DOCUMENT AND ENTITY INFORMATION
DOCUMENT AND ENTITY INFORMATION - shares | 3 Months Ended | |
Oct. 31, 2018 | Nov. 30, 2018 | |
Entity Information [Line Items] | ||
Entity Registrant Name | Nutanix, Inc. | |
Entity Central Index Key | 1,618,732 | |
Current Fiscal Year End Date | --07-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Oct. 31, 2018 | |
Document Fiscal Year Focus | 2,019 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Common Class A | ||
Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding (in shares) | 145,930,552 | |
Common Class B | ||
Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding (in shares) | 33,206,369 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Oct. 31, 2018 | Jul. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 399,786 | $ 305,975 |
Short-term investments | 565,189 | 628,328 |
Accounts receivable, net | 237,682 | 258,289 |
Deferred commissions—current | 34,742 | 33,691 |
Prepaid expenses and other current assets | 39,621 | 36,818 |
Total current assets | 1,277,020 | 1,263,101 |
Property and equipment, net | 104,750 | 85,111 |
Deferred commissions—non-current | 87,365 | 80,688 |
Total intangible assets, net | 79,830 | 45,366 |
Goodwill | 184,994 | 87,759 |
Other assets—non-current | 39,127 | 37,855 |
Total assets | 1,773,086 | 1,599,880 |
Current liabilities: | ||
Accounts payable | 69,474 | 65,503 |
Accrued compensation and benefits | 65,709 | 85,398 |
Accrued expenses and other current liabilities | 28,552 | 31,682 |
Deferred revenue—current | 307,195 | 275,648 |
Total current liabilities | 470,930 | 458,231 |
Deferred revenue—non-current | 394,605 | 355,559 |
Convertible senior notes, net | 436,745 | 429,598 |
Other liabilities—non-current | 39,487 | 29,713 |
Total liabilities | 1,341,767 | 1,273,101 |
Commitments and contingencies (Note 7) | ||
Stockholders’ equity: | ||
Preferred stock, par value of $0.000025 per share— 200,000,000 shares authorized as of July 31, 2018 and October 31, 2018; no shares issued and outstanding as of July 31, 2018 and October 31, 2018 | 0 | 0 |
Common stock, par value of $0.000025 per share—1,200,000,000 (1,000,000,000 Class A, 200,000,000 Class B) shares authorized as of July 31, 2018 and October 31, 2018; 172,858,082 (135,109,672 Class A and 37,748,410 Class B) and 179,066,211 (141,366,331 Class A and 37,699,880 Class B) shares issued and outstanding as of July 31, 2018 and October 31, 2018 | 4 | 4 |
Additional paid-in capital | 1,554,878 | 1,355,907 |
Accumulated other comprehensive loss | (1,168) | (1,002) |
Accumulated deficit | (1,122,395) | (1,028,130) |
Total stockholders’ equity | 431,319 | 326,779 |
Total liabilities and stockholders’ equity | $ 1,773,086 | $ 1,599,880 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (parenthetical) - $ / shares | Oct. 31, 2018 | Jul. 31, 2018 |
Preferred stock, par value (in dollars per share) | $ 0.000025 | $ 0.000025 |
Preferred stock, shares authorized (in shares) | 200,000,000 | 200,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.000025 | $ 0.000025 |
Common stock, shares authorized (in shares) | 1,200,000,000 | 1,200,000,000 |
Common stock, shares issued (in shares) | 179,066,211 | 172,858,082 |
Common stock, shares outstanding (in shares) | 179,066,211 | 172,858,082 |
Common Class A | ||
Common stock, shares authorized (in shares) | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued (in shares) | 141,366,331 | 135,109,672 |
Common stock, shares outstanding (in shares) | 141,366,331 | 135,109,672 |
Common Class B | ||
Common stock, shares authorized (in shares) | 200,000,000 | 200,000,000 |
Common stock, shares issued (in shares) | 37,699,880 | 37,748,410 |
Common stock, shares outstanding (in shares) | 37,699,880 | 37,748,410 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | |
Oct. 31, 2018 | Oct. 31, 2017 | |
Revenue: | ||
Total revenue | $ 313,283 | $ 275,552 |
Cost of revenue: | ||
Total cost of revenue | 74,106 | 108,622 |
Gross profit | 239,177 | 166,930 |
Operating expenses: | ||
Sales and marketing | 196,497 | 145,405 |
Research and development | 110,531 | 64,512 |
General and administrative | 27,339 | 16,052 |
Total operating expenses | 334,367 | 225,969 |
Loss from operations | (95,190) | (59,039) |
Other expense, net | (2,703) | (189) |
Loss before provision for (benefit from) income taxes | (97,893) | (59,228) |
Provision for (benefit from) income taxes | (3,628) | 2,259 |
Net loss | $ (94,265) | $ (61,487) |
Net loss per share attributable to common stockholders—basic and diluted (in dollars per share) | $ (0.54) | $ (0.39) |
Weighted-average shares used in computing net loss per share attributable to common stockholders—basic and diluted (in shares) | 175,445,969 | 156,780,631 |
Professional Services | ||
Revenue: | ||
Total revenue | $ 88,937 | $ 56,500 |
Cost of revenue: | ||
Total cost of revenue | 34,845 | 23,460 |
Product | ||
Revenue: | ||
Total revenue | 224,346 | 219,052 |
Cost of revenue: | ||
Total cost of revenue | $ 39,261 | $ 85,162 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands | 3 Months Ended | |
Oct. 31, 2018 | Oct. 31, 2017 | |
Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (94,265) | $ (61,487) |
Other comprehensive loss, net of tax: | ||
Change in unrealized loss on available-for-sale securities, net of tax | (166) | (130) |
Comprehensive loss | $ (94,431) | $ (61,617) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY Statement - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit |
Stockholders' equity, beginning balance (in shares) at Jul. 31, 2017 | 154,636,520 | ||||
Stockholders' equity, beginning balance at Jul. 31, 2017 | $ 217,063 | $ 4 | $ 948,134 | $ (106) | $ (730,969) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of common stock through employee equity incentive plans, net of repurchases (in shares) | 3,989,701 | ||||
Issuance of common stock through employee equity incentive plans, net of repurchases | 7,968 | 7,968 | |||
Issuance of common stock from ESPP purchase (in shares) | 1,261,104 | ||||
Issuance of common stock from ESPP purchase | 17,402 | 17,402 | |||
Vesting of early exercised stock options | 249 | 249 | |||
Stock-based compensation | 35,515 | 35,515 | |||
Other comprehensive loss | (130) | (130) | |||
Net loss | (61,487) | (61,487) | |||
Stockholders' equity, ending balance (in shares) at Oct. 31, 2017 | 159,887,325 | ||||
Stockholders' equity, ending balance at Oct. 31, 2017 | $ 216,580 | $ 4 | 1,009,268 | (236) | (792,456) |
Stockholders' equity, beginning balance (in shares) at Jul. 31, 2018 | 172,858,082 | 172,858,082 | |||
Stockholders' equity, beginning balance at Jul. 31, 2018 | $ 326,779 | $ 4 | 1,355,907 | (1,002) | (1,028,130) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of common stock through employee equity incentive plans, net of repurchases (in shares) | 2,629,079 | ||||
Issuance of common stock through employee equity incentive plans, net of repurchases | 3,680 | 3,680 | |||
Issuance of common stock from ESPP purchase (in shares) | 1,127,728 | ||||
Issuance of common stock from ESPP purchase | 26,318 | 26,318 | |||
Vesting of early exercised stock options | 70 | 70 | |||
Issuance of common stock in connection with a business combination | 2,451,322 | ||||
Issuance of common stock in connection with a business combination | 102,978 | 102,978 | |||
Stock-based compensation | 65,925 | 65,925 | |||
Other comprehensive loss | (166) | (166) | |||
Net loss | $ (94,265) | (94,265) | |||
Stockholders' equity, ending balance (in shares) at Oct. 31, 2018 | 179,066,211 | 179,066,211 | |||
Stockholders' equity, ending balance at Oct. 31, 2018 | $ 431,319 | $ 4 | $ 1,554,878 | $ (1,168) | $ (1,122,395) |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | ||
Oct. 31, 2018 | Oct. 31, 2017 | ||
Cash flows from operating activities: | |||
Net loss | $ (94,265) | $ (61,487) | |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||
Depreciation and amortization | 16,183 | 11,333 | |
Stock-based compensation | 65,925 | 35,515 | |
Change in fair value of contingent consideration | (799) | 282 | |
Amortization of debt discount and issuance costs | 7,148 | 0 | |
Other | (759) | 131 | |
Changes in operating assets and liabilities: | |||
Accounts receivable, net | 23,497 | 7,326 | |
Deferred commissions | (7,728) | (8,457) | |
Prepaid expenses and other assets | (3,812) | (316) | |
Accounts payable | 1,292 | (6,504) | |
Accrued compensation and benefits | (19,689) | (7,220) | |
Accrued expenses and other liabilities | (7,442) | (293) | |
Deferred revenue | 70,273 | 39,788 | |
Net cash provided by operating activities | 49,824 | 10,098 | |
Cash flows from investing activities: | |||
Maturities of investments | 143,409 | 35,920 | |
Purchases of investments | (79,766) | (59,108) | |
Purchases of property and equipment | (29,832) | (17,965) | |
Payment for a business combination, net of cash and restricted cash acquired | (18,662) | 0 | |
Net cash (used in) provided by investing activities | 15,149 | (41,153) | |
Cash flows from financing activities: | |||
Proceeds from sales of shares through employee equity incentive plans, net of repurchases | 29,890 | 25,231 | |
Payment of debt in conjunction with a business combination | (991) | 0 | |
Payment of convertible notes issuance costs | (75) | 0 | |
Payment of offering costs | 0 | (85) | |
Net cash provided by financing activities | 28,824 | 25,146 | |
Net (decrease) increase in cash, cash equivalents and restricted cash | [1] | 93,797 | (5,909) |
Cash, cash equivalents and restricted cash—beginning of period | [1] | 307,098 | 139,497 |
Cash, cash equivalents and restricted cash—end of period | [1] | 400,895 | 133,588 |
Restricted cash | [1],[2] | 1,109 | 1,129 |
Cash and cash equivalents—end of period | 399,786 | 132,459 | |
Supplemental disclosures of cash flow information: | |||
Cash paid for income taxes | 3,910 | 2,066 | |
Supplemental disclosures of non-cash investing and financing information: | |||
Issuance of common stock in connection with a business combination | 102,978 | 0 | |
Purchases of property and equipment included in accounts payable and accrued liabilities | 15,717 | 7,084 | |
Vesting of early exercised stock options | $ 70 | $ 249 | |
[1] | During the first quarter of fiscal 2019, we adopted Accounting Standards Update ("ASU") No. 2016-18, which requires that the statement of cash flows explain the change during the period in the total of cash, cash equivalents and restricted cash. We adopted the standard retrospectively for the prior period presented. Our adoption of ASU 2016-18 did not have any significant impact on our condensed consolidated statements of cash flows. | ||
[2] | Included within other assets—non-current in the condensed consolidated balance sheets. |
OVERVIEW AND BASIS OF PRESENTAT
OVERVIEW AND BASIS OF PRESENTATION | 3 Months Ended |
Oct. 31, 2018 | |
Accounting Policies [Abstract] | |
OVERVIEW AND BASIS OF PRESENTATION | OVERVIEW AND BASIS OF PRESENTATION Organization and Description of Business Nutanix, Inc. was incorporated in the state of Delaware in September 2009. Nutanix, Inc. is headquartered in San Jose, California, and together with its wholly-owned subsidiaries (collectively, "we," "us," "our" or "Nutanix") has operations throughout North America, Europe, Asia Pacific, the Middle East, Latin America and Africa. We provide a leading enterprise cloud platform that digitizes the traditional silos of enterprise computing, converging compute, virtualization, storage, networking, desktop, governance and security services into one integrated solution. We primarily sell our products and services to end customers through distributors, resellers and original equipment manufacturers ("OEMs") (collectively, "Partners"). Principles of Consolidation and Significant Accounting Policies The accompanying condensed consolidated financial statements, which include the accounts of Nutanix, Inc. and its wholly-owned subsidiaries, have been prepared in conformity with accounting principles generally accepted in the United States ("U.S. GAAP") and are consistent in all material respects with those included in our Annual Report on Form 10-K for the fiscal year ended July 31, 2018 , filed with the Securities and Exchange Commission ("SEC"), on September 24, 2018. All intercompany accounts and transactions have been eliminated in consolidation. The condensed consolidated financial statements are unaudited, but include all adjustments of a normal recurring nature necessary for a fair presentation of our quarterly results. Certain reclassifications have been made to the prior year financial statements to conform to the current year presentation. These reclassifications had no impact on the previously reported net loss or accumulated deficit. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes in our Annual Report on Form 10-K for the fiscal year ended July 31, 2018 . Use of Estimates The preparation of interim condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Such management estimates include, but are not limited to, the best estimate of selling prices for products and related support; useful lives of intangible assets and property and equipment; allowance for doubtful accounts; determination of fair value of stock-based awards; accounting for income taxes, including the valuation allowance on deferred tax assets and uncertain tax positions; warranty liability; fair value of contingent consideration in a business combination; sales commissions expense; and contingencies and litigation. Management evaluates these estimates and assumptions on an ongoing basis using historical experience and other factors and makes adjustments when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could materially differ from those estimates and assumptions. Concentration of Risk Concentration of revenue and accounts receivable —We sell our products primarily through our Partners and occasionally directly to end customers. For the three months ended October 31, 2017 and 2018 , no end customer accounted for more than 10% of total revenue. For each significant Partner, revenue as a percentage of total revenue and accounts receivable as a percentage of total accounts receivable, net are as follows: Revenue Accounts Receivable as of Three Months Ended Partners 2017 2018 July 31, October 31, 2018 Partner A 17 % 12 % 16 % 14 % Partner B 28 % 11 % 13 % (1) Partner C 19 % 22 % 15 % 16 % Partner D 10 % (1) (1) 11 % Partner E 12 % 12 % 12 % 13 % (1) Less than 10% Summary of Significant Accounting Policies There have been no changes to our significant accounting policies described in our Annual Report on Form 10-K for the fiscal year ended July 31, 2018 , filed with the SEC on September 24, 2018, that have had a material impact on our condensed consolidated financial statements and related notes. Recently Adopted Accounting Pronouncements In October 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory, which requires us to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The new standard was effective for fiscal years beginning after December 15, 2017, with early adoption permitted, including interim reporting periods within those fiscal years. We adopted this ASU effective August 1, 2018 using a modified retrospective approach. The adoption of the new standard did not have a material impact on our condensed consolidated financial statements, as the increase in our U.S. deferred tax assets was offset by a valuation allowance. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash or restricted cash equivalents should be included with cash and cash equivalents when reconciling beginning-of-period and end-of-period amounts shown on the statement of cash flows. The new standard was effective for fiscal years beginning after December 15, 2017, with early adoption permitted, including interim reporting periods within those fiscal years. We adopted the new standard effective August 1, 2018, using the retrospective transition approach. The reclassified restricted cash balances from operating activities to changes in cash, cash equivalents and restricted cash on the condensed consolidated statements of cash flows were not material for any period presented. In June 2018, the FASB issued ASU 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which aligns the accounting for share-based payment awards issued to nonemployees with the guidance applicable to grants to employees. Under the new standard, equity-classified share-based payment awards issued to nonemployees will be measured on the grant date, instead of the current requirement to remeasure the awards through the performance completion date. The new standard is effective for fiscal years beginning after December 15, 2018, with early adoption permitted, including interim reporting periods within those fiscal years. We early adopted the standard effective August 1, 2018, using the prospective approach, and our adoption did not have a material impact on the condensed consolidated financial statements. In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other (Topic 350): Internal-Use Software, which standard aligns the requirements for capitalizing implementation costs incurred in a cloud computing arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The new standard is effective for fiscal years beginning after December 15, 2018, with early adoption permitted, including interim reporting periods within those fiscal years. We early adopted the standard effective August 1, 2018, using the prospective approach, and our adoption did not have a significant impact on our condensed consolidated financial statements. In August 2018, the SEC issued Securities Act Release No. 33-10532, which amends certain disclosure requirements, including extending to interim periods the annual requirement to disclose changes in stockholders’ equity. Under the new requirements, registrants must now analyze changes in stockholders’ equity, in the form of a reconciliation, for the current and comparative year-to-date interim periods, with subtotals for each interim period. The final rule was effective in November 2018. We adopted this new guidance during the first quarter of fiscal 2019 and have included a reconciliation of the changes in stockholders' equity in this Quarterly Report on Form 10-Q. Recently Issued and Not Yet Adopted Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02, Leases, which requires recognition of right-to-use lease assets and lease liabilities for all leases, except for short-term leases, on the balance sheet of lessees. The new standard is effective for fiscal years beginning after December 15, 2018, with early adoption permitted, including interim reporting periods within those fiscal years. We will adopt ASU 2016-02 effective August 1, 2019. This new standard requires a modified retrospective transition approach and provides certain optional transition relief. We currently anticipate that the adoption of this standard will have a material impact on our condensed consolidated balance sheets, given that we had operating lease commitments in excess of $100 million as of October 31, 2018. We expect that most of our operating lease commitments will be subject to the new standard and recognized as lease liabilities and right-of-use assets upon adoption, which will increase the total assets and total liabilities reported. However, we do not anticipate that the adoption of this standard will have a material impact on our condensed consolidated statements of operations, as the expense recognition under this new standard will be similar to current practice. We do not expect the adoption of this ASU to have a material impact on our condensed consolidated statements of cash flows. In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which provides companies with an option to reclassify stranded tax effects resulting from the enactment of the Tax Cuts and Jobs Act ("TCJA") from accumulated other comprehensive income to retained earnings. The new standard is effective for fiscal years beginning after December 15, 2018, with early adoption permitted, including interim reporting periods within those fiscal years, and will be applied either in the period of adoption or retrospectively to each period in which the effect of the change in the tax rate as a result of TCJA is recognized. We have not made a determination as to which alternative method we will use upon adoption of the standard, but we do not expect the adoption of this ASU to have a material impact on our condensed consolidated financial statements. |
BUSINESS COMBINATIONS
BUSINESS COMBINATIONS | 3 Months Ended |
Oct. 31, 2018 | |
Business Combinations [Abstract] | |
BUSINESS COMBINATIONS | BUSINESS COMBINATION Mainframe2, Inc. On August 24, 2018, we completed the acquisition of Mainframe2, Inc. ("Frame"), a privately held Delaware corporation with its principal offices in San Mateo, California ("Frame Acquisition"). Frame provides a cloud-based Windows desktop and application delivery service. The aggregate preliminary purchase price of approximately $129.7 million consisted of approximately $26.7 million in cash and 1,807,576 shares of our Class A common stock, with an aggregate fair value of approximately $103.0 million . The fair value of the shares of common stock issued was determined to be $56.97 per share, the closing price of our stock on August 24, 2018. Certain portions of the consideration for the acquisition, both cash and shares of our Class A common stock, have been placed in escrow to secure the indemnification obligations of certain Frame security holders. We also entered into employee holdback or deferred payment arrangements with certain employees of Frame who joined Nutanix after the acquisition, totaling approximately $43.3 million , of which $6.6 million will be paid in cash and $36.7 million will be paid in shares. As payment of these deferred payments is contingent upon the continuous service of the employees, they are being accounted for as post-combination compensation expense over the required service period of three years. As part of the share holdback arrangements, we issued 643,746 shares of our Class A common stock with a fair value of $56.97 per share, the closing price of our Class A common stock on August 24, 2018. This holdback is being accounted for as stock-based compensation over the required three-year service period. On September 21, 2018, we filed a Form S-3 registration statement with the SEC for the 2,451,322 shares of our Class A common stock that were issued as partial consideration in the Frame Acquisition. Acquisition-related costs are expensed as incurred as general and administrative expenses on our condensed consolidated statement of operations. We incurred approximately $0.9 million of acquisition-related costs in connection with the Frame Acquisition, of which approximately $0.2 million was recognized during the three months ended October 31, 2018 . The following table presents the preliminary aggregate purchase price allocation related to our acquisition of Frame as of October 31, 2018 : Estimated Fair Value (in thousands) Goodwill $ 97,143 Amortizable intangible assets 38,180 Tangible assets acquired 10,811 Liabilities assumed (16,474 ) Total consideration $ 129,660 The $38.2 million of amortizable intangible assets includes $31.8 million related to developed technology and $2.2 million related to customer relationships, which will be amortized over an estimated economic life of five years , and $4.2 million related to trade name, which will be amortized over an estimated economic life of four years . Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired. The goodwill recognized in this acquisition is primarily attributable to the synergies expected from the expanded market opportunities with our offerings and the knowledgeable and experienced workforce that joined us as part of the acquisition. Goodwill will not be amortized, but will instead be tested for impairment annually or more frequently if certain indicators of impairment are present. Goodwill is not expected to be deductible for income tax purposes. The purchase price allocation for Frame reflects various preliminary fair value estimates and analyses, including certain tangible assets acquired and liabilities assumed, the valuation of intangible assets acquired, income taxes and goodwill, which are subject to change within the measurement period as preliminary valuations are finalized. Measurement period adjustments are recorded in the reporting period in which the estimates are finalized and adjustment amounts are determined. We determined the fair values of the intangible assets with the assistance of a valuation firm. The estimation of the fair value of the intangible assets required the use of valuation techniques and entailed consideration of all the relevant factors that might affect the fair value, such as present value factors and estimates of future revenues and costs. Our condensed consolidated financial statements for the three months ended October 31, 2018 |
REVENUE, DEFERRED REVENUE AND D
REVENUE, DEFERRED REVENUE AND DEFERRED COMMISSIONS | 3 Months Ended |
Oct. 31, 2018 | |
Revenue Recognition and Deferred Revenue [Abstract] | |
REVENUE, DEFERRED REVENUE AND DEFERRED COMMISSIONS | ue and Revenue Recognition We generate revenue primarily from the sale of our enterprise cloud platform, which can be delivered pre-installed on an appliance that is configured to order or delivered separately to be utilized on a variety of certified hardware platforms. Software delivered on configured to order appliances is not portable to other appliances and has a term equal to the life of the associated appliance, while separately purchased software typically has a term of one to five years . Configured to order appliances, including our Nutanix-branded NX hardware line, can be purchased from one of our OEM partners or directly from Nutanix. Our platform is typically purchased with one or more years of support and entitlements, which includes the right to software upgrades and enhancements as well as technical support. A substantial portion of sales are made through channel partners and OEM relationships. The following table depicts the disaggregation of revenue by revenue type, consistent with how we evaluate our financial performance: Three Months Ended 2017 2018 (in thousands) Non-portable software $ 126,897 $ 146,570 Subscription 62,376 126,976 Hardware 80,838 32,547 Professional services 5,441 7,190 Total revenue $ 275,552 $ 313,283 Prior to the first quarter of fiscal 2019, we disaggregated revenue into the following categories: software revenue, hardware revenue and support, entitlements and other services revenue. Software revenue included non-portable software and term-based software licenses. Under the new disaggregated revenue categories, included in the table above, term-based software licenses are included within subscription revenue and non-portable software is presented separately. Support, entitlements and other services revenue included software entitlement and support subscriptions and professional services. Under the new disaggregated revenue categories, software entitlement and support subscriptions are included within subscription revenue and professional services revenue is presented separately. There was no change to the presentation of hardware revenue. Non-portable software revenue — Non-portable software revenue includes sales of our software operating system 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 have a term equal to the life of the appliance the software is delivered on. Revenue from our non-portable software products is generally recognized upon transfer of control to the customer. Subscription revenue — Subscription revenue is generated from the sales of software entitlement and support subscriptions, separately purchased software term-based licenses and cloud-based Software as a Service ("SaaS") offerings. We recognize revenue from software entitlement and support subscriptions and SaaS offerings ratably over the contractual service period. These offerings represented approximately $51.1 million and $83.0 million of our subscription revenue for the three months ended October 31, 2017 and 2018 , respectively. Revenue from our separately purchased software term-based licenses is generally recognized upon transfer of control to the customer, which happens when we make the software available to the customer. These software term-based licenses represented approximately $11.3 million and $44.0 million of our subscription revenue for the three months ended October 31, 2017 and 2018 , respectively. For the quarter ended October 31, 2018 , the weighted average term for these subscriptions was approximately 3.6 years . Hardware revenue — In transactions where we deliver the hardware appliance, 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. Professional services revenue — We also sell professional services with our products. We recognize revenue related to professional services as they are performed. Contracts with multiple performance obligations — Some of our contracts with customers contain multiple performance obligations. For these contracts, we account for individual performance obligations separately if they are distinct. The transaction price is allocated to the separate performance obligations on a relative standalone selling price ("SSP") basis. For deliverables that we routinely sell separately, such as software entitlement and support subscriptions on our core offerings, we determine SSP by evaluating the standalone sales over the trailing 12 months. For those that are not sold routinely, we determine SSP based on our overall pricing trends and objectives, taking into consideration market conditions and other factors, including the value of our contracts, the products sold and geographic locations. Contract balances — The timing of revenue recognition may differ from the timing of invoicing to customers. Accounts receivable are recorded at the invoiced amount, net of an allowance for doubtful accounts. A receivable is recognized in the period