NTNX - Earnings call transcript Q2 2018

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Operator

Good afternoon. My name is Chris and I’ll be your conference operator today. At this time, I would like to welcome everyone to the Nutanix Q2 2018 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator may conference. you begin Chin, the Tonya

Tonya Chin

broadcast Thank call our to afternoon accessed and in also second can Relations web today’s Nutanix conference welcome to website. being is discuss call of of the XXXX. you. over be fiscal the and Good quarter This live section the the Investor results of

its issued Joining second financial the market After Williams, Nutanix’s me today CFO. XXXX. the fiscal are of announcing Dheeraj today, quarter Pandey, a Nutanix Nutanix’s results release for CEO; and Duston press closed

net potential If find securities of gross you’d will to views those number statements management regarding We by that underdevelopment, materially expectations timing some statements and per the plans features, is business, Releases’ Safe could statements objective, competitive not future. the undertake these regarding the product expenses, involve future acquisitions, and sales, of cause a and flow, you like you apply laws, obligation technology dynamics, these strategic how copy on our regarding you representing impact of forward-looking and we revenue, regarding and control, no our We statements. of Company’s plans partnership free and operating anticipated our adversely results meaning the actual beyond our call, update website. it forward-looking the business and section as software which loss, be to of software-only business them Harbor new billings, changes the certain release, sales, content this that are related rely to provisions the making sales sales, cash today more and Company’s risks after in uncertainties, should our would can remind as today’s productivity, on call. of of solution, Press like These differ and anticipated our forward-looking to loss plans increasing and in statements from which product federal the margins, industry share, during components the These will focus in opportunities of expectations future of a other of information. within for, transition pricing of software market report financial

our of more fiscal For Form please on a as to our XXXX posted or Relations be ago visiting on from risks a measures and quarter charges. SEC of few these on Copies on minutes first all note description as XXXX, financial use non-GAAP referenced, have Investor certain documents may our adjusted of and section basis December the to please the refer a by with that detailed exclude the for been are release these uncertainties, filed today otherwise report the XX-Q XX, expressed quarterly we on call SEC obtained of website. earnings website. unless this Also specifically our well

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using the all the adopted standard reminder, the newly in XXX. a today release, are As and results revenue call included ASC press

have you Day should investors hosting attending. a and analysts they’re hope interested contact certified planned. of Tonya City on if of its day possible in in XXth. as see Investor as Interest afternoon great Nutanix to is Finally, the inaugural institutional many as New Chin March York We we

Dheeraj. the over call to turn Dheeraj? I’ll Now,

Dheeraj Pandey

X,XXX. to about also a sale quarter, better and emphasis Last total lot everyone. saw customers, us our a us align heard up stepped with add EPS quarter our yet revenue, all million help joining. of Tonya. Thank you from up software-defined business to on time, operating than gross the including margin our nature how dramatically model record of Nutanix elimination in and of bringing strong of QX proud pass-through for new the for Hi, software sales the well pass-through were go-to-market over consensus. system. QX and Thank surface I’m to so of execute guidance hardware our our number with area leadership year-over-year, has our with eliminating you, grow $XX the QX, this billings, XX% us was you even for our another number shift. revenues revenues. In hardware

software-defined to us Our billion move software growing we deal pace. for this milestone in be rate. This pleased worth is one few are up alone, also Very run million, QX, at rate and large significant That support secured a $X our and now we Also reached business billings $X its in XX have In than deals worth helped million. the them. software XX year-over-year. towards software accelerate we business momentum. is had $X own more business model deals XXX% and to among in more QX achieved than support has annualized public companies over

were over quarter. with $X lifetime over customers up the were than fie million and worth from million worth bookings, million XX fact, $XX XX in XXXX We significantly more were of more more customers. with have all now with lifetime in bookings, deals lifetime customers three and million, and $X Global in previous $XX bookings, million In than than XX these $X three customers

significant the early moment milestone about firms operating watershed Infrastructure, presence share emphasize representing a in first a like of analyst believe companies published Company’s their for Hyperconverged the Gartner that Quadrant Before February, Leaders Magic we in software its is history. we QX systems talk time quadrant. to numbers, I’d In the

service testament on right product furthest ability vision customer quality, delight. end-user highest execute the a was which access and to position of Our access to the our and on is the completeness to

call similar the OS. Cloud world hyper-converging and already started tiers In about in choice gaining common a disparate from have for platform common case inflection to [ph] of the report disparate data the infrastructure journey cloud state hyperconvergence of make that Enterprise system using centers Software-defined the marks the silos, in a center intend In we immense enterprises enterprise is of heart and mobility. years, of point few ground the hard this application data cloud. on the next operating Gartner, private the multi-cloud thinking we software of

to Gartner’s in is solid signed share that customer public customers definitive with enhanced to and maker results of running operational I’m to reporting an insights the called cost addition clouds. service excited we’ve marketplace, workloads our acquire of a our unified their Minjar AWS agreement control success, into in also elegant the In company Minjar. providing Botmetric, built for a

business environment giving embrace We expect enable in architectures, multi-cloud cloud choose for freedom the applications Botmetric data. their our to to customers operators the will best

