Nutanix Q1 Results Offset By Slowing Annual Recurring Revenue, Federal Vertical Weakness: Analysts

Core Insights - Nutanix, Inc. reported an 18% growth in annual recurring revenue (ARR) and a 16% increase in overall revenue [1] - Analysts have a positive outlook, with Needham's Mike Cikos reiterating a Buy rating and raising the price target to $90 from $80, while Northland Capital Markets' Nehal Chokshi raised the price forecast to $77 from $74 [1][2] - The company added 630 customers in the quarter, marking a 66% year-over-year increase, indicating a re-acceleration in customer acquisition [3] Financial Performance - Fiscal 2025 revenue estimates were raised from $1.36 billion to $1.42 billion by Needham [1] - Despite strong revenue results, there was a slowdown in ARR growth to 18% year-over-year, down from 22% in the previous quarter [3] - The incremental ARR of $58 million showed a 43% year-over-year decline, primarily due to underperformance in the federal vertical linked to delayed government spending [4] Market Position and Strategy - Nutanix's early success with new go-to-market partnerships and share gains from M&A disruption contributed to strong results [1] - The company is focusing on small and medium-sized businesses (SMBs) to drive growth [3] - Operating margin expansion provides flexibility for continued investment in sales, marketing, and R&D [2]