A month has gone by since the last earnings report for Nutanix (NTNX). Shares have lost about 2.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Nutanix due for a breakout? Before we dive into how investors and analysts have reacted as of late, let’s take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Nutanix Q4 Earnings Surpass Estimates, Revenues Increase Y/Y
Nutanix reported fourth-quarter fiscal 2024 non-GAAP earnings of 27 cents per share, which surpassed the Zacks Consensus Estimate by 35% and increased 12.5% year over year.
Nutanix’s revenues climbed 11% year over year to $548 million, beating the Zacks Consensus Estimate by 2.02% and the guided range of $530-$540 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 in the fiscal fourth quarter was 3.1 years, 0.1 years higher than the fiscal third quarter.
During the fiscal fourth quarter, Nutanix’s Annual Contract Value (ACV) billings jumped 21% to $338 million, which was above the guided range of $295-$305 million.
Top-Line Details of NTNX
Product revenues (48.5% of total revenues) increased 10.6% year over year to $265.9 million. Support, entitlements & other services revenues (51.5% of total revenues) rose 11.2% to $282.05 million.
Subscription revenues (94.7% of total revenues) climbed 12.9% from the year-ago quarter’s figure to $518.7 million. Professional services revenues (4.9% of total revenues) improved 11.4% to $26.7 million. Other non-subscription product revenues (0.5% of total revenues) decreased 76.8% to $2.49 million.
Billings were up 23.5% year over year to $672.86 million. Annual recurring revenues climbed 22% to $1.91 billion.
During the fiscal fourth quarter, Nutanix added 670 customers, taking the total number of clients to 26,530.
The company’s largest win in the fiscal fourth quarter was a multimillion-dollar ACV deal with a North American-based Fortune 100 financial services company, which replaced its existing solution with the Nutanix Cloud platform, including AHV hypervisor as well as Nutanix cloud manager.
Operating Details
In the fiscal fourth quarter, Nutanix’s non-GAAP gross margin expanded 110 basis points year over year to 86.9%.
Non-GAAP operating expenses increased 12% year over year to $405.5 million.
Non-GAAP operating income came in at $70.5 million compared with $63.3 million reported in the year-ago quarter.
Balance Sheet & Cash Flow
As of Jul 31, 2024, cash and cash equivalents plus short-term investments were $994.3 million, down from $1.44 billion at the end of the third quarter of fiscal 2024.
During the fourth quarter of fiscal 2024, cash generated through operating activities was $244.7 million and free cash flow was $224.3 million.
Outlook
For the first quarter of fiscal 2025, revenues are estimated between $565 million and $575 million. Non-GAAP operating margin is expected in the band of 14.5-15.5%. The company expects fully diluted weighted average shares outstanding of approximately 287 million shares.
For fiscal 2025, revenues are estimated in the range of $2.435-$2.465 billion, indicating year-over-year growth of 14% at the mid-point. The company expects free cash flow in the range of $540-$600 million, suggesting a free cash flow margin of 23% at the midpoint.
Non-GAAP operating margin is expected in the band of 15.5-17%.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
The consensus estimate has shifted 445.45% due to these changes.
VGM Scores
At this time, Nutanix has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren’t focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions has been net zero. Notably, Nutanix has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Article Source
https://finance.yahoo.com/news/nutanix-ntnx-down-2-7-153017128.html
