NTNX - Earnings call transcript Q1 2021

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Nutanix Q1 Fiscal Year 2021 Earnings Conference Call. [Operator Instructions].

Now I'd like to hand the conference over to your speaker today, Ms. Tonya. Please go ahead.

Tonya Chin

to first call quarter welcome results discuss and our of of afternoon, today's to conference the Good fiscal XXXX. also in website is can call being the over This web be accessed ir.nutanix.com. our at Relations Investor broadcast and

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

of release, the please the our read IR to section website. like you'd If press visit releases

impact including which statements, our performance, forward-looking regarding the actual could our make targets factors will timing pandemic. anticipated management call, These of current cause transition outlooks, position plan; financial today's and adversely from plans, and anticipated business our and of and competitive timing our the and by driving risks are differ results the of involve and those use these to statements our CEO of uncertainties, strategies the future statements. and During and impact announced some our beyond forward-looking financial COVID-XX materially and periods; future growth; in and impact transition; performance current business which including metrics the control, of model statements

today. please factors, as well after fiscal as including on update to Form forward-looking on these this XX, obligation we to XXXX For XXXX apply SEC These September undertake issued description statements today, of and statements XX-K filed recent our annual a detailed press these our filings, for most as SEC refer no our report with call. of release the earnings

specifically our on note, views certain charges. not measures rely should Please them exclude are referenced, have to in otherwise on adjusted today's expressed non-GAAP call all future. the use a basis financial been result, representing as we unless a you and As on

We release. financial reconciliations in on earnings financial to GAAP press our extent the to website measures to IR have available, non-GAAP measures these our and provided,

Needham Crédit James the the XX. Dheeraj. on that, TMT Technology you on January on investors will X X, the hope to meetings Conference Wells over there. the connect and management Conference virtual many host Suisse December Lastly, December to Growth of Raymond call XXth X, Technology And with at Dheeraj? with December Nutanix I'll with Fargo Conference turn on the Annual Summit We

Dheeraj Pandey

Thank Tonya, of very rest fiscal. QX afternoon, and quarter, us good you, well everyone. good the was positioning for a

While go headline was key ACV And consensus. financials, notably, Duston the our more pandemic and bookings best is details notwithstanding. guidance on ever, that were ahead into midpoint billings our outperformed QX across ACV will quarter the our the XX% of all we metrics. of the

margins, In addition, free flow we delivered strong performance. cash and gross EPS

future our come, progress, over fruit. multi-cloud journey our to We an product top a decade, infrastructure, ehave of a to bearing there's last are see the do. built look hybrid is and and cloud-like combined with how with our industry-leading and ambitious business far on delighted model, hyperconverged back is w last subscription to of of the more HCI Well, transition continued thesis great on years X it our

to us, our behind performance. were collectively grateful QX contributed factors and is work I'm hardest what and have to we date. that the So accomplished proud number of for a There

scale. products, discounting average and shift, we sales new to business. the significant lower of positive $X.X sold driving strategy as we compensation our In shortened. growth ACV XX% all year-over-year more our ACV-based our at delivered billion And run First, result rate while benefits QX, term a a saw of contract overall

attach basis, was a saw products software. our we ago. I our during year from adoption of top as of new QX percentage up rolling Next, points on mentioned, rate product X a On growth core in XX%, strong X-quarter new our

durations saw we and Calm new number XX% products solutions, our DevOps newer of new products, for particularly good solutions, data as also as is Files also including which the database-as-a-service In detail. the our the licenses contract and of to a consistent also U.S. many our for expected, which for this address year-over-year a as deals HCI as drive core cloud XX% grew our Flow, federal, the our and sector good foundation fiscal Within with Demand number hybrid of well Notably, our the which contributing Era. and government's new new all had for infrastructure, ACV momentum X-year had fact, for The products, quarter-over-quarter. included reduction will year-end. quarter, we Duston center and geographies seasonality verticals, demand deals Fed product decade. we software, across significant to demand was of of in core our average drive our a duration proving the new more more solutions contract for software, thesis in that quarter our our owing

providing quarter spent million speak firms lifetime spent the another the in of of in than combined of As win themes This one A always, and servicing existing million largest $X.X discussed journeys with to more are during cloud. the expand world and oldest ways ACV private the customer quarter. customer, the $XX investment our was that the I've many customer administration. financial their in best management, services which to has

$XX and ACV in story Japan, power companies similar upwards has in with our one million digitizing lifetime with in very spending a filers stack, had of software the spent their another largest also $X.X QX. million We which of desktops

driven momentum area by strong results of the also were cloud. in our Our go-to-market

sales around enablement Specifically, the benefits. with ACV successful sales of training launch our together ACV compensation plan, and effective

process to our The and role we deliver map a sale of help journey. road the to customer channel during closely working a quality end, and evolve the that how embrace an profitability business an in addition, partners help even COVID-XX, we sales improving simplified job extremely by program play adopting important accelerated sales with cloud an To robust the of announced building In our and to multi-product partners more even channel excellent model. multi-workload pipeline continues have a done teams approach.