Calm Minjar also public to customers manner cloud leverage significantly public Minjar biggest we We in software management Botmetric, burden people the version its operational expertise Xi, Company X.X. integrate antivirus fabric. minutia. This was Minjar hypervisor, Calm to software encryption, the how coming seamless SmartAssist the cloud and offers Noteworthy and the in I. technology graphics spelled, release quarter, customers of shouldering cloud X Last brings from on our from details the DevOps, real-time our own migration. services services and native business. addition the managed for provide and our space portal more specifically AHV our and to history, software-defined released Assurance product in self-service of in software the Company’s public Cloud. NUMA include offering also AFS a lifecycle virtualization clusters, services, technology for offloads file replication, into operate transformation and our features the based and cloud update single build months, which management In automation Minjar and service, we’ll bolster adopt cloud In hassle-free for Xi support we’ll a cross-hypervisor and node

play management. migration is of multi-cloud also Docker, application-centric virtualization melding As coming the DevOps Kubernetes-based, years, approach Containers. lifecycle go-to-market this the in In offering we’ve our brings mentioned Calm product and very enterprise. a Calm before, role and within an crucial the Linux, to orchestration, will worlds

We a which deals of Global one Moreover, that with in coverage GXK with our QX, overall, $X the with ending the XXX. customer operates we account base, customer critical in the of of penetration GXK clinical of as the X.X customer XXXX the laboratory fantastic expansion since without over million or from saw Global Global release. was including five our quarter are $X than our involving our customers, we we a delighted Calm, strategy QX world. became in going In more of growth by a the and It available largest had customers forward. deals XXXX And customer, interest our of seven quarter spending penetration of by and XX XXXX with in top QX, million consistent increasing networks increase quarter QX a deals business XX our the generally one our product customers top number XXXX of remains the our same goes GXK us. into XX more base. we’re part spending our patent In XX were GXK than time. seeing for

that land nearly in were than $X our customers deals us Speaking the XXXX. across QX spend purchased had XX% with that in more about customers quarter, expand, million and with also from

it quarter more XXXX towards this has in mentioned the bookings previously world. quarter in of and networks continues customers expand than clinical use cloud. largest our customer million this has of One private Global with our $XX operates to of within the as our software spent laboratory the was its This deals that largest purchasing in lifetime one the solution transitioned

integrated was software-defined deal in GXK plus a the a major largest first customer as in over and XX storage $XX a our AFS with for factor beverages that quarter. one of of marked critical Our the also was richness which company. for was services. customer This deal the is largest Nutanix the this A success million quarter was deal a deal brand also new million

purchases deployment largest American is on includes utilities first the natural Pro, company in do runs deals holding and seven GXK its that servers. telecommunications last win enterprise As making Garner the an history. company’s be Yet to that was prospects. a had has instrumental with growing, establishing in Prism further In $X deals an The million provider confidence QX gas Nutanix trust MQ our management Pro reaching in operations service wireless value low-six-figure These provides that us figures of time that the notable engagement so company. one with quarter is deals brand internet have The of us. customers in purchase Cisco with we an with each also will its since the software deal XXXX. every American is two. QX, repeat our is UCS Prism a of customer it plus customer another services made in with initial This quarter, in large increased

risk of Exchange state-of-the-art Commodity team providing settlement Ltd. of commodity India’s recovery for exchange Our Multi has MCX options to platform features trading Cloudera, India a DevOps hypervisor thereby our a and signed with in that disaster and Exchange own is selected great deal exchange. workloads, commodity a and listed management. or and India The clearing directives runs production online our transactions, AHV. MCX, its a on first platform facilitates

want Gupta, important to the to Karan factors invented I We XXth Alex cluster one our in of building by on talk were patent most moment a servers the a take a trio commodity Konka Finally, and system running U.S. people. engineering of Kaufman. distributed about metadata [ph] on granted our building Pavan our of business,

Chief Officer President and our Kozup as our the as in software new President of Customers Marketing President our of come and and also as engineering Resources to platforms it Vice as Aaron of Sales. Vice that team Officer, appreciate management organization Human bolstered addition Vice Ricardo team flexibility joined becoming In Senior say the terms with leadership our of also runs Ben We Marketing of number Channel the as increasingly Jenez of on. conclusion, licensing. Senior Global Global Chris now has Chief Bean, ubiquitous joined Rodney portability Development, of the of I’d Foreman joined hardware have Gibson is

of on through will customer Like experience as some brands the servers. we software of design, model score good competitive delightful have learning strong we That paranoid as grow and has to this larger as about and click consumer been new to to give started infrastructure the it and deliver years, keep require it with been talk DNA over Duston. We’ve continue keep choice our company we focus some business last transition. more the our become that Street. to promoter experience on net as of more insights, advantage software-defined Duston? promise we retaining business true the we that Main a the about as on best believe and automation, turn company. the will we to commodity we’ll tremendous footing is goal machine I’ll one remain can this in six as NPS and running the With to our just biggest Our has

Duston Williams

QX. increase fourth X% Despite in year-ago We during eliminating a quarter the I’m XX% from Thank you, in year-ago flow, very from deals, a expected much was metric. hardware and for that Global OEM number billed $XXX in adds, cash $XX a of $XXX million, for the pass-through million in our record XX% revenue, new up XX% had from Revenue than We and performances large pleased million billings, better bookings. virtually the quarter, QX quarter. growing customer the previous XXXX from Dheeraj. free software-only a revenue and results every came bookings, backlog, representing increase quarter. bookings significant bookings,

specifically a exceeded previous in revenue overachievement moved the Although, ratio consensus This in great performance well payment our due we part billings general X.XX. about as this up versus of in to ship estimates. don’t renewals far support estimate billings, was as to of a and excess a higher guide transaction will receiving street that million bill outperformance in for The QX. $XX to X.XX to QX

deferrals additional of above, higher which ultimately deferred In the recognize, has quarter software-only recognition forward within our our more periods. addition via in are of going balance experiencing deals, ratably revenue the stated we slightly with future high-margin items along revenue increasing lowering revenue to the adding revenue also and predictability current impact our

was $XX Our up quarter. million, a ago million, XX% growing by XX% X% quarter deferred previous increased $XXX previous in and growing a revenue year from quarter. Gross the QX for from ago the from from and XX% profit year up the