we deliver goods or provide services, or when our right to consideration is unconditional. In situations where revenue recognition occurs before invoicing, an unbilled receivable is created, which represents a contract asset. Unbilled accounts receivable, included in accounts receivable, net on the condensed consolidated balance sheets, was not material for any of the periods presented. Payment terms on invoiced amounts are typically 30 days. The balance of accounts receivable, net of allowance for doubtful accounts, as of July 31, 2018 and October 31, 2018 is presented in the accompanying condensed consolidated balance sheets. Costs to obtain and fulfill a contract — We capitalize commissions paid to sales personnel and the related payroll taxes when customer contracts are signed. These costs are recorded as deferred commissions in the condensed consolidated balance sheets, current and non-current. We determine whether costs should be deferred based on our sales compensation plans, if the commissions are incremental and would not have been incurred absent the execution of the customer contract. Sales commissions for renewals of customer contracts are not commensurate with the commissions paid for the acquisition of the initial contract given the substantive difference in commission rates in proportion to their respective contract values. Commissions paid upon the initial acquisition of a contract are amortized over the estimated period of benefit, which may exceed the term of the initial contract. Accordingly, the amortization of deferred costs is recognized on a systematic basis that is consistent with the pattern of revenue recognition allocated to each performance obligation and included in sales and marketing expense in the condensed consolidated statements of operations. We determine the estimated period of benefit by evaluating the expected renewals of customer contracts, the duration of relationships with our customers, customer retention data, our technology development lifecycle and other factors. Deferred costs are periodically reviewed for impairment. Deferred revenue — Deferred revenue primarily consists of amounts that have been invoiced but not yet recognized as revenue and primarily pertain to support subscriptions and professional services. The current portion of deferred revenue represents the amounts that are expected to be recognized as revenue within one year of the condensed consolidated balance sheet date. Significant changes in the balance of deferred revenue (contract liability) and total deferred commissions (contract asset) for the periods presented are as follows: Three Months Ended Deferred Revenue Deferred Commissions (in thousands) Balance as of July 31, 2018 $ 631,207 $ 114,379 Additions 159,210 33,958 Revenue/commissions recognized (88,937 ) (26,230 ) Assumed in a business combination 320 — Balance as of October 31, 2018 $ 701,800 $ 122,107 Of the $122.1 million deferred commissions balance as of October 31, 2018 , we expect to recognize approximately 28% as commission expense over the next 12 months, and the remainder thereafter. During the three months ended October 31, 2017 , we recognized revenue of approximately $49.6 million pertaining to amounts deferred as of July 31, 2017. During the three months ended October 31, 2018 , we recognized revenue of approximately $78.8 million pertaining to amounts deferred as of July 31, 2018. The majority of our contracted but not invoiced performance obligations are subject to cancellation terms. Revenue allocated to remaining performance obligations represents contracted revenue that has not yet been recognized ("contracted not recognized"), which includes deferred revenue and non-cancelable amounts that will be invoiced and recognized as revenue in future periods and excludes performance obligations that are subject to cancellation terms. Contracted not recognized revenue was approximately $719.7 million as of October 31, 2018 , of which we expect to recognize approximately 45% |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Oct. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS The fair value of our financial assets and liabilities measured on a recurring basis is as follows: As of July 31, 2018 Level I Level II Level III Total (in thousands) Financial Assets: Cash equivalents: Money market funds $ 41,763 $ — $ — $ 41,763 Commercial paper — 77,818 — 77,818 U.S. government securities — 4,985 — 4,985 Short-term investments: Corporate bonds — 448,458 — 448,458 Commercial paper — 120,772 — 120,772 U.S. government securities — 59,098 — 59,098 Total measured at fair value $ 41,763 $ 711,131 $ — $ 752,894 Cash 181,409 Total cash, cash equivalents and short-term investments $ 934,303 Financial Liabilities: Contingent consideration $ — $ — $ 1,872 $ 1,872 As of October 31, 2018 Level I Level II Level III Total (in thousands) Financial Assets: Cash equivalents: Money market funds $ 59,957 $ — $ — $ 59,957 Commercial paper — 106,600 — 106,600 U.S. government securities — 4,985 — 4,985 Short-term investments: Corporate bonds — 458,674 — 458,674 Commercial paper — 57,247 — 57,247 U.S. government securities — 49,268 — 49,268 Total measured at fair value $ 59,957 $ 676,774 $ — $ 736,731 Cash 228,244 Total cash, cash equivalents and short-term investments $ 964,975 Financial Liabilities: Contingent consideration $ — $ — $ 1,073 $ 1,073 Financial Instruments Not Recorded at Fair Value on a Recurring Basis We report our financial instruments at fair value, with the exception of the 0% Convertible Senior Notes, due in 2023 (the "Notes"). Financial instruments that are not recorded at fair value are measured at fair value on a quarterly basis for disclosure purposes. The carrying values and estimated fair values of financial instruments not recorded at fair value are as follows: As of July 31, 2018 As of October 31, 2018 Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value (in thousands) Convertible senior notes, net $ 429,598 $ 685,527 $ 436,745 $ 634,513 The carrying value of the Notes as of October 31, 2018 was net of the unamortized debt discount of $130.9 million and unamortized debt issuance costs of $7.3 million . The total estimated fair value of the Notes was determined based on the closing trading price per $100 of the Notes as of the last day of trading for the period. We consider the fair value of the Notes to be a Level 2 measurement due to the limited trading activity. A summary of the changes in the fair value of our contingent consideration, characterized as Level 3 in the fair value hierarchy, is as follows: Three Months Ended 2017 2018 (in thousands) Contingent consideration—beginning balance $ 4,295 $ 1,872 Change in fair value (1) 282 (799 ) Contingent consideration—ending balance $ 4,577 $ 1,073 (1) Recognized in the condensed consolidated statements of operations within general and administrative expenses. |
BALANCE SHEET COMPONENTS
BALANCE SHEET COMPONENTS | 3 Months Ended |
Oct. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BALANCE SHEET COMPONENTS | BALANCE SHEET COMPONENTS Short-Term Investments The amortized cost of our short-term investments approximates their fair value. As of July 31, 2018 and October 31, 2018 , unrealized gains and losses from our short-term investments were not material. As of July 31, 2018 and October 31, 2018 , unrealized losses from securities that were in an unrealized loss position for more than 12 months were not material. Unrealized losses related to our short-term investments are due to interest rate fluctuations, as opposed to credit quality. In addition, unless we need cash to support our current operations, we do not intend to sell and it is not likely that we would be required to sell these investments before recovery of their amortized cost basis, which may be at maturity. As a result, at July 31, 2018 and October 31, 2018 , there were no other-than-temporary impairments for these investments. The following table summarizes the estimated fair value of our investments in marketable debt securities by their contractual maturity dates: As of October 31, 2018 (in thousands) Due within one year $ 434,191 Due in one year through three years 130,998 Total $ 565,189 Property and Equipment, Net Property and equipment, net consists of the following: Estimated As of July 31, October 31, 2018 (in months) (in thousands) Computer, production, engineering and other equipment 36 $ 131,805 $ 153,647 Demonstration units 12 53,547 54,387 Leasehold improvements (1) 19,916 26,138 Furniture and fixtures 60 7,636 9,580 Total property and equipment, gross 212,904 243,752 Less: accumulated depreciation (127,793 ) (139,002 ) Total property and equipment, net $ 85,111 $ 104,750 (1) Leasehold improvements are amortized over the shorter of the estimated useful lives of the improvements or the remaining lease term. Depreciation expense related to our property and equipment was $10.2 million and $12.5 million for the three months ended October 31, 2017 and 2018 , respectively. Goodwill and Intangible Assets, Net The changes in the carrying value of goodwill during the three months ended October 31, 2018 were as follows: Carrying Amount (in thousands) Balance as of July 31, 2018 $ 87,759 Acquired in Frame Acquisition 97,143 Other 92 Balance as of October 31, 2018 $ 184,994 Intangible assets, net consists of the following: As of July 31, October 31, 2018 (in thousands) Developed technology $ 47,500 $ 79,300 Customer relationships 6,650 8,860 Trade name — 4,170 Total intangible assets, gross 54,150 92,330 Less: Accumulated amortization of developed technology (6,956 ) (10,122 ) Accumulated amortization of customer relationships (1,828 ) (2,204 ) Accumulated amortization of trade name — (174 ) Total accumulated amortization (8,784 ) (12,500 ) Total intangible assets, net $ 45,366 $ 79,830 Amortization expense related to our intangible assets is being recognized in the condensed consolidated statements of operations within product cost of revenue for developed technology and sales and marketing expense for customer relationships and trade name. The estimated future amortization expense of our intangible assets is as follows: Fiscal Year Ending July 31: Amount (in thousands) 2019 (remaining nine months) $ 13,060 2020 17,380 2021 17,380 2022 16,183 2023 10,856 Thereafter 4,971 Total $ 79,830 Other Assets—Non-Current Other assets—non-current consists of the following: As of July 31, October 31, 2018 (in thousands) Other tax assets—non-current $ 30,927 $ 31,460 Deferred tax assets—non-current 2,860 2,810 Other 4,068 4,857 Total other assets—non-current $ 37,855 $ 39,127 Other tax assets—non-current as of July 31, 2018 and October 31, 2018 represents a receivable associated with alternative minimum tax credit carryforwards which will be refundable as a result of the Tax Cuts and Jobs Act. For additional details, refer to Note 10. Accrued Compensation and Benefits Accrued compensation and benefits consists of the following: As of July 31, October 31, 2018 (in thousands) Accrued commissions $ 21,660 $ 17,721 Accrued vacation 10,548 12,069 Payroll taxes payable 9,563 9,718 Contributions to ESPP withheld 21,931 8,907 Accrued bonus 12,129 7,848 Other 9,567 9,446 Total accrued compensation and benefits $ 85,398 $ 65,709 Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consists of the following: As of July 31, October 31, 2018 (in thousands) Income taxes payable $ 20,863 $ 19,571 Accrued professional services 5,838 3,124 Other 4,981 5,857 Total accrued expenses and other current liabilities $ 31,682 $ 28,552 |
CONVERTIBLE SENIOR NOTES
CONVERTIBLE SENIOR NOTES | 3 Months Ended |
Oct. 31, 2018 | |
Debt Disclosure [Abstract] | |
CONVERTIBLE SENIOR NOTES | CONVERTIBLE SENIOR NOTES In January 2018, we issued Convertible Senior Notes with a 0% interest rate for an aggregate principal amount of $575.0 million , due in 2023 (the "Notes"), in a private placement to qualified institutional buyers pursuant to Rule144A under the Securities Act of 1933, as amended. This included $75.0 million in aggregate principal amount of the Notes that we issued resulting from initial purchasers fully exercising their option to purchase additional notes. There are no required principal payments prior to the maturity of the Notes. The total net proceeds from the Notes are as follows: Amount (in thousands) Principal amount $ 575,000 Less: initial purchasers' discount (10,781 ) Less: cost of the bond hedges (143,175 ) Add: proceeds from the sale of warrants 87,975 Less: other issuance costs (707 ) Net proceeds $ 508,312 The Notes do not bear any interest and will mature on January 15, 2023, unless earlier converted or repurchased in accordance with their terms. The Notes are unsecured and do not contain any financial covenants or any restrictions on the payment of dividends, or the issuance or repurchase of securities by us. Each $1,000 of principal of the Notes will initially be convertible into 20.4705 shares of our Class A common stock, which is equivalent to an initial conversion price of approximately $48.85 per share, subject to adjustment upon the occurrence of specified events. Holders of these Notes may convert their Notes at their option at any time prior to the close of the business day immediately preceding October 15, 2022, only under the following circumstances: 1) during any fiscal quarter commencing after the fiscal quarter ending on April 30, 2018 (and only during such fiscal quarter), if the last reported sale price of our Class A common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding fiscal quarter, is greater than or equal to 130% of the conversion price on each applicable trading day; 2) during the five business day period after any five consecutive trading day period (the "measurement period") in which the trading price per $1,000 principal amount of Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our Class A common stock and the conversion rate for the Notes on each such trading day; or 3) upon the occurrence of certain specified corporate events. Based on the closing price of our Class A common stock of $41.51 on October 31, 2018 , the if-converted value of the Notes was greater than the principal amount. However, since the price of our Class A common stock was not greater than or equal to 130% of the conversion price for 20 or more trading days during the 30 consecutive trading days ending on the last trading day of the quarter ended October 31, 2018 , the Notes are not convertible for the fiscal quarter commencing after October 31, 2018 . On or after October 15, 2022, holders may convert all or any portion of their Notes at any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date, regardless of the foregoing conditions. Upon conversion of the Notes, we will pay or deliver, as the case may be, cash, shares of our Class A common stock or a combination of cash and shares of Class A common stock, at our election. We intend to settle the principal of the Notes in cash. The conversion rate will be subject to adjustment in some events, but will not be