Nutanix NTNX reported first-quarter fiscal 2025 non-GAAP earnings of 42 cents per share, which surpassed the Zacks Consensus Estimate by 35.48% and increased 44.8% year over year.

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Nutanix’s revenues climbed 16% year over year to $591 million, beating the Zacks Consensus Estimate by 3.3% and the guided range of $565-$575 million.

The top line was primarily driven by growth in NTNX’s extending partnerships and clientele, as well as the solid adoption of its new capabilities. Nutanix continues to witness strong logo performance with new logo additions of 630 growing 50%-plus year over year.

Nutanix Price, Consensus and EPS Surprise

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

NTNX noted that the average contract term length in the fiscal first quarter was 3.1 years, unchanged compared to the fourth quarter of fiscal 2024.

Top-Line Details of NTNX

Product revenues (51.09% of total revenues) increased 22.27% year over year to $301.9 million. Support, entitlements & other services revenues (48.91% of total revenues) rose 9.43% to $289.03 million.

Subscription revenues (94.88% of total revenues) climbed 16.94% from the year-ago quarter’s figure to $560.6 million. Professional services revenues (4.62% of total revenues) improved 19.49% to $27.2 million. Other non-subscription product revenues (0.5% of total revenues) decreased 65.96% to $2.97 million.

Billings were up 5.39% year over year to $591.39 million. Annual recurring revenues climbed 18.16% to $1.96 billion.

During the fiscal first quarter, Nutanix added 630 customers, taking the total number of clients to 27,160.

The company expanded its strategic partnership with AWS during the fiscal first quarter to offer AWS services to clients migrating to NC2 on AWS. Further, Nutanix was also named a leader in 2024 Gartner Magic Quadrant for Distributed Hybrid Infrastructure. During the reported quarter, NTNX also advanced its AI platform to public cloud.

Operating Details

In the fiscal first quarter, Nutanix’s non-GAAP gross margin expanded 160 basis points year over year to 87.5%.

Non-GAAP operating expenses increased 11% year over year to $398.9 million.

Non-GAAP operating income came in at $118.2 million and increased $38.7 million compared with the year-ago quarter.

Balance Sheet & Cash Flow

As of Oct. 31, 2024, cash and cash equivalents plus short-term investments were $1.07 billion, up from $994.3 million at the end of the fiscal first quarter of fiscal 2024.

During the first quarter of fiscal 2025, cash generated through operating activities was $161.7 million, and free cash flow was $151.9 million.

Outlook

For the second quarter of fiscal 2025, revenues are estimated between $635 million and $645 million. Non-GAAP operating margin is expected in the band of 20-21%. The company expects fully weighted average shares outstanding to be approximately 289 million.

For fiscal 2025, revenues are estimated in the range of $2.435-$2.465 billion. The company expects free cash flow in the range of $560-$610 million.

Non-GAAP operating margin is expected in the band of 16-17%.

Zacks Rank & Other Key Picks

Nutanix sports a Zacks Rank #1 (Strong buy) at present. Shares of NTNX have gained 59.7% in the year-to-date period.

Some other top-ranked stocks from the broader Computer and Technology sector are Fortinet FTNT, Meta Platforms META and Reddit Inc. RDDT. Fortinet sports a Zacks Rank #1, while Meta Platforms and Reddit Inc. carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Fortinet shares have returned 64.7% in the year-to-date period.

The Zacks Consensus Estimate for the company’s long-term earnings is pegged at $18.3 per share. 

Meta Platforms shares have returned 62.1% in the year-to-date period.

The Zacks Consensus Estimate for the company’s long-term earnings is pegged at $20.1 per share. 

Reddit Inc. shares have returned 170.6% in the year-to-date period.

The Zacks Consensus Estimate for the company’s long-term earnings is pegged at $36 per share.

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