NUTANIX, INC. (NTNX): what the price assumes

In the published model solve dated 2026-Q2, anchored at $68.88, NUTANIX, INC. (NTNX) is priced for today's economics sustained for ~6.2 years. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-06-27.

Generated: 2026-08-30 · Source: https://boothcheck.com/report/NTNX

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

Solve inputs: computed at a 9.8% cost of capital; growth searched up to the 50% self-funding ceiling.

How unusual the bet is: n/a

Valuation X-Ray

Every valuation family lands below the price. The price therefore sits beyond what those standard frames encode.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that call it expensive: Earnings, Relative

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.9%); the inversion above states its own rate.

Per-Model Detail (n=5)

Economic-Unit Decomposition (Sum Of The Parts)

Only one reportable economic unit is present in the current topology source. Consolidated operating lenses remain available, but there is no multi-unit decomposition.

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

• Nutanix sells software that lets companies run their own data centers like a private cloud, a subscription business with $2.43 billion of annual recurring revenue growing 15% as customers move off legacy virtualization.
• The defining risk is the price: no valuation method reaches it, so the buyer is paying for many years of high growth, and the heavy stock-based compensation that flatters the adjusted margins is diluting the share count about 6.6% a year.
• The next markers are the ARR growth trajectory and the fiscal 2026 guide of $2.82 to $2.84 billion in revenue with roughly $760 to $780 million of free cash flow, against the industry shift away from competing virtualization platforms.

Bull Case

Nutanix's competitive position rests on a structural advantage that is finally paying off: it is the credible independent alternative in enterprise virtualization at exactly the moment customers are looking for one. As the dominant incumbent platform changed hands and reworked its licensing and pricing, enterprises began re-evaluating a layer of infrastructure they had treated as permanent, and Nutanix is the natural beneficiary. The proof is in the recurring revenue: annual recurring revenue reached $2.43 billion in the third quarter of fiscal 2026, growing 15%, on total revenue up 10% to $703.1 million. ARR growing faster than revenue is the signature of a subscription business compounding its installed base.

The margins have inflected, which is what separates a durable software franchise from a cash-burning growth story. Nutanix posted GAAP net income of $72.1 million in the quarter and a non-GAAP operating margin of 22.3%, with operating expenses growing slower than revenue, the discipline that turns subscription scale into profit. The subscription model itself is sticky by construction: the 10-K notes revenue is recognized over the contractual service period, so the installed base produces a predictable, deferred stream that cushions any single quarter. Customers who build their data-center operations on Nutanix do not switch casually, and the renewal-and-expand dynamic is the moat.

The cash generation backs the growth claim with real money. Nutanix guided fiscal 2026 free cash flow to $760 million to $780 million, a substantial figure for a company this size, and it increased its share-repurchase authorization by $750 million to return capital on top of the growth. With net cash on the balance sheet and free cash flow expanding, Nutanix has the resources to keep investing in product while buying back stock. The bull case is that a profitable, fast-growing subscription franchise is capturing a once-in-a-decade shift in enterprise infrastructure spending.

Bear Case

Start with the capital structure, because it is where the adjusted numbers and the real ones diverge. Nutanix reports a 22% non-GAAP operating margin, but that figure adds back heavy stock-based compensation, and the cost of that compensation shows up where it cannot be adjusted away: the share count has grown about 6.6% a year. That is dilution, and it means existing holders own a steadily smaller slice of the company even as it grows. The $750 million buyback authorization is partly a response to that, cash spent to mop up the shares the company hands to employees, which is a real use of the free cash flow the bull case celebrates. On a GAAP basis the operating margin is closer to 9%, not 22%, and the gap is the SBC the dilution makes concrete.

The balance sheet also carries convertible debt, gross debt above $1.3 billion against net cash of roughly $667 million. The net position is positive, but the convertibles are a reminder that the company has used dilutive financing, and conversions add to the share count when the stock rises, compounding the dilution. For a company whose entire value case is per-share compounding, a structure that steadily expands the denominator is a headwind the growth has to overcome before any of it reaches the owner.

