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Nutanix (NTNX) Updates Q3 View to Reflect Coronavirus Impact
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Nutanix (NTNX - Free Report) recently reported preliminary third-quarter fiscal 2020 results, ended Apr 30, reflecting the impacts of the coronavirus pandemic. The company anticipates third-quarter fiscal 2020 revenues to be $312-$317 million or grow 8-10% year over year. The Zacks Consensus Estimate for revenues in the fiscal third quarter stands at $308.8 million, indicating 7.37% year-over-year growth.
Moreover, total contract value (TCV) revenues are expected between $307 million and $312 million compared with the earlier guidance of $300-$320 million. Also, TCV billings guidance was updated from a range of $365-$385 million to $371-$376 million.
The guidance takes into account a headwind resulting from the company’s ongoing transition from hardware sales to a subscription-based business model. The impacts of economic disruptions stemming from the pandemic have been also considered in this updated guidance.
Additionally, the uncertainty in demand due to the negative economic impacts led by the coronavirus outbreak on customers and end markets prompted Nutanix to withdraw its fiscal 2020 guidance provided during its last earnings call. Moreover, the company also withdrew its business targets for fiscal 2021, including a target to reach $3 billion in TCV billings.
Nonetheless, Nutanix has reportedly continued to witness steady demand for its hybrid cloud solutions, which has helped mitigate the negative impact of the pandemic on its business.
The uncertain macro environment is leading to a rise in demand for virtual desktop infrastructure (VDI) and Daas solutions, which is a positive for Nutanix.
The company’s business continuity program, FastTrack, is helping channel partners and global system integrators adapt to the changing demand patterns and remote working environment in the wake of the pandemic.
Management expects to benefit from “corporate initiatives around remote work, hands-free IT automation, disaster recovery, and lift-n-shift to public cloud datacenters”.
Moreover, Nutanix is managing expenses with various cost-reduction methods.
Uncertainty Looms Large
The coronavirus outbreak has not only claimed human lives but also been wreaking havoc on the global economy. It is affecting trade, investment, tourism and supply chains all over.
Companies across the globe are facing unprecedented challenges and taking stringent measures to tackle the crisis. Suspension of production, forced leaves/layoffs and cost cutting are becoming commonplace. Despite policymakers’ best efforts, companies are finding it difficult to stay afloat amid such trying times.
For instance, Yelp (YELP - Free Report) is reducing its employee strength to survive amid this pandemic. Moreover, Sabre (SABR - Free Report) has undertaken several measures, including pay cuts, suspension of the 401 (K) program and putting brakes on its dividend and share-repurchase programs to preserve cash and maintain ample liquidity amid the coronavirus-led financial crisis.
Further, companies like IBM (IBM - Free Report) , Corning and Analog Devices have withdrawn their full-year guidance, reflecting the gravity of the economic uncertainty due to the pandemic-led disruptions.
Given the recession that has hit the globe, cash is the king for businesses and investors. Therefore, amid the coronavirus crisis, many companies might be forced to take stringent measures for cash preservation. So, until the fog clears, investors should brace for more layoffs, pay cuts, and dividend payout and share-buyback suspensions.
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Nutanix (NTNX) Updates Q3 View to Reflect Coronavirus Impact
Nutanix (NTNX - Free Report) recently reported preliminary third-quarter fiscal 2020 results, ended Apr 30, reflecting the impacts of the coronavirus pandemic. The company anticipates third-quarter fiscal 2020 revenues to be $312-$317 million or grow 8-10% year over year. The Zacks Consensus Estimate for revenues in the fiscal third quarter stands at $308.8 million, indicating 7.37% year-over-year growth.
Moreover, total contract value (TCV) revenues are expected between $307 million and $312 million compared with the earlier guidance of $300-$320 million. Also, TCV billings guidance was updated from a range of $365-$385 million to $371-$376 million.
The guidance takes into account a headwind resulting from the company’s ongoing transition from hardware sales to a subscription-based business model. The impacts of economic disruptions stemming from the pandemic have been also considered in this updated guidance.
Additionally, the uncertainty in demand due to the negative economic impacts led by the coronavirus outbreak on customers and end markets prompted Nutanix to withdraw its fiscal 2020 guidance provided during its last earnings call. Moreover, the company also withdrew its business targets for fiscal 2021, including a target to reach $3 billion in TCV billings.
Nonetheless, Nutanix has reportedly continued to witness steady demand for its hybrid cloud solutions, which has helped mitigate the negative impact of the pandemic on its business.
Nutanix Inc. Price and Consensus
Nutanix Inc. price-consensus-chart | Nutanix Inc. Quote
What is Helping Nutanix Stay Afloat?
The uncertain macro environment is leading to a rise in demand for virtual desktop infrastructure (VDI) and Daas solutions, which is a positive for Nutanix.
The company’s business continuity program, FastTrack, is helping channel partners and global system integrators adapt to the changing demand patterns and remote working environment in the wake of the pandemic.
Management expects to benefit from “corporate initiatives around remote work, hands-free IT automation, disaster recovery, and lift-n-shift to public cloud datacenters”.
Moreover, Nutanix is managing expenses with various cost-reduction methods.
Uncertainty Looms Large
The coronavirus outbreak has not only claimed human lives but also been wreaking havoc on the global economy. It is affecting trade, investment, tourism and supply chains all over.
Companies across the globe are facing unprecedented challenges and taking stringent measures to tackle the crisis. Suspension of production, forced leaves/layoffs and cost cutting are becoming commonplace. Despite policymakers’ best efforts, companies are finding it difficult to stay afloat amid such trying times.
For instance, Yelp (YELP - Free Report) is reducing its employee strength to survive amid this pandemic. Moreover, Sabre (SABR - Free Report) has undertaken several measures, including pay cuts, suspension of the 401 (K) program and putting brakes on its dividend and share-repurchase programs to preserve cash and maintain ample liquidity amid the coronavirus-led financial crisis.
Further, companies like IBM (IBM - Free Report) , Corning and Analog Devices have withdrawn their full-year guidance, reflecting the gravity of the economic uncertainty due to the pandemic-led disruptions.
Given the recession that has hit the globe, cash is the king for businesses and investors. Therefore, amid the coronavirus crisis, many companies might be forced to take stringent measures for cash preservation. So, until the fog clears, investors should brace for more layoffs, pay cuts, and dividend payout and share-buyback suspensions.
The company currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
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