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    Earnings call· May 2026(Q1 FY27)

    Everpure Q1 FY27 earnings call P

    May 27, 2026 Source

    Executive summary

    Everpure Q1 FY27 — Strong Revenue Growth and Market Share Gains Amidst Supply Chain Challenges

    Everpure delivered an outstanding Q1 FY27, significantly exceeding revenue and operating profit guidance driven by broad-based strength and accelerating market share gains. The company navigated a dynamic supply chain environment marked by unprecedented component price increases, strategically managing pricing to maintain competitive advantage and customer trust. While demand remains robust, the full-year outlook reflects cautious optimism for the second half due to ongoing supply volatility and potential demand destruction from elevated prices.

    Highlights

    5

    • Revenue grew 35% year-over-year, significantly exceeding the high end of guidance.

    • Operating profit nearly doubled year-over-year to $159 million, surpassing guidance.

    • New customer logos were up 20% year-over-year.

    • Evergreen/One sales increased 73% year-over-year.

    • Annual Recurring Revenue (ARR) grew 19% to over $2 billion, accelerating sequentially by nearly 300 basis points.

    Concerns

    3

    • Supply chain crisis led to unprecedented component price increases, with spot market prices for NAND/memory up 5-10x.

    • Product gross margins are expected to recover gradually in the second half due to ongoing volatile and rapidly rising input costs.

    • The 1touch acquisition is expected to be approximately $12 million dilutive to operating profit in fiscal year '27.

    Guidance & targets

    9
    CategoryTargetConfidence
    Q2 FY27 Revenue
    $1.095 billion to $1.105 billion
    high materiality
    High
    Q2 FY27 Operating Profit
    $195 million to $205 million
    high materiality
    High
    Full-year FY27 Revenue
    $4.41 billion to $4.51 billion
    high materiality
    Medium
    Full-year FY27 Operating Profit
    $820 million to $860 million
    high materiality
    Medium
    Hyperscale product revenue ramp
    Rise significantly
    medium materiality
    High
    Product gross margin recovery
    Begin to recover gradually
    medium materiality
    Medium
    1touch acquisition operating profit impact
    Approximately $12 million dilutive
    low materiality
    High
    1touch acquisition operating profit accretion
    Accretive to operating profit within 24 months
    low materiality
    High
    Hyperscaler gross margins
    75% to 85%
    medium materiality
    High

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Product Revenue
    Includes revenues from hyperscale shipments and a portion of software revenue when sold as term licenses. Minimal contribution from hyperscalers in Q1.
    		$577 million55%——
    Subscription Services Revenue
    Accounted for 45% of total revenue in Q1 FY27.
    		$476 million17%——
    U.S. Revenue
    Strong growth in the domestic market.
    		$739 million39%——
    International Revenue
    Represented 30% of total revenue in Q1 2027, scaling international presence is a key strategic focus.
    		$314 million27%——

    Operational metrics

    17
    Operating profit
    $159 millionOver 90% year-over-year
    Q1 FY27

    Exceeded the high end of guidance range.

    Total gross margin
    70.1%
    Q1 FY27

    Non-GAAP measure.

    Subscription services margin
    75.6%
    Q1 FY27

    Non-GAAP measure. Sequential quarterly gross margin drop by about 1.4 points, driven by mix and shift away from Evergreen/One, but considered temporary.

    Product gross margin
    65.5%150 basis points year-over-year increase, 180 basis points sequential decrease
    Q1 FY27

    Non-GAAP measure. In line with long-term range of 65% to 70%. Sequential change driven by increased commodities costs partially offset by price increases and shifts in customer and product mix.

    Annual Recurring Revenue (ARR)
    Over $2 billion19% year-over-year, sequential acceleration of nearly 300 basis points from Q4 2026
    Q1 FY27

    Non-GAAP measure.

    Evergreen/One sales
    $165 million73% year-over-year
    Q1 FY27

    Non-GAAP measure. Reflects greater customer appreciation for the operational and financial benefits of the Storage-as-a-Service model.

    Cash and investments balance
    Over $1.5 billion
    End of Q1 FY27

    Balance sheet remains robust.

    Capital investments
    $68 million
    Q1 FY27

    Supported scaling of hyperscale business and accelerated growth of Evergreen/One.

    Shares repurchased
    1.3 million shares
    Q1 FY27

    Part of capital return to shareholders.

    Withholding taxes on employee awards
    $101 million
    Q1 FY27

    Offsetting dilution.

    Remaining share repurchase authorization
    Approximately $245 million
    Q1 FY27

    Under existing program announced in Q4 FY26.

    Headcount
    6,600 employeesIncreased by 211 sequentially
    End of Q1 FY27

    Total employee count.

    Purity Fusion adoption
    More than 1,200 customersDoubled
    Q1 FY27

    Enables customers to build their own data clouds.

    Fortune 500 penetration
    64%
    Q1 FY27

    Indicates market reach among large enterprises.

    New customers
    275
    Q1 FY27

    Number of new customers added during the quarter.

    New commercial logos
    223
    Q1 FY27

    Attests to strength across all segments.

    Q1 revenue growth from price increases and pull-ins
    Approximately 1/3
    Q1 FY27

    Estimated portion of year-on-year revenue growth attributed to these factors.

