NTNX - Earnings call transcript Q2 2022

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Operator

Hello. Welcome to the Nutanix Q2 Fiscal 2022 Earnings Conference Call. My name is Emily and I will be coordinating the call today. [Operator Instructions] I will now turn the call over to our host, Rich Valera. Please go ahead.

Rich Valera

to second call quarter welcome results discuss and our of of afternoon today’s to conference the Good fiscal XXXX.

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

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

market forward-looking and and the involve uncertainties, are metrics from and our trends impact statements benefits During which current model future strategies, anticipated and business our adversely competitive financial in statements, including future timing management today’s a new macroeconomic, of targets impact make operations including financial plans, which manner as materially statements. our position of risks and of factors objectives will growth, our and our these differ and and business pandemic. on successfully COVID-XX guidance and impact periods, performance ability anticipated initiatives, our regarding and in financial vision, and our to results, the outlook, and timely there our statements current geopolitical our by performance control, and to thereof different some the business use cause opportunity, transitions, beyond the driving These and could those and and on actual or as of call, results well execute forward-looking industry

no issued statements XXXX quarter press obligation ended to as fiscal July XXXX these statements These Form report Annual on this to these SEC undertake XX-Q today quarterly our call. our October detailed ended filed apply Report description refer forward-looking for today. well after and XX, earnings of in as XX-K we of the filings, revise For and risks our on fiscal XX, please uncertainties, a and Form our including as release year

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

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

Lastly, that, March X over the Nutanix X, participating KeyBanc management will in to March Technology Stanley Susquehanna on I on be the Morgan turn TMT the Summit will Tech call And Conference Rajiv. Conference with on and XX. March Emerging and Rajiv?

Rajiv Ramaswami

you, Thank everyone. and good Rich afternoon

to current want moment situation the Ukraine. I a begin, spend acknowledging we in Before

who are region. the are thoughts with all Our of those personally the by situation impacted in

an Now, business. quarter, against COVID-XX turning backdrop renewals of quarter, build to delivered all momentum of saw second in fiscal another our our we guided evolving the solid and metrics our pandemic, exceeding

year-over-year, strong our businesses for demand line centers rate continued execution X and healthy delivered by data driven see hybrid to record XX% Nutanix billings, which continue to We performance. cloud adopt subscription Taking and models. on accelerate and ACV transformation, closer the We second look, looking highest top their a digital by years. quarter our marked was reflected operating bottom grew model platform, their modernize our growth in multi-cloud

of the years second on cash putting half flow achieving to financial us calendar positive by subscription, Overall, track target ago, the second generate linearity, year-over-year saw grew X we our are to quarter XXXX. with Once positive we started despite to we with year transition time sustainable enabled expected which of term pleased management, again, seeing us cash first XX% approximately expense our our free well free also revenue results. competition. good diligent for since Our combined flow

Respondents smart noted X,XXX this We cost as During Cloud and Global Index cloud around a of the are based parameters. choosing security, multi-cloud Report they survey IT Enterprise fourth its see that on world. published performance approach strategically on fiscal the driver second workloads a decision-makers quarter, right Nutanix adoption. hybrid based around of

we and looking agree the priority of survey packaging, strategic the the to enabled deploying The ideal and a our hybrid hybrid designs Nutanix validated variety market launch was respondents XX% consuming, supported is took of the environments, that we our global As view and performance, such, important launch, workloads operating cloud the is best for. model. our not of multi-cloud sell solutions pricing that cloud managing by easier with what platform reinforce are we that and surprised aligned With our on results step portfolio this our products of forward hybrid across and practices. the Recently, customers metering simplicity for on-prem another consume, of solution and the our multi-cloud and by deployment portfolio. simplified our making multi-cloud with are public

on on-prem mission-critical just ease Nutanix NCX for live storage recovery solutions, cloud set from as or analysts deployment applications, to While it’s an weeks. service in numerous who apart wins sales in and to which solutions. rollout the and customers alternative still We early, existing encouraging. already and existing to Nutanix reps industry from added has partners, deployment been solution initial new and existing the response failover from is adopted including with the use to and the saw quarter the cloud extend customers, using clusters us the Bank deployment customer in in of AWS RBL cases. an flexible platform its cloud disaster unified Nutanix their a capacity cloud into our on NCX emphasis platform, X They found to from proof-of-concept India, recently renamed it, as public we public seamless simplicity, going disaster recovery database

on government industry from receive support security the second named to quarter, on continue for last in Nutanix in the leader the its AWS first EMEA consolidate Gartner’s to Magic while regional the in Distributed on and Files was in a Nutanix Radar File Files NCX a Nutanix spikes and recognition workloads outperformer solutions. saw seamlessly branches Report. to received Scale-Out win GigaOm’s we which using a storage unified improve time. visionary ministry was region demand. and Another cost seasonal Storage our for platform for Object performance, in quarter, recognition named Quadrant Spending cloud Systems to In

