the industry. This is yet another of many reasons why we feel fully confident in our growth, our strategy, and our future. I'll now turn the call over to Tarek to provide greater insight into our performance and our expectations for the remainder of the year. Tarek? Tarek Robbiati: Thank you, Charlie. Q2 was another outstanding quarter for Everpure and represents an important milestone in our growth journey. Year-over-year, revenue increased 38%, while operating profit grew 77%, with both metrics exceeding the high end of our guidance range. In addition, this marked our third consecutive quarter with performance above the Rule of 40, underscoring our ability to deliver both strong growth and profitability. Importantly, our performance was not driven by any single product, customer, or geography. Growth was broad-based across our business with strength across all major geographies, product categories, and business segments, and the sales momentum we experienced in Q1 continued into Q2. As we look ahead, we believe the fundamentals supporting our business are more than ever firmly in place. We are entering Q3 with a healthy pipeline, strong customer engagement, and continued momentum across the organization. As a result, we're raising our full year revenue growth guidance substantially to reflect the strength of our execution and the confidence we have in our outlook for the remainder of the fiscal year. More on that later. In addition to our excellent financial performance in Q2, on August 10, we announced that we secured a design win and supply agreement with a second top 5 hyperscaler. This achievement represents a significant validation of our technology and strategy. Securing a second top 5 hyperscaler reinforces the compelling economic, operational, and performance advantages of our DirectFlash technology and demonstrates the growing recognition of our differentiated architecture in the world's most demanding data infrastructure environments. As we noted in our August 10 announcement, we expect only a de minimis revenue contribution in fiscal year '27 from this new agreement and anticipate a meaningful ramp beginning in fiscal year '28, with revenue continuing to scale in subsequent years. Importantly, this agreement marks another inflection point for our hyperscale products and provides another long-term growth opportunity for the business. Now let's dive deep into our Q2 performance. The exceptional momentum we experienced in our core in Q2 was driven by a combination of pricing, mix shift, and capacity growth, offsetting lower system unit volumes. Our ability to implement price increases while continuing to drive demand demonstrates the strength of both our technology and our customer relationships. We saw particularly strong demand from large established enterprise customers, many of whom were willing to absorb higher costs to secure access to our solutions. In fact, we are operating at a pricing level that we have not seen in 10 years. Even as we tested higher price points, demand remained resilient, particularly among our top-tier enterprise customers, reflecting both the mission-critical nature of our solutions and the value customers place on our differentiated offerings. Product revenue increased 54% year-over-year to $687 million. As expected, hyperscaler revenue contributed only minimally during Q2. It is worth noting a couple of observations that attest of the overall strength of demand for our products. First, customers are buying fewer solutions at higher prices. Second, we have observed a mix shift to higher performance configurations with terabyte capacity up across our portfolio. Third, in terms of deal sizes, deals above $5 million grew 59%, and deals above $20 million grew a whopping 385% year-on-year. Finally, sales of our Evergreen//One solution have grown significantly higher than product sales, indicating even stronger growth than appears in our current revenue numbers. Overall, Q2 demonstrated the strength of our business model, the durability of demand across our customer base, and our ability to execute in a dynamic market environment. We remain focused on sustaining this momentum as we continue to expand our market opportunity, deepen customer relationships, and drive long-term profitable growth. Turning to our Storage-as-a-Service business. We continue to see exceptional momentum, particularly with Evergreen//One. Evergreen//One Total Contract Value, or TCV, has accelerated to an annualized run rate of above $1 billion for fiscal year '27. Evergreen//One performance in Q2 was driven by a combination of both velocity deals, those below $5 million, and large enterprise agreements, highlighting broad-based customer adoption. The current pricing environment has further strengthened the value proposition of Evergreen//One. Unlike traditional product sales, which can be more directly affected by component cost fluctuations, Evergreen//One is built on long-term customer commitments with lower upfront capital requirements. With Evergreen//One, customers can ramp into growth and are billed on a consumption basis, which allows them to better match expense outlays to the growth of their solutions. These characteristics provide customers with a more predictable and cost-efficient operating model. Importantly, and because we control the configurations of the solutions that underpin the Evergreen//One SLA-based contracts, we were able to contain price increases for Evergreen//One well below the price increases of traditional product purchases, making the offering even more compelling in the current environment. As a result, TCV for our Storage-as-a-Service portfolio, which includes Evergreen//One, increased 121% year-over-year to $277 million in Q2. The continued acceleration we are seeing reinforces our belief that customers increasingly value consumption-based infrastructure models that provide greater flexibility and cost predictability. Turning to our broader subscription business. Subscription services revenue in Q2 increased 20% year-over-year to $499 million and represented 42% of total company revenue. Annual recurring revenue, or ARR, increased 20% year-over-year to more than $2 billion, driven primarily by the continued growth of Evergreen//One and strong renewal activity during the quarter. Remaining performance obligations, or RPO, increased 44% year-over-year to more than $4 billion. Growth in RPO was driven by strong bookings across our core business, including offerings attached to Evergreen//Forever, as well as continued momentum with Evergreen//One. I'd like to briefly address the relationship between RPO and ARR, as differences in the timing of these metrics can create variations in their respective growth rates from quarter-to-quarter. RPO reflects the total value of contracted revenue that has yet to be recognized, while ARR measures the annualized value of recurring revenue currently contributing to the business. Because multiyear contracts are included in RPO when they are signed, RPO often serves as a leading indicator for future ARR growth. As a result, ARR can temporarily lag RPO during periods of strong bookings activity, particularly when large multiyear contracts are signed. Given the acceleration we are seeing in RPO, we would expect ARR growth to continue over the next several quarters as these contracts begin contributing recurring revenue. Turning to gross margins. Total gross margin was 69.9%. Product gross margin stood at 66.2%, in line with our long-term range of 65% to 70%, representing an increase of 70 basis points sequentially, while subscription services margin was relatively unchanged at 74.9%. As predicted on our last earnings call, the revenue contribution from our hyperscale business was minimal in Q2, and we continue to expect the majority of hyperscaler revenue to be recognized in the second half of fiscal year '27. Hyperscale product deployments yield margins in the range of 75% to 85% and, therefore, should provide an incremental benefit to total product gross margins as volumes begin to ramp in the second half of fiscal year '27. Let me address product revenue growth and gross margins, excluding hyperscaler revenues. First, the pricing actions we implemented in Q2 have largely offset the increases we've seen in component costs so far. We continue to monitor component costs to maintain stable pricing and margins. Second, it's important to emphasize that our pricing strategy remains focused on balancing near-term profitability with our long-term growth and market share objectives. We have approached pricing in a measured and disciplined manner, remaining consistent with our commitments to customers while preserving the long-term strength of our franchise. Our goal here is not simply to maximize margins in the current environment. We intend to continue to operate at the low end of our 65% to 70% product revenue gross margin range to drive top-line growth and market share gains while maintaining strong customer relationships. Ultimately, our plan is to allow our product gross margins to return to the upper end of the long-term range of 65% to 70% once semiconductor costs begin to stabilize and return close to original levels. This balanced approach is clearly paying off as we are driving higher levels of top-line growth and operating leverage, as our operating profit growth attests. Our operating profit of $230 million grew 77% year-over-year, resulting in an operating margin of 19.4%. Revenue outperformance and pricing management discipline drove this excellent result. With respect to our geographic mix of revenues, U.S. revenue was $688 million, growing 19%, and international revenue was $498 million, growing 75% year-over-year. International revenue represented 42% of total revenue in Q2. Notably, this marks our highest international revenue contribution to date. Scaling our international presence remains a significant opportunity and a key strategic focus for the company, and we are very pleased with the team's execution this quarter. Moving on to our balance sheet. Our liquidity remains robust with over $1 billion in cash and investments at the end of the quarter. Cash flow from operations was negative $136 million in the quarter, primarily reflecting strategic component purchases made to support customer demand and secure component supply to fuel strong growth of our core business. These