adjusted for any accrued or unpaid interest. A holder who converts their Notes in connection with certain corporate events that constitute a "make-whole fundamental change" per the indenture governing the Notes are, under certain circumstances, entitled to an increase in the conversion rate. In addition, if we undergo a fundamental change prior to the maturity date, holders may require us to repurchase for cash all or a portion of their Notes at a repurchase price equal to 100% of the principal amount of the repurchased Notes, plus accrued and unpaid interest. We may not redeem the Notes prior to the maturity date, and no sinking fund is provided for the Notes. In accounting for the issuance of the Notes, we separated the Notes into liability and equity components. The carrying amount of the liability component of approximately $423.4 million was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature. The carrying amount of the equity component of approximately $151.6 million , representing the conversion option, was determined by deducting the fair value of the liability component from the par value of the Notes. The difference between the principal amount of the Notes and the liability component (the "debt discount") is amortized to interest expense using the effective interest method over the term of the Notes. The equity component of the Notes is included in additional paid-in capital in the condensed consolidated balance sheets and is not remeasured as long as it continues to meet the conditions for equity classification. We incurred transaction costs related to the issuance of the Notes of approximately $11.5 million , consisting of an initial purchasers' discount of $10.8 million and other issuance costs of approximately $0.7 million . In accounting for the transaction costs, we allocated the total amount incurred to the liability and equity components using the same proportions as the proceeds from the Notes. Transaction costs attributable to the liability component were approximately $8.5 million , recorded as debt issuance costs (presented as contra debt in the condensed consolidated balance sheets), and are being amortized to interest expense over the term of the Notes. The transaction costs attributable to the equity component were approximately $3.0 million and were net with the equity component within stockholders’ equity. The Notes consisted of the following: As of October 31, 2018 (in thousands) Principal amounts: Principal $ 575,000 Unamortized debt discount (1) (130,949 ) Unamortized debt issuance costs (1) (7,306 ) Net carrying amount $ 436,745 Carrying amount of equity component (2) $ 148,598 (1) Included in the condensed consolidated balance sheets within convertible senior notes, net and amortized over the remaining life of the Notes using the effective interest rate method. The effective interest rate is 6.62% . (2) Included in the condensed consolidated balance sheets within additional paid-in capital, net of $3.0 million in equity issuance costs. As of October 31, 2018, the remaining life of the Notes was approximately 50 months. The following table sets forth the total interest expense recognized related to the Notes: Three Months Ended (in thousands) Interest expense related to amortization of debt discount $ 6,770 Interest expense related to amortization of debt issuance costs 378 Total interest expense $ 7,148 Note Hedges and Warrants Concurrently with the offering of the Notes in January 2018, we entered into convertible note hedge transactions with certain bank counterparties, whereby we have the initial option to purchase a total of approximately 11.8 million shares of our Class A common stock at a conversion price of approximately $48.85 per share, subject to adjustment for certain specified events. The total cost of the convertible note hedge transactions was approximately $143.2 million . In addition, we sold warrants to certain bank counterparties, whereby the holders of the warrants have the initial option to purchase a total of approximately 11.8 million shares of our Class A common stock at a price of $73.46 per share, subject to adjustment for certain specified events. We received approximately $88.0 million in cash proceeds from the sale of these warrants. Taken together, the purchase of the convertible note hedges and the sale of warrants are intended to offset any actual dilution from the conversion of the Notes and to effectively increase the overall conversion price from $48.85 to $73.46 per share. As these transactions meet certain accounting criteria, the convertible note hedges and warrants are recorded within stockholders’ equity and are not accounted for as derivatives. The net cost incurred in connection with the convertible note hedge and warrant transactions of approximately $55.2 million was recorded as a reduction to additional paid-in capital in the condensed consolidated balance sheets as of July 31, 2018 and October 31, 2018 . The fair value of the note hedges and warrants are not remeasured each reporting period. The amounts paid for the note hedges are tax deductible expenses, while the proceeds received from the warrants are not taxable. Impact to Earnings per Share The Notes will have no impact to diluted earnings per share ("EPS") until they meet the criteria for conversion, as discussed above, as we intend to settle the principal amount of the Notes in cash upon conversion. Under the treasury stock method, in periods when we report net income, we are required to include the effect of additional shares that may be issued under the Notes when the price of our Class A common stock exceeds the conversion price. Under this method, the cumulative dilutive effect of the Notes would be approximately 3.9 million shares if the average price of our Class A common stock was $73.46 . However, upon conversion, there will be no economic dilution from the Notes, as exercise of the note hedges eliminate any dilution that would have otherwise occurred. The note hedges are required to be excluded from the calculation of diluted earnings per share, as they would be antidilutive under the treasury stock method. The warrants will have a dilutive effect when the average share price exceeds the warrant strike price of $73.46 per share. As the price of our Class A common stock continues to increase above the warrant strike price, additional dilution would occur at a declining rate so that a $10 increase from the warrant strike price would yield a cumulative dilution of approximately 4.9 million diluted shares for EPS purposes. However, upon conversion, the note hedges would neutralize the dilution from the Notes so that there would only be dilution from the warrants, which would result in an actual dilution of approximately 1.4 million shares at a common stock price of $83.46 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Oct. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Operating Leases We have commitments for future payments related to our office facility leases and other contractual obligations. We lease our office facilities under non-cancelable operating lease agreements expiring through 2024. Certain of these lease agreements have free or escalating rent payments. We recognize rent expense under such agreements on a straight-line basis over the lease term, with any free or escalating rent payments amortized as a reduction or addition of rent expense over the lease term. Future minimum payments due under operating leases as of October 31, 2018 are as follows: Fiscal Year Ending July 31: Amount (in thousands) 2019 (remaining nine months) $ 22,196 2020 28,084 2021 25,506 2022 25,233 2023 24,151 Thereafter 18,315 Total $ 143,485 Purchase Commitments In the normal course of business, we make commitments with our third-party hardware product manufacturers to manufacture our inventory and non-standard components based on our forecasts. These commitments consist of obligations for on-hand inventory and non-cancelable purchase orders for non-standard components. We record a charge for firm, non-cancelable and unconditional purchase commitments with our third-party hardware product manufacturers for non-standard components when and if quantities exceed our future demand forecasts through a charge to cost of product revenue. As of October 31, 2018 , we had approximately $60.0 million of non-cancelable purchase commitments pertaining to our normal operations, and approximately $126.6 million |
STOCKHOLDERS_ EQUITY
STOCKHOLDERS’ EQUITY | 3 Months Ended |
Oct. 31, 2018 | |
Equity [Abstract] | |
STOCKHOLDERS’ EQUITY | STOCKHOLDERS’ EQUITY We have two classes of authorized common stock, Class A common stock and Class B common stock. As of October 31, 2018 , we had 1,000,000,000 shares of Class A common stock authorized, with a par value of $0.000025 per share, and 200,000,000 shares of Class B common stock authorized, with a par value of $0.000025 per share. As of October 31, 2018 , we had 141,366,331 shares of Class A common stock issued and outstanding and 37,699,880 shares of Class B common stock issued and outstanding. Holders of Class A common stock are entitled to one vote for each share of Class A common stock held on all matters submitted to a vote of stockholders. Holders of Class B common stock are entitled to 10 |
EQUITY AWARD PLANS
EQUITY AWARD PLANS | 3 Months Ended |
Oct. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
EQUITY AWARD PLANS | EQUITY INCENTIVE PLANS Stock Plans We have three equity incentive plans, the 2010 Stock Plan ("2010 Plan"), 2011 Stock Plan ("2011 Plan") and 2016 Equity Incentive Plan ("2016 Plan"). Our stockholders approved the 2016 Plan in March 2016 and it became effective in connection with our initial public offering ("IPO"). As a result, at the time of the IPO, we ceased granting additional stock awards under the 2010 Plan and 2011 Plan and both plans were terminated. Any outstanding stock awards under the 2010 Plan and 2011 Plan will remain outstanding, subject to the terms of the applicable plan and award agreements, until such shares are issued under those stock awards, by exercise of stock options or settlement of restricted stock units ("RSUs"), or until those stock awards become vested or expired by their terms. Under the 2016 Plan, we may grant incentive stock options ("ISOs"), non-statutory stock options ("NSOs"), restricted stock, RSUs and stock appreciation rights to employees, directors and consultants. We initially reserved 22,400,000 shares of our Class A common stock for issuance under the 2016 Plan. The number of shares of Class A common stock available for issuance under the 2016 Plan will also include an annual increase on the first day of each fiscal year, beginning in fiscal 2018, equal to the lesser of: 18,000,000 shares, 5% of the outstanding shares of all classes of common stock as of the last day of our immediately preceding fiscal year, or such other amount as may be determined by the Board. Accordingly, on August 1, 2017 and 2018, the number of shares of Class A common stock available for issuance under the 2016 Plan increased by 7,731,826 and 8,642,904 shares, respectively, pursuant to these provisions. As of October 31, 2018 , we had reserved a total of 52,147,732 shares for the issuance of equity awards under the Stock Plans, of which 18,417,184 shares were still available for grant. Restricted Stock Units Performance RSUs — We grant RSUs that have both service and performance conditions to our executives and employees ("Performance RSUs"). Vesting of Performance RSUs is subject to continuous service and the satisfaction of certain performance targets. While we recognize cumulative stock-based compensation expense for the portion of the awards for which both the service condition has been satisfied and it is probable that the performance conditions will be met, the actual vesting and settlement of Performance RSUs are subject to the performance conditions actually being met. Market Stock Units — In October 2018, the Compensation Committee of our Board of Directors approved the grant of 100,000 RSUs subject to certain market conditions ("MSUs") to our Chief Executive Officer ("CEO"), with a weighted average grant date fair value per unit of $25.16 . The MSUs may vest based upon the achievement of an average stock price of $80 over a performance period of approximately 4.5 years (the “Performance Period”), subject to his continuous service on each vesting date. The average stock price will be calculated based on the average closing price of one share of our Class A common stock, as reported on the NASDAQ Stock Market during the 180-day period ending on the last trading day prior to each measurement date (as applicable, the “Average Stock Price”). The Average Stock Price will be measured once per quarter during the Performance Period, and: • If the Average Stock Price on any given quarterly measurement date does not equal or exceed $80 , then none of the MSUs will vest that quarter, and any unvested MSUs will carry over to the next quarter (the “Carryover MSUs”); • If the Average Stock Price on any given quarterly measurement date equals or exceeds $80 , then 1/18th of the MSUs plus the applicable Carryover MSUs, if any, would vest; and/or • If the Average Stock Price never equals or exceeds $80 during the Performance Period, the MSUs would terminate at the end of the Performance Period. We used a Monte Carlo simulation to calculate the fair value of the award on the grant date. A Monte Carlo simulation requires the use of various assumptions, including the stock price volatility and risk free interest rate as of the valuation date corresponding to the length of time remaining in the performance period and expected dividend yield. We will recognize stock-based compensation expense related to these MSUs using a graded vesting attribution method over the Performance Period. As of October 31, 2018 , 100,000 MSUs remained outstanding. Below is a summary of RSU activity, including MSUs, under the Stock Plans: Number of Grant Date Fair Value per Share Outstanding at July 31, 2018 23,597,499 $ 31.20 Granted 1,789,990 $ 44.14 Vested (1,677,501 ) $ 23.19 Canceled/forfeited (371,928 ) $ 28.39 Outstanding at October 31, 2018 23,338,060 $ 32.81 Stock Options We did not grant any stock options during the three months ended October 31, 2018 . A total of 950,965 stock options were exercised during the three months ended October 31, 2018 , for an average exercise price per share of $3.87 . As of October 31, 2018 , 10,358,308 stock options, with a weighted average exercise price of $5.23 per share, a weighted average remaining contractual life of 5.4 years and an aggregate intrinsic value of $375.8 million , remained outstanding. Employee Stock Purchase Plan In December 2015, the Board adopted the 2016 Employee Stock Purchase Plan ("2016 ESPP"), which was subsequently amended in January 2016 and September 2016 and approved by our stockholders in March 2016. The 2016 ESPP became effective in connection with our IPO. A total of 3,800,000 shares of Class A common