we skill XX,XXX fracks Nutanix levels of new overall The more arm. software quadrupled Additionally, We this technolog certifications and counting. technology. to of University, to stickiness participation past across improvements the meaningful with year increase our program Nutanix over the in and in consumption program made provides education learners in our now

Our of an on-prem partnerships for customers. of with HPE, freedom and to Dell, Lenovo part continue our offering our important to others be strategy choice

with new a they in automated plan our the selected we reduce will furniture fact, our a from large site, no acquisition. gained automation a meaningful solution ACV fully we as retailer days as during of software, had who well quarter-to-date new implementation In European HPE quarter great customer that A example pandemic. is this best to new navigate with implement core IT distributed We cloud software, database-as-a-service solution, especially Era and IT time on to Calm. staff as weeks customer

pandemic transformation, accelerate. helped and digital Speaking has it the on

become and several organization. rate the the For to have a digital marketing we our been has to shorten drive, or the programs. distinctive meaningfully self-service top of sales Test funnel quarters, X of touch of conversion highest past cycles continues delivering shown all engagement marketing provide prospects while

our to largest event company's And hold We the in virtual in we held also person ever, history. in globally. virtual QX, events continue

significantly is track and Our partners. events. XXX% lower deliver in than virtual.next-gen [indiscernible] And strong record to person over customers attendance cost on had at generation the pipeline of in a quarter

you a share in authentic cloud from with also Let to being hyperconverged on-prem pioneer infrastructure, new we infrastructure hybrid how are HCI being morphing the an company. me

we quarter, availability the HCI During on announced the clusters, of our general AWS.

a with will become This to a approach foremost partnership is major solutions competitive data We to our bring Azure. to that singular on software our in product including enabling bring license company hybrid company's across strategy, clouds. all provide experience a portfolio computing significant your in also own application, Microsoft partnership us seamless announced deliver management as infrastructure help customers with evolves and advantage we our journey. mobility, the the a substantially to This license

any of a As in fabric we've an private. use forward past, services This AWS offers their and public cloud of benefits, They new by institution test in financial and growing extending stated during invisible the Nutanix region dev contract. in represents require. their is computing frictionless services them public on or software help flexibility AWS unified across in the multiple clusters delivering realizing customer X-year to migration in a on simplicity the also to with ease purchased our for quarter Nutanix cloud. a A needs vision a who they example cluster including to the of to step selected clouds, availability significant and new AWS anywhere support our clusters of the the APJ and Nutanix to make clients, provides the

our the Era. launch Kubernetes-based platform core platform-as-a-service, updates platform and as to continue and includes our We well core our new solution, to new quarter. of in This innovate solution, database-as-a-service capabilities as to the products PaaS our significant both software

continue need business repeat reliability models As to loyalty the product a and renewals, of and and customer business. big be continue service subscription driver to outstanding our for underscore our consumption

award row, in Summit won in than centricity. years, of the award, we from the awarded also Class more rare award our because NorthFace this we is the recognition excellence were a having year sustained for of X for seventh And which NorthFace For honor. CRMI a customer ScoreBoard our confirmed

annual are trends the investments launched a we hybrid result private respondents their encouraged IT Gartner last addressable IT doubling changes powerful infrastructure XX% how substantial increasing business Duston? both talk cloud IT spending third hand think This pandemic out X as briefly these and results it they to hybrid that, around continuity of see like with deployments, shift world, performance solutions, modernization up XXXX. hyperconverged and automation about work me our and despite tailwind by public. a to relative for XX% the public XXXX, provide week. is cloud, companies pandemic. Global Index, using evolve. to remote validated lift Across see In and planning and X,XXX to percentage said professionals continue of to been next future organizations We've they to Enterprise years. and of collectively that as predicts Duston. the teams prioritize clouds, hands-free With from the the let that by and XX% will as in the we our grow increased Finally, short, points opportunity, over our Cloud held in I'd about has which projects. XX private markets over be

Duston Williams

Dheeraj. you, Thank

uncertain Going to environment our the are both ACV-based outperformed an transition very the start quarter, that and guidance expectations We clearly model. compensation to into with into we sales took strong macro the consideration pleased our provided an fiscal year. and

the in FY on-prem, enables the off-prem set seamlessly is thesis and the our following: and business that convergence most elegant enter best our the solution both product we on for As the going marketplace. remains centered forward overall 'XX, of industry-leading

the Optionality matters further to products drive new core subscription customers leads prospects extending HCI our solution to core corresponding ACV previously and were our of with with will offering to options alone. address add Next, offering in continue that our growth. to variable by of to growth continue terms which solution reach significant out additional optionality, opportunities our will and and flexibility turn truly their new

