Everpure, Inc.

Previous wording

Other income (expense), net consists primarily of interest income related to cash, cash equivalents and marketable securities, interest expense related to our revolving credit facility, and gains (losses) from foreign currency transactions.

Current wording

Other income (expense), net consists primarily of interest income related to cash, cash equivalents and marketable securities, interest expense related to our revolving credit facility, unrealized gains (losses) from mark-to-market adjustments on an equity security, and gains (losses) from foreign currency transactions.

Previous wording

Provision for income taxes consists primarily of income taxes in certain foreign jurisdictions in which we conduct business and current income taxes in the United States. Our foreign subsidiaries earn a profit margin based upon transfer pricing principles which require an arm’s length return. Our foreign subsidiaries’ sales and marketing expenses are expected to increase over time as we grow, resulting in higher pre-tax foreign earnings and higher foreign income taxes.

Current wording

Provision (benefit) for income taxes consists primarily of income taxes in certain foreign jurisdictions in which we conduct business and current income taxes in the United States. Our foreign subsidiaries earn a profit margin based upon transfer pricing principles which require an arm’s length return. Our foreign subsidiaries’ sales and marketing expenses are expected to increase over time as we grow, resulting in higher pre-tax foreign earnings and higher foreign income taxes.

Previous wording

The increase in product revenue during the first quarter of fiscal 2027 compared to the first quarter of fiscal 2026 was primarily driven by an increase in customer demand for our FlashArray and FlashBlade solutions across all of our key geographic areas and customer base and increased pricing and to a lesser extent, royalties from hyperscaler shipments.

Current wording

The increase in product revenue during the second quarter and first two quarters of fiscal 2027 compared to the second quarter and first two quarters of fiscal 2026 was primarily driven by an increase in customer demand for our FlashArray and FlashBlade solutions across all of our key geographic areas and customer base, particularly our large enterprise customers, as well as increased pricing with a mix shift to higher performance configurations with terabyte capacity up across our portfolio, and to a lesser extent, royalties from hyperscaler shipments.

Previous wording

The increase in subscription services revenue during the first quarter of fiscal 2027 compared to the first quarter of fiscal 2026 was largely driven by increases in sales of our Evergreen consumption, subscription-based offerings and renewals of our Evergreen subscription services across our installed base.

Current wording

The increase in subscription services revenue during the second quarter and first two quarters of fiscal 2027 compared to the second quarter and first two quarters of fiscal 2026 was largely driven by increases in sales of our Evergreen//One consumption, subscription-based offerings and renewals of our Evergreen subscription services across our installed base.

Previous wording

During the first quarter of fiscal 2027 compared to the first quarter of fiscal 2026, total revenue in the United States grew 39% from $530.7 million to $739.4 million while total rest of the world revenue grew 27% from $247.8 million to $313.5 million.

Current wording

During the second quarter of fiscal 2027 compared to the second quarter of fiscal 2026, total revenue in the United States grew 19% from $577.0 million to $688.4 million while total rest of the world revenue grew 75% from $284.0 million to $497.5 million. During the first two quarters of fiscal 2027 compared to the first two quarters of fiscal, total revenue in the United States grew 29% from $1.1 billion to $1.4 billion while total rest of the world revenue grew 52% from $531.8 million to $811.0 million.

Previous wording

The year-over-year growth in our Subscription ARR at the end of the first quarter of fiscal 2026 was 18%. The increase in year-over-year growth to 19% at the end of the first quarter of fiscal 2027 was driven by our increased sales of Evergreen subscription-based offerings.

Current wording

The year-over-year growth in our Subscription ARR at the end of the second quarter of fiscal 2026 was 18%. The increase in year-over-year growth to 20% at the end of the second quarter of fiscal 2027 was driven by our continued growth of Evergreen subscription-based offerings and strong renewal activity during the quarter.

