Yahoo Finance Nutanix (NTNX) Falls Even as Q2 Prelim Results Top Estimates
Nutanix NTNX shares plunged 5.5% during Monday’s extended trading session although the company reported better-than-expected preliminary revenues for second-quarter fiscal 2023.
Notably, the hyperconverged-infrastructure solution provider was supposed to report full financial results for the fiscal second quarter. However, the company notified that it is yet to finalize the quarter’s financial statement due to an ongoing Audit Committee investigation on some accounting matter.
As a result, Nutanix is currently unable to provide financial information regarding fiscal second-quarter expenses. Though the company is trying to resolve the issue as soon as possible, it fears that it may not be able to file second-quarter results on Form-10Q with the U.S. Securities and Exchange Commission within the stipulated time limit.
We believe that the uncertainty about the company’s expenses and profitability might have worried investors, thereby sending its shares down 5.5% during yesterday’s after-hour trading session.
Nutanix Price and Consensus
Nutanix price-consensus-chart | Nutanix Quote
Q2 Prelim Results Top Expectations
Nutanix’s preliminary fiscal second-quarter revenues increased 18% year over year to $486.5 million and surpassed the Zacks Consensus Estimate of $463.9 million. The top line also came well ahead of management’s own guidance of $460-$470 million. NTNX noted that the average contract term length declined to 3.0 years from 3.1 years in the year-ago quarter.
The top line was primarily driven by the company’s subscription-based business model and the solid adoption of its hyper-converged infrastructure solutions. The company noted that despite the ongoing uncertain macroeconomic challenges, its customers have continued with modernizing their data centers and adopted hybrid multi-cloud models.
During the fiscal second quarter, Nutanix’s Annual Contract Value (ACV) billings jumped 23% to $267.6 million. The company had expected ACV billings between $245 million and $250 million. Our estimate for second-quarter ACV billing was pegged at $246.7 million.
Subscription revenues (92.7% of revenues) climbed 20.3% from the year-ago quarter’s figure to $450.9 million. Professional services revenues (4.8% of revenues) increased 6.4% to $23.4 million.
Non-Portable Software revenues (2.2% of revenues) plunged 25.2% year over year to $10.9 million. Hardware revenues (0.3% of revenues) slumped 29.8% to $1.2 million.
Billings were up 13.9% year over year to $529.1 million. Annual Recurring Revenues climbed 32% to $1.38 billion.
During the fiscal second quarter, Nutanix added 490 customers, taking the total number of clients to 23,620.
The company generated operating cash flow and free cash flows of $74.1 million and $63 million, respectively.
Guidance
Due to ongoing accounting investigation, Nutanix hadn’t provided expenses and profitability guidance for the third quarter and full-fiscal 2023. It has just provided revenue and ACV billings guidance for the two periods.
For the third quarter of fiscal 2023, Nutanix expects ACV billings between $220 million and $225 million. Revenues are estimated between $430 million and $440 million.
For fiscal 2023, NTNX now expects ACV billings between $905 million and $915 million, up from the previous guidance of $895-$900 million. Revenues are now estimated in the range of $1.80-$1.81 billion, up from the earlier guidance of $1.77-$1.78 billion.
The company reaffirmed its previously provided fiscal 2023 guidance of $100-$125 million for free cash flow.
Zacks Rank & Stocks to Consider
Nutanix currently carries a Zacks Rank #3 (Hold). Shares of NTNX have gained 18.7% over the past year.
Some better-ranked stocks from the broader technology sector are Clarivate Plc CLVT, Aspen Technology AZPN and ServiceNow NOW, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Clarivate’s first-quarter 2023 earnings has been revised a penny northward to 17 cents per share over the past 60 days. For 2023, earnings estimates have been revised a penny northward to 80 cents per share in the past 60 days.
Clarivate's earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 15.6%. Shares of CLVT have fallen 9.4% in the trailing 12 months.
The Zacks Consensus Estimate for Aspen Technology's third-quarter fiscal 2023 earnings has been revised upward by 17 cents to $1.66 per share in the past 60 days. For fiscal 2023, earnings estimates have been revised northward by 2 cents to $7.10 per share in the past 30 days.
Aspen Technology’s earnings beat the Zacks Consensus Estimate thrice in the preceding four quarters while missing the same on one occasion, the average surprise being 5.2%. Shares of AZPN have rallied 50.3% over the past year.
The Zacks Consensus Estimate for ServiceNow's first-quarter 2023 earnings has been revised northward by a penny to $2.02 per share over the past 30 days. For 2023, earnings estimates have moved downward by 3 cents to $9.15 per share in the past seven days.
ServiceNow's earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 6.9%. Shares of NOW have plunged 14.2% in the trailing 12 months.
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