Nutanix (NTNX) Q4 Loss Narrower Than Estimated, Revenues Beat

Nutanix NTNX reported a non-GAAP fourth-quarter fiscal 2022 loss of 17 cents per share, significantly narrower than the Zacks Consensus Estimate of a loss of 39 cents. The figure was narrower than the year-ago quarter’s loss of 26 cents per share.

Nutanix reported revenues of $385.5 million, beating the Zacks Consensus Estimate of $353.9 million. The top line dropped 1% from the year-ago quarter’s figure of $390.7 million. NTNX noted that the average contract term length declined to 3.2 years from 3.4 years in the year-ago quarter, primarily due to higher federal businesses that usually have shorter contract term lengths.

During the fiscal fourth quarter, Nutanix’s Annual Contract Value (ACV) billings jumped 10% to $193.2 million.

Nutanix Price, Consensus and EPS Surprise Nutanix Price, Consensus and EPS Surprise

Nutanix price-consensus-eps-surprise-chart | Nutanix Quote

Top-Line Details

Product revenues (43.8% of revenues) decreased 16.8% year over year to $168.8 million. Support, entitlements & other services revenues (56.2 % of revenues) grew 15.5% to $216.8 million.

The top line was primarily driven by growth in NTNX’s core hyper-converged infrastructure software and the solid adoption of its new capabilities. Nutanix continues to witness a strong adoption of its hybrid multi-cloud solutions across Fortune 100 and Global 2000 companies.

Subscription revenues (91% of revenues) declined 0.5% from the year-ago quarter’s figure to $350.6 million. However, professional services revenues (6% of revenues) jumped 3.4% to $23.1 million.

Non-Portable Software revenues (3% of revenues) plunged 11.6% year over year to $11.4 million. Hardware revenues (0.1% of revenues) slumped 89.5% to $340 million.

Billings were down 7.3% year over year to $398.1 million. Nutanix’s run-rate ACV grew 17% year over year to $1.8 billion. Annual Recurring Revenues climbed 37% to $1.2 billion.

During the fiscal fourth quarter, Nutanix added 620 customers, taking the total number of clients to 22,600.

Operating Details

During the fiscal fourth quarter, Nutanix’s non-GAAP gross margin contracted 30 basis points year over year to 82.6%.

Non-GAAP operating expenses decreased 4% year over year to $355.8 million.

Balance Sheet & Cash Flow

As of Jul 31, 2022, cash and cash equivalents plus short-term investments were $1.32 billion, up from $1.30 billion at the end of third-quarter fiscal 2022.

During the fourth quarter of fiscal 2022, cash utilized through operating activities was $38 million and free cash flow was $23.2 million. During fiscal 2022, Nutanix generated $67.5 million of cash from operating activities and a free cash flow of $18.5 million.

Full-Year Highlights  

Nutanix reported revenues of $1.58 billion in full fiscal 2022, up 13% year over year. ACV billings stood at $756.3 million, reflecting a 27% year-over-year rise.

Non-GAAP gross margin expanded 70 basis points to 83%. Non-GAAP operating expenses were $1.40 billion compared with $1.43 billion reported a year ago.

Non-GAAP loss per share was 46 cents compared with a loss of $1.48 per share reported a year ago.

The dollar-based net retention rate (including Life of the Device – non-portable software) was 125% at the end of fiscal 2022. However, the company noted that the ongoing transition to a subscription-based business model led to a decline in the average contract term in fiscal 2022.

Outlook

For the first quarter of fiscal 2023, Nutanix expects ACV billings between $210 million and $215 million. Revenues are estimated between $410 million and $415 million.

Non-GAAP gross margin is estimated to be approximately 82%. Non-GAAP operating expenses are expected in the range of $360-$365 million.

For the full fiscal 2023, NTNX expects ACV billings between $895 million and $900 million. Revenues are estimated in the range of $1.77-$1.78 billion.

Non-GAAP gross margin is estimated to be 82% for fiscal 2023. Non-GAAP operating expenses are projected in the range of $1.41 billion to $1.42 billion.

Zacks Rank & Key Picks

Nutanix currently carries a Zacks Rank #3 (Hold). Shares of NTNX have declined 57.2% in the past year.

Some better-ranked stocks from the broader Computer and Technology sector are Clearfield CLFD, Silicon Laboratories SLAB and Taiwan Semiconductor TSM, each flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Clearfield's fourth-quarter fiscal 2022 earnings has been revised 10 cents north to 80 cents per share over the past 30 days. For fiscal 2022, earnings estimates have moved 36 cents north to $3.13 per share in the past 30 days.

Clearfield’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 33.9%. Shares of CLFD have increased 153% in the past year.

The Zacks Consensus Estimate for Silicon Laboratories’ third-quarter 2022 earnings has increased 22.9% to $1.02 per share over the past 30 days. For 2022, earnings estimates have moved 14.2% up to $4.18 per share in the past 30 days.

Silicon Laboratories’ earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 63.6%. Shares of SLAB have decreased 20.6% in the past year.

The Zacks Consensus Estimate for Taiwan Semiconductor's third-quarter 2022 earnings has been revised a penny southward to $1.69 per share over the past 30 days. For 2022, earnings estimates have moved 41 cents north to $6.30 per share in the past 60 days.

TSM's earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 3.9%. Shares of the company have decreased 31% in the past year.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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