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The past six months have been terrible for Nutanix ( NTNX 6.79% ) investors as shares of the enterprise cloud platform provider have plunged more than 42% during this period.

However, Nutanix's severe pullback doesn't seem justified, as it has been reporting impressive growth in recent quarters thanks to the switch to a subscription business model. The trend of strong results continued when Nutanix released its fiscal 2022 second-quarter earnings reporton March 2.

The company beat Wall Street's expectations handsomely and slightly raised the lower end of its full-year guidance on account of robust spending on enterprise cloud infrastructure. The increasing adoption of the software-defined hyper-converged infrastructure (HCI) that combines computing, storage, and networking onto a single platform was also a tailwind for Nutanix.

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Let's take a closer look at Nutanix's quarterly numbers and see why this is one cloud stock investors may not want to miss after its recent slide.

The hyper-converged infrastructure market was reportedly worth $7.8 billion in 2020, according to third-party estimates. By 2025, the HCI market is expected to generate $27 billion in revenue, clocking a compound annual growth rate of 28%. So Nutanix has a lot of room for growth in the future, as it has generated $1.5 billion in revenue over the trailing 12 months.

More importantly, the rate of growth in the company's billings indicates that it is on track to grow at a faster pace than the market it operates in. The annual contract value (ACV) of Nutanix's billings in Q2 increased 37% year over year to $218 million. Nutanix arrives at the ACV by dividing the total value of a contract by the term of the contract; ACV billings refers to the sum of all contracts that were billed during the period.

The increase in Nutanix's ACV should translate into robust revenue growth when the company fulfills its obligations and recognizes revenue for the services provided. Meanwhile, Nutanix's annual recurring revenue increased 55% year over year to $1.04 billion. Annual recurring revenue is the sum of the ACV of all subscription contracts that were in effect at the end of the quarter, and the metric's impressive growth points toward the solid growth of Nutanix's subscription business, which is also leading to fatter margins.

Nutanix's adjusted gross margin increased 110 basis points year over year during the quarter. Thanks to the 19% year-over-year growth in revenue to $413 million and an improved margin profile, Nutanix reducedits adjusted net loss to $0.03 per share last quarter from$0.37 per share in the prior-year period. Analysts were lookingfor a bigger loss of $0.17 per share on $407 million in revenue.

For the full year, Nutanix is now anticipating its revenue to increase 17% to $1.63 billion, which would be an acceleration over fiscal 2021's revenue growth of 7%. Additionally, its ACV billings are expected to increase 28% year over year to $762.5 million, up from fiscal 2021's growth of 18%.

So the faster pace of growth in Nutanix's billings this year should pave the way for solid revenue growth in the long run.

Nutanix is one of the best ways to tap into the fast-growing HCI market. That's because the company controls nearly25% of this space, second only to VMware, which has a 41.5% share of the HCI market under its control. The good part is that Nutanix's share of the HCI market more than doubled in the third quarter of 2021, compared to 11.5% in the prior-year period.

Looking ahead, it wouldn't be surprising to see Nutanix dominate the HCI market -- the company's simplified portfolio, which now consists of five offerings as compared to 15 products earlier, is leading to faster sales growth. Not surprisingly, the potential growth of Nutanix's end market and the company's solid share should lead to an improvement in its top and bottom lines going forward.

With the stock tradingat 3.5 times sales right now as compared to its five-year average price-to-sales multiple of 5, now looks like a good time to buy this cloud computing play since it could explode in the long run.

This article represents the opinion of the writer, who may disagree with the official recommendation position of a Motley Fool premium advisory service. Were motley! Questioning an investing thesis even one of our own helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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This Rapidly Growing Cloud Stock Is on Sale Right Now - The Motley Fool