Revenue 289.4M 41% yoy
Billings 351.2M 50% yoy
Gross margin 68.4%, up from 61.2%
net loss per share $.21 down from $.32
Deferred revenue $539.9M up 62%
67% growth in software/support billings
55% growth in software/support revenue
Guidance for 4Q2018
295-300M revenue
gross margin 73-74%
OPEX 250-260M
$.20-$.22 loss per share
Revenue 289.4M 41% yoy
Billings 351.2M 50% yoy
Gross margin 68.4%, up from 61.2%
net loss per share $.21 down from $.32
Deferred revenue $539.9M up 62%
67% growth in software/support billings
55% growth in software/support revenue
Guidance for 4Q2018
295-300M revenue
gross margin 73-74%
OPEX 250-260M
$.20-$.22 loss per share
On it’s face, this report looks outstanding. Appears maybe the EPS guidance is what is causing the minor dip in the afterhours, but this looks quite good. The gross margins are accelerating. Is that due to the shift to software (not selling the hardware as a pass through any longer…)?
Regards,
A.J.
The gross margins are accelerating. Is that due to the shift to software (not selling the hardware as a pass through any longer…)?
The answer to my own question is, “Yes.”
The gross margins are accelerating as a result of eliminating pass through hardware.
A good thing…
The biggest concern I have around Nutanix is the level of dilution. Shares were diluted 17% YoY.
It appears they are expecting a 2% dilution by next quarter, so that may be slowing.
I would guess the market is looking at EPS guidance which the company estimates as flat compared to this quarter. Other than that, the quarter and guidance appear quite solid.
A.J.
causing the minor dip in the afterhours
rather typical this year for stocks reporting good earnings. The loss will be made up within a month or so.
A.J.
I agree, it does look like an outstanding quarter. After I go thru the call, I should have a better “feel” for if there was anything else other than the EPS guidance. Drops after earnings reports like this don’t bother me, in fact might be a nice opportunity to add to, start a position. They are in my top 5, so will most likely hold off until going thru the report before adding more.
Kevin
Kevin,
I’m not worried about the drop either. Only attempting to understand the quarter and the outlook.
Take care,
A.J.
$289 million, up 41% from $206 million in the third quarter of fiscal 2017, reflecting the elimination of approximately $52 million in pass-through hardware revenue in the quarter as the company executes its shift toward increasing software revenue
If people take the trouble to read what this actually says, it means that comparing apples to apples, they would have had $289 million plus $52 million = $341 million the way they were calculating a year ago. And 341 divided by 206 is 1.655. That means that apples to apples they increased revenue 65.5%. That’s really glorious growth!
Best,
Saul
And they just gave the adjusted net loss of $34.6 million, down from $45.7 million, and didn’t calculate the following for us: That was not only a reduction of 23% in dollar loss, but it was a loss of just 12% of reported revenue, down from 22% of reported revenue the year before. I must say it’s a pleasure to read the report.
Saul
Yeh - I might well be topping up Nutanix today as well as Pure.
they would have had $289 million plus $52 million = $341 million the way they were calculating a year ago. And 341 divided by 206 is 1.655. That means that apples to apples they increased revenue 65.5%. That’s really glorious growth!
I find it really hard to believe how a company with a Net Promotor Score of 90 could not be a big winner and grow revenue at a super fast rate…given that they have a lot of the market yet to capture and that the market is growing. NTNX still remains my largest holding and from the lastest results I see no reason to change that.
Chris
Darn, I was only able to add a very small amount to my position in the pre-market at $53.36 average before the price went back up to $55.00. Too bad. But it IS my largest position, after all.
Saul
Darn, I was only able to add a small amount to my position in the pre-market at $53.36 average before the price went back up to $55.00. Too bad. But it IS my largest position, after all.
Saul
Re: Saul "$289 million, up 41% from $206 million in the third quarter of fiscal 2017, reflecting the elimination of approximately $52 million in pass-through hardware revenue in the quarter as the company executes its shift toward increasing software revenue
If people take the trouble to read what this actually says, it means that comparing apples to apples, they would have had $289 million plus $52 million = $341 million the way they were calculating a year ago. And 341 divided by 206 is 1.655. That means that apples to apples they increased revenue 65.5%. That’s really glorious growth!"
They would have had a crazy amount of pass through revenue since they recognized 63 million and eliminated 52 million. If they weren’t transitioning their business that would have been an incredible 115 million dollars or 33% of their total revenue. Quick glance shows that the largest % of revenue passthrough hardware has made up is about 26%. To me this means they must be adding customers like wildfire (they are) at +57% and their customers must be adding nodes like crazy (they are) as 73% of bookings are from existing customers. Truly impressive.
