What happened
Shares of cloud computing company Nutanix (NTNX -1.94%) fell sharply this morning after that the company reported a third-quarter loss that was far worse than expected and issued revenue guidance that was below Wall Street's average estimate.
As a result, the tech stock plummeted 23.2% as of 10:30 a.m. ET.
So what
Nutanix's third-quarter sales increased 17% from the year-ago quarter to $403.7 million and beat analysts' consensus estimate of $397.9 million. But investors were unenthused about the company's quarterly sales and instead focused their attention on Nutanix's loss and its outlook for the rest of the year.
Image source: Getty Images.
Nutanix's diluted loss per share of $0.50 in the quarter was an improvement from a loss of $0.60 in the year-ago quarter, but it was far worse than the loss of $0.22 that Wall Street was expecting.
Missing analysts' bottom-line estimates can usually cause a company's share price to slide, but adding to investor pessimism today was the fact that management issued lower-than-expected guidance as well.
Nutanix's leadership said that full-year revenue will be in the range of $1.53 billion to $1.55 billion, which was below analysts' consensus estimate of $1.63 billion. Additionally, management's fourth-quarter sales guidance of between $340 million and $360 million was far below analysts' average estimate of $439.4 million.
Now what
Nutanix CEO Rajiv Ramaswami said in a press release, "Increased supply chain delays with our hardware partners account for the significant majority of the impact to our outlook, and higher-than-expected sales rep attrition in the third quarter was also a factor."
Ramaswami added that those challenges don't reflect any change in demand for its hybrid multicloud platform and that management is "focused on mitigating the impact" of these problems.
Unfortunately for the company and its investors, Nutanix's poor third-quarter results and weak outlook comes at the same time that investors are increasingly skeptical of growth stocks.
