What happened
Shares of Nutanix (NTNX 1.26%) were up 12.3% as of 2:20 p.m. ET Friday after the cloud computing and hyperconverged infrastructure (HCI) specialist announced strong fiscal 2023 fourth-quarter results (for the period ended July 31).
Nutanix's quarterly revenue climbed 28% year over year, to $494.2 million, translating to adjusted earnings of $67.5 million, or $0.24 per diluted share. By comparison, most analysts were modeling adjusted earnings of only $0.16 per share on revenue of $475.9 million.
So what
Nutanix CEO Rajiv Ramaswami credited the company's subscription model for driving "consistent execution over the course of the year against an uncertain macro backdrop."
Nutanix's annual contract value (ACV) billings -- a key metric helping analysts measure future growth -- grew an impressive 44% year over year during the quarter, to $278.7 million, while annual recurring revenue (ARR) climbed 30% to $1.56 billion to end the fiscal year. The average contract term for Nutanix's clients was exactly three years, contracting only slightly from 3.2 years at the same point last year.
Nutanix also saw a sharp improvement in its cash generation, with quarterly free cash flow nearly doubling year over year to $45.5 million.
Now what
If that wasn't enough, Nutanix announced its board of directors has authorized the repurchase of up to $350 million of its Class A common stock -- a sum representing around 4.5% of Nutanix's total shares outstanding at today's prices.
Finally, Nutanix initiated full fiscal-year 2024 guidance for revenue in the range of $2.085 billion to $2.115 billion, with even the bottom end well above analysts' consensus expectations for revenue of $2.08 billion.
All things considered, this was as strong a quarter as any Nutanix investor (including myself) could have hoped. Shares of the leading cloud computing stock are responding in kind.
