--- title: Large Deal Strength Drives Earnings For Nutanix description: We are buyers of NTNX as F2Q18 results outline a potential inflection in the Global 2000 customer base with expansion in repeat purchase multiple (up 22% y/y) and a record number of large deals. image: https://www.coolspirit.co.uk/hubfs/400_372___11580377881_bullsandbears-weblisting.jpg --- ![](https://www.coolspirit.co.uk/hubfs/website/images/curves/hero/pngs/hero-curve-white.png) ## Large Deal Strength Drives Earnings For Nutanix Written on: ** Jul 24, 2018 2:08:00 PM ** Written by: ** Alex Raben ** Topic [Data Infrastructure] Share this post: ##### **Nutanix: Large Deal Strength Drives Billings and FCF; Raising Estimates, Price Target** Research on Nutanix activities has shown growth in large-deal execution, please read more in this brief article. ##### Overview We are buyers of NTNX as F2Q18 results outline a potential inflection in the Global 2000 customer base with expansion in repeat purchase multiple (up 22% y/y) and a record number of large deals. Gross profit dollars were up 45% y/y vs. 38% in the prior quarter as some large customers are now negotiating software ELAs. We see the HCI market (with integrated hypervisor and automation) as a two-horse race with VMware/Nutanix as global enterprises modernize core infrastructure. We are raising our price target to $44 on 6x FY19 revenue. ##### What Happened - Revenue of $287M, ahead of guidance of $282.5M and consensus of $283M. - EPS of ($0.14) was ahead of guidance of ($0.21) and consensus of ($0.20), primarily driven by revenue out-performance and a slowing in hiring (opex $8M below guidance). - Strong sales execution drove a record number of new customer additions (1,057) and deals over $1M at 57 vs. 28 a year ago, including 32 Global 2000 customers and 19 software and support deals. This drove billings of $356M, above consensus of $322M, and FCF of $32M (11% FCF margin) vs. $7M a year ago. - Nutanix is successfully back-filling the Dell OEM partnership (now less than 10% of bookings) with other vendors like Lenovo (+80% q/q, four deals over $1M), Cisco (+40% q/q, $2.5M and $1.5M deals), and IBM (first two deals booked). ##### Guidance and Model Impact - Nutanix guided F3Q18 revenue to $275M-$280M, which would have been $45M higher under the prior reporting model (implies 57% revenue growth y/y). - Gross margin of 67-68% (Street at 69%) and EPS of ($0.21)-($0.19). - We are raising estimates due to improving large deal execution, strong Global 2000, new customer adoption, and billings out-performance. ##### Bottom Line - Sales execution challenges in the past year, especially within Global 2000 and internationally, appear to have been addressed during FY18 (9.0x Global 2000 repurchase rate vs. 7.4x a year ago). Our Key FirstLook RFP database has identified several large FY18 EU projects that underscore Nutanix's growing capabilities as it adds traditional enterprise features into the portfolio. **Source:** Pacific Crest Securities. The full report can be found [here](https://key2.bluematrix.com/sellside/EmailDocViewer?encrypt=bac12b86-1d5d-4d25-b3b7-80e27c354a9b&mime=pdf). If you are looking for confidence when hosting and managing your data, then choose COOLSPIRiT today to help design Nutanix into your infrastructure. Our Nutanix Partnership page can be found [here](https://www.coolspirit.co.uk/partners/nutanix), with data sheets, white papers and customer success stories. ![](https://www.coolspirit.co.uk/hubfs/website/images/curves/top/top-curve-dark-blue.svg) ## Discover our latest insights #### Enhance your knowledge by browsing our extensive library of case studies, brief sheets, data sheets, ebooks and white papers. 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