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Good afternoon, everyone. Thank you for joining us here, day two of BFA's Global Tech Conference. I'm Wamsi Mohan, I cover ID hardware supply chain here for the bank. Delighted to welcome EverPure to the conference today. We have the CFO, Tarek Robiadi. Tareq, thank you so much for being here. Thank you, Wamsri, for having me, and thank you to BFA for hosting us. Yeah, excellent. Well, before we get started, I do have to read forward-looking statement here, statements made in these discussions, which are not statements of historical fact or forward- looking statements based on current expectations. Actual results could differ materially from those projected due to a number of factors, including those referenced in Everpeer's most recent SEC filings on Form 10Q, 10K, and 8K. And with that, I think I'm getting the green light from Sandra back there they they jump into q a so tarik um you know this has been a period of really strong uh growth across the board for for most companies you guys had a pretty good um solid quarter two as you as you think about what has changed maybe in the in in what your customer conversations are maybe we can start there and then dive into more questions yeah so um unquestionably the the market has woken up to the need to modernize infrastructure in the day of in this new ai era and we see a lot of demand across the board in the commercial segment in enterprise customers and this globally north america emea and asia pacific so it's very encouraging to see that And this translated into very strong growth across our business. And we posted a very solid Q1 result, which came on the back of a very solid Q4 result, you know, that we generate a lot of orders in a quarter. Those orders materialize in revenue when we ship in possibly in the quarter, sometimes in subsequent quarters. So we entered fiscal year 27. This is our first quarter with very, very strong momentum across the board. And it bodes well for the rest of the year Yeah, so as you as you think about sort of the outperformance in the quarter and you you know You also guided like the second quarter higher How do you how do you think the sustainability because you kind of left the back half sort of relatively unchanged and You know obviously in one world, it's prudent I don't know if you were meaning to signal anything about back half or not, but I curious to get your thoughts No, you know, we manage the business on a couple of quarters forward-looking basis. I feel very good about Q2. We continue to solve for Q3, Q4. Our guide reflects what we started the year with. And, you shouldn't be reading too much into a D cell because we have time to solve for what is a perceived D cell if you simply do the basic math between the full-year guide, the Q1 actual and the Q2 guide. I mean, so far, the thing that we all need to agree on is that demand is very, very strong. And so even if you look at how much we grew excluding pricing or so-called pull-ins, we grew very substantially. We grew 35.5% overall, but we said a third of that growth came from pricing and pull- ins. And so, you know, even if we were to adjust for that, A good 22% growth comes from what our normal business would do, normalizing for pricing and impacts. And that is a multiple of what the competition has done. I think probably with hindsight, and hindsight is always 20-20, I would not talk about pull-ins anymore because no one did, but everybody had them. And so I put myself into a difficult position talking about pull-ins. I maybe have been a little bit too transparent and honest, and that prompts a lot of questions. I don't regret being honest and I'll never be dishonest. But I think you should ask the question about other players who have grown in single digits and who have very different levels of performance. What is the amount of growth that they had that comes from pricing and pull-in? And that is pointing to them having negative growth. And that's what I want to highlight to you is that we are the market share taker. And that is not by accident. It's by design. And the way we address pricing was really very intentional. We did not raise prices quickly. We raised pricings last. We raised pricing less than the competition because we felt that there is much greater value created for shareholders by actually driving higher top line growth, acceleration of the top line growth with, yes, you have expenses that come as well. But on the whole, we're creating much greater levels of operating leverage. And that's why you see that our guide for the full year is implying a very strong operating profit growth on about 22% top line goals on a full year basis. And by the way, in the space of a year, we doubled top line groups on high numbers. So we didn't start from a low base. But last year, when we started last fiscal year, we said 11% top line growing from the onset. We rise it to 15. We ended up 15.5. And now we started at 18% top-line growth, and now we're saying 21.5 and counting. Yeah. Yeah. It's nice to see the company get back about 20% topline growth which the last few years has not been the case. But great to see that company re-accelerate growth in a somewhat challenging supply chain environment at least um to execute on that so you know i think tarik you've noted that back half of this year we should start to see some contribution from hyperscale customers um what what are some of the gating factors or i mean are we are we at a point now in what in the visibility in the back half where there's really it's just sort of you know marching according to schedule and there's delivery or are there other things that need to happen a lot of heavy lifting needs to happen to be able to um count on that revenue in the back half yeah no the revenue on the back half is based on a customer commitment so i don't think there is um doubts around that and i feel comfortable reiterating that point um and this is a function of when they want uh our solutions to be shipped to them right so we've planned that way in advance we have secured an end and we're