NTNX - Earnings call transcript Q3 2021

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Operator

Good day and thank you for standing by. Welcome to the Nutanix Third Quarter Fiscal 2021 Earnings Conference Call. [Operator Instructions] I would now like to hand the conference over to your speaker today, Rich Valera, Vice President, Investor Relations. Please go ahead.

Richard Valera

Good afternoon and welcome to today's conference call to discuss the results of our third quarter of fiscal year 2021. being our the ir.nutanix.com. Investor also be and is on accessed Relations call broadcast web over can This website at

me quarter After Ramaswami, Duston Rajiv release announcing Nutanix today and for press XXXX. Joining and its results CEO; third issued Nutanix's a Williams, year market the President CFO. financial closed fiscal today, Nutanix's are

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

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

today well of our call. press as release this earnings fiscal quarter These revise of we ended X, SEC statements these factors, January XXXX our detailed for description the for XX, obligation on Quarterly year on XXXX XX-K SEC to apply filed as with recent Annual these our XX, a please Report after March Form our refer XXXX, fiscal issued with the undertake filed Form XX-Q SEC XXXX as filings, statements on For September including the on to most forward-looking no today. and Report and

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

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

link the Cross management Conference be Insight hosting XXXX will on Stifel Investor A We see June over you many Conference that, events. call release William And in to our this Growth earnings Day on at to can XX. be X register I'll today. turn participating be will Nutanix hope Nutanix the these Blair in Rajiv? Sector also of issued to found Stock Virtual upcoming a X. Lastly and for on June with Rajiv. June the

Rajiv Ramaswami

and good afternoon are Thank hope everyone. safe staying all and you, Rich, healthy. you I

the in help India. our I'm closely country. are employees world, to the the and offered We monitoring efforts relief India, local and resilience in of the from by team, impressed particularly current organization support situation COVID to especially fundraising the where we've our around in assistance globe, around supporting customers for both healthcare

I the outlined QX discuss results. of We outperformance all quarter the our to last key metrics. progress on delivered call. quarter some strong accomplishments move highlight our I'll of momentum quarter across priorities and improved the of on another some Now, Today, board. on a like in was earnings to I'd execution, and our on our also guided continued

to economics These on terms to continuing to with shorter continue is products. to revenue model. due expected execute duration an renewal from transition pipeline as to uplift continue We And our build. emerging our ACV improve our based combined

Last to ongoing steady, to is these to subscription growth, priorities shift Nutanix subscription to with in work our in later and transition more Duston to subscription continuing of details driving on the of our we pool. while simplifying decline of seasonal that and today. the I partnerships hold our outlined typically see And a go-to-market further like demonstrating in were into linearity nurturing go-to-market. our the demand and we on provide strength model our paying see Overall, financial are impact hard good new a of components a and to updates saw Including we performance. give priorities couple transformation to more pleased long-term we shared subscription talent how quarter we quarter. for with I'd in execution on operational will partnerships, CEO the can engine. our a ecosystem a deepening including our model our in our improvements addition ecosystem off. our our my finally, through as able moving product as our go third In result business backlog of a Starting model. quarter observations quarter, portfolio, deepening a the

contract unit economics. Our years, higher decline, down last drive from to continues X.X coming helping average to term quarter

positivity We go into our our important underway And of and Day. renewals efficiency. as efficiency, increased cash more base and With and top well to flow driver focus an growth we'll line also profit. see clear a transition of and see Investor path our on details operating growing upcoming sales marketing increasingly at with we this

model. of April, Focusing critical Nutanix incremental great and This as relationship includes larger extended by for creating server payment us new virtual This partnerships enable complete desktops one as-a-service of aspect support, client a contact all Nutanix announced partner to work Lenovo data example opportunities a a to devices seller point solution, of and our of as-a-service the powered in is PCs the convenience better can drive for with in monthly desktop on single hybrid single and well order strategic of Lenovo deepening number is software. with to desktops more long-term to hosted well with our meaningful division the Lenovo solution the we in IT go-to-market, as capabilities Citrix as serve we the our world as give opportunity. scale customers us their a how center of to from accounts new how new the success. In make to remote managed workforce with leverage

progress. Microsoft Our continued also with partnership to

across with our and now and the with Arc. deploying During clusters Karbon, of with management, by Azure Kubernetes governance announced Azure HCI the that quarter provided on Cluster Kubernetes we the Kubernetes certified Arc consistent validated managing ease is solution, policies Nutanix

