Nutanix Stock Price Falls 57% In A Month; Partners, Leaders Unfazed

‘I actually bought more [Nutanix] stock since it’s been down because as a partner, I know what’s going on at the company on the customer side,’ says Tim Joyce, president and CEO of Roundstone Solutions.

Nutanix’s stock has dropped a whopping 57 percent in less than a month and is currently down 8 percent Wednesday morning, sinking with the larger stock market amid the global coronavirus outbreak. However, channel partners and Nutanix leaders are undisturbed about the company’s future.

“I look at [the stock drop] as a buying opportunity. I actually bought more stock since it’s been down because as a partner, I know what’s going on at the company on the customer side,” said Tim Joyce, president and CEO of Roundstone Solutions, an Orinda, Calif.-based Nutanix partner. “Customers love the Nutanix platform. Every single one of my existing customers is adding to their Nutanix deployment. The stock market numbers aside, in my view, the business is solid and getting better, especially in their sales organization.”

Nutanix stock price was $37.42 per share on Feb. 19, but has since fallen to $15.94 percent as of Wednesday morning. The San Jose, Calif.-based company’s market cap is currently $3.17 billion.

[Related: The Hottest Data Center Companies In 2020: CRN’s Data Center 50]

In a recent interview with CRN, Nutanix CEO Dheeraj Pandey says he’s unfazed by the stock drop and is determined to grow his company into a $3 billion software powerhouse.

“If you look back at all these other companies that went on to become larger over time, they had to go through this,” said Pandey. “Look at Microsoft’s stock from 1991 to 1994—it basically hovers around $1.70 to $2.95 per share in those three years. Look at Adobe’s stock from 2010 to 2014. Look at Red Hat’s stock from 2010 to 2014. You have to walk on fire to really build a large business.”

The hyperconverged pioneer’s stock initially took a 28 percent hit on Feb. 27 following its second fiscal quarter earnings report. Nutanix reported 4 percent total revenue growth of $347 million for its second quarter year over year with a net loss of $217 million. Software and support sales hit $338 million, up 14 percent year over year, while software and support billings reached $420 million, up 12 percent from the same quarter one year ago.

However, Nutanix slightly lowered its full fiscal year 2020 software and support revenue guidance from between $1.3 billion and $1.4 billion to $1.29 billion and $1.36 billion due to coronavirus concerns, specially its impact on sales in Asia, as well as a faster than expected transition to subscription.

The coronavirus has dramatically affected the IT world – from component shortages and sales drops to the canceling of major conferences across the globe.

Roundstone’s Joyce said the coronavirus isn’t impacting his company’s revenue.

“The net effects so far have been that a lot of meetings have move from face-to-face to the phone via video conference or something like that. But business is still going on. I haven’t seen any change in the amount of activity on the IT side from before the coronavirus,” said Joyce. “Yes, the conferences have been canceled, but my customers business requirements are still what they were three weeks ago. So they still have problems to solve -- that hasn’t changed at all.”

Joyce commended Nutanix’s revamped sales organization strategy over the past year, which includes hiring more sales staff as well as promoting Chris Kaddaras to lead the company’s global and channel sales. “Nutanix’s issues in the past has been sales issues, but the new sales management has introduced rigor, discipline and accountability into their sales organization which is showing in the form of greater sales,” he said.

Nutanix stock hit an all-time low of $15.19 per share in April 2017, but steadily grew to reach a record high of nearly $62 per share in June 2018.

Nutanix’s CEO and co-founder said its takes endurance, perseverance and patience to become a long-term IT powerhouse.

“Where we are with our $2 billion to go to $3 billion, we’ll be crossing yet another chasm. I don’t bemoan this. I think it is all par for the course,” said Pandey. “Most of the world should be, by definition, a naysayer because they’re like, ‘How could you become a larger company over time?’ We just have to keep our heads down, work on things that are in our control and not worry about what we’re not in control of.”