QX. Our accelerated deal economics compression ACV-first powerful in our with and focus ultimately thesis ultimately business to time via above a lower a set very shorter will leading for model execution term forth clearly continue expect better will ACV show in more business And forward. finally, growth going market-leading a our ACV efficient to we The renewals. growth becomes combined to this, played improvement strengthen solution, out go-to-market combination discounting,

core the ACV well bookings, very quarter, product customer bookings. ACV continued to total with representing new our perform of XX% During

backlog a related also net new was quarter, uncertainties we also COVID. and in substantial backlog added typical of customers QX. the usage also macro a XXX very Linearity despite to added to of We amount amount QXs. ACV of the generated new a We previous good about record in during pipeline, ongoing compared

QX sales, focus As you product and products comp renewed belief surprisingly, may in that on well during put it our performed not recall, very call, our earnings would a our QX. new new sales was ACV-based

new of all delivering Objects, new quarter Calm, record Flow related and products a to our had ACV Files, Era, quarters. we ACV noted, Dheeraj record As with

products optionality of budget New quarter deal deals. improving played during into our opting during also flexibility came the the for in subscription quarter. more economics play customers a benefit with of X-year Furthermore, clearly the role the

in QX incremental Our $XX outperformance pool will to which an million our is the previous has $XX added X-year QX that plan. million up 'XX, on and above in renewals to come deals FY over

drive We to leverage upsell our in model. transacted expect these will more cost and renewals less at our be compared predictable new which significantly business, and to

very also are large that the as significant deal about term any QX, expectations. lower which in to lower potentially term some more we X-year And X.X QX expectations, communicated would while a we of discounting comp impact the when compressed expect years and percentage in in to specifics was compression versus the new we average as term sales much resulted new we our to compress, business see of several we shift in than term from average our terms as economics to Since somewhat compression, mirrored decreased a optimistic level As compared with QX. of our the QX, In look fiscal not deals deals, year. X-year to balance setup business The see the our plan well better QX we on term X.X customers amounts would completed previously ahead, contributed QX, usually and contract business specifically did customers compression is existing not that term around actual QX terms larger for total of experienced the federal expected. experience In have average X-year which do the years all compression. Federal same deals. 'XX, our X-year smaller decrease. would ACV-based federal

While detail X/XX existing term customers, contract term X/XX of average customers to not every of new declined average we this by of by plan quarter, decreased of of ex-renewals, year. while level year, a a contract do disclose

last execution line few over consistent our top Lastly, outperformance showing evidenced the go-to-market our quarters. by is as

our only X have our we quarter to encouraged we belt FY with 'XX, are in under progress very date. Although

QX QX range ACV above of to were well $XXX rate I'll XX% Now of million financial reflecting billings million. growth our as some $XXX move specific on ACV million, Run highlights. year-over-year, to $XXX $XXX guidance of of million, which compared of was growing Revenue, down was least our XX% X% by as year-over-year. was term guidance at end year-over-year expected, decreased average XX% impacted billion, the $X.XX growth. to length,

XX% gross margin were user End spike guidance versus non-GAAP at a $XXX expenses million. business to demand as XX.X% computing, operating in and percent the versus our $XXX of our versus of QX was the year-over-year QX total down COVID in XX%. million, was Our we The 'XX of saw flat of beginning guidance million $XXX as moderated.

of purchased X.XXX announced shares average we $XXX million buyback. stock During $XX.XX completed at the previously quarter, an our million We price per share.

the additional PIK, dilution reminder, with the the the stock incur will to paid-in-kind, we As offsetting was a intention Bain executed that convertible related on buyback or of the notes. interest feature

$XX a share. million net was non-GAAP of per or Our for the $X.XX loss loss quarter

internal in Our free QX driven We with million quarter by significantly negative XX good total days investments linearity in Bain cash $XXX million linearity. very million versus QX 'XX, was QX than $XXX the million. were 'XX. $XX QX XX our of billion and The cash expenses from note stock by includes $X.XX flow And DSOs performance was for in $XXX less was buyback. and days good convertible also QX, aided expectations. the cash better This versus short-term closed which

million. guidance. turning outstanding million, between of year-over-year be a $XXX to Now to of ACV shares QX our billings approximately of $XXX $XXX margin X%. representing $XXX to XX.X%. Operating between X% of approximately growth 'XX decline representing year-over-year Average million expenses Gross X% $XXX X%. million million, and can and

assumptions. modeling few a Now

the be in bookings slightly we create cautious Our third macro expected higher substantially of QX COVID growth QX the ACV be of guidance impact as 'XX. a continue as 'XX implied year-over-year to in and basis, could QX of that waves COVID consumed rate uncertainty. backlog additional second we negative is includes a light On of to our the

grow sequential year-over-year. slight reminder, we trend the ACV a versus to have what rate on growth strong to expect which suggests to QX. would and would QX we expect in in experienced, exhibit QX similar seasonality, billings As QX its a decrease ACV guidance, XX% we billings ACV 'XX run continue based approximately And

