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Nutanix Reports Second Quarter Fiscal 2024 Financial Results

Reports 26% YoY ARR Growth and Strong Free Cash Flow

Delivers Outperformance Across All Second Quarter Guided Metrics

Nutanix, Inc. (NASDAQ: NTNX), a leader in hybrid multicloud computing, today announced financial results for its second quarter ended January 31, 2024.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20240228914366/en/

“Our disciplined execution enabled us to deliver a solid second quarter financial performance against an uncertain, but stable macro backdrop,” said Rajiv Ramaswami, President and CEO of Nutanix. “We continue to remain focused on being a long-term strategic and innovative partner to our customers as they look to operate in a hybrid multicloud world.”

“Our second quarter results demonstrated a good balance of top and bottom line performance with 26% year-over-year ARR growth and strong free cash flow generation,” said Rukmini Sivaraman, CFO of Nutanix. “We also achieved GAAP operating profitability for the first time, reflecting the progress we’ve made in driving operating leverage in our model and optimizing the difference between our GAAP and non-GAAP results.”

Second Quarter Fiscal 2024 Financial Summary

 

Q2 FY’24

Q2 FY’23

Y/Y Change

Annual Contract Value (ACV)1 Billings

$329.5 million

$267.6 million

23%

Annual Recurring Revenue (ARR)2

$1.74 billion

$1.38 billion

26%

Average Contract Duration3

2.8 years

3.0 years

(0.2) year

Revenue4

$565.2 million

$486.5 million

16%

GAAP Gross Margin

85.6%

82.2%

340 bps

Non-GAAP Gross Margin

87.3%

84.8%

250 bps

GAAP Operating Expenses

$446.6 million

$456.2 million

(2)%

Non-GAAP Operating Expenses

$369.4 million

$342.5 million

8%

GAAP Operating Income (Loss)

$37.0 million

$(56.5) million

$93.5 million

Non-GAAP Operating Income

$123.9 million

$70.0 million

$53.9 million

GAAP Operating Margin

6.6%

(11.6)%

18.2% pts

Non-GAAP Operating Margin

21.9%

14.4%

7.5% pts

Net Cash Provided by Operating Activities

$186.4 million

$74.1 million

$112.3 million

Free Cash Flow

$162.6 million

$63.0 million

$99.6 million

Reconciliations between GAAP and non-GAAP financial measures and key performance measures, to the extent available, are provided in the tables of this press release.

Third Quarter Fiscal 2024 Outlook

 

 

ACV Billings

$265 - $275 million

Revenue

$510 - $520 million

Non-GAAP Gross Margin

~85%

Non-GAAP Operating Margin

7.5% to 8.5%

Weighted Average Shares Outstanding (Diluted)5

Approximately 301 million

Fiscal 2024 Outlook

 

 

ACV Billings

$1.09 - $1.11 billion

Revenue

$2.12 - $2.15 billion

Non-GAAP Gross Margin

85% to 86%

Non-GAAP Operating Margin

12.5% to 13.5%

Free Cash Flow

$420 - $440 million

Supplementary materials to this press release, including our second quarter fiscal 2024 earnings presentation, can be found at https://ir.nutanix.com/financial/quarterly-results.

Webcast and Conference Call Information

Nutanix executives will discuss the Company’s second quarter fiscal 2024 financial results on a conference call today at 4:30 p.m. Eastern Time/1:30 p.m. Pacific Time. Interested parties may access the conference call by registering at this link to receive dial in details and a unique PIN number. The conference call will also be webcast live on the Nutanix Investor Relations website at ir.nutanix.com. An archived replay of the webcast will be available on the Nutanix Investor Relations website at ir.nutanix.com shortly after the call.

Footnotes

1Annual Contract Value, or ACV, is defined as the total annualized value of a contract, excluding amounts related to professional services and hardware. The total annualized value for a contract is calculated by dividing the total value of the contract by the number of years in the term of such contract, using, where applicable, an assumed term of five years for contracts that do not have a specified term. ACV Billings, for any given period, is defined as the sum of the ACV for all contracts billed during the given period.

2Annual Recurring Revenue, or ARR, for any given period, is defined as the sum of ACV for all non life-of-device contracts in effect as of the end of a specific period. For the purposes of this calculation, we assume that the contract term begins on the date a contract is booked, unless the terms of such contract prevent us from fulfilling our obligations until a later period, and irrespective of the periods in which we would recognize revenue for such contract.

3Average Contract Duration represents the dollar-weighted term, calculated on a billings basis, across all subscription and life-of-device contracts, using an assumed term of five years for life-of-device licenses, executed in the period.

4Revenue was negatively impacted by a year-over-year decline in the average contract duration, including as a result of Nutanix’s transition to a subscription-based business model.

5Weighted average share count used in computing diluted non-GAAP net income per share.

