Bearish stock to watch: Nutanix Inc (NASDAQ: NTNX)

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Nutanix Inc (NASDAQ: NTNX) stock lost over 3.2% in the pre-market session of May 28th, 2020 (Source: Google finance) after the company posted lower than expected results for the third quarter of FY 20. For the third quarter, the company has posted a loss of $240.7 million compared to a loss of $209.8 million, a year earlier.

Billings increased by 11% from a year ago to $383.5 million as the company continues to shift toward a subscription-based model. The company delivered the Software and Support (TCV) Revenue of $314.5 million for the third quarter, up 18% year-over-year from $265.8 million in the third quarter of fiscal 2019. The company delivered the Software and Support (TCV) Billings of $379.7 million for the third quarter, up 17% year-over-year from $324.2 million in the third quarter of fiscal 2019. Overall, the company has posted 43% increase in the subscription billings to $321 million, representing 84% of total billings, and subscription revenue grew by 55% year-over-year to $261 million, representing 82% of total revenue.

Moreover, the company posted the Non-GAAP gross margin of 80.7% for the third quarter of 2020, which reflects an increase from 77.1% in the third quarter of fiscal 2019. The company’s Cash and Short-term Investments stood at $732.1 million, which reflects the decline from $940.8 million in the third quarter of fiscal 2019. The company reported the deferred revenue of $1.12 billion for the third quarter 2020, up 34% from the third quarter of fiscal 2019. The company’s operating Cash Flow usage was of $84.9 million, compared to usage of $36.5 million in the third quarter of fiscal 2019. The company has generated the free Cash Flow of $117.5 million for the third quarter of 2020, compared to free cash flow of $58.9 million in the third quarter of fiscal 2019. Meanwhile, due to the uncertainty created by the COVID-19 pandemic, the company has withdrawn its guidance for fiscal 2020, which was originally provided on February 26, 2020, as well as its business model targets for calendar 2021.

NTNX in the third quarter of FY 20 has reported the adjusted loss per share of 69 cents, while reported the adjusted revenue growth of 11 percent to $318.3 million in the third quarter of FY 20. During the third quarter, the company’s costs increased by 16% from a year earlier while its expenses rose 14%.

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