Our mutual customers path that to a cloud announced in fast Nutanix providing hybrid we single a environment now containerized now instances across applications bare smooth US metal leverage on cloud. AWS and public the and GovCloud, AWS Amazon and strength month organization their and cloud have GovCloud. now on-premises for ECX interface extends AWS public running unified environment. security across private to This platform hybrid a and adoption Nutanix GovCloud accelerate by their a looking management offered and platform sector can modern

the solution as solutions infrastructure emerging software our in quarter. in their us. during We engagements to while well solutions. three our as year-over-year we rates momentum acquire both against and increase saw continue reflected customers healthy continued a Next customers In I'll existing by our competitor expanded core with talk our tier our our win the about strength QX, in new core largest

attach also We products XX% four-quarter saw continued strength last up a increasing rates emerging quarter. XX%, on to from our in basis, with rolling

a private workloads. software SQL platform as develop critical of We chose well including their complete meet their mission are to security, exchange our supporting as all security examples entity with cloud in seeing solutions An more the needs. database region together that government of our customers of emerging system, was the Asia-Pacific secure, our this solutions example network platform cloud business cloud choosing and to software

to continues had solution platform Service solutions an Financial A of the to headquartered operations. hybrid differentiator cloud scale management good selected top their standardize SQL our Europe to drastically their growth will at simplify during be helping database financial Agreement. emerging Era banking overall solution customer era company to momentum database for and optimize multiple across infrastructure Our on help quarter. support management and for customers their and important our us services deploy, and Level in other and manage performance, use to clouds, database This requirements databases expand

architecture for multi-cloud to services VDI run using during also to cloud with recovery case the the replace company adoption quarter their AWS their additional American previous to of disaster In virtual is capacity. North for XXX a the consolidation, clusters use in cases environment. We center to and multi-million-dollar data clusters recovery selected into and burst their Nutanix a desktops including burst on-demand softening disaster one deal in ability and financial workflows Fortune the

an to Next efficiency. of part on like I'd is our This important path touch to profitability.

by marketing market have to digital our our productivity, efficient and as headcount spend, X.X% of We within these decreased marketing leverage functions go-to global sales from refine our In continue recently the market we opportunity. optimized including model. on channel partners increased with based efforts, more increased go-to-market we in our geographies and connection headcount

$XX actions expect in million approximately to these annual We savings. yield

and Insights and during storage. support. were the vendor solutions Finally, industry Peer Choice awards as for I'd customers our that like distributed demonstrate products object some highlight enthusiasm by which a recognized for systems file quarter for Nutanix our received to We emerging Customers' Gartner

In was in defined as addition won service. Virtualization, category. HCI NorthFace the Scoreboard by in storage Server Desktop Radius software and we Award customer our the Service software achieving a Virtual Also Top core recently Rated Trust recognized Infrastructure for excellence Product

All any customer services forward multi-cloud applications. the to the We I fixed with board our across In delight third about Investor on software a of to I'm simple on to in Day more quarter. our June execution upcoming these feedback. to plan awards at customers more with XX. look are information run our sharing based summary, with and and mission pleased hybrid build, into data manage details go open platform very

to our go-to-market and meantime I over it outlook. provide In will Duston will solution strategies, on insights hand Williams. Duston? We the portfolio, financial also mid-term

Duston Williams

In transition guidance as focus and play quarter to of you, our benefits another continued ACV first consistent the expected QX Rajiv. execution. subscription all our of was Thank planned. we QX out exceeded and metric

products, for retention average year-over-year attach And contract growth over begin which lengths the rates term in with term key Term declining QX focus of in lengths, improvement better our revenue transition emerging reported compressed 'XX. pleased Our move years very have to to time. we expect lengths stabilize, subscription to Other is were we average average contract expected, both do billings during performed rates growth X.X term as correlated typically economics years highly of well metrics in include components to the shorter ACV and increased ACV first deal quarter. quarter. contract economics and our versus compression closer deal our as these to the X.X

financial to ACV above XX% I'll QX the from growing ACV year-over-year, QX $XXX mid some was rate 'XX. on our million, was $XXX million Revenue XX% billion, for record of growth range. our specific as million, Run end $XXX Now, billings. to compared growing X% move highlights. we of guidance were guidance In million. $X.XX XX% ACV year-over-year range QX, QX in billings of $XXX to growth reflecting had the

expenses Operating million. XX%. margin gross our $XXX our million were was non-GAAP Our in of to XX.X% QX $XXX $XXX of million versus versus guidance guidance

We benefit overall continue go-to-market spending including to from reductions, efficiencies.