all fine in terms of heavylifting there is always a lift but i think right now we have a formula that works and the formula rests on three things one is the nans the nance have to be qualified and the hyperscalers procure the nands through their own supply chains the second thing is um the other componentry that is non-land related that we procure just to facilitate the adoption and there's not a lot of calories attached to that for us but we do it to remove friction and to facilitate the adoption in a hyperscaler environment, make things simpler. Sure. And then the third thing is our software. And on the whole, when you look at this, with this model, we're targeting 75 to 85% gross margins. And I feel comfortable about that range. On top of that, we offer support. We offer spares occasionally when they need it. That all is goodness that translates into the overall revenue line from hyperscalers. But the model is set. We're going to go with this model where the quote-unquote lifting needs to take place is making sure that our solution fits in the production environment of a hyperscaler. And that is always a technical evaluation. Aside from the NANDs being qualified, there is a lot of the software that needs to be tuned to function with their operating system and um that is what we are we're doing um and we're working uh to get into um more and more hyperscalers with that um i'd say it's a matter of time remember this is not a enterprise sales cycle it's an engineering sales motion and uh it's an engineering skills motion that takes the time it takes to essentially have a plane fly for the first time that's what you have to remember right because they're building a new environment for the next generation of data centers everything has to function at unison servers networking storage with all the civil engineering around that that is the design of a next generation data center and that's we have to fit into right yeah so on that point right like as you know i think you've had your initial customer um the very first sort of sales motion was different from the way that you structured the deals in in subsequent time frames and now you're at a point where you're suggesting that these hyperscaler uh deals will have that margins of 75 to 85. um is that sort of the way that we should think about not that you're announcing any new hyperscales but as more hyperscalers come online if and when they do should we be expecting this to be the normal sort of way or are there other business models that you are contemplating because again as you said right this is like a plane taking off for the first time in some ways like everyone has their own specific needs yes you're correct but i think the business model is set i mean we had to establish a formula right you know and that's we have established a formula and so um you can expect 75 to 85. It varies depending also on, for example, how large of a DFM module the customer would want, right? So if it's a 300 terabytes or 150 or 600 terabytes, it fluctuates a bit. But the range doesn't really change. So we feel very comfortable that we've created a replicable formula here okay and we also um uh believe that this formula is has a broader appeal beyond hyperscalers onto neo clouds and also ai titans and their conversations with a dozen of companies who have were fairly large and who have built their own storage management software in terms of compression dedupe etc they don't need that that comes with our systems they want the medium and software to manage the medium that's where our hyperscaler solution comes in what's the like if you know there's so much value that you add in purity there's so much of value that You add from sort of your know-how of not just how to manage and write to that nan but in the compression techniques and in the deduplication and creates your storage to be very efficient compared to a lot of other similar media players like use similar media. So in some ways, if you're talking about maybe potentially some of these other potential customers who are not wanting that piece of it, how does the economics to you change in terms of not wanting a certain piece of the pretty high value software? Yeah. No, but look, the economics change in a sense that when you buy a system and you reduce the price of the system to a price per terabyte, obviously, the richer the system, the higher the price per term, right? And so you know that if you are only providing the medium and managing that medium, the software that manages the medium, then the price per terabyte is a lot lower but the volume is a lot higher and so if we put things in perspective we ship and i think you know that once we ship on an annual basis for our core roughly six to seven exabytes yeah uh when we uh currently ship to hyperscalers customers a multiple of that yes and then hyperscale is as a whole industry right uh buys about 650 exabytes per year and counting yeah that that number is rising and so you can see that you have a very different set of economics uh when you buy a big system or when you buy a a um essentially the medium and the software to manage that medium but every every customer is free to choose so um hyperscalers and ai titans probably would you know some of the ai titan's build their their own storage management software and all some do near clouds very few of them do they buy fully made systems and that's a different world that's where exa comes in we're very pleased with the progress we're making on exa exa is really designed for massive parallel storage and so effectively if you really want a simple rule of thumb you can have a data center where you have a few hundred gpus call it thousand packs We can cater to that in the enterprise world for our customers with flashblades. When you break above the thousand GPU and you go to 10,000 GPU and so on, now you're talking about a massive parallel storage system. That's where EXA comes in. And we're just at the very beginning with EXA. We did very well in the first quarter of the year. I think Charlie on the call told the street that generated about less than 