Nutanix, Inc. (NASDAQ:NTNX) ended fiscal 2026 with a strong quarter, but its reported free cash flow guidance midpoint points to a more measured year ahead. Fourth-quarter revenue rose 16% to $757.1 million, while annual recurring revenue, or ARR, also increased 16% to $2.55 billion. Revenue exceeded Nutanix, Inc. (NASDAQ:NTNX)’s $725 million-$745 million guidance range and the consensus estimate of $738.3 million. Company-defined non-GAAP diluted earnings per share of $0.60 also beat the consensus estimate of $0.49.
Nutanix, Inc. (NASDAQ:NTNX)’s fiscal 2027 outlook calls for revenue of $3.18 billion-$3.23 billion, company-defined non-GAAP operating margin of 24%-25%, and free cash flow of $850 million-$950 million. At the respective midpoints, revenue would grow about 12%, while free cash flow would rise around 7% to $900 million. That difference raises the question of whether operating leverage is beginning to normalize.
Bull Case
Nutanix, Inc. (NASDAQ:NTNX) showed clear operating leverage during the fourth quarter. GAAP operating margin widened to 9.2% from 4.8%, while the company-defined non-GAAP operating margin increased to 26.2% from 18.3%. Fourth-quarter company-defined non-GAAP operating expenses rose just 2% against the 16% revenue increase. For the full year, the non-GAAP operating margin expanded 260 basis points to 23.7%.
Nutanix, Inc. (NASDAQ:NTNX) produced $277.6 million of fourth-quarter free cash flow, up from $207.8 million a year earlier. Full-year free cash flow reached $840.7 million, versus $750.2 million in fiscal 2025. Nutanix, Inc. (NASDAQ:NTNX) defines free cash flow as operating cash flow less purchases of property and equipment.
Demand indicators also remain supportive. Total remaining performance obligations rose 28% to $3.44 billion, and the current portion increased 27% to $1.69 billion. Nutanix, Inc. (NASDAQ:NTNX) added more than 3,000 customers during fiscal 2026 and signed new or enhanced agreements with AMD, Lenovo, NetApp and NVIDIA. Support for external storage systems and Nutanix Cloud Clusters may help customers proceed despite high server prices and extended lead times.
The restructuring bridge makes the cash-flow outlook stronger than the reported midpoint suggests. Nutanix, Inc. (NASDAQ:NTNX) said guidance includes $33 million-$43 million of non-recurring restructuring charges, with $30 million-$35 million expected to be paid during the first quarter. Adding back the $38 million midpoint would increase normalized free cash flow to approximately $938 million. That would represent roughly 12% growth and a margin of about 29% at the revenue-guidance midpoint, close to expected revenue growth and the prior-year margin.
Bear Case
The reported guidance still shows slower cash-flow expansion. The $900 million free-cash-flow midpoint implies roughly 7% growth and a 28% margin, below fiscal 2026’s 29%. Fourth-quarter GAAP gross margin also fell 120 basis points to 86.0%, while the company-defined non-GAAP gross margin declined 60 basis points to 87.7%.
Nutanix, Inc. (NASDAQ:NTNX) expects server constraints to continue through fiscal 2027, assumes more orders with future software start dates, and expects the available renewal pool to grow more slowly. Nutanix, Inc. (NASDAQ:NTNX) also plans to reinvest most restructuring savings into Agentic AI, cloud-native products, sales coverage and digital-sovereignty initiatives. Annual payment schedules and third-party financing may support customer purchasing decisions while shifting the timing of cash collections.
Hedge Fund Sentiment
The filings available so far reflect positions held before NTNX reported its recent results. Insider Monkey’s database showed 48 hedge funds holding NTNX at the end of 2Q2026, unchanged from funds three months earlier.
Conclusion
Nutanix, Inc. (NASDAQ:NTNX)’s reported $900 million fiscal 2027 free-cash-flow guidance midpoint indicates that operating leverage is normalizing. The restructuring-adjusted bridge points to approximately $938 million of free cash flow, roughly 12% growth and a stable margin, suggesting that part of the reported slowdown reflects non-recurring costs. Gross-margin pressure, payment timing, and renewed investment remain important variables, but recurring-revenue growth, expanding operating margins, and contracted demand show that the underlying operating model remains healthy.
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Disclosure: None. This article is originally published at Insider Monkey.