remained for backlog. and QX per less third Our quarter-over-quarter with in non-GAAP good days, experienced 'XX of $XX QX demand XX from or QX, pipeline QX quarter being share. of some our million QX down position we QX in versus typically generation our spending a days DSOs were linearity. XX our represented 'XX. slower 'XX. were was significantly of net which days quarter usage significantly occurred versus XX in from in in increase solid experience year-over-year down that pipeline. despite in We $X.XX QX, seasonally This growth in a backlog consecutive loss quarter flat and spend QX pleased the usually we loss a In QX our

$X.XX good from at consensus. and free quarter million, coming a with slightly was $XX cash QX 'XX. short-term negative down million Our flow by closed $X.XX again linearity, billion, once than $XX aided We billion QX of in the cash better investments for in

range shares run QX billings year-over-year. XX% $XXX expenses expect follows: of rate to year-over-year in $XXX Weighted and to of $XXX our on Now turning Gross mid to to representing the for to to guidance guidance. is guidance, be ACV million $XXX million. between The margin the ACV 'XX and XX%. low of approximately Based QX average outstanding billings approximately million ACV XX.X% million 'XX between XX% grow we as QX Operating XXX XX%. million. growth

Additionally million to of based million we billings on ACV million, guidance, reflecting from our XX% $XX $XXX billings year-over-year ACV $XXX for FY expect up 'XX QX to in approximate XX%. FY to growth 'XX 'XX

fiscal reminder, deal the less quarters. for are one from year term reported any than addition year total billings annualize therefore, we quarterly not billings, length, a ACV As that the in the simple is our four of derived fiscal ACV

than occurs QX. material renewal deal yearly year-over-year believe year in within one guidance ACV see should Based average on the that is our do Our double-digit reflect happens term to not we contract eliminate revenue duplication change a period ACV and length for any implied calculation in billings will any less that with QX We in billings the the of duration. growth.

includes guidance workforce approximately related previously in reductions severance expense place took operating to that million costs the mentioned Our QX. $XX in limited

total our And presentation our QX. ACV for cash some run free to performance finally, length earnings we ACV, on modeling, with located ACV your to model historical billings, trends rate term QX a and flow help and our IR billings. improvement billings billings convert to in bridge expect current We our website, versus in how on in guidance to include continue our and future

questions. for 'XX. this that, include detail operator, to With please could continue will We of the of end the up FY you open level call through

Operator

Matt question [Operator comes Markets. Instructions] Your Capital Hedberg with RBC first from

open. is line Your

Matt Hedberg

I about the strong results. ask clusters. to on ACV Congrats wanted

talked guys adoption guess it but also sounds think that bit script, wonder upsell I kind the can stack you a helping an cloud? some about it if we your Is with future-proofing Nutanix I to clusters extending is both there in it's customer and of more the about like how on provide terms perspective, in better. existing of You detail how doing spend? trends

Rajiv Ramaswami

[DA] what answer that. are Yes, Happy of we're all we for to tax perspective. a since still Matt. early for seeing fairly first quite It's did Rajiv It's by clusters, encouraged we But from AWS. here. days

are cases at using use that If today, that you the existing look clusters. cases customers use

financial doing as effective, workload very customer you for today. where recovery, other on-prem but cost media large run that funds, we effective can about is course elastic For your you a case example, projectors. cloud any talked that's that VDI is of There a use services somewhat for need recovery disaster actually disaster use very and workloads, the for

other seeing data for consolidation. also are center We cases driving use

without cloud.. data them. and to re-architect existing the want workloads migrate of You to needing easiest shift get for center to applications and out way the The lift to

are organizations starting to capacity use and for this also burst We demands. see dev for seasonal test

of there future-proofing. latter important the is of equally Matt, part an to your think Now question there I factor

customers cloud So spectrum across terms the adoption. our in of vary

this lot more Others them path choosing their cloud looking part today. today are gives customers of a future course journey, them of are for about using future. as the are Some at actually those a who already of thinking to it Nutanix And as as in having capability platform. this a confidence

to this multicloud our Now roadmap, have access the available Azure we and about and closely for we working later with with on talked project. clusters, so last we on do be year that partnering are expect early that Microsoft

Matt Hedberg

which thanks. of ACV your acceleration one maybe here? - that and strong you're a this acceleration gives fact but in confidence decrease quarter is off throughout great, then based lot you results, that the of ACV for Rajiv. what also another kind Duston. I this certainly QX. for And billings in pipeline in didn't else That's and backlog Obviously noticeable assume calling

