Nutanix Q2 Results Impressive, But Why Did Stock Prices Slide?

Nutanix stock

Monday marked the release of Nutanix’s (NTNX:NSD) preliminary Q2 results, which revealed excellent year-over-year growth in annual contract value billings and revenue. Despite the excellent results, the stock price plummeted by around 5.5% in extended trade.

The company’s quarterly annual contract value (ACV) billings increased 23% year-over-year to $267.6 million. In addition, revenue climbed by 18% year-over-year to $486,500,000, exceeding analysts’ estimates of $465,000,000. The substantial revenue boost was attributable to a 20% increase in subscription revenue. During the quarter, Nutanix’s free cash flow increased to $63 million from $17.2 million in the prior year’s quarter.

But, the delay in completing its 10Q report cast a shadow over Nutanix’s Q2 results. For several years, the corporation utilized third-party evaluation software for interoperability testing, validation, and customer proofs of concept. Nutanix is actively evaluating the financial implications of this matter and anticipates incurring higher expenses as a result of the software’s expanded use. Hence, the corporation cannot file its quarterly report until the audit committee has considered the situation.

Nutanix anticipates ACV billings for the third quarter to range between $220 million and $225 million, with revenue between $430 million and $440 million. The company anticipates ACV billings between $905 million and $915 million and revenue between $1.80 billion and $1.81 billion for the fiscal year 2023.

Notwithstanding the delay in submitting the 10Q report, Nutanix’s outstanding second-quarter earnings and optimistic forecast indicate that the firm is well-positioned to support a solid demand environment in future quarters. In addition, the company’s robust cash flow position is a positive sign for investors.

Today, Wall Street has a cautiously positive outlook on Nutanix stock, with a consensus rating of Buy. The average price projection for Nutanix stock shares is $30.19, indicating a possible upside of 11.2% from present levels.

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