NTNX - Earnings call transcript Q3 2022

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Operator

Good afternoon, and thank you for attending today's Nutanix Q3 Fiscal 2022 Earnings Conference Call. My name is Selena, and I will be your moderator. All lines will be muted during the presentation portion of the call with an opportunity for questions-and-answers at the end. [Operator Instructions] I would now like to pass the conference over to our host, Rich Valera, Vice President of Investor Relations. Please go ahead.

Rich Valera

to third call quarter welcome results discuss and our of fiscal afternoon, today's to conference the Good XXXX.

closed CFO. Joining Nutanix’s me results the for Nutanix’s quarter announcing President Ramaswami, issued market After and CEO; its press today and Rukmini financial are release today, Nutanix Rajiv XXXX. a third Sivaraman,

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

including regarding our call, and will and guidance, there objectives make our statements business and thereof impact management including vision, execute plans, benefits our today's the as During and in well business, financial statements, outlook, financial as to manner our operations initiatives, strategies, forward-looking results. and on a ability timely successfully on

ongoing or and future our driving geopolitical current the different trends, performance Our our opportunity, and market and transitions, by including macroeconomic, pandemic. the financial impacts These and global results materially from COVID-XX some involve cause and risks performance our metrics competitive which future of periods, new targets statements of of anticipated position could and factors the anticipated timing growth, uncertainties, of and and impact differ control, supply those actual current the model are forward-looking our industry business these the beyond and statements. in to and use chain which adversely challenges

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

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Rajiv Ramaswami

we you, Thank solid backdrop, quarter, afternoon, good metrics a all our business. seeing macro delivered in our exceeding Rich, Against continued strong volatile and everyone. and performance guided renewables another

our see our book unexpected their an operating didn't driven said, cloud centers our solid saw continue challenges to and data We expected. Late when quarter, expect billings limited our dates delayed, quarter some chain the percentage supply our affected and delays for and in start future resulted in and having quarter. hardware. upside to this pending hardware both orders, for accelerate adopt their we digital of an This QX. typically transformation, Nutanix upside cases third hybrid outlook of modernize QX, in had as our in orders continue demand a affected we Increased or the platform, trend from to that portion availability businesses multi-cloud we finish the the quarter being in quarters, looking impact significant in of by That increasing model. we revenue in fourth

strong ACV our renewables. XX%, execution subscription of third reflected our execution lower entering headcount in it of driving rate bottom prior bolstered billings a the than of performance. building quarter addition, marked on line model and improving continued Overall, each rep expected QX. worsen In Rukmini discuss will by issues in prepared on sales solid topline for QX, remarks. our quarters. delivered her after by attrition in seeing was improved our and more saw We two these among growth detail We base

operating continues which from be year-over-year combined renewals term in revenue, drove a with and non-GAAP grew management sharp by to improvement leverage Topline XX%. diligent compression income. affected expense growth, Our

collections While adversely of for free impacted timing our the cash flow performance quarter.

to in 'XX. financial pleased third are results. we working generation cash FY continue sustainable our with flow free Overall, prioritize We quarter towards

healthy with to largest application public public cloud centers decided Cloud self-service adopt cloud. Our in customer of management Nutanix deploy core modernize adoption and operating well access, to customers cloud is well This extending capabilities. hybrid Cluster infrastructure deal as operations, solutions multi-cloud as by new our cloud their including workloads the public good quarter reflected or looking stack data the Manager infrastructure, Nutanix and management. models, traction Cloud company a full and deal as based workloads large storage, as The the expected for is cloud in reduce simplify them of good cloud adding seven-figure solution has Nutanix requirements hybrid operations into looking with energy into cycle modernize enable infrastructure their to Nutanix exploration management while for NCX their to support flexibility Nutanix North traditional automation, seamlessly that example database-as-a-service American a was A X-tier and their the life to their and extend cloud. their adjacent

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Rukmini Sivaraman

performance. $XXX QX QX to Thank first and a our my year-over-year $XXX you, range join metrics. am Nutanix billings guided solid growth for of I earnings quarter, was our Rajiv. to $XXX million. all XX%, today million ACV a all to Getting call. beat of exceeding representing honored you we guidance was million, directly

XXXX Our $XXX do and was reflected GRR, million and performing in XX%, productivity in term growth was to million, date with was at renewals QX in in representing also with and Growth business continues $X.XXX ACV Gross $XXX our in end the X.X expectations. expected. million. orders for guidance greater at QX are to slight license in upside billings billion, only because collected $XXX but to year-over-year was of rate, from of in of year-over-year. QX years the Revenue range actual future are in our that revenue, be XX% better billings begin recognized compression was due start can of because the QX ACV expectations. than to exceeding quarter of dates growing sales retention to than QX renewals ACV ARR was line start QX XXXX. line with growth our billings, years X.X the revenue well, booked in