purchases consisted primarily of NAND and other key components that were intentionally made to mitigate the impact of continued cost inflation and further increases in component pricing. These actions are consistent with our long-standing approach to supply chain management and reflect prudent operational planning to meet the strong demand across our portfolio. While these purchases created a temporary headwind to operating cash flow in the quarter, we expect operating cash flow to normalize over the next 2 quarters. Capital expenditures were $101 million, representing approximately 9% of revenue for the quarter. Our capital investments continue to support the continued scaling of our hyperscale business and to accelerate growth of our Evergreen//One subscription offering, while also reflecting the higher price of components. As a result, free cash flow was negative $238 million, and we expect free cash flow to track back to operating margins during the course of the year and expect free cash flow for fiscal year '27 to be between $600 million and $800 million. In Q2, we repurchased 932,000 shares, returning approximately $69 million to shareholders. We also paid $74 million in withholding taxes on employee awards, offsetting dilution of approximately 1 million shares. We currently have about $176 million remaining under our existing $400 million repurchase authorization announced in Q4 '26. Finally, our head count increased sequentially by 282 employees, bringing our total head count to 6,900 employees. Now turning on to guidance. I would like to take the opportunity to explain the rationale for our guidance raise. As mentioned in the prior Q1 earnings announcement on May 27, 2026, we were unsure about the sustainability of demand as market participants had to adjust to unprecedented price increases that had not been experienced in years. Equally, the supply environment was tight and allocation-driven. The combination of these 2 factors led us to argue that it was too early to call for further upside to our guide in the second half of 2027. Today, although market prices have increased to levels not experienced since 2017, demand remains strong, and we have anticipated continuous supply tightness with further strategic buys. Also, as we are past the half year point, we have now 2 quarters of visibility towards the end of fiscal year '27. With this new backdrop, we are now in a position to significantly increase our guidance for the second half of the year. For Q3, we anticipate revenue to be in the range of $1.325 billion to $1.335 billion, representing approximately a 38% increase year-over-year at the midpoint. We expect operating profit to be in the range of $265 million to $275 million, representing approximately also a 38% year-over-year increase at the midpoint. The outstanding strength of our Q2 results, good short-term pipeline visibility, and continued momentum we are seeing across our customer base gives us confidence in our full year guidance. Again, I would like to remind everyone for prior guidance that we continue to expect significant hyperscale product revenue in Q3 and Q4 based on order commitments through the hyperscale supply chain for our DFM solutions. For fiscal year '27, we anticipate revenue to be in the range of $5.030 billion to $5.070 billion, representing at the midpoint, an increase of more than $500 million relative to prior fiscal year '27 guidance. In growth terms, we expect revenue growth year-on-year to be at 38% at the midpoint. This is an increase of 75% in growth rate from prior guidance. We expect operating profit to be in the range of $940 million to $960 million, representing approximately at the midpoint, an increase of $110 million relative to prior fiscal year '27 guidance. In growth terms, we expect operating profit growth year-on-year to be at 50% at the midpoint. This is an increase of 54% in growth rate from prior guidance. As Charlie mentioned, we look forward to providing you with an update on Everpure's long-term strategy, path to growth, and long-term financial framework at our upcoming Financial Analyst Meeting that will be held on Wednesday, September 23 at our Santa Clara campus. With that, I'll now turn the call back to Paul for Q&A. Paul Ziots: Thanks, Tarek. [Operator Instructions] Operator, let's get started. Operator: [Operator Instructions] Our first question comes from Amit Daryanani from Evercore ISI. Amit Daryanani: Congrats on the impressive print and guide over here. Charlie, I think the question you dealt with over the last 90 days was why are you folks implying this big decel in your full year guide? You clearly are implying no more deceleration with this updated 37%, 38% growth on the guide. But -- and I heard all the reasons you kind of gave upfront and what's driving some of the strength. But if you could just help us appreciate when we think about the sizable uplift in guide against 90 days ago, you're talking about 16%, 17%, what specifically changed in the last 90 days? And is there a way to think about how big the factors when maybe it's end market or better supply or pricing on new workloads? So I think the guide is obviously very impressive and the step-up. It would be helpful if you just unpack what's driving it and the durability of it versus 90 days ago. Charles Giancarlo: You bet, Amit, and thanks for the question. Just to set the record straight, we were -- we've repeated multiple times in the last call that we weren't saying there was going to be a deceleration. We simply said that we were not updating the annual guidance beyond what we had already seen. So it was the lack of an update. Now why is that? And you're absolutely correct. What changed? Well, first of all, as you well know and for people who listened to this call all the time though, we generally operate with 1 to 2 quarters of visibility, not a full year. So we -- I don't -- I cannot remember a time when we raised guidance after Q1 other than just the performance that we had in Q1 plus Q2. So -- but things did change over the last quarter. So your question is absolutely appropriate. Two things went away, the concern about our ability to source components to be able to deliver. And the second was the understanding of what our customers and market participants would do under the scenario of far higher prices. As you may remember, price increases were implemented in Q1, but really didn't fall into the customer environment until Q2. So this is the first full quarter that we've seen of higher prices. And we now have a much better understanding of how customers are responding to the higher prices. And we also have now 2 quarters of visibility. So 2 things went away, concern about the higher prices and the effect, the concern around supply chain, which we feel now we are very much on top of. And then one thing, new information that came in, which is actual experience in how customers are responding to the higher prices. I hope that answers your question, Amit. Operator: Our next question comes from Aaron Rakers from Wells Fargo. Unknown Analyst: This is Michael [indiscernible] on behalf of Aaron. I also want to say congrats on the results in the second hyperscaler design win. For my question, I just was wondering if you can unpack sort of what's baked into the full year guide as far as the trajectory of product gross margins and OpEx growth as well to the back half? Charles Giancarlo: You bet. So let me start with that. We -- I want to make it really clear. We are very intentional with our gross margins. I feel that we are in complete control of our gross margins, and we are choosing to operate at the lower end of our normal range in order to help customers to share the pain with the customers to help customers through this very difficult transition that is going on in the industry through no fault of their own. I mean the demand for semiconductors has completely outstripped supply. That's driving semiconductor prices higher across the board from the smallest to the largest, most complex, and it affects us as someone who assembles those semiconductors into equipment. Tarek, I'll leave it to you to the other part of the question on OpEx. Tarek Robbiati: Yes. Thank you, Charlie. I would add to that, that I'd like to add some color on intentionality that Charlie has referred to a moment ago. Our goal is not to maximize gross margin in percentage terms. Our goal is to seize the opportunity to accelerate the growth and continue to gain market share. We are deliberately choosing to operate at the bottom end of our product gross margin long-term range of 65% to 70% and this strategy is paying off. It's paying off visibly in terms of operating leverage, and you can see 2 things. Number one, the top line growth that we're driving that I consider to be very impressive at 38%. But also at the bottom line, at the operating profit level, we're driving substantial growth in operating profit, 77% year-over-year because we can see that acceleration outpacing the acceleration of our OpEx cost in totality. So this is very intentional, and it's about driving market share gains, revenue growth and operating leverage. Operator: Our next question comes from Howard Ma from Guggenheim Securities. Howard Ma: I want to add my congratulations, too, on a spectacular performance all around, including the second hyperscale win and demand holding up in light of these unprecedented price increases. My question is, can you help us better understand the ASP versus volume mix so far this year? In Q1, I think you guys said pricing and pull forward was roughly 10 to 15 points of growth, and therefore, volume growth was about 20 points of that growth or I guess, a little over 20. Volume was down in Q2, as you guys said, or I should say more specifically overall capacity shifts. Can you share how much? And then with ASPs up over 100% already in the back half this year, does that mean that your guidance despite the big raise that, that still implies a significant drop-off in capacity or a bigger drop-off in capacity back half versus Q2, and that's even after adjusting for the higher Evergreen//One sales. Or in other words, maybe a better way to ask it too is, is there still a similar level of conservatism built into the back half guide? Charles Giancarlo: I'll take that one first, Tarek. So look, the way I like to phrase it is very simple, which is there is