The valuation is the amplifier on all of it. No valuation method reaches today's price near $47 (June 27, 2026); the stock is rich on earnings power, on peer multiples, and even on forward growth. The inverted price embeds operating-profit growth above 40% a year, a pace far beyond the 10% revenue growth the company is actually posting, which means the price assumes both an acceleration and years of it. The tailwind from a competitor's pricing changes is real but finite: enterprises migrate once, and once the wave of switching passes, Nutanix's growth normalizes toward the underlying market. A buyer here is paying a price no standard frame supports, for a company diluting its holders, on the assumption that an industry-disruption tailwind persists at a 40%-plus pace. If growth decelerates as the migration matures, the multiple has a long way to fall.

Valuation

The blunt fact dominates: no valuation method reaches Nutanix's price. The stock is rich on earnings power, on peer multiples, and even on a forward-growth model, which puts it in the category of a bet beyond what any standard frame supports. At roughly 53 times blended earnings, the price is the entire thesis.

What the price embeds is extraordinary growth. Inverted, today's level requires operating-profit growth above 40% a year, against the 10% revenue growth and 15% ARR growth the company actually reports. The reconciliation is partly that GAAP profit is depressed by stock-based compensation and rising as that scales, so the percentage growth off a small base looks large, and partly that the market is extrapolating the competitor-migration tailwind. Either way, the price has paid for an acceleration that has not yet shown up in the revenue line. The non-GAAP operating margin near 22% and the strong free cash flow are the bull's evidence, but the GAAP margin near 9% and the 6.6% annual share-count growth are the offsetting reality, and the valuation credits the former while the dilution delivers the latter.

Solvency is adequate but not a fortress. Nutanix holds net cash of about $667 million, but gross debt exceeds $1.3 billion in convertibles, so the clean cash position is smaller than it first appears, and the converts add shares on conversion. Free cash flow guided to $760 million to $780 million for the year is genuine and funds the buyback that offsets dilution. The bet the buyer underwrites is demanding: that Nutanix sustains a growth rate well above what it currently posts, long enough to justify a multiple no method supports, while diluting holders along the way. The business is real and profitable on an adjusted basis; the price assumes it stays exceptional and accelerates.

Catalysts

Fiscal third-quarter 2026 beat and lifted the outlook. Revenue rose 10% year over year to $703.1 million, ARR grew 15% to $2.43 billion, and GAAP net income was $72.1 million, with EPS of $0.47 well above the $0.36 consensus. Non-GAAP operating margin reached 22.3% as operating expenses grew slower than revenue, and quarterly free cash flow was $197.2 million, bringing nine-month free cash flow to $563.1 million.

Management raised the full-year picture, guiding fiscal 2026 revenue to $2.82 billion to $2.84 billion, a non-GAAP operating margin near 22.5%, and free cash flow of $760 million to $780 million. It also increased the share-repurchase authorization by $750 million, layering capital return on top of the growth, though the buyback also offsets the dilution from stock-based compensation.

The markers to watch are the durability of the ARR growth and the migration tailwind behind it. The pace of new subscriptions and renewals tells you whether the shift away from competing virtualization platforms is still feeding Nutanix's pipeline or maturing; the GAAP-versus-non-GAAP margin gap and the share-count trajectory tell you how much of the adjusted profitability is reaching shareholders; and the free-cash-flow trend against the raised guide tests whether the cash generation can keep funding both growth and the buyback. Each print measures whether the growth rate is holding near the level the valuation requires.

