Nutanix (NTNX) will report fiscal first quarter (October) earnings after the market closes tomorrow (Tuesday, November 26) and management will host a call at 4:30 PM EST.
Nutanix is the ‘hyperconverged' leader. The Nutanix Enterprise Cloud Platform converges server, storage, virtualization and networking into a resilient, software-defined solution.
Nutanix guided for a first quarter non-GAAP loss per share of $0.28-0.26 on revenue of $295-310 million, implying software and support revenue up 40-45%, billings of $370-390 million, implying software and support billings up 50-55%, a bill to revenue ratio of 1.26x and non-GAAP gross margins of 78-79%.
That guidance was disappointing three months ago, as the revenue outlook was below consensus for the first time in six quarters. Nutanix cited pass-through hardware revenue of 5-6% of billings, rather than its original expectation of 7%. The company is currently transitioning away from hardware in order to become more software-centric, with the goal of driving stronger margins and profitability. The transition to the software model is progressing faster than expected, which represents a near-term sales headwind.
Weeks later, the stock fell to a six-month low after The Information reported Google (GOOG/L)is considering expanding into the private customer data center market. That would represent a competitive threat to Nutanix, but analysts were quick to defend the stock as Nutanix and Google signed a partnership just last year. Google reportedly denied it was planning to compete with partners.
Shares of Nutanix have since remained weak as the correction took hold in technology and especially high growth software stocks.
Nutanix has a $7.4 billion market cap and trades at ~5x sales, which is a modest discount to many high quality small-mid cap enterprise software stocks.