Bert on NTNX

A detailed breakdown of NTNX, their latest earnings and a look at the valuation.…


-Nutanix announced the results of its fiscal Q1 last week.
-The results were substantially above prior expectations, and further above those expectations considering the elimination of some hardware sales.
-The company’s EPS over-attainment was partially driven by the inability of the company to hire to its plan - this might continue for a quarter or two.
-The company formally announced its pivot to an almost pure software model with an impact on gross margins.
-The company’s EV/S ratio of less than 5X is far below the valuation of other infrastructure software vendors such as Splunk, which have slower growth.

Bert has been long NTNX and still believes it to be a good investment despite the recent runup in share price.

As mentioned, I own Nutanix shares and have owned them for some little while at this point. I expect to continue to hold them for some time to come. The story, as I see it, is just in its early innings. There are simply just not that many investments which offer an apples to apples growth rate of greater than 50% and gross margins of 80% or more. The category that Nutanix leads is one of the stronger growth stories in IT and that is not likely to change in the foreseeable future. Nutanix is likely to maintain its leadership role given its visionary CEO and a new Chief Revenue Officer with experience in sales execution. I’m sure there will be speed bumps at some point - all companies have those - but this is one of the more substantive high-growth investments to be seen. I think it will continue to generate positive alpha.