Duston Williams

about ACV a XX% Yes, to on that year-over-year for typically is quarter give billings. I QX as is said the growth us. guidance, XX%, pleased no, which we're stronger

gone We've some that okay thing. with a the Emerging see do the lift you do products the and the is The discipline more rates that management Conversion marketplace. things in the bit pipeline well like having their to seen with themselves that. So work on continuing to products channels the with indications of a and early of doing Clearly are the that. big deals. doing some little pipeline perspective. the from deal and pipeline in has

good going bit But a So scenes. combination is of it's little things. behind backdrop lot a with I things a better, but the on think the of always QX those again, of

Operator

question James comes Fish Piper with next Sandler. from Our

is open. Your line

James Fish

The favorable first to go our the well Kind renewals ensure do does over be are and off and from How Matt's as the now of you point. of question added to sales business XX as about next feeling the you looking really going there. months? XX main are environment the productivity appear inflecting that to to capacity what vantage is

Rajiv Ramaswami

Yes.

So chime start Duston can and there. maybe can in you I

in focus management are our the conversion productivity. of to much terms sales doing continue we very discipline talked terms of of of sales and more much how Yes, we a we've pipeline course with pipeline predictable - lot about in team. So

partner out also are now. building course We of more leveraging ecosystem the

help bringing more are improve on solution-oriented our our ASP as also emerging productivity. that compressing We time well. then uplift products And same selling at again terms and deal the top of our the overall

it second have the coming when all very of renewals ready for in. to so on much building out Jim, for part been Now, the your engine renewals comes the being focused question we

renewals So a we low-cost mechanism. team focus the are renewal on out now to building

necessary around We customer we've across are the into profit renewal. that success the sales for the also are whose tooling this the time putting and teams their created and where full visibility so sales the of responsible all adoption of through organization whole cycle customers consumption in we from in driving time get clarity the and

So stream feel all we about the here. in all, upcoming renewals good pretty of

James Fish

helpful the very and on announcement the about And marketing, Rajiv. the sales obviously just headcount That's reduction. keeping

any or think layer the Just element? guys. more was management do Thanks of or further of here about middle details that reps kind we themselves reduction how it any

Rajiv Ramaswami

the new again many renewal to that specific creating packaging was a is - we sales excess from think of it didn't on go for market wasn't coverage I far need based we build-out and elimination it regions, doing saw more team separate ACV. and was it done mean room but our exclusively I in Yes, where people that in certain example it marketing, functions, that's

tried reps we to this So course, in distributed process. of And reps, spectrum. non-quota-carrying the look impact fairly but it not at terms possible was across quota-carrying of wherever the

fairly area. specific was to one distributed. Not it particular So

Operator

with comes from Bora question JPMorgan. Our Pinjalim next

Your line open. is

Pinjalim Bora

want emerging one. I pretty a like Rajiv, double-click on good to products. Seems the

a We about kind last of have maturity what at I in you Era as an are the Files? maybe this that solution a thinking this market constant this the think differentiation of to kind and been time of sell kind the Era where in platform cases, some hearing from of other is, being the pulling a act to you ACV seeing quarter, the what's drumbeat maybe standalone - point and uplift time, in beachhead in point core and the at part to alluded the Era kind of in of is

Rajiv Ramaswami

there. Yes. Good questions

So to streamline make It management of then is database use their install Nutanix very and on customers day-to-day some holiday, offering. provision these the databases. we they allows And Era functions of clearly all underlying a and that to our lifecycle the do database operations the platform on Era, need to as efficiently. of databases manage databases do

that is the the to platform. implied connection So underlying today

to there very see around us also But and platform. we of focusing is a Nutanix value two-fold by any what for into So Nutanix in footprint and which have them in can on go Era to of Era differentiated proposition new Obviously don't Era. allowing has pull our customers Era way on get as is well. of upsell top us previous accounts, installed our they a base go-to-market core where we within on the platform our been

ways. both works it So

increase that Era range and we course engine let this Files offering. to seeing over uplift Duston good database vision of multi-cloud is I a and we Duston? specific just on that very the are product to comment would investing of an ACV etc. grow area and Nutanix So time more Era into will say is is are and only that market in Flow, tied for our fit in we multi-platform, the support the in point this a not I'll platform, offering, at

Duston Williams

Sure.

