Nutanix (NTNX) Q1 Earnings Top Estimates, Revenues Rise Y/Y
Nutanix NTNX stock jumped more than 6% during Wednesday’s extended trading session after the company reported better-than-expected revenues for the fiscal first quarter of 2024.
The cloud-computing network management software maker 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.
Nutanix Price, Consensus and EPS Surprise
Nutanix price-consensus-eps-surprise-chart | Nutanix Quote
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%.
Zacks Rank & Other Key Picks
Nutanix carries a Zacks Rank #2 (Buy) at present. Shares of NTNX have gained 59.5% in the year-to-date period.
Some other top-ranked stocks from the broader Computer and Technology sector are NVIDIA NVDA, NetEase NTES and Dropbox DBX, each flaunting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
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