Nutanix (NASDAQ:NTNX) has made a remarkable comeback on the stock market in recent months, having entered the year on weak footing as investors feared that its growth would be curtailed by bigger cloud infrastructure companies. In fact, Nutanix shares now trade at 52-week highs following a series of strong quarterly reports and rapid customer growth.

Furthermore, Wall Street analysts have been bullish about Nutanix's prospects, raising their price targets in anticipation of stronger financial growth thanks to its switch toward a software-only model that'll enhance margins. Therefore, investors will be expecting a strong set of results from the enterprise cloud specialist when it releases its first-quarter results after the market closes on Nov. 30.

Artist's rendering of computers connected to a cloud.

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Nutanix faces great expectations

Analysts expect Nutanix's quarterly revenue to rise 60% year over year to $266.8 million, which should reduce its loss to $0.26 per share from the year-ago quarter's loss per share of $0.37. However, the consensus estimates sit well above the company's own guidance.

Nutanix had originally guided for a first-quarter loss of $0.37 per share on revenue of $240 million to $250 million, so it will have to stretch a lot to meet analysts' expectations. William Blair analyst Jason Ader believes that the company will be able to outperform its own expectations as it reportedly struck a substantial number of large deals during the quarter.

Nutanix CEO Dheeraj Pandey had said during the previous conference call that "we feel very good about our large customers becoming even larger and many of them are now interested in software agreements with us in fiscal 2018." In fact, Nutanix came into the new fiscal year on the back of an increasing number of large deals, driven by strong demand for its data center management and virtualization products.

More importantly, Nutanix's existing customers are making more repeat purchases. The company landed 70% of its bookings during the last reported quarter from its current clients, up from 64% in the year-ago period. Additionally, the number of $1 million-plus deals struck by Nutanix during the fourth quarter of fiscal 2017 jumped 39% year over year, which led to a 77% increase in the company's deferred revenue.

These large deals and repeat purchases from existing customers have helped Nutanix reduce its sales and marketing expenses. It spent 58.6% of its revenue on sales and marketing in the final quarter of fiscal 2017, down from 62.9% during the year-ago period. Therefore, it won't be surprising if a combination of customer growth and an increase in large-sized deals boosts Nutanix during the first quarter.

But investors shouldn't panic even if Nutanix's results fall short of these high expectations given its solid long-term prospects.

Looking at the long run

Nutanix plies its trade in the fast-growing hyper-converged cloud infrastructure market, which helps enterprises reduce data center complexity by integrating storage, computing, and networking with the help of a software-driven platform. The company forecasts that this market could hit $8.5 billion in revenue by 2020, so it has a lot of room to grow given that it generated $767 million in revenue during the latest fiscal year.

Nutanix is going all out to attack the hyper-convergence opportunity with its Nutanix Enterprise Cloud Operating System. The company has updated this operating system with a new feature known as Nutanix Calm, which allows clients to launch enterprise applications across both public and private cloud infrastructure.

This means that a Nutanix client can launch applications in the Google Cloud from an IBM-provided on-site cloud infrastructure. Looking ahead, Nutanix Calm could be the company's ticket to boosting software sales as enterprise customers get a single operating system to unify their multiple cloud deployments across private and public clouds.

The good news is that Nutanix is already witnessing tremendous traction for such software products. Its software-related bookings shot up 96% during the last-reported quarter, and the continued adoption of its latest platform could lead to further growth.

In fact, RBC Capital Markets believes that Nutanix will pivot its business toward a software-only model in the long run. Last year, the company got 70% to 75% of its $1 billion in bookings from software and support-related services. The gross margin in this business reportedly exceeds 70%, which is substantially higher than Nutanix's 59.2% gross margin last fiscal year.

Nutanix is setting itself up for robust top- and bottom-line growth, and its upcoming results should confirm the same.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.