QX, linearity We flow not that of mirror to to and decrease usage to From in expecting are QX we term expect a compared in the perspective, cash of QX. are half cash therefore, 'XX the to amount X.X our projecting the cash expect There cash would are this internal QX. of years our length forth flow FY we we of increase at in a first currently QX in QX for slight beginning of exact free plan the usage exceed the year. fiscal set in

travel to as included to how billings help billings, to modeling, billings for year ACV go-to-market on than in benefit Dheeraj like and While our 'XX you. in presentation operating to our term flat earnings continue as to website, continue maintain we slightly I'd total costs, from and we invest to for And finally, last With previously our your efficiencies questions. that, did have with to ACV our it grow IR as current historical convert quarter the to guidance we business. last we expenses additional Thank we trends run pass higher lower communicated, our rate anticipate focus on be length back ACV, future we we and and fiscal billings. before located bridge remarks a model, take to

Dheeraj Pandey

encouraged close quarter's in participated a get where to to the who journey in of Duston. now. the call our last business you everyone transformation. I years to Thanks, with earnings are we has X the thank We're with extremely model progress want this

still power of While do, subscription these to have the demonstrate we the work thesis. results

model, mutants, alongside look meaningful of when partners, our a market strong news. best is watch to portfolio to decade employees. to make come. has journey the value serve has for lifetime it have technology that and This our that's base a is future-proof product customer progress search. reliability so and a we company our you call fit, on and CEO Our With simple, been as that customers Personally, yet fundamentally working continues a a secure such forward to We seamless. a values a we Board to updating the business

for Now open it we'll up questions.

Operator

Instructions]. [Operator

line Your Jason first come of the Ader from of will William Blair. question

Jason Ader

surprised transition. did on speaking, And ACV you could were the about, didn't expected? of question surprise it why My maybe but just is And What you surprises, like you seems what than bit talk broadly if better there little you? a you?

Duston Williams

few, say a take I'll in free here, I Dheeraj, Yes. would surprises. Jason, very feel shot, jump any, and to was real there too. if

quotas. we view had going about, which views And that, -- terms those QX. thought and customers, into think much to economics. they we Deal mattered. for as we would thought in it an customers, deal they would had out our We new we I more have We We decrease. not customers. decreased more that opinion only our played higher improved. but lead talked attack tools offer And less their existing a thought to reps mattered Optionality, as pretty all economics sales planned. now go on because they knew for

I maybe we lower an So think exact X/XX not was really terms anyway. in so it than or of science but that's expected, Yes, the can't anything.

again, And rallied I QX. you very around played just kind we a saw think better everybody from from guide good than probably a surprises a little think for we certainly was I And that of and delivered out think, quarter there So honestly. through, -- anticipated. hadn't for I ACV comp, thought the matters. sales And And quite what it that. has optionality,

Jason Ader

you than expected? And environment was the demand better

Duston Williams

were the at pretty from XXX%, think I pipeline, perfect. record it's impacted pleased especially were And humming here. overall we full on Yes, this environment. that pleased in Obviously, they is pretty not we -- too. with based economy Well, perspective, not

Dheeraj Pandey

spenders, of and is was Duston this. the thing of of because knew that, that keep it terms much our the in to early operations radar add were with kind very spend when how has on lot it like and federal think And XXXX us I where friend think O&M I we And be federal for to maintenance, ACV I'll budgeting. into and -- embraced XXXX, we a in to under is through the Yes. cyclical business only going it Jason really going

how lot out turned about. X-year be to Maybe this has that salespeople great surprise quarter them for selling embraced our think federal. of Part a the X-, it it competitive more So pleasant is upon a been to Duston X-, talked deals makes than the that it X-year really other deals.

Operator

comes the of question from line Kidron Your Oppenheimer. Ittai of next

Ittai Kidron

me. questions couple from A of

is about basis. How given of a now evolution of an First be think to multiyear instead on annual sales a basis all, from that just you of capacity the forward, activity do capacity. going the guys done going renewal

than capacity? So think from order more front be hire standpoint business. mean to capacity? again to capacity you that How that do need the renewals you time new on about aggressively to would sales evolution dedicated of create new more Does customer in

Duston Williams

sure. -- I ahead, So Dheeraj. Go

Dheeraj Pandey

Yes.

So are and I ACV-focused. land which think focused reps all all is on the new expand, field

Now a and renewal. to on they get ding we all be really focused the them expand. all, in But if will get land didn't we expect

and team, that's to customer comped inside, All doing which going the how and really renew of is on well. on as adopt be are their success they all the that's phone

Duston Williams

Yes. the here the And renewal to to separate Ittai, predominantly point, hiring, of that's take I'd is thesis ACV whole main not around that's to leverage, by the move going aggressive exact all team. that, right? No, be -- right? is this add the what around will premise one the handled a Because that

we to rep will build separate team. that renewals all But up Now adds. have sales one-for-one these go be not

require to reps the of $XX that. $XX We've quarter. business saw leverage. in to of impact from go million, QX new 'XX deals the subscription lot million yet. pool haven't that's attack that's the renewals the a not gets flow added acceleration 'XX. any in where pretty just in -- had So much And you We to the their X-year just And going

the ACV move. the So that's of premise

Ittai Kidron

it. Got

the you long-term in topic, maybe make little you And done you is perhaps differently very that it which just quarter. from the term quite standpoint? pace maybe does just where help the by this contract follow-up, a aggressively a you've in well state about a can then was I of steady on Okay. there? as there. clearly, cutting your Or get bit outperformance term But think guess