XX.X%, to ago high-end which Our was compares quarter. our at guidance and XX.X% the of prior the the in quarter gross XX.X% the margin for and year quarter is in

plan pass-through on On QX XX% software during and XX% targeted to to million revenue support basis our support and pass-through recall, $XX pass-through of billings XX% and that As mix our the million to may hardware. basis, software was we strong and pleased our execution with mix, was revenue a last and say quarter. revenue. product of $XX for you a pass-through hardware quarter, eliminate eliminated exceeded up XX% On a product hardware I’m we hardware.

bookings represented New customer XX% of bookings. total

to million, $XXX by hires. were $X million, timing expenses our the operating due of new Our guidance primarily below

to have half shortfall. full-court the press We make try a headcount on in hiring to this second for the fiscal year up

lastly, XXXX loss while in XX%, net EMEA’s QX these and XXXX. nicely in Both $X.XX the $X.X its XX% relationship quarter. by were APAC Lenovo loss over $XX QX. still UCS related results QX non-GAAP million productivity all experienced Our exceeded of Dell within regions million bookings previous strong. our million included share. performance of were deals and regions is each. historical included all performance, XX% best $X versus or bookings and the IBM first quarter XX% and a best deals expectations. We its its were increased recording Nutanix outstanding than total in over sequentially. performances. net deals of booked and came slightly two million. with four over our quarter its Dell XX%. of APAC Lenovo less deal three within record our almost sequentially, at of especially well geographic basic sales its of million. contributed of than $X.X $X.X progressing bookings and previous by related increasing quarter. recorded EMEA matched record from greater best XX% Cisco Both $X.X international regions per to initial was exceeded and included in XX% Dell bookings, deals across regions of in two IBM million early Bookings total also in our sizes stages Performance best Lenovo And

Looking continue significantly. forward, to business will our grow software

many Our platforms. among server software completely different portable is

servers, servers nodes Nutanix immediate XX For secure regarding Without of another nodes XX deployment remaining XX these exact details. nodes servers. software HP a customer could on knowledge on our on licenses XX nodes and Dell instance, Cisco of a the and deploy from the

to bookings fact, to of Nutanix million licenses deployed over in with with deployed Dell, ELA million X XXXX other on some matter bookings Dell, has we and one be HP a completed and QX, be directly directly with As also servers. same have Global Dell on of In that licenses servers. mix $X ELA this potentially exact HP did with customer

edition software-only quarter up own of and our our software, commenting of will cash or and we single to QX. cash as HP. is due equivalents surrounding via grouping convertible Instead, deployed other QX as approximately balance the the $XXX or with other Lenovo raised balance well as and closed includes OEM from the $XXX sales. ubiquitous on such all million. on minutes longer in five-year the cash forward details We into OEM any reporting sales the sheet. in Going notes. specific software Few will be Cisco comment we quarter business various vendors on no during software million million called, a The specific through nature senior transactions the our proceeds net combine IBM and or $XXX Dell, This on services

ESPP XX conversion rate cost spread impacted As we XXX% rate, on the a days in generated XX of in was interest was straight with flow impacted million QX. add Weighted In XX%. XX total to last free on versus in percent compared days cash operations in interest call this on also the proceeds, of funding. were quarter average We was cash funding effective of $XX $XX quarter. nodes, AHV premium approximately a days as This positively million of was the the QX and from $XX of was million based rolling and including reminder, an which zero average by XX the DSOs X%. million nodes an four transaction based by average of a ESPP positively generated done effective pretax DSO $XX flow at [ph] Nutanix quarter. during

expenses million even guidance a $XXX And revenue our that $X.XX of the software could follows. is negative a and this profit somewhat gross is in million growth disingenuous we per of again centric during looking on Now, during and is being opinion our to margin period third on gross transition Furthermore, who loss reminder, be guidance a approximately company operating rate a anyone our a growth ago from also shares weighted period assumed and year fluid quarter. believe X.X. $XXX The In using best and XX% period. as profit of on $XXX casts guidance approximately at growth model growth. simply founded dollars this during bill-to-revenue margins revenue or as yields non-GAAP profit and growth transition dollars for the transition. to Revenue revenue million, gross $XXX XX%, based we average gross a and between strong of between the assuming gross believe on outstanding share rate as progress million, metric measure $X.XX this million. to $XXX to of slowing revenue above not we’re revenue And the growth the gross profit a XX% approximately even assumes importantly more XX% a QX, ratio year-ago guidance period. the from the The

And open would pass-through that assumes of if revenue that up great. the eliminate could during questions, our you. with call operator, quarter. Thanks you be that $XX hardware Lastly, the will this approximately million guidance we for

Operator

first Baird. question comes with Jayson Noland Your Instructions] from [Operator

Your line open. is

Jayson Noland

And the to on pass-through Okay, of what’s as QX expectation Congrats hardware elimination for the Duston, quarter. clarify, a revenue? percent great. just

Duston Williams

came that Yes. and that making provided a came at believe quarter here. transacted to previously complicated. outputs And in it range plus It’s for on be set It’s I said going we will But, We parts shipped to think and around inputs front, plus being be some be a America going got think, moving variable hardware bunch had maybe. range minus. more somewhere a we We’ve different. percent XX%. or too only having and XX% is we now attached. is say really before, progress. this it’s in the good that XX% I without don’t and quarter. have And we’re of minus within reason XX% pretty I said that the North this But good much or quarter a all

be international nicely. along seem regions. So, the is up and heavy lifting all real pretty those and in the going We running processes said to

hardware we start in still happened EMEA. we do closed It to obviously one be So, of without was we’ve the already to We’ve speak. that done without big kind work transacted some order the there, in actually that we’ll about of which undertaking a the theme, million orders those have deal significant transaction And we’re transact the to shortly. as just one-off already all-in $X on here quarter hardware.

