Nutanix (NTNX 17.37%) won't be heading into the Thanksgiving holiday on a high note. The hybrid cloud computing specialist's stock took a major hit on Wednesday, cratering by almost 18% after the release of a dispiriting quarterly earnings report.
A mixed start to fiscal 2026
After market close on Tuesday, Nutanix unveiled its fiscal first quarter of 2026 results. The company's revenue grew by 13% year-over-year to $670.6 million, while net income not according to generally accepted accounting principles (GAAP) improved by 18% to hit $120.9 million ($0.41 per share). Annual recurring revenue (ARR), meanwhile, rose 18% to just under $2.3 billion.
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Nutanix's revenue came in lower than the average analyst expectation of $676.9 million. The company's non-GAAP (adjusted) profitability met the consensus estimate.
In its earnings release, Nutanix attributed the improvements to strong client demand; it pointed out that bookings were ahead of its expectations. It also cited expansions with partners Dell Technologies and Microsoft as catalysts for growth.
NASDAQ: NTNX
Key Data Points
Double whiffs on guidance
Nutanix's trailing numbers weren't discouraging, but its guidance left something to be desired. The company is expecting to earn $705 million to $715 million in revenue for its current (second) quarter, which is quite some distance under the analyst consensus of almost $749 million. The adjusted net margin should be 20.5% to 21.5%.
It's similar for the current fiscal year, as management is modeling revenue of $2.82 billion to $2.86 billion, but the collective pundit projection is $2.92 billion. Management believes the adjusted net margin for the 12-month period will be 21% to 22%.
As a maturing tech company, Nutanix is no longer posting the sky-high growth rates it once did, so it's likely this is one source of investor disappointment. Those guidance misses are probably the main factor in the Wednesday sell-off, though, and the market isn't very forgiving of such whiffs these days.
Yet the company is still on a growth path and offers in-demand services, so I think the bears overreacted in their rush to unload the stock.
