Why Nutanix Stock Was Surging Today | The Motley Fool

Shares of Nutanix (NTNX 19.70%) were moving higher today after the hyper-converged infrastructure specialist (HCI) posted better-than-expected results in its fiscal fourth-quarter earnings report.

Investors responded positively to the news, sending the stock up 20.4% as of 12:53 p.m. ET.

Nutanix bounces back

Following a disappointing earnings report in the fiscal third quarter, Nutanix bounced back after reassuring investors that customer adoption remains solid.

Revenue in the quarter rose 11% to $548 million, which topped the consensus at $536.9 million.

Other metrics showed underlying growth was even faster, as annual contract value (ACV) billings were up 21% to $338 million, and annual recurring revenue increased 22%, showing that reported revenue should accelerate in the coming quarters. The company also expanded its gross margin by 150 basis points to 85.2%.

On the bottom line, adjusted operating income increased from $63.6 million to $70.5 million, and adjusted earnings per share rose from $0.24 to $0.27, ahead of the consensus at $0.20.

Free cash flow in the quarter surged from $45.5 million to $224.3 million due to significant growth in deferred revenue.

CEO Rajiv Ramaswami said, “Our fourth quarter was a solid finish to a fiscal year that showed good progress on our financial model, with solid top-line growth and sharp year-over-year improvement in profitability.” He also noted new and expanded agreements with Cisco, Nvidia, and Dell.

What’s next for Nutanix?

Looking ahead to the fiscal first quarter, management called for revenue of $565 million-$575 million in the first quarter, which compared to the analyst consensus of $573.3 million. For the full year, it expects revenue of $2.435-$2.465 billion, in line with estimates of $2.45 billion, and up 14% at the midpoint.

With revenue accelerating and free cash flow ramping up, it’s not surprising to see Nutanix moving higher on the news.