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Nutanix (NTNX) to Report Q1 Earnings: What's in the Cards?

Nutanix Inc. NTNX is scheduled to report first-quarter fiscal 2019 earnings on Nov 27.

Notably, the company’s earnings beat the Zacks Consensus Estimate thrice in the trailing four reported quarters, missing it once. Its average positive surprise is 29.20%.

In the last reported quarter, the company incurred a loss of 11 cents per share, narrower than the Zacks Consensus Estimate of a loss of 22 cents and the year-ago quarter’s loss of 17 cents.

Revenues jumped 20% from the year-earlier period to $303.7 million. Product revenues climbed 11% year over year to $224.7 million while support & other services revenues surged 55% to $79.1 million.

Nutanix Inc. Price and EPS Surprise

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

What to Expect in Q1

For the first quarter of fiscal 2019, revenues are projected between $295 million and $310 million. Nutanix forecasts non-GAAP net loss between 26 cents and 28 cents for the quarter to be reported.

The Zacks Consensus Estimate for bottom line in the fiscal first quarter is pegged at a loss of 27 cents, wider than the year-ago quarter’s loss of 16 cents. The Zacks Consensus Estimate for revenues of $304.8 million indicates around 10.4% growth from the prior-year period’s tally.

Let’s take a look at how things are shaping up for the upcoming announcement.

Factors to Consider

Nutanix is considered a pioneer in the hyper converged infrastructure (HCI) market. Its built-in hypervisor has been gaining a significant traction with customers continuing to select it as a low-cost alternative to other vendor offerings.

A growing customer base with the addition of prominent names is expected to drive Nutanix’s growth. The company added 1000 customers taking the total end-customer count to 10,610 at the end of the fiscal fourth-quarter 2018. Increasing AHV adoption rate has been a major growth factor.

Nutanix is also benefiting from strength in the Software and Support segment, which is likely to steadily boost results in the soon-to-be-reported period.

Nutanix’s deal wins are anticipated to aid the top line in the October quarter. The company added 46 deals worth more than $1 million in the last reported quarter and also made the largest deal in its history worth more than $20 million in the same period.

However, Nutanix plans to increase its expenditure massively in fiscal 2019. Management intends to spend more on core products and expansion of its product portfolio, including Xi, Beam, Epoch, Era, Flow, Sherlock and Frame, its latest offering. The company’s escalated level of investments is presumed to keep margins under pressure.

Moreover, intense competition from the likes of Cisco CSCO, Hewlett Packard Enterprise HPE and NetApp NTAP remains a concern.

Nutanix currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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