Nutanix Inc., a provider of data center infrastructure for enterprises, saw its share price fall by more than 4 percent in after-hours trading Thursday after posting a bigger-than-expected loss in its fiscal third quarter.

The company posted a loss after certain costs such as stock compensation of 21 cents per share on revenue of $289.4 million. Wall Street was expecting a loss of 19 cents on revenue of $279 million.

Nutanix also said its deferred revenue, which refers to advance payments it will receive for products or services that are to be delivered in the future, rose by 62 percent from a year ago, to $539.9 million.

However, all that was offset by the company’s poorer-than-expected guidance. The company forecast a loss of 20 to 22 cents per share after certain costs for its fiscal fourth quarter on revenue of $295 million to $300 million. Analysts had predicted a loss of just 13 cents per share on $289 million in revenue. That discrepancy prompted a minor selloff, with investors driving Nutanix’s share price down 4 percent.

Nutanix, which traditionally sold hardware appliances for managing data center infrastructure, has been undergoing a transition of late. The company has switched its focus to software that manages networks, storage and servers as part of a “hyperconverged” approach to private cloud computing that promises advantages such as cost reduction, security and improved scalability in virtualization.

The company’s transformation has been fairly complex, involving new partnerships, product releases and acquisitions, including a recent collaboration with Cyxtera Technologies Inc. to provide on-demand HCI via software-powered data center architecture. On the acquisition side, Nutanix this year has snapped up cloud infrastructure optimization company Minjar Inc. and also application monitoring firm Netsil Inc. In addition, the company unveiled a new software-as-a-service offering called Nutanix Beam aimed at providing multicloud governance and management capabilities.

Nutanix Chief Executive Officer Dheeraj Pandey (pictured) said in a statement that this transition is slowly but surely paying off, despite this quarter’s losses. “Our shift toward a software-centric strategy is on track and we aligned our sales compensation in February to support this transition,” Pandey said.

Pandey cited the company’s revenue breakdown as evidence of this claim, noting Nutanix’s software revenue of $158.5 million, up 57 percent from last year. The company’s hardware revenue, meanwhile, came in at $62.6 million, up 5.6 percent.

“We have seen some large deals in terms of what we see on the horizon that would not have been possible had we continued to sell appliances,” Pandey told analysts during a conference call.

Pandey’s optimism was shared by Holger Mueller, vice president and principal analyst at Constellation Research Inc., who said the disappointing quarter was most likely just a bump in the road as Nutanix forges ahead with its transition.

“Nutanix’s earnings are a good reminder that despite an attractive product portfolio and a good growth record, executives still have to manage expectations,” Mueller said. “In this case the [earnings] miss is likely not going to affect the long-term positive product potential, as it transitions from its hardware past to a more attractive software portfolio.”

Pandey recently appeared on SiliconANGLE’s mobile TV studio theCUBE at the Nutanix NEXT U.S. event in New Orleans, where he spoke in depth about the company’s transition:

Image: SiliconANGLE