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Nutanix (NTNX) Q1 Loss Narrower Than Expected, Revenues Beat

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Nutanix NTNX reported first-quarter fiscal 2022 non-GAAP loss of 22 cents per share, significantly narrower than the Zacks Consensus Estimate of a loss of 76 cents per share. The figure was narrower than the year-ago quarter’s loss of 44 cents per share.

Nutanix reported revenues of $378.5 million beating the Zacks Consensus Estimate of $368 million. The top line improved 21% from the year-earlier quarter’s $312.8 million. The company noted that the average contract term length declined to 3.1 year from 3.5 years in the year-ago quarter primarily due to higher federal business, which usually have shorter contract term length.

During the fiscal first-quarter, Nutanix’s Annual Contract Value (“ACV”) billings jumped 33% to $183.3 million. ACV billings witnessed the highest year-over-year growth rate over the past two and a half years.

Nutanix Price, Consensus and EPS Surprise

Nutanix Price, Consensus and EPS Surprise
Nutanix Price, Consensus and EPS Surprise

Nutanix price-consensus-eps-surprise-chart | Nutanix Quote

Top-Line Details

Product revenues (47.6% of revenues) increased 15.6% year over year to $180.1 million. Support, entitlements & other services revenues (52.4% of revenues) grew 26.4% to $198.4 million.

The top line witnessed the highest growth rate in over three years. It was primarily driven by growth in the company’s core hyper-converged infrastructure software and the solid adoption of its new capabilities. Nutanix continues to witness strong adoption of its hybrid multi cloud solutions across Fortune 100 and Global 2000 companies.

Additionally, Nutanix benefited from strong adoption of its hybrid cloud solution on Amazon’s AMZN cloud platform, Amazon Web Services (“AWS”). Large customers like a federal civilian agency, a national retailer and a Europe-based multinational pharmaceutical company utilized clusters on Amazon’s AWS through the company's cloud platform.

Subscription revenues (89.3% of revenues) rose 21.5% from the year-ago quarter to $337.9 million. Professional services revenues (6.4% of revenues) jumped 74.5% to $24.1 million.

Non-Portable Software revenues (3.8% of revenues) plunged 28.5% year over year to $14.3 million. Hardware revenues (0.6% of revenues) soared 196.7% to $2.2 million.

Billings were up 18.8% year over year to $398 million. The company’s run-rate ACV grew 23% year over year to $1.59 billion. Annual Recurring Revenue (“ARR”) climbed 67% to $952.6 million.

During the fiscal first quarter, the company added 570 customers, bringing the total number of clients to 20,700. New ACV bookings from Emerging Products witnessed year-over-year growth of 11%.

Operating Details

During the fiscal first quarter, Nutanix’s non-GAAP gross margin expanded 20 basis points (bps) year over year to 82.1%.

Non-GAAP operating expenses increased 3% year over year to $352.6 million.

Balance Sheet & Cash Flow

As of Oct 31, 2021, cash and cash equivalents plus short-term investments were $1.28 billion, up from $1.21 billion at the end of fourth-quarter fiscal 2021.

During the first quarter fiscal 2022, cash used in operating activities was $6.9 million and free cash outflow was $1.9 million.

Outlook

For second-quarter fiscal 2022, Nutanix expects ACV billings between $195 million and $200 million. Revenues are estimated between $400 million and $410 million.

Non-GAAP gross margin is estimated to be approximately 82% to 82.5%. Non-GAAP operating expenses are expected in the range $360 million to $365 million.

For full fiscal 2022, Nutanix expects ACV billings between $740 million and $750 million. Revenues are estimated in the range of $1.62 billion to $1.63 billion for the full year.

Non-GAAP gross margin is estimated to be approximately 82%, while non-GAAP operating expenses are expected in the range $1.48-$1.49 billion during fiscal 2022.

Zacks Rank & Stocks to Consider

Nutanix currently carries a Zacks Rank #3 (Hold), while Amazon has a Zacks Rank #5 (Sell). Shares of NTNX and AMZN have appreciated 2.2% and 9.9% in the year-to-date (“YTD”) period, respectively.

Some better-ranked stocks in the broader technology sector are Advanced Micro Devices AMD and Qualcomm QCOM, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Advanced Micro Devices’ fourth-quarter 2021 earnings has been revised upward by 8 cents to 76 cents per share over the past 30 days. For 2021, earnings estimates have moved north by 15 cents to $2.65 per share in the last 30 days.

Advanced Micro Devices’ earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 14%. Shares of AMD have rallied 63.5% in the YTD period.

The consensus mark for Qualcomm’s first-quarter fiscal 2022 earnings has been raised to $3.01 per share from $3 in the past seven days. For fiscal 2022, earnings estimates have been revised upward by 5 cents to $10.49 per share in the past seven days.

Qualcomm’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 11.2%. Shares of QCOM stock have gained 18.8% YTD.


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