10% of the bookings that we generated in the quarter. It will materialize in revenue in Q2, Q3, Q4. And we're counting because XA is really gaining traction and we're very pleased with the progress we're making. Okay. And there seems to be some concern anyway from an investor perspective that some of these hyperscalers are trying an approach of do-it-themselves um to sort of replicate you know to some a subset of what you do not exactly what you do but a subset because their environments maybe don't need everything that you do um have you seen any evidence of that have you like what's your what's your point of view on that sure so you know nothing is um immune to replication the barriers to copying the know-how that we put together on mastering Flash modules is high. The barrier is high, right? So it's been built since 2009. And since 2009, we've mastered multiple versions of the NAND that comes from the same provider, multiple generation of NANDs from the same provider multiple providers and every combination of that right so the software neutralizes those differences sure and so you if it takes a long time to get to understand the intricacies of the nans and and what's interesting to observe is that um we buy the nand from the same providers that provide ssds sure and they have not done that they have not built the software right you just go into competition with us they prefer to build ssds yes but we help them in also in the mastery of the development of then and and we extract more about 30 to 40 percent more performance from our flash modules than they do through their own ssd's and that's very interesting uh for for them and it's why we we are adding to their total market that they otherwise would not have okay that's super interesting um obviously we're we're working with this inflationary environment from an end perspective um how are you managing through that um you know it's um it seems like everyone has pricing for value and everyone has taken price you guys have raised pricing with you know number of times um as you think about a what's your view on how long this inflationary environment plays out b is it impacting supply for you and um lastly like are we going to reach a point of where there is going to be demand destruction or we don't see that these are really 64 000 questions each so um i'm going to venture in territory of opinion, not fact, because it's not obvious. I have the belief that this cycle is longer. And the reason why I say the cycle is longer, meaning this rush for infrastructure and the purchase of components that comes with it, it's because the demand comes from very, very large players right though particularly the the cloud providers uh if you uh add the uh totality of the capex they spend on putting data centers up it is only and i saw a great piece of research from uh bva about this uh it only points to 90 percent of their operating cash flow so if you take the whole capex of every hyperscalers in the world and you add it all up and it's pretty much 95 of the operating cash flow that they generate right and so they can afford it and they can continue to put more and more data centers up then you have to add on top of that the ai titans and there's a lot of talk right now on ipos and how much these companies are worth and how much they will raise so again you know there is the money to to invest in this but the path to return is is not necessarily obvious for all these players having said that they have core businesses that can fund that expansion yes which makes me say it's going to last for longer so i don't see this environment changing before at least the first half of next year beyond that point it's hard to to tell the so how do we procure in this environment which is the second part of your question it's an allocation driven market and you either have the allocation or you don't we feel very comfortable with an m that's not a question for us we we can procure nams um other components are tighter so cpus are tighter uh dram is tighter um we just have to manage that and we do and i'm glad to see for example that cpu's prices have gone up i you know i'm a fan of libu and i you know i have he's a good friend and we work really well with them and i am delighted to see that there is something there for them as well but this cycle is is there to stay so now the third part of your question um at least for a while the third part of the question is is do we see demand destruction and that's why in in our earnings quite honestly um we debated this internally quite a bit we see demands very very strong linearity in q1 was very strong linearity q2 is ex is still very strong so customers Still buy stuff. Yeah, we don't see evidence of demand destruction. However, when you're raising prices 70 80 percent we raise prices in the first quarter 70 percent competitors raise them even higher than what we did, right? You're testing levels of price of the cities that are unknown. Yes, right. So is this a new level? That customers are accustomed to It's a big question. What we're seeing, and this is very interesting, what we're seeing in the things that we sell is there's a shift to quality. There's a shift to higher end performance systems. And in our revenue, you see price impacting our revenue. But you also see mix shift impacting the revenue quite dramatically. And the units that we're selling at higher performance systems are higher than what we have ever sold so far. Okay. Are people, like, you know, when you think about budgets generally in IT, there's a certain amount of dollars that you have and prices go up, you're getting fewer exabytes of whatever you want. are you seeing any evidence of people changing policies around storage doing other things as stopgap versus saying okay well we we have a need to store x exabytes and we can only buy half of that with the given pricing so we're just deferring the demand and it's kind of reflecting in backlog, RPO, whatever metric you want to put, but you've got some way of saying there's actually a demand deferral, and we can count on this cycle being longer because