solutions. platform, of to databases. adopted facilitate Nutanix more it win replaced demonstrated the the including also platform. we migration was customer existing Our HCI of infrastructure the increasing distributor a unified databases in Nutanix They goods This broader cloud U.S. database quarter with seeing and traction performance storage the with and product our service and Nutanix storage based with are a competing sporting to the modern administration unified automate cloud new Nutanix and with and unhappy

shifted our a to cloud seeing with container data growing with European-based win Hat, momentum the strategic This were demonstrated services an Another the that workloads provider joint running including big HCI energy OpenShift customer Nutanix we partner. Red on solution platform, AHV on competing base, their are hypervisor. a important

and retailer recent RHEL, our We performance a to the certification RHEL OpenShift wins, running on their running also both of of In our by on cloud the AHV. on meaningful on saw workloads Hypervisor, joint business-critical Enterprise Nutanix American-based savings by these improved AHV assured Linux, see cost customers able both platform. deploy and or Red Hat were

that see building opportunity the Red and pipeline Hat. are with We excited we large about

this had we important two ESG, quarter. governance As progress across during for announcements to all front on continue strive aspects we the of

of First, company’s base equal broaden structure all shareholder-friendly think and improve shares ensuring index we included voting both our funds and investors. of being We our simplifying eliminated capital move shareholder the our rights. structure, passive and this stock could that dual-class additional chances have in active

with the our regional around And against Transformation believe with flow Directors largest of subscription model. a from a Second, and our Microsoft towards and Sheppard, solutions, works will and the transitioning hand consistent Gayle positive makes And are We marketing about Gayle’s world, first announced customers of We of metrics guided modernization Board quarter look with subscription pleased to AI. to us Digital our of who results for our And starting opportunity exceeded driving base for building quarter. with we President of of with appointment to governments and running on leverage. to forward optimistic ahead closing, also our platform to and I I In business. help of strategies that and we that Azure’s easier Expansion expect it combination over sell I strengthened Cloud Duston? of countries experience see made Gayle fit progress our Duston of progress generated cloud scale another we will cash to growth the time am renewals, Global is will for second important our closely it ability our deliver since serves businesses which benefits that, to free all public me Corporate We for the the and deliver growth, sales and and as and at benefiting innovation substantial transition our great the strong delivered us multiyear the which This think insights. our make multi-cloud currently us. are vast digital adopt. hybrid we Head implementing Microsoft’s customers we Vice beginning of for Williams. of and expansion.

Duston Williams

to year-over-year, our range specific reflecting I ACV Rajiv. guidance highlights. million. $XXX above Street million and $XXX you, million, million of billings of $XXX get the for of some into QX ahead consensus Thank were right the growth of $XXX will QX XX% significantly number

renewals business starting of are is which based license the our mix a estimated date. for the a and business. renewals renew renewals rate. after the to than their expected, upside any an quarter, and renewals We and LOD to higher ACV renewals forecast before team renewals and executed performed apply of early term-based on stride date, ATR, billings support certain hit the executed or on-time In comprised that retention renewals in percentage is accounting renewals available performance better resulted that late quarter. in given Both renewals Our our much are renewal the the exceeded renewal of renewal plans

and was $XXX for expected, the bit processed quarter of estimate our of QX, muted to led year-over-year, of million and XX% quarter not which also $XXX impact percentage projection. us a for ACV renewals renewals early range revenue more number renewals we above The will late, early. than transacted as to of million. Revenue million, as outperformance early billings the Street growth that We than more was reflecting revenue. million the guidance In ahead exceed consensus $XXX did renewals be $XXX QX our outperformance current on-time the

Additionally, ratably term is the over length support LOD the outperformance current reflected renewals renewals immediately on was recognized the LOD in revenue not support revenue. for and quarter

lengths was term X.X%, high stayed since of contract we in quarter. the thought a end length, as contract at term business, overall average during QX has in would our quarter in in term impacted ARR the steady billion, the slight lengths which XX% the term mix see QX federal the Our has a previously We of same ‘XX. as QX average seasonal $X.XX lower but higher the renewal growing year-over-year. length uptick

offerings our as previously rolled becoming to meaningful. product fully out stated, now new have We less have solutions emerging periods are overall globally. comparisons And prior we

products, However, bookings productivity Files, net of in quarter. our sales were levels saw our to reps sales with prior line year-over-year was total and record in forecast emerging relatively of QX. which have clean healthy rep Era and both flat periods, growth two in and comparisons the historically QX largest

‘XX new QX the of ‘XX logo pleased in with ‘XX addition and count count approximately QX XXX XXX. the We XXX the are QX versus logos logo new of of new

return to normalcy. Our than QX This lower million, of million. expense is guidance our in diligence hiring has a that $XXX our of operating guidance XX.X%. XX% bit non-GAAP versus post-COVID were expenses slower a gross planned continued slower and of XX.X% Non-GAAP been million a was $XXX $XXX than on management, margin result to to