Peer Cohorts (Per Segment, With Filing Citations)

Hybrid multicloud software (subscription) (reported)

• DBX (Dropbox, Inc.)
• FY2025 10-K: …to scale efficiently. We've built a thriving global business with 18.08 million paying users. Our Subscription Plans We generate revenue from individuals, families, teams, and organizations by selling subscriptions to our platform, which serve the varying needs of our diverse customer base. Our subscriptions include…
• FY2025 10-K: Sign, as our e-signature solution. Dropbox Sign has several product lines, and the pricing and revenue generated from each product line varies. Product lines are primarily priced based on the number of licenses purchased (similar to Dropbox plans), while some are priced based on a customer's transaction volume.…
• TDC (TERADATA CORP /DE/)
• FY2025 10-K: …security risks by increasing our joint responsibility with customers and third-party cloud providers for protecting sensitive information processed through these platforms, preventing any unauthorized access to or use of such platforms, preventing data breaches, and addressing vulnerabilities in customer-managed…
• FY2025 10-K: …and other - The Company sells on-premises and cloud subscriptions to its customers through its subscription licenses, cloud and hardware rental offerings. Teradata's on-premises subscription licenses include a right-to-use license and revenue is recognized upfront at a point in time unless the customer has a…
• DT (Dynatrace, Inc.)
• FY2025 10-K: …including Ahead, Computacenter, Trace3, and World Wide Technology, that help joint customers integrate our offerings into their multicloud ecosystems. These partners extend our scale and reach and collaborate with our direct sales teams, bringing domain expertise in technologies and industries along with additional…
• FY2025 10-K: …requirements. We automatically upgrade all Dynatrace instances and offer on-premises cluster customers auto-deployment options that suit their specific enterprise management processes. The Dynatrace Platform Subscription ("DPS") licensing model provides customers with a flexible, scalable, and transparent…
• ESTC (Elastic N.V.)
• FY2025 10-K: …Subscriptions provide the right to use paid proprietary software features and access to support for our paid and unpaid software. Our subscription agreements are either term-based or consumption-based, with the vast majority of Elastic Cloud subscriptions being consumption-based. A portion of the revenue from…
• FY2025 10-K: …our offerings at every level. We make our platform available as a service across major cloud providers (Amazon Web Services ("AWS"), Google Cloud Platform ("GCP"), and Microsoft ("Azure")) in more than 55 public cloud regions globally. Customers can also deploy our platform across hybrid clouds, public or private…
• OKTA (Okta Inc)
• FY2025 10-K: …especially from larger, well-established companies, and we may lack sufficient financial or other resources to maintain or improve our competitive position. The markets for our solutions are rapidly evolving, highly competitive, and subject to shifting customer needs and frequent introductions of new technologies. As…
• FY2025 10-K: …a suite of security capabilities that protect our customers from different types of malicious traffic, including bots, breached passwords, suspicious IP addresses and brute force attacks. Attack Protection enables our customers to minimize risks associated with the ever-growing volume of identity-targeted attacks. •…
• TENB (TENABLE HOLDINGS, INC.)
• FY2025 10-K: …• delays in releasing our new offerings or enhancements to our existing offerings to the market; • introduction or anticipated introduction of competing products by our competitors; • poor business conditions for our customers, including as a result of difficult macroeconomic conditions, causing them to delay or…
• FY2025 10-K: …has historically been generated from customers using our solutions on an on-premises basis, our customers are increasingly adopting our cloud offering. We expect that our customers will continue to move to our cloud offering and that it will become more central to our distribution model. To support both on-premises…
• QLYS (QUALYS, INC.)
• FY2025 10-K: …primarily with renewable annual subscriptions. These subscriptions require customers to pay a fee in order to access each of our cloud solutions. We generally invoice our customers for the entire subscription amount at the start of the subscription term, and the invoiced amounts are treated as deferred revenues and…
• FY2025 10-K: …expand their use of our platform, our operating results and our business may be harmed. If we are unable to renew existing subscriptions for our IT, security and compliance solutions, sell additional subscriptions for our solutions and attract new customers, our operating results would be harmed. We offer our cloud…
• BOX (Box, Inc.)
• FY2025 10-K: …mergers and acquisitions affecting our customer base, our ability to successfully integrate new or acquired technology into our products, our ability to execute on our product roadmap, our customers' budgets and spending levels, and the effects of global economic conditions, especially if challenging macroeconomic…
• FY2025 10-K: …Suites plan or at rates that are consistent with our expectations, or if the market for cloud-based enterprise services declines or develops more slowly than we expect, our business could be adversely affected. • Because we recognize revenue from subscriptions for our services over the term of the subscription,…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.