Nutanix and Pure Storage beat expectations on strong infrastructure demand
Data center infrastructure firms Nutanix Inc. and Pure Storage Inc. reported strong earnings results today, benefiting from rising demand fueled by ongoing digital transformation efforts and post-pandemic economic growth.
Nutanix delivered both earnings and revenue that topped Wall Street’s expectations and followed up with strong guidance for the current quarter and full year.
The company reported a fiscal first-quarter loss of $419.9 million, or 22 cents per share, on revenue of $378.5 million, up 21% from a year ago. The performance was better than expected, with analysts looking at a bigger loss of 34 cents per share on sales of $367 million.
Nutanix’s stock gained more than 6% in extended trading following the report.
“Our first quarter was a good start to our fiscal year, demonstrating strong year-over-year top and bottom-line improvement,” said Nutanix Chief Executive Rajiv Ramaswami (pictured).
Nutanix sells a software-defined hyperconverged infrastructure or HCI stack that integrates compute, storage and networking components into a single appliance or cloud service. The company has been spent the last couple of years transitioning to a subscription-based business model that provides a more consistent revenue stream than product sales do.
The transition is working, as Nutanix reported that its annual contract value billings jumped by 33%, to $183.3 million, in the quarter. That was better than expected too, with analysts modeling ACV billings of $175 million.
ACV is a metric that shows how much the typical ongoing customer contract is worth by averaging and normalizing its value over one year. It’s closely watched by investors, because with subscription-based businesses, the focus is more on maximizing what customers spend over a year rather than just how many contracts are signed.
The company also reported annual recurring revenue of $952.6 million, up from just $569.4 million one year ago.
Ramaswami told SiliconANGLE in an interview that the migration to the cloud is now all but complete.
“We’ve shifted the business to subscription,” he said. “Now, all those initial subscriptions we sold are coming up for renewal. The renewal adds a lot of business for us. It also doesn’t cost us much to get additional business.”
Ramaswami said Nutanix was enjoying high demand for its products because enterprises are emerging from the COVID-19 pandemic and looking to accelerate their digital transformation efforts. He said Nutanix allows them to flex into the public cloud as needed, using the same management tools they use on-premises or in private clouds.
“Running in the public cloud in a steady state can be expensive,” he said. “People are going to be in this hybrid world” for the foreseeable future.
Looking to the current quarter, Nutanix said it sees ACV billings in a range of $195 million to $200 million, versus the $190.1 million analyst consensus. As for revenue, Nutanix sees sales of $400 million to $410 million, versus the consensus of $400 million.
Pure Storage powers ahead
As for Pure Storage, it actually did even better than Nutanix. It reported a profit before certain costs such as stock compensation of $69.5 million, generating earnings of 22 cents per share. Quarterly sales came to $562.7 million, up 37% from a year ago.
The results were well ahead of expectations. Wall Street had been looking for earnings of just 12 cents per share on revenue of $530.83 million. Not surprisingly, investors were thrilled, with Pure Storage’s stock gaining 16% in after-hours trading.
Pure Storage Chairman and CEO Charles Giancarlo said his company “continues to set the pace” for the storage industry.
The key metrics for Pure Storage include its subscription annual recurring revenue and its subscription services revenue, and the company had some strong numbers to show. Subscription ARR jumped by 30% to $788.3 million, while subscription services rose 38%, to $187.8 million.
Pure Storage also said its remaining performance obligations now total $1.2 billion, up 27% from a year ago.
The company had a busy quarter on the product front, announcing the launch of its new Pure Fusion and Portworx Data Services, which are meant to advance its vision of a future where data, storage and management services are delivered as code. It also announced a key update to its PX-Backup platform that provides scalable storage for application containers.
With reporting from Robert Hof
Photo: SiliconANGLE
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