Cloud Stocks: Nutanix Focuses On Government And Media Verticals

According to a recent report by Fortune Business Insights, the global cloud computing market size is expected to grow at 19% CAGR to reach $760.98 billion by 2027. The recent COVID-19 crisis has accelerated some of this transition to the cloud. Enterprise cloud computing companies like Nutanix (Nasdaq: NTNX) are seeing strong revenue growth as well.

Nutanix’s Financials

Third quarter revenues grew 11% to $318.3 million, ahead of the market’s forecast by 1.11%. It continued to report losses and ended the quarter with an adjusted loss of $0.69 per share which was significantly better than the market’s forecast loss of $0.85 per share. A year ago, the company had reported a loss of $0.56 per share.

Product revenues fell 2% over the to $180.8 million due to an 83% decline in hardware revenues. Support, entitlements & other services revenues grew 34% to $137.5 million.

Subscription revenues grew 55% over the year to $261 million. Professional services revenues grew 35% to $11.6 million. Non-Portable Software revenues fell 53% to $41.9 million and hardware revenues fell 83% to $3.8 million.

Among key metrics, billings grew 11% over the year to $383.5 million. Software and Support billings were up 17% to $379.7 million. Total Contract Value (TCV) revenues increased 18% to $314.5 million. Nutanix has been migrating to a subscription-based billing model, and during the quarter, it saw 82% of its revenues come from subscription services.

Given the current crisis, Nutanix withdrew its outlook for the year. It did not provide an outlook for the quarter as well.

Nutanix’s Product Expansion

Nutanix continued to expand its market reach through product enhancement and by widening its partner network. During the quarter, it launched Nutanix FastTrack for VDI, a service focused on helping partners and customers expand their remote workforce capabilities at an accelerated pace. FastTrack for VDI includes pre-sized configurations for a range of user types that can be shipped quickly. It also includes remote services to enable rapid deployment of users, and incentives to enhance partner profitability.

It also expanded its platform to include new features geared for big data and analytics applications. It released Nutanix Objects 2.0 that provides organizations with the ability to manage object data across multiple clusters, thus helping achieve scale. It also obtained a formal Splunk SmartStore certification and its platform is optimized for big data to deliver performance while reducing cost.

It also added several new capabilities to its HCI software and AHV hypervisor that are focused on helping protect business-critical applications. The new capabilities include advanced automation for recovering applications and data, seamless multi-site DR, and a near-zero data loss.

With reference to its expanding partner program, it entered into an alliance with Wipro to announce Digital Database Services that are powered by Nutanix Era. The joint solution from Wipro has been powered by Nutanix, and it empowers customers to consolidate their database workloads onto a shared infrastructure to manage database sprawl. It thus helps provides better efficiency, agility, and cost-effectiveness to customers by simplifying database administration.

Nutanix recently achieved FedRAMP Authorization for Xi Government Cloud that includes its multi-cloud Desktop-as-a-Service offering Xi Frame and a hybrid cost governance tool Xi Beam. The FebRAMP status will allow it to market these products within the government sector, thus helping federal agencies to quickly and securely expand telework capabilities.

Besides the federal sector, Nutanix expanded its offerings for the Media and Entertainment industry by announcing a partnership with Avid to deliver the first HCI Platform. The Nutanix hyper-converged infrastructure software is now certified to run with Avid Media Composer video editing software and the Avid MediaCentral media collaboration platform, making it the first HCI-powered private cloud solution to be certified for Avid products.

Its stock is currently trading at $22.38 with a market capitalization of $4.2 billion. It was trading at a 52-week high of $37.86 in February this year. It fell to a 52-week low of $11.31 in March this year amid the turmoil.