    Industry KPIs

    12
    MetricValueDetails
    Capital return FCF$112 millionUSD
    Unit shipments ASP—
    Gross margin drivers65.5%%
    Company specific kpisMore than 1,200 customersunits
    Exabyte bit shipments—
    Market share commentary—
    Services peripheral attach$165 millionUSD
    Long term supply agreements—
    Component supply constraints5 to 10xmultiple
    Installed base refresh runway64%%
    Ai server orders revenue backlog—
    Revenue mix by end market segment—

    Orderbook & backlog

    1
    Remaining Performance Obligations (RPO)$3.8 billionEnd of Q1 FY27

    41% year-over-year

    Driven by execution of large deals and strength of Evergreen Forever and Evergreen/One offerings.

    Deals & partnerships

    1
    1touchacquisition

    Acquisition closed earlier this month, expanding Everpure's opportunity to help customers manage their enterprise data, whether on pure products or not, both on-prem and in the cloud. Technology enables building full data catalogs, adding semantics, and creating knowledge graphs for comprehensive data management.

    Risks & headwinds

    4
    Supply chain crisis and component price volatilityOngoing, at least through summer for further price increases

    Prices for NAND and memory up 5-10x on the spot market; fab capacity sold out through '27 for NAND, memory, CPUs, and low-end chips.

    Mitigation: Strategic management of component supplies, holding off price increases longer and raising them less than competitors, operating at lower end of product gross margin range to support customers and gain market share.

    Gradual recovery of product gross marginsSecond half of FY27

    Product gross margin stood at 65.5% in Q1, a sequential decrease of 180 basis points.

    Mitigation: Expectation of contribution from hyperscaler revenues (75%-85% gross margins) and continued pricing actions to catch up with input costs.

    Potential demand destruction from elevated pricesSecond half of FY27

    Unquantified, but a concern for the second half of the year.

    Mitigation: Prudent price increases and consistent terms to enhance market share and protect the franchise for the long term, rather than seeking to profit from the crisis.

    1touch acquisition dilutionFiscal year '27

    Approximately $12 million dilutive to operating profit.

    Mitigation: Expected to become accretive to operating profit within 24 months from the acquisition on a post-synergies basis.

    Q&A highlights

    8

    Given strong Q1 and Q2 guidance, why does the full-year guidance imply a deceleration in the second half? Is it due to conservatism, component pricing, or AI deployment timing?

    The dynamic supply chain and pricing environment makes high visibility into the second half unrealistic. While demand is currently strong, the company is cautious due to uncertainty about potential demand destruction from historically high prices and the unstable supply environment, which requires constant effort to secure components.

    “What I will say is we saw a very strong demand, as you can see in the first quarter. We continue to see strong demand now. So the 2 things that, frankly, we'd want to see before raising guidance one of which is, will demand continue given these historically high prices or will we start to see some demand destruction? We don't know.”

    asked by Amit Daryanani · answered by Charles Giancarlo

    2 min read6 chapters

    Detailed Narrative

    01

    Q1 Performance Highlights

    Everpure reported an outstanding Q1 FY27, with revenue growth of 35% year-over-year and operating profit nearly doubling to $159 million, both significantly exceeding the high end of guidance. This strong performance was broad-based across core businesses and geographies, with large deals above $5 million showing high double-digit growth and new customer logos increasing 20% year-over-year. The company also expanded its customer base by 275 new customers, reaching 64% penetration of the Fortune 500.

    02

    Supply Chain and Pricing Strategy

    The current supply chain crisis, driven by insatiable AI demand, has led to unprecedented🌐 component price increases, with spot market prices for NAND and memory escalating 5-10x. Everpure has adopted a transparent strategy, sharing the cost burden with customers by delaying price increases and implementing them at lower rates than competitors. This approach, operating at the lower end of product gross margin range, aims to protect the franchise and gain market share, though product gross margin recovery is expected to be gradual in the second half.

    03

    Evergreen/One and Subscription Business Growth

    Evergreen/One, Everpure's Storage-as-a-Service offering, saw sales surge 73% year-over-year to $165 million, reflecting increased customer adoption due to its economic advantages in the high-pricing environment. The model benefits from longer contracts, lower upfront costs, and extended asset life cycles, enabling more stable and cost-efficient operations for customers. Overall Annual Recurring Revenue (ARR) grew 19% to over $2 billion, marking a sequential acceleration of nearly 300 basis points, with Remaining Performance Obligations (RPO) growing 41% to $3.8 billion.

    04

    Enterprise Data Cloud and 1touch Acquisition

    Everpure's Enterprise Data Cloud strategy continues to gain momentum, with Purity Fusion adoption doubling to over 1,200 customers, enabling them to build private cloud environments. The recent acquisition of 1touch, closed in May, is set to enhance data management capabilities by allowing customers to create comprehensive data catalogs, add semantics, and build knowledge graphs across all enterprise data sources, including on-prem and cloud. This is crucial for improving data quality and preparation for AI and analytics applications.

    05

    Hyperscaler and AI Market Traction

    While hyperscaler product revenue was minimal in Q1, a significant ramp-up is anticipated in Q3 and Q4 based on customer order commitments. In the AI space, FlashBlade//EXA secured new wins in AI machine learning and GPU-accelerated trading applications, demonstrating its unmatched performance and operational simplicity. Everpure is increasingly displacing competitive AI storage products in enterprise and neo-cloud markets, with active discussions ongoing with dozens of prospective customers across the AI ecosystem.

    06

    Market Share Gains and Competitive Dynamics

    Everpure is accelerating market share gains, driven by strong competitive win rates and an increased rate of competitive displacements. Management attributes this to its comprehensive solution offering, covering all storage needs with a unified software environment (block, file, object), and the simplicity of its enterprise data cloud. The company's transparent and empathetic approach to pricing during the supply chain crisis is also seen as contributing to its competitive advantage.

    AI-generated summary of the company’s earnings call. Not investment advice.