Everpure Reports 38% Revenue Growth but Faces Negative Free Cash Flow Amid Hyperscale Expansion
Everpure reported a strong fiscal second-quarter performance with revenue rising by 37.7% year-over-year to $1.19 billion, driven primarily by product and subscription services growth. Remaining performance obligations increased by 44%, reaching $4.1 billion, while GAAP operating income surged from $4.9 million to $63.2 million. However, the company's free cash flow turned negative at -$237.6 million due to strategic inventory purchases, higher capital expenditures and working-capital outflows. The firm raised its fiscal 2027 revenue guidance significantly, projecting a midpoint increase of $590 million to between $5.03 billion and $5.07 billion. Management anticipates that hyperscale deployments will begin contributing meaningfully in the second half of next year with higher gross margins (75-85%). Despite this optimism, cash conversion from core operations remains a concern as operating cash flow swung negative due to supply chain investments. Everpure's stock-based compensation costs have also risen sharply and now exceed GAAP net income. While management expects free cash flow normalization in the next two quarters with $600 million to $800 million for fiscal 2027, investors remain cautious about whether hyperscale growth will translate into sustainable cash generation.
Topics: free cash flow hyperscaler agreements revenue growth