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Shares in data storage companies Nutanix Inc. and Pure Storage Inc. took a beating Thursday after each posted quarterly results that left shareholders scrambling for the exits.

The greatest misfortune fell upon Nutanix. The company was left reeling as its stock plunged more than 22 percent in after-hours trading thanks to dismal guidance for its upcoming third quarter. That came in spite of what was otherwise a pretty solid performance in the three-month period just gone.

Update: Shares of Nutanix were plummeting even more Friday, down nearly 31 percent. However, investors rethought their pessimism on Pure Storage, with shares up a fraction of a point Friday.

Shares in Pure Storage, meanwhile, fell more than 5 percent in extended trading today after the company posted earnings and revenue for the quarter that fell way short of Wall Street’s forecast. That share decline at least was something of a recovery from the more than 20 percent they plunged before executives calmed investors a bit on the earnings conference call.

Both companies are accustomed to this kind of volatility, at least. They’re trying to disrupt a seriously competitive data center storage market, so their investors are extremely sensitive to even the smallest of changes in their growth prospects.

In the case of Nutanix, its strategy revolves around selling “hyperconverged” systems that merge storage, computing and networking. The company is trying to reduce its dependence on hardware sales in favor of an enterprise cloud operating system that can run on most kinds of infrastructure. As part of this transition, Nutanix is increasingly focused on moving customers toward a subscription-based licensing model.

Those efforts are going well, if Nutanix’s fiscal second-quarter 2019 results are any indication. It posted a loss before certain costs such as stock compensation of 23 cents per share on revenue of $335 million. That was better than expected, since Wall Street had forecast a loss of 25 cents per share on revenue of $331 million.

Nutanix also reported more success on the customer acquisition front, adding 920 “new end-customers” during the quarter. They included Apache Corp., GS Energy Corp., Harris Corp. and Komatsu America Corp. In addition, Nutanix said that six of its customers purchased at least $5 million worth of products and services during the quarter.

“We were pleased with our large deal activity and our progress in moving toward a subscription model,” said Duston Williams, chief financial officer at Nutanix.

But those successes weren’t enough to reassure Nutanix’s investors, who are generally more interested in its immediate prospects going forward. The company had some disappointing news in that regard, saying it expects revenue of between $290 million to $300 million in the third quarter — well short of Wall Street’s forecast of $348 million.

Nutanix Chief Financial Officer Duston Williams said the reason for the shortfall is that the next quarter will reflect “the impact of inadequate marketing spending for pipeline generation and slower than expected sales hiring.” Williams promised that the company had been “taking actions” to address these issues, but that reassurance wasn’t enough to sway shareholders.

In fact, analyst Holger Mueller of Constellation Research Inc. said it was quite “remarkable” to see Nutanix blame its poor guidance on inadequate spending. Investors probably felt the same too, he said.

“Not being able to make revenue due to not filling its sales headcount is equally remarkable,” Mueller said. “Let’s hope Nutanix has these issues under control soon, otherwise future quarters will be challenging as well.”

Some analysts think the problem is temporary, though it might continue for several quarters. “While the shortfall is a disappointment, we don’t believe it reflects Nutanix’s product portfolio or market positioning,” Morgan Stanley analyst Katy Huberty wrote in a note to clients.

Pure Storage also struggled to provide much solace. The company, which sells all-flash storage systems that are increasingly being used to replace older and slower disk-based systems, missed Wall Street profit targets.

Earnings before certain costs such as stock compensation came to 14 cents a share on revenue of $422.2 million. But Wall Street was looking for a profit of 18 cents per share on revenue of $443.3 million.

Pure Storage officials blamed the miss on a “process breakdown” at a contract equipment manufacturer that prevented some orders from being fulfilled, plus a shift from some of its customers to a subscription licensing model. “Except for these two items, our revenue and profits would have been within our guided range,” company officials insisted.

In an interview with SiliconANGLE, Pure Storage Chief Executive Officer Charlie Giancarlo explained that the manufacturing breakdown didn’t become apparent to the company until after the last quarter had closed.

“Orders we thought had shipped were still sitting on the manufacturing floor,” Giancarlo said. “We did a deep postmortem. We’ve made changes. We don’t expect it to recur.”

Mueller told SiliconANGLE that Pure Storage was simply unlucky, because supply breakdowns can happen to any company. However, he said the company would be well-advised to improve the resiliency of its supply chain to prevent these things from occurring again.

“Less excusable is the revenue miss due to a move to subscription revenue,” Mueller said. “Not being able to plan revenue mix and manage expectations is an operational issue that needs addressing.”

There were some bright spots, at least. For example, the company pointed to a new two-year deal it signed with a “systems integrator” in the new quarter that’s worth more than $100 million. Giancarlo said this would ensure that people “start taking notice” and was reason to be optimistic.

“It indicates a very sophisticated customer betting on Pure,” Giancarlo said. “We don’t think that’s going to be an isolated case.”

Giancarlo also highlighted strong sales of the company’s Evergreen Storage or ES2 storage as a service that was introduced last year for hybrid and private cloud computing setups. “We’ve been keeping it on a short leash,” he said, but in the last quarter, “we took the governors off. It sold beyond our expectations.”

The only problem with higher sales of ES2 is that it’s sold as a subscription, with revenue recorded over a period of a year or two, so current revenue isn’t as high as with single hardware deals.

For the current quarter, Pure Storage said it was optimistic that it would fare much better. It said it expects revenue of between $327 million to $339 million, the midpoint beating analysts’ $331 million forecast.

With reporting from Robert Hof

Photo: Nutanix/livestream