elasticity in the market. And when prices go up, elasticity works against the volume side of it. So the increase in revenues that we're seeing is not in proportion. The proportion of total capacity shipped, however you calculate that does not -- has not kept up is far less than the amount of total revenue dollars that are shipped. And as we see prices start to stabilize, which I would hope to see towards the end of the year, I think we'll start to see volume start to come back up. But Tarek, do you want to add any further. Tarek Robbiati: Sure. Thank you, Charlie. And thank you, Howard, for the question. I won't comment on the second part of your question. I would simply say to you that there are 4 things that have driven our performance in Q2: price, mix, unit systems and also capacity. So overall, system units are down. We see customers paying more for systems at the high end of our portfolio. That's also explainable by the mix shift and capacity in the system that they buy has gone up. So it is only the units of systems that has not grown, and that's what we have observed across our portfolio. And that is, in a sense, a very good result, considering that in Q1, as also was anticipated, there were some pull-ins, and we were transparent in the fact that when you have substantial price increases, customers tend to bring forward some purchases, and that's why we had pull-ins in Q1. But in Q2, this is no longer the case. Pull-ins did not play any role, and we don't anticipate any further impact from so-called pull-ins in the rest of the year. We feel very good about our guidance as it stands. And I think that if you really look at our top line growth at 38% you would have to adjust that also for the growth of Evergreen//One. Evergreen//One has grown spectacularly well in Q2. As Charlie remarked, it's in excess of a $1 billion run rate. So our total growth once you normalize for the Evergreen//One contribution is well north of 40%, approaching the 50s. Operator: Our next question comes from Mike Cikos from Needham & Company. Matthew Calitri: This is Matt Calitri on for Mike Cikos over at Needham. We're curious about contract duration and deal size trends for Storage-as-a-Service customers that underlie the strong growth you're seeing there. Are you seeing any difference in how new and existing customers are approaching Evergreen deals, particularly as it relates to near versus long-term planning in the current supply environment? Charles Giancarlo: Yes. No substantial change other than larger volume. Average contract length tends to exceed 3 years, somewhere between 3 and 4 years. So there's been no substantial change in that. What we are seeing is that -- well, first of all, just because of the way it works, we did not need and we did not raise prices in the -- in Evergreen//One as a Service as much as we had to on product sales. And we've gone through why that's the case on multiple occasions. I think what customers see is that it's a much -- they can -- they're able to plan on lower prices over a longer period of time with the as-a-service environment, and they appreciate that stability. So -- and we've seen this in the past that when prices go up, we see relatively more demand for Evergreen//One, which is great because part of the challenge in an as-a-service business when it's on-prem is that customers weren't used to it. So we really welcome the additional attention it's getting. But also when prices go down, then customers may arbitrage and look to buy a product rather than go with a service. So we'll see both sides of that. Operator: Our next question comes from Erik Woodring from Morgan Stanley. Erik Woodring: Congrats on the hyperscaler win and nice guide. Charlie, when I think about why Everpure wins some of these deals in these higher-growth hyperscaler environments, today, it doesn't seem super cost effective to replace nearline HDDs with DFMs, just given where QLC NAND pricing is versus HDDs. So in these new kind of wins and environments with hyperscalers, like what exactly are you displacing? Is that traditional SSDs? Or maybe asked differently, what is the value proposition that these new customers are seeking with your DFMs that they couldn't get with their prior solutions? Charles Giancarlo: Yes. So I'll start. I'm going to hand it over to Rob, who works this extensively. But at a top level, you're correct. We are mainly, at this point in time, replacing SSDs. Now our solution can be extended down to HDDs when the pricing comes back into line. But in the meantime, we replace SSDs. And you might ask, well, what is our benefit over SSDs? Well, quite simply, it's everything from power performance to absolute performance to ease of use because we have one software solution for any size, any scale, any performance level, longer lifetimes, lower failure rate, and then I'm going to hand it over to Rob. Robert Lee: Yes, Erik, just to add on to that, Charlie has enumerated a number of the benefits of the DirectFlash technology, which obviously, our enterprise customers are well familiar with and have been able to be beneficiaries of for some time. Where the hyperscalers are now seeing a lot of promise for the technology is as they're looking at, to your point, now some of these SSD estates, comparing the benefits they can get in those areas that Charlie enumerated versus SSDs and the dramatic effects that has on reducing their overall cost and, just call it, headache of operations at hyperscale. When you think about -- just to put some numbers for comparison. When you think about the significant reliability benefits that DirectFlash drives versus SSDs, 5x more reliability on a component basis. When you think about the density benefits, the fact that we can be 2, 3, 5x as dense, when you multiply those out and you look at the overall reliability benefits that drives, you're getting into 25, 50x type of benefits. When you look at efficiency, when you look at power savings, similarly outsized amounts of benefits. And as compelling as those are in the enterprise, you now think about this at hyperscale and those benefits are very, very significant. So look, I think it's very early days. We're very pleased to be able to announce the second major design win. But more so, it's just great validation that DirectFlash software has a lot of room to run in this new market that we're opening up. Operator: Our next question comes from Jason Ader from William Blair. Jason Ader: Just on the hyperscale business, do you plan on providing any disclosure on the size of the business maybe at the end of the year or sometime next year? And have you raised your hyperscale contribution in the guidance for this year versus what you had baked in last quarter? Charles Giancarlo: So starting off with that on the -- on what's baked in. It's mostly baked in. There's been a slight modification to it, but nothing worth calling out. It is on track. It should be stated that it's very much on track according to what we had indicated at the beginning of the year. With 2 hyperscalers now, it creates a little bit of, if you will, greater confidentiality, but not a lot. So we're going to still stay fairly -- keep it fairly abstract in terms of guidance. We've indicated the rough size of exabytes that we'll be shipping this year. We said next year would be multiples of that. We're staying on that right now as the guide. But yes, we can't go further. Once the business gets to be bigger than it is today, hopefully, with more customers than we have today, we'd be able to then become a bit more specific in terms of the overall scale of the business. Operator: Our next question comes from Simon Leopold from Raymond James. Simon Leopold: Great. I wanted to see if maybe you could do a little bit of compare and contrast of the second hyperscale deal to the first. And what I'm sort of trying to tease out is, I recall that there was some degree of R&D work that needed to be done and prep work to ramp it. So what's different about this deal versus the original hyperscale deal? And how should we think about those compared to the others you're pursuing? Charles Giancarlo: Yes. I want to identify one thing that was different in the -- if you will, the closing, if you will, of the deal, and then I'll hand it to Rob on the technology side of it. One of the things about this deal and the reason why it took longer than we anticipated was that this particular hyperscaler didn't want to award the design win until they also had a contract -- a supply contract in place. And so while we had strong indications of a design win quite some time ago, we didn't have an official one until we had the supply contract. So that took -- that was one of the things that was different about this one. So Rob? Robert Lee: Yes. And Simon, just to add on, maybe to get back to your original question. Look, if I step back for a minute without getting into too specific details, what I'd say is that the general design, the environment, the integration, the packaging of our technology in the second environment is substantially similar to the first customer. As with the first design win, the focus is initially going to be in the warmer and higher performance tiers as we spoke about earlier during the call. But as well, this customer is very interested in, over time, having this consistent architecture, be able to be applied across multiple and lower performance tiers as well. And again, similar to the first customer environment and what we're seeing in our ongoing conversations across the board, very horizontal storage environments across all workloads, including AI, but as well serving end customer Platform-as-a-Service and infrastructure services. Always will be some fit and finish integrations as with any large customized environment. But what's really nice to see and validates our strategy here is that the core IP, the core packaging, the core implementation of solution, very, very similar as well as not just the solution from a technology point of view, but a business model point of view, right? As we have had conversations with the financial community over the last 4 to 5 quarters as we ramped up our experience with our first customer, really nicely landed on a business model that worked well for both parties mutually taking advantage of our IP, our -- the hyperscaler supply chain capabilities and our contract manufacturer