Nutanix Jumps 9% On Lower-Than-Feared 1Q Loss

Shares of Nutanix jumped 8.9% in Monday’s extended trading session after the cloud platform provider reported a lower-than-feared 1Q loss. The company’s 1Q adjusted loss of $0.44 per share was smaller than analysts’ expectations of a loss of $0.57 and compared to the year-ago quarter’s loss of $0.71. The improved bottom-line performance reflects a 12% year-over-year decline in adjusted operating expenses.

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Nutanix’s (NTNX) 1Q revenues declined 0.6% to $312.8 million year-over-year but beat the Street’s estimates of $299.2 million. The company noted that its top-line “was negatively impacted by a year-over-year decline in average contract term associated with the ongoing transition to a subscription-based business model.”

“Our ACV (Annual Contract Value)-first strategy and solid go-to-market execution drove outperformance across all key financial metrics including ACV billings growth of 10 percent year-over-year and run-rate ACV growth of 29 percent year-over-year,” said Duston Williams, CFO of Nutanix.

For 2Q, Nutanix projects ACV between $145 million and $148 million. The company estimates non-GAAP gross margin of approximately 81.5% in the quarter. It forecasts adjusted operating expenses to be in the range of $360 million -$370 million. (See NTNX stock analysis on TipRanks)

Cleveland Research analyst Benjamin Bollin said in a note to investors on Nov. 18 that his channel checks point to an improved business activity for Nutanix as more formerly paused projects are returning. As a result, Bollin was expecting NTNX to outperform 1Q top and bottom lines. Nonetheless, the analyst maintained a Hold rating and reiterated the price target of $29 (1.9% upside potential), as he views the stock as being fairly valued.

The rest of the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 4 Buys, 6 Holds and 1 Sell. The average price target stands at $27.44 and implies downside potential of about 3.6% to current levels. Shares are down by about 8.9% year-to-date.