Non-GAAP Financial Measures and Other Key Performance Measures

To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, this press release includes the following non-GAAP financial and other key performance measures: non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP operating margin, free cash flow, Annual Contract Value Billings (or ACV Billings), Annual Recurring Revenue (or ARR), and Average Contract Duration. In computing non-GAAP financial measures, we exclude certain items such as stock-based compensation and the related income tax impact, costs associated with our acquisitions (such as amortization of acquired intangible assets, income tax-related impact, and other acquisition-related costs), costs related to the impairment and early exit of operating lease-related assets, restructuring charges, litigation settlement accruals and legal fees related to certain litigation matters, the amortization of the debt discount and issuance costs, interest expense related to convertible senior notes, gains on divestitures, and other non-recurring transactions and the related tax impact. Non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, and non-GAAP operating margin are financial measures which we believe provide useful information to investors because they provide meaningful supplemental information regarding our performance and liquidity by excluding certain expenses and expenditures such as stock-based compensation expense that may not be indicative of our ongoing core business operating results. Free cash flow is a performance measure that we believe provides useful information to our management and investors about the amount of cash generated by the business after necessary capital expenditures, and we define free cash flow as net cash provided by (used in) operating activities less purchases of property and equipment. ACV Billings is a performance measure that we believe provides useful information to our management and investors as it allows us to better track the topline growth of our business during our transition to a subscription-based business model because it takes into account variability in term lengths. ARR is a performance measure that we believe provides useful information to our management and investors as it allows us to better track the topline growth of our subscription business because it takes into account variability in term lengths. We use these non-GAAP financial and key performance measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. However, these non-GAAP financial and key performance measures have limitations as analytical tools and you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP. Non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP operating margin, and free cash flow are not substitutes for gross margin, operating expenses, operating income (loss), operating margin, or net cash provided by (used in) operating activities, respectively. There is no GAAP measure that is comparable to ACV Billings, ARR, or Average Contract Duration, so we have not reconciled the ACV Billings, ARR, or Average Contract Duration data included in this press release to any GAAP measure. In addition, other companies, including companies in our industry, may calculate non-GAAP financial measures and key performance measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures and key performance measures as tools for comparison. We urge you to review the reconciliation of our non-GAAP financial measures and key performance measures to the most directly comparable GAAP financial measures included below in the tables captioned “Reconciliation of GAAP to Non-GAAP Profit Measures” and “Reconciliation of GAAP Net Cash Provided By Operating Activities to Non-GAAP Free Cash Flow,” and not to rely on any single financial measure to evaluate our business. This press release also includes the following forward-looking non-GAAP financial measures as part of our third quarter fiscal 2024 outlook and/or our fiscal 2024 outlook: non-GAAP gross margin, non-GAAP operating margin, and free cash flow. We are unable to reconcile these forward-looking non-GAAP financial measures to their most directly comparable GAAP financial measures without unreasonable efforts, as we are currently unable to predict with a reasonable degree of certainty the type and extent of certain items that would be expected to impact the GAAP financial measures for these periods but would not impact the non-GAAP financial measures.

Forward-Looking Statements

This press release contains express and implied forward-looking statements, including, but not limited to, statements regarding: our business momentum and prospects, our third quarter fiscal 2024 outlook, and our fiscal 2024 outlook.

These forward-looking statements are not historical facts and instead are based on our current expectations, estimates, opinions, and beliefs. Consequently, you should not rely on these forward-looking statements. The accuracy of these forward-looking statements depends upon future events and involves risks, uncertainties, and other factors, including factors that may be beyond our control, that may cause these statements to be inaccurate and cause our actual results, performance or achievements to differ materially and adversely from those anticipated or implied by such statements, including, among others: the inherent uncertainty or assumptions and estimates underlying our projections and guidance, which are necessarily speculative in nature; any failure to successfully implement or realize the full benefits of, or unexpected difficulties or delays in successfully implementing or realizing the full benefits of, our business plans, strategies, initiatives, vision, and objectives; our ability to achieve, sustain and/or manage future growth effectively; the rapid evolution of the markets in which we compete, including the introduction, or acceleration of adoption of, competing solutions, including public cloud infrastructure; failure to timely and successfully meet our customer needs; delays in or lack of customer or market acceptance of our new solutions, products, services, product features or technology; macroeconomic or geopolitical uncertainty, including supply chain issues; our ability to attract, recruit, train, retain, and, where applicable, ramp to full productivity, qualified employees and key personnel; factors that could result in the significant fluctuation of our future quarterly operating results (including anticipated changes to our revenue and product mix, the timing and magnitude of orders, shipments and acceptance of our solutions in any given quarter, our ability to attract new and retain existing end-customers, changes in the pricing and availability of certain components of our solutions, and fluctuations in demand and competitive pricing pressures for our solutions); our ability to form new or maintain and strengthen existing strategic alliances and partnerships, as well as our ability to manage any changes thereto; the impact of a pandemic or major public health concern; our ability to make share repurchases; and other risks detailed in our Annual Report on Form 10-K for the fiscal year ended July 31, 2023 filed with the U.S. Securities and Exchange Commission, or the SEC, on September 21, 2023 and our subsequent Quarterly Reports on Form 10-Q filed with the SEC. Additional information will be set forth in our Quarterly Report on Form 10-Q for the fiscal quarter ended January 31, 2024, which should be read in conjunction with this press release and the financial results included herein. Our SEC filings are available on the Investor Relations section of our website at ir.nutanix.com and on the SEC's website at www.sec.gov. These forward-looking statements speak only as of the date of this press release and, except as required by law, we assume no obligation, and expressly disclaim any obligation, to update, alter or otherwise revise any of these forward-looking statements to reflect actual results or subsequent events or circumstances.

