Nutanix stock climbed on Wednesday after the company delivered fiscal first-quarter earnings that topped consensus estimates. January quarter revenue guidance came in above views but the company reiterated full-year guidance.
Reported after the close on Tuesday, Nutanix earnings for the quarter ended Oct. 31 were 42 cents a share on an adjusted basis vs. 29 cents a year earlier. That topped estimates for 32-cent adjusted profit.
The maker of cloud-computing network management software said revenue for Nutanix stock rose 16% to $591 million, topping views for $571.7 million in sales.
For the current quarter ending in January, Nutanix predicted revenue of $640 million at the midpoint of guidance versus estimates of $631 million.
"Fiscal 2025 revenue guidance was only reiterated despite the first-quarter beat, with management attributing the conservatism to the fact that it is only one quarter into the fiscal year and continued timing uncertainty related to the growing mix of large deals in the pipeline," said William Blair analyst Jason Ader in a report.
AT JPMorgan, analyst Pinjalim Bora holds a cautious view.
Slowing Growth In Key Metric
"Nutanix reported a good start to the year, with all guided metrics landing ahead of consensus, including one of the highest beats on revenue over the last several quarters," said Bora in a report. "The company also reported a strong new-logo quarter, driving a slight acceleration in the total customer count. The strength in new logo, however, was more than offset by a downtick in expansions, driven largely by a softer performance in the U.S. federal business, in addition to continued elongation in sales cycles and a greater variability in deal timing for larger deals in the pipeline. The weakness in expansions negatively impacted net-new ARR (annual recurring revenue)."
On the stock market today, NTNX stock popped 7.7% to near 78 in early trading.
Raymond James analyst Simon Leopold also pointed to slowing ARR growth in a report.
"Quarterly billings saw a sharp decline to $591 million from $673 million last quarter," he said. "Management noted continued progress in booking new customers, renewals were impacted from un-seasonally slower federal activity, magnified by federal seasonality. Management expects federal spending will normalize in fiscal Q2 as a budget compromise is reached. Despite this, slowing ARR growth will likely remain a point of concern for investors until we see more tangible trends towards a recovery in renewal activity."
Nutanix Stock: Technical Ratings
"Nutanix reported a good quarter with annual recurring revenue of $1.97 billion, up 18%, while operating margin was 20% versus consensus at 15.2%," said RBC Capital analyst Matthew Hedberg in a report. "Free cash flow was $152 million vs. consensus at $130 million."
Further, Nutanix's software manages network, storage and server infrastructure in cloud-computing platforms. Nutanix competes against Broadcom's VMware unit, Hewlett Packard Enterprise and Dell Technologies.
Meanwhile, Nutanix stock has gained 52% in 2024. NTNX stock trades well above a 5% buy zone, with an entry point of 64.25.
The stock holds a Relative Strength Rating of 88 out of a best-possible 99, according to IBD Stock Checkup.
Also, Nutanix has transitioned to a software subscription business model from selling hardware appliances.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
