Nutanix Inc. (NASDAQ: NTNX) shares soared to a new 52-week high driven by a strong fiscal Q1 2024 earnings beat and raised guidance. The Company provides hyperconverged IT infrastructure services as a member of the Computer and Technology sector. Nutanix offers its software-defined infrastructure (SDI) platform that combines the management, deployment and operations of hybrid and multi-cloud environments.

Nutanix has partnered with Nvidia Co. (NASDAQ: NVDA) to enable companies to build better scalable artificial intelligence (AI) solutions.

Nutanix Cloud

The Nutanix Cloud unified platform integrates software-defined storage, virtualized networking, and virtualized compute services, eliminating the need for silos of applications and data. Data can be hyperconverged from on-premise to the cloud or multi-cloud environments. This ensures flexibility, agility, access and availability with disaster recovery capabilities. Digital transformation and IT infrastructure modernization are secular tailwinds with a long runway for the Company despite the uncertain macroeconomic backdrop.

Flexibility and scalability of hybrid multi-cloud

By combining on-premise infrastructure and public and private cloud services, organizations can be more agile and flexible with workloads and scaling demands. A private cloud can be used to store sensitive data, while a public cloud is used for processing and analyzing big data. The public cloud can be used for resource-intensive workloads, while the private cloud is used for confidential workloads.

Nutanix's software is used to scale up and down to optimize IT infrastructure and minimize the need for expensive hardware upgrades. Nutanix is used by 24,930 customers, including The Home Depot Inc. (NYSE: HD), Vodafone Group Public Ltd Co. (NASDAQ: VOD), 7-11, and Société Générale.

Beat and Raise

On Nov. 29, 2023, Nutanix released its fiscal first-quarter 2024 results for the quarter ending October 2023. The Company reported an earnings-per-share (EPS) profit of 29 cents, excluding non-recurring items, beating consensus analyst estimates of 18 cents by 11 cents. Revenues rose 18% year-over-year (YoY) to $511.1 million, beating analyst estimates of $501.26  million. Annual contract value (ACV) billings rose 24% to 287.2 million.

Annual recurring revenue (ARR) increased by 30% to $1.66 billion. The average contract duration is 2.9 years. GAAP gross margins improved 300 bps to 84%, and non-GAAP gross margins improved 250 bps to 85.9%. Non-GAAP operating income was $79.5 million.

The Company strengthened its cyber resilience with accelerated ransomware detection and recovery in its cloud platform. Micron Technology Inc. (NYSE: MU) selected Nutanix to build a cloud platform for its manufacturing facilities globally.

Raising forecasts

Nutanix raised guidance for fiscal Q2 2024 revenues to come in between $545 million to $555 million versus $534.12, according to consensus analyst estimates, with ACV billings of $295 million to $305 million. Non-GAAP gross margins will be between 85% and 86%, and non-GAAP operating margins will be between 14% and 16%.

Fiscal full-year 2024 revenues are expected to be between $2.095 billion and $2.125 billion. Full-year 2024 ACV billings are expected to be between $1.08 billion and $1.10 billion, with non-GAAP gross margins of around 85%. Non-GAAP operating margin is expected to be between 11.5% and 12.5%, and free cash flow is expected to be between $340 million and $360 million.   

CEO Insights

Nutanix CEO Rajiv Ramaswami stated that the uncertain macro backdrop was largely unchained from its fiscal fourth quarter. However, steady demand was driven by the prioritization of infrastructure modernization and digital transformation. The Company had several federal agency contract wins across three expansion vectors, including capacity for net new workloads, existing workloads and adoption of additional products within its portfolio.

Ramaswami commented,  “We delivered a solid first quarter financial performance against an uncertain macro backdrop reflecting the value our customers see in the Nutanix Cloud Platform and the strength of our subscription business model,”

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Daily ascending price channel

The daily candlestick chart for NTNX illustrates an ascending parallel price channel towards new 52-week highs. The lower ascending trendline started to form at the $34.40 swing low, accelerated by the daily market structure low (MSL) trigger at $35.29. The ascending trendline continued to grind higher as NTNX formed higher lows on pullbacks.

Bounces were accelerated by the rising relative strength index (RSI), which surged through the overbought 70-band upon its earnings release and spiked to highs. The rising daily 200-period moving average support is at $30.56, and Pullback support levels are at $42.22, $39.63, $37.28 and $35.29 daily MSL trigger.