About Nutanix

Nutanix is a global leader in cloud software, offering organizations a single platform for running apps and data across clouds. With Nutanix, companies can reduce complexity and simplify operations, freeing them to focus on their business outcomes. Building on its legacy as the pioneer of hyperconverged infrastructure, Nutanix is trusted by companies worldwide to power hybrid multicloud environments consistently, simply, and cost-effectively. Learn more at www.nutanix.com or follow us on social media @nutanix.

© 2024 Nutanix, Inc. All rights reserved. Nutanix, the Nutanix logo, and all Nutanix product and service names mentioned herein are registered trademarks or unregistered trademarks of Nutanix, Inc. in the United States and other countries. Other brand names and marks mentioned herein are for identification purposes only and may be the trademarks of their respective holder(s). This press release contains links to external websites that are not part of Nutanix.com. Nutanix does not control these sites and disclaims all responsibility for the content or accuracy of any external site. Our decision to link to an external site should not be considered an endorsement of any content on such a site.

 

NUTANIX, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

 

As of

 

 

 

July 31,

2023

 

 

January 31,

2024

 

 

 

(in thousands)

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

512,929

 

 

$

679,246

 

Short-term investments

 

 

924,466

 

 

 

964,714

 

Accounts receivable, net

 

 

157,251

 

 

 

189,046

 

Deferred commissions—current

 

 

120,001

 

 

 

138,606

 

Prepaid expenses and other current assets

 

 

147,087

 

 

 

108,825

 

Total current assets

 

 

1,861,734

 

 

 

2,080,437

 

Property and equipment, net

 

 

111,865

 

 

 

115,224

 

Operating lease right-of-use assets

 

 

93,554

 

 

 

97,307

 

Deferred commissions—non-current

 

 

237,990

 

 

 

214,555

 

Intangible assets, net

 

 

4,893

 

 

 

6,884

 

Goodwill

 

 

184,938

 

 

 

185,235

 

Other assets—non-current

 

 

31,941

 

 

 

29,892

 

Total assets

 

$

2,526,915

 

 

$

2,729,534

 

Liabilities and Stockholders’ Deficit

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

29,928

 

 

$

39,544

 

Accrued compensation and benefits

 

 

143,679

 

 

 

177,837

 

Accrued expenses and other current liabilities

 

 

109,269

 

 

 

22,401

 

Deferred revenue—current

 

 

823,665

 

 

 

893,889

 

Operating lease liabilities—current

 

 

29,567

 

 

 

29,151

 

Total current liabilities

 

 

1,136,108

 

 

 

1,162,822

 

Deferred revenue—non-current

 

 

771,367

 

 

 

814,605

 

Operating lease liabilities—non-current

 

 

68,940

 

 

 

73,720

 

Convertible senior notes, net

 

 

1,218,165

 

 

 

1,250,434

 

Other liabilities—non-current

 

 

39,754

 

 

 

39,635

 

Total liabilities

 

 

3,234,334

 

 

 

3,341,216

 

Stockholders’ deficit:

 

 

 

 

 

 

Common stock

 

 

6

 

 

 

6

 

Additional paid-in capital

 

 

3,930,668

 

 

 

4,039,779

 

Accumulated other comprehensive (loss) income

 

 

(5,171

)

 

 

879

 

Accumulated deficit

 

 

(4,632,922

)

 

 

(4,652,346

)

Total stockholders’ deficit

 

 

(707,419

)

 

 

(611,682

)

Total liabilities and stockholders’ deficit

 

$

2,526,915

 

 

$

2,729,534

 

 

NUTANIX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

Three Months Ended

January 31,

 

 

Six Months Ended

January 31,

 

 

 

2023

 

 

2024

 

 

2023

 

 

2024

 

 

 

(in thousands, except per share data)

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Product

 

$

250,538

 

 

$

299,660

 

 

$

459,112

 

 

$

546,582

 

Support, entitlements and other services

 

 

235,957

 

 

 

265,573

 

 

 

460,992

 

 

 

529,705

 

Total revenue

 

 

486,495

 

 

 

