Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Nutanix Reports Second Quarter Fiscal 2024 Financial Results By: Nutanix, Inc. via Business Wire February 28, 2024 at 16:05 PM EST 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 View source version on businesswire.com: https://www.businesswire.com/news/home/20240228914366/en/Contacts Investor Contact: Richard Valera ir@nutanix.com Media Contact: Jennifer Massaro pr@nutanix.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. 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Nutanix Reports Second Quarter Fiscal 2024 Financial Results By: Nutanix, Inc. via Business Wire February 28, 2024 at 16:05 PM EST 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 View source version on businesswire.com: https://www.businesswire.com/news/home/20240228914366/en/Contacts Investor Contact: Richard Valera ir@nutanix.com Media Contact: Jennifer Massaro pr@nutanix.com
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 View source version on businesswire.com: https://www.businesswire.com/news/home/20240228914366/en/