stock were initially reserved for issuance under the 2016 ESPP. The number of shares of Class A common stock available for sale under the 2016 ESPP also includes an annual increase on the first day of each fiscal year, beginning in fiscal 2018, equal to the lesser of: 3,800,000 shares, 1% of the outstanding shares of all classes of common stock as of the last day of our immediately preceding fiscal year, or such other amount as may be determined by the Board. Accordingly, on August 1, 2017 and 2018, the number of shares of Class A common stock available for issuance under 2016 ESPP increased by 1,546,365 and 1,728,580 shares, respectively, pursuant to these provisions. The 2016 ESPP allows eligible employees to purchase shares of our Class A common stock at a discount through payroll deductions of up to 15% of eligible compensation, subject to caps of $25,000 in any calendar year and 1,000 shares on any purchase date. The 2016 ESPP provides for 12 -month offering periods, generally beginning in March and September of each year, and each offering period consists of two six-month purchase periods. On each purchase date, participating employees will purchase Class A common stock at a price per share equal to 85% of the lesser of the fair market value of our Class A common stock on (i) the first trading day of the applicable offering period or (ii) the last trading day of each purchase period in the applicable offering period. If the stock price of our Class A common stock on any purchase date in an offering period is lower than the stock price on the enrollment date of that offering period, the offering period will immediately reset after the purchase of shares on such purchase date and automatically roll into a new offering period. During the three months ended October 31, 2018 , 1,127,728 shares of common stock were purchased under the 2016 ESPP for an aggregate amount of $26.3 million . As of October 31, 2018 , 2,283,313 shares were available for future issuance under the 2016 ESPP. We use the Black-Scholes option pricing model to determine the fair value of shares purchased under the 2016 ESPP with the following weighted average assumptions on the date of grant: Three Months Ended 2017 2018 Expected term (in years) 0.75 0.79 Risk-free interest rate 1.25 % 2.5 % Volatility 50.2 % 49.5 % Dividend yield — % — % Stock-Based Compensation Total stock-based compensation expense recognized in the condensed consolidated statements of operations is as follows: Three Months Ended 2017 2018 (in thousands) Cost of revenue: Product $ 570 $ 698 Support, entitlements and other services 2,072 3,157 Sales and marketing 13,766 22,606 Research and development 15,542 31,009 General and administrative 3,565 8,455 Total stock-based compensation expense $ 35,515 $ 65,925 As of October 31, 2018 , unrecognized stock-based compensation expense related to outstanding stock awards was approximately $701.6 million and is expected to be recognized over a weighted average period of approximately 2.6 |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Oct. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The income tax provision of $2.3 million for the three months ended October 31, 2017 primarily consisted of foreign taxes on our international operations and U.S. state income taxes. The income tax benefit of $3.6 million for the three months ended October 31, 2018 primarily consisted of a $5.9 million U.S. valuation allowance release in connection with an acquisition, partially offset by foreign taxes on our international operations and U.S. state income taxes. The net deferred tax liability recorded in connection with this acquisition provided an additional source of taxable income to support the realizability of the pre-existing deferred tax assets and as a result, we released a portion of our U.S. valuation allowance. We continue to maintain a valuation allowance for our U.S. Federal and state deferred tax assets. In December 2017, the U.S. Congress passed, and the President signed, the Tax Cuts and Jobs Act, which includes a broad range of tax reform proposals affecting businesses, including a federal corporate rate reduction from 35% to 21%, effective January 1, 2018, limitations on the deductibility of interest expense and executive compensation, the creation of new minimum taxes, such as the base erosion anti-abuse tax ("BEAT") and Global Intangible Low Taxed Income ("GILTI") tax and a new minimum tax on certain foreign earnings. On December 22, 2017, Staff Accounting Bulletin No. 118 (“SAB 118”) was issued to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the TCJA. During the first quarter of fiscal 2019, the Company noted no additional guidance or information that affects the provisional amounts previously recorded. While we do not anticipate any remaining adjustments, the measurement period under SAB 118 remains open as there is still anticipated guidance clarifying certain aspects of the TCJA. The income tax benefit for the quarter ended October 31, 2018 is based on the assumption that foreign undistributed earnings are indefinitely reinvested. We will continue to evaluate whether to continue to assert indefinite reinvestment on part or all of our foreign undistributed earnings. In the event we determine not to continue to assert the permanent reinvestment of part or all of our foreign undistributed earnings, such a determination could result in the accrual and payment of additional foreign, state and local taxes. |
NET LOSS PER SHARE
NET LOSS PER SHARE | 3 Months Ended |
Oct. 31, 2018 | |
Earnings Per Share [Abstract] | |
NET LOSS PER SHARE | NET LOSS PER SHARE Basic net income (loss) per share is computed using the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share is computed by giving effect to potentially dilutive common stock equivalents outstanding during the period, as their effect would be dilutive. Potentially dilutive common shares include participating securities and shares issuable upon the exercise of stock options, the exercise of common stock warrants, the exercise of convertible preferred stock warrants, the vesting of RSUs and each purchase under the 2016 ESPP, under the treasury stock method. In loss periods, basic net loss per share and diluted net loss per share are the same, as the effect of potential common shares is antidilutive and therefore excluded. The rights, including the liquidation and dividend rights, of the holders of our Class A and Class B common stock are identical, except with respect to voting. As the liquidation and dividend rights are identical, our undistributed earnings or losses are allocated on a proportionate basis among the holders of both Class A and Class B common stock. As a result, the net income (loss) per share attributed to common stockholders will, therefore, be the same for both Class A and Class B common stock on an individual or combined basis. The computation of basic and diluted net loss per share attributable to Class A and Class B common stockholders is as follows: Three Months Ended 2017 2018 (in thousands, except share and per share data) Numerator: Net loss $ (61,487 ) $ (94,265 ) Denominator: Weighted average shares—basic and diluted 156,780,631 175,445,969 Net loss per share attributable to common stockholders—basic and diluted $ (0.39 ) $ (0.54 ) The potential shares of common stock that were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented because including them would have been antidilutive are as follows: Three Months Ended 2017 2018 Outstanding stock options and RSUs 34,400,643 33,696,368 Employee stock purchase plan 2,089,383 1,596,411 Contingently issuable shares pursuant to business combinations — 920,371 Common stock subject to repurchase 152,558 29,461 Common stock warrants 34,180 34,180 Total 36,676,764 36,276,791 |
SEGMENT INFORMATION
SEGMENT INFORMATION | 3 Months Ended |
Oct. 31, 2018 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | SEGMENT INFORMATION Our chief operating decision maker is a group which is comprised of our Chief Executive Officer and Chief Financial Officer. This group reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance. Accordingly, we have a single reportable segment. The following table sets forth revenue by geographic location based on bill-to location: Three Months Ended 2017 2018 (in thousands) U.S. $ 187,365 $ 181,006 Europe, the Middle East and Africa 37,444 54,776 Asia Pacific 44,859 67,238 Other Americas 5,884 10,263 Total revenue $ 275,552 $ 313,283 As of July 31, 2018 and October 31, 2018 , $130.0 million and $160.3 million |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 3 Months Ended |
Oct. 31, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | RELATED PARTY TRANSACTIONS We enter into various transactions with related parties in the normal course of business. During the three months ended October 31, 2017 and 2018 , we did not have any material related party transactions. In connection with the acquisition of PernixData in the first quarter of fiscal 2017, entities affiliated with Lightspeed Venture Partners, which owned approximately 36.7% of our outstanding Convertible Preferred Stock as of July 31, 2016, owned approximately 26.4% of the outstanding capital stock of PernixData immediately prior to the completion of the PernixData acquisition. One member of our Board is affiliated with Lightspeed Venture Partners. As of October 31, 2018 , entities affiliated with Lightspeed Venture Partners owned approximately 6.5% |
OVERVIEW AND BASIS OF PRESENT_2
OVERVIEW AND BASIS OF PRESENTATION (Policies) | 3 Months Ended |
Oct. 31, 2018 | |
Accounting Policies [Abstract] | |
Principles of Consolidation and Significant Accounting Policies | Principles of Consolidation and Significant Accounting Policies The accompanying condensed consolidated financial statements, which include the accounts of Nutanix, Inc. and its wholly-owned subsidiaries, have been prepared in conformity with accounting principles generally accepted in the United States ("U.S. GAAP") and are consistent in all material respects with those included in our Annual Report on Form 10-K for the fiscal year ended July 31, 2018 , filed with the Securities and Exchange Commission ("SEC"), on September 24, 2018. All intercompany accounts and transactions have been eliminated in consolidation. The condensed consolidated financial statements are unaudited, but include all adjustments of a normal recurring nature necessary for a fair presentation of our quarterly results. Certain reclassifications have been made to the prior year financial statements to conform to the current year presentation. These reclassifications had no impact on the previously reported net loss or accumulated deficit. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes in our Annual Report on Form 10-K for the fiscal year ended July 31, 2018 |
Use of Estimates | Use of EstimatesThe preparation of interim condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Such management estimates include, but are not limited to, the best estimate of selling prices for products and related support; useful lives of intangible assets and property and equipment; allowance for doubtful accounts; determination of fair value of stock-based awards; accounting for income taxes, including the valuation allowance on deferred tax assets and uncertain tax positions; warranty liability; fair value of contingent consideration in a business combination; sales commissions expense; and contingencies and litigation. Management evaluates these estimates and assumptions on an ongoing basis using historical experience and other factors and makes adjustments when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could materially differ from those estimates and assumptions. |
Concentration Risk | Concentration of Risk Concentration of revenue and accounts receivable —We sell our products primarily through our Partners and occasionally directly to end customers. For the three months ended October 31, 2017 and 2018 |
Recently Issued and Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements In October 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory, which requires us to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The new standard was effective for fiscal years beginning after December 15, 2017, with early adoption permitted, including interim reporting periods within those fiscal years. We adopted this ASU effective August 1, 2018 using a modified retrospective approach. The adoption of the new standard did not have a material impact on our condensed consolidated financial statements, as the increase in our U.S. deferred tax assets was offset by a valuation allowance. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash or restricted cash equivalents should be included with cash and cash equivalents when reconciling beginning-of-period and end-of-period amounts shown on the statement of cash flows. The new standard was effective for fiscal years beginning after December 15, 2017, with early adoption permitted, including interim reporting periods within those fiscal years. We adopted the new standard effective August 1, 2018, using the retrospective transition approach. The reclassified restricted cash balances from operating activities to changes in cash, cash equivalents and restricted cash on the condensed consolidated statements of cash flows were not material for any period presented. In June 2018, the FASB issued ASU 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which aligns the accounting for share-based payment awards issued to nonemployees with the guidance applicable to grants to employees. Under the new standard, equity-classified share-based payment awards issued to nonemployees will be measured on the grant date, instead of the current requirement to remeasure the awards through the performance completion date. The new standard is effective for fiscal years beginning after December 15, 2018, with early adoption permitted, including interim reporting periods within those fiscal years. We early adopted the standard effective August 1, 2018, using the prospective approach, and our adoption did not have a material impact on the condensed consolidated financial statements. In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other (Topic 350): Internal-Use Software, which standard aligns the requirements for capitalizing implementation costs incurred in a cloud computing arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The new standard is effective for fiscal years beginning after December 15, 2018, with early adoption permitted, including interim reporting periods within those fiscal years. We early adopted the standard effective August 1, 2018, using the prospective approach, and our adoption did not have a significant impact on our condensed consolidated financial statements. In August 2018, the SEC issued Securities Act Release No. 33-10532, which amends certain disclosure requirements, including extending to interim periods the annual requirement to disclose changes in stockholders’ equity. Under the new requirements, registrants must now analyze changes in stockholders’ equity, in the form of a reconciliation, for the current and comparative year-to-date interim periods, with subtotals for each interim period. The final rule was effective in November 2018. We adopted this new guidance during the first quarter of fiscal 2019 and have included a reconciliation of the changes in stockholders' equity in this Quarterly Report on Form 10-Q. Recently Issued and Not Yet Adopted Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02, Leases, which requires recognition of right-to-use lease assets and lease liabilities for all leases, except for short-term leases, on the balance sheet of lessees. The new standard is effective for fiscal years beginning after December 15, 2018, with early adoption permitted, including interim reporting periods within those fiscal years. We will adopt ASU 2016-02 effective August 1, 2019. This new standard requires a modified retrospective transition approach and provides certain optional transition relief. We currently anticipate that the adoption of this standard will have a material impact on our condensed consolidated balance sheets, given that we had operating lease commitments in excess of $100 million as of October 31, 2018. We expect that most of our operating lease commitments will be subject to the new standard and recognized as lease liabilities and right-of-use assets upon adoption, which will increase the total assets and total liabilities reported. However, we do not anticipate that the adoption of this standard will have a material impact on our condensed consolidated statements of operations, as the expense recognition under this new standard will be similar to current practice. We do not expect the adoption of this ASU to have a material impact on our condensed consolidated statements of cash flows. In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which provides companies with an option to reclassify stranded tax effects resulting from the enactment of the Tax Cuts and Jobs Act ("TCJA") from accumulated other comprehensive income to retained earnings. The new standard is effective for fiscal years beginning after December 15, 2018, with early adoption permitted, including interim reporting periods within those fiscal years, and will be applied either in the period of adoption or retrospectively to each period in which the effect of the change in the tax rate as a result of TCJA is recognized. We have not made a determination as to which alternative method we will use upon adoption of the standard, but we do not expect the adoption of this ASU to have a material impact on our condensed consolidated financial statements. |
Revenue Recognition | We generate revenue primarily from the sale of our enterprise cloud platform, which can be delivered pre-installed on an appliance that is configured to order or delivered separately to be utilized on a variety of certified hardware platforms. Software delivered on configured to order appliances is not portable to other appliances and has a term equal to the life of the associated appliance, while separately purchased software typically has a term of one to five years |
OVERVIEW AND BASIS OF PRESENT_3
OVERVIEW AND BASIS OF PRESENTATION (Tables) | 3 Months Ended |
Oct. 31, 2018 | |
Accounting Policies [Abstract] | |
Schedules of Concentration of Revenue and Accounts Receivable | For each significant Partner, revenue as a percentage of total revenue and accounts receivable as a percentage of total accounts receivable, net are as follows: Revenue Accounts Receivable as of Three Months Ended Partners 2017 2018 July 31, October 31, 2018 Partner A 17 % 12 % 16 % 14 % Partner B 28 % 11 % 13 % (1) Partner C 19 % 22 % 15 % 16 % Partner D 10 % (1) (1) 11 % Partner E 12 % 12 % 12 % 13 % (1) |
BUSINESS COMBINATIONS (Tables)
BUSINESS COMBINATIONS (Tables) | 3 Months Ended |
Oct. 31, 2018 | |
Business Combinations [Abstract] | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table presents the preliminary aggregate purchase price allocation related to our acquisition of Frame as of October 31, 2018 : Estimated Fair Value (in thousands) Goodwill $ 97,143 Amortizable intangible assets 38,180 Tangible assets acquired 10,811 Liabilities assumed (16,474 ) Total consideration $ 129,660 |
REVENUE, DEFERRED REVENUE AND_2
REVENUE, DEFERRED REVENUE AND DEFERRED COMMISSIONS (Tables) | 3 Months Ended |
Oct. 31, 2018 | |
Revenue Recognition and Deferred Revenue [Abstract] | |
Revenue by Arrangement, Disclosure | The following table depicts the disaggregation of revenue by revenue type, consistent with how we evaluate our financial performance: Three Months Ended 2017 2018 (in thousands) Non-portable software $ 126,897 $ 146,570 Subscription 62,376 126,976 Hardware 80,838 32,547 Professional services 5,441 7,190 Total revenue $ 275,552 $ 313,283 |
Deferred Revenue, by Arrangement, Disclosure | Significant changes in the balance of deferred revenue (contract liability) and total deferred commissions (contract asset) for the periods presented are as follows: Three Months Ended Deferred Revenue Deferred Commissions (in thousands) Balance as of July 31, 2018 $ 631,207 $ 114,379 Additions 159,210 33,958 Revenue/commissions recognized (88,937 ) (26,230 ) Assumed in a business combination 320 — Balance as of October 31, 2018 $ 701,800 $ 122,107 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended |
Oct. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Schedule of Financial Assets and Liabilities Measured on Recurring Basis | The fair value of our financial assets and liabilities measured on a recurring basis is as follows: As of July 31, 2018 Level I Level II Level III Total (in thousands) Financial Assets: Cash equivalents: Money market funds $ 41,763 $ — $ — $ 41,763 Commercial paper — 77,818 — 77,818 U.S. government securities — 4,985 — 4,985 Short-term investments: Corporate bonds — 448,458 — 448,458 Commercial paper — 120,772 — 120,772 U.S. government securities — 59,098 — 59,098 Total measured at fair value $ 41,763 $ 711,131 $ — $ 752,894 Cash 181,409 Total cash, cash equivalents and short-term investments $ 934,303 Financial Liabilities: Contingent consideration $ — $ — $ 1,872 $ 1,872 As of October 31, 2018 Level I Level II Level III Total (in thousands) Financial Assets: Cash equivalents: Money market funds $ 59,957 $ — $ — $ 59,957 Commercial paper — 106,600 — 106,600 U.S. government securities — 4,985 — 4,985 Short-term investments: Corporate bonds — 458,674 — 458,674 Commercial paper — 57,247 — 57,247 U.S. government securities — 49,268 — 49,268 Total measured at fair value $ 59,957 $ 676,774 $ — $ 736,731 Cash 228,244 Total cash, cash equivalents and short-term investments $ 964,975 Financial Liabilities: Contingent consideration $ — $ — $ 1,073 $ 1,073 As of July 31, 2018 As of October 31, 2018 Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value (in thousands) Convertible senior notes, net $ 429,598 $ 685,527 $ 436,745 $ 634,513 |
Summary of Changes in Fair Value of Convertible Preferred Stock Warrant Liability | A summary of the changes in the fair value of our contingent consideration, characterized as Level 3 in the fair value hierarchy, is as follows: Three Months Ended 2017 2018 (in thousands) Contingent consideration—beginning balance $ 4,295 $ 1,872 Change in fair value (1) 282 (799 ) Contingent consideration—ending balance $ 4,577 $ 1,073 (1) |
BALANCE SHEET COMPONENTS (Table
BALANCE SHEET COMPONENTS (Tables) | 3 Months Ended |
Oct. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Investments in Marketable Debt Securities, by Contractual Maturity Date | The following table summarizes the estimated fair value of our investments in marketable debt securities by their contractual maturity dates: As of October 31, 2018 (in thousands) Due within one year $ 434,191 Due in one year through three years 130,998 Total $ 565,189 |
Schedule of Property, Plant and Equipment | Property and Equipment, Net Property and equipment, net consists of the following: Estimated As of July 31, October 31, 2018 (in months) (in thousands) Computer, production, engineering and other equipment 36 $ 131,805 $ 153,647 Demonstration units 12 53,547 54,387 Leasehold improvements (1) 19,916 26,138 Furniture and fixtures 60 7,636 9,580 Total property and equipment, gross 212,904 243,752 Less: accumulated depreciation (127,793 ) (139,002 ) Total property and equipment, net $ 85,111 $ 104,750 (1) Leasehold improvements are amortized over the shorter of the estimated useful lives of the improvements or the remaining lease term. |
Schedule of Goodwill | The changes in the carrying value of goodwill during the three months ended October 31, 2018 were as follows: Carrying Amount (in thousands) Balance as of July 31, 2018 $ 87,759 Acquired in Frame Acquisition 97,143 Other 92 Balance as of October 31, 2018 $ 184,994 |
Schedule of Finite-Lived Intangible Assets | Intangible assets, net consists of the following: As of July 31, October 31, 2018 (in thousands) Developed technology $ 47,500 $ 79,300 Customer relationships 6,650 8,860 Trade name — 4,170 Total intangible assets, gross 54,150 92,330 Less: Accumulated amortization of developed technology (6,956 ) (10,122 ) Accumulated amortization of customer relationships (1,828 ) (2,204 ) Accumulated amortization of trade name — (174 ) Total accumulated amortization (8,784 ) (12,500 ) Total intangible assets, net $ 45,366 $ 79,830 |
Schedule of Indefinite-Lived Intangible Assets | Intangible assets, net consists of the following: As of July 31, October 31, 2018 (in thousands) Developed technology $ 47,500 $ 79,300 Customer relationships 6,650 8,860 Trade name — 4,170 Total intangible assets, gross 54,150 92,330 Less: Accumulated amortization of developed technology (6,956 ) (10,122 ) Accumulated amortization of customer relationships (1,828 ) (2,204 ) Accumulated amortization of trade name — (174 ) Total accumulated amortization (8,784 ) (12,500 ) Total intangible assets, net $ 45,366 $ 79,830 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | The estimated future amortization expense of our intangible assets is as follows: Fiscal Year Ending July 31: Amount (in thousands) 2019 (remaining nine months) $ 13,060 2020 17,380 2021 17,380 2022 16,183 2023 10,856 Thereafter 4,971 Total $ 79,830 |
Schedule of Other Assets, Noncurrent | Other assets—non-current consists of the following: As of July 31, October 31, 2018 (in thousands) Other tax assets—non-current $ 30,927 $ 31,460 Deferred tax assets—non-current 2,860 2,810 Other 4,068 4,857 Total other assets—non-current $ 37,855 $ 39,127 |
Schedule of Accrued Liabilities | Accrued Compensation and Benefits Accrued compensation and benefits consists of the following: As of July 31, October 31, 2018 (in thousands) Accrued commissions $ 21,660 $ 17,721 Accrued vacation 10,548 12,069 Payroll taxes payable 9,563 9,718 Contributions to ESPP withheld 21,931 8,907 Accrued bonus 12,129 7,848 Other 9,567 9,446 Total accrued compensation and benefits $ 85,398 $ 65,709 Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consists of the following: As of July 31, October 31, 2018 (in thousands) Income taxes payable $ 20,863 $ 19,571 Accrued professional services 5,838 3,124 Other 4,981 5,857 Total accrued expenses and other current liabilities $ 31,682 $ 28,552 |
CONVERTIBLE SENIOR NOTES (Table
CONVERTIBLE SENIOR NOTES (Tables) | 3 Months Ended |
Oct. 31, 2018 | |
Debt Disclosure [Abstract] | |
Net Proceeds from Notes | The total net proceeds from the Notes are as follows: Amount (in thousands) Principal amount $ 575,000 Less: initial purchasers' discount (10,781 ) Less: cost of the bond hedges (143,175 ) Add: proceeds from the sale of warrants 87,975 Less: other issuance costs (707 ) Net proceeds $ 508,312 |
Components of Notes | The Notes consisted of the following: As of October 31, 2018 (in thousands) Principal amounts: Principal $ 575,000 Unamortized debt discount (1) (130,949 ) Unamortized debt issuance costs (1) (7,306 ) Net carrying amount $ 436,745 Carrying amount of equity component (2) $ 148,598 (1) Included in the condensed consolidated balance sheets within convertible senior notes, net and amortized over the remaining life of the Notes using the effective interest rate method. The effective interest rate is 6.62% . (2) Included in the condensed consolidated balance sheets within additional paid-in capital, net of $3.0 million |
Interest Expense Recognized | The following table sets forth the total interest expense recognized related to the Notes: Three Months Ended (in thousands) Interest expense related to amortization of debt discount $ 6,770 Interest expense related to amortization of debt issuance costs 378 Total interest expense $ 7,148 |
COMMITMENTS AND CONTINGENCIES C
COMMITMENTS AND CONTINGENCIES COMMITMENTS AND CONTINGENCIES (Tables) | 3 Months Ended |
Oct. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Rental Payments for Operating Leases | Future minimum payments due under operating leases as of October 31, 2018 are as follows: Fiscal Year Ending July 31: Amount (in thousands) 2019 (remaining nine months) $ 22,196 2020 28,084 2021 25,506 2022 25,233 2023 24,151 Thereafter 18,315 Total $ 143,485 |
EQUITY AWARD PLANS (Tables)
EQUITY AWARD PLANS (Tables) | 3 Months Ended |
Oct. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of RSUs Activity | Below is a summary of RSU activity, including MSUs, under the Stock Plans: Number of Grant Date Fair Value per Share Outstanding at July 31, 2018 23,597,499 $ 31.20 Granted 1,789,990 $ 44.14 Vested (1,677,501 ) $ 23.19 Canceled/forfeited (371,928 ) $ 28.39 Outstanding at October 31, 2018 23,338,060 $ 32.81 |
Schedule of ESPP Valuation Assumptions | We use the Black-Scholes option pricing model to determine the fair value of shares purchased under the 2016 ESPP with the following weighted average assumptions on the date of grant: Three Months Ended 2017 2018 Expected term (in years) 0.75 0.79 Risk-free interest rate 1.25 % 2.5 % Volatility 50.2 % 49.5 % Dividend yield — % — % |
Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs | Total stock-based compensation expense recognized in the condensed consolidated statements of operations is as follows: Three Months Ended 2017 2018 (in thousands) Cost of revenue: Product $ 570 $ 698 Support, entitlements and other services 2,072 3,157 Sales and marketing 13,766 22,606 Research and development 15,542 31,009 General and administrative 3,565 8,455 Total stock-based compensation expense $ 35,515 $ 65,925 |
NET LOSS PER SHARE (Tables)
NET LOSS PER SHARE (Tables) | 3 Months Ended |
Oct. 31, 2018 | |
Earnings Per Share [Abstract] | |
