Cloud Stocks: Nutanix Expands Government Vertical Offerings

According to an IDC report, the converged systems market grew a modest 0.2% over the year in the fourth quarter last year. The industry only grew 0.6% during the year. But within the market, the hyperconverged system sales grew 7.4% over the year. Dell remains the leader in the global hyperconverged systems market with a 33% market share. HPE is a distant second with 14% share, followed by Nutanix that recorded a 10% market share in the fourth quarter of the year. Recently, Nutanix (Nasdaq: NTNX), reported its third quarter results that continued to surpass market expectations.

Nutanix’s Financials

For the third quarter of the year, revenues grew 8% to $344.5 million, ahead of the market’s forecast of $336.6 million. ACV billings grew 18% over the year to $159.9 million. Net loss came in at $123.6 million, compared with a loss of $240.7 million reported a year ago.

By segment, Nutanix’s Product revenues fell 4.8% to $172.3 million while revenues from support, entitlements and other services grew 25.2% to $172.2 million.

For the current quarter, Nutanix forecast ACV billings of $170-$175 million with non GAAP operating expenses of $380-$385 million. Nutanix is looking at improving its profitability. It has increased its go-to-market productivity, by adding more efficient digital marketing spend, increasing the leverage of its channel partners and optimizing its headcount in geographies based on market opportunity. Recently it announced its decision to decrease its global headcount by 2.5% from within the sales and marketing functions.

Nutanix’s Cloud Expansion

Recently, Nutanix announced the extension of the Nutanix cloud platform to AWS GovCloud. The service will provide a unified cloud platform throughout Nutanix on-premise solutions and bare metal Amazon Elastic Compute Cloud instances that run on the AWS GovCloud region. The extension will allow Nutanix to better serve its U.S. public sector customers that need the security posture that is offered by AWS GovCloud. It will also enable Nutanix to provide its customers with the ability to use the same software stack across private and public clouds, giving them the flexibility to choose the appropriate cloud. Nutanix Clusters on AWS GovCloud and Flow Security Central were also added to the Nutanix Government Cloud Services Fedramp portfolio.

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Disclosure: All investors should make their own assessments based on their own research, informed interpretations and risk appetite. This article expresses my own opinions based on my own ...

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