Why Is Nutanix (NTNX) Up 15.7% Since Last Earnings Report?

Core Insights - Nutanix reported strong Q4 fiscal 2025 results, with non-GAAP earnings of 37 cents per share, exceeding estimates by 15.63% and showing a year-over-year increase of 60.8% [2] - Revenues for the quarter rose 19% year-over-year to $653.3 million, surpassing the Zacks Consensus Estimate by 1.63% [2] Financial Performance - Product revenues, accounting for 52% of total revenues, increased by 28% year-over-year to $339.8 million [4] - Support, entitlements, and other services revenues rose 11% to $313.5 million, while subscription revenues climbed 19% to $616 million, representing 94.3% of total revenues [5] - Professional services revenues improved by 8% to $28.9 million, and other non-subscription product revenues surged 238% to $8.4 million [5] - Billings increased by 8% year-over-year to $726.9 million, and annual recurring revenues grew by 17% to $2.22 billion [5] Customer Growth - During the fiscal fourth quarter, Nutanix added 800 new customers, bringing the total client count to 29,290 [6] Operating Metrics - Non-GAAP gross margin expanded by 140 basis points year-over-year to 88.3% [7] - Non-GAAP operating expenses rose by 13% year-over-year to $457.2 million, with non-GAAP operating income increasing by $49.0 million to $119.5 million [8] - Non-GAAP operating margin was reported at 18.3%, exceeding the guided range of 15.5-16.5% and up by 540 basis points compared to the previous year [8] Balance Sheet and Cash Flow - As of July 31, 2025, cash and cash equivalents plus short-term investments totaled $1.99 billion, an increase from $1.88 billion at the end of the previous quarter [9] - Cash generated from operating activities during the fourth quarter was $219.5 million, with free cash flow amounting to $207.8 million [9] Future Outlook - For Q1 fiscal 2026, Nutanix estimates revenues between $670 million and $680 million, with a non-GAAP operating margin expected in the range of 19.5-20.5% [10] - For fiscal 2026, revenues are projected to be between $2.90 billion and $2.94 billion, with free cash flow anticipated in the range of $790 million to $830 million [11] Market Sentiment - Recent estimates for Nutanix have shown a downward trend, indicating a shift in market expectations [12][14] - The company currently holds a Zacks Rank 3 (Hold), suggesting an expectation of in-line returns in the coming months [14]