we actually know that this customer here wanted more that they couldn't buy right now. There is that. There is every flavor of no demand to super strong demand and everything in between. So you have the customers who sweat more their assets. That's a possibility. There are customers who are more selective about what they buy. That's the majority of what we see. You have customers who are buying more because they have needs to transform their infrastructure. And you have customers who say, okay, I'm going to experiment a new model like Evergreen One because I still have my need, but I don't want to commit dollars to it. I want to buy an outcome. I wantto buy an SLA. And that's where Evergreen one comes in. And we had an incredibly strong performance with Evergreen in Q1. We grew our total contract value by about 73% for our storage as a service offerings. and so we we can grow with a product by selling the high-end stuff we can grow with subscription by selling evergreen one and i think right now we are 55 product 45 subscription and you saw the acceleration of our arr and you mentioned rpo rpo grew 41 arr grew 19 300 basis points higher than the past q4 so this is very solid for us from from our vantage point the the good news is that we have a hedged model right that's effectively the strength of everybody yeah as we think about the progression of product gross margins in in this environment like what's the right framework to use for that and as more hyperscaler demand comes in how should we think of that based on different models that people might be thinking about so what i would say is for the rest of the year you can expect product gross margin in totality to recover because you have the benefit of the mix and the contribution from hyperscaler revenue coming in the second half if you exclude that contribution we said that product cross margins excluding hyperscale contribution would recover gradually over time i was not definitive on timing and the reason why i don't want to be definitive on timing is because it is we want to preserve our market share taking stance and it's commercially sensitive so we left it at that Is there a target market share, like that dynamic that you're thinking about in balancing what you're reinvesting in terms of pricing and being able to take share? If you think at the end of this year or next year, are we talking about a point of share? Are we talking more? How do you think about balancing that? We've taken, on average, a little bit more than a point of share per year for the past 13 years right um but this is accelerating and if you take 2025 figures we have captured 40 percent of the growth in the industry and we have captured 50 percent of capacity of the industry in enterprise storage x china so i think our goal is to obviously get to number one we're right now neck to neck uh with a couple of players aldel is number one neck to back with with netapp and we are growing them and so our goal will be to um get to no.1 in in in revenue terms or in value terms if you prefer and my personal goal is to sustain this performance durably as I love to scale companies and I love scale Everpure so I'm guiding to if you really look at our guide it's a rule of 40 guide for the full year right and so I'd like to see that performance sustained over multiple years we hit it in Q4 we hit in Q1 I'm getting rule of forty for the full year and we see it that way for this year and will guide at the right time for next but so far so good okay maybe uh just on on the competitive landscape and the share gain that you're talking about um do you historically just to put this in context i should go back and look but have you gained more share in inflationary or deflationary environments oh i don't know the answer to that that's a good But I would say, well, we've gained, let's say in simple terms, the past years up to the late part of 2025 were deflationary in nature. And we've gain share in a deflation market. Now we are in an inflationary market, and we're gaining share in an inflational market by judging by the differential growth phase between us and the other players in the industry. So ultimately, I think the value that Everpure provides with a software-defined solution gives us a lot of ability to grow with a very simple solution from a hardware standpoint and all the sophistication residing in the software. And ultimately, customers love Everpures for the simple reason that we're 10 times more reliable than the next player, thanks to our software architecture and our simplified engineering. And that counts a lot when you think about market share gains over the long run. Your reliability and performance are the two things that stand out. Yeah, no, absolutely. Unfortunately, I know we're coming up on time over here, so it's a very quick 30 minutes. But Tarek, would love to maybe just get some closing remarks from you in terms of what should investors be most excited about about yours opportunity over here I mean there seems to be you know this re-acceleration of growth you you have potential new hyperscaler opportunities you mentioned neocloud so a lot to like sort of look forward to but would love to hear your perspective on that no I think you know if you look at the software space and you look a little bit more at um rule of 50 rule of 40 there are not many companies uh who are at that level of performance or at least let me rephrase that there are any company at of scale that are that level of performance so we are accelerating revenue uh we doubled the growth rate last year we did 3.66 billion dollars of revenue we're guiding to 22 above that this fiscal year first quarter a lot happening uh we have a lot of tailwinds um and we're in a unique position in a sector that is very much at the forefront of ai and so there's a lot of things to be excited about we have to continue to execute and deliver and we'll do everything we can to do so and satisfy our shareholders excellent well thank you so much tarik really appreciate you uh taking the time and uh thank you for being here thank you thank you so much thank you