Nutanix's Q3 Earnings Beat Alert: Why Subscription Growth and a 5.26% EPS Surprise Signal a Buy Now

Nutanix (NTNX) is set to report Q3 2025 earnings on May 28, and the data suggests this could be another blockbuster quarter for the hybrid cloud leader. With a Zacks Earnings ESP of +5.26%—a key metric forecasting earnings surprise potential—and revenue diversification driving 19.4% YoY growth, investors are primed for a catalyst to propel shares higher. Let's dissect why this stock deserves a buy ahead of results.

The Earnings Surprise Case: +5.26% ESP Points to a Likely Beat

The Zacks Earnings ESP model is a powerful predictor of earnings surprises, and Nutanix's current score of +5.26% signals a high probability of beating estimates. This score arises because analysts' Most Accurate Estimates for Q3 EPS ($0.40) now exceed the consensus ($0.38)—a divergence reflecting renewed optimism.

Historically, Nutanix has beaten EPS estimates in four of the last four quarters, including a +19.15% surprise in Q2. Combined with its Zacks Rank #2 (Buy), this bodes well for Q3. The model's 70% success rate for stocks with a positive ESP and Hold/Buy rank further strengthens the case for a beat.

Revenue Growth: Subscription Dominance and Product Momentum

Nutanix's revenue diversification is a key growth lever. In Q2, Subscription Revenue—now 95% of total revenue—grew 17.37% YoY to $624.4 million, fueled by its $2.06 billion ARR (up 18.5%). This recurring revenue stream is the backbone of its model, insulating it from one-time sales volatility.

Meanwhile, Product Revenue (e.g., software licenses) rose 18.2% YoY to $354.2 million, showing broader customer adoption. The company added 710 new customers in Q2, pushing total clients to 27,870, a 2.6% sequential increase. This momentum is critical as Nutanix targets enterprises seeking hybrid cloud solutions amid industry consolidation (e.g., VMware's M&A activity).

Strategic Metrics: Why the Beat Is Imminent

1. Customer Expansion: The 710 new clients in Q2 and $2.06 billion ARR highlight sticky customer relationships.
2. Operating Efficiency: Non-GAAP operating margins hit 24.6% in Q2, exceeding guidance, thanks to cost discipline.
3. Balance Sheet Strength: Cash and investments rose to $1.74 billion, enabling M&A or R&D investments to fend off rivals like AWS and VMware.

Risks? Yes—But the Upside Outweighs Them

Competitors like VMware and public cloud giants pose threats, but Nutanix's hybrid cloud focus and AWS partnership give it an edge. Additionally, the $862.5 million convertible notes issuance and $500 million credit facility provide liquidity to weather macroeconomic headwinds.

Why Buy Now? The Imminent Catalyst

With shares up +21.5% over the past month—outperforming the broader market—and analysts like Barclays raising price targets to $94, the stock is primed for a post-earnings surge. A beat on $0.38 EPS and $626.12 million revenue (both growing >35% YoY) would validate its subscription-driven model, attracting institutional buyers.

Final Call: Buy NTNX Ahead of Results

Nutanix's +5.26% Earnings ESP, subscription-led revenue growth, and strong balance sheet make it a high-conviction buy ahead of Q3 earnings. This is a cloud infrastructure play with scale and recurring revenue—a rare combination in today's tech landscape.

Investors seeking exposure to the hybrid cloud boom should act now. A beat on May 28 could ignite a multi-month rally—don't miss the train.

Action: Buy NTNX now and set a price target of $85–$90, with a stop below $70 to manage risk.

This analysis combines predictive earnings metrics with tangible growth drivers, making Nutanix a compelling buy before its earnings report. The stars are aligned for a major upside catalyst—don't let it pass you by.