Coronavirus concern weighs on Nutanix outlook, drags stock down over 20%

Key Points
  • Nutanix lowered its 2020 guidance in part because of "the anticipated impact of the coronavirus."
  • The stock plunged in extended trading after the announcement but was already down 36% over the past year.
Dheeraj Pandey, CEO, Nutanix
Scott Mlyn | CNBC

Nutanix shares sank as much as 24% in extended trading on Wednesday after the developer of cloud storage and networking software cited coronavirus concerns as one reason for lowering its 2020 revenue outlook.

The company said that software and support sales for the full year, based on total contract value (TCV), will be between $1.29 billion and $1.36 billion, down from an earlier forecast of $1.3 billion to $1.4 billion. In fiscal 2019, about 22% of Nutanix's revenue came from the Asia Pacific and Japan (APJ) region.

"Nutanix's TCV guidance for both the third quarter of fiscal 2020 and the full year of fiscal 2020 is impacted by the much faster than expected transition to subscription coupled with a more cautious view on business activities in the greater APJ region due to the anticipated impact of the coronavirus," the company said in a press release.

The announcement came just as Microsoft said it doesn't expect to meet quarterly revenue guidance for the segment that includes Windows, and a week after Apple warned that the spread of the coronavirus will leave the company shy of its own expectations for the March quarter. Online travel giant Booking Holdings said on Wednesday that the outbreak will damp travel demand and drive down sales in the first quarter, and Workday canceled its annual internal sales meeting over fears of the coronavirus, and will be moving the program online.

Stocks have plunged to start the week, with the S&P 500 dropping 6.6% over the past three days. The Centers for Disease Control and Prevention confirmed 59 cases of coronavirus in the U.S., a majority of which came from passengers repatriated from the Diamond Princess cruise ship that was quarantined off the coast of Japan. A total of more than 80,200 cases have been confirmed worldwide, the vast majority in China, with 2,704 deaths.

In addition to slashing its revenue guidance, Nutanix said software and support billings for 2020 will come in at $1.6 billion to $1.67 billion, down from a prior estimate of $1.65 billion to $1.75 billion. Even before Wednesday's announcement, Nutanix shares were down 36% over the past 12 months.

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