Back to top

Image: Shutterstock

Nutanix (NTNX) Q2 Loss Narrower Than Estimated, Revenues Beat

Read MoreHide Full Article

Nutanix (NTNX - Free Report) reported a non-GAAP second-quarter fiscal 2022 loss of 3 cents per share, significantly narrower than the Zacks Consensus Estimate of a loss of 21 cents. The figure was narrower than the year-ago quarter’s loss of 37 cents per share.

Nutanix reported revenues of $413.1 million, beating the Zacks Consensus Estimate of $407.8 million. The top line improved 19% from the year-earlier quarter’s figure of $346.4 million. NTNX noted that the average contract term length declined to 3.1 year from 3.4 years in the year-ago quarter, primarily due to higher federal business, which usually have shorter contract term length.

During the fiscal second quarter, Nutanix’s Annual Contract Value (ACV) billings jumped 37% to $217.9 million.

Nutanix Price, Consensus and EPS Surprise Nutanix Price, Consensus and EPS Surprise

Nutanix price-consensus-eps-surprise-chart | Nutanix Quote

Top-Line Details

Product revenues (50.6% of revenues) increased 19.7% year over year to $209.2 million. Support, entitlements & other services revenues (49.4% of revenues) grew 18.9% to $203.9 million.

The top line was primarily driven by growth in NTNX’s core hyper-converged infrastructure software and the solid adoption of its new capabilities. Nutanix continues to witness a strong adoption of its hybrid multi-cloud solutions across Fortune 100 and Global 2000 companies.

Subscription revenues (90.7% of revenues) rose 22.5% from the year-ago quarter’s figure to $374.7 million. Professional services revenues (5.3% of revenues) jumped 26.3% to $22.1 million.

Non-Portable Software revenues (3.5% of revenues) plunged 33.2% year over year to $14.5 million. Hardware revenues (0.5% of revenues) increased 38.5% to $1.8 million.

Billings were up 20.5% year over year to $464.5 million. Nutanix’s run-rate ACV grew 21% year over year to $1.68 billion. Annual Recurring Revenue (ARR) climbed 55% to $1.04 billion.

During the fiscal second quarter, Nutanix added 700 customers, bringing the total number of clients to 21,400.

Operating Details

During the fiscal second quarter, Nutanix’s non-GAAP gross margin expanded 110 basis points (bps) year over year to 83.8%.

Non-GAAP operating expenses decreased 2% year over year to $347.3 million.

Balance Sheet & Cash Flow

As of Jan 31, 2022, cash and cash equivalents plus short-term investments were $1.29 billion, up from $1.28 billion at the end of first-quarter fiscal 2022.

During the second quarter of fiscal 2022, cash generated through operating activities was $25.8 million and free cash flow was $17.2 million. During the first six months of fiscal 2022, Nutanix generated $32.7 million of cash from operating activities and a free cash flow of $15.3 million.

Outlook

For third-quarter fiscal 2022, Nutanix expects ACV billings between $195 million and $200 million. Revenues are estimated between $395 million and $400 million.

Non-GAAP gross margin is estimated to be approximately 82%. Non-GAAP operating expenses are expected in the range of $365-$370 million.

Nutanix raised guidance for the full fiscal. NTNX now expects ACV billings between $760 million and $765 million compared with the previously guided range of $740-$750 million. Revenues are now estimated in the range of $1.625-$1.630 billion compared with the prior range of $1.62-$1.63 billion.

Non-GAAP gross margin is now estimated to be 82.5% compared with the earlier guidance of 82%. Non-GAAP operating expenses are now projected in the range of $1.465-$1.470 billion compared with the previous estimate of $1.48-$1.49 billion.

Zacks Rank & Key Picks

Nutanix currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks from the broader computer and technology sector are Advanced Micro Devices (AMD - Free Report) , currently sporting a Zacks Rank #1 (Strong Buy), besides the iPhone maker Apple (AAPL - Free Report) and Axcelis Technologies (ACLS - Free Report) , both carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for AMD’s first-quarter fiscal 2022 earnings has been revised 23 cents upward to 91 cents per share over the past 30 days. For fiscal 2022, earnings estimates have moved a penny south to $3.99 per share in the past seven days.

AMD’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average being 17%. Shares of AMD have gained 46.3% in the past year.

The Zacks Consensus Estimate for Apple’s second-quarter fiscal 2022 earnings has been revised 5.1% upward to $1.43 per share over the past 60 days. For fiscal 2022, earnings estimates have moved a penny north to $6.16 per share in the past seven days.

Apple’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average being 20.3%. AAPL stock has appreciated 36.4% in the past year.

The Zacks Consensus Estimate for Axcelis’ first-quarter 2022 earnings has been revised a couple of cents upward to 89 cents per share over the past 30 days. For 2022, earnings estimates have moved 12.4% north to $3.99 per share in the past 30 days.

Axcelis’ earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average being 30.3%. Shares of ACLS have rallied 86.1% in the past year.