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Nutanix (NTNX) Up 10.6% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Nutanix (NTNX - Free Report) . Shares have added about 10.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Nutanix due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Nutanix Q1 Earnings Top Estimates, Revenues Rise Y/Y
Nutanix reported non-GAAP first-quarter fiscal 2024 earnings of 29 cents per share, surpassing the Zacks Consensus Estimate by 70.59%. The company had delivered an adjusted earnings per share of 3 cents in the year-ago quarter.
Nutanix’s revenues climbed 18% year over year to $511.1 million, beating the Zacks Consensus Estimate by 1.95% and the guided range of $495-$505 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.
NTNX noted that the average contract term length declined to 2.9 years from 3 years in the year-ago quarter, primarily due to higher federal businesses that usually have shorter contract term lengths.
During the fiscal first quarter, Nutanix’s Annual Contract Value (ACV) billings jumped 24% to $287.2 million.
Top-Line Details
Product revenues (48.3% of revenues) increased 18.4% year over year to $246.9 million. Support, entitlements & other services revenues (51.7% of revenues) grew 17.4% to $264.1 million.
Subscription revenues (93.8% of revenues) climbed 19% from the year-ago quarter’s figure to $479.48 million. However, professional services revenues (4.5% of revenues) improved 2.5% to $22.84 million.
Billings were up 19.5% year over year to $561.13 million. Annual recurring revenues climbed 30% to $1.66 billion.
During the fiscal first quarter, Nutanix added 380 customers, taking the total number of clients to 24,930.
Operating Details
During the fiscal first quarter, Nutanix’s non-GAAP gross margin expanded 250 basis points year over year to 85.9%.
Non-GAAP operating expenses increased 2% year over year to $359.8 million.
Non-GAAP operating income came in at $79.5 million compared with $69.3 million reported in the year-ago quarter.
Balance Sheet & Cash Flow
As of Oct 31, 2023, cash and cash equivalents plus short-term investments were $1.57 billion, up from $1.32 billion at the end of fourth-quarter fiscal 2023.
During the first quarter of fiscal 2023, cash generated through operating activities was $145.5 million and free cash flow was $132.5 million.
Outlook
For the second quarter of fiscal 2024, Nutanix expects ACV billings between $295 million and $305 million. Revenues are estimated between $545 million and $555 million.
Non-GAAP gross margin is estimated between 85% and 86%. Non-GAAP operating margin is expected in the band of 14-16%.
For fiscal 2024, NTNX expects ACV billings between $1.08 billion and $1.1 billion. Revenues are estimated in the range of $2.095-$2.125 billion.
Non-GAAP gross margin is estimated to be 85% for fiscal 2024. Non-GAAP operating margin is projected in the range of 11.5-12.5%.
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 93.94% due to these changes.
VGM Scores
Currently, Nutanix has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. 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.
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Nutanix (NTNX) Up 10.6% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Nutanix (NTNX - Free Report) . Shares have added about 10.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Nutanix due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Nutanix Q1 Earnings Top Estimates, Revenues Rise Y/Y
Nutanix reported non-GAAP first-quarter fiscal 2024 earnings of 29 cents per share, surpassing the Zacks Consensus Estimate by 70.59%. The company had delivered an adjusted earnings per share of 3 cents in the year-ago quarter.
Nutanix’s revenues climbed 18% year over year to $511.1 million, beating the Zacks Consensus Estimate by 1.95% and the guided range of $495-$505 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.
NTNX noted that the average contract term length declined to 2.9 years from 3 years in the year-ago quarter, primarily due to higher federal businesses that usually have shorter contract term lengths.
During the fiscal first quarter, Nutanix’s Annual Contract Value (ACV) billings jumped 24% to $287.2 million.
Top-Line Details
Product revenues (48.3% of revenues) increased 18.4% year over year to $246.9 million. Support, entitlements & other services revenues (51.7% of revenues) grew 17.4% to $264.1 million.
Subscription revenues (93.8% of revenues) climbed 19% from the year-ago quarter’s figure to $479.48 million. However, professional services revenues (4.5% of revenues) improved 2.5% to $22.84 million.
Billings were up 19.5% year over year to $561.13 million. Annual recurring revenues climbed 30% to $1.66 billion.
During the fiscal first quarter, Nutanix added 380 customers, taking the total number of clients to 24,930.
Operating Details
During the fiscal first quarter, Nutanix’s non-GAAP gross margin expanded 250 basis points year over year to 85.9%.
Non-GAAP operating expenses increased 2% year over year to $359.8 million.
Non-GAAP operating income came in at $79.5 million compared with $69.3 million reported in the year-ago quarter.
Balance Sheet & Cash Flow
As of Oct 31, 2023, cash and cash equivalents plus short-term investments were $1.57 billion, up from $1.32 billion at the end of fourth-quarter fiscal 2023.
During the first quarter of fiscal 2023, cash generated through operating activities was $145.5 million and free cash flow was $132.5 million.
Outlook
For the second quarter of fiscal 2024, Nutanix expects ACV billings between $295 million and $305 million. Revenues are estimated between $545 million and $555 million.
Non-GAAP gross margin is estimated between 85% and 86%. Non-GAAP operating margin is expected in the band of 14-16%.
For fiscal 2024, NTNX expects ACV billings between $1.08 billion and $1.1 billion. Revenues are estimated in the range of $2.095-$2.125 billion.
Non-GAAP gross margin is estimated to be 85% for fiscal 2024. Non-GAAP operating margin is projected in the range of 11.5-12.5%.
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 93.94% due to these changes.
VGM Scores
Currently, Nutanix has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. 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.