A month has gone by since the last earnings report for Nutanix (NTNX). Shares have lost about 3.4% 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 the most recent earnings report in order to get a better handle on the important drivers.
Nutanix 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.
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.
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.
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.
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.
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.
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%.
It turns out, estimates revision have trended upward during the past month.
The consensus estimate has shifted 9.21% due to these changes.
At this time, Nutanix has a great Growth Score of A, a grade with the same score on the momentum front. However, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Nutanix has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Nutanix belongs to the Zacks Computers - IT Services industry. Another stock from the same industry, CyberArk (CYBR), has gained 0.6% over the past month. More than a month has passed since the company reported results for the quarter ended September 2024.
CyberArk reported revenues of $240.1 million in the last reported quarter, representing a year-over-year change of +25.6%. EPS of $0.94 for the same period compares with $0.42 a year ago.
For the current quarter, CyberArk is expected to post earnings of $0.71 per share, indicating a change of -12.4% from the year-ago quarter. The Zacks Consensus Estimate has changed +3.6% over the last 30 days.
CyberArk has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.
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