do. But, So, some stuff, work lot good we’re a pretty so good. to far doing so of go

Jayson Noland

And force. a follow-up on sales then,

curious guys thoughts. you the the of could channel perspective Maybe side, conflict to force quota on software-only the you in that’s on We’ve how of hardware the but sales with think, Xst. hear elimination an I field. heard taken your February give if on early went

Dheeraj Pandey

their Dheeraj. force, expiration in commissions the that past the is how there Thanks quote as are nature. is sales that and and the would actually This would for thinking Yes. say and relate clarity of I we fulfill that things to to question. about how because for

everything we currency normalizes So, one. have single now into and this

and what thing. a that large, is this good by we’ve So, clarity heard

that see that’s We more good thing very but And leadership have work. is process, the adapted to nothing actually there needs changed this actually we’re a management. to going

shape in of this I good we’re quarter. pretty as think

Operator

Leopold James. question from Simon next Your comes with Raymond

open. is line Your

Victor Chiu

was Simon behind Could there a about for strategy, and made, acquisition deal? just maybe the speak for Victor your logic you you that to guys with is Leopold. that is particular the just This little what color in around

Dheeraj Pandey

absolutely. Yes,

with orchestration about layer built the as multiple and developers closer and it’s user. that’s that DevOps the we across about clouds, think orchestration you to have end Calm if So

these next and complements multi-cloud and Minjar that Now, we sitting its believe in next it things, That’s includes other to customer right control one feature now, the require we’d and of in a pieces that is costing, plane sets. compliance on-prem to service an next that to budgeting, future fit as three sits which an managed it, what governance clouds itself. with actually that the to And layer really towards to is. about about, the of improve that actually multi-cloud, my migration these script be talk will Calm, for as to they’ve of Minjar hyperconvergence five talk well. was done more as this world puzzle Xi years, hyperconvergence we’ll a the earning as many Minjar goes clouds together that customer and all different more need off-prem we of They using and of well, and have Cloud couple

Victor Chiu

Did sorry. you… or disclose transaction you terms the guys did that of I’m

Duston Williams

to material It’s balance the sheet. not. did not We

that. So, disclosing we be won’t

Operator

question Matt next from Hedberg Your comes Capital RBC with Markets.

open. is line Your

Matt Hedberg

in is guess towards talked what Dheeraj But remarks, about supposed about subscription model and prepared still it’s referring And moving second aggressive revenue inflection us Xi have I your Cloud to launch coming? mid-year even In a you tell I’m this you an curious, ratable to to software. I move future? is I’m clearly the think more to think

Dheeraj Pandey

Yes.

three-year support, for of is appliance heritage. because and about collecting to us our think I collect used been that. think We as there company, a as support we three-year you definitely software have

on is some of lot communicate ratable and more today, as well. important an want you and that pillar Duston that? is overall we’ll to of going But, talk quarters, business more we add a as if billings as well. to with future Duston, as subscription you forward our too that there So, color some

Duston Williams

No.

I think that’s right.

think, a I that. better get got on opinion more our we little can bit a first to have I think Xi and we’ve under of belt

Matt Hedberg

then, to wondering Okay, you. well, to maybe we’ll would if long-term But, us be if margin a QX Analyst And gross for you year don’t and I’m like fiscal rate more a all you’re follow-up exit you’re Day. at this your outlook certainly good exit look I comment today, help Duston great. I an as get guiding know what this going for at a might I of can maybe assume exiting rate on XXXX helpful? year. know, but

Duston Williams

I Yes. mean, than quarter. don’t more a we go out

July I’m specifically our going not call. So, to in this quarter talk about

XX expect to a pretty healthy or down be point at X% talked XX%. similar to once looking revenue as But, that’s And X%, margin. which the other software, we’re software percent At on software companies, like decent billings be margins, I think time, or plus percentish then would basis. should you XX you’d about pretty XXX% that support in a margin. probably XX%, target longer probably we’ve it something XX term, maybe of X%, at

can and You do math zero. at be hardware that then the remaining whatever’s left over would

profile, stuff. some margin just pass-through get with pretty healthy to minimal once hardware we a calculation up down good come with can you that So, appliance

Operator

with comes Sachs. Hall question Rod next Your Goldman from

is Your line open.

Unidentified Analyst

you. on Thank Rod. Yes. just This for the Dheeraj, [indiscernible] software is transition.

little result but you if the seen the just know just wondering you cycle impact early I sales a still been far have it’s on of a as response has customer bit days So, about talk and what any so change? could

Dheeraj Pandey

Yes. for question. the Thanks

appreciates are if bigger, time. you hardware do they that big bigger. whole you software hyperconvergence we’re where a seeing that’s because is as becoming as and depreciates at also over deals to hardware a you that’s or I grow software is thing consumer But, been consumption big that really as of like about tried have about have them obviously small a looking consumption, consumption, think, cloud pay grow time. company, you idea over start and larger away year And for we people the more, because around for you and right actually seeing now time over more never and decouple we’re talking deals the they’re

because So, upfront, next and of months, why you actually things know become would lot over XX faster based that on hardware Moore’s cheaper. law they buy a will the XX to

of they lot we including of base channel seeing by they share our see we’re some with where our margins we’re as value think, resonate partners, software money them this with today. customer go make And can a to selling our and well. can and I partners talking the

all-in-all, So, is Street quite I Main happy. think

it’s early days. I think again,

As pretty I paranoid about as about we’re of good a some talk company, things well. these think to we’ll got every a and come start. quarter But things we’ve and