QX DSOs products. non-GAAP Our loss of linearity quarter company days, for was good. or were $X a loss ‘XX. began non-GAAP This the $X.XX was up QX in from remained in million QX our days per shipping share. loss XX XX net net lowest the since

once in aided linearity at over Street positive a again consensus. free $XX better million flow cash by the Our coming $XX than in million, collections was good

$X.XX consistently cash for first will quarterly Although might cash we flow on in free we billion, progress over positive We a not and cash short-term the $X.XX at the closed that positive time free billion quarter pleased we we quite with are very and be the have of from point X QX ‘XX. flow the years with basis, made. investments generated we up generate in

weighted ACV representing of be between of and to to ACV Now, of $XXX margin XX%, is $XXX for of million; of $XXX to million calls $XXX year-over-year the of to year-over-year for XX%; XX%; QX million approximately $XXX and turning approximately revenue growth million, guidance, and and billings our growth XX% guidance, outstanding growth operating actual of QX ‘XX. consensus million; QX The growth expenses between to gross as which $XXX million guidance average $XXX billings Street follows: million. the ‘XX XX% to in shares compares XX% for QX the XX%

combined previous $X.XXX versus guidance revenue contract impact to of The to non-GAAP support of consensus be expenses renewals in The the flow for estimates a term most in would operating billion between ACV the you operator, billion, $X.XXX million $X.XX billings million to on billion and have guidance year-over-year $X.XX The you. estimate in $XXX elevated million. for with consensus compares growth likely versus support million. overall previous of a LOD cash $X.XXX With $XXX From somewhat a XX% representing open will to of XX.X%, billings guidance billion of of margin length revenue will expect average somewhat please Thank QX. higher mix, $XXX of with $X.XXX of million we $X.XXX $X.XX current that ratable Our should ‘XX flattish stay range to million, and renewals, of The follows: QX. $X.XX of range billion small guidance $XX revenue recognition, billion $XXX QX. approximately FY non-GAAP elevated perspective, LOD billion. up renewal be which growth $XXX the to million and ACV as is billion. $XXX and $XXX to and current call could gross a than billion the which the to compares million usage revenue small guidance the negative QX questions? previous of cash, better is consensus estimates have between free XX%,

Operator

much. first comes open. Jason, Ader very question line the you of Jason your Thank [Operator from is Blair. Instructions] from William Today’s line

Jason Ader

A guys. Hi, ones you. quick couple Thank of for me.

Duston, renewals expected about a the First, specifically, came going from don’t it to you of, when better was you you quarter? are it a of points I And than if than percentage disclose not few us to the know, in that you being going disclose sense are ACE talked you percentage could better give expected?

Duston Williams

Yes.

to we than the way What basically said entire easiest talk is the maybe the better upside Jason, quarter. that So about for being expected.

$XXX million. we guided So ACV $XXX on million to million billings. $XXX We printed

quarter, So million was ACV upside in new which was that was million million. $XX the effectively, the $XXX at in $XXX that implies to that basically assumed that the renewal guide

Jason Ader

disclose And not Okay, to going right, perfect. but you’re quarterly – percentage, correct? the

Duston Williams

Correct.

Jason Ader

kind with motivation Rajiv, years think way company create want it has still there that of then, But channels last that of this is effort, know you the about you that culmination over solutions of couple to to is been the of just I think sort the And has – was and simplification. and really of Because and feedback right multiyear this is something Was and to where portfolio that the feel really being simplification? something that’s sort work you’re constantly confident towards the how there. the to looks? and Alright. for channels picture the reps customers in do the product the about spent and understand terms – striving it go-forward can changing had this time get Okay. because just and new when confusing sales offering reps of a the bundles

Rajiv Ramaswami

pricing our metering in you very good portfolio. of GA talked XX across regions. to with Investor etcetera now in we a this a Day changing individual went said about We more here. most XX, products towards Yes, did from go-to-market And last we tireless different we XX year. And if moving recall, terms solution-oriented earlier were the with about that Jason, world. the in question our it we recently, that’s at

validated and our metering practices consuming, we’ve what pricing. the the that We’ve aligned this, with our simplified want best so is we’ve customers deployment are packaging, solutions and provided help to them. And designs to we’ve and portfolio done they and our

with to We’ve these seen our customers purchase as these partners. rollout, initial encouraging from with the some already We’ve see transactions our taking like it’s of more advantage to for from own early, new the more sellers needs. analysts. to still new we our general, actually partners, seen simplified pricing sales rapid but a and quickly deals, high-velocity is complete expect as from this Now set solutions packaging the their in response own And from and the quite both customers, closure utilizing packaging. industry meet more well

Jason Ader

And be are does how doesn’t you that renewals that the which for solutions? the How work? new something, clear, the line renewals doing customer bought previously your – it just to with in up

Rajiv Ramaswami

Yes.

we of old gradually, any will to over and new that keep new. we So time, well bookings as for available the will we period renewals goes time, as both both the the new that do. for And migrate a and

Jason Ader

you. Thank Great.

