Gary Alexander article on Nutanix…

He points out that billings is key, and mentions that the hardware wind-down can mask some of the underlying growth in the recurring/software side.

Also mentions that the market is probably overreacting a bit to this short-term 1 quarter miss on the bottom line, which will essentially fade into oblivion and seem like a really silly reaction another 4-6 quarters from now (my words in that last phrasing).

Conclusion from the article:
The bottom line on Nutanix shares: the company is still firing on all cylinders as it achieves above-expected revenue and billings growth, despite the elimination of hardware revenues and a largely increased focus on software-only deals. Shares may see some turbulence over the next month as the company enters into a period with few catalysts for the stock, but any pullbacks in the shares should be bought.

finally long NTNX as of today, also added some short-term $57.50 call options, which may have been premature with the 3-day rule…so contemplating throwing in an order to buy some more shares at $50 in the event the price falls any more while I am traveling next week


rule of 40

we would continuously trade-off higher or lower revenue growth with corresponding lower or higher free cash flow and profitability, while always targeting a rule of 40 score of 40% or greater. Based on a rolling four quarter basis and using our software and support revenue as a proxy for total revenue, our Q4 guidance would suggest a Rule of 40 score approaching 50%, which we believe puts us in the top 10% to 15% of all public software companies.

The acceleration in software and support growth to 67% in the quarter, is that entirely driven by faster node growth or is there also a dynamic of higher attach software that’s playing into that trend?
Dheeraj Pandey
Yes, I think … I guess, it’s a combination of quite a few things. Large deals being one. the fact that we can decouple software from hardware and not worry so much about hardware pricing.

I will have to say that even after a quick read of the CC I still lack any deep understanding of NTNX.

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