and uplift I but there. uplift the also there. obviously Era, those of give pricing heard flow a bucket a a getting best it bit front a a XX% the and is percent for with shed economics talk for deal bucket, higher products, look deal there's emerging in significant far attach and likes is we're and more I deal economics a bit me and a and where it, which and think a year-over-year just light a term that getting as XX% the products those when And deal Flow just we'll economics? So economics, the on insight ACV in little have light at how overall try to year broader to of you the way better without been some year as questions, Era at Let perspective, think emerging have uplift increase in Investor year a and I seeing shed three emerging to a compression shorter from far there of better likes three-year is, deal look because to that we're uplift and then at a the rate I in helping there the and little as that deal center Day products from five-year little bit as Era that first an as to in little to three terms ways at three-year like-for-like two And and get you just we our economics, deal. we'll on deal think we economics look time one bit think products, we're

Pinjalim Bora Q

was more on this to term in your on and like a Those I time deal point but - go at are wondering those what a maybe for of customers this device deal? the been? life you. motions customers that growth weighing point? Trump back one-year coming towards to from them motion how of - is than has convert portion I at And mean already one Duston, get customers those to have ACV you three-year renewals, conversations

Duston Williams

to said, emerging as natural a that when renewal device transaction. time based for subscription as have a far up, Naturally life is renewals as your of into ton. up support renewal support a renewal discussion Yes, for over not you it's

So those naturally. go on

gets going ACV likely five deals, deal, just a pegged higher occurrence higher perspective. and Our up have occurrence. years got from renewals most shift guys our of natural for those likelihood of, device, terms we've are natural based to to that they which even don't for merge all a a with commission a ACV is tick over because toward that's that more life more lot or the it's a that rest so maybe merge, more shorter of three that, comp, money, A new renew. tilted get And better subscription that down deal again dollars its the economics, They'll support come with into renewals better in and transaction.

So there you years that's and pool of that's ongoing we'll is news tack as great ongoing the several that that an continue we've got that over and perspective. a next know that effort so the big all from to

Pinjalim Bora

the I'm about that sure Analyst at the quarter. more Thanks. but, on Day, Understood. hear congrats we'll

Operator

Our next Ader Jason from with William Blair. question comes

line is open. Your

Jason Ader

impacted first has narrative I and Nutanix? generally. it I demand, on-prem how you shift think was accelerated this COVID that's guess My to that just has space specifically Rajiv, then question, for there's demand wondering, how for And in the cloud, impacted the

Rajiv Ramaswami

at those mean at deployments. And a that the and use deployments how look effect effectively. I think that's what's on get employees impact remotely terms working scaling to spot their had the COVID of Yes, lot about in us. desktop And certainly for I sweet if a pretty level top case you talked stimulus a customers more

benefited certainly from that. we So

use the of to starting also CV, use are cloud. We

well, cloud, effective we about public as in the the services driver both. VDI also of but disaster deployments is Now, some using have here certainly provided cloud and customers more of being our for look think - are cost customers support doing a remote actually the that with a making customer examples financial and like for seen we've certainly, more workforce some as of Doing we doing use who at looking migration talked cloud cloud to meaning at recovery the like very way. I their

of certainly we as more seeing we more forward. use emerge So cases the and go hybrid cloud of are

digital, work at in they're and focused more that where infrastructure I and think modernizing doing COVID, So which generally application look means driving it transformation, digital more think I also we general, it's customers means sense. makes isolated when also in their

is to cloud and the It drive is hybrid time here we going will stay. there be It's part be the remotely. workflows and all us that then office be offices. So come the the part that's back us well as helps of hybrid for likely to factor the and to time work helping going as of people into working in remote to

So it continue. will

those are us. I in helping general think So drivers

Jason Ader

you customers a haven't or seen to go shift done of we really kind anymore, native said, And want we where with that of data from seeing we you they've centers, don't significant guys just type any opportunities not and are on-prem need just we're cloud phenomenon?

Rajiv Ramaswami

we mean I haven't healthily. our grow that continues business see to quite seen as can you

in good seeing are in demand here. uptick seeing We and we an are fact demand

decide we're what in that think to want They're not to no, I be are wanting to this So, multi-cloud world. more But yet. they seeing going we seeing more and customers talking about run of their well. applications, be cloud, newer public will in as are terms some will the continue applications the be on-prem, will in edge and go in these application to some some

to see emerge. starting more we hybrid So of trend are that

Operator

Our Andrews question from Jack comes with Needham. next

open. is line Your

Jack Andrews

I and to their or amount if you've wondering all that just up the line channel your guess still just channel core offerings? the to Rajiv the there? happening education Is terms capabilities has could was discuss awareness partnerships speed in emerging introduced of fully the HCI there of how is - an your process of to maybe awareness given on I ecosystem maybe maturity and for products focus your you relative your of market

