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Nutanix's (NTNX) Q1 Earnings to Gain From Expanding Clientele

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Nutanix Inc. (NTNX - Free Report) is scheduled to report first-quarter fiscal 2018 earnings on Nov 30. We expect the results to benefit from robust product portfolio, which is expanding the comppany's client base.

Notably, the company beat the Zacks Consensus Estimate for earnings in the trailing four quarters, with an average positive surprise of 12.85%. In the previous quarter, the company delivered a positive earnings surprise of 13.16%.

Moreover, the top-line performance has been consistent. The company beat the Zacks Consensus Estimate for revenues in each of the trailing four quarters.

Nutanix expects first-quarter fiscal 2018 revenues in the range of $240-$250 million. Gross margins are projected at approximately 58%, almost flat sequentially. Management anticipates a 10% increase in DRAM costs, which will be offset by higher mix of software only sales.

Nutanix’s stock has returned 29.1%% year to date, underperforming the 35.6% rally of the industry.



Expanding Customer Base Key Catalyst

Nutanix has been benefiting from prospects in the hyperconverged integrated systems (HCIS) market. Last quarter, the company’s AHV built-in hypervisor saw 75% year-over-year growth in adoption (based on a four-quarter rolling average of nodes using AHV, as a percentage of total nodes sold).

Notably, customer count continued to be strong. In fiscal 2017, Nutanix added 875 new end-customers in the last quarter taking the count to 7051. Moreover, number of customers of more than $1 million deal increased 39% year over year to 43%.
 

Nutanix Inc. Price and EPS Surprise

Nutanix Inc. Price and EPS Surprise | Nutanix Inc. Quote

 

Moreover, the company launched Xi Cloud Services in strategic partnership with Alphabet (GOOGL - Free Report) division, Google.

We believe that Nutanix’s robust product portfolio through the launch of Nutanix Cloud and Xi cloud services along with networking and security will continue to boost clientele. Moreover, collaboration with the likes of International Business Machines Corporation (IBM - Free Report) is a positive.

Why a Likely Positive Surprise?

Our proven model shows that Nutanix is likely to beat earnings due to the favorable combination of Zacks Rank #3 (Hold) and +1.42% Earnings ESP. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Note that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating earnings estimates.

Conversely, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.

Stock to Consider

Here is a stock that, per our model, has the right combination of elements to post an earnings beat in its upcoming release.

Micron Technology Inc. (MU - Free Report) is set to report first-quarter fiscal 2018 earnings results on Dec 19, 2017. It has an Earnings ESP of +1.60% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

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