Duston Williams

played some dramatically. the the Not business of won't They percent QX. term a compression same Federal the in role in QX. in be of

offsetting of year. got at the this somewhere some We'll fiscal out. end how there's kind low the So see that We've view of average factors of there. X-year plays

quarter bigger, of the I optionality maybe think a view, but like sales that. into that to opinionated the quarter be bit this to more certainly, more to seen and our give customers from the anyway. used model kind X this used from reps especially a to things start is real model, little how we've too and because little a get with what federal we're this get But the first played early to bit. Maybe encouraged we see

Dheeraj Pandey

there's forces And enterprises Japan, to they're opposing to of well. be large places be going probably The like kind as term. longer going still

at other federal our the will that you look customers then term. shorter on still of term. commercial large and longer very And side, are go Some

a to going it's between these healthy think yin-yang I So be two.

Operator

Your next come from Kurtz the KeyBanc. question line Alex of of will

Alexander Kurtz

fiscal the to had Duston, you the a start question, just but duration target was you I at 'XX end clarification. targeting? I threw three a with on were out, want that contract of

Duston Williams

the was fiscal kind but referencing we've got was -- 'XX. X at what in of I the of end Well, again, low Xs there, mentioning I low quarter,

Alexander Kurtz

point too fiscal opportunities wonder you tell? or dip this could that at with that do there's early to some X 'XX what below And think a thing saw in given the you chance

Duston Williams

to said, to still that you've some older early but tell, deals, customers cling got too as It's we've -- X-year and Dheeraj will hang school got too.

to we're I early opinion. But much think, thought give kind give another, we we'll a of another that us and again, happened. going happen too think, So of to X but it's pretty tell, everything quarter quarter, just was encouraged I better

Dheeraj Pandey

want depending collect incentives say we'll based compensation. on sales of this, tweak such and much well that simple part sales I able as how we need and just to well on be as as cash go to to

a we We architecture And worried. want go overly the place. not great we're now like can in way have it. and So we we tweak feel

Alexander Kurtz

question with the what when person person that you The would table? profile process, could discussions you like that what you're investors touched Dheeraj. your that there's this your if about vision little and know would that -- happened, I last over would right bring about expand, think now like it And of helpful. And a and replace been that, as share to you maybe appreciate about I a you on be to you decision capabilities to that the see lot the take look bit experience. into to I over could role very CEO? you the person quarter, the would

Dheeraj Pandey

Yes.

someone be I big people, can't because think long-term take product. to around be the you industry the you able the corner do process embrace because technology strategy you other, the your eyes look strategy-focused, short-term Basically, can one the the that ball. piece and is, off have balance who you computing is an overdo how to that's can't or changing fast so and

there relevance well. I to with space. And definitely looking in And a So candidates be the we out few who quite of pipeline. the at in a as of the there. There's infrastructure great in we've software think gotten some our has a the to view We're especially public would I business up for cloud the our of for a reliability and different people strategy X-year system engineers. a There's the to that like company in to think, lot landscape all various infrastructure all, people engineering very, very also look out engineers, of front and need would vision departments in somebody in X- be that's developers, sales a our somebody important, lot us.

Operator

Needham. line Jack of Andrews question from of next Your will come the

Jon Andrews

start product good I the down on could you're Congratulations if year. you wanted new drill a that new strength bit the on to more to the fiscal see experiencing.

success but helping is number a something the with, is, specific you types you drive Are attach they related to of the ACV success? mentioned any products? could the new DevOp-related the product sales mainly down Or changed is Have of question on you that around do credit shift use -- cases? seeing You you're seeing incentives rate? products drill or new else? are you this to And

Dheeraj Pandey

want it? you do Duston, me you Or take that? to should take

Duston Williams

Dheeraj. I'll take let the you use cases,

Dheeraj Pandey

Okay. Yes. Cool.

good all, first as really saw of unit Duston So economics, of short we said, mid-term because lens.

taking together. we're out not one pocket putting of it So money and

mindful We that. are very very, of

products to and core. pull-through themselves they New for to have have fend the

So moving lot core is products. new what no we engineering watch money [indiscernible] financial a to for of business of from

all, of and amazing another. I Oracle, and fact drop and them cloud in we database architecture, Ethic databases, simple some can that they database-as-a-service. so workloads, we've large health Again, traction large with think, is and new in SAP, all DB from that the saw a it care. this Sequel, one loving drag ton seeing great to economics made We're

The data other one good the special really around job case. use and objects desktop-as-a-service. containers. doing that a files DevOps with around And is finally, We're unstructured

I lot think just we've there's VMware also for our around Citrix a Horizon, own of but work and not brokers. done,