Unidentified Analyst

And Duston, on then convert. the for just

So, pretty generation strong cash was a QX quarter.

had proceeds. a I cash think, the already you solid balance hand, even on pretty excluding

time? if you’re can more issuance understand how the a wondering thinking Just us behind motivation you little just bit and proceeds about the over help the using

Duston Williams

were around the Yes. in There’s And we appreciates that. capital after stock And until that simply do it’s from XXX% raise after some deal. markets even remarkably a And statistics The the of forward even cost. look dilution an time effective gave in clearly took to dilution outstanding was to happens. motivation to data when quality I at did from that, opportunity the rate good we period minimal any there. And that. shareholder to we the that the then, some no

announced you cash, the our what and good but to and good the us optionality the not we not you transaction take wouldn’t cash then on advantage and that optionality -- uses need economies Company today for bad deals the again to expect necessary. a to was from this that we on -- an more us us M&A expect of go just one perspective to times with That’s situations successful deals. from should a should the place of the big gives economies make of do most and it it and And bad work Anyway, hand... cash, great smaller possible. any put trends do just like really times large and having perspective, to an grow perspective, So, Company do and time to it’s -- from

Dheeraj Pandey

end and I XXXX. of business think was at of said, what just Calm this we’ll I gratification just instant July, three reiterate Yes, And just smaller for teams, in not M&A any we product and that to not this got look years. an of said thing really that want There absorb the acquisition smart built that And us. to no to we’ve acquisition, the I can company’s technologies, the we next teams overall August DNA smart is done think right an will in customers. the come bolster what for. of five we was for large company the

So, the in only January. [ph] cannot GA

three for that is years revenue. these as to a to we to our out looking we’re things saying So need something XX at to doing bolster months of opposed five XX next lot the

Operator

comes with question Wells Rakers next Aaron Fargo. Your

Your open. line is

Aaron Rakers

make sure questions to results. I’m Yes, I about math very current great correctly. thank much a the the thinking congratulations and little the for just wanted the about that on bit guidance quarter taking to ask and you

are plus guess getting being So, million software as percent off, percent burn revenue if revenue look got if And true, the based I range? of next about breakdown software kind have a the are year-over-year hardware follow-up. the for I guys you’ve product in I’m quarters? of XX grow that’s stream, sustainable how that only at your much couple the growth quarter. that only April kind of And what you into you of over of plus that you range this you thinking deferred assuming on as XX about flows $XX is can

Duston Williams

not we’ll of about I but the Yes. just growth generalities some talk Aaron, I’m guess. maybe getting the to pieces

our with far here insight as at rates, March comfortable feel little shortly. I we’ll bit a Day coming XX on how give we Investor up going growth the think As of forward

on we So, basis, we’ll based year-over-year XX% just QX give to profit talked then, at growing clearly in the insights there. year-over-year. a And gross growth on about some rates guidance general, we’re QX

back you rate took year-over-year. year-over-year would just you XX% be $XX I the and If eliminating we’re to that close it add million growth that the believe topline

that. from big while. a like should perspective we in leader a rate so growth for we’re that market have and things growth It’s healthy good forward market, rates all going a pretty So, some healthy

Dheeraj Pandey

we’re be can’t consuming while this a over-emphasize I company of all going have oh, fact surface as Yes. like, market. then the this to honestly. this successful and still we might not if are done but started an box we MQ MQ mean, scratching haven’t a that that, is I it’s

clouds is to operating for said, And over system is to about a as about converging opportunity not this that. we’ve build about this it’s computing, make an think I massive and hyperconvergence. got there time I

Aaron Rakers

a And follow-up on the well. quickly then, as as model real

the of looks that, well talked support mid-XX% kind range, you like XX.X% about last this did gross you above think being I quarter, it margin in quarter. that

talk of forward? per right the going the $XX margin to also right kind million $XX this thinking spent then, expenses So be what’s you million level a growing about gross you under And there? about operating quarter. is Obviously, quarter, quarter, but that

Duston Williams

got before. to I the a coming to range, we’ve that going plus forward obviously this directionally from minus, XXX. correct. generally of we’re think quarter it’s stated bunch to XXX trying think or in We’ve do which make-up, XXX somewhere I But

the So, I of part first And got a go to think was… clearly, projects spend lot on. we’ve

Aaron Rakers

gross margin, gross support services The margin.

Dheeraj Pandey

gets of answer Yes. if is hardware to margin it target COGS, there. involved the includes that That residual internal all a will some bit stays I be gone. you mean, once

has to somewhere. it So flow

revenue steady the to over to right attach number probably kind probably is ultimately get billings the to that hardware once piece we X% that’s state in X% So, of in time. and or model the pass-through the

Aaron Rakers

So, just that sticking last you’re gave quarter? you with the to be clear, mid-XX%

Duston Williams

Yes.

think entirety that its has we’ve with you at to it little it at look go piece. steady state support bumped all I and encompassing, into a very hardware, somewhere when

Operator

Huberty Stanley. comes question from Morgan next Your Katy with

Your line open. is

Katy Huberty

through up, And might mix top last how you in node you in the shipments you months? be do additional the you HP, as that what’s In that when Cisco software the come changed a U.S. the or where year think, transition, Lenovo, hardware? terms over six new out around then seeing sort two is in work hardest where of the market, of now on manner a and opportunity there teams that to an walked And of used of the and aligned connected in all your this deployments? that realize cases the of you OEMs success that, is are transition? potentially participate awake diverse the servers, just those deploying software to customers, management other you more given number across to non-SuperMicro you’re mix of stories Dell, on So, these of pushing software that shipments

