MarketWatch First Take: Forecasts see no dark clouds on horizon for Salesforce, Nutanix

Investors jittery about the murky forecasts from several tech companies this quarter were pleased Tuesday that any references to clouds referred only to products, and not the outlooks for software firms Inc. and Nutanix Inc.

Both companies reported results that beat analysts’ expectations, sending their shares soaring in after-hours trading. The stock of Salesforce CRM, +0.89%  climbed nearly 9% after hours, after the customer-relationship management software firm reported a better-than-expected fiscal third quarter and a slightly better revenue outlook for fiscal 2019 and fiscal 2020. Nutanix NTNX, -1.80%  also jumped almost 9% in extended trading after posting an encouraging outlook.

In conference calls with analysts, both companies were asked about their view of the macro economic environment.

“I continue to see strong growth because I’ve seen so much investment this year. It’s going to pay out for these companies going forward,” Salesforce Co-Chief Executive Marc Benioff said. “So I see still several years ahead of good, solid growth for the economy, and where that gets tempered — I think I’ve mentioned this before — is when I talk to European CEOs, they tend to be more conservative.”

However, there have been a smattering of CEOs in the U.S. who have said they are seeing a slowdown among their customers, especially in the semiconductor and semi equipment arena, a key underpinning of technology.

Duston Williams, chief financial officer of Nutanix Inc. NTNX, -1.80% NTNX, -1.80% a developer of hybrid cloud software, echoed those thoughts. “We haven’t seen any slowdown in our business anyway,” he said. “Now, we’re not a $ 20 billion company that would have insight into everything. But certainly within our realm anyway, we’ve seen really no signs of that.”

Shares of both Salesforce and Nutanix have declined in the past few weeks, with Salesforce off 23% since peaking in late September, “a victim of the selloff in popular high-growth technology,” wrote Steve Koenig, a Wedbush Securities analyst, in a recent note.

Investors have been nervous about a slowdown as a potential impact from the Trump administration’s tariffs on tech products made or assembled in China, which includes some products in data-center hardware. In recent years, the build-out of more data centers across the world — both by companies for their own use and to rent out for cloud computing — has been one of the strongest growth engines in tech. Nutanix CEO Dheeraj Pandey told analysts that customers were both expanding workloads and continuing to modernize and create cloud-like experiences in their own data centers.

Salesforce executives also pointed out that its fiscal-fourth-quarter revenue outlook was staying the same because of expected currency fluctuations, an issue brought up by a number of other companies, including Cisco Systems Inc. CSCO, +1.21%

Whether or not the outlook stays bright for the cloud companies is a big question going forward, but for now investors can relax. Combined with the strong results of the cloud infrastructure businesses of both Microsoft Corp. MSFT, +0.63%  and Inc. AMZN, +0.01% this quarter, cloud-related companies could be a safe haven from any impending storms, at least for now.

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