Previous wording

Total remaining performance obligations (RPO) which is total contracted but not recognized revenue was $3.8 billion at the end of the first quarter of fiscal 2027, and primarily includes non-cancelable Total Contract Value (TCV) sales for our storage-as-a-service offerings, including Evergreen//One, Evergreen//Flex, and Everpure Cloud consumption and subscription-based offerings, as well as $51.4 million relates to a lessor arrangement. RPO consists of both deferred revenue and non-cancelable amounts that are expected to be invoiced and recognized as revenue in future periods. Product orders are generally cancelable until delivery has occurred, and as such, unfulfilled product orders that are cancelable are excluded from RPO. Cancelable orders will fluctuate depending on numerous factors.

Current wording

Total remaining performance obligations (RPO) which is total contracted but not recognized revenue was $4.1 billion at the end of the second quarter of fiscal 2027, and primarily includes non-cancelable Total Contract Value (TCV) sales for our storage-as-a-service offerings, including Evergreen//One, Evergreen//Flex, and Everpure Cloud consumption and subscription-based offerings, as well as $44.5 million relates to a lessor arrangement. RPO consists of both deferred revenue and non-cancelable amounts that are expected to be invoiced and recognized as revenue in future periods. Product orders are generally cancelable until delivery has occurred, and as such, unfulfilled product orders that are cancelable are excluded from RPO. Cancelable orders will fluctuate depending on numerous factors.

Previous wording

TCV sales for our storage-as-a-service offerings is a key business metric we use to evaluate the performance of our consumption and subscription based offerings. TCV sales for these offerings include recurring subscription fees, any non-recurring charges such as initial setup fees, and any other billable services directly tied to the execution of the underlying service contract. Year-over-year growth in RPO to 41% at the end of the first quarter of fiscal 2027 when compared to 40% at the end of fiscal 2026 was driven by both growth of TCV sales for our storage-as-a-service offerings, and strong renewals of our Evergreen subscriptions.

Current wording

TCV sales for our storage-as-a-service offerings is a key business metric we use to evaluate the performance of our consumption and subscription based offerings. TCV sales for these offerings include recurring subscription fees, any non-recurring charges such as initial setup fees, and any other billable services directly tied to the execution of the underlying service contract. Year-over-year growth in RPO to 44% at the end of the second quarter of fiscal 2027 when compared to 40% at the end of fiscal 2026 was driven by both growth of TCV sales for our storage-as-a-service offerings, and strong renewals of our Evergreen subscriptions.

Previous wording

We expect to recognize approximately 43% of total RPO over the next 12 months, and the remainder thereafter. RPO is expected to increase as our subscription services business grows over time.

Current wording

We expect to recognize approximately 42% of total RPO over the next 12 months, and the remainder thereafter. RPO is expected to increase as our subscription services business grows over time.

Previous wording

The increase in product gross margin during the first quarter of fiscal 2027 when compared to the first quarter of fiscal 2026 was primarily due to price increases and shifts in product mix towards higher performance FlashArray and FlashBlade solutions and to a lesser extent, royalties from hyperscaler shipments.

Current wording

The slight increase in product gross margin during the first two quarters of fiscal 2027 when compared to the first two quarters of fiscal 2026 was primarily due to lower amortization of intangible assets and to a lesser extent royalties from hyperscaler shipments, partially offset by increase in component pricing.

Previous wording

The slight decrease in subscription services gross margin during the first quarter of fiscal 2027 when compared to the first quarter of fiscal 2026 was primarily driven by amortization of capitalized software costs for the development of Everpure Fusion and Everpure Cloud Azure Native and higher employee compensation and related costs.

Current wording

The slight decrease in subscription services gross margin during the second quarter and first two quarters of fiscal 2027 when compared to the second quarter and first two quarters of fiscal 2026 was primarily driven by higher part replacements cost, depreciation of assets supporting the growth of our Evergreen//One offering, amortization of capitalized software costs for the development of Everpure Fusion and Everpure Cloud Azure Native and employee compensation and related costs.

