Technology

Report by Behind the Numbers

NTNX's Q3 revenue and EPS beat was aided by exceptionally conservative guidance and accounting / cost factors that may not be sustainable. Management had guided Q3 revenue to just 6-8% growth despite maintaining a higher full-year growth outlook, creating a favourable setup for a beat, similar to Q2. BTN also highlights rapid growth in contract assets, which contributed around three days of sales to revenue recognition over the past two quarters, more than enough to explain the reported beats. Meanwhile, deferred revenue has been broadly flat for two years and continues to decline on a days-of-sales basis, while deferred commissions suggest weaker new customer acquisition. Margins also appear supported by low depreciation, declining capex, and reduced cash R&D and S&M intensity.

Technology

Report by Corto Capital Advisors

NTNX reported 2Q26 results above consensus, but Corto believes the quality of the beat is highly suspect. Buried in the Q2 10-Q is the disclosure that the company reclassified previously reported unbilled receivables into a new “contract asset” category, where consideration is conditional on factors beyond the passage of time. This is significant as revenue has been recognised without an unconditional right to bill or collect. The reclassified balance grew 33% sequentially to $137m, including $71m in non-current contract assets. The $34m sequential increase alone exceeds the $13m revenue beat, suggesting NTNX would have missed the consensus revenue estimate by a wide margin. In addition, Corto’s prior concerns remain intact - absent any evidence of ARR inflection, NRR stabilisation, or FCF recovery, they continue to see material downside in NTNX shares.

Technology

Report by Sales Pulse Research

SPR’s latest channel checks indicate that large deals are finally progressing after previous delays as enterprises were still evaluating their alternatives and negotiating with Broadcom. However, some channels criticise NTNX for its rigid pricing strategy, suggesting the firm should adopt a more aggressive sales approach like Pure Storage. As expected the Dell / NTNX partnership continues to grow and SPR also believes NTNX is making progress on enhancing its Acropolis Hypervisor (ACH), that some estimated previously had ~80% of the functionality of VMware ESX. Enhancements to ACH will make it easier for NTNX to replace VMware, especially in complex operating environments.

Technology

Report by Sales Pulse Research

Sales Pulse continue to pick up more positive views of the tailwinds for Nutanix and examples of deals that are driven by Broadcom’s acquisition of VMware however, channels are quick to state that the move from VMware is challenging, at least for large users. In Nutanix upcoming report we expect to see more evidence of growth from the Broadcom/VMware acquisition as well as the other catalyst that we have discussed in recent notes (increase in partnerships including Cisco, Dell and additional VARs), but rapid acceleration seems unlikely. Many speakers at Nutanix’ Next Conference in Barcelona discussed their move from VMware to Nutanix.

Technology

Report by Sales Pulse Research

SPR provides recent field feedback on AVGO’s actions, users reactions and vendors who are benefitting. While many acquisitions do not produce the increases in revenue and cost synergies that were promised, based upon AVGO’s aggressive approach, SPR expects it will immediately deliver strong results for both metrics. Despite the disruption and animosity it is creating, SPR is picking up many examples of end users who are paying much more to AVGO then they were prior to this acquisition (price hikes of 100-1000% have been reported). These end users are locked into some or all the VMware products. The cost of switching is very high and, in some cases, will take years. Other vendors discussed include Nutanix, IBM Red Hat and HashiCorp.

Technology

Report by Sales Pulse Research

Areas of focus for Sales Pulse in the year ahead will include: 1) Cybersecurity - changing end user priorities and competitive dynamics. 2) UC/CC/CP - will a reduction in seat count negate increased ARPU from AI features? How will continued M&A impact this market? 3) Vendors benefitting from the rapid growth in DevOps / DevSecOps. 4) Gap in orders in 1H24 for networking market as end users digest backlog and we await ramp of next generation. 5) Broadcom acquisition of VMware driving end users to look at alternatives, to the benefit of IBM Red Hat and Nutanix. 6) Ramp of funding for Broadband Infrastructure. 7) Impact of CSP Marketplaces on Distributors and VARs.

Technology

Report by Two Rivers Analytics

Sales have fallen for three quarters, from a growth rate of 51% last June to -23% in the quarter just ended. Margins have collapsed (gross margins down from 48% to 42% and EBITDA margins from 39% to 31%) and the company has added $1bn of debt since 2017. The share price is only down 13% YTD and is still 10% higher than a year ago. Eric Fernandez believes UI warrants a closer look as a potential short candidate with the stock trading at high multiples of both sales and earnings (46x Jun 22 and 35x 2023 earnings). Other companies flagged in Eric's ‘Breaking Estimates’ model are Nutanix, Upstart and Corsair Gaming.

Technology

Report by Summit Insights Group

Former software engineer, Srini Nandury, who was the original bear on Nutanix and JFrog, highlights three names that continue to offer material downside…

Gitlab (GTLB) - Reminds Srini of JFrog; market fragmentation and intense competition will limit growth.
HashiCorp (HCP) - Growth to slow more quickly than investors realise; VMware catching on faster as it did with Nutanix. Stock could easily fall to $22.
UiPath (PATH) - Turned bearish with the stock at $70 last June. Expensive solution in a commoditising market; Microsoft is quickly vaulting to the leadership position in RPA.