Nutanix (NTNX) announced impressive fourth-quarter fiscal 2024 results, exceeding both revenue and earnings expectations. The company reported non-GAAP earnings of 27 cents per share, surpassing the Zacks Consensus Estimate by 35% and marking a 12.5% year-over-year increase. Nutanix’s revenues surged 11% year-over-year to $548 million, outperforming the Zacks Consensus Estimate by 2.02% and exceeding the guided range of $530-$540 million. This robust top-line growth was driven primarily by the expansion of NTNX’s core hyper-converged infrastructure software and the widespread adoption of its new capabilities.
Nutanix continues to experience strong adoption of its hybrid multi-cloud solutions across Fortune 100 and Global 2000 companies. The company reported an average contract term length of 3.1 years in the fiscal fourth quarter, a slight increase from the previous quarter. Notably, Nutanix’s Annual Contract Value (ACV) billings jumped 21% to $338 million during the quarter, surpassing the guided range of $295-$305 million. This impressive growth reflects the confidence businesses have in Nutanix’s solutions and their commitment to long-term partnerships.
Breaking down the revenue composition, product revenues (48.5% of total revenues) increased 10.6% year-over-year to $265.9 million. Support, entitlements & other services revenues (51.5% of total revenues) rose 11.2% to $282.05 million. Subscription revenues, representing 94.7% of total revenues, climbed 12.9% from the previous year to $518.7 million. Professional services revenues (4.9% of total revenues) improved 11.4% to $26.7 million, while other non-subscription product revenues (0.5% of total revenues) decreased 76.8% to $2.49 million.
Nutanix’s strong performance is also evident in its billings, which were up 23.5% year-over-year to $672.86 million. The company’s Annual Recurring Revenues (ARR) climbed 22% to $1.91 billion, demonstrating the increasing reliance of businesses on Nutanix’s subscription-based services. During the fiscal fourth quarter, Nutanix added 670 new customers, bringing the total number of clients to 26,530.
One of Nutanix’s notable wins in the fiscal fourth quarter was a multimillion-dollar ACV deal with a North American-based Fortune 100 financial services company. This company opted to replace its existing solution with Nutanix’s Cloud platform, leveraging the AHV hypervisor and Nutanix cloud manager. This significant win highlights the company’s ability to attract large enterprises seeking modern, cloud-based solutions.
Nutanix’s operating performance was equally strong. Non-GAAP gross margin expanded 110 basis points year-over-year to 86.9%, reflecting the company’s efficient operations and cost management. Non-GAAP operating expenses increased 12% year-over-year to $405.5 million, primarily due to investments in growth initiatives. Non-GAAP operating income came in at $70.5 million, compared to $63.3 million in the year-ago quarter.
As of July 31, 2024, Nutanix’s cash and cash equivalents plus short-term investments stood at $994.3 million, down from $1.44 billion at the end of the third quarter of fiscal 2024. During the fourth quarter of fiscal 2024, cash generated through operating activities amounted to $244.7 million, with free cash flow reaching $224.3 million.
Looking ahead, Nutanix expects revenue for the first quarter of fiscal 2025 to be between $565 million and $575 million. The company projects a non-GAAP operating margin in the range of 14.5-15.5%. For fiscal 2025, Nutanix anticipates revenue in the range of $2.435-$2.465 billion, indicating year-over-year growth of 14% at the midpoint. The company expects free cash flow in the range of $540-$600 million, suggesting a free cash flow margin of 23% at the midpoint. Non-GAAP operating margin for the fiscal year is expected in the band of 15.5-17%.