Operator

Next, we ahead. have from James Piper Fish a question please from James, go Sandler.

line open. Your is

James Fish

Thanks, a overall, just outright of to of activity just rate activity we resulted we Analyst quarter, million retention on against million off very Duston, the a that net us Can on that pull-in also early probably that of want in results of guys. was better much to It’s break how upsell Jason’s renewal but you of it had you Day renewal all say upside better really down cross-sell, nice renewals. early but had good see. down targets? $XX lot instead your these of talk question of know broke do congrats $XX a great I you renewal about, results. When there. it I build to time the in congrats

Duston Williams

Yes.

range that rate, far out we’re So as that laid within we there. as in, retention obviously,

as of as upside point And far early renewals. one clearly there. goes, the that that’s So were most

was pull-in. of little things in renewal is label renewals quotes to out we early. provide more maybe, of date a some renewals just their of more renewals. transact Now and I but the bit LOD This refining all almost obviously, our kind to effectively, wouldn’t early that those and customers it advance, office back processes And team and opt

not in but we early seeing renewal paid process And actually they those renewals for what only case, also. you’re that’s the early, this So there. did

James Fish

really given change we likely goalpost flow and your and a what forward seem been guys follow-up guide more get to even few ‘XX? of Understood. linearity And into here more seems of fiscal be good potentially example, it just I holding would your For I pulled quarters. until cash be the flow are as from just a the execution. has few side. operationally, stronger to But really $XXX you million to implemented operational out lower much cash prevent Day showing it only going ‘XX? think and and the efficiencies range about that with when and for know free to end all $XXX strong guess the that Analyst ‘XX been fiscal like being on not you’re million and anticipated quarters, you’re renewals than last it’s does

Duston Williams

have There an the be renewals lot of still are job, expense Yes. as of all work with They doing around out outstanding execution lot work the do renewals lifting happy been to No, planned. there. kind done The there. good. to and of good, operating as continues Linearity, is heavy you really discipline mentioned, team. be playing with continues we’re actually. A a done to

accelerate with backdrop, a on and got future. into CRO. that solution come offerings now things the board should just with obviously, these product the have of we’ve new great a as So

quarters But how a pointed of things that are Day. only direction. but we’re reality really Investor a got going play how things And see from So in few away so the we’re we’ve is will with the we things out, lot right pleased far.

James Fish

Thanks, Outstanding. guys.

Operator

Matt Matt, Hedberg Our Capital Markets. go comes ahead. next from question please RBC from

Dan Bergstrom

it’s for Hedberg. Hey, Bergstrom Dan Matt

profile more you of the was the customers? in first quarter? just up quarter the new been quarter. I customer growth the quality to on versus customers. more customer Any nicely new in focusing simply of kind here those of new know So acquire new did change Or quality the we’ve

Rajiv Ramaswami

Yes, I’ll...

Duston Williams

Go Go ahead, Rajiv. Yes. ahead.

Rajiv Ramaswami

for higher say No, quality last been we I to focused – was somewhat and and into quarters the going better we And to several – we compared new as did new well. for QX, have newer a QX QX, get what logos. that ASPs sorry, in translates – and yes, this that between on QX do typically, in we were more time logos –

quite want We’re of logos again we that or do are quality. around are back to fact add the good XXX anything? Duston, new and so happy you they now with

Duston Williams

add No. Perfect. Yes, anything. I wouldn’t

Dan Bergstrom

for are solution of are be the on Great offerings, to year? you. simplified products that there both portfolio, rolled be just and that we the out thinking the And packaging into Thank this clear, there Or about emerging be of half should product you. then over second point? have other new we new still at to largely pricing

Rajiv Ramaswami

Yes, we are done.

all is portfolio the products. it. includes all are this They part the solution. So This of

and in We cloud cloud service, of storage, infrastructure, unified have And that represents the portfolio. entirety right, computing. Nutanix database user our management,

Dan Bergstrom

That’s great you. hear. Thank to

Operator

question next Pinjalim from Bora go ahead. JPMorgan. from Please Our is

Your line open. is

Pinjalim Bora

renewals to seeing So from way? say great. the the any my to will jump quarter Duston, – follow-up Hello. that a as QX seasonality that big Good for Does part, change congrats you’re Or the continue early there. does you see. uplift see you to do renewals well. that in echo a QX just on I QX?

