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Nutanix (NTNX) Surpasses Q4 Earnings & Revenue Estimates

Zacks Equity Research
·4 mins read

Nutanix NTNX incurred fourth-quarter fiscal 2020 loss of 39 cents per share, beating the Zacks Consensus Estimate by 41.8%. Moreover, the figure was narrower than the year-ago quarter’s loss of 57 cents.

Revenues increased 9.3% year over year to $327.9 million and also beat the consensus mark by 2.1%.

Top-Line Details

Product revenues (54.6% of revenues) fell 3.9% year over year to $179.1 million. Support, entitlements & other services revenues (45.4% of revenues) surged 31.1% to $148.8 million.

Subscription revenues (86.9% of revenues) jumped 45.6% from the year-ago quarter to $284.8 million. Professional services revenues (3.7% of revenues) grew 34.8% to $12.2 million.

Nutanix Inc. Price, Consensus and EPS Surprise


Nutanix Inc. Price, Consensus and EPS Surprise
Nutanix Inc. Price, Consensus and EPS Surprise

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

Non-Portable Software revenues (9% of revenues) plunged 64.1% year over year to $29.5 million. Moreover, hardware revenues (0.4% of revenues) plummeted 89.2% to $1.4 million.

Software and Support revenues were $326.5 million, up 14% year over year.

Billings were up 4.5% year over year to $388.5 million. Software and Support billings were $387.1 million, up 7.9% year over year.

Annual Contract Value billings were $139.9 million, up 13% year over year.

During the fiscal third quarter, the company added 780 new customers, bringing the total number of clients to 17,360. The company added 10 Global 2000 customers bringing the total count to 910. Global 2000 customers continued to be approximately 30% of Nutanix’s business.

Notable customer wins in the reported quarter included AIB Group, Cadence Design Systems CDNS, Dongfeng Renault, MayBank Singapore, QBE Insurance, and more.

Moreover, the company launched Nutanix Hybrid Cloud Infrastructure on Amazon Web Services (“AWS”), the cloud arm of Amazon AMZN.

Nutanix added several new capabilities to its Desktop-as-a-Service solution, Xi Frame, including enhanced onboarding for on-premises desktop workloads on Nutanix AHV. The Zacks Rank #2 (Buy) company also expanded support for user-profile management and the ability to convert Windows Apps into Progressive Web Apps and increased regional support to 69 regions across Microsoft MSFT Azure, GCP and AWS. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The company also launched new solutions that allow IT teams to deploy, upgrade and troubleshoot their cloud infrastructure while working from anywhere. These solutions are delivered through Nutanix Foundation Central, Insights and Lifecycle Manager - all of which are available as part of Nutanix software at no additional cost to customers.

Operating Details

In the fiscal fourth quarter, Nutanix’s non-GAAP gross margin expanded 300 basis points (bps) year over year to 83%.

Sales & marketing, on a non-GAAP basis as percentage of revenues, declined 550 bps year over year to 70.1%. Research & development expenses as percentage of revenues fell 310 bps to 29.1%. Moreover, general & administrative expenses as percentage of revenues declined 90 bps to 6.2%.

Operating expenses on a non-GAAP basis as percentage of revenues declined 940 bps to 105.5%.

As a result, non-GAAP operating loss narrowed from $104.6 million to $73.6 million in the reported quarter.

Balance Sheet & Cash Flow

As of Jul 31, 2020, cash and cash equivalents plus short-term investments were $719.8 million compared with $732 million as of Apr 30, 2020.

Cash flow from operations was $3.6 million compared with the outflow of $163.5 million in the previous quarter.

Free-cash outflow was $13.8 million compared with the prior quarter’s $17.5 million.

Deferred revenues surged 30% year over year to $1.18 billion at the end of the reported quarter.

Debt Deal With Bain Capital

Nutanix announced that Bain Capital Private Equity has agreed to invest $750 million in convertible notes. The company plans to use the investment to support its growth initiatives.

Moreover, in connection with the investment, David Humphrey and Max de Groen, managing directors of Bain Capital, will join the Nutanix’s board of directors following the close of this transaction, which is expected to occur in late September.

Management Change

Nutanix also announced that Chairman and CEO Dheeraj Pandey plans to retire from the management team upon the selection and appointment of the next CEO.

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