relationships. Operator: Our next question comes from Krish Sankar from TD Cowen. Sreekrishnan Sankarnarayanan: Congrats again for the really impressive numbers. Charlie or Rob, I had a question for you, again, sorry, on the hyperscalers. Very impressive, the second hyperscaler. I'm just kind of curious, how much of the -- is there a date to figure out how much of this is actually going to be recurring revenues? And how confident are you given that multiples [indiscernible] exabytes, is there any correlation to NAND prices versus your hyperscaler wins? And any chance you can announce a third hyperscaler win this year? Charles Giancarlo: Yes. So with respect to the -- there is -- NAND prices obviously have a very significant effect on the business, both in terms of where the technology is targeted and also, frankly, in terms of our -- because we do manage -- we're very deeply involved in the supply chains that deliver the NAND to the customer. So it also affects how we have to engage at that level overall. So I would say NAND prices do affect our business in a very significant way. Robert Lee: And Krish, since you speak in the second part of the question, we're not going to be speaking about individual customers and speculating about timing of design wins moving forward. Now with the second customer with the repeatability, we'll be speaking about looking at this product category as a whole moving forward. Operator: Our next question comes from Joseph Cardoso from JPMorgan. Joseph Cardoso: I'll echo my congrats here as well. Maybe can you just touch on the pre-buys that you highlighted in the prepared remarks? Like how should we be thinking about the duration or how many quarters of supply you've now locked in? And any thoughts in terms of how we should think about the implications for margins? Or is the expectation here that you can pass through pricing? Tarek Robbiati: Well, Joe, thank you for the question, and welcome. I think this is your first call with us. So glad to hear your voice. Look, we've executed those strategic purchases to continue to support the growth of our core. Our core is growing extremely solidly, and we have now sufficient supply coverage for the foreseeable future. I won't go into the details because it is commercially sensitive, as you can expect. We also now have a -- reached a point in time where pricing has roughly caught up with the costs of raw materials, and this is really helping the management of the gross margins moving forward. But like I said to your colleague earlier on the call, we continue to want to operate at the low end of our product gross margin range of 65% to 70%. That is to continue to accelerate top line growth and market share and drive higher levels of operating leverage. Hopefully, this helps. Operator: Our next question comes from Wamsi Mohan from Bank of America. Wamsi Mohan: I think you just noted in the Q&A that you were waiting for the hyperscaler customer to secure supply. And I'm wondering sort of a follow-up to your prior question. Would you be willing to share if you are signing any long-term agreements with memory makers? Or is there an appetite to do that at all given that your hyperscaler customers are trying to secure supply. But for your non-hyperscale business, obviously, you bumped up some supply with inventory buildup. But just curious if you're motivated or think that it might be necessary for you to sign any LTAs as you look out further beyond the next couple of quarters? Tarek Robbiati: Wamsi, it's Tarek. Thank you for the question. We executed those strategic buys for our core, not for the hyperscaler business. We do not procure the NAND for the hyperscaler business. The hyperscalers procure the NAND for their business through their supply chain. And what Charlie was referring to before is as we executed the second agreement with the hyperscaler, the hyperscaler was waiting to secure his own purchase agreements before signing the agreement with us. That is the distinction. We don't procure the NAND for hyperscalers. So strategic buys are just there to continue to fuel the growth of our core, which has been outstanding in Q2, and we have really good confidence for the rest of the year because of that. Operator: Our next question comes from Asiya Merchant from Citi. Asiya Merchant: Great. Charlie, if I may, I think the commentary suggests that you have a good visibility beyond just fiscal '27 that you guys are guiding to here, but it seems like the commentary suggested that you have possibility of continued share gains and durability of demand. So if I could just ask you to just unpack, is it enterprise AI adoption that's really driving this and you see the demand towards these high-performance flash that's driving sustainability just even beyond the hyperscaler business, if you could? And just if I may, on subscription margins, maybe if you could peel the level here as well on when to expect subscription margins to come back to ranges that they were in the past? Charles Giancarlo: Yes. Well, thank you for the question. So we -- as I mentioned at the beginning, we generally operate on about 2 quarters of good visibility of good pipeline that we -- that allows us to forecast roughly 2 quarters in the future. And so that's what we're doing right now. Now you're correct. I'm referencing that I believe that our momentum has increased and that we're picking up share faster than we have in the past or at least in the most recent past. And because of that, we're more confident as we go into FY '28 because the momentum that we have, we feel, is much stronger than we've had in the last -- for multiple years. And the reasons I gave at the very beginning of my opening remarks is the basis of that. That is to say that we've completed building our products across the entire application use case space of data storage. We're leading the industry. The Gartner Magic Quadrant is another example of that. We continue to expand what customers can do with their data and how they can protect it and how they can leverage it for AI. And we think that is benefiting us with outsized market share demands. And that momentum, we think, will carry going forward. But I want to be very clear that on a forecast or guide basis, we really only have about 2 quarters of visibility generally, and that's what we guide on is what -- that is our best prediction of the near future that we can have. Tarek Robbiati: Sorry, let me answer the second part of the question on subscription gross margins. Look, there are many small factors that have that are behind the performance in this quarter. But the main one is being price increases in components replacement costs for our Forever program. And that is a good thing. And the reason why it's a good thing is that what we know from customers who take on Forever is that their churn is lower. And so this helps in the long run our business, and we will continue to make investments to fuel our Evergreen//Forever program. Thank you. Paul Ziots: Thank you, Asiya. We're a little bit over time, but we're going to squeeze in one more question. Operator: Our last question today comes from Tim Long from Barclays. Timothy Long: I think we covered a lot of the stuff here. I did want to -- maybe if you could just touch a little bit, Charlie or Tarek, on the international performance, really big spike in the quarter. So just curious, I know that's been an area of focus and last quarter it was down a little bit. So I'm sure there's some lumpiness. But what are the kind of the dynamics there? Is this go-to-market? Is it better product availability? What kind of drove that? And how sustainability -- how sustainable do you see that theater? Charles Giancarlo: Well, we believe that we're going to -- our -- we have been operating at roughly a 30% plus international share of our total revenues, which is a bit low for -- and it's an area that we've been investing in for a long time. So we do expect that to continue to go up. But I will say on a quarter-by-quarter basis, it's better measured on an annual basis. Quarter-by-quarter, remember, it's all based on shipments rather than on bookings and -- both shipments and bookings vary over time. So really, it's better measured on an annual basis. But yes, we hope to see that continue to increase over time. Paul Ziots: Thank you, Tim. Before we conclude, Charlie, I think he has a final comment. Charles Giancarlo: Yes. Before we close, I do want to thank our customers, employees, our partners, our investors and our suppliers through -- going with us through this very challenging period of time. Our continued success is made possible by your trust and your commitment. So thank you all very much. Speak to you next quarter. Operator: That concludes the Everpure's second quarter fiscal 2027 financial results conference call. Thank you for your participation. You may now disconnect your lines. 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This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has positions in and recommends Everpure. The Motley Fool has a disclosure policy. Everpure (P) Q2 2027 Earnings Call Transcript was originally published by The Motley Fool