Duston Williams

renewals. always Not to have meaningful. going I early No. we’re with quarters mean

ATR perspective, up, changed. to So the that from QX QX not does go that’s from materially and

Pinjalim Bora

coming on about into new Rajiv, the might back in accelerate talk table new year? environment the IT and compared XXXX kind you Got modernization the last projects year? Do heading to are it. could demand general standpoint you feel business from of like a maybe

Rajiv Ramaswami

Yes.

to healthy. the environment continues think I demand be still

continuing using as to are to modernize to continue go remote on They customers workforce. drive their an their continuing seeing infrastructure, on are focused enabler. IT We of public and course, focus the to cloud

HCI public much intact. right, that I storage In are what – then and we that pure-play pretty the say cloud. still transitioning So market X-tier is to fundamental would on focused to that dynamics and architectures are legacy provider their we that HCI, a context, that haven’t seen extending

we anything point. change a significant customers investing and continue So haven’t seen be all at to this from at demand

Pinjalim Bora

it. Got

I underlying unit packaging Is there and for said. lower in if The an I is if has uplift renewing? can. pricing Lastly, price and you pricing like-for-like obviously metering, somebody think

Rajiv Ramaswami

or Yes, right? very that that’s a our here our price around way this a intent good decrease. But new make our be for was our consume intended price question. it was products and not needs. is intent, in So – for it to wasn’t either portfolio a our to really And their easier our that to it launch with really reps quote customers a to matches increase

you for give We core-based pricing our we specific moved metering, to simplify and core the I’ll Now did examples. entirely offerings. some

that’s that operations, to right? geared would now solution actually buy use and before, required And across looking of more have So example, have our We’ve Now custom introduced, and products our with in thing competitive, compared makes governance. disk. hybrid the very favoring particular flash offering. on specifically new hybrid impact one customers offering for increasingly customers is in much catering it also core all-flash the operating cost tier at that’s cloud model for towards that self-service the this cloud more a buy case. past change to you a this a all very you we that management – are middle than configurations includes And

partners from multi-product we to so made for help then sales address and these far our their So specific buy be out. this protective. for will say the customers more to solutions needs. is it consume feedback customers our to easier reps of them I’d both our And overall, more and of And portfolio best that

Pinjalim Bora

Thank you. it. Got

Operator

have a your line America. Wamsi, we Wamsi question from open. Mohan from of Bank Next, is

Wamsi Mohan

another past you Hi. you. efficiencies the Duston quarters, for showing maybe pace results very than guide said to at you your structural lower guide Yes, have what to several in and thank you’re much I coming quarters. or anticipated? on maybe at four strong not had in seem of function labor OpEx? those a guys least increasing magnitude about And a relative on is be difficulties the the that And Can been way, OpEx, your have versus talk headcount market in of more adding what is follow-up. you for

Duston Williams

Wamsi, we discipline is on that. OpEx, There and the have Yes. continue to doubt that good very no continue. about will

everybody we exception On Nutanix had hiring for It’s the a tough no we heads. more front. the where is wish few hiring on front,

can done sales But look some there, at So efficient there and that there. we’ve is pretty is Even on, how get assumed we perspective. the going little bit, from sales. down a clearly to a plug A of efficiencies is a a quite that obviously, more underspend head to we returned. back on some look good hard here travel would we going get though continue bit even wish normal taking a count continuing getting that just forward. job would still who’s bit got We that thoughts hasn’t of return little

guided So we up only inherent for look and we for QX the have guide – there. guide if I you at the for, officially step because a the haven’t guide for QX assumed that’s think quarter assumed the then

return normalcy So hiring. think increased I assuming in to some here we’re and some again QX,

Wamsi Mohan

That’s to Thank And then Okay. helpful. renewals. I you. back could

on You noted color impact? And Is have you And doesn’t I do you. are these Thank somewhat early pull-forward shed or it that? some why early why renewals, that that choosing clear maybe very to – how early a of wasn’t the can customers just pull-in are renewals? this?

Duston Williams

Sure.

the total it renewal long we recognized be does the it accelerate again. quarter in collect starts that in do it cash does or as as it right, to But revenue billings. we terms, has, the is accelerate early, impact So always when and as billings, ACV that going the billings,

from go billings renewal. you’re long going ACV as into revenue an never and we that cash, recognize collect perspective. billings that early on will So total But to early as

QX. question your came of much guidance so from million on, Now from roughly QX gets think, was QX, things, $XX about and how probably scores or I which kind into

lot a a what’s that dates. about to? And to we’re of so business, upselling. the our relates different that difference, the leaves beauty think customer always co-terming with then of the the But because renewal you And difference related of mostly bunch

have this a renewals what QX, And to for just common is It easier bunch makes those all co-term if easier of us. it they makes them to opt in and a do renewals have fair bring in got for so date, in case a QX term amount them. customer has renewal and QX, QX, may and in they of a it

of some the So that’s to of mostly QX. related renewals are other outside there that

Wamsi Mohan

very you. helpful. that’s Thank Okay,

Operator

question Meta Marshall a have from we from Next, Stanley. Morgan

is open. line Your

Meta Marshall

thanks. Great,

get Just on question that wanted are of answer of kind And kind of what this kind OEM just an of to the one quarter? co-term Duston, customers to getting challenges sense then a ability to during your Thanks. means sense and supply any a impact whether some customers new has second, with or maybe kind overall whether just nice of of base underlying demand not that size of to the at and partners of of close percentage your kind revenue chain building of point? contracts

