Nutanix Stock: Is the Cloud Growth Sustainable?

There are well over 50,000 listed companies worldwide, and only a fraction can bear the label disruptive. A great story isn’t good enough. Entry into the disruption club requires at least double-digit revenue growth which represents market share being captured. The larger the company, the tougher it becomes to grow. Disruption implies an opportunity to capture a lot of market share very quickly which is why a large total addressable market (TAM) and compelling growth thesis also need to exist. Today’s company, Nutanix (NTNX), has all three – double digit revenue growth, a stated $57 billion TAM, and a compelling thesis which surrounds the continued growth of cloud computing.

Nutanix Stock Sees Growth Stall

In the information technology world, buzzwords get upgraded faster than Leonardo DiCaprio’s girlfriends. When Nutanix had their IPO in 2016 they were selling a “cloud platform that converges traditional silos of server, virtualization and storage into one integrated solution.” The business model saw product revenues (the majority) recognized at time of sale while services and support (the minority) were recurring or recognized over time. In 2019 they decided to move, “from hardware life-bounded license sales to subscription billing,” which saw them get out of selling hardware which resulted in the slowing growth you see in the above chart from 2019 to 2021. As the company predicted, growth has resumed, and the