Rajiv Ramaswami

new and that's Flow still core they're Most are as HCI, much sell there think File and and our their building channel and to are only that. what most be These now newer I Era partners selling education is latter, products such core of to so familiar the forth to able capabilities relatively offering, up they partners process. very our it's our an are with. our very much

this the play that role. products product market think products, where is some for was deploying - we these and actually And very significant now we so fit these have I much market scaling are of product initial very in fit on. partners come a they doing us are the and by

transact So is building capabilities investing and think in to there And well. data I we in emerging the are future enabling up certainly up their them build as competencies products. a these leveraging for the partners and opportunity

Jack Andrews

quick Duston. then And for one

any the that terms whilst comments you're beyond year? fiscal changes fiscal you're here in into and Any to it how material of expecting thinking moving mentioned in term this contract You XQ. next about not

Duston Williams

think gradual see will some potential I Yes, you again decline.

a we in So not whole the there's pipeline, think those see of terms. in what I lot movement

to had probably I see converts over the previously we'll think see that plays have out. to out. again, of can while a X.X is of time and now actual here over that's there how I've period and much we'll pretty next I couple it change, a now now played said deals, But years, to when years. for but Now, X.X around much what pretty it's but things said it's somewhere But

expected, customer a far, thought So or it base term. existing would we believe has have XX% gradual of I already we a minus because that got be set you plus decline the

So to you change that need whatever. and

we'll of think time that over that next I and over goes it's or somewhere X.X that period year see occurs ultimately X.X and So between some we're at think today again, two. and I the years and how X

Operator

with Our Bank next comes Wamsi Mohan from America. question of

line open. is Your

Wamsi Mohan

leadership, solid there terms any clearly to in thank change I a the have largest etc. as or either there especially anticipate Yes, has deal pricing? ACV And Rajiv pertains ownership, Nutanix competitor, it significant changes channel or follow-on. lot of guide. and been a you of respect competitive to Do a congrats on you with both and results

Rajiv Ramaswami

good what's independent the our happening our market, position think I of good obviously the Look, for competitors. I Yes. of in competition pretty at customer. any feel is about

are focused. We very

products if platform, in We executing customers. that on are are our extending clouds I HCI do to on and focused emerging out the of building the delivering And that to place. we the our in on very rest fall look right, think and multiple that focused outcomes and customers best top our we will

our [indiscernible] cloud and take hardware focused continuing of partners with worth And I even are software. leverage choice likes for the that remain the build is customers hypervisor, more one where in to it executing we us. terms opportunity the at the and still along in Now, that also see market our platforms, we mission provided most to allowing noting on and very of the

Wamsi Mohan

annual else or on is P&L. you. Rajiv. million of thanks basis. some Thank getting a $XX the net is the that's savings, gross reinvested And all somewhere Duston flow down to that Okay, there that in is And or

Rajiv Ramaswami

in and minor most vast COGS, Yes, flows into of the all some services operating most is that. with P&L. in like of it may through. some rest be reinvesting, of it two-thirds things majority of There flows the that But, and is our will expense and flow probably but though

Operator

Our Huberty next comes from with Katy Morgan Stanley. question

is line open. Your

Katy Huberty

strengthening internal to a demand in of bit strategy too. end backlog the My I to at context around you run thank signal with that the an Is than quarter? Duston. ship quarter quarter start question some you give levels just Yes, Can the that a function on of of or surprise better congrats able to wanted and third backlog. you. of visibility a a the for that at seasonal higher just a weren't improve was

Duston Williams

sure. Katy, backlog I Yes, you mean have your for higher pipelines to hope But, been strong. always there. point

the pipe. were year-over-year increase pleased comments with the in that saw pipe, we increase You in the quarter-over-quarter

then, I have the within a like perspective deal definitely on you to some you So execution on good pipeline management that. going backdrop things with that layer and see again, pretty and the think deal and management also of from demand something there. closure And

Quite combination it's that of in QX, me indicator big in surprised not also the was, think like a typically bit talked I both linearity linearity, certainly just as little it about. being a coming quarter good off a QX. was good a as we So honestly which and

combination I play So of positive it's mostly there. a think things at

Katy Huberty

clearly compare your And part you fastest the then business partner asked to you. that is of how strategic is change just as can does that are Thank year the OEMs a percentage which I ecosystem? what then in context maybe seeing that just ago? comment partners Rajiv with? out build of growth the and by a driven And here. to OEM follow-up, Today, that And