Rajiv Ramaswami

Rajiv can chain, supply the here. take question first do I’ll Okay. the second. Duston And Meta, the and on

it’s variety software And tied to noted the we’ve a sales. chain, new of in one-on-one the past not platforms. On that necessarily runs supply hardware our on hardware

so also including seen orders hardware. some to access orders impact modest, chain a to placing We’ve business deliveries customers that delayed few supply cases with this late relatively confirm get has So other seen our some in pulling today hardware. customers expected We’ve forward far in early have or quarter. been in

this, provide and expect effect our certainly over we minimal. so procurement on would far net software, our remain the What is I say hardware So, to flexibility been choice given business though we has near-term. the to the with that challenging

We forward. very go this to very, as will, watch we of carefully course, continue

Duston Williams

on just then And the...

Rajiv Ramaswami

Duston?

Duston Williams

to of the will Yes, on suspect simplicity. into to the I by of get different more the we’re dates percentage renewals, has we to as customer far renewal renewals as so want co-terms, starting see are It’s these definition, volume. where certainly a going all these more this as up, just they and term-based start into come early and not. – into

simplicity. want to going We’re

more in next and the quarters. over continues more of these suspect ATR, as would So several general, see I to the we elevate will

Meta Marshall

Thanks. Great.

Operator

go Hall Next, Rod, from a Rod ahead. from we Goldman Sachs. have question please

Rod Hall

Thanks, see bit deeper and Appreciate the observing. you’re a renewal renewals like It want question. Yes. come to the renewals into and to you’re rate I to now. what guys. little back sounds

these of And I’m the think point? curious What sort follow-up. I just rate have co-term in is you running? do early you’re up is a but then of rate that I some renewal it, done stage running You’ve deals. to what this know

Duston Williams

greater. And are Duston. there perspective within it’s that currently. from Day, At XX% put Sure, out a had target a we or Yes. Investor range GRR of we

So, seen there last than have no the quarters. over really real what difference of was we couple

have is. happy a course, core size, We are now. where the bigger of And sample we

product on meaningful so really there. no the has focusing total change We adoption are been of there portfolio. But far,

Rod Hall

what is you And all know on in were renewals don’t I trying much the Great. and that representative is what observation? much if going the forward, get happen, the I wanted Okay. on renewals of did any of to are will guess, So, that I think kind that – this thing you can then don’t other a like to the expect or the how through And we this so available, co-terming? many, I how might catering of come ask co-terms? see of help them renewals I without proportion give us of how to handle know, just

Rajiv Ramaswami

Yes. about talk It’s early this probably a little this to at point.

of tilt at QX. have because playing outside extension just look have was you more out of or of co-terming the somewhat of would to of early. QX the tilt if anything more a just think majority then I would And some

So, to customer too. force want to a something don’t force too do customer a anything. all that economics side. this wouldn’t to preference is I do – early We customer it’s We it’s And think our tell. with on just to

I something suspect bigger this think to of So, the just forward. I will more the are But of with, is we to going customers. some just this monitor by have elevation see ATR, I certainly the think going we probably

Rod Hall

Great.

Okay. Thank you.

Operator

question next from Please comes Cikos go Needham. Our Mike from line ahead. of the

Mike Cikos

questions Hi guys. the taking Thanks for here.

then of was this that us and I ACV in that billings, that sorry, anything declines. typically coming that seeing would have in X% upside am co-terming million to of I the quarter, for the is curious am early QX you results, million that see I almost I from for the from – X% normalize $XX just through go and sequentially helping, entirely reduce it if to QX? maybe in is from you like of your the are which to, about seen guess billings revenue seems But typical to there we point going that billings renewals sequential looking of, reported upside $XX QX and would at QX. billings is guide, normalize wanted guess that the If from this it’s day implies it Just know be the seasonality can I pull-in And instead you the topic QX flat here. I

Duston Williams

Sure.

Let me at take a that. shot

weren’t renewals renewals. the company Investor we and renewals on predictability up-sell, at of built to traits thesis have was laid that Because we two and One was afforded out of that the always new we Day of the laid and out. the luxury

First, and cost-effective the secondly, added And were right. added business very they that predictability, they model. to leverage they

And now, has so a revenue are higher starting to that level predictability. a have of much stream we

have or this QX, going clearly, talking for wouldn’t QX. X too we I different your business layer have been years. last into are the the not and comment profile new much And up-sell. Now, the up, by about goes as X that’s to ATR years that is what about dominated of But finally, a we

and to somewhat morph a more Finally, the change into business. predictable, business better starts leverage

Mike Cikos

a that versus of guys here, there materially chunk to you on Was previously well the else – second that were ahead Very outperformed helpful. derived you question, delivered. from anything XX% margin leads that gross this the you to that we gross XX.X% or had of modeling? but into XX.X% is margin, solid this And renewals the where outperform guided I that that my from probably a helped think day

Duston Williams

mean, it’s case, in I favorableness we on wasn’t this necessarily revenue quite But line, obviously, little increasing top any design. you some by got honestly got a That have and Well, also under-spend time headcount margin. support. going to for the help

XX%, of I gross margin trend it’s I at continue, job little So, many think XX% we think but the the been a in it, range. – that over we for bit range. do look quarters, good to pretty And that accounted are you that last clearly, if a many, managing within

primarily little a QX popped base we in And little up QX higher naturally from than are we QX. out a as go bit it bringing shrinks as revenue what probably it down we to the reason the So, expected.

