A month has gone by since the last earnings report for Nutanix (NTNX Quick QuoteNTNX - Free Report) . Shares have lost about 9.2% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Nutanix due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Nutanix Q3 Loss Narrower Than Estimated, Revenues Miss

Nutanix reported non-GAAP third-quarter fiscal 2022 loss of 5 cents per share, significantly narrower than the Zacks Consensus Estimate of a loss of 20 cents. The figure was narrower than the year-ago quarter’s loss of 41 cents per share.

Nutanix reported revenues of $403.7 million, missing the Zacks Consensus Estimate of $438.5 million. The top line improved 17% from the year-earlier quarter’s figure of $344.5 million. NTNX noted that the average contract term length declined to 3.2 years from 3.3 years in the year-ago quarter, primarily due to higher federal businesses that usually have shorter contract term lengths.

During the fiscal third quarter, Nutanix’s Annual Contract Value (ACV) billings jumped 28% to $204.7 million.

Top-Line Details

Product revenues (49.5% of revenues) increased 15.8% year over year to $199.6 million. Support, entitlements & other services revenues (50,5% of revenues) grew 18.5% to $204 million.

The top line was primarily driven by growth in NTNX’s core hyperconverged 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 (92% of revenues) rose 21% from the year-ago quarter’s figure to $370.5 million. Professional services revenues (6% of revenues) jumped 15.4% to $22.5 million.

Non-Portable Software revenues (2% of revenues) plunged 43.7% year over year to $9.4 million. Hardware revenues (0.3% of revenues) increased 30% to $1.3 million.

Billings were up 20.7% year over year to $448 million. Nutanix’s run-rate ACV grew 19.3% year over year to $1.73 billion. Annual Recurring Revenue (ARR) climbed 46% to $1.1 billion.

During the fiscal third quarter, Nutanix added 580 customers, taking the total number of clients to 21,980.

Operating Details

During the fiscal third quarter, Nutanix’s non-GAAP gross margin expanded 160 basis points (bps) year over year to 83.3%.

Non-GAAP operating expenses decreased 5% year over year to $341.7 million.

Balance Sheet & Cash Flow

As of Apr 30, 2022, cash and cash equivalents plus short-term investments were $1.30 billion, up from $1.29 billion at the end of second-quarter fiscal 2022.

During the third quarter of fiscal 2022, cash utilized through operating activities was $3.2 million, and free cash flow was negative $20.1 million. During the first nine months of fiscal 2022, Nutanix generated $29.5 million of cash from operating activities and a free cash flow of negative $4.7 million.

Outlook

For fourth-quarter fiscal 2022, Nutanix expects ACV billings between $175 million and $185 million. Revenues are estimated between $340 million and $360 million.

Non-GAAP gross margin is estimated to be approximately 79-80%. Non-GAAP operating expenses are expected in the range of $360 million to $365 million.

Nutanix revised guidance for the full fiscal. NTNX now expects ACV billings between $735 million and $745 million compared with the previously guided range of $760-$765 million. Revenues are now estimated in the range of $1.535 billion to $1.555 billion compared with the prior range of $1.625-$1.630 billion.

Non-GAAP gross margin is now estimated to be 82% compared with the earlier guidance of 82.5%. Non-GAAP operating expenses are now projected in the range of $1.402 billion to $1.407 billion compared with the previous estimate of $1.465-$1.470 billion.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

The consensus estimate has shifted -21.56% due to these changes.

VGM Scores

At this time, Nutanix has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Nutanix has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Nutanix belongs to the Zacks Computers - IT Services industry. Another stock from the same industry, Wix.com (WIX Quick QuoteWIX - Free Report) , has gained 1.8% over the past month. More than a month has passed since the company reported results for the quarter ended March 2022.

Wix.com reported revenues of $341.6 million in the last reported quarter, representing a year-over-year change of +12.3%. EPS of -$0.72 for the same period compares with -$0.54 a year ago.

Wix.com is expected to post a loss of $0.39 per share for the current quarter, representing a year-over-year change of -39.3%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.3%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Wix.com. Also, the stock has a VGM Score of F.