Schedule of Basic and Diluted Net Loss Per Share | The computation of basic and diluted net loss per share attributable to Class A and Class B common stockholders is as follows: Three Months Ended 2017 2018 (in thousands, except share and per share data) Numerator: Net loss $ (61,487 ) $ (94,265 ) Denominator: Weighted average shares—basic and diluted 156,780,631 175,445,969 Net loss per share attributable to common stockholders—basic and diluted $ (0.39 ) $ (0.54 ) |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The potential shares of common stock that were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented because including them would have been antidilutive are as follows: Three Months Ended 2017 2018 Outstanding stock options and RSUs 34,400,643 33,696,368 Employee stock purchase plan 2,089,383 1,596,411 Contingently issuable shares pursuant to business combinations — 920,371 Common stock subject to repurchase 152,558 29,461 Common stock warrants 34,180 34,180 Total 36,676,764 36,276,791 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 3 Months Ended |
Oct. 31, 2018 | |
Segment Reporting [Abstract] | |
Schedule of Revenue by Geographic Area | The following table sets forth revenue by geographic location based on bill-to location: Three Months Ended 2017 2018 (in thousands) U.S. $ 187,365 $ 181,006 Europe, the Middle East and Africa 37,444 54,776 Asia Pacific 44,859 67,238 Other Americas 5,884 10,263 Total revenue $ 275,552 $ 313,283 |
OVERVIEW AND BASIS OF PRESENT_4
OVERVIEW AND BASIS OF PRESENTATION (Details) - Partner Concentration Risk | 3 Months Ended | 12 Months Ended | |
Oct. 31, 2018 | Oct. 31, 2017 | Jul. 31, 2018 | |
Revenue | Partner A | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 12.00% | 17.00% | |
Revenue | Partner B | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 11.00% | 28.00% | |
Revenue | Partner C | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 22.00% | 19.00% | |
Revenue | Partner D | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 10.00% | ||
Revenue | Partner F | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 12.00% | 12.00% | |
Accounts Receivable | Partner A | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 14.00% | 16.00% | |
Accounts Receivable | Partner B | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 13.00% | ||
Accounts Receivable | Partner C | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 16.00% | 15.00% | |
Accounts Receivable | Partner D | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 11.00% | ||
Accounts Receivable | Partner F | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 13.00% | 12.00% |
BUSINESS COMBINATIONS - Additio
BUSINESS COMBINATIONS - Additional Information (Details) - Mainframe2, Inc. - USD ($) $ / shares in Units, $ in Thousands | Sep. 21, 2018 | Aug. 24, 2018 | Mar. 22, 2018 | Oct. 31, 2018 |
Business Acquisition [Line Items] | ||||
Consideration transferred | $ 129,700 | $ 129,660 | ||
Payments to acquire businesses, gross | $ 26,700 | |||
Equity interest issued or issuable (in shares) | 2,451,322 | 1,807,576 | ||
Equity interests issued and issuable (in shares) | $ 103,000 | |||
Share price (in dollars per share) | $ 56.97 | |||
Deferred payment arrangement, amount | $ 43,300 | |||
Deferred payment arrangement, amount paid in cash | 6,600 | |||
Deferred payment arrangement, amount paid in shares | $ 36,700 | |||
Deferred payment, number of shares (in shares) | 643,746 | |||
Payment term | 3 years | |||
Acquisition related costs | $ 900 | 200 | ||
Intangible assets | $ 38,180 | |||
Developed technology | ||||
Business Acquisition [Line Items] | ||||
Finite-lived intangible assets acquired | 31,800 | |||
Customer relationships | ||||
Business Acquisition [Line Items] | ||||
Intangible assets | $ 2,200 | |||
Estimated life | 5 years | |||
Trade Names | ||||
Business Acquisition [Line Items] | ||||
Intangible assets | $ 4,200 | |||
Estimated life | 4 years |
BUSINESS COMBINATIONS - Prelimi
BUSINESS COMBINATIONS - Preliminary Aggregate Purchase Price Allocation (Details) - USD ($) $ in Thousands | Aug. 24, 2018 | Oct. 31, 2018 | Jul. 31, 2018 |
Business Acquisition [Line Items] | |||
Goodwill | $ 184,994 | $ 87,759 | |
Mainframe2, Inc. | |||
Business Acquisition [Line Items] | |||
Goodwill | 97,143 | ||
Amortizable intangible assets | 38,180 | ||
Tangible assets acquired | 10,811 | ||
Liabilities assumed | (16,474) | ||
Total consideration | $ 129,700 | $ 129,660 |
REVENUE, DEFERRED REVENUE AND_3
REVENUE, DEFERRED REVENUE AND DEFERRED COMMISSIONS - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Oct. 31, 2018 | Oct. 31, 2017 | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Total revenue | $ 313,283 | $ 275,552 |
Subscription | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Total revenue | 126,976 | 62,376 |
Subscription and Circulation, Software | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Total revenue | 44,000 | 11,300 |
Subscription and Circulation, Software Entitlement and Support Subscription [Member] | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Total revenue | $ 83,000 | $ 51,100 |
Minimum | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Software, license term | 1 year | |
Maximum | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Software, license term | 5 years | |
Weighted Average | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Software, license term | 3 years 7 months 6 days |
REVENUE, DEFERRED REVENUE AND_4
REVENUE, DEFERRED REVENUE AND DEFERRED COMMISSIONS - Schedule of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Oct. 31, 2018 | Oct. 31, 2017 | |
Condensed Income Statements, Captions [Line Items] | ||
Total revenue | $ 313,283 | $ 275,552 |
Subscription and Circulation, Software Entitlement and Support Subscription [Member] | ||
Condensed Income Statements, Captions [Line Items] | ||
Total revenue | 83,000 | 51,100 |
Software | ||
Condensed Income Statements, Captions [Line Items] | ||
Total revenue | 146,570 | 126,897 |
Subscription | ||
Condensed Income Statements, Captions [Line Items] | ||
Total revenue | 126,976 | 62,376 |
Hardware | ||
Condensed Income Statements, Captions [Line Items] | ||
Total revenue | 32,547 | 80,838 |
Professional Services | ||
Condensed Income Statements, Captions [Line Items] | ||
Total revenue | 7,190 | 5,441 |
Accounting Standards Update 2014-09 | ||
Condensed Income Statements, Captions [Line Items] | ||
Total revenue | $ 313,283 | $ 275,552 |
REVENUE, DEFERRED REVENUE AND_5
REVENUE, DEFERRED REVENUE AND DEFERRED COMMISSIONS - Deferred Revenue/Commissions (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Oct. 31, 2018 | Oct. 31, 2017 | |
Movement in Deferred Revenue [Roll Forward] | ||
Deferred revenue, beginning balance | $ 631,207 | |
Additions | 159,210 | |
Revenue recognized | (88,937) | |
Assumed in a business combination | 320 | |
Deferred revenue, ending balance | 701,800 | |
Movement in Deferred Commissions [Roll Forward] | ||
Deferred commissions, beginning balance | 114,379 | |
Additions | 33,958 | |
Commissions recognized | (26,230) | |
Assumed in a business combination | 0 | |
Deferred commissions, ending balance | $ 122,107 | |
Percent expected to be recognized in next year | 28.00% | |
Revenue recognized, amount deferred in prior period | $ 78,800 | $ 49,600 |
Contracted revenue not recognized | $ 719,700 | |
Percent expected to be recognized in next year | 45.00% |
FAIR VALUE MEASUREMENTS - Fair
FAIR VALUE MEASUREMENTS - Fair Value of Financial Assets and Liabilities (Details) - USD ($) $ in Thousands | Oct. 31, 2018 | Jul. 31, 2018 |
Financial Assets: | ||
Short-term investments: | $ 565,189 | $ 628,328 |
Recurring | ||
Financial Assets: | ||
Total measured at fair value | 736,731 | 752,894 |
Cash | 228,244 | 181,409 |
Total cash, cash equivalents and short-term investments | 964,975 | 934,303 |
Recurring | Commitments | ||
Financial Liabilities: | ||
Convertible preferred stock warrant liability | 1,073 | 1,872 |
Recurring | Corporate bonds | ||
Financial Assets: | ||
Short-term investments: | 458,674 | 448,458 |
Recurring | Commercial paper | ||
Financial Assets: | ||
Short-term investments: | 57,247 | 120,772 |
Recurring | U.S. government securities | ||
Financial Assets: | ||
Short-term investments: | 49,268 | 59,098 |
Recurring | Money market funds | ||
Financial Assets: | ||
Cash equivalents: | 59,957 | 41,763 |
Recurring | Commercial paper | ||
Financial Assets: | ||
Cash equivalents: | 106,600 | 77,818 |
Recurring | U.S. government securities | ||
Financial Assets: | ||
Cash equivalents: | 4,985 | 4,985 |
Recurring | Level I | ||
Financial Assets: | ||
Total measured at fair value | 59,957 | 41,763 |
Recurring | Level I | Commitments | ||
Financial Liabilities: | ||
Convertible preferred stock warrant liability | 0 | 0 |
Recurring | Level I | Corporate bonds | ||
Financial Assets: | ||
Short-term investments: | 0 | 0 |
Recurring | Level I | Commercial paper | ||
Financial Assets: | ||
Short-term investments: | 0 | 0 |
Recurring | Level I | U.S. government securities | ||
Financial Assets: | ||
Short-term investments: | 0 | 0 |
Recurring | Level I | Money market funds | ||
Financial Assets: | ||
Cash equivalents: | 59,957 | 41,763 |
Recurring | Level I | Commercial paper | ||
Financial Assets: | ||
Cash equivalents: | 0 | 0 |
Recurring | Level I | U.S. government securities | ||
Financial Assets: | ||
Cash equivalents: | 0 | 0 |
Recurring | Level II | ||
Financial Assets: | ||
Total measured at fair value | 676,774 | 711,131 |
Recurring | Level II | Commitments | ||
Financial Liabilities: | ||
Convertible preferred stock warrant liability | 0 | 0 |
Recurring | Level II | Corporate bonds | ||
Financial Assets: | ||
Short-term investments: | 458,674 | 448,458 |
Recurring | Level II | Commercial paper | ||
Financial Assets: | ||
Short-term investments: | 57,247 | 120,772 |
Recurring | Level II | U.S. government securities | ||
Financial Assets: | ||
Short-term investments: | 49,268 | 59,098 |
Recurring | Level II | Money market funds | ||
Financial Assets: | ||
Cash equivalents: | 0 | 0 |
Recurring | Level II | Commercial paper | ||
Financial Assets: | ||
Cash equivalents: | 106,600 | 77,818 |
Recurring | Level II | U.S. government securities | ||
Financial Assets: | ||
Cash equivalents: | 4,985 | 4,985 |
Recurring | Level III | ||
Financial Assets: | ||
Total measured at fair value | 0 | 0 |
Recurring | Level III | Commitments | ||
Financial Liabilities: | ||
Convertible preferred stock warrant liability | 1,073 | 1,872 |
Recurring | Level III | Corporate bonds | ||
Financial Assets: | ||
Short-term investments: | 0 | 0 |
Recurring | Level III | Commercial paper | ||
Financial Assets: | ||
Short-term investments: | 0 | 0 |
Recurring | Level III | U.S. government securities | ||
Financial Assets: | ||
Short-term investments: | 0 | 0 |
Recurring | Level III | Money market funds | ||
Financial Assets: | ||
Cash equivalents: | 0 | 0 |
Recurring | Level III | Commercial paper | ||
Financial Assets: | ||
Cash equivalents: | 0 | 0 |
Recurring | Level III | U.S. government securities | ||
Financial Assets: | ||
Cash equivalents: | $ 0 | $ 0 |
FAIR VALUE MEASUREMENTS - Non-r
FAIR VALUE MEASUREMENTS - Non-recurring Basis (Details) - USD ($) $ in Thousands | Oct. 31, 2018 | Jul. 31, 2018 | Jul. 31, 2017 |
Convertible Debt | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Unamortized discount | $ (130,949) | $ (130,900) | |
Unamortized debt issuance cost | $ (7,306) | (7,300) | |
Reported Value Measurement | Fair Value, Measurements, Nonrecurring | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Convertible senior notes, net | 436,745 | $ 429,598 | |
Estimate of Fair Value Measurement | Fair Value, Measurements, Nonrecurring | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Convertible senior notes, net | $ 634,513 | $ 685,527 |
FAIR VALUE MEASUREMENTS - Level
FAIR VALUE MEASUREMENTS - Level 3 Roll Forward (Details) - Commitments - USD ($) $ in Thousands | 3 Months Ended | |
Oct. 31, 2018 | Oct. 31, 2017 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Contingent consideration—beginning balance | $ 1,872 | $ 4,295 |
Change in fair value | 799 | (282) |
Contingent consideration—ending balance | $ 1,073 | $ 4,577 |
BALANCE SHEET COMPONENTS - Shor
BALANCE SHEET COMPONENTS - Short-Term Investments (Details) - USD ($) $ in Thousands | Oct. 31, 2018 | Jul. 31, 2018 |
Debt Securities, Available-for-sale, Maturity, Fair Value, Rolling Maturity [Abstract] | ||
Due within one year | $ 434,191 | |
Due in one year through three years | 130,998 | |
Total | $ 565,189 | $ 628,328 |
BALANCE SHEET COMPONENTS - Prop
BALANCE SHEET COMPONENTS - Property, Plant and Equipment (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Oct. 31, 2018 | Oct. 31, 2017 | Jul. 31, 2018 | |
Property, Plant and Equipment [Line Items] | |||
Total property and equipment, gross | $ 243,752 | $ 212,904 | |
Less: Accumulated depreciation | (139,002) | (127,793) | |
Total property and equipment, net | 104,750 | 85,111 | |
Depreciation and amortization | 16,183 | $ 11,333 | |
Property, Plant and Equipment | |||
Property, Plant and Equipment [Line Items] | |||
Depreciation and amortization | $ 12,500 | $ 10,200 | |
Computer, production, engineering and other equipment | |||
Property, Plant and Equipment [Line Items] | |||
Estimated Useful Life | 36 months | ||
Total property and equipment, gross | $ 153,647 | 131,805 | |
Demonstration units | |||
Property, Plant and Equipment [Line Items] | |||
Estimated Useful Life | 12 months | ||
Total property and equipment, gross | $ 54,387 | 53,547 | |
Leasehold improvements | |||
Property, Plant and Equipment [Line Items] | |||
Total property and equipment, gross | $ 26,138 | 19,916 | |
Furniture and fixtures | |||
Property, Plant and Equipment [Line Items] | |||
Estimated Useful Life | 60 months | ||
Total property and equipment, gross | $ 9,580 | $ 7,636 |
BALANCE SHEET COMPONENTS - Good
BALANCE SHEET COMPONENTS - Goodwill (Details) $ in Thousands | 3 Months Ended |
Oct. 31, 2018USD ($) | |
Goodwill [Roll Forward] | |
Balance as of July 31, 2018 | $ 87,759 |
Balance as of October 31, 2018 | 184,994 |
Netsil Inc. | |
Goodwill [Roll Forward] | |
Acquired in acquisition | 97,143 |
Minjar Inc. | |
Goodwill [Roll Forward] | |
Acquired in acquisition | $ 92 |
BALANCE SHEET COMPONENTS - Inta
BALANCE SHEET COMPONENTS - Intangible Assets (Details) - USD ($) $ in Thousands | Oct. 31, 2018 | Jul. 31, 2018 |
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross | $ 92,330 | $ 54,150 |
Less: | ||
Accumulated amortization | (12,500) | (8,784) |
Total intangible assets, net | 79,830 | 45,366 |
Developed technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross | 79,300 | 47,500 |
Less: | ||
Accumulated amortization | (10,122) | (6,956) |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross | 8,860 | 6,650 |
Less: | ||
Accumulated amortization | (2,204) | (1,828) |
Trade Names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross | 4,170 | 0 |
Less: | ||
Accumulated amortization | $ (174) | $ 0 |
BALANCE SHEET COMPONENTS - Futu
BALANCE SHEET COMPONENTS - Future Amortization Expense (Details) $ in Thousands | Oct. 31, 2018USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2019 (remaining nine months) | $ 13,060 |
2,020 | 17,380 |
2,021 | 17,380 |
2,022 | 16,183 |
2,023 | 10,856 |
Thereafter | 4,971 |
Total | $ 79,830 |
BALANCE SHEET COMPONENTS - Othe