Previous wording

The increase in research and development expense during the first quarter of fiscal 2027 when compared to the first quarter of fiscal 2026 was primarily driven by an increase in employee compensation and related costs, including stock-based compensation, from growth in headcount and, to a lesser extent, an increase in equipment depreciation and facilities-related costs.

Current wording

The increase in research and development expense during the second quarter andfirst two quarters of fiscal 2027 when compared to the second quarter and first two quarters of fiscal 2026 was primarily driven by an increase in employee compensation and related costs, including stock-based compensation, from growth in headcount and, to a lesser extent, an increase in equipment depreciation.

Previous wording

The increase in sales and marketing expense during the first quarter of fiscal 2027 when compared to the first quarter of fiscal 2026 was primarily driven byan increasein employee compensation and related costs, including sales commission expense and stock-based compensation, from growth in headcount and higher bookings achievement.

Current wording

The increase in sales and marketing expense during the second quarter and first two quarters of fiscal 2027 when compared to the second quarter and first two quarters of fiscal 2026 was primarily driven byan increasein employee compensation and related costs, including sales commission expense and stock-based compensation, from growth in headcount and higher bookings achievement, and to a lesser extent, an increase in marketing and advertising activities, and third-party professional services.

Previous wording

The increase in general and administrative expense during the first quarter of fiscal 2027 when compared to the first quarter of fiscal 2026 was primarily driven byan increase in employee compensation and related costs, including stock-based compensation, from growth in headcount, and, to a lesser extent, an increase in third-party professional services, including acquisition-related transaction costs.

Current wording

The increase in general and administrative expense during the second quarter and first two quarters of fiscal 2027 when compared to the second quarter and first two quarters of fiscal 2026 was primarily driven byan increase in employee compensation and related costs, including stock-based compensation, from growth in headcount, and, to a lesser extent, an increase in third-party professional services, including acquisition-related transaction costs.

Previous wording

The decrease in other income (expense), net during the first quarter of fiscal 2027 when compared to the first quarter of fiscal 2026 was primarily due to higher net foreign exchange losses as the U.S. dollar strengthened relative to certain foreign currencies.

Current wording

The decrease in other income (expense), net during the second quarter and first two quarters of fiscal 2027 when compared to the second quarter and first two quarters of fiscal 2026 was primarily due to unrealized gains from mark-to-market adjustments on an equity security during the first two quarters of fiscal 2026, and to a lesser extent, lower net foreign exchange losses as the U.S. dollar strengthened relative to certain foreign currencies and lower interest income from lower cash and cash equivalents balances.

Previous wording

At the end of the first quarter of fiscal 2027, we had cash, cash equivalents and marketable securities of $1.5 billion. Our cash and cash equivalents primarily consist of bank deposits and money market accounts. Ourmarketable securities generally consist of highly rated debt instruments of the U.S. government and its agencies, debt instruments of highly rated corporations, debt instruments issued by foreign governments, asset-backed securities, and municipal bonds.

Current wording

At the end of the second quarter of fiscal 2027, we had cash, cash equivalents and marketable securities of $1.0 billion. Our cash and cash equivalents primarily consist of bank deposits and money market accounts. Ourmarketable securities generally consist of highly rated debt instruments of the U.S. government and its agencies, debt instruments of highly rated corporations, debt instruments issued by foreign governments, asset-backed securities, and municipal bonds.

Previous wording

We believe our existing cash, cash equivalents, marketable securities and revolving credit facility will be sufficient to fund our operating and capital needs for at least the next 12 months. Our future capital requirements will depend on many factors including our sales growth, the timing and extent of capital spending to support development efforts including investments to scale operations in support of our hyperscale customer and capture additional growth opportunities, the timing and extent of strategic inventory purchases driven by supply chain constraints, higher commodity pricing, growth of our Evergreen//One offering, the addition or closure of office space, the timing of new product introductions, our share repurchases, the timing of repayment of borrowings under the revolving credit facility, and cash payments for tax withholding obligations for equity awards held by employees. We may continue to enter into arrangements to acquire or invest in complementary businesses, services and technologies, including intellectual property and other licensing rights. For example, on May 7, 2026, we completed the acquisition of 1touch. We may enter into other financing arrangements and seek additional equity or debt financing in the future.

