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Why Nutanix Shares Skyrocketed Today

By Evan Niu, CFA - Aug 29, 2019 at 11:38AM

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The company topped expectations in the fiscal fourth quarter.

What happened

Shares of Nutanix (NTNX -0.82%) have skyrocketed today, up by 27% as of 11 a.m. EDT, after the enterprise hybrid cloud provider reported fiscal fourth-quarter earnings results. The company beat expectations for both the top and bottom lines.

So what

Revenue in the fiscal fourth quarter declined to $299.9 million, ahead of the $294 million in sales that analysts were modeling for. That translated into an adjusted net loss of $105.8 million, or $0.57 per share. Consensus estimates called for $0.64 per share in adjusted losses. Nutanix continues to transition to a subscription model, which helped adjusted gross margin to expand to a record 80%.

Blue and green stock chart going up

Image source: Getty Images.

Billings were $371.7 million during the quarter, and deferred revenue ballooned to $910 million. Subscription billings in the fiscal fourth quarter represented 71% of total billings, and subscription revenue accounted for 65% of total sales.

Now what

"We delivered a solid fourth quarter and believe our performance reflects our execution improvements and the meaningful progress we have made transitioning our business to a subscription model," CEO Dheeraj Pandey said in a statement. "We are encouraged by our record gross margins, strengthening pipeline, progress in sales hiring, and recent large customer wins."

In terms of guidance for the first quarter of fiscal 2020, the company expects software and support revenue to be $290 million to $300 million, with software and support billings of $360 million to $370 million. Hardware is expected to represent 3% or less of total billings and adjusted gross margin should be around 80%. Nutanix guided for an adjusted net loss of $0.75 per share.

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