I think unstructured around Duston? So and all databases, data great in some that. all, desktop-as-a-service, use cases

Duston Williams

the that on a was now something move because I But -- part, X-year deal basis. same was ACV it to comp you for to try as as $XXX,XXX just it for And was do spread the it is same X-year helped the to to certainly part, is most had on $XXX,XXX it got just for deal a a by new -- the remember, product they the believe then the help sales around. yes, part, most the go

above said, I smaller these go the reps optionality, regions use only there, obvious all in regions. drive go an ACV we will And love quota. it tools to more this perspective, and different our and but clearly little not there's Which well There's retirement terms. from I played with additional quota customers' obviously. sales see, perspective on I here So with mean, played to say but were well. all things

So a bit that gives of of of kind the you little to. optionality feel of power

Operator

Your next of come James of the question will Fish line Piper Sandler. from

James Fish

was from cause sequentially? drill you seeing count sales normal change And ACV-based and as what to this employee want your to down Just to color the as give down further reps? any your additional marketing compensation. Can down -- for you're and on whether actually churn

Duston Williams

the was question, of what on Jim, sorry, again? I'm part last the

James Fish

marketing employee sequentially. sales your was total Just and and down count

further the ACV-based if additional I'm compensation, us than quarter normal? to And you in to seeing you're So what on caused wondering, as the reps? give can from churn color it just change

Duston Williams

the what Yes. from much mean, sales churn isn't in has I the been several organization last different general over quarters. it within

the have different. that. Now more overall, little and some But a forced aren't things significantly churn, selling and might there like rates churn on maybe some selective been focus bit more maybe the software

the Now reps. though, how in There's things incremental do is Kris have resources done, field out more shifted of that. team been they've realignment productivity and and with some like what regions leverage, the get amongst we same coders to certainly

you So focus now that. them that from productive, and a -- the more real of right have that even we perspective ACV do reps. things like get How reasonable lot is an certainly

the We that's significant focus won't So this now. main right reps add amount fiscal of a year.

Operator

Hedberg will RBC. Your Matt next come from question of

Daniel Bergstrom

Dan for Hedberg. Matt It's Bergstrom

you mentioned the Dheeraj, So clusters in remarks. prepared

clouds from elasticity the looking Are model? customers hearing case Just on customers? across early early thoughts or you're early any for operating curious or adoption for adopters around around optionality that, the Just around there? bursting, what demand mobility use

Dheeraj Pandey

became it a big very very shift, within latency want part have focused moving Absolutely. X the just very disaster case one testing xXX. is recovery also 'XX A workloads, again, and of own servers of movement virtualization workloads, and same sort to for desktops. enterprises enterprises had was And everybody well. then contract And initiative test Intel to lift workloads as it use your was I/O high bring at then intensive so clusters of to bring case XX around XXXX Unix a of be puzzle is And in from and the best own from whole a are, probably us, piece I to dev, I also Yes, the the are comes virtual years. that find there's It's Citrix and low Vmware, apart and important clusters. use license, draw when we as virtualization And I lot the great biggest well. think your ago. years VDI the dev. of of from coming will And for test AWS the Azure for think about large and

the and the large test of of early a cases expect from wins these we as use one that databases, talked cloud. you to dev, saw shift about lift So around and many I and finally,

Daniel Bergstrom

maybe then Duston, Great. expense the And on side. for

to From about the on maybe further on color remaining growth? for to accelerate year. the You top But accelerated out? think we into around provided quarter, line some prudent maybe Should for would that investment for now. guidance a see the here, we should the expenses potential start there be

Dheeraj Pandey

Duston, are you there?

Duston Williams

through increased Yes, we're sorry. to line most from top just a the in midterm, near to get going that of productivity. leverage, so rep perspective, hopefully, I'm

So here of here But some got able that. I currently should have incremental to ACV growth growth. resources to great surge as anything of need regions get I fair lot ACV throughout we wouldn't the now. surge resources incremental most higher like continue mean, it we've a with or see spread of to as won't it there you whatever. put is a and hiring now amount the get we We clearly of reasonable be

won't in past spend spend had at just future, there's whatever learned -- nearly benefited But travel, -- back won't else -- So we've So no come point, will in obviously, some to point, just that everybody's and we hopefully, online. differently. at as is everybody has, travel some clearly, when things even normal the because the from, whatever things how some much right? some we do things travel as we

resources hiring and like need and customers of and things support it's rep selective of we taking with as and first obviously, care productivity So to and we're we make products leverage, that. need then as realignment sure, foremost,

here the to of kind view that's the over So midterm. near

Operator

Morgan Huberty from will question next of of Your line Katy Stanley. come the

Kathryn Huberty

some said Why in October follow-up. especially just you Just you do conservative backlog successful the coming in off pipeline into in? color first ACV billings you is performance decelerate put why Then conference? strong to that the about growth more than eat fact given a like and what would bit ACV the the Just quarter didn't .next as the you outlook January, quarter a performance. the typically I the levels, have record