Rajiv Ramaswami

comment of to one comment OEMs. I'll size the on Duston you then the and on can second the business the

Clearly together we supports been more us. clearly us partnered would fastest as Dell is that. say, that's solution OEM Dell growing overall fulfillment Dell is for to one the in So relationships Dell and of and the for I customers HP, land terms the in I continues want hardware, say our would

good say, HP, I for would are to continuously in perspective continues markets partner So they Lenovo, be server a also to extent are the us. that a where they from very strong,

two comment big probably sizing? the those are So Duston want I say ones. to the on you would

Duston Williams

we to over software all because meet to to ago Dell have a not well. service, Yes, lot the complicated, that continues OEM that their whole there. has is which most, quite a because don't stat bucket rolled going and But channel do got because I of if core, stopped our outside while just giving it running to it's with on XE business which out add, the

Operator

next Rod Our Goldman with Hall Sachs. comes from question

is line Your open.

Rod Hall

of kind within it of install I software customers not have I to on supply. a selling wanted this the to question start with servers know server. your you're

servers So the I'm risk on? want any you can't but find two, out think software, to People follow-up. hearing the And given we just have curious install there's supply quarter they all or look your whether to next then about? then it keep as a shortages I buy you

Rajiv Ramaswami

they all is, people already deploy just Yes, need that serves procured. of even say not the - the stuff it there they out could more virtualization doing are some can sales might that are about I global you I cases Rod, I I on shortage time. have ones. thing software and mean existing it's chips software think all mean, In tell one necessarily and there our I

at supply or being seen haven't shortages quite point a So all. impacting this driver we at us

Rod Hall

And wanted Okay, to that's just to contract my on then you Thank I follow-up. great. Rajiv. come this point back term.

guide look mean said puts I'm expected. worry you higher some a mix this we're terms on think tracking have stabilization assuming curious, that and where I guys and stabilizing just a at and Thanks. dig out? around to would probably into great. ticks that ought color That any that how you and after after is understand would think that how in remained that stable trajectory level. down help maybe Duston the takes we to of why you that's they little maybe us I QX in years I see I'm X.X people other playing be kind is could of just kind or

Rajiv Ramaswami

Yes.

the that's here about science - down As given what or not quarter. an quarter-over-quarter a surprised exact to comments I change. My be to It wouldn't there, how be just a XXth here just whatever, go you predict in any going that. terms I are could know, exactly is material

of Now have bit and different they it's a pops little a in when one-year up lot deals. Fed QX

terms of see take X.X out plays see the equation, again in years, don't how years. it rapid are the - I just of out but somewhere any I years in So that we'll X.X next over and range. decline that couple

I think as more have time with more have discussions and we customers. reps

from We to going try to to or are naturally move shorter. five them three

don't stay don't decline. years we So move I a it's - over we that rapid that any not and at time. think occurs naturally X.X I I just assumption further. it's here But think my

Rod Hall

it like that? We is would or that, anything or is there maybe any shouldn't or stabilize, think like renewals slowing nothing that on

Duston Williams

No.

on a clear will and we We you and you front that. give all we'll very when visibility more the feel good renewal are loud and give

- XX. So a you're good going toast of you'll see to June that on

Operator

Simon with Raymond Our Leopold next from James. comes question

open. is line Your

Victor Chiu

little term of Simon. different Victor cloud solutions. I want the approaches kind more and encompasses to a into for generic of portfolio. Hybrid a is number that cloud This Chiu draw the in a is

enterprises integrated which So center VMware hybrid speak vital compared consider proposition to can most deciding maybe Nutanix's you to data and understand more Azure when maybe Stack particular adopt? like approach defined the and platforms/software us are what solutions about competitive Cloud cloud cloud help factors that

