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TICKERS: NTNX

Nutanix Shares Rise on Earnings and $750 Million Investment by Bain Capital

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Nutanix traded 30% higher after the company reported a 9% growth in Q4/20 YoY revenue and a $750 million equity investment by Bain Capital Private Equity.

Enterprise cloud computing company Nutanix Inc. (NTNX:NASDAQ) yesterday announced financial results for its fourth quarter and fiscal year ended July 31, 2020.

The firm reported that total revenue in Q4/20 increase by 9% to $327.9 million, compared to $299.9 million in Q4/19. The company noted that billings increased by 5% YoY during the same period to $388.5 million.

The firm advised that it saw improvement in GAAP gross margin, which was 79.6% in Q4/20, up from 77.0% in Q4/19. Non-GAAP gross margin also improved to 83.0%, up from 80.0% in the prior year's corresponding quarter.

The company posted a GAAP net loss of $185.3 million in Q4/20, compared to a GAAP net loss of $194.3 million Q4/19, which equates to a GAAP net loss per share of $0.93 in Q4/20, versus a GAAP net loss per share of $1.04 Q4/19.

Nutanix reported FY/20 total revenue increased by 6% to $1.31 billion, compared to $1.24 billion for FY/19. The company posted a GAAP net loss of $872.9 million, or $4.48 per share for FY/20, compared to a GAAP net loss of $621.2 million, or $3.43 per share for FY/19.

The company' Chairman, Co-Founder and CEO Dheeraj Pandey commented, "I am thrilled to report strong results to close the year, a performance all the more impressive given the uncertainty of the global market environment we are facing today...We have demonstrated growth in the midst of a pandemic and have now generated $1.6 billion in annual billings. In addition, the $750 million investment from Bain Capital Private Equity validates the market opportunity in front of us and positions us well with enhanced financial flexibility and resources to further scale, gain share and remain at the forefront of innovation in our industry. The strategic value of IT is clear as customers increasingly value our software and solutions in a rapidly changing work environment. Our biggest product news of the quarter was launching our solution on bare metal with AWS, creating a new type of HCI: hybrid cloud infrastructure."

Nutanix's CFO Duston Williams added, "We entered the fourth quarter with a continued focus on managing expenses and cash usage, handily outperforming all key consensus metrics, while progressing on our business model transformation...We achieved these objectives, and in doing so, delivered all-time highs across a number of key financial and operating metrics, including ACV billings and gross margin. We also made significant progress on our transformation to a subscription-based business model, with 88% of billings for the quarter coming from subscription. With our shift to subscription nearly complete, the guidance metrics we provide will change accordingly to reflect our business growth, namely focusing on ACV."

In a separate news release, the company announced that Chairman and CEO Dheeraj Pandey intends to retire from Nutanix's management team. He will continue to serve in his current position while a formal search for a replacement is conducted by the company's board of directors.

The company also announced that it has received a $750 million investment from Bain Capital Private Equity in the form of convertible notes. Nutanix advised that it will be utilizing the investment proceeds to support the its growth initiatives. As part of the investment terms, the firm noted that David Humphrey and Max de Groen, managing directors of Bain Capital, will join the Nutanix board of directors. The company stated that it expects that the investment transaction will close in late September 2020. The firm also stated that unrelated to the Bain Capital investment, it also added an experienced board member, Virginia Gambale, to its board of directors in June.

Nutanix is headquartered in San Jose, Calif., and describes itself as "a global leader in cloud software and a pioneer in hyperconverged infrastructure solutions, making computing invisible anywhere." The company stated that its software is used worldwide by companies to leverage a single enterprise cloud platform in order to manage any app regardless of location for their private, hybrid, integrated and multicloud environments.

Nutanix began the day with a market capitalization of around $4.3 billion with approximately 199.6 million shares outstanding and a short interest of about 5.0%. NTNX shares opened nearly 10% higher today at $23.79 (+$2.09, +9.63%) over yesterday's $21.70 closing price. The stock has traded today between $23.09 and $28.53 per share and is currently trading at $28.30 (+$6.60, +30.41%).

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