Revenue Mix and Growth Drivers
The company's revenue mix for the full year is similar to last year's, with a slight weighting towards the second half. The updated guidance for fiscal year 2026 is slightly more weighted towards the second half, with a midpoint of Q2 and full year guidance. Nutanix saw success in the marketplace with its cloud platform, highlighting notable wins, including a North American-based provider of agricultural products and services, a European government agency, and a 7-figure global new logo with an EMEA-based provider of energy products and services.
Valuation and Growth Expectations
With a P/S Ratio of 6.01 and an EV/EBITDA of 60.32, the market seems to be pricing in a certain level of growth for Nutanix. Analysts estimate next year's revenue growth at 15.7%, which is higher than the current year's growth rate. The company's ability to capitalize on the VMware migration trend and its focus on cloud-native and AI opportunities will be crucial in achieving this growth.
Migration Trend and Competitive Landscape
Nutanix is seeing an increase in bookings due to the migration trend from VMware, but revenue recognition may be pushed out over time due to phased licensing. The company's remaining performance obligations (RPO) grew significantly year-over-year, driven by a non-cancelable backlog. Nutanix believes it is winning a significant portion of migrations, particularly compared to Red Hat, and is strategically focused on taking share from VMware.
Operational Efficiency and Cash Flow
The company's free cash flow yield is 4.92%, indicating a decent cash generation capability. Nutanix is balancing investments in current and future opportunities, including Kubernetes, cloud-native, and AI, while maintaining a focus on margins. The company's ability to manage its supply chain and mitigate potential shortages will be important in maintaining its operational efficiency.