Why Nutanix's Stocks Crashed Today – Motley's Fool

What happened

Cloud software provider actions Nutanix (NASDAQ: NTNX) fell on Friday after a second-quarter fiscal report that exceeded expectations but included disappointing forecasts. At 11:15 am EST, the stock was down about 33.6%.

So what

Nutanix reported a business turnover of 335.4 million dollars in the second quarter, up 17% over the previous year and about 4.2 million dollars above from the average estimate of analysts. Software and support revenue reached $ 297.4 million, an increase of 42% over the same period last year. Revenues from subscriptions totaled $ 157 million, up 112% from the previous year. Fifty-seven percent of the billings during the quarter came from subscriptions.

Non-GAAP earnings per share resulted in a loss of $ 0.23, compared with a loss of $ 0.14 per share for the prior year period and $ 0.02 in the prior year. better than analysts' forecasts. Free cash flow was a loss of $ 4.1 million, down from a $ 32.4 million gain in the second quarter of last year.

Nutanix's results exceeded expectations, but not expectations. The company expects to generate between $ 290 and $ 300 million of revenue in the third quarter, as well as a non-GAAP net loss of $ 0.60 per share. This outlook was well below analyst expectations of $ 347.6 million and a non-GAAP net loss of $ 0.28 per share.

Now what

Nutanix's mediocre advice has led Oppenheimer analysts to downgrade the performance overperformance rating. Oppenheimer thinks that the lack of investment in the company's sales and marketing is starting to pose a problem, and that long-term goals could ultimately be reduced.

Nutanix's forecast for the third quarter imply annual revenue growth of only 2% at mid-term, a dramatic slowdown for a growing company. Given this tepid orientation, strong sales should not surprise anyone.