Why Is Nutanix (NTNX) Down 1.8% Since Last Earnings Report?
It has been about a month since the last earnings report for Nutanix (NTNX). Shares have lost about 1.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Nutanix due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its latest earnings report in order to get a better handle on the important drivers.
Nutanix Q4 Earnings and Revenues Beat, ARR Growth Accelerates
Nutanix reported fourth-quarter fiscal 2026 non-GAAP earnings of 60 cents per share, beating the Zacks Consensus Estimate by 25% and rising from 37 cents in the year-ago quarter.
Nutanix's revenues climbed 16% year over year to $757.1 million, beating the company's guided range of $725-$745 million and representing a significant acceleration from the company's 10% growth rate in the preceding quarters. The figure beat the consensus mark by 2.6%.
The company noted strength across the business, citing broad-based demand for its hybrid multicloud platform through strong uptake of external storage offerings and Nutanix Cloud Clusters, or NC2, which helped customers overcome hardware availability constraints. Management indicated that partnerships with NetApp and others were instrumental in signing several large wins in Q4, including several seven-figure deals. The company added over 3,000 customers in fiscal 2026, demonstrating sustained momentum in customer acquisition.
Top-Line Details of NTNX
Product revenues (51.3% of total revenues) increased to $388.4 million, while support, maintenance & other services revenues (48.7% of total revenues) reached $368.7 million.
Subscription revenues climbed to $719.1 million, while professional services and other revenues reached $37.9 million.
Annual recurring revenues climbed 16% year over year to $2.549 billion, representing acceleration from the prior quarter's growth rate.
NTNX's Operating Details
In the fourth quarter, Nutanix's non-GAAP gross margin was 87.7%, down 60 basis points year over year.
Non-GAAP operating expenses increased 2% year over year to $465.6 million.
Non-GAAP operating income was $198 million, up $78.5 million from the year-ago quarter. Non-GAAP operating margin expanded to 26.2%, up 790 basis points compared to the year-ago quarter and well above the company's guidance range of 21-23%. This substantial margin expansion was driven by better-than-expected revenues and operational efficiencies from timing of hiring and strategic investments.
NTNX's Balance Sheet & Cash Flow
As of July 31, 2026, cash and cash equivalents plus short-term investments totaled $2.361 billion.
During the fourth quarter of fiscal 2026, cash generated from operating activities was $315.0 million, and free cash flow was $277.6 million.
For the full fiscal year 2026, free cash flow reached $841 million, representing a 29% free cash flow margin, and the company achieved a Rule of 40 score of 42%, marking its third consecutive year above 40.
Nutanix Offers Q1 and FY27 Outlook
For the first quarter of fiscal 2027, revenues are estimated between $755 million and $765 million.
Non-GAAP operating margin is expected in the band of 26-28%. The company anticipates weighted average shares outstanding (diluted) to be approximately 294 million.
For fiscal 2027, revenues are estimated in the range of $3.180-$3.230 billion. The company expects free cash flow in the range of $850-$950 million.
Non-GAAP operating margin is projected in the 24-25% band.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a upward trend in estimates revision.
The consensus estimate has shifted 29.78% due to these changes.
VGM Scores
Currently, Nutanix has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. However, the stock was allocated a score of D on the value side, putting it in the bottom 40% for value investors.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Interestingly, Nutanix has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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This article originally published on Zacks Investment Research (zacks.com).