Current wording

We believe our existing cash, cash equivalents, marketable securities and revolving credit facility will be sufficient to fund our operating and capital needs for at least the next 12 months. Our future capital requirements will depend on many factors including our sales growth, the timing and extent of capital spending to support development efforts including investments to scale operations in support of our hyperscale customers and capture additional growth opportunities, the timing and extent of strategic component purchases driven by supply chain constraints, higher commodity pricing, growth of our Evergreen//One offering, the addition or closure of office space, the timing of new product introductions, our share repurchases, the timing of repayment of borrowings under the revolving credit facility, and cash payments for tax withholding obligations for equity awards held by employees. In addition, we may be obligated under our long-term supply agreements to purchase components that our contract manufacturers do not, which could increase our cash requirements. We may continue to enter into arrangements to acquire or invest in complementary businesses, services and technologies, including intellectual property and other licensing rights. For example, on May 7, 2026, we completed the acquisition of 1touch. We may enter into other financing arrangements and seek additional equity or debt financing in the future.

Previous wording

We are subject to certain affirmative and negative covenants, including a Consolidated Net Leverage Ratio not to exceed 3.5:1 (which may be increased to 4:1 for the first six consecutive fiscal quarters after a qualified acquisition, as defined in the Credit Agreement) measured as of the last day of each fiscal quarter. As of the end of the first quarter of fiscal 2027, there were no outstanding borrowings and we were in compliance with all covenants under the Credit Facility.

Current wording

We are subject to certain affirmative and negative covenants, including a Consolidated Net Leverage Ratio not to exceed 3.5:1 (which may be increased to 4:1 for the first six consecutive fiscal quarters after a qualified acquisition, as defined in the Credit Agreement) measured as of the last day of each fiscal quarter. As of the end of the second quarter of fiscal 2027, there were no outstanding borrowings and we were in compliance with all covenants under the Credit Facility.

Previous wording

At the end of fiscal 2026 and the first quarter of fiscal 2027, we had outstanding letters of credit in the aggregate amount of $13.0 million and $16.6 million in connection with our facility leases and a certain employee-related benefit, that mature on various dates through December 2031. Of the $13.0 million and $16.6 million outstanding as of the ends of fiscal 2026 and the first quarter of fiscal 2027, $2.0 million and $4.9 million is issued under the Credit Facility.

Current wording

At the end of fiscal 2026 and the second quarter of fiscal 2027, we had outstanding letters of credit in the aggregate amount of $13.0 million and $16.6 million in connection with our facility leases and a certain employee-related benefit, that mature on various dates through December 2031. Of the $13.0 million and $16.6 million outstanding as of the ends of fiscal 2026 and the second quarter of fiscal 2027, $2.0 million and $4.9 million is issued under the Credit Facility.

Previous wording

Our Board of Directors has authorized up to $1.8 billion under our share repurchase program. At the end of the first quarter of fiscal 2027, $244.9 million remained available for future share repurchases under our current repurchase authorization. The authorization allows us to repurchase shares of our common stock opportunistically and will be funded from available working capital. Repurchases may be made at management’s discretion from time to time on the open market through privately negotiated transactions, transactions structured through investment banking institutions, block purchase techniques, 10b5-1 trading plans, or a combination of the foregoing. The share repurchase program does not obligate us to acquire any of our common stock, has no end date, and may be suspended or discontinued by us at any time without prior notice. During the first quarter of fiscal 2027, we repurchased and retired approximately 1.3 million shares of common stock at an average purchase price of $65.59 per share for an aggregate repurchase price of $84.1 million.