Mike Cikos

very the appreciate Thank for Understood. it. you much timing. We

Operator

Next, please Rakers ahead. we have a go from question Aaron Aaron, from Wells Fargo.

Aaron Rakers

Yes. Thanks questions. the taking as for Two, I well. can if

I of Can about from wanted in from And the first Any etcetera? that perspective? that completely is how evolved and your post think I off context, the biggest landscape just spun engagements company that ask maybe evolved how HP? all, to that’s Dell on with now competitor comment same partner has incremental competitive a you ecosystem spin, Dell? So,

Rajiv Ramaswami

Sure.

So at Aaron, let that. me take a crack

So, first and the then competitive environment partners. the on

it’s And all the while grow same-size multi-cloud. are a I becomes from foundation all market workloads, enterprise performance-sensitive. say, seen with perspective. continued will of hybrid virtualized these haven’t it view we fundamentally from I a very a said traditional competitive including So, – architectures, major handling in market like HCI earlier, capable to dynamics basic that databases for change

a from have the of in traditional here, other market places many the at angle, of some if storage look offerings Now, and HCI. other players competitive so both names you in without naming the

tend without so HCI. effort be protect competitors, developers not be And pushing a a in broader their seek offerings that margins to things maybe in aggressive includes traditional at in you HCI had business. portfolio they just they they look as And less go-to-market security of then they if – and classes other like to focused

are that we play. perspective, pure from So, a

continuing of to the the focus simplicity, the our the flexibility more the delight. We our choice because of offer fair platform, the that market course, win of and of we freedom robustness, share are on scale, and customer

that’s the angle. competitive So,

ecosystem Now, OEM then vendors partners I and have the when when and the then we our partners, – in comes the we traditional again, and cloud. our talked think to it about about talked

side, from So, on can grow as you we own with OEM big a GreenLake. earnings, see the – on the they their HPE. to had There continue partnership focus

of together. GreenLake platform well both and together growing sorry, small part our are as as offerings. in their GreenLake am era solutions, GreenLake to We database their part core our rapidly. And the – I but working of deals is and platform service teams continue are win field as the

Lenovo with partnership steady develop. is continues a to So, that state us.

it. Lenovo on working ecosystem when that Red The come focused of we we continue a the And very are quarters into now now, now We And to right have we we long There time. had Hat announced of Hat Red Hat for a side Red with together is to two been Citrix. with then fund the – are side. we under do have since very number partnership, we engagements. two-plus well the and

quarter new wins We here. get continue every to

One energy there platform. Nutanix provider the hypervisor. competing were about deployed European own momentum I can was that their retailer who on services the the on workloads we on data and of of to There our on like build OpenShift, running workloads couple customer platform, had. that to call were this moved was cloud big We to a this continue top example, Nutanix Nutanix their cloud talk a that around it minutes For container-based quarter, OpenShift platform. solution a that Hat Linux another already HCI the to but including on Red business-critical moving had running

continues relationship recently. has we relationship that a have With to got had Citrix, So, formalized that grow. long-standing just

together happened quarter. number engine That So, just joint engagements every there desktop. computing and wins of around and virtual is a customer

the examples there. continues that our Stack of Win customer cloud I with and up in think for some We piece a quarter is quarter, much terms again, last about of had piece. was usage. AWS Citrix more we have that This solution The in talked There very momentum while. this

to continuing market. to Microsoft with solution cloud our work are We out hybrid jointly get Azure to

We private are preview that. on in

more partnerships from get we are build, we as more them to So, and all these continuing to progress. expect and

Aaron Rakers

below had the executed clearly OpEx That’s or quick you great. in OpEx, have guided And underperformed quarters. several to I curious question, then but for follow-up, Wamsi’s range Duston, only back the not am you you past a as well have

should back up you reflective expect quarter that how couple couple last that’s that, of we spent yet some office given over fully back guide not of that a these the have and under over next quarters could Given much be of to where hiring, quarters? catches there to some relative slower

Duston Williams

I to close guide million guided we $XXX come to case, to. this range expect million. to that Well, $XXX we mean we a In

reset. You have things some just taxes FICA like one-off

in million, step of first do can year. $XXX $XXX up the millions year. in million $XXX that’s the calc million to for for a bigger and inherent guide have the dollars – the million or And of for $XXX So, the is we QX, part you the calendar this

would would eventually, to hire to hire. So we more like folks. We like

will We reps. just but sales are more not would question to massively that off few like more a do sales support over the R&D hire reps, time. We It’s would folks. folks. We will like hire some more And hire target of like to the happen. a we I we think of when to that

laid expense and for but have again, not only ‘XX with out Now structure an guide, it this laid we ‘XX. out we have year this