Rajiv Ramaswami

the the is, way I or key well. our customers question by one there, think with public operate, center operating, are more of the mean, as course, all, I data of first people with Yes, but cloud

is not a providers to can you AWS at Azure and show the are also Now you often in also Arc more at are hybrid and embracing customers But customers public some that cloud strategies cloud has than particular cloud. look solution. so more Day, if interested cloud outsourced public now. showed hybrid particular public all locked where we one we the that than provider, and one they at looking data public cloud more are public Investor

interfaces, value provide one one now they of solutions on-prem of more. provide we their this license with can out, center edge we of they when on-prem, use tomorrow are workload hopefully you start set one that their our platform, and using manage So a multiple over our and looking that public one and at today once and tooling, the or clouds Whether - moving environment, is, they management is look cloud want. customer whichever deploy set to time, course we'll data also to and on we Azure and AWS have it's cloud get

own us can from get customers where use license, have, cloud well, unique you say the slightly accounts software deploy, you you as similar our - essentially customers multi-cloud we a right. we VMware platform a some you today that actually you And same just that whatever get your has something and think this have so have as that different, public can extent to The buy of it. don't approach that

use wherever you want. You it

do to deploy public of you go cloud that you If in choice, we want and the enable deploy can and that to your out you it.

more one all store in You we do also in data. manage lot services with terms handling terms how manage of of it in And can our all terms and the of we data heritage solution. a work being

as So we well particularly that well. do

essentially highly these be silos this provide platform their each proposition provide invisible, our clouds, businesses of able for clouds cloud run the on. go that platform consistent of and across to fundamentally is customers cuts So underlying make complexities to value to this multiple

Operator

with Erik comes next Securities. Our JMP Suppiger from question

Your line is your is open. Erik, open. line

Erik Suppiger

question. the taking for Thanks

can what the in point as dynamics about probably a partnership, AHV that change road have are other do? providers it's Lenovo for for that Is any in going this there to it with XX% just the and integration kind in are Lenovo it the down any at or tied something XX%, at you is a settles the the curious competitive settled where been talk On if Are working of while? with that's secondly, you And then it's in while. they there? range

Rajiv Ramaswami

Good questions.

announcement, I'm have the they April - that offering sure true this now, other called particular may launched board was us they the Lenovo on for it's time. is So a bringing as it everything delivered Awards, just this over right. which But subscription. partners and with offering scale are

PCs, a servers, the the all offering and customers. that software delivered offering, put the subscription as the So hardware Citrix as the their means together and service Nutanix media a to

this or as-a-service to this complete and hardware example able us with end-to-end to partner to this deliver offering be as combining users address so well a enabling is work subscription to their software use remote first solution end-to-end, where customer go case they consume And an as right, end desktops. as

are the first we then. solution So

on question Now is AHV. your

We continued been AHV expect and adoption over It's time. of a growth continuing gradual upshift.

the mission to day of can customers customers workloads it's where value the and better want. So AHV handle AHV, at every better that look getting all today critical

workloads more at migrate a AHV. time, So as them more continue and customers bit of an look to this save opportunity for to their over and quite costs of to

solution that I large that’s is that the Pacific with as the was Asia deals and so It that workloads. security in very people on of all part makes - network build one example, this AHV, mission essentially critical of you hypervisor mainstream our assay AHV, right. mean in comfortable can made of deployment it are we For announced use major run

more. So be we of terms gradual and uptick of do AHV. will It expect deployment a in more the

Erik Suppiger

catalysts Is would drive any that that there higher?

Rajiv Ramaswami

customers - that using AHV, more that, for on example, based start extent are in will the that cloud hybrid Azure as and cloud actually more AHV. and our of solutions all to AWS by also the cloud and be Potentially

well. renewals as at look of look that and they from customers potential cost vendors existing as software could this accelerate other their As at savings

Operator

Chokshi Markets. Capital Northland with Our comes Nehal from final question

open. is line Your

Nehal Chokshi

Yes, thank my you for taking question.

you've up entire there three by because guidance been guidance for the So, past. ACV own the healthy three quarter way margin been has your beating building the change a quarters, quarters, relative your a in to in the the prior this

has change there a if just wondering this in building guidance? up So ACV you're been the that way

Duston Williams

Same methodology.

Nehal Chokshi

products, emerging Okay, increase by also actually? mean in ACV mean great. billings the core like-for-like an when is pricing seeing year-over-year the And just of you it or about acceleration uplift you you are what then does talk driver that ACV from and

Duston Williams

the Yes. It's Yes, better latter. deal economics. actually

Nehal Chokshi

in And could is can you what you difficult the of percent us but was - actually billings somewhat quarter? renewals I know this tell ACV

Duston Williams

that. not We fair at again on of basis an on that likely amount a detail have ACV given but highly you'll Investor see Day

Nehal Chokshi

on the strong fantastic is Congrats I great. Okay, quarter what Congratulations. and think, think guidance. I

Operator

this This conference Thank call. further at time. are you today’s There concludes no for questions participating.

You may now disconnect.

Nutanix (NTNX) 27 May 212021 Q3 Earnings call transcript