Current wording

Our Board of Directors has authorized up to $1.8 billion under our share repurchase program. At the end of the second quarter of fiscal 2027, $176.0 million remained available for future share repurchases under our current repurchase authorization. The authorization allows us to repurchase shares of our common stock opportunistically and will be funded from available working capital. Repurchases may be made at management’s discretion from time to time on the open market through privately negotiated transactions, transactions structured through investment banking institutions, block purchase techniques, 10b5-1 trading plans, or a combination of the foregoing. The share repurchase program does not obligate us to acquire any of our common stock, has no end date, and may be suspended or discontinued by us at any time without prior notice. During the second quarter of fiscal 2027, we repurchased and retired approximately 0.9 million shares of common stock at an average purchase price of $74.01 per share for an aggregate repurchase price of $69.0 million.

Previous wording

During the first quarter of fiscal 2027, we withheld approximately 1.6 million shares to cover $101.0 million in tax withholding obligations.

Current wording

During the second quarter of fiscal 2027, we withheld approximately 1.0 million shares to cover $74.3 million in tax withholding obligations related to equity awards vested.

Previous wording

Net cash provided by operating activities consists of net income, adjusted for non-cash items and changes in operating assets and liabilities. Non-cash items primarily included stock-based compensation and depreciation and amortization. The year-over-year decrease in net cash provided by operating activities was primarily driven by a decrease of $177.7 million from changes in operating assets and liabilities, partially offset by higher net income of $38.1 million and higher stock-based compensation of $25.8 million. The decrease from changes in operating assets and liabilities were primarily impacted by higher payments for employee compensation, including commission payments pertaining to overachievement in the fourth quarter of fiscal 2026, and increased payments for inventory purchases.

Current wording

Net cash provided by operating activities consists of net income, adjusted for non-cash items and changes in operating assets and liabilities. Non-cash items primarily included stock-based compensation and depreciation and amortization. The year-over-year decrease in net cash provided by operating activities was primarily driven by a decrease of $625.4 million from changes in operating assets and liabilities, partially offset by higher net income of $65.1 million and higher stock-based compensation of $68.2 million. The decrease from changes in operating assets and liabilities were primarily impacted by strategic component purchases to support customer demand and secure component supply to support the growth of our business.

Previous wording

Our primary source of cash from operating activities during the first quarter of fiscal 2026 and 2027 were from cash collections from billings for sales of our product and subscription services.

Current wording

Our primary source of cash from operating activities during the first two quarters of fiscal 2026 and 2027 were from cash collections from billings for sales of our product and subscription services.

Previous wording

Our primary uses of cash from operating activities during the first quarter of fiscal 2026 and 2027 were payments to our contract manufacturers, payments for employee compensation, and general corporate operating expenditures.

Current wording

Our primary uses of cash from operating activities during the first two quarters of fiscal 2026 and 2027 were payments to our contract manufacturers, payments for employee compensation, and general corporate operating expenditures.

Previous wording

Net cash used in investing activities during the first quarter of fiscal 2027 was driven by $68.4 million in capital expenditures, partially offset by net proceeds of $23.0 million in marketable securities. Key capital expenditures included investments for equipment supporting deployments of our Evergreen//One offering, data center expansion to support testing of new products and services, including for our hyperscale business, and leasehold improvements related to our new office leases.

Current wording

Net cash used in investing activities during the first two quarters of fiscal 2027 was driven by $169.7 million in capital expenditures, $125.3 million in acquisition of 1touch, partially offset by net proceeds of $65.4 million in marketable securities. Key capital expenditures included investments for equipment supporting deployments of our Evergreen//One offering, data center expansion to support testing of new products and services, including for our hyperscale business, and leasehold improvements related to our new office leases.

Previous wording

Net cash used in investing activities during the first quarter of fiscal 2026 was driven by $72.3 million in capital expenditures. Key capital expenditures included investments for equipment supporting deployments of our Evergreen//One offering, data center expansion to support testing of new products and services, including for our hyperscale solution design win, and developing our Pure Fusion v2 solution. Cash outflows were also impacted by net purchases of marketable securities of $39.4 million.