– to total those still still marching what hiring, company of parameters. we we end the regardless up So, are

Aaron Rakers

That’s helpful. Thank Duston. you,

Operator

comes next Leopold James. question from Simon Raymond from Our

open. Your line is

Simon Leopold

about Thank you you your to average wanted getting might am and on are the quarters quarter forecast, seems per process just help ACV ACV July. imply fourth reported Appreciate thinking this put understanding about the the I expecting up bit wanted April of question quarter in a you there? little between two in I in thought which you quarter you decline be $XXX to a I about have the a what full year billings. ask you. here. million correctly, for forecast If billings

Duston Williams

not Simon. correct, that’s Well,

facts. me state kind the of let So,

equal would we much earnings in the four so quarters this equate the recall, billing you do count have if in doesn’t we deals, of ACV six-month because the ACV guidance think three that that And reason million-dollar don’t we about that times – this time, of the last So, have $X I talked the talked why as million. as quarter, about deal, X-year is is didn’t for than our a we year. calls, less we we because

about laid X% you X%, we so a can’t – earnings this historically, it’s out And Again, have add. It’s discount. in call. been simply been

So, do would that ACV not math, I if certainly in suggest a billings you QX. in all it think decrease

Simon Leopold

talking you should it repeating. I to recall certainly you It’s I it think be before, No, about continue point but making. Yes. bears a

Duston Williams

Yes.

talk So, guide certainly specially do there – But billings I that want again, because suggest don’t is at simple it’s in would you we if to don’t do. QX QX. about in math it point. math, QX to this an ACV to uptick

Simon Leopold

then And as a follow-up. just Thanks.

you of operating a terms year. the the quarter? change inflation Obviously, seen in guided for have last you have expenses, a lower to In wage in slightly expense the

are Just want you about wage an thinking update on in Thank what inflation that equation? you.

Duston Williams

Yes.

gone of that are I think has one salaries gone those things up up. and have certainly everything

the forecast. we into built that So, have

are within those also. for will this daily, We obviously, are that expense And have effectively And the regardless the we up again, is is, isn’t is tweaked laid us, And structure everybody. just out. what wages we this ‘XX still the But of tweaking will monitoring that or operate FY we assumption the there assumptions end assumption up weekly. we increasing. have it

Rajiv Ramaswami

are if people, – up of or like have XXX that’s something the means right, came only that what another the Yes. thing we hiring may at add to But might that definitely OpEx that we practically might going people I I is add yes. month. still and instead that, just wages XX

Simon Leopold

much. very you Thank

Operator

from Nehal Next, from Markets. question Chokshi Northland Capital we a have

Your open. line is

Nehal Chokshi

up and experienced you up on what’s year-over-year the quarters Thanks the quarter. much for January the renewals Yes. are to one percent on available differential on you between say, expected what you, billings the in a just results. adjusting the two or that Is It what on basis. going put that guiding are between But congratulations go-forward April like when out growth quarter? as ACV are and ACV you you quarter sounds not as on awesome

Duston Williams

sorry. understood quite I not am Nehal. am question, sure I I the

Nehal Chokshi

Alright.

again. me Let try

earlier higher expected. certain a percent you renewed of into to what January a beat was So, that percent the renewals the expect typically quarter was went greater a percent renew, for than while than it expected,

Duston Williams

Yes.

Nehal Chokshi

forward, guidance not that’s this to because your typically, represent for a ACV pull relative actually you raising would guidance quarter what April are billings And but represents work.

And quarter but the so much I guess not peak. January as it’s as

that guess to here? I renewal So, but more as what was the that, I that experienced say in much had percent essentially trying as raising that what’s usual quarter. than the is Is not happening January am you what

Duston Williams

dollar amount basis this We or a of Yes. the point, basis early not can a you QX. that renewals That’s would fair. experienced do percentage we on at of in sort expect

Nehal Chokshi

Great. Alright.

Duston Williams

also got on had what been that little than previously renewals Yes. playing in port too assumed a bit It’s have LOD the we here stronger same piece.

Nehal Chokshi

negatively there then been also understanding a OpEx impact this future And and not around whether ACV of billings is Great. questions to growth. lot going has or

see another is of this where So, that new per way sales team’s are runaway you ACV you maybe your targets Do of to that? still in address terms plenty improving today? for

Duston Williams

Rajiv training whole talked [Abrupt big the has and lot whole you one force solutions for and on a leveraging away then working is of – a which going We do. of autonomy, the channel the the We concepts were the And lot, offering. more and a have – about solution channel channel on. and target whether a different that’s the there quarter, and lot, are again, things partners, this there, Dom this but selling. talked on End] about – work have we lot team sales

Nutanix (NTNX) 3 Mar 222022 Q2 Earnings call transcript