Dheeraj Pandey

I one, would XX-XX this is about of this if about six think about would in XX% imagine On one-third lifetime non-SuperMicro, last the selling. and the first lifetime, waging again of say deployments, was was years five, one. months I six probably next the to or think months a this that’d as get obviously I some But XX in so. every good guess, observing would And will well. be a be you

market many the forces, the And to direct support, one-stop support to are and them which I what Now, love hardware just software. do people market for are shop can’t us. We the just come want forces The on to our is because it of both think NX own accord. also strong. to for

support we look have as they go fact while because top-line, with So, trust we actually to baby to that one actually out hardware might our want of the we will we the throw to forces that at, eliminate the be this the the don’t transition. through bathwater continue

which And actually XX love on think gave look, would not? would one Cisco, how XXXX think And been basically about next run it what wage is that’s in to of we’ve especially is I grassroots on do the I is XX-XX the the work question, powerful all the like The months, you XX it and actually who’ve powerful, that rebellion happening, the XX, last about customers, the happens. to one months. or really They’re XX in ones So, I something I gave extremely for your what I like it’s server Duston -- the is been vendors Global the really grassroots HP, trying the and another about examples to of second customer. power where the it think, the saying, I servers. I Nutanix go way dictates very it is and the partners, in they’re the for

Operator

KeyBanc Alex with question next comes from Kurtz Capital. Your

open. line is Your

Steve Enders

so, and you Alex. you this wondering year really these seeing bit guys the really seems was Europe well. on I you are for was wondering, what going Hi, development? it’s a -- if little could driving well, right like It guys, the for now. guys about Enders I or have this executing made what’s you’re talk past are Steve changes or going in

Dheeraj Pandey

Yes.

of roles. think Part good some part VP and going many people the as job kind with deals lastly, was on one it of is business large of is who -- quarter people Brexit And really done good from based deals. We’ve deals it large existing existing customers. customers, different businesses, of a I pretty of for of restructuring which our at some done has pillars also of looking EMEA of from our from needed them something well. large these on last being and of then, there’s

is places, go a lot it’s and from they’re the moving where their alive, moving and operations, to customers market when to I where think, and when of because such Germany of infrastructure about I a Britain center as to projects well. causing lot transformation think in other data they’re come thinking land also

Duston Williams

was Xx And or large -- EMEA deals performance. EMEA quarter-over-quarter definition, the just the on QX deal the by our believe QX’s I about comment, large

-- So so. deals as again repeat that most of large customers, about these thing Dheeraj some happening EMEA. good capability And said exciting is really of the purchase in is the

Dheeraj Pandey

up take point note the Europe integrators And now. which is I the popping to because also and note see system some that’s especially. at in starting there’s And [indiscernible] you’re to other start taking direction tipping that thing in think are movement a

Operator

Your comes Bank question Wamsi Merrill America next with Mohan from Lynch. of

Your line is open.

Wamsi Mohan

Hi, yes. Thank you.

customer of that are the the have profile also pace in wondering strength. add can buyer? a I drove customer new any on if It your incremental of seeing And you about then was increased of the you strong. the could So, shift like follow-up. was the new buyers? comment per materially, talk profile billings very new And the I you seems what

Dheeraj Pandey

Yes.

-- the which first I on sorry, I think skipped is about question. the one,

Wamsi Mohan

adds. customer The

Dheeraj Pandey

Customer where definitely to us are kicking took it a the in, mean, you. Yes, I we -- channel we’re get think I especially the in actually to is seeing adds. channel mid-market while the

has focus VPs them CIOs, Gartner at We have not the think I C-level come of is this were getting a a I the channel, to And blend acquisition. just on elevated customer mid a to MQ, market the changing huge waiting the infrastructure, contribution together because second on people, intense how thing. the they look overall partner. with think is with customer the as been lead a buyers as for And mainstream question, profile we that really as it

of carrying last For years, come market. creating together. the change a we’re I really burden think And the five, six seeing that we’re actually

do really contain that I more XX especially on see and coming out think from architectures well as bills clouds, So, of and of prem senior big we figure these go many to got where they’ve now XX, better months, the boss spend. public and the out situation, over as to see coming budget cloud the figure stock people the taking we’ll the I the

Wamsi Mohan

happen could and just noise Thank lot what reverse can VMware mergers if follow-up, a I there of is mergers. including at And Dell around you.

And if change seen sounds side from were handicap your commentary, your you of But, somewhat you’ve happen, on any would behavior how emphasis there as the probability relationship. of pertains really not any deal that to Dell? Nutanix in at it

Dheeraj Pandey

Jeff Nutanix is close systems one what’s there Nutanix. that and of the is the lose would company Dell there, President this Michael what also I well. of operating I know And And we’re in I’ll watching. closer XX I they of say years, actually only years, Yes. are the strength routes is who will and to over Clarke difficult by leader. the to to four and mean server Dell he built what And massive for one VMware in three, going that this continued us see as market, business to last hand, one to coming not XC, on VMware and of what if of we or have one to is that server not given, has that happen mean, and happen two leadership which his last waiting the cloud is merging this one being EMC on together, really the is but a relationship. mean, speculate, the the business. want goals are he they I this it’s I gets I Obviously, things respect to to mean as

marketplace people that they that just We have and consumer and months. app I XX can as they business are companies compete stuff. been have think question the like still smart know partners feeling And last for with all actually this store just and who

what about. that’s is all think I Dell

for to closer think smart close I system they’ve get one VMware, think to them closer strategy. gotten to getting to But, probably company. they they a I be another VMware, would the are be might operating

Operator

comes from question Needham Andrews Company. next with Your Jack and

Your line is open.