565,233

 

 

 

920,104

 

 

 

1,076,287

 

Cost of revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Product (1)(2)

 

 

15,506

 

 

 

9,402

 

 

 

28,022

 

 

 

19,636

 

Support, entitlements and other services (1)

 

 

71,299

 

 

 

72,154

 

 

 

141,278

 

 

 

143,879

 

Total cost of revenue

 

 

86,805

 

 

 

81,556

 

 

 

169,300

 

 

 

163,515

 

Gross profit

 

 

399,690

 

 

 

483,677

 

 

 

750,804

 

 

 

912,772

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing (1)(2)

 

 

229,788

 

 

 

236,702

 

 

 

466,010

 

 

 

472,025

 

Research and development (1)

 

 

142,301

 

 

 

160,401

 

 

 

291,744

 

 

 

312,376

 

General and administrative (1)

 

 

84,109

 

 

 

49,529

 

 

 

130,213

 

 

 

97,032

 

Total operating expenses

 

 

456,198

 

 

 

446,632

 

 

 

887,967

 

 

 

881,433

 

(Loss) income from operations

 

 

(56,508

)

 

 

37,045

 

 

 

(137,163

)

 

 

31,339

 

Other (expense) income, net

 

 

(10,112

)

 

 

2,096

 

 

 

(23,528

)

 

 

(3,179

)

(Loss) income before provision for income taxes

 

 

(66,620

)

 

 

39,141

 

 

 

(160,691

)

 

 

28,160

 

Provision for income taxes

 

 

4,170

 

 

 

6,346

 

 

 

9,613

 

 

 

11,218

 

Net (loss) income

 

$

(70,790

)

 

$

32,795

 

 

$

(170,304

)

 

$

16,942

 

Net (loss) income per share attributable to Class A common stockholders, basic

 

$

(0.31

)

 

$

0.13

 

 

$

(0.74

)

 

$

0.07

 

Net (loss) income per share attributable to Class A common stockholders, diluted

 

$

(0.31

)

 

$

0.12

 

 

$

(0.74

)

 

$

0.09

 

Weighted average shares used in computing net (loss) income per share attributable to Class A common stockholders, basic

 

 

231,924

 

 

 

243,853

 

 

 

230,229

 

 

 

242,667

 

Weighted average shares used in computing net (loss) income per share attributable to Class A common stockholders, diluted

 

 

231,924

 

 

 

298,540

 

 

 

230,229

 

 

 

294,851

 

(1)

Includes the following stock-based compensation expense:

 

 

Three Months Ended

January 31,

 

 

Six Months Ended

January 31,

 

 

 

2023

 

 

2024

 

 

2023

 

 

2024

 

 

 

(in thousands)

 

Product cost of revenue

 

$

2,113

 

 

$

1,697

 

 

$

4,272

 

 

$

3,625

 

Support, entitlements and other services cost of revenue

 

 

8,172

 

 

 

7,183

 

 

 

13,518

 

 

 

14,299

 

Sales and marketing

 

 

23,570

 

 

 

20,738

 

 

 

44,042

 

 

 

42,209

 

Research and development

 

 

36,491

 

 

 

40,541

 

 

 

75,113

 

 

 

78,945

 

General and administrative

 

 

14,944

 

 

 

15,810

 

 

 

29,300

 

 

 

30,889

 

Total stock-based compensation expense

 

$

85,290

 

 

$

85,969

 

 

$

166,245

 

 

$

169,967

 

(2)

Includes the following amortization of intangible assets:

 

 

Three Months Ended

January 31,

 

 

Six Months Ended

January 31,

 

 

 

2023

 

 

2024

 

 

2023

 

 

2024

 

 

 

(in thousands)

 

Product cost of revenue

 

$

2,531

 

 

$

749

 

 

$

5,341

 

 

$

1,860

 

Sales and marketing

 

 

198

 

 

 

82

 

 

 

547

 

 

 

119

 

Total amortization of intangible assets

 

$

2,729

 

 

$

831

 

 

$

5,888

 

 

$

1,979

 

 

NUTANIX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

Six Months Ended

January 31,

 

 

 

2023

 

 

2024

 

 

 

(in thousands)

 

Cash flows from operating activities:

 

 

 

 

 

 

Net (loss) income

 

$

(170,304

)

 

$

16,942

 

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

39,479

 

 

 

36,389

 

Stock-based compensation

 

 

166,245

 

 

 

169,967

 

Amortization of debt discount and issuance costs

 

 

21,082

 

 

 

22,300

 

Operating lease cost, net of accretion

 

 

18,158

 

 

 

16,046

 

Early exit of lease-related assets

 

 

(1,109

)

 

 

 

Non-cash interest expense

 

 

9,817

 

 

 

10,064

 

Other

 

 

(2,427

)

 

 

(8,859

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable, net

 

 

(28,649

)

 

 

(19,662

)

