September 24, 2022

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For Tech Lovers

What’s in the Offing for Nutanix (NTNX) This Earnings Season?

4 min read

Nutanix NTNX is slated to release fourth-quarter fiscal 2021 results on Sep 1.

The Zacks Consensus Estimate for fiscal fourth-quarter revenues stands at $363.5 million, indicating an improvement of 10.9{888a2f61c345d2e855d0f46d172f155075abed3efdb13b6aef551f16df00e7f6} from the year-ago quarter.

The Zacks Consensus Estimate for the bottom line is pegged at a loss of 43 cents per share, significantly wider than the year-ago quarter’s loss of 39 cents per share.

For the quarter under review, Nutanix anticipates ACV billings between $170 million and $175 million. Based on this, quarterly revenues are likely to witness a double-digit year-over-year growth. It expects non-GAAP gross margin to be 81.5-82{888a2f61c345d2e855d0f46d172f155075abed3efdb13b6aef551f16df00e7f6}. Non-GAAP operating expenses are expected in the range of $380 million to $385 million.

The company’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 24.7{888a2f61c345d2e855d0f46d172f155075abed3efdb13b6aef551f16df00e7f6}.

Nutanix Inc. Price and EPS Surprise

Nutanix Inc. price-eps-surprise | Nutanix Inc. Quote

Factors to Note

Nutanix’s fourth-quarter results are likely to reflect benefits from increased demand for its hyper-converged solutions and automation services. The ongoing shift to cloud solutions owing to the pandemic-induced remote-working wave is likely to have acted as a key catalyst.

Rise in the work-from-home trend, driven by the social-distancing norms related to the coronavirus pandemic, has been spurring demand for virtual desktop infrastructure and Daas solutions. This is likely to have favored the to-be-reported quarter’s performance.

Besides, Nutanix’s collaboration with Lenovo is a positive. The company has been benefiting from Lenovo’s TruScale, an as-a-service solution for hosted desktops that provides IT companies with remote working solutions, since April. Expansion in the company’s customer base as a consequence of this strategic partnership is likely to have contributed to the company’s fourth-quarter performance.

Nutanix continues to witness strong adoption of its products. This trend is likely to have aided its quarterly performance. An increasing AHV (Acropolis Hypervisor Virtualization) adoption rate might get reflected in the to-be-reported quarter’s top line.

The company has been managing expenses with several cost-reduction methods. This may have contributed to margins.

Nutanix’s continued focus on enhancing its go-to-market productivity levels through efficient digital marketing spending, optimizing headcounts and leveraging its channel partners might have positively impacted the to-be-reported quarter’s performance. The company has decreased its global workforce by 2.5{888a2f61c345d2e855d0f46d172f155075abed3efdb13b6aef551f16df00e7f6}, particularly from the sales and marketing department. The move is anticipated to yield approximately $50 million in annual savings.

The ongoing transition to a subscription-based business model might have weighed on the fourth-quarter top-line performance.

What Our Model Unveils

Our proven model does not conclusively predict an earnings beat for Nutanix this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.

Nutanix currently has Zacks Rank #3 and an Earnings ESP of 0.00{888a2f61c345d2e855d0f46d172f155075abed3efdb13b6aef551f16df00e7f6}.

Stocks With Favorable Combinations

Here are some companies, which per our model have the right combination of elements to post an earnings beat in their upcoming releases:

Lululemon Athletica LULU has an Earnings ESP of +3.06{888a2f61c345d2e855d0f46d172f155075abed3efdb13b6aef551f16df00e7f6} and a Zacks Rank #2 currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

RH RH has an Earnings ESP of +2.43{888a2f61c345d2e855d0f46d172f155075abed3efdb13b6aef551f16df00e7f6} and a Zacks Rank #2 currently.

Torrid Holdings CURV has an Earnings ESP of +6.12{888a2f61c345d2e855d0f46d172f155075abed3efdb13b6aef551f16df00e7f6} and a Zacks Rank #3 presently.

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