Jack Andrews

themes types specific from if Good catalysts if it’s or involved whether cases used there more deals forward? afternoon. I there five you Are was down applicable Thanks signing questions. just any lessons deals million of my you learned little with common could bit signed. they taking drill wondering for those the moving any that and you were there you on are could take $X

Dheeraj Pandey

Yes.

we this the stuff. replatforming customers as folks with the efficiency, is talk say stuff trust And about and talk like modernization. then I last us the upselling data think or to product chunk when with a say and would I start with and XX we over we’ve the this with and workload want go model. do simplicity the like gained around means big that’s they then, focus this the about months for I they the phrase least This of large really and elegance start has called talk application well. you same more that to of And this which we well been center success, everything customer about operational at

would as that’s looking platform And to going as comes big are with that their a that that, reporting that play. only help with over because seen capital Gartner to the I actually MQ trust say last, shift imagine the done. at So, I all the really XX actually actually us the Nutanix months. would is we’ve refresh, the they existing Gartner comes And has

data and pretty customers. tried have utilization So trust Nutanix. entire keen the of built, existing all-in-all, have gone are is center that would Promoter a say the most they looking and them I re-platform Net We’ve and Score played with at the to in role

Jack Andrews

priorities, over touch you your are could of follow-up, couple what quarters? on quick the guess a next As I hiring

Dheeraj Pandey

Yes.

you pretty is massive of reported repeat at that because that probably we you could us. think, in on ahead I our that website, big once more $X.X can we the business an have there seen we even close And $XX hiring, even it’s imagine dollar take average investor deck, a to of than that our are look Global evident we’ve population market close $X, we’ll from $X.X the get get and entire to top or $XX a our XX. customer, the XXXX from from from actually more

that just a actually formula to is we there need coverage. that, all go says, given for So, to

have Attanasio, where lose Our the at the seat Officer, the the he Revenue table. -- places I Lou on says I don’t table is where seat that Chief

teams, doing push awareness focus is and a But the within there And revenue. be So smaller actually coverage, going of account the last increase lot though going to even I is which of more it’s four we’re for well. obviously, basically get quarters, as of smart keep the think R&D which the three, the to to I acquire mean, we’re focus I guardrails. to some for XX% big business. the think these for company close work is actually to within the is XX%, a guardrails the

Operator

from Piper Fish next James with Jaffray. question comes Your

Your open. line is

James Fish

the a mode? Andy. ago. change prior bit Are reduction the just follow-up for to question a Thanks only a questions here. the friction to seeing you channel on for in I’m software a Maybe following

Dheeraj Pandey

after it the thesis and on of not go now, software take can partner we’ll a go how consumption. utilization bunch software, and early, we the that the can consumption, Nutanix an which lying more on as fact it’s as their vendors coming channel the is probably And or, report hardware some of more and they professional partners can way next as go you The based is on expect plus based of is And see we shelves. top because we it. and it and to they we either get wear actually other services reduce, the have because and more but matchmakers hope then on money make that sell the shelf it And it’s in the -- months, now solution. it pay on to think, can I good, only and some hardware a be ELAs, our six we together. customers’ come should sell and be it’s on because want software put

that play always the is the good actually for played business in there matchmaker So, of past they can history. IT years and XX, they’ve XX them

James Fish

And quickly. just follow-up a

bit before over You quarter hire on a talked the about you Do put billings a growth. so? this how actually year other saw And being you next need solid expected really? very in or quarter hiring to yet that do as much is in you productivity this the as you words, behind think sustainable

Dheeraj Pandey

Yes.

there’s a bell think, I curve.

the will the over half of we the years we to things international ago, we’ve outside about that said, lot expansion, come did territory, see got one X think a business ago, You well X international because time U.S. years the from the of

even seeing we’re And pretty and Germany where job good like of are we’ve not and in places then, success, that there So, Japan a done like laggards good markets being UK. that. ASEAN

a So, at a pillars we’ll was two, look three look of the much think, success whole this years at federal I I more. some in we could those, ago where of lot federal company’s we’ll mean, way. honestly bigger one of

been there’s happens in think and referential go healthcare selling they’re that double of in also referential itself. us, a success I of space lot but a Healthcare some the down we So, these can vertical massive stories. has for --

few in put Duston, do want to these So coming help the you specialists where that sales us with three, four can XXXX verticals And there’s a will actually we the come Global force years. to add…

James Fish

questions. for Thanks Thanks. it. the Got

Operator

comes Nehal Maxim with Chokshi question the next Your from Group.

Your open. line is

Nehal Chokshi

profit. profit will higher correct? Great billings in that than Is Thank quarter. you. reported gross Gross the be

Duston Williams

understand again, Say I I’m sure Nehal? not your question. that

Nehal Chokshi

than The that’s billings the the profit. gross in gross reported will number be held Correct? profit higher

Duston Williams

Yes.

Nehal Chokshi

Yes.

