Shares of Everpure Inc., formerly Pure Storage Inc., fell more than 7% in late trading today despite the data storage company beating expectations on revenue and earnings in its fiscal 2027 first quarter and raising its full-year outlook.

For the quarter ended May 3, Everpure reported adjusted earnings per share of 47 cents, up from 29 cents in the same quarter a year earlier, on revenue of $1.05 billion, up 35% year-over-year. Analysts were expecting adjusted earnings of 40 cents per share on revenue of $1 billion.

Product revenue was a standout, climbing 55% year-over-year, to $577 million. Subscription services revenue rose 17%, to $476 million, while subscription annual recurring revenue reached $2 billion, up 19%. Remaining performance obligations, a measure of contracted work yet to be delivered, grew 41%, to $3.8 billion.

Adjusted gross margin came in at 70.1% and adjusted operating income reached $159 million, well above the year-earlier figure. The company swung to net income of $24 million, or 7 cents per share, from a loss of $14 million a year earlier.

Free cash flow was one weak spot. Operating cash flow of $180 million was down from $284 million in the same quarter last year and free cash flow fell to $112 million from $212 million, a decline driven in part by higher capital spending and working capital movements.

The quarter was Everpure’s first full reporting period under its new identity. The company formally retired the Pure Storage name in February and switched its ticker to “P” on the New York Stock Exchange.

Earlier this month, Everpure closed its acquisition of 1touch.io Inc., a data security posture management and data discovery company, folding its capabilities into what Everpure calls its Enterprise Data Cloud platform.

“Q1 was another outstanding quarter, reflecting the deepening trust customers place in Everpure to unlock their most valuable asset, their data,” Chairman and Chief Executive Charles Giancarlo said in the company’s earnings release. “As we expand our Enterprise Data Cloud vision with the integration of 1touch, we are uniquely positioned to help enterprises eliminate infrastructure friction and activate their data for the AI era.”

The company also highlighted product moves during the quarter, including extending ActiveCluster support to file workloads, announcing an upcoming beta test of Everpure Data Stream aimed at simplifying enterprise AI data orchestration and unveiling Purity DeepReduce, a similarity-based data reduction technology aimed at AI pipelines and backup workloads. FlashBlade//EXA, the company’s high-end artificial intelligence storage system, set a record on the SPECstorage Solution 2020 AI_Image benchmark, according to Everpure.

Everpure also returned about $84 million to shareholders during the quarter through repurchases of 1.3 million shares. It ended the period with $1.5 billion in cash, cash equivalents and marketable securities.

For its fiscal second quarter, Everpure expects revenue of $1.095 billion to $1.105 billion, representing year-over-year growth of 27% to 28%, with adjusted operating income of $195 million to $205 million. The company raised its full-year fiscal 2027 outlook to revenue of $4.41 billion to $4.51 billion from a prior range of $4.3 billion to $4.4 billion, ahead of analyst expectations of $4.39 billion. Adjusted operating income guidance for the year was lifted to $820 million to $860 million, from $780 million to $820 million.

The after-hours decline came despite the beat-and-raise, with only free cash flow emerging as the sore spot. Operating cash flow fell 37% year-over-year and free cash flow margin compressed to 10.6% from 27.2% in the same quarter a year earlier, according to StockStory, even as revenue grew 35%.

Image: Everpure