Shares of Nutanix Inc climbed almost 30 percent late Friday after the enterprise software group reported impressive results and disclosed fresh funding from Bain Capital.
Nutanix was on course for its biggest one-day percentage rally after the Cloud computing giant beat earnings estimates in the latest quarter and disclosed a private-equity deal.
The company, estimated to be worth around $5.6 billion, also, said that its chief operating officer and co-founder, Dheeraj Pandey, will be stepping down after leading the firm since its unveiling in 2009. Pandey has steered Nutanix to $1.3 billion in yearly sales. He will stay on until the company finds a replacement for the CEO spot.
The San Jose, California-based software group registered a slim fiscal fourth-quarter decline of $185 million and said the company's sales were up almost 10 percent year-on-year to $328 million, figures that surpassed market observers' expectations.
Investors, also, welcomed the investment by Bain Capital, which is pouring out around $750 million in convertible notes with a preliminary conversion price of $27.75 per share. The notes will mature on Sept. 15, 2026, with 2.5 percent interest annually. Investors will be encouraged by the added capital which can provide long-term benefits, Jack Andrews of Needham disclosed in a note to shareholders.
Nutanix reported fourth-quarter sales of $328 million, rising from the previous year of $300 million but shed $185 million in the process. The company suffered a $194 million net loss last year but gained 780 new clients. Nutanix added 10 Global 2000 clients to its portfolio, giving it a total of 910.
Global 2000 customers comprise around 30 percent of the company's business. It currently has 17,360 customers. As of July 31 this year, the company's cash and cash equivalents including short-term investments were at almost $720 million from $732 million from the previous period.
Based on Zacks analysis, the company's product sales were down almost 4 percent $179 million, year over year. Sales form support and other services soared 31 percent to $149 million. Revenues from subscriptions rose almost 46 percent from the last 2019 quarter to $285 million.
In a separate note, William Blair market strategist Jason Ader disclosed that stakeholders will heave a sigh of relief from both the robust quarterly gains and the new investment that should ease liquidity worries. Ader gave Nutanix stock an Outperform rating, which has advanced more than 20 percent in the last quarter as the S&P 500 surged 15 percent.
Ader also praised Pandey for revolutionizing Nutanix into a market powerhouse, but he also noted that the moment "feels right for a change in leadership," especially as Nutanix is in its second decade in the business.
