The global hybrid Cloud market is expected to grow at 20% CAGR to reach $262.4 billion by 2027. Enterprise cloud computing player Nutanix (Nasdaq: NTNX) is cashing in on this growth by expanding its presence in international markets through partnerships and new products.

Nutanix’s Financials

For the second quarter of the year, revenues grew 18% to $486.5 million, ahead of the market’s forecast of $463.9 million. ACV billings grew 23% to $267.6 million.

By segment, Nutanix’s subscription revenues grew 20.3% to $450.95 million, while non-portable software revenue fell 25.2% to $10.88 million. Hardware revenue fell 29.8% to $1.23 million, and professional services revenue grew 6.3% to $23.44 million.

Nutanix’s results were clouded by their recent discovery that the evaluation software that they have been using from one of its third-party providers was instead being used for interoperability testing, validation, and customer proof-of-concept over a multi-year period. Nutanix’s audit committee commenced an investigation into the matter to assess the financial reporting impact. It is likely that additional costs would be incurred to address the use cases. As a result, Nutanix was unable to provide financial information regarding expenses in its second quarter preliminary results or its outlook for the third quarter or full fiscal year 2023. While the investigation may result in additional costs, both Nutanix and analysts believe that it may not be significant.

For the third quarter, Nutanix forecast revenues of $430-$440 million compared with the market’s estimates of $466.8 million.

Nutanix’s Growth Focus

Nutanix realizes that as enterprises move to cloud-native deployment, technology integration and strategic platform partnerships have become more important. It is these beliefs that have helped it define the way it has partnered with Red Hat to drive customer benefits. While cloud native solutions result in a solution that is scalable, flexible, elastic, and interoperable, it can also very easily become very complex.

Nutanix entered into a partnership with Red Hat OpenShift in 2021 to continue to build on an evolving open hybrid cloud platform. Since then, its partnership has also evolved to become a precision-engineered one that supports data-critical applications, to accelerate time to business value and to deliver a better return on investment across the datacentre, user desktop environment, mobile device, and now the Internet of Things (IoT). Red Hat customers can leverage Nutanix teams to accelerate innovation through the Nutanix AHV expansion for Red Hat Enterprise Linux (RHEL)/OpenShift. Nutanix customers can advance their innovation programs by accessing Red Hat OpenShift Container Platform (OCP).

Meanwhile, Nutanix continues to drive growth in multiple geographies. It is leveraging its channel partner network to drive sales in India. It recently announced the release of a Starter Kit Bundle for its channel partners across India. The kit provides customers the quickest and easiest way to get started with the Nutanix Cloud Platform and includes Nutanix’s hybrid multicloud platform, integrated virtualization, and one-click management, along with deployment and migration services to accelerate time-to-value, and education vouchers to get IT staff the skills they need to maximize the value of their investment.

Earlier last month, it announced the general availability of Nutanix Cloud Clusters (NC2) on Microsoft Azure in Australia, extending its hybrid cloud environment to Microsoft Azure dedicated bare metal nodes. NC2 on Azure will provide a seamless hyperconverged infrastructure and unified management to accelerate hybrid cloud adoption. It allows customers to deploy and manage their workloads in their own Azure account while keeping the operating model simple and consistent between Azure and on-premises. NC2 on Azure was already available to customers on Azure dedicated bare metal nodes in North America Azure regions.

Its stock is currently trading at $24.91 with a market capitalization of $5.73 billion. It was trading at a 52-week high of $33.73 in December last year and a 52-week low of $13.44 in June last year.

Disclosure: All investors should make their own assessments based on their own research, informed interpretations, and risk appetite. This article expresses my own opinions based on my own research of product-market fit, channel execution, and other factors. My primary interest is in product strategy. While this may have bearing on stock movements, my writings tend to focus on long-term implications. The information presented is illustrative and educational, but should not be regarded as a complete analysis nor recommendation to buy or sell the securities mentioned herein. I am not a registered investment adviser and I am not receiving compensation for this article. I am an investor in this company.