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Nutanix (NTNX) and Cyxtera Team Up for Federal Innovation Lab

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Nutanix (NTNX - Free Report) recently partnered with Cyxtera to launch its first Federal Innovation Lab. Powered by Cyxtera’s digital exchange and Enterprise Bare Metal, the lab will be located at one of Cyxtera’s data centers in Northern Virginia.

The lab will provide the US government customers and industry partners an ecosystem to test mission-critical hybrid cloud applications using the on-demand infrastructure.

Nutanix revealed that the lab has been developed in collaboration with industry-leading technology solution providers like Intel (INTC - Free Report) .

The innovation lab’s cloud environment is built on Nutanix Cloud Platform, which is certified under the Department of Defense Information Network’s approved products list. The platform integrates multiple IT functions that simplifies day-to-day management of a government agency’s IT environment.

The pioneer in hyper-converged infrastructure (HCI) solutions, Nutanix, is expected to benefit from its HCI growth prospects in the long run. Per a report of MarketsandMarkets, the global HCI market is anticipated to reach $27.1 billion by 2025, witnessing a CAGR of 28.1% during the 2020-2025 period.

Strong adoption of its products and a high rate of customer satisfaction are expanding the customer base. In the fiscal third quarter, the company’s clientele totaled 19,430 with the addition of 660 customers.

The company’s growing recurring revenue stream reflects customer loyalty to its solutions, which improves the visibility of the revenue growth trajectory. The third-quarter top line was primarily driven by growth in the company’s core HCI software and solid adoption of its new capabilities. The company gained from strong adoption of its hybrid cloud solution on Amazon’s (AMZN - Free Report) cloud platform, Amazon Web Services (AWS). It reported $344.5 million revenues in the third quarter, reflecting year-over-year improvement of 8%.

Besides, Nutanix’s transition to software-only sales is anticipated to significantly boost the gross margin. The company’s non-GAAP gross margin increased 100 basis points (bps) year over year to 81.7% in third-quarter 2021.

Remarkably, with the addition of notable Global 2000 customers including India-based ICICI Bank Limited, Alimentation Couche-Tard (operator of the Circle K brand), NTT Communications Corporation, and Sony Device Technology (Thailand) Co., Ltd, Nutanix further expanded its customer base in third-quarter fiscal 2021.

Zacks Rank & A Key Pick

Nutanix currently carries a Zacks Rank #3 (Hold).

A better-ranked stock in the broader technology sector is Avnet (AVT - Free Report) which currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The long-term earnings growth rate of Avnet is pegged at 25.4%.


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