Deferred commissions

 

 

19,110

 

 

 

4,830

 

Prepaid expenses and other assets

 

 

(28,348

)

 

 

40,575

 

Accounts payable

 

 

(3,171

)

 

 

8,695

 

Accrued compensation and benefits

 

 

(11,467

)

 

 

34,158

 

Accrued expenses and other liabilities

 

 

52,423

 

 

 

(86,009

)

Operating leases, net

 

 

(19,965

)

 

 

(14,884

)

Deferred revenue

 

 

78,723

 

 

 

101,329

 

Net cash provided by operating activities

 

 

139,597

 

 

 

331,881

 

Cash flows from investing activities:

 

 

 

 

 

 

Maturities of investments

 

 

529,112

 

 

 

429,219

 

Purchases of investments

 

 

(508,984

)

 

 

(455,254

)

Payments for acquisitions, net of cash acquired

 

 

 

 

 

(4,500

)

Purchases of property and equipment

 

 

(30,772

)

 

 

(36,784

)

Net cash used in investing activities

 

 

(10,644

)

 

 

(67,319

)

Cash flows from financing activities:

 

 

 

 

 

 

Proceeds from sales of shares through employee equity incentive plans

 

 

22,896

 

 

 

15,153

 

Taxes paid related to net share settlement of equity awards

 

 

 

 

 

(53,180

)

Repayment of convertible notes

 

 

(145,704

)

 

 

 

Repurchases of common stock

 

 

 

 

 

(59,192

)

Payment of finance lease obligations

 

 

(2,344

)

 

 

(1,758

)

Net cash used in financing activities

 

 

(125,152

)

 

 

(98,977

)

Net increase in cash, cash equivalents and restricted cash

 

$

3,801

 

 

$

165,585

 

Cash, cash equivalents and restricted cash—beginning of period

 

 

405,862

 

 

 

515,771

 

Cash, cash equivalents and restricted cash—end of period

 

$

409,663

 

 

$

681,356

 

Restricted cash (1)

 

 

3,062

 

 

 

2,110

 

Cash and cash equivalents—end of period

 

$

406,601

 

 

$

679,246

 

Supplemental disclosures of cash flow information:

 

 

 

 

 

 

Cash paid for income taxes

 

$

16,191

 

 

$

14,168

 

Supplemental disclosures of non-cash investing and financing information:

 

 

 

 

 

 

Purchases of property and equipment included in accounts payable and accrued and other liabilities

 

$

18,646

 

 

$

1,648

 

(1)

Included within other assets—non-current in the consolidated balance sheets.

Reconciliation of Revenue to Billings

(Unaudited)

 

 

 

Three Months Ended

January 31,

 

 

Six Months Ended

January 31,

 

 

 

2023

 

 

2024

 

 

2023

 

 

2024

 

 

 

(in thousands)

 

Total revenue

 

$

486,495

 

 

$

565,233

 

 

$

920,104

 

 

$

1,076,287

 

Change in deferred revenue

 

 

42,602

 

 

 

51,250

 

 

 

78,723

 

 

 

101,329

 

Total billings

 

$

529,097

 

 

$

616,483

 

 

$

998,827

 

 

$

1,177,616

 

Disaggregation of Revenue and Billings

(Unaudited)

 

 

 

Three Months Ended

January 31,

 

 

Six Months Ended

January 31,

 

 

 

2023

 

 

2024

 

 

2023

 

 

2024

 

 

 

(in thousands)

 

Disaggregation of revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Subscription revenue

 

$

450,948

 

 

$

531,983

 

 

$

853,872

 

 

$

1,011,461

 

Professional services revenue

 

 

23,442

 

 

 

25,008

 

 

 

45,720

 

 

 

47,843

 

Other non-subscription product revenue

 

 

12,105

 

 

 

8,242

 

 

 

20,512

 

 

 

16,983

 

Total revenue

 

$

486,495

 

 

$

565,233

 

 

$

920,104

 

 

$

1,076,287

 

Disaggregation of billings:

 

 

 

 

 

 

 

 

 

 

 

 

Subscription billings

 

$

494,363

 

 

$

572,759

 

 

$

935,793

 

 

$

1,101,673

 

Professional services billings

 

 

22,629

 

 

 

35,482

 

 

 

42,522

 

 

 

58,960

 

Other non-subscription product billings

 

 

12,105

 

 

 

8,242

 

 

 

20,512

 

 

 

16,983

 

Total billings

 

$

529,097

 

 

$

616,483

 

 

$

998,827

 

 

$

1,177,616

 

Subscription revenue — Subscription revenue includes any performance obligation which has a defined term, and is generated from the sales of software entitlement and support subscriptions, subscription software licenses and cloud-based Software as a Service, or SaaS offerings.