Duston Williams

with to what's Yes. encompassed happening. Obviously, phases, perspective direction and Again, XX% to real concerned your guided we from in mentioned haven't that a billings the grew COVID and We've third ACV going are X% wrong things outlook. in gotten we we clearly point, Obviously, second shutdowns billings. in X%. so year-over-year. our We're QX that's the aggressive in QX

Now probably we're on X% Xx, X% it basis. Xx there at growth anymore, again, rate bookings look though, on comparative that a at if a bookings but disclosing not is least to basis, you which

was unusual some when at QX because, base some there's which good perspective. that pretty it growth -- from So a brought in you look used 'XX, backlog, bookings a little we on again, actually

So better. I bookings, -- a COVID something baked on bit to got it's combination again, certain -- from a in we're perspective a again, think a we've And of little the a degree. quite there

Dheeraj Pandey

Yes, just to add to...

Kathryn Huberty

I that rollback the be to news for headlines to Or you Just want to the the closings? of and -- conservative point November potential seeing the just say, month would that in outlook? on anything just is was going are you of cause it economic to more

Duston Williams

Yes.

News.

much just think than approach. make environment. think, sense I aggressive not News at to this prior very this get doesn't point, headlines. different It's in just I our

Kathryn Huberty

you mean Sorry, off. Deeraj, I to didn't cut

Dheeraj Pandey

X a understand strategy, we No, where it but that, quarter understand sorry. We just saying would that I get and second look, ACV-first coincident. we had one. we've a the was ACV be

would pattern. a one third be The

be learn X important this strategy. next ACV-first So quarters us I to think about really going to are for

Kathryn Huberty

think Okay. just flow? goal? you And lastly, time to free What cash Duston, the here, happen becoming has in line to do breakeven that to build from near-term confidence about and then more a how

Duston Williams

compressed little get come don't we maybe And a have above, they're how bit is Well, little that two But happen to if three to to terms have first. even that's a going know factors terms need will right offsetting bit to fast we've of where we now, got out. kind below. I Because year, maybe down.

billings out, growth But takes of we terms to obviously, can to have side, revenue. terms, stabilization a on some in good fast the the accelerate And how view. that and need flip regardless So first offset we kind of that. then ACV the

I quite some well FY think we the we get through up compression, think as of that why probably that stepped then honestly, all quite combination we Now and always productivity that's term But growth, of products, 'XX. And after I've stabilization. been stuff, that's expense first that some the quicker probably half it the better. the view And need point. again, the more the maybe prudent

Operator

of comes line Your Wamsi of of Mohan the from Bank next question America.

Wamsi Mohan

billings much fiscal a renewal ballpark think quarter? percent as how And in if the billings I Is changed you we 'XX? the of And Can there? tell sort renewal during about XX% us activity follow-up. a Yes. in the should have total of

Duston Williams

Yes.

of own. is on We to modeling go haven't the start given but now specifics good a we've that, your given news quite that bit you data on

You ACV now by percent and as or ACV a have QX QX, term length.

obviously, the things that. X-year We you now, and swap quarters. know deals QX X-year, So got like X the in X-year will

million, TCV basis, happened up. just in and to to And million continue bit start will we've based So like over disclosed a already XX% or from kick Again, that renewals simple that. below that some to here $XX 'XX, things On QX $XX to will we've do what this months, And been pretty a that quarter. accelerate. perspective. added the roughly on modeling quite last it's XX

FY now about to the You'll some to in see start And deals a you've in push this got kick ago. more pretty then, big few 'XX, in years 'XX. X-year talked a of again, initial we've tranche from subscription that

Wamsi Mohan

maybe about just of a SMB can SMB SMB? how like where vaccine given the and exposure strength your And tell is? now, maybe news Okay. us the thinking you are especially about sort in think you between even and help recovery us Enterprise And

Duston Williams

Do Dheeraj? that, take you want to

Dheeraj Pandey

probably obviously, international vaccine fairly a business. Yes. it's have I another And itself. X take we the going mean, for to It's early. quarters administering

XX%, mid-market do Even We the about that their talk a SMB, consider enterprise business have as XX% which quarters we -- of about as there when the are outside we outside you can SMB. the U.S., commercial. of in lot U.S., look at we the outside the and U.S.

take administration new whatever new probably countries, can will vaccine have meanwhile, taking workloads quarters customers. that a and view are you X are given we real from we focused new the the products, customers of to it on fact in So X of the I about think In get we that itself. XXX

are transform and I we good we lot reinvent do think we've ourselves. What like our a fairly practices ourselves, to changing of done job, digital prospecting. a can

the when that have an up, demand So digital business. amazing we opens

right doing now we're safer. to the everything feel actually for we SMB they can So open as really up

Operator

of Aaron Rakers question next Your line of Wells the come Fargo. will from

Aaron Rakers

talk forward? compression a to Congrats on you I'm ratio? you those modeling variables. about And about billings revenue? bit curious little if see I'm think just about follow-up. ACV we quarter. the do think could about did those mean, how think Thinking in some quarter. on how we And the should the curious we about going billings I to I because a ratios just have how