However, reps than QX fewer remained we market highly ended as with talent the planned competitive.

focused rep both retention on saw our Dom entering Under via sales Revenue new better we to resulting our of QX. worse Officer, and than rep lower-than-expected increased getting mentioned, Chief target level leaders rep Rajiv attrition efforts. our leadership headcount in Delfino, headcount the As hiring remain in QX,

largely overall QX. slightly in grew Our our in is historical from seasonal XXX line trend new QX in which company logo with count additions We QX. new added logos head to QX, in

$XX as margin for cash expense is toward our X%, XX%. a slower to operating from days $XXX was management gross previous Non-GAAP in teams sales for were progress operating QX DSOs diligence up QX up QX. and our achieving negative was continued on billion new reflects logo our continue XX Free growth QX, at This a QX worse-than-expected were was year-over-year focus million, closed was $X.XX of new higher-quality our than in result came in leverage of margin by million logos, investments, slightly which operating focus a which of planned. expenses guidance we linearity operating from with of continued QX ahead hiring of quarters, We $X.X lower on negative we've bit million. ASP XX in As impacted and guidance in Non-GAAP in of $XXX flow billion of sustained short-term quarter reflected cash the QX. in and $XXX on profit. range at goal was in to billings. than the approximately discussed days Non-GAAP our in XX.X% million QX. end that in

make chain. in a model low regarding a transformed starting levels around and XXXX comments our year XXs appliance fiscal XX% that we gross to will the move few margins grow non-GAAP Nutanix model guidance, to in to I supply current saw our QX. back Before from the QX software of

Our us availability hardware provider, of customers the on with the whom of many are until providers. with servers, choice choose some one, receiving hardware or of of case customers the availability our prefer an delays from are to cases, start us either: future to to purchase means in for software software from server expected software they purchase customers orders that we server orders server when from in This with Because often our hardware, providers, dates are quarters; the time providers, infrastructure hardware license becomes may there purchase stock available. delay their leading underlying date which partners. in their subscription their base software from two, the line-up the run

late issues. experienced several During the chain impact in from have minimal and until quarters we QX, supply last

impact to I delay million. due increased shares our significant outstanding weighted average The ways; affects earlier, are XX% in the QX. in us With have our expenses orders supply guidance XXX challenges chain QX impact for for with the and QX QX, pending limited that chain choosing margin million but between be our start and change not future upside these in a of and to availability yet ACV approximately and orders to million; QX guidance as us million; to $XXX our million; QX, we to two, solutions, be in us seen While trends we for late date, gross the and collected; previously us, revenue million in supply hardware. these is that which, continue relative between as billings and the non-GAAP to is majority $XXX of implied guidance billings $XXX book two $XXX not of placing with demand $XXX customers on described saw follows, XX%; $XXX expect we that, of operating is which between between the ACV challenges, million impact and customers one, that non-GAAP

chain also rep QX saw the but lower headcount QX issues, and or that than that previously uncertainty environment into QX is range. to uncertainty. our into ranges sales the been actual Absent being The impacted their ACV more have we ACV to orders and continue continuing the end in we in ACV start collected Because by challenges and guidance QX. are changing, to increased it that planned. in the rapidly we are QX because than revenue relative of revenue in Our guidance implied previously booked of billings guidance widening likely towards the in believe date. are QX to chain of is billings implied we only supply assumes supply reflected macro impacted going respective start is how billings, supply with quarter The reflected worsen the license would at reflect dates QX that our the increased chain are numbers future guidance close guidance

length million to it an $XXX previously approximately is contract expected QX the million QX that The term though sales implied expect from be of even well in-person in average is challenging about operating $X we expenses supply includes Because chain flattish and below for guidance Our increase guidance of moved was into dynamics linearity expect due we needs enablement to QX QX. because to QX. remain in QX in event billing working to the delays, QX. capital

current As significant a than consensus. higher result, the expect QX QX and cash we be usage to in Street

for and guidance revenue, representing $X.XXX year revenue approximately operating of billion year-over-year to billion; $X.XXX XX%; billion to of full XX%; year ACV margin million non-GAAP growth to expenses $X.XXX and XXXX $XXX Moving is on million, of between to billings of as be gross $X.XXX $XXX the fiscal billion. XX% non-GAAP follows; between

the As a quarters one-year ACV transactions above the adjustment not The reminder, XX% is ACV billings assumes ACV is four of summation term length. full of because than annual the of quarters billings. for the billings billings a straight year guidance that of four guidance ACV sum less of required with