  • Ratable — We recognize revenue from software entitlement and support subscriptions and SaaS offerings ratably over the contractual service period, the substantial majority of which relate to software entitlement and support subscriptions.
  • Upfront — Revenue from our subscription software licenses is generally recognized upfront upon transfer of control to the customer, which happens when we make the software available to the customer.

Professional services revenue — We also sell professional services with our products. We recognize revenue related to professional services as they are performed.

Other non-subscription product revenue — Other non-subscription product revenue includes $10.9 million and $18.7 million of non-portable software revenue for the three and six months ended January 31, 2023, respectively, $7.0 million and $15.2 million of non-portable software revenue for the three and six months ended January 31, 2024, respectively, $1.2 million and $1.8 million of hardware revenue for the three and six months ended January 31, 2023, respectively, and $1.2 million and $1.8 million of hardware revenue for the three and six months ended January 31, 2024, respectively.

  • Non-portable software revenue — Non-portable software revenue includes sales of our enterprise cloud platform when delivered on a configured-to-order appliance by us or one of our OEM partners. The software licenses associated with these sales are typically non-portable and can be used over the life of the appliance on which the software is delivered. Revenue from our non-portable software products is generally recognized upon transfer of control to the customer.
  • Hardware revenue — In transactions where the hardware appliance is purchased directly from Nutanix, we consider ourselves to be the principal in the transaction and we record revenue and costs of goods sold on a gross basis. We consider the amount allocated to hardware revenue to be equivalent to the cost of the hardware procured. Hardware revenue is generally recognized upon transfer of control to the customer.

 

Annual Contract Value Billings and Annual Recurring Revenue

(Unaudited)

 

 

 

Three Months Ended

January 31,

 

 

Six Months Ended

January 31,

 

 

 

2023

 

 

2024

 

 

2023

 

 

2024

 

 

 

(in thousands)

 

Annual Contract Value Billings (ACV Billings)

 

$

267,622

 

 

$

329,481

 

 

$

483,142

 

 

$

598,407

 

Annual Recurring Revenue (ARR)

 

$

1,377,713

 

 

$

1,737,364

 

 

$

1,377,713

 

 

$

1,737,364

 

Reconciliation of GAAP to Non-GAAP Profit Measures

(Unaudited)

 

 

 

GAAP

 

 

Non-GAAP Adjustments

 

 

Non-GAAP

 

 

 

Three Months Ended January 31, 2024

 

 

(1)

 

 

(2)

 

 

(3)

 

 

(4)

 

 

(5)

 

 

(6)

 

 

Three Months Ended January 31, 2024

 

 

 

(in thousands, except percentages and per share data)

 

Gross profit

 

$

483,677

 

 

$

8,880

 

 

$

749

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

493,306

 

Gross margin

 

 

85.6

%

 

 

1.6

%

 

 

0.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

87.3

%

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

236,702

 

 

 

(20,738

)

 

 

(82

)

 

 

194

 

 

 

 

 

 

 

 

 

 

 

 

216,076

 

Research and development

 

 

160,401

 

 

 

(40,541

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

119,860

 

General and administrative

 

 

49,529

 

 

 

(15,810

)

 

 

 

 

 

 

 

 

(227

)

 

 

 

 

 

 

 

 

33,492

 

Total operating expenses

 

 

446,632

 

 

 

(77,089

)

 

 

(82

)

 

 

194

 

 

 

(227

)

 

 

 

 

 

 

 

 

369,428

 

Income from operations

 

 

37,045

 

 

 

85,969

 

 

 

831

 

 

 

(194

)

 

 

227

 

 

 

 

 

 

 

 

 

123,878

 

Operating margin

 

 

6.6

%

 

 

15.2

%

 

 

0.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

21.9

%

Net income

 

$

32,795

 

 

$

85,969

 

 

$

831

 

 

$

(194

)

 

$

117

 

 

$

16,651

 

 

$

177

 

 

$

136,346

 

Weighted shares outstanding, basic

 

 

243,853

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

243,853

 

Weighted shares outstanding, diluted (7)

 

 

298,540

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

298,540

 

Net income per share, basic

 

$

0.13

 

 

$

0.36

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

0.07

 

 

$

-

 

 

$

0.56

 

Net income per share, diluted (8)

 

$

0.12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

0.46

 

(1)

 

Stock-based compensation expense

(2)

Amortization of intangible assets

(3)

Restructuring charges (reversals)

(4)

Other

(5)

Amortization of debt discount and issuance costs and interest expense related to the convertible senior notes

(6)

Income tax effect primarily related to stock-based compensation expense

(7)

Includes 54,687 potentially dilutive shares related to the convertible senior notes and the issuance of shares under employee equity incentive plans

(8)

In accordance with ASC 260, in order to calculate GAAP net income per share, diluted, the numerator has been adjusted to add back $4,271 of interest expense related to the convertible senior notes

 

 

GAAP

 

 

Non-GAAP Adjustments

 

 

Non-GAAP

 

 

 

Six Months Ended January 31, 2024

 