Saul, I went through the same thought process as you but just a little differently. Since they are going to be eliminating the pass through hardware I took that out. That would make q32017 147 million, this quarter 226 million for 54% yoy growth. Like you said, “that’s really glorious growth”
Cash flow from operation of 13 million is nothing to sneeze at and they have only negative 1 million of FCF. Unless their trajectory changes they will be throwing off cash soon!
I’m also excited they have been able to hire effectively. Lets hope they didn’t need to lower their standards to do so. I was worried this would become a bottleneck for their growth after they missed their hiring targets last quarter.
All in all a really great quarter. I bought more too
-e
I finally started a position.
This is one where I almost had had a mental block simply because I had known about the company well before the IPO (thanks to programmatic ads mostly, I think).
I had been at a career fair to recruit for my company back in 2016-ish, I think, and Nutanix was there. Since I knew they were about to have their IPO roadshow, I asked a little about the company. Nothing the couple guys said struck me in any way, so I never dug in deeply enough and started a position previously. This thread and others from the past gave me some impetus, however…and having recently jettisoned Starbucks shares since they don’t fit my investment profile/time horizon, I had some cash ready.
Nutanix is just absolutely killing it. I’m getting the sense that their HCI software platform is one of the most important tools out there for companies in this data world.
I was lucky enough to start with them back in Oct and they are now my number 1 or 2 conviction.
The software and software services grew at 67% yoy. That is their business now. The hardware is whithering away to nothing in short order. Just scroll through the earnings call slides. I mean wow!
https://seekingalpha.com/article/4177051
Then read the call. The products that are coming later this year are going to carry them through.
One click to rule them all.
Darth
agreed it looks good.
From my view in the IT reseller/VAR world, they are no longer that same unknown, nor is HCI technology the same unknown. There tends to be a gulf between early adopters and those large enterprises that won’t deploy 1st or even 2nd gen technologies in their production environments.
So I expect that they have some easy growth ahead of them, as long as they continue to have a motivated and well-run sales force.
So that doesn’t really even take into account all the new markets they are going after in cloud mgmt and cloud-related spaces with their latest announcements. Those new solutions will also have an adoption curve, but it should be a bit quicker because they are both more of an established name in the IT circles now and they can also likely get quicker traction on new solutions within the existing install base. (more expanding after landing)
I am not saying they will rule the IT world, but they certainly have that as a goal. In my opinion (which along with $2.50 will buy you a Monster Rehab at a gas station) they are a much better long-term play than Arista and Pure, because they already are in the Enterprise and looking to bleed more into the cloud (vs Arista) and they don’t have painful “forklift” upgrade cycles like typical storage vendors (vs Pure).
It will probably be lumpy, especially if they have a Q when their growth takes an unexpected step back and everyone questions the model, but I don’t see how they don’t double in next 2-3 years. The only thing stopping them is a declining market/recession, which would both compress P/S multiples and cause IT budgets to shrink (like they did in 2009) for all IT vendors.
Dreamer
long NTNX, AYX,IQ, HUYA, BIDU, JD, BZUN
Hi All,
Maybe I overlooked it, but did management give any update as to when they expect hardware to reach zero? Were they hoping by end of year?
Best,
Matt
One thing that I am trying to determine is their customer %'s in terms of total revenue; does anyone know what percent of overall revenue their top 3 clients represent? I’ve heard that Dell/EMC is a large client but can’t determine if that is a big number or small number.
Sox - long NTNX.
I’ve heard that Dell/EMC is a large client but can’t determine if that is a big number or small number.
Nutanix solutions are built on top of prescriptive collections of hardware. Dell & EMC are suppliers of components, as are IBM Power and Lenovo (there are probably others as well).
Dell & EMC are suppliers of components, as are IBM Power and Lenovo (there are probably others as well)
Those are just partnerships, but the reality is they have taken the vendor-agnostic approach of VMware and while HPE or Cisco may not openly tout Nutanix, Nutanix has taken the time to offer approved requirements or ref architecture that they have proven their software runs effectively on.
What was smart was they offered free downloads of the software. So users everywhere tried it out, and these have monitoring/reporting features that allowed Nutanix to basically reap the rewards of of these users testing out how Nutanix software works on various different systems.
https://www.nutanix.com/dlserver/
Once you prove you can run on HPE, Dell, Lenovo, and Cisco UCS, that is pretty much the majority of the servers out there in the Enterprise. The original Nutanix product ran on whitebox servers from Supermicro.
https://www.nutanix.com/products/hardware-platforms/
Dreamer