Nutanix (NASDAQ:NTNX) stock tanked about 5.5% in Monday’s extended trade despite reporting strong preliminary results for the fiscal second quarter. The company designs and develops enterprise cloud platforms.
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The annual contract value (ACV) billings in the quarter rose 23% year-over-year to $267.6 million. Furthermore, the company reported revenues of $486.5 million, which increased 18% from the same quarter last year and surpassed the analysts’ expectations of $465 million. The upside can be attributed to a more than 20% jump in subscription revenue.
It is worth highlighting that free cash flow during the quarter increased significantly to $63 million from $17.2 million in the previous year’s quarter.
Delay in 10Q Filing
The company revealed that third-party evaluation software was used for interoperability testing, validation, and customer proofs of concept over a multi-year period. Thus, Nutanix is assessing the financial impact of this matter and expects to have incurred additional costs due to the additional use of the software.
Consequently, the company is unable to file its quarterly report unless the matter has been reviewed by the audit committee.
Outlook
For the fiscal third quarter, the company expects ACV billings to be in the range of $220 million to $225 million. Further, revenue is anticipated to be between $430 million and $440 million.
For Fiscal 2023, Nutanix guides ACV billings between $905 million and $915 million along with revenue of $1.80 billion to $1.81 billion.
Is Nutanix a Good Investment?
Looking at the top-line metrics, Nutanix seems well-positioned to support a healthy demand environment in the quarters ahead. Also, the company’s strong cash flow position is another encouraging factor.
Overall, the Street has a cautiously optimistic view of Nutanix and has a Moderate Buy consensus rating based on two Buys and one Hold. The average NTNX stock price forecast of $32 suggests 11.2% upside potential from current levels.