 

(1)

 

 

(2)

 

 

(3)

 

 

(4)

 

 

(5)

 

 

(6)

 

 

Six Months Ended January 31, 2024

 

 

 

(in thousands, except percentages and per share data)

 

Gross profit

 

$

912,772

 

 

$

17,924

 

 

$

1,860

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

932,556

 

Gross margin

 

 

84.8

%

 

 

1.6

%

 

 

0.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

86.6

%

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

472,025

 

 

 

(42,209

)

 

 

(119

)

 

 

194

 

 

 

 

 

 

 

 

 

 

 

 

429,891

 

Research and development

 

 

312,376

 

 

 

(78,945

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

233,431

 

General and administrative

 

 

97,032

 

 

 

(30,889

)

 

 

 

 

 

 

 

 

(273

)

 

 

 

 

 

 

 

 

65,870

 

Total operating expenses

 

 

881,433

 

 

 

(152,043

)

 

 

(119

)

 

 

194

 

 

 

(273

)

 

 

 

 

 

 

 

 

729,192

 

Income from operations

 

 

31,339

 

 

 

169,967

 

 

 

1,979

 

 

 

(194

)

 

 

273

 

 

 

 

 

 

 

 

 

203,364

 

Operating margin

 

 

2.9

%

 

 

15.8

%

 

 

0.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

18.9

%

Net income

 

$

16,942

 

 

$

169,967

 

 

$

1,979

 

 

$

(194

)

 

$

1,083

 

 

$

32,998

 

 

$

451

 

 

$

223,226

 

Weighted shares outstanding, basic

 

 

242,667

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

242,667

 

Weighted shares outstanding, diluted (7)

 

 

294,851

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

294,851

 

Net income per share, basic

 

$

0.07

 

 

$

0.69

 

 

$

0.01

 

 

$

-

 

 

$

-

 

 

$

0.14

 

 

$

-

 

 

$

0.91

 

Net income per share, diluted (8)

 

$

0.09

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

0.76

 

(1)

 

Stock-based compensation expense

(2)

Amortization of intangible assets

(3)

Restructuring charges (reversals)

(4)

Other (amount has been adjusted to reflect an immaterial change to the prior quarter and is now reflected correctly for the year-to-date period)

(5)

Amortization of debt discount and issuance costs and interest expense related to the convertible senior notes

(6)

Income tax effect primarily related to stock-based compensation expense

(7)

Includes 52,184 potentially dilutive shares related to the convertible senior notes and the issuance of shares under employee equity incentive plans

(8)

In accordance with ASC 260, in order to calculate GAAP net income per share, diluted, the numerator has been adjusted to add back $8,451 of interest expense related to the convertible senior notes

 

 

GAAP

 

 

Non-GAAP Adjustments

 

 

Non-GAAP

 

 

 

Three Months Ended January 31, 2023

 

 

(1)

 

 

(2)

 

 

(3)

 

 

(4)

 

 

(5)

 

 

(6)

 

 

(7)

 

 

Three Months Ended January 31, 2023

 

 

 

(in thousands, except percentages and per share data)

 

Gross profit

 

$

399,690

 

 

$

10,285

 

 

$

2,531

 

 

$

 

 

$

(35

)

 

$

 

 

$

 

 

$

 

 

$

412,471

 

Gross margin

 

 

82.2

%

 

 

2.1

%

 

 

0.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

84.8

%

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

229,788

 

 

 

(23,570

)

 

 

(198

)

 

 

 

 

 

533

 

 

 

 

 

 

 

 

 

 

 

 

206,553

 

Research and development

 

 

142,301

 

 

 

(36,491

)

 

 

 

 

 

 

 

 

(45

)

 

 

 

 

 

 

 

 

 

 

 

105,765

 

General and administrative

 

 

84,109

 

 

 

(14,944

)

 

 

 

 

 

(806

)

 

 

(9

)

 

 

(38,185

)

 

 

 

 

 

 

 

 

30,165

 

Total operating expenses

 

 

456,198

 

 

 

(75,005

)

 

 

(198

)

 

 

(806

)

 

 

479

 

 

 

(38,185

)

 

 

 

 

 

 

 

 

342,483

 

(Loss) income from operations

 

 

(56,508

)

 

 

85,290

 

 

 

2,729

 

 

 

806

 

 

 

(514

)

 

 

38,185

 

 

 

 

 

 

 

 

 

69,988

 

Operating margin

 

 

(11.6

)%

 

 

17.5

%

 

 

0.6

%

 

 

0.2

%

 

 

(0.1

)%

 

 

7.8

%

 

 

 

 

 

 

 

 

14.4

%

Net (loss) income

 

$

(70,790

)

 

$

85,290

 

 

$

2,729

 

 

$

806

 

 

$

(514

)

 

$

38,185

 

 

$

15,887

 

 

$

543

 

 

$

72,136

 

