Episode Details

Nutanix (NTNX) Q4 FY2026 — Shares gapped 8.9% ABOVE the prior close on the reaction session, reached +13.8% intraday, then closed 6.2% under their own session high at $69.84, +6.81% on the day - and one session later they sit at $69.16, +5.77% against the pre-print close. Nutanix reported GAAP diluted EPS of $5.17 for fiscal 2026 against $0.65 a year ago. Approximately $1,208M of that - $4.14 per diluted share - is the release of the valuation allowance on its US deferred tax assets, an item Nutanix names itself as adjustment seven of its own GAAP reconciliation. Net income of $1,507M sits on pre-tax income of $327M, and cash actually paid in income tax for the year was $30M against $33M last year. Strip only that item and reported EPS is $1.03, real growth of +59.2%. The company's own adjusted figure is $2.04 against $1.62, up +25.9%. Meanwhile FY2027 revenue is guided to $3.18B-$3.23B, or 12.3% at the midpoint, against 12.4% just delivered - and the FY2027 operating margin ranges imply 23.7% for the last nine months, below both the 27% Q1 guide and the 26.2% Q4 just printed. We rate NTNX a HOLD at a fair value of $59.39 against $69.16. THE CALL: HOLD (3/5, MODERATE) — base-case value ~$59.39 vs ~$69.16 today. KEY METRICS: - Q4 revenue $757M, +15.9% YoY - a beat vs the $738M estimate; FY2026 revenue $2.85B, +12.4% - Q4 adjusted EPS $0.60 vs a $0.49 consensus - a beat of 22% - EPS basis PROVEN: the four filed adjusted quarters $0.41, $0.56, $0.47, $0.60 add to $2.04, the filed annual figure - GAAP diluted EPS $5.17 vs $0.65 - but $4.14 per share of it is the valuation allowance release - Net income $1,507M on pre-tax income of $327M - 4.6x more after tax than before it - Cash paid in income tax $30M vs $33M last year; the booked benefit is 39x the cash - Ex-release reported EPS $1.03 vs $0.65 a year ago; adjusted EPS $2.04 vs $1.62, +25.9% - Q4 adjusted operating margin 26.2% vs 18.3%; FY2026 23.7% vs 21.1% - ARR $2.55B, +15.8% (methodology re-cut in Q1 FY26, priors restated); RPO $3.44B, +27.8% - FY2027 revenue guide $3.18B-$3.23B = 11.4% to 13.2% growth, 12.3% at the midpoint vs 12.4% delivered - FY2027 margin: Q1 guided 26%-28%, full year 24%-25% - the last nine months imply 23.7% - FY2027 FCF guide $850M-$950M = +7.1% at the midpoint, against +12.1% growth this year - FY2026 free cash flow $841M, +12.1%; stock comp $358M (12.5% of revenue); owner earnings $483M - Buyback $484M exceeded stock comp by $126M; diluted share count FELL 0.65% - Equity flipped from a $695M deficit to $703M - 86% of the swing is the deferred tax asset - Fair value $59.39: DCF $57.96, 26x adjusted EPS $60.15, 30x owner earnings $60.62 - all BELOW the $69.16 close - Bear $35.17 to bull $86.04 - a 2.45x range; Street median $80.00 is ABOVE the price What to watch: A quarterly update lifting the FY2027 revenue guide above 14% growth, a FULL YEAR of adjusted operating margin above 26% rather than a quarter of it, or owner earnings (free cash flow less stock compensation, $483M today) clearing $600M, would each break our thesis Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.