Duston Williams

come Sure. go we've that down. think, think to terms I ACV far with do Again, Aaron, all as tools you working and the to as where and are given going you, doing TCV

I Again, see X/XX QX, the think we'll plays out it how to that see massive going in we've ratios. is anyway, don't decline there. So X/XX QX to not that pretty with with you're of those tools all a quarter you easily doable the whatever might be, given or movement. or

about. to general, revenue ratio bill the -- a total billings, little not revenue. talk talking the total in probably to see On easier That's

you've the fair amount got billings a total balance bit rate. little total coming still growth, compression, term a the but you got higher sheet and With slower revenue off

hopeful good to So for revenue you there stuff. I bill be then can a again, down it's the back and tools where forward you that somewhere pick that you've there think all are you and that's got And news can going into to But on go why X.X come saw ACV is ratio. billings terms and probably to bill, lot go the going you quarter. to of this probably around think X.XX,

So pretty it's a exercise.

Aaron Rakers

follow-up. quick a as then And helpful. very That's

the go cloud Microsoft providers? and there. curious, AWS of engagement little about transcript the in go-to-market mentioned You beginning can with the you the those of engagement deeper I'm terms just a and on bit

Dheeraj Pandey

Yes.

AWS -- is and very rapid commits. consumption for They a a on Azure consumption. that we consumption. get bring everything get paid So sold mean both sellers on your of don't of is And get point that helpful They is I paid to the contract workload and really thing consumption commit. HCI own good view. on killer get paid

the those actually sellers. -- hand-in-hand so as really ready built does We've for we're will credits the the It working and lose customers for cloud use the what better, the how happens consumption. revenue players. be they faster don't have they which for is Microsoft. is credits. a Nutanix of that well the job it at great years, cloud X them burns of it if end burning That's nodes, things recognition sort And at So they get just as the that you for paid sellers, don't means consumption because

It from of a prospecting. learning legacy So of are that we're webinars really enterprise and working things has boot the and was mundane that not of lot there's workloads, Windows they they I not the understanding they cloud does the a And a sellers day. because hand-in-hand machine of public one devices talking public customers honestly, reboot doing the the legacy in other the and their and with does because also are both And nature. to and lot cloud. enterprise joint like have up in players cloud the workloads. lot

years X operating that and not of to ton that before together. lift or can up, and come shift have the this a actually come will all take redesign to there's So we hope applications the system to redesign

Operator

from the will of of next line Simon Leipold come James. Raymond Your question

Simon Leopold

to First one, context. I maybe set just wanted

new You sure of what coming that, of that some over time? you've roughly rates but products percent not off I'm ACV to talked what and baseline from should contributes the new got about I And products? see is rattled of evolve we growth strong how the of

Duston Williams

We're from a goal or new for that we've And new broke got, so at obviously, start. XX% ACV any a focus I on of it got out products. to why accelerate products. We coming that go or to couple shouldn't. the these Yes. quarters further. in good few of points Again, we've don't tools a think all 'XX there's to off reason is

into a as we've built got of ACV continued plan . the percent acceleration a So new

Simon Leopold

maybe your deals. follow-up, a understanding as contribution. remarks the to high related. my are then the X-year we But mentioned some restricted guess prepared one duration when of somewhat you I And aspects term federal agencies trend, And in is Great. the and see was

So what's makes in the think much normal how that the I Could in sort federal that duration have help contribution? big we maybe the the play sense. about influenced federal has and quarters to hope mix. should how that don't you something contribution us understand of average

Duston Williams

a have Yes, or year, closer exactly how at it to quarter, or with let's obviously. sense. call a probably, a perfect could it but maybe with it I'm you not yet get depends sure almost But ex-renewals it federal look X/XX of we But whatever. X/XX, to X/XX. you X maybe renewals it normal makes

mix surprised I'd and some it movement. So -- you trend. said mix that which the a on business, down us with percent new our of existing come the But again, as actually there why in by percent was like from another than knowledge be if quarter, more here force that and QX, be on again, than I'd that. you forward a most just just logos. there's it likely, do federal assume new the we'll more it But customer back from opinion, I continued sales to the no normal -- And business more another new be down downward get in the saw drastic That's QX. will was it's any QX. I a QX. we of little will get slight But total way, it faster, new give decrease new again, surprised comes we the just And QX. always in go as yet. will Give ACV, obviously business knowledge XXX base going does in with And then earlier. customer was we up customer if more a

QX, So it better than sorry, In than in QX. I'm better QX. was it was --

total, going quarter-over-quarter, bit up a far ACV too. as new So we encouraging saw little as of customer some a percent anyway, signs, as

side of the So view. that's just there. that's note kind But a

Operator

you time now that's we today. And much all This for last with the you participation, question, concludes your and today's have disconnect. Thank earnings that for left call. may very

Nutanix (NTNX) 23 Nov 202021 Q1 Earnings call transcript