Hybrid multicloud computing company Nutanix (NASDAQ: NTNX) reported revenue ahead of Wall Street’s expectations in Q4 CY2025, with sales up 10.4% year on year to $722.8 million. On the other hand, next quarter’s revenue guidance of $685 million was less impressive, coming in 2% below analysts’ estimates. Its non-GAAP profit of $0.56 per share was 28.1% above analysts’ consensus estimates.
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Nutanix (NTNX) Q4 CY2025 Highlights:
- Revenue: $722.8 million vs analyst estimates of $709.9 million (10.4% year-on-year growth, 1.8% beat)
- Adjusted EPS: $0.56 vs analyst estimates of $0.44 (28.1% beat)
- The company dropped its revenue guidance for the full year to $2.82 billion at the midpoint from $2.84 billion, a 0.7% decrease
- Operating Margin: 11.6%, up from 10% in the same quarter last year
- Free Cash Flow Margin: 0%, down from 26% in the previous quarter
- Annual Recurring Revenue: $2.03 billion vs analyst estimates of $2.34 billion (flat year on year, miss)
- Market Capitalization: $10.24 billion
Company Overview
Originally pioneering hyperconverged infrastructure to break down traditional data center silos, Nutanix (NASDAQ: NTNX) provides a unified software platform that enables organizations to run applications and manage data across private, public, and hybrid cloud environments.
Revenue Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years. Over the last five years, Nutanix grew its sales at a 15.5% compounded annual growth rate. Though this growth is acceptable on an absolute basis, we need to see more than just topline growth for the software sector, which can display significant earnings volatility. This means our bar for the sector is particularly high, reflecting the non-essential and hit-driven nature of the products and services offered. Additionally, five-year CAGR starts around Covid, when revenue was depressed then rebounded. Luckily, there are other things to like about Nutanix.
Long-term growth is the most important, but within software, a half-decade historical view may miss new innovations or demand cycles. Nutanix’s annualized revenue growth of 15.3% over the last two years aligns with its five-year trend, suggesting its demand was stable. 
This quarter, Nutanix reported year-on-year revenue growth of 10.4%, and its $722.8 million of revenue exceeded Wall Street’s estimates by 1.8%. Company management is currently guiding for a 7.2% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 13.4% over the next 12 months, a slight deceleration versus the last two years. This projection is underwhelming and implies its products and services will face some demand challenges. At least the company is tracking well in other measures of financial health.
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Annual Recurring Revenue
While reported revenue for a software company can include low-margin items like implementation fees, annual recurring revenue (ARR) is a sum of the next 12 months of contracted revenue purely from software subscriptions, or the high-margin, predictable revenue streams that make SaaS businesses so valuable.
Nutanix’s ARR came in at $2.03 billion in Q4, and over the last four quarters, its growth slightly lagged the sector as it averaged 13.2% year-on-year increases. This alternate topline metric grew slower than total sales, which likely means that the recurring portions of the business are growing slower than less predictable, choppier ones such as implementation fees. If this continues, the quality of its revenue base could decline. 
Customer Acquisition Efficiency
The customer acquisition cost (CAC) payback period measures the months a company needs to recoup the money spent on acquiring a new customer. This metric helps assess how quickly a business can break even on its sales and marketing investments.
Nutanix is extremely efficient at acquiring new customers, and its CAC payback period checked in at 20.1 months this quarter. The company’s rapid recovery of its customer acquisition costs means it can attempt to spur growth by increasing its sales and marketing investments.
Key Takeaways from Nutanix’s Q4 Results
It was encouraging to see Nutanix beat analysts’ revenue expectations this quarter. On the other hand, its revenue guidance for next quarter missed and its annual recurring revenue fell short of Wall Street’s estimates. Overall, this was a weaker quarter. The stock traded up 14% to $43.93 immediately after reporting.
So should you invest in Nutanix right now? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).