BALANCE SHEET COMPONENTS - Other Assets Noncurrent (Details) - USD ($) $ in Thousands | Oct. 31, 2018 | Jul. 31, 2018 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Other tax assets—non-current | $ 31,460 | $ 30,927 |
Deferred tax assets—non-current | 2,810 | 2,860 |
Other | 4,857 | 4,068 |
Total other assets—non-current | $ 39,127 | $ 37,855 |
BALANCE SHEET COMPONENTS - Accr
BALANCE SHEET COMPONENTS - Accrued Compensation Benefits (Details) - USD ($) $ in Thousands | Oct. 31, 2018 | Jul. 31, 2018 |
Employee-related Liabilities, Current [Abstract] | ||
Accrued commissions | $ 17,721 | $ 21,660 |
Accrued vacation | 12,069 | 10,548 |
Payroll taxes payable | 9,718 | 9,563 |
Contributions to ESPP withheld | 8,907 | 21,931 |
Accrued bonus | 7,848 | 12,129 |
Other | 9,446 | 9,567 |
Total accrued compensation and benefits | $ 65,709 | $ 85,398 |
BALANCE SHEET COMPONENTS - Ac_2
BALANCE SHEET COMPONENTS - Accrued Liabilities (Details) - USD ($) $ in Thousands | Oct. 31, 2018 | Jul. 31, 2018 |
Other Liabilities Disclosure [Abstract] | ||
Income taxes payable | $ 19,571 | $ 20,863 |
Accrued professional services | 3,124 | 5,838 |
Other | 5,857 | 4,981 |
Total accrued expenses and other current liabilities | $ 28,552 | $ 31,682 |
CONVERTIBLE SENIOR NOTES - Proc
CONVERTIBLE SENIOR NOTES - Proceeds from Notes (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended |
Jan. 31, 2018 | Oct. 31, 2018 | Jan. 31, 2018 | |
Debt Instrument [Line Items] | |||
Payments for convertible note hedges | $ (143,200) | ||
Proceeds from issuance of warrants | 88,000 | ||
Convertible Debt | |||
Debt Instrument [Line Items] | |||
Principal amount | $ 575,000 | $ 575,000 | 575,000 |
Less: initial purchasers' discount | (10,781) | (10,781) | |
Payments for convertible note hedges | (143,175) | ||
Proceeds from issuance of warrants | 87,975 | ||
Debt issuance cost, gross, noncurrent | 707 | $ 707 | |
Less: other issuance costs | $ (378) | ||
Net proceeds | $ 508,312 |
CONVERTIBLE SENIOR NOTES - Addi
CONVERTIBLE SENIOR NOTES - Additional Information (Details) $ / shares in Units, shares in Millions | 1 Months Ended | 3 Months Ended | 6 Months Ended |
Jan. 31, 2018USD ($)day$ / sharesshares | Oct. 31, 2018USD ($)$ / sharesshares | Jan. 31, 2018USD ($)$ / sharesshares | |
Debt Instrument [Line Items] | |||
Number of securities called by warrants or rights (in shares) | shares | 11.8 | 11.8 | |
Payments for convertible note hedges | $ 143,200,000 | ||
Exercise price of warrants (in dollars per share) | $ / shares | $ 73.46 | $ 73.46 | |
Proceeds from issuance of warrants | $ 88,000,000 | ||
Transaction cost | $ (55,200,000) | ||
Dilutive effect of convertible securities (in shares) | shares | 3.9 | ||
Share price threshold for dilutive effect of convertible debt (in dollars per share) | $ / shares | $ 73.46 | ||
Dilutive effect of $10 increase in share price (in shares) | shares | 4.9 | ||
Dilutive effect of warrants (in shares) | shares | 1.4 | ||
Share price threshold for dilutive effect of warrants (in dollars per share) | $ / shares | $ 83.46 | ||
Common Class A | |||
Debt Instrument [Line Items] | |||
Share price (in dollars per share) | $ / shares | $ 41.51 | ||
Convertible Debt | |||
Debt Instrument [Line Items] | |||
Interest rate, stated percentage | 0.00% | 0.00% | |
Face amount | $ 575,000,000 | $ 575,000,000 | |
Convertible debt | $ 75,000,000 | $ 75,000,000 | |
Conversion ratio | 20.4705 | ||
Conversion price (in dollars per share) | $ / shares | $ 48.85 | $ 48.85 | |
Threshold trading days | day | 20 | ||
Threshold consecutive trading days | day | 30 | ||
Threshold percentage of stock price trigger | 130.00% | ||
Redemption price, percentage | 100.00% | ||
Carrying amount of liability component | $ 423,400,000 | $ 423,400,000 | |
Carrying amount of equity component | 151,600,000 | 151,600,000 | |
Unamortized discount and debt issuance costs, net | 11,500,000 | 11,500,000 | |
Unamortized discount, net | 10,781,000 | 10,781,000 | |
Debt issuance cost, gross, noncurrent | 707,000 | 707,000 | |
Transaction costs attributable to liability component | 8,500,000 | 8,500,000 | |
Transaction costs attributable to equity component | 3,000,000 | $ 3,000,000 | $ 3,000,000 |
Debt instrument, term | 50 months | ||
Payments for convertible note hedges | 143,175,000 | ||
Proceeds from issuance of warrants | $ 87,975,000 | ||
Convertible Debt | Common Class A | |||
Debt Instrument [Line Items] | |||
Threshold percentage of stock price trigger | 98.00% |
CONVERTIBLE SENIOR NOTES - Comp
CONVERTIBLE SENIOR NOTES - Components of Notes (Details) - USD ($) $ in Thousands | Oct. 31, 2018 | Jul. 31, 2018 | Jan. 31, 2018 |
Debt Instrument [Line Items] | |||
Convertible senior notes, net | $ 436,745 | ||
Convertible Debt | |||
Debt Instrument [Line Items] | |||
Principal amount | 575,000 | $ 575,000 | |
Unamortized discount | (130,949) | $ (130,900) | |
Unamortized debt issuance cost | (7,306) | $ (7,300) | |
Carrying amount of the equity component | $ 148,598 | ||
Effective interest rate | 6.62% | ||
Payments of offering costs | $ (3,000) | $ (3,000) |
CONVERTIBLE SENIOR NOTES - Inte
CONVERTIBLE SENIOR NOTES - Interest Expense (Details) - Convertible Debt $ in Thousands | 3 Months Ended |
Oct. 31, 2018USD ($) | |
Debt Instrument [Line Items] | |
Interest expense related to amortization of debt discount | $ 6,770 |
Interest expense related to amortization of debt issuance costs | 378 |
Total interest expense | $ 7,148 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands | Oct. 31, 2018 | Jul. 31, 2018 |
Loss Contingencies [Line Items] | ||
2019 (remaining nine months) | $ 22,196 | |
2,020 | 28,084 | |
2,021 | 25,506 | |
2,022 | 25,233 | |
2,023 | 24,151 | |
Thereafter | 18,315 | |
Total | $ 143,485 | |
Non-contract Vendors | ||
Loss Contingencies [Line Items] | ||
Purchase obligation | $ 60,000 | |
Contract Manufacturer | ||
Loss Contingencies [Line Items] | ||
Purchase obligation | $ 126,600 |
STOCKHOLDERS_ EQUITY (Details)
STOCKHOLDERS’ EQUITY (Details) | Oct. 31, 2018voteclass$ / sharesshares | Jul. 31, 2018$ / sharesshares |
Class of Stock [Line Items] | ||
Common stock, number of classes of stock | class | 2 | |
Common stock, shares authorized (in shares) | 1,200,000,000 | 1,200,000,000 |
Common stock, par value (in dollars per share) | $ / shares | $ 0.000025 | $ 0.000025 |
Common stock, shares issued (in shares) | 179,066,211 | 172,858,082 |
Common stock, shares outstanding (in shares) | 179,066,211 | 172,858,082 |
Common Class A | ||
Class of Stock [Line Items] | ||
Common stock, shares authorized (in shares) | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued (in shares) | 141,366,331 | 135,109,672 |
Common stock, shares outstanding (in shares) | 141,366,331 | 135,109,672 |
Common stock number of votes per share | vote | 1 | |
Common Class B | ||
Class of Stock [Line Items] | ||
Common stock, shares authorized (in shares) | 200,000,000 | 200,000,000 |
Common stock, shares issued (in shares) | 37,699,880 | 37,748,410 |
Common stock, shares outstanding (in shares) | 37,699,880 | 37,748,410 |
Common stock number of votes per share | vote | 10 |
EQUITY AWARD PLANS - Additional
EQUITY AWARD PLANS - Additional Information (Details) | Aug. 01, 2018shares | Aug. 01, 2017shares | Sep. 30, 2016USD ($)purchase_periodshares | Dec. 07, 2018$ / sharesshares | Oct. 31, 2018USD ($)$ / sharesshares | Jul. 31, 2016shares |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Exercises in period (in shares) | 950,965 | |||||
Weighted average exercise price (in dollars per share) | $ / shares | $ 3.87 | |||||
Options outstanding (in shares) | 10,358,308 | |||||
Outstanding options, weighted average exercise price (in dollars per share) | $ / shares | $ 5.23 | |||||
Contractual term | 5 years 4 months 24 days | |||||
Options outstanding, intrinsic value | $ | $ 375,800,000 | |||||
Compensation not yet recognized | $ | $ 701,600,000 | |||||
Period for recognition (in years) | 2 years 7 months 6 days | |||||
RSUs | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Granted (in shares) | 1,789,990 | |||||
Granted (in dollars per share) | $ / shares | $ 44.14 | |||||
Released (in dollars per share) | $ / shares | $ 23.19 | |||||
Employee Stock | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Percent of eligible compensation (up to) | 15.00% | |||||
Monetary cap | $ | $ 25,000 | |||||
Share cap (in shares) | 1,000 | |||||
Offering period duration (in months) | 12 months | |||||
Number of six-month purchase periods | purchase_period | 2 | |||||
Purchase price of common stock, percent | 85.00% | |||||
ESPP stock issued during period (in shares) | 1,127,728 | |||||
Proceeds from stock plans | $ | $ 26,300,000 | |||||
Common Class A | Employee Stock | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Shares reserved for future issuance (in shares) | 3,800,000 | |||||
Annual increase (in shares) | 3,800,000 | |||||
Annual increase, percent of outstanding shares | 1.00% | |||||
Number of additional shares authorized | 1,728,580 | 1,546,365 | ||||
Employee Stock Purchase Plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Shares reserved for future issuance (in shares) | 2,283,313 | |||||
2016 Plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Shares reserved for future issuance (in shares) | 52,147,732 | |||||
2016 Plan | Common Class A | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Shares reserved for future issuance (in shares) | 22,400,000 | |||||
Annual increase (in shares) | 18,000,000 | |||||
Annual increase, percent of outstanding shares | 5.00% | |||||
Number of additional shares authorized | 8,642,904 | 7,731,826 | ||||
Number of shares available for grant (in shares) | 18,417,184 | |||||
Market Stock Units | RSUs | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Granted (in shares) | 100,000 | |||||
Granted (in dollars per share) | $ / shares | $ 25.16 | |||||
Released (in dollars per share) | $ / shares | $ 80 | |||||
Award vesting period | 4 years 6 months | |||||
Equity instruments outstanding (in shares) | 100,000 | |||||
Subsequent Event | RSUs | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Granted (in shares) | 881,541 | |||||
Granted (in dollars per share) | $ / shares | $ 44.23 |
EQUITY AWARD PLANS - RSU (Detai
EQUITY AWARD PLANS - RSU (Details) - RSUs - $ / shares | 3 Months Ended | |
Oct. 31, 2018 | Jul. 31, 2018 | |
Number of Shares | ||
Outstanding, beginning balance (in shares) | 23,597,499 | |
Granted (in shares) | 1,789,990 | |
Released (in shares) | (1,677,501) | |
Canceled/forfeited (in shares) | (371,928) | |
Outstanding, ending balance (in shares) | 23,338,060 | |
Grant Date Fair Value per Share | ||
Outstanding (in dollars per share) | $ 32.81 | $ 31.20 |
Granted (in dollars per share) | 44.14 | |
Released (in dollars per share) | 23.19 | |
Canceled/forfeited (in dollars per share) | $ 28.39 |
EQUITY AWARD PLANS - ESPP (Deta
EQUITY AWARD PLANS - ESPP (Details) - Employee Stock Purchase Plan | 3 Months Ended | |
Oct. 31, 2018 | Oct. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected term (in years) | 24 days | 22 days |
Risk-free interest rate | 2.50% | 1.25% |
Volatility | 49.50% | 50.20% |
Dividend yield | 0.00% | 0.00% |
EQUITY AWARD PLANS - Stock Base
EQUITY AWARD PLANS - Stock Based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Oct. 31, 2018 | Oct. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Total stock-based compensation expense | $ 65,925 | $ 35,515 |
Cost of revenue, product | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Total stock-based compensation expense | 698 | 570 |
Cost of revenue, support and other services | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Total stock-based compensation expense | 3,157 | 2,072 |
Sales and marketing | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Total stock-based compensation expense | 22,606 | 13,766 |
Research and development | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Total stock-based compensation expense | 31,009 | 15,542 |
General and administrative | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Total stock-based compensation expense | $ 8,455 | $ 3,565 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Oct. 31, 2018 | Oct. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||
Provision for (benefit from) income taxes | $ (3,628) | $ 2,259 |
Valuation allowance release | $ 5,900 |
NET LOSS PER SHARE - Computatio
NET LOSS PER SHARE - Computation of Basic and Diluted Net Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Oct. 31, 2018 | Oct. 31, 2017 | |
Earnings Per Share [Abstract] | ||
Net loss | $ (94,265) | $ (61,487) |
Weighted-average shares used in computing net loss per share attributable to common stockholders—basic and diluted (in shares) | 175,445,969 | 156,780,631 |
Net loss per share attributable to common stockholders—basic and diluted (in dollars per share) | $ (0.54) | $ (0.39) |
NET LOSS PER SHARE - Antidiluti
NET LOSS PER SHARE - Antidilutive Securities (Details) - shares | 3 Months Ended | |
Oct. 31, 2018 | Oct. 31, 2017 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 36,276,791 | 36,676,764 |
Outstanding stock options and RSUs | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 33,696,368 | 34,400,643 |
Employee stock purchase plan | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 1,596,411 | 2,089,383 |
Contingently issuable shares pursuant to business combinations | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 920,371 | 0 |
Common stock subject to repurchase | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 29,461 | 152,558 |
Common stock warrants | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 34,180 | 34,180 |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) $ in Thousands | 3 Months Ended | ||
Oct. 31, 2018USD ($)segment | Oct. 31, 2017USD ($) | Jul. 31, 2018USD ($) | |
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Number of reportable segments | segment | 1 | ||
Total revenue | $ 313,283 | $ 275,552 | |
U.S. | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Total revenue | 181,006 | 187,365 | |
Long-lived assets | 160,300 | $ 130,000 | |
Europe, the Middle East and Africa | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Total revenue | 54,776 | 37,444 | |
Asia Pacific | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Total revenue | 67,238 | 44,859 | |
Other Americas | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Total revenue | $ 10,263 | $ 5,884 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands | Oct. 31, 2018 | Oct. 31, 2017 | Jul. 31, 2016 |
Related Party Transaction [Line Items] | |||
Payables to related parties | $ 0 | $ 0 | |
Receivables from related parties | $ 0 | $ 0 | |
Nutanix, Inc. | Lightspeed Venture Partners | Lightspeed Venture Partners | |||
Related Party Transaction [Line Items] | |||
Ownership percentage by noncontrolling owners | 6.50% | 36.70% | |
PernixData [Member] | Lightspeed Venture Partners | Lightspeed Venture Partners | |||
Related Party Transaction [Line Items] | |||
Ownership percentage by noncontrolling owners | 26.40% |