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Nutanix (NTNX) Down 5.8% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Nutanix (NTNX - Free Report) . Shares have lost about 5.8% 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 drivers.
Nutanix Q3 Earnings and Revenues Surpass Estimates
Nutanix reported non-GAAP third-quarter fiscal 2023 earnings of 4 cents per share, surpassing the Zacks Consensus Estimate of 2 cents per share. The company delivered an adjusted loss per share of 5 cents in the year-ago quarter.
Nutanix reported revenues of $448.6 million, beating the Zacks Consensus Estimate of $431.6 million. The top line climbed 11% from the year-ago quarter’s figure of $403.7 million. NTNX noted that the average contract term length declined to 3 years from 3.2 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 17% to $239.8 million.
Top-Line Details
Product revenues (47.4% of revenues) increased 6.5% year over year to $212.5 million. Support, entitlements & other services revenues (52.6% of revenues) grew 15.7% to $236.1 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 (93.1% of revenues) climbed 12.7% from the year-ago quarter’s figure to $417.5 million. However, professional services revenues (4.9% of revenues) declined 1.6% to $22.1 million.
Non-Portable Software revenues (1.9% of revenues) increased 1.9% year over year to $8.3 million. Hardware revenues (0.1% of revenues) slumped 53.4% to $619 million.
Billings were up 3.1% year over year to $461.9 million. Annual recurring revenues climbed 32% to $1.47 billion.
During the fiscal third quarter, Nutanix added 430 customers, taking the total number of clients to 24,050.
Operating Details
During the fiscal third quarter, Nutanix’s non-GAAP gross margin expanded 50 basis points year over year to 83.8%.
Non-GAAP operating expenses increased 8% year over year to $369.1 million. Non-GAAP operating income came in at $7 million against the year-ago quarter’s loss of $5.8 million.
Balance Sheet & Cash Flow
As of Apr 30, 2023, cash and cash equivalents plus short-term investments were $1.36 billion, down from $1.39 billion at the end of first-quarter fiscal 2023.
During the third quarter of fiscal 2023, cash generated through operating activities was $64.3 million and free cash flow was $42.5 million.
Outlook
For the fourth quarter of fiscal 2023, Nutanix expects ACV billings between $240 million and $250 million. Revenues are estimated between $470 million and $480 million.
Non-GAAP gross margin is estimated to be 84%. Non-GAAP operating margin is expected in the band of 9-10%.
For the full fiscal 2023, NTNX expects ACV billings between $915 million and $925 million. Revenues are estimated in the range of $1.84-$1.85 billion.
Non-GAAP gross margin is estimated to be 84% for fiscal 2023. Non-GAAP operating margin is projected in the range of 6-7%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
The consensus estimate has shifted 51.08% due to these changes.
VGM Scores
At this time, Nutanix has a strong Growth Score of A, a grade with the same score on the momentum front. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Nutanix has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Nutanix is part of the Zacks Computers - IT Services industry. Over the past month, Amdocs (DOX - Free Report) , a stock from the same industry, has gained 0.9%. The company reported its results for the quarter ended March 2023 more than a month ago.
Amdocs reported revenues of $1.22 billion in the last reported quarter, representing a year-over-year change of +6.8%. EPS of $1.47 for the same period compares with $1.54 a year ago.
Amdocs is expected to post earnings of $1.47 per share for the current quarter, representing a year-over-year change of +15.8%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.4%.
Amdocs has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.
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Nutanix (NTNX) Down 5.8% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Nutanix (NTNX - Free Report) . Shares have lost about 5.8% 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 drivers.
Nutanix Q3 Earnings and Revenues Surpass Estimates
Nutanix reported non-GAAP third-quarter fiscal 2023 earnings of 4 cents per share, surpassing the Zacks Consensus Estimate of 2 cents per share. The company delivered an adjusted loss per share of 5 cents in the year-ago quarter.
Nutanix reported revenues of $448.6 million, beating the Zacks Consensus Estimate of $431.6 million. The top line climbed 11% from the year-ago quarter’s figure of $403.7 million. NTNX noted that the average contract term length declined to 3 years from 3.2 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 17% to $239.8 million.
Top-Line Details
Product revenues (47.4% of revenues) increased 6.5% year over year to $212.5 million. Support, entitlements & other services revenues (52.6% of revenues) grew 15.7% to $236.1 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 (93.1% of revenues) climbed 12.7% from the year-ago quarter’s figure to $417.5 million. However, professional services revenues (4.9% of revenues) declined 1.6% to $22.1 million.
Non-Portable Software revenues (1.9% of revenues) increased 1.9% year over year to $8.3 million. Hardware revenues (0.1% of revenues) slumped 53.4% to $619 million.
Billings were up 3.1% year over year to $461.9 million. Annual recurring revenues climbed 32% to $1.47 billion.
During the fiscal third quarter, Nutanix added 430 customers, taking the total number of clients to 24,050.
Operating Details
During the fiscal third quarter, Nutanix’s non-GAAP gross margin expanded 50 basis points year over year to 83.8%.
Non-GAAP operating expenses increased 8% year over year to $369.1 million. Non-GAAP operating income came in at $7 million against the year-ago quarter’s loss of $5.8 million.
Balance Sheet & Cash Flow
As of Apr 30, 2023, cash and cash equivalents plus short-term investments were $1.36 billion, down from $1.39 billion at the end of first-quarter fiscal 2023.
During the third quarter of fiscal 2023, cash generated through operating activities was $64.3 million and free cash flow was $42.5 million.
Outlook
For the fourth quarter of fiscal 2023, Nutanix expects ACV billings between $240 million and $250 million. Revenues are estimated between $470 million and $480 million.
Non-GAAP gross margin is estimated to be 84%. Non-GAAP operating margin is expected in the band of 9-10%.
For the full fiscal 2023, NTNX expects ACV billings between $915 million and $925 million. Revenues are estimated in the range of $1.84-$1.85 billion.
Non-GAAP gross margin is estimated to be 84% for fiscal 2023. Non-GAAP operating margin is projected in the range of 6-7%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
The consensus estimate has shifted 51.08% due to these changes.
VGM Scores
At this time, Nutanix has a strong Growth Score of A, a grade with the same score on the momentum front. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Nutanix has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Nutanix is part of the Zacks Computers - IT Services industry. Over the past month, Amdocs (DOX - Free Report) , a stock from the same industry, has gained 0.9%. The company reported its results for the quarter ended March 2023 more than a month ago.
Amdocs reported revenues of $1.22 billion in the last reported quarter, representing a year-over-year change of +6.8%. EPS of $1.47 for the same period compares with $1.54 a year ago.
Amdocs is expected to post earnings of $1.47 per share for the current quarter, representing a year-over-year change of +15.8%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.4%.
Amdocs has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.