Nutanix (NASDAQ: NTNX) is back on track.
For the second quarter in a row, the stock was flying higher on the strength of an earnings report as the company's transition to a subscription-based Software-as-a-Service (SaaS) business appears to be gaining traction. In just two years the tech company has gone from selling hardware to selling software, and now cloud-based software, through a subscription model.
The company, which focuses on cloud-based infrastructure and hyper-convergence (the combination of storage, computing, and networking), beat estimates and its own guidance on both the top and bottom lines. Overall revenue in the fiscal first quarter rose 0.5% to $314.8 million, a reflection of the move away from hardware and traditional software revenue, which comes in one lump sum. However, that was well ahead of the analyst consensus at $306.4 million. Similarly, its adjusted loss per share widened from -$0.13 to -$0.71, but that was also better than expectations of -$0.75. Its losses grew as it missed out on legacy sales from hardware and one-time software sales and ramped up spending on sales and marketing by 48.5% to $298.8 million to drive subscription sales. CEO Dheeraj Pandey said the company would continue to grow its sales force to strengthen the subscription business as long as the returns warrant it.