Weighted shares outstanding, basic

 

 

231,924

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

231,924

 

Weighted shares outstanding, diluted (8)

 

 

231,924

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

280,661

 

Net (loss) income per share, basic

 

$

(0.31

)

 

$

0.38

 

 

$

0.01

 

 

$

-

 

 

$

-

 

 

$

0.16

 

 

$

0.07

 

 

$

-

 

 

$

0.31

 

Net (loss) income per share, diluted

 

$

(0.31

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

0.26

 

(1)

 

Stock-based compensation expense

(2)

Amortization of intangible assets

(3)

Costs related to early exit of existing leases

(4)

Restructuring charges

(5)

Litigation settlement accrual and legal fees

(6)

Amortization of debt discount and issuance costs and interest expense related to convertible senior notes

(7)

Income tax effect primarily related to stock-based compensation expense

(8)

Includes 48,737 potentially dilutive shares related to convertible senior notes and the issuance of shares under employee equity incentive plans

 

 

GAAP

 

 

Non-GAAP Adjustments

 

 

Non-GAAP

 

 

 

Six Months Ended January 31, 2023

 

 

(1)

 

 

(2)

 

 

(3)

 

 

(4)

 

 

(5)

 

 

(6)

 

 

(7)

 

 

Six Months Ended January 31, 2023

 

 

 

(in thousands, except percentages and per share data)

 

Gross profit

 

$

750,804

 

 

$

17,790

 

 

$

5,341

 

 

$

 

 

$

230

 

 

$

 

 

$

 

 

$

 

 

$

774,165

 

Gross margin

 

 

81.6

%

 

 

1.9

%

 

 

0.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

84.1

%

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

466,010

 

 

 

(44,042

)

 

 

(547

)

 

 

 

 

 

(3,283

)

 

 

 

 

 

 

 

 

 

 

 

418,138

 

Research and development

 

 

291,744

 

 

 

(75,113

)

 

 

 

 

 

 

 

 

(1,661

)

 

 

 

 

 

 

 

 

 

 

 

214,970

 

General and administrative

 

 

130,213

 

 

 

(29,300

)

 

 

 

 

 

(1,726

)

 

 

(129

)

 

 

(38,185

)

 

 

 

 

 

 

 

 

60,873

 

Total operating expenses

 

 

887,967

 

 

 

(148,455

)

 

 

(547

)

 

 

(1,726

)

 

 

(5,073

)

 

 

(38,185

)

 

 

 

 

 

 

 

 

693,981

 

(Loss) income from operations

 

 

(137,163

)

 

 

166,245

 

 

 

5,888

 

 

 

1,726

 

 

 

5,303

 

 

 

38,185

 

 

 

 

 

 

 

 

 

80,184

 

Operating margin

 

 

(14.9

)%

 

 

18.1

%

 

 

0.6

%

 

 

0.2

%

 

 

0.6

%

 

 

4.1

%

 

 

 

 

 

 

 

 

8.7

%

Net (loss) income

 

$

(170,304

)

 

$

166,245

 

 

$

5,888

 

 

$

1,726

 

 

$

5,303

 

 

$

38,185

 

 

$

31,617

 

 

$

1,047

 

 

$

79,707

 

Weighted shares outstanding, basic

 

 

230,229

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

230,229

 

Weighted shares outstanding, diluted (8)

 

 

230,229

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

277,488

 

Net loss per share, basic

 

$

(0.74

)

 

$

0.72

 

 

$

0.03

 

 

$

0.01

 

 

$

0.02

 

 

$

0.17

 

 

$

0.14

 

 

$

-

 

 

$

0.35

 

Net loss per share, diluted

 

$

(0.74

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

0.29

 

(1)

 

Stock-based compensation expense

(2)

Amortization of intangible assets

(3)

Costs related to early exit of existing leases

(4)

Restructuring charges

(5)

Litigation settlement accrual and legal fees

(6)

Amortization of debt discount and issuance costs and interest expense related to convertible senior notes

(7)

Income tax effect primarily related to stock-based compensation expense

(8)

Includes 47,259 potentially dilutive shares related to convertible senior notes and the issuance of shares under employee equity incentive plans

Reconciliation of GAAP Net Cash Provided by Operating Activities to Non-GAAP Free Cash Flow

(Unaudited)

 

 

 

Three Months Ended

January 31,

 

 

Six Months Ended

January 31,

 

 

 

2023

 

 

2024

 

 

2023

 

 

2024

 

 

 

(in thousands)

 

Net cash provided by operating activities

 

$

74,084

 

 

$

186,408

 

 

$

139,597

 

 

$

331,881

 

Purchases of property and equipment

 

 

(11,070

)

 

 

(23,764

)

 

 

(30,772

)

 

 

(36,784

)

Free cash flow

 

$

63,014

 

 

$

162,644

 

 

$

108,825

 

 

$

295,097

 

 

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