This article first appeared on GuruFocus. Revenue: Increased 38% year-over-year, exceeding guidance. Operating Profit: Surged 77% to $230 million, with an operating margin of 19.4%. Product Revenue: Increased 54% year-over-year to $687 million. Subscription Services Revenue: Increased 20% year-over-year to $499 million, representing 42% of total revenue. Annual Recurring Revenue (ARR): Increased 20% year-over-year to more than $2 billion. Remaining Performance Obligations (RPO): Increased 44% year-over-year to more than $4 billion. Total Gross Margin: 69.9%. Product Gross Margin: 66.2%, within the long-term range of 65% to 70%. Subscription Services Margin: Relatively unchanged at 74.9%. Evergreen One TCV: Accelerated to an annualized run rate above $1 billion for fiscal year '27. Storage as a Service TCV: Increased 121% year-over-year to $277 million in Q2. US Revenue: $688 million, growing 19% year-over-year. International Revenue: $498 million, growing 75% year-over-year, representing 42% of total revenue. Cash Flow from Operations: Negative $136 million, reflecting strategic component purchases. Capital Expenditures: $101 million, approximately 9% of revenue. Free Cash Flow: Negative $238 million; expected to be between $600 million and $800 million for fiscal year '27. Share Repurchases: Repurchased 932,000 shares, returning approximately $69 million to shareholders. Headcount: Increased sequentially by 282 employees to 6,900 total. Q3 Fiscal 2027 Guidance: Revenue expected in the range of $1,325 million to $1,335 million; operating profit expected between $265 million and $275 million. Full-Year Fiscal 2027 Guidance: Revenue expected between $5.03 billion and $5.07 billion; operating profit expected between $940 million and $960 million. Warning! GuruFocus has detected 3 Warning Sign with P. Is P fairly valued? Test your thesis with our free DCF calculator. Release Date: August 26, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Revenue growth of 38% year-over-year, exceeding guidance and continuing a streak of 30%+ growth since Q4. Operating profit surged 77% to $230 million, with operating margin at 19.4%. Evergreen One TCV accelerated to a $1 billion run rate, indicating stronger market share gains than revenue growth implies. Secured a design win and supply agreement with a second top-five hyperscaler, validating DirectFlash technology and opening a significant long-term growth avenue. International revenue grew 75% year-over-year, reaching a record 42% of total revenue, driven by strong execution and market expansion. System unit volumes declined as customers bought fewer solutions at higher prices due to price increases. Operating cash flow was negative $136 million due to strategic component purchases to secure supply and mitigate cost inflation. Product gross margins are intentionally kept at the low end of the 65%-70% range to share cost burden with customers, limiting near-term margin expansion. Hyperscaler revenue contribution was minimal in Q2, with significant revenue expected only in the second half of fiscal 2027 and beyond. The company faces ongoing supply chain tightness and component cost inflation, requiring strategic buys and creating uncertainty in cost management. Q: What specifically changed in the last 90 days to drive the significant upward revision to the full-year guidance, and how durable is this growth? A: Charlie Giancarlo (CEO) explained that two major concerns from the previous quarter were alleviated. First, the concern about the company's ability to source components to meet demand was resolved through strategic purchases. Second, the company gained a full quarter of visibility into how customers would respond to the unprecedented price increases, which was the first full quarter of these higher prices. This new information showed that demand remained resilient, giving management the confidence to raise guidance substantially. Q: Can you unpack the trajectory of product gross margins and OpEx growth baked into the full-year guidance? A: Tarek Robbiati (CFO) stated that the company is intentionally choosing to operate at the lower end of its 65% to 70% product gross margin range. This strategy is designed to accelerate top-line growth and gain market share rather than maximize margins. The approach is paying off, as evidenced by 38% revenue growth and 77% operating profit growth, demonstrating that operating leverage is outpacing OpEx increases. Q: Can you help us understand the ASP versus volume mix this year, and does the back-half guidance imply a significant drop-off in capacity? A: Tarek Robbiati (CFO) noted that Q2 performance was driven by price, mix, and capacity, while system unit volumes were down. Customers are buying fewer systems at higher prices with a mix shift toward higher-performance configurations. Charlie Giancarlo (CEO) added that there is elasticity in the market, and while revenue is up significantly, total capacity shipped has not kept pace. He expects volumes to return as prices stabilize toward the end of the year. Q: What are the trends in contract duration and deal size for Storage-as-a-Service customers, and how are they approaching Evergreen deals in the current supply environment? A: Charlie Giancarlo (CEO) stated that there has been no substantial change in contract structure, with average contract lengths remaining between three and four years. However, the pricing environment has made Evergreen One more compelling because the company did not need to raise prices on the as-a-service offering as much as on product sales. Customers appreciate the price stability and predictability, leading to relatively more demand for Evergreen One during periods of high price inflation. Q: In the new hyperscaler wins, what exactly is EverPure displacing, and what is the value proposition that these customers couldn't get with prior solutions? A: Charlie Giancarlo (CEO) clarified that the company is primarily replacing SSDs in these environments. Rob Lee (CTO) elaborated that DirectFlash technology offers significant advantages over SSDs, including five times more reliability on a component basis, two to five times greater density, and substantial power savings. When multiplied out at hyperscale, these benefits translate into 25x to 50x improvements in overall reliability and efficiency, making the technology highly compelling for large-scale environments. Q: Do you plan to provide more disclosure on the size of the hyperscale business, and have you raised the hyperscale contribution in this year's guidance? A: Charlie Giancarlo (CEO) stated that the hyperscale contribution is on track with what was indicated at the beginning of the year, with only slight modifications not worth calling out. The company will keep the guidance abstract for now, but as the business grows with more customers, they will be able to provide more specific details on the overall scale of the business. Q: How does the second hyperscaler deal compare to the first, and what was different about the process? A: Charlie Giancarlo (CEO) noted that the second hyperscaler required both a design win and a supply contract to be in place before officially awarding the deal, which is why it took longer than anticipated. Rob Lee (CTO) added that the core technology integration and packaging are substantially similar to the first customer, validating the repeatability of the strategy. The business model also translated well, leveraging the company's IP, hyperscaler supply chain capabilities, and contract manufacturer relationships. Q: How should we think about the strategic component pre-buys, and how many quarters of supply have you locked in? A: Tarek Robbiati (CFO) explained that the strategic purchases were made to support the strong growth of the core business and provide sufficient supply coverage for the foreseeable future. He declined to provide specific details due to commercial sensitivity. He noted that pricing has now roughly caught up with raw material costs, which helps with gross margin management, but the company will continue to operate at the low end of its margin range to drive growth. Q: Are you signing any long-term agreements with memory makers, or is there an appetite to do so given the supply environment? A: Tarek Robbiati (CFO) clarified that the strategic buys were for the core business, not the hyperscaler business. The company does not procure NAND for hyperscalers; the hyperscalers procure their own NAND through their supply chains. The delay in the second hyperscaler deal was due to the customer securing its own purchase agreements before signing with EverPure. Q: Is enterprise AI adoption driving the sustainability of demand, and when should we expect subscription margins to return to previous levels? A: Charlie Giancarlo (CEO) stated that the company's momentum is stronger than it has been in years, driven by a complete product portfolio, industry leadership, and expanding capabilities for AI. However, he reiterated that guidance is based on roughly two quarters of visibility. Tarek Robbiati (CFO) addressed subscription margins, noting that the main factor was price increases in component replacement costs for the Evergreen Forever program, which is a positive as it leads to lower customer churn in the long run. Q: What drove the significant spike in international performance, and how sustainable is it? A: Charlie Giancarlo (CEO) stated that international revenue has historically been around 30% of total revenue, and the company has been investing in this area for a long time. While the 75% year-over-year growth in Q2 was notable, he cautioned that it is better measured on an annual basis due to quarterly fluctuations in shipments and bookings. The company expects international revenue to continue increasing over time. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Interested in Everpure, Inc.? Here are five stocks we like better. Everpure exceeded expectations and raised its outlook: Fiscal Q2 revenue rose 38% year over year, operating profit increased 77% to $230 million, and fiscal 2027 revenue guidance was raised to $5.0 billion-$5.7 billion. Subscription and storage-as-a-service growth remained strong: Subscription revenue increased 20% to $499 million, annual recurring revenue surpassed $2 billion, and Evergreen//One storage-as-a-service contract value grew 121% year over year. AI and hyperscale opportunities expanded: Everpure announced a design win with a second top-five hyperscaler, although meaningful revenue is expected mainly from fiscal 2028; the company also cited growing adoption of its AI data and virtualization offerings. Permian Resources Rally Faces a Test Everpure (NYSE:P) reported second-quarter fiscal 2027 results that exceeded its guidance, with revenue rising 38% year over year and operating profit increasing 77% to $230 million. Chief Executive Officer Charlie Giancarlo said growth was broad-based across geographies, products and business segments, while the company raised its full-year outlook on continued demand strength and improved visibility into supply availability. Giancarlo said the company’s revenue growth has accelerated over the past eight quarters and that management believes the higher growth rate can be sustained “for some time.” He attributed the momentum to the expansion of Everpure’s product portfolio, its unified Purity software platform, its DirectFlash technology, and the growth of its Evergreen//One storage-as-a-service offering. → What Rising Delivery Forecasts Say About Rivian's Stock Prospects Beyond Big Tech: 3 Non-Tech Earnings Winners to Watch “We have