Current wording

Net cash provided by investing activities during the first two quarters of fiscal 2026 was driven by net proceeds of marketable securities of $152.4 million, partially offset by $134.4 million in capital expenditures. Key capital expenditures included investments for: (a) equipment supporting deployments of our Evergreen//Oneoffering; (b) data center expansion to support testing of new products and services, including for our hyperscale solution design win; and (c) developing our Pure Fusionv2 solution.

Previous wording

Net cash used in financing activities during the first quarter of fiscal 2027 was primarily driven by cash outflows related to tax withholding remittances on vested equity awards of $102.9 million and share repurchases of $84.1 million, partially offset by proceeds from the issuance of common stock under our employee stock purchase plan (ESPP) of $30.0 million, and the exercise of stock options of $6.6 million. The year-over-year increase in tax withholding remittances on vested equity awards was primarily driven by higher stock prices.

Current wording

Net cash used in financing activities during the first two quarters of fiscal 2027 was primarily driven by cash outflows related to tax withholding remittances on vested equity awards of $173.3 million and share repurchases of $153.1 million, partially offset by proceeds from the issuance of common stock under our employee stock purchase plan (ESPP) of $30.0 million, and the exercise of stock options of $15.2 million. The year-over-year increase in tax withholding remittances on vested equity awards was primarily driven by higher stock prices.

Previous wording

Net cash used in financing activities during the first quarter of fiscal 2026 was primarily driven by cash outflows related to share repurchases of $119.9 million and tax withholding remittances on vested equity awards of $61.3 million, partially offset by proceeds from the issuance of common stock under our ESPP of $27.2 million, and the exercise of stock options of $5.4 million.

Current wording

Net cash used in financing activities during the first two quarters of fiscal 2026 was primarily driven by cash outflows related to share repurchases of $162.2 million and tax withholding remittances on vested equity awards of $117.5 million, and repayment of the $100.0 million outstanding on our former credit facility that terminated in June 2025, partially offset by proceeds from the issuance of common stock under our ESPP of $27.2 million, and exercise of stock options of $13.5 million.

Previous wording

Except as set forth in Notes 6 to 8 of Part I, Item 1 of this Quarterly Report on Form 10-Q, there have been no material changes to our non-cancelable contractual obligations and commitments disclosed in our Annual Report on 10-K for fiscal 2026.

Current wording

Except as set forth in Notes 7 to 9 of Part I, Item 1 of this Quarterly Report on Form 10-Q, there have been no material changes to our non-cancelable contractual obligations and commitments disclosed in our Annual Report on 10-K for fiscal 2026.

Previous wording

We deem an accounting policy to be critical if the nature of the estimate or assumption it incorporates is subject to material level of judgment related to matters that are highly uncertain and changes in those estimates and assumptions are reasonably likely to materially impact our condensed consolidated financial statements. Refer to Note 2 of Part I, Item I of this Quarterly Report on Form 10-Q for the summary of significant accounting policies. In addition, see “Critical Accounting Policy and Estimates” in our latest Form 10-K for our fiscal year ended February 1, 2026. There have been no material changes to our critical accounting policies and estimates since this Form 10-K filed on March 25, 2026.

Current wording

We deem an accounting policy to be critical if the nature of the estimate or assumption it incorporates is subject to material level of judgment related to matters that are highly uncertain and changes in those estimates and assumptions are reasonably likely to materially impact our condensed consolidated financial statements. Refer to Note 2 of Part I, Item I of this Quarterly Report on Form 10-Q for the summary of significant accounting policies. In addition, see “Critical Accounting Policy and Estimates” in our latest Form 10-K for our fiscal year ended February 1, 2026. There have been no material changes to our critical accounting policies and estimates since our Form 10-K was filed on March 25, 2026.

Previous wording

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), 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. The information we publish through these channels is not incorporated by reference into this Quarterly Report on Form 10-Q or in any other report or document we file with the SEC, and any references to our websites are intended to be inactive textual references only.

Current wording

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. The information we publish through these channels is not incorporated by reference into this Quarterly Report on Form 10-Q or in any other report or document we file with the SEC, and any references to our websites are intended to be inactive textual references only.