Billion-Dollar Unicorns: Nutanix Delivers Upbeat Performance, Stock Still Down

| About: Nutanix (NTNX)

Summary

Nutanix's first quarter revenues grew 90% to $166.8 million driven by a 87% increase in billings to $239.8 million. Loss for the quarter came in at $47.8 million or $0.37 per share.

Loss for the quarter came in at $47.8 million or $0.37 per share.

Wall Street was looking for revenues of $152 million and a loss of $0.44 per share.

Recently listed Nutanix (NASDAQ:NTNX) announced its first quarterly results after it went public in October this year. The results surpassed market expectations, but did little to improve the stock's performance.

Nutanix's Financials

Nutanix's first quarter revenues grew 90% to $166.8 million driven by a 87% increase in billings to $239.8 million. Loss for the quarter came in at $47.8 million or $0.37 per share. The market was looking for revenues of $152 million and a loss of $0.44 per share.

By segment, product revenues grew 84% over the year to $129.66 million and support and other services revenues grew 114% to $37.15 million. During the quarter, Nutanix added more than 700 customers to end with nearly 4,500 customers.

Nutanix expects revenues of $175-$180 million for the current quarter with a loss of $0.35-$0.36 per share. The Street had forecast revenues of $168 million and a loss of $0.37 per share.

Nutanix's Acquisitions

During the quarter, Nutanix completed two acquisitions. It had announced the acquisition of storage acceleration and analytics specialist PernixData in August this year. PernixData specializes in scale-out data acceleration and analytics and is known for its software that helps customers virtualize applications without compromising on performance and visibility.

Earlier last quarter, Nutanix also acquired DevOps automation services provider Calm.io. Nutanix plans to leverage the Calm.io acquisition to build an application first approach toward managing IT by adding cloud automation and more management tools. The acquisition will help Nutanix move closer to being able to deliver application and service orchestration, runtime lifecycle management and policy-based governance across all application environments. Terms of the acquisitions are not known.

According to IDC, the hyperconverged infrastructure market is estimated to grow from $981.91 million market in 2015 to more than $4.7 billion by 2019. But despite impressive market growth rate projections and an upbeat performance, investors aren't too optimistic about Nutanix as bigger players like Cisco (NASDAQ:CSCO) and Hewlett Packard Enterprise (NYSE:HPE) are entering the hyper-converged cloud infrastructure market. Earlier this year, both these players had launched their versions of the hyperconverged offerings, which analysts believe will help commoditize the space.

Nutanix isn't very worried. According to Nutanix, Cisco's hyper-converged solution essentially competes with VMware's (NYSE:VMW) products and is dependent on VMware to function properly. Cisco does not necessarily offer its own virtualization experience. To provide a superior service, Nutanix is working more closely with Amazon (NASDAQ:AMZN) and is designing the operating system to span from an enterprise's facilities to public cloud installations running on AWS.

In August this year, Cisco also announced plans that ousted Nutanix from its solutions partner program. Analysts believe that Cisco's move was fueled by its failed attempts to acquire Nutanix earlier last year.

The stock had listed in October this year at $16 and had soon soared to a high of $46.78. It is currently trading at $25.28 with a market capitalization of $3.6 billion. It had fallen to a low of $23.11 in November.

About this article:

Expand
Tagged: , , , Information & Delivery Services
Want to share your opinion on this article? Add a comment.
Disagree with this article? .
To report a factual error in this article, click here