entered into breakout territory in our core enterprise market,” Giancarlo said, citing the company’s product architecture, go-to-market expansion and broader brand recognition across enterprise, mid-market and government customers. Product revenue increased 54% year over year to $687 million in the quarter. Subscription services revenue rose 20% to $499 million and represented 42% of total company revenue. Annual recurring revenue increased 20% to more than $2 billion, while remaining performance obligations increased 44% to more than $4 billion. → NVIDIA Reveals $21 Billion SpaceX Stake: Signal of Confidence or Circular Financing? $27 Billion in Buybacks: 3 Stocks Betting Their Strong Runs Aren’t Over Chief Financial Officer Tarek Robbiati said the results marked the company’s third consecutive quarter above the Rule of 40, a measure combining revenue growth and profitability. Total gross margin was 69.9%, including product gross margin of 66.2% and subscription-services margin of 74.9%. Management said demand remained resilient despite higher component costs and price increases. Robbiati said the quarter’s growth reflected pricing, a shift toward higher-performance configurations and higher capacity per system, while overall system unit volumes declined. Deals above $5 million grew 59% year over year. Deals above $20 million increased 385% year over year. U.S. revenue was $688 million, up 19%. International revenue was $498 million, up 75% and accounted for 42% of total revenue. → Berkshire Boosts Its Bet: This AI Hyperscaler Is Now a Top-3 Holding Giancarlo said Everpure is deliberately operating at the lower end of its long-term 65% to 70% product gross-margin range in order to share component-cost pressures with customers and support market-share gains. Robbiati said the company expects margins to move toward the upper end of that range after semiconductor costs stabilize closer to original levels. Evergreen//One total contract value reached an annualized run rate above $1 billion for fiscal 2027, according to management. Storage-as-a-service portfolio TCV, which includes Evergreen//One, rose 121% year over year to $277 million in the second quarter. Management said the current pricing environment has strengthened the appeal of Evergreen//One because the consumption-based offering gives customers more predictable spending and lower upfront capital requirements. Giancarlo said the company did not raise Evergreen//One pricing as much as traditional product pricing, helping customers plan around lower costs over a longer period. Average Evergreen//One contracts typically run between three and four years, Giancarlo said. The company has seen increased demand for the offering as customers confront higher prices for traditional storage products. Everpure highlighted growth opportunities in artificial intelligence, data management and virtualization. Giancarlo said the company’s Data Intelligence offering, including capabilities gained through its 1touch acquisition, is designed to help enterprises identify distributed data sources, understand their context and prepare data for AI applications. The company said more than 2,000 of its 15,000 customers now have enterprise data-cloud capabilities. It also reported first-quarter sales for DataStream, an offering built on NVIDIA’s AI Data Platform, and continued adoption of FlashBlade//S and FlashBlade//EXA systems for enterprise AI and large-scale AI environments. In virtualization, Everpure said its alternatives to VMware—including Portworx with Red Hat OpenShift and Nutanix virtualization—have grown to a run rate of more than $100 million annually. On Aug. 10, Everpure announced a design win and supply agreement with a second top-five hyperscaler. Management expects the agreement to contribute only minimally to fiscal 2027 revenue, with a meaningful ramp beginning in fiscal 2028. The company continues to expect significant hyperscale revenue in the third and fourth quarters of fiscal 2027 from existing commitments. Giancarlo said DirectFlash currently is primarily replacing SSDs in hyperscale environments. Chief Technology and Growth Officer Rob Lee said the technology can provide higher reliability, density and power efficiency than SSD-based deployments. Lee said the second hyperscale customer’s implementation is substantially similar to the first customer’s design, including initial use in higher-performance storage tiers. Everpure ended the quarter with more than $1 billion in cash and investments. Cash flow from operations was negative $136 million, largely due to strategic purchases of NAND and other components intended to support demand and mitigate further cost inflation. Free cash flow was negative $238 million after $101 million in capital expenditures. Robbiati said the company expects operating cash flow to normalize over the next two quarters and forecast fiscal 2027 free cash flow of $600 million to $800 million. Everpure repurchased 932,000 shares for about $69 million during the quarter and had approximately $176 million remaining under its existing repurchase authorization. For the third quarter, Everpure forecast revenue of $1.325 billion to $1.335 billion, representing approximately 38% year-over-year growth at the midpoint. It expects operating profit of $265 million to $275 million. For fiscal 2027, the company raised its revenue outlook to $5 billion to $5.7 billion, with midpoint growth of 38% year over year. It forecast operating profit of $940 million to $960 million, representing approximately 50% growth at the midpoint. Robbiati said the guidance increase reflects strong second-quarter execution, improved short-term pipeline visibility, continued customer demand despite price increases, and strategic component purchases that have provided supply coverage for the foreseeable future. Pure Storage, Inc provides data storage technologies, products, and services in the United States and internationally. The company's Purity software is shared across its products and provides enterprise-class data services, such as data reduction, data protection, and encryption, as well as storage protocols, including block, file, and object. Its products portfolio includes FlashArray for block-oriented storage, addressing databases, applications, virtual machines, and other traditional workloads; FlashArray//XL; and FlashArray//C, an all-QLC flash array. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Everpure Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Everpure, Inc. P used its second-quarter fiscal 2027 earnings call to argue that faster growth can persist despite elevated component costs and customer pricing. Chairman and CEO Charles Giancarlo tied the outlook to resilient enterprise demand, market share gains and accelerating Evergreen//One adoption. That confidence drove a sharp fiscal 2027 guidance increase, while Q&A centered on pricing, supply visibility and the timing of hyperscale revenues. Responding to an Evercore ISI analyst, CEO Giancarlo said that two uncertainties eased during the fiscal second quarter — component availability and customer response to much higher prices. With those risks better understood and two quarters of visibility, Everpure reset its annual outlook. The fiscal 2027 revenue guidance rose to $5.03-$5.07 billion from $4.41-$4.51 billion, while the non-GAAP operating income guidance increased to $940-$960 million from $820-$860 million. The fiscal third quarter calls for $1.33-$1.34 billion in revenues and $265-$275 million in non-GAAP operating income. The non-GAAP EPS of $0.70 surpassed the Zacks Consensus Estimate for earnings of $0.59. Meanwhile, the company’s revenues of $1.19 billion beat the consensus estimate of $1.09 billion. Everpure, Inc. price-consensus-eps-surprise-chart | Everpure, Inc. Quote CFO Tarek Robbiati said that fiscal second-quarter product growth reflected pricing, mix and higher capacity per system, offset by lower system unit volumes. He said that fiscal first-quarter purchase pull-forward did not recur in the second quarter. Robbiati added that Everpure is deliberately operating near the low end of its 65-70% long-term product gross margin range to support share gains. The fiscal second-quarter product gross margin was 66.2%, while the total gross margin was 69.9%. The pricing environment also strengthened Evergreen//One. Robbiati said that Storage-as-a-Service TCV rose 121% year over year to $277 million, while Evergreen//One reached an annualized fiscal 2027 TCV run rate above $1 billion. Giancarlo positioned data management as a larger part of Everpure's AI strategy. He said that customer interest in Data Intelligence has been very strong as enterprises seek to discover, contextualize and govern fragmented data for AI use. Giancarlo added that more than 2,000 of Everpure's 15,000 customers are enabled for its Enterprise Data Cloud capability, which gives customers centralized policy control across storage fleets. He also highlighted early Data Stream sales and continued demand for FlashBlade//S and FlashBlade//EXA in enterprise and large-scale AI environments. Giancarlo said that Everpure signed a design win and supply agreement with a second top-five hyperscaler. The new agreement should contribute only de minimis revenues in fiscal 2027, with a meaningful ramp beginning in fiscal 2028. VP, CTO and chief growth officer Robert Lee told a Morgan Stanley analyst that DirectFlash is initially replacing SSD-based infrastructure, with benefits centered on density, reliability, power efficiency and operational simplicity. CTO Lee told a Raymond James analyst that the second deployment is substantially similar to the first in core design and packaging. CFO Robbiati still expects significant hyperscale product revenues in the fiscal third quarter and the fourth quarter from existing commitments. CFO Robbiati attributed negative $136 million of operating cash flow largely to strategic purchases of NAND and other components intended to support core demand. The free cash flow was negative $238 million. He said that Everpure has sufficient supply coverage for the foreseeable future and that pricing has roughly caught up with raw-material costs. The operating cash flow is expected to normalize over the next two quarters. CFO Robbiati maintained the fiscal 2027 free cash flow guidance of $600-$800 million. The fiscal second-quarter capital expenditure was $101 million, supporting hyperscale scaling and Evergreen//One growth. Giancarlo said that growth momentum and share gains are stronger than in recent years, but he reiterated that Everpure generally has only about two quarters of reliable forecasting visibility. The call paired a materially higher near-term outlook with a disciplined focus on margins, supply and execution. Everpure plans its next strategic update at the Sept. 23 Financial Analyst Meeting. P currently carries a Zacks Rank #3 (Hold), with a Growth Score of B, a Momentum Score of A and a VGM Score of B. Its Value Score of F is the weaker part of the Style Score profile. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Zacks Style Scores put A above B and favor A or B readings, while the strongest combinations pair those scores with Zacks Rank #1 or #2 (Buy) stocks. The Zacks Rank #3 can change as earnings estimates are revised after the newly reported results. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Everpure, Inc. (P) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Total revenue growth of 38% year-over-year Product revenue growth of 54% year-over-year Significantly increased FY27 revenue and operating profit guidance SANTA CLARA, Calif., Aug. 26, 2026 /PRNewswire/ -- Everpure (NYSE: P), the company revolutionizing storage and data management, today announced financial results for its second quarter fiscal year 2027 ended August 2, 2026. "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," said Charles Giancarlo, Chairman and CEO of Everpure. "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." Second Quarter Financial Highlights Revenue $1.2 billion, up 38% year-over-year Product revenue $687 million, up 54% year-over-year Subscription services revenue $499 million, up 20% year-over-year Subscription annual recurring revenue (ARR) $2.1 billion, up 20% year-over-year Remaining performance obligations (RPO) $4.1 billion, up 44% year-over-year GAAP gross margin 68.4%; non-GAAP gross margin 69.9% GAAP operating income $63 million; non-GAAP operating income $230 million GAAP operating margin 5.3%; non-GAAP operating margin 19.4% Operating cash flow $(136) million; free cash flow $(238) million Total cash, cash equivalents, and marketable securities $1.0 billion Returned approximately $69 million to stockholders through share repurchases of 0.9 million shares. "Q2 was another outstanding quarter for Everpure, where we delivered record revenue and operating profit, exceeding the high-end of our guidance," said Everpure CFO Tarek Robbiati. "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." Second Quarter Company Highlights Second Top-Five Hyperscale Win Announced on August 10 a landmark design win with a second top-five hyperscaler, leveraging Everpure's advanced DirectFlash® architecture to drastically lower operational costs and reclaim vital power and rack space for hyperscale workloads. Advancing Enterprise Data & AI Infrastructure Unveiled the Data Primacy architecture at //Accelerate 2026, Everpure Data Intelligence for automated data discovery and governance. Announced general availability of Everpure Data Stream to automate data pipelines from ingestion to inference and accelerate data preparation. Evolved Pure1 AI Copilot from a conversational assistant into an active operator that analyzes performance anomalies, provides step-by-step root-cause analysis, and guides teams to resolution. Expanding Hybrid Cloud & Virtualization Introduced Portworx for Edge on Red Hat OpenShift and expanded Portworx by Everpure to bring native Kubernetes data management, including storage, data protection, and disaster recovery, directly into the Red Hat OpenShift console. Announced general availability of Everpure Cloud Azure Native for Azure Virtual Machines, extending the fully managed enterprise block storage service across public cloud environments. Driving Strategic Ecosystem Partnerships Achieved general availability of Everpure FlashBlade integration into Cisco Intersight, delivering native onboarding, complete inventory visibility, and unified health dashboards. Announced the Everpure OpenSharing Connector, enabling Databricks to query Iceberg and Delta tables directly on Everpure object storage without data replication or egress fees. Industry Recognition & Impact Named a Leader in the 2026 Gartner® Magic Quadrant™ for Enterprise Storage Platforms, positioned highest in execution and furthest in vision for the second consecutive year. Named to the PEOPLE® Companies That Care by Great Place to Work® and PEOPLE® magazine. Named Virtualization Transformation Partner of the Year in the 2026 Red Hat Ecosystem Innovation Awards and recognized as a Leader in The Forrester Wave™: Object Storage Solutions, Q2 2026. CEO Charles Giancarlo was recognized on CRN's The 25 Most Influential Executives Of 2026 list. Third Quarter and FY27 Guidance These statements are forward-looking and actual results may differ materially. Refer to the Forward Looking Statements section below for information on the factors that could cause our actual results to differ materially from these statements. Everpure has not reconciled its guidance for non-GAAP operating income and related year-over-year growth rate to their most directly comparable GAAP measures because certain items that impact these measures are not within Everpure's control and/or cannot be reasonably predicted. Accordingly, reconciliations of these non-GAAP financial measures guidance to the corresponding GAAP measures are not available without unreasonable effort. Conference Call InformationEverpure will host a teleconference to discuss the second quarter fiscal 2027 results at 2:00 pm PT today, August 26, 2026. A live audio broadcast of the conference call will be available on the Everpure Investor Relations website. Everpure will also post its earnings presentation and prepared remarks to this website concurrent with this release. A replay will be available following the call on the Everpure Investor Relations website or for two weeks at 1-800-770-2030 (or 1-647-362-9199 for international callers) with passcode 5667482. Additionally, Everpure is scheduled to participate at the following investor conferences: Save the Date: Everpure Financial Analyst MeetingPlease save the date for Everpure's Financial Analyst Meeting on Wednesday, September 23, 2026. Members of the executive leadership team will provide an update on the company's long-term strategy, path to growth, and long-term financial framework. A live webcast and presentation materials will be available on the company's Investor Relations website. Additional event details, including registration information, will be provided closer to the event. About EverpureEverpure (NYSE: P) allows organizations to take control of their data with an industry-leading, ever-evolving storage and data management platform. We help companies unleash the power of their data by ensuring it is secure, accessible, intelligent, and ready to perform in the AI era. We make data management effortless while simultaneously scaling performance and significantly reducing energy consumption. With one of the highest Net Promoter Scores for over a decade, Everpure is the choice of the world's most innovative organizations. For more information, visit www.everpuredata.com. Connect with EverpureBlogLinkedInTwitterFacebook Everpure, the Everpure P Logo, Portworx, Pure Storage and the marks in the Everpure Trademark List are trademarks or registered trademarks of Everpure, Inc. or its licensed subsidiaries in the U.S. and/or other countries. The Trademark List can be found at Everpuredata.com/trademarks. Other names may be trademarks of their respective owners. Investors and others should note that we announce material business and financial information through our investor relations website at www.investors.everpuredata.com, SEC filings, public conference calls and webcasts, and press releases, including earnings press releases. We also announce business and financial information through our newsroom website (https://www.everpuredata.com/company/newsroom.html), blog (http://blog.everpuredata.com), LinkedIn (linkedin.com/company/everpure-data), X (x.com/EverpureData), Facebook (@purestorage), Instagram (@purestorage) and YouTube (@everpure-data). It is possible that the information we post on these channels could be deemed to be material information. Therefore, we encourage investors to follow these channels, in addition to our SEC filings, public conference calls and webcasts, and press releases. Forward Looking StatementsThis press release contains forward-looking statements regarding our products, business and operations, including but not limited to our views relating to our future period financial and business results, our ability to manage potential disruptions to our supply chain, our ability to procure a sufficient supply of flash and other components, the impact of recent increases in component costs, the anticipated effects of our recent acquisition of 1touch, our opportunity relating to hyperscale and AI environments, our ability to meet hyperscalers' performance, price and other requirements, our ability to expand with our current hyperscale customers and land new hyperscale customers, our ability to meet the needs of hyperscalers for the entire spectrum of their online storage use cases, the timing and magnitude of large orders, including sales to hyperscalers and large enterprises, the timing and amount of hyperscale customer revenue, demand for our products and subscription services, including Evergreen//One, our sales pipeline, the relative sales mix between our subscription and consumption offerings and traditional capital expenditure sales, our technology and product strategy, specifically ongoing development and customer adoption of new products and the Enterprise Data Cloud architecture (including Pure Fusion™), priorities around sustainability and energy saving benefits to our customers of using our products, our ability to expand market share, the impact of inflation, currency fluctuations, tariffs, or other adverse economic conditions, our expectations regarding our product and technology differentiation, new investments and partnerships, and other statements regarding our products, business, operations and results. Forward-looking statements are subject to known and unknown risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements. Actual results may differ materially from the results predicted, and reported results should not be considered as an indication of future performance. The potential risks and uncertainties that could cause actual results to differ from the results predicted include, among others, those risks and uncertainties included under the caption "Risk Factors" and elsewhere in our filings and reports with the U.S. Securities and Exchange Commission, which are available on our Investor Relations website at investor.everpuredata.com and on the SEC website at www.sec.gov. Additional information is also set forth in our Annual Report on Form 10-K for the fiscal year ended February 1, 2026. All information provided in this release and in the attachments is as of August 26, 2026, and Everpure undertakes no duty to update this information unless required by law. Key Performance MetricsSubscription ARR is a key business metric that refers to the annualized recurring contract value of all active, non-cancelable customer subscription agreements with subscription terms of any length at the end of the quarter, plus on-demand billings for the quarter multiplied by four. Total Contract Value (TCV) Sales, or bookings, of Everpure's Evergreen//One and similar consumption- and subscription-based offerings is an operating metric, representing the value of orders received during the period. Non-GAAP Financial MeasuresTo supplement our unaudited condensed consolidated financial statements, which are prepared and presented in accordance with GAAP, Everpure uses the following non-GAAP financial measures: non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income (loss), non-GAAP operating margin, non-GAAP net income, non-GAAP net income per share, and free cash flow. We use these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. Our management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance and liquidity by excluding certain expenses such as stock-based compensation expense, payroll tax expense related to stock-based activities, amortization of debt issuance costs related to debt, amortization of acquired intangible assets and gains from mark-to-market adjustments on strategic investments that may not be indicative of our ongoing core business operating results. Everpure believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when analyzing historical performance and liquidity and planning, forecasting, and analyzing future periods. The presentation of these non-GAAP financial measures is not meant to be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP, and our non-GAAP measures may be different from non-GAAP measures used by other companies. For a reconciliation of these non-GAAP financial measures to GAAP measures, please see the tables captioned "Reconciliations of non-GAAP results of operations to the nearest comparable GAAP measures" and "Reconciliation from net cash provided by (used in) operating activities to free cash flow," included at the end of this release. View original content to download multimedia:https://www.prnewswire.com/news-releases/everpure-announces-second-quarter-fiscal-2027-financial-results-302860903.html

(Bloomberg) -- Wall Street is eagerly anticipating Nvidia Corp.'s (NVDA) earnings on Wednesday afternoon, not so much for what the numbers will say about the chip giant, but for what they mean to artificial intelligence investors and the market itself. Most Read from Bloomberg Lutnick's Intervention in Canada Talks Draws Praise, Blame Apple Gears Up to Launch Its First New Mac Mini in Two Years Xi Signals Defiance as US Threatens Sanctions Over Iran Help US Weighs More Trade Measures Against Canada After Retaliation Bessent's Mentor Druckenmiller Calls Bond Buying a Mistake "Nvidia is the best barometer for AI spending," said Rob Conzo, chief executive officer of the Wealth Alliance, which owns Nvidia shares in several portfolios. "It will help determine if hyperscalers are still accelerating, from an infrastructure perspective, or if they're becoming more disciplined." The company's shares have been on a wild ride this year, sinking through the winter, then soaring through the spring, and bouncing around all summer. They're coming off a seven-day losing streak, matching the longest since 2019, in which they lost 7.5%. And that follows a 19% leap from late July through mid-August. All told, Nvidia is up 14% in 2026, a decent showing but still a far cry from its past performance. At this time last year, the stock had gained 34%, and in 2024 it was soaring more than 150%. The reason is hardly a secret, with investors increasingly cautious about the durability of the AI trade with inflation remaining high, interest rates rising and geopolitical risks all over the place, whether it's the US's military and economic war with Iran or its trade war with Canada. The tech-heavy Nasdaq 100 Index suffered its worst month in more than a year in July, falling 6.6% as investors dumped the shares of companies exposed to the AI buildout amid concerns about how much longer the heavy spending would last. But since its July 29 trough, the index has regained much of that lost ground, led by memory and storage companies like Sandisk Corp. and chipmakers such as Marvell Technology Inc. Wall Street expects Nvidia to deliver stellar results for the fiscal second quarter, which ended July 31. Analysts project that revenue nearly doubled from a year ago, which would be the fastest pace in two years, as did net income, according to data compiled by Bloomberg. That, however, isn't what the market is focused on. Rather, investors want to hear what Chief Executive Officer Jensen Huang has to say about capital spending by its biggest customers, future demand and a spate of new financing deals that involve Nvidia. Price increases will also be top of mind after some of the company's customers were told that the cost of servers with its AI chips will rise more than 15% in some cases, due to surging memory costs. "This will be a very interesting report, but it isn't so much about the numbers," Conzo said. "The forward guidance discussions will be far more in view." Earlier this month, Nvidia said it's partnering with Wall Street firms including Goldman Sachs Group Inc., BlackRock Inc. and Apollo Global Management Inc. to provide $500 billion in financing for AI infrastructure. Nvidia also agreed to spend as much as $105 billion to back a data center campus in Ohio that will be leased by OpenAI. "They're going to need to discuss those two big partnerships or agreements in good detail and sort of calm the market's fears around the circularity of financing," said Shaon Baqui, a senior equity analyst at Janus Henderson, which holds a substantial position in Nvidia. The big questions from investors are how much of Nvidia's revenue is being driven by its own financing and if it's creating or bringing forward demand. Huang's comments alone likely won't be enough to resolve some of the issues the market is having with AI investments at the moment, according to Daniel Pilling, portfolio manager at Sands Capital Management, which owns the stock. "It's going to be a really important quarter for them, not because of what they're doing on the balance sheet, but what they're doing off the balance sheet," said Brian Mulberry, chief market strategist at Zacks Investment Management, which holds Nvidia shares. "It effectively makes Jensen Huang kind of like the pope of AI. He gets to bless any of these deals." Even with a market capitalization of more than $5 trillion, the biggest in the world, Nvidia's equity valuation has been steadily eroding this year. At roughly 19 times earnings expected over the next 12 months, the stock is close to the cheapest it has been since late 2018, before AI exploded and when the chipmaker's market value was less than $100 billion. "Nvidia isn't the most exciting part of the market, or even the AI trade, anymore," said Randy Hare director of equity research at Huntington National Bank, which owns the stock. "Right now the tightness is in the memory space, the optical area, energy. Momentum is shifting from semis to other parts of infrastructure, and from there it could shift to hyperscalers again." In terms of trading into the earnings, Nvidia shares haven't performed well after its results over the last few quarters, falling the day after five of its last six reports, according to data compiled by Bloomberg. The options market is pricing in a roughly 5% swing in either direction. Of course, the shares could get a boost from a strong report and forecasts that calm investors' nerves, potentially reinvigorating the broader AI trade. Wall Street will be listening for updates on Nvidia's Vera Rubin and Blackwell chip sales as well as its outlook for gross margins. "Their stock in my view is at a bit of a nexus, like a bit of a turning point," said Melissa Otto, head of technology, media and telecommunications research at Visible Alpha. "We're going to get a lot more visibility, hopefully, and commentary around Rubin and the performance of Blackwell." Tech Chart of the Day Top Tech Stories Meta Platforms Inc. and state attorneys general have discussed a possible mid-trial settlement of a blockbuster case accusing the company of deliberately designing Facebook and Instagram to addict teens, people familiar with the matter said. OpenAI said that its new Jalapeno chips performed better than Nvidia's current lineup during testing, underscoring the company's progress developing AI processors in-house. SoftBank Group Corp. is talking with investment banks about a potential $10 billion to $20 billion bond offering to help refinance a loan for its investment in US tech giant OpenAI, according to people familiar with the matter. Apple announced upgraded Mac mini and Mac Studio desktop computers, giving the in-demand machines major processor upgrades. Earnings Due Earnings Postmarket: --With assistance from Subrat Patnaik and David Watkins. Most Read from Bloomberg Businessweek The Diamond Industry's Old Guard Wants You to Buy 'Natural' Plus-Size Clothes Are Disappearing at Retailers in GLP-1 Era Drones, Balloons and Sound Waves: New Ways to Fight the World's Fires Moldy Peanuts Can Be Deadly. The Solution Is More Mold New York's Israeli Restaurants Are Doing Better Than You Might Think ©2026 Bloomberg L.P.