Nutanix stock jumps 16% on strong results; RBC flags 'impressive' execution

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(Updated - May 25, 2023 6:30 AM EDT)

Nutanix (NASDAQ: NTNX) shares soared more than 15% pre-open Thursday after the company reported Q3 earnings.

Earnings per share came in at $0.04, just ahead of the consensus estimate of $0.03. Revenue grew 11% year-over-year to $448.58 million, beating the consensus estimate of $433.12M.

ACV billings were up 17% year-over-year to $240M. Annual Recurring Revenue (ARR) was $1.47 billion, representing 32% year-over-year growth.

“Our business performed well in the third quarter against an uncertain macro backdrop, as the value proposition of our cloud platform continued to resonate with customers,” said CEO Rajiv Ramaswami.

For Q4/23, the company expects revenue in the range of $470-$480M, above the consensus of $452.24M. ACV billings are seen at $240–$250M.

For the full year, the company expects revenue in the range of $1.84-$1.85B, better than the consensus of $1.8B. ACV billings are seen at $915–$925M.

RBC analyst Matthew Hedberg raised the price target on NTNX stock to $38 per share as "execution remains impressive."

"Results were highlighted by outperformance in ACV billings/revenue and strong FCF despite a challenging, though consistent macro. FY/23 guidance again moved higher as the fundamentals remain intact. We like the completion of the investigation into third-party software usage which should remove an overhang from the stock," Hedberg wrote.

BofA analyst Wamsi Mohan also raised the target on Nutanix shares, going to $34 per share as ACV billings "continue to benefit from strong renewals."

"We reiterate our Neutral rating given the tougher macro backdrop and broader weakening spending environment offset by solid execution that is delivering on efficiently converting a strong renewal pipeline."

By Davit Kirakosyan and Senad Karaahmetovic

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