While our profitable operating breakeven non-GAAP guidance, implied focused fiscal QX continue prioritize to XXXX. our flow sustainable outlook is and on we in prior lower and remain free margin working cash growth generation year towards than

please to look Thank in QX open you. on year and XXXX expectations call that, earnings provide up the XXXX fiscal year August. more questions, call during operator, We will our With for color could fiscal please? you

Operator

comes with from [Operator The Mohan Bank question Absolutely. Please ahead. America. of Instructions] Wamsi first go

Unidentified Analyst

quarter, well for My Look on It's that for fiscal specifically working said you the in supply think is today. do for issues my I'm impacted Rajiv. two filling you. will you going the same to were can role. But labor congrats things going hardware timing to up sales the the resolve you availability. the fiscal long the question. should effects the The chain on So do and fourth sales last? with things quarter, these on you impacted taking well? Rutu seeing? you when these as think do that XQ question supply XXXX, rep, quarter? you're as Wamsi hardware this expected Rajiv, the reps, linger try how Hi. replace and delays, the expect given the the you thoughts And into And reps the the just think your of the in required sales that we into you first question about you forward Rukmini you're that attrition we make Thank as them. [ph] replace shortages, think can on in when will so on on in new reps are issues assuming more chain that that fiscal than

Rajiv Ramaswami

Yes.

And So Rutu -- vast right? chain me majority start was contributor, with first because that the we the biggest in all, let outlook of supply of play late very hardware start that QX. the constraints. saw in of because so this chain -- The in the supply lower to come really is last

mean, if didn't to we late again, started more Now much now, until we We really from significant of being course, QX orders until just that, with that, real but delayed. at were -- have experience issues you managing any right? -- didn't in I look chain, supply become

partners try supply very we to one and respect Now working mind improve removed, closely hardware. the we that don't step are right, directly But have we with because in the of keep with hardware. to our the availability supply chain, hardware

So the is them influence somewhat ability limited. to

all in multiple hearing and are we what on manufacturers likely chain challenges the for based persist that to the these said, supply are quarters. expect server partners, that we the hardware from Now

issues was we're of which headcount, rep the much component smaller, a smaller the on facing. that Now

And rep industry were of we the affected across prior been noted quarters targets. we've board, somewhat Now trend right? greater in our we headcount resignations behind the that broader by

two of led Now That improving a quarter. in lower expected quarter-over-quarter we to quarter, after fourth the a in saw than entering third quarters the increase attrition, attrition. rep headcount

the CRO, focused things, three Now Delfino specifically about right? on of we're is very Dom hiring. reps doing our in what terms retention, new that, right, with So productivity and rep of

what improved on our as that coverage to of first that quota territory go fiscal next expect by and that's we it coverage move model. and And and we have will progress retention, level we will are our do is, ready and result into year. higher part – to attainment in of rep to the continuing in Now refine really segmentation

enablement. rep doubling we On productivity, on the are down training and

and portfolio. partner-based implementing leveraging are product We course, of simplified the selling,

since recruiting we'd of previous where side, increased about hiring even our us to headcount. early the we've efforts to levels. terms are the be back sales rep seeing On right, of more results, terms And in encouraging in like QX, we that getting

of supply know know the hard on So, issues, quarters, these last the We right? working And few is I remedy, think asap. headcount, working we're I right? to chain don't quarters. And don't right? I we're going both multiple to get think that a on rep yet,

Q –Unidentified Analyst

all for new Rajiv. another about on more I past, you've quality customers. was XXX The quarter Thanks talked versus new Okay. details, for just Maybe count question customer the focusing the quantity. you. this in know

couple I of XQ the think if XXX. last from the over look think been it's average, around QX I at years, I to

that are of mean, quarters? less a being given next more the or customer on ACV you couple becomes the focus this with happy like added And metric? number should And of billings things that force, the Do of think on focus I of less in issues So, customers are we we some meaningful metric? level the should other additions? sales with you

Rajiv Ramaswami

Yes.

third weaker it when with So the And saw quarter, is seasonality new to QX. in than QX logos. historical we line in roughly seasonally came a decline

is And Now focused higher we so comp. we're on in that absolute new for. solid logo we what more logo a saw logos front, year-over-year than QX, have as ASP on new ASP which driving you indicated also, higher been growth new quality,

leverage sales in continuing selling, you we make incentives to right, growth more the we more our program, place. enabling partner to to that new get forward, trying go have be expect to and – So, by continuing logo partners right a through if autonomy sure drive look partner-based our from driven strategic

on going of and forward – capture. So we logos can the yes, new