Okay.

gross to question able profit is reported gross my is profit higher then your we tee So, and than out… be the growth, billings that is that even growth should

Duston Williams

numbers. I the exactly at a bit I but the Nehal. case, don’t yes, can little that but -- don’t don’t here, likely have hand exact have I for get We you,

Nehal Chokshi

slight adoption. right. uptick factor a have All there that play at any there? Was Acropolis you nice in new that And your did drove hypervisor Okay. acceleration

Dheeraj Pandey

time, come trying then upsell from, datacenter same we but just customer which in talking one especially whole to of the was look and in not about the AHV what can a stack, at but hyperconvergence they’re play about three for good around has rest coming replatforming journey computing finally to last tier talked away you together, Well, oh, is customers. Citrix well. whole been then about starting the that partner stack know, the the going existing workload, itself, this as vein we where modernization, because storage of the from into is

So too. helped I caught AHV I few last with. in are virtualization. think And a of been the was on behind that’s we that were big for that workload features micro-segmentation ones we and coming years network there has And that’s two think cooking that up and one

stack see that into actually see making virtual companies partners, platform. true to so that balancers, lot and partners our virtual that integrating have really our comes blue network their firewalls, our a is you up So, a And security with of network a of so to security. and together hope APIs network APIs are stack, AHV lot written load with actually that we’ve the opened whole

Operator

question from with Mark next comes JP Morgan. Your Murphy

open. is line Your

Unidentified Analyst

is question. [indiscernible] Quadrant. featured This as being you Magic in taking on my Hi. leader Mark. for in Gartner’s for congratulations Dheeraj, filling Thank

What derail critical XXXX, [indiscernible] states business that Do in - thesis? acceleration that that think public also three than [Ph] currently the more aggressive the of that’s could an you an HCI. or opinion? cloud And in XX% transition workload will to view? by migration your think I conservative the is report workloads, public to

Dheeraj Pandey

Yes.

rented. talking years I the to you pendulum now will been about And is as and we’ve in and the too last swung itself. to has come the owning balance that this be think for think I far renting direction everything going other three know about

be I of So, a made of what banking on the And be Because becomes to -- the look and we just software. pure a in boxes years of over we make an to thing look, be. this are an going And on. that three I to lot a gets and was off-prem on bursting a said identity real and which there I that networking job conversion in Similar hyperconverging is security an thing, our make is and problem of hardware public lot need blurring so money the five five in off-prem business the -- experience. won’t cloud a lines mean is the quarters next renting we mean into where only goalpost three on-prem, to there between harder to we of and and we and actually into innovation next to years owned that that personally experience. even will something with will seasonal it, over on-prem the and top private with be on-prem that’s journey thing, did is doing what when money rented, is respect at to

to that. -- game. solve if problems in computer bring when science cloud this you’ll and a as at lot don’t had a is good So look and there a say go I growth sum as in the you look there actually money to of zero made It’s at lot silos together. a you’ll how design mindset, are you for can of silo and be

stuff VMware that’s was On I give zero; it’s bigger And XX%. if new to that fine, computing in any every the all we the than new working new Gartner certifications and capabilities XXXX is new year ago, think was company on Quadrant tab. regions, the become were reducing virtualization probably a so right it’s architecture. then it to we’ll this today, better features, it thing, and XX%, Magic was virtualization and years something passage a mean four what as just XX. you again were now, then succeed geographies, tax, of of new workloads, the okay, And I

we’ll respect So, we hands in customer. really at how And very of it the the and this. product behave is makers to to going and on and holding will legacy and of customer are market revise come about and with the based year its every days looking Gartner early talk service number

Unidentified Analyst

it. Got

them they between thinking NSX, in line networking and a a and big deal on-premise lot obviously blurring deal holds a was when that for and off-premise, acquisition that’s big like seemingly Now, about seems VMware is Nicira there had. the that of the

a For I on do How networking you developing you, you gap this and point? think in-house. your point this at much between an there par would say think you’re at is NSX you technology or in are time

Dheeraj Pandey

the look, actually Yes. most the I on think formula focus That’s focus of XX%. mean we it. companies that XX% on good product I

we and to months need and And $X virtual in stuff click. million XX clouds rollout developer the don’t go would deal they you I buy are that’s private the XX%. a and cloud, that $XX XX% is So, because of not virtualization any because but groups talk the thing if public not million, already consume expect actually today million, network security XX% real you think is and that virtualization say professional $XX Look a of one and the million stuff us can it’s even $X bundled, XX% at just services. is for network other for about

not node really at because system I a thing goal thing to because entire an not and it is $XX about a it’s a So, a click really one operating is ELA to experience. part a being our it’s time really, make talk million one think network of it have and virtualization really

Unidentified Analyst

process, February one that the more everything changes, where going update a with you in territories I you perspective through else? done if in on currently are are we from us changes and the speak with with all of sales cash changes And with changes can could already all especially we Understood. the the coming in the Xst terms comp are sales

Dheeraj Pandey

and we notes we there and think you a a But really have have actually think, operating is mean every to Morgan that of as folks exchange like about I to come love have JP -- is system we’d making need because with I upon talking our Mark conference, Day go-to-market something look, to we a actually innovating operating Duston and been improvements in. I that’s this there well have is to system, Yes. innovation, how is just about actually on quarter. software our lot Mark come Investor lot

coming think the conference, Investor you including as about but But Mark every have I will quarter come how together. early the it’s to you change -- results well. love So to is together more quarter days, these tell Day

Operator

at will turn And back time, Q&A the the today’s concludes to conference. this presenters. I session for now it this

Dheeraj Pandey

Thank in was VMware it you because and day. I all so moving and tough joining us. much know us of the everybody for day, Splunk same

showed us. of to here all you actually means a presence lot For

Thank Investor to Your the seeing precious forward you. conference. you and time Day look is at

Operator

today’s call. conference This concludes

disconnect. may now You

Nutanix (NTNX) 1 Mar 182018 Q2 Earnings call transcript