Nutanix CFO Explains Conservative Guidance: 'There Is A Chance For Over Performance'

Shares of Nutanix Inc NTNX were trading lower by nearly 20 percent ahead of Friday's market open in reaction to the company's earnings report on Thursday, which was guided notably below Wall Street's expectations. The once-hot IPO issue saw its stock peak at $46.78 as some analysts were optimistic on the company's outlook. But after Thursday's report, the stock now lower by more than 40 percent from its highs.

Nutanix's Guidance

Specifically, Nutanix guided its third-quarter loss to be in a range of $0.45 to $0.48 per share versus analyst expectations of a loss of $0.35 per share. Revenue was guided to a range of $180 million to $190 million versus the $188.45 million analysts were expecting. Also, gross margin was guided to a range of 57 percent to 58 percent, which marks a drop from the reported 60 percent in the second quarter and 63 percent in the second quarter a year ago.

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After the earnings report, Nutanix's management hosted a conference call and needless to say the company's guidance was a key focus.

Here is what the company's Chief Financial Officer Duston Williams said during the call regarding the guidance.

• The guidance factors in a seasonally slow Q3 and efforts that were put in place to boost North American sales and productivity.
• The timing of the company's efforts is "a bit uncertain" which reflects "conservatism" in the guidance.
• Given a 30 to 40 percent expected increase in DRAM prices in Q3 the company was forced to raise its product list prices on February 1.
• But if the price increase holds "there is a chance for over performance" on the guidance.
• However, the executive added that "it's just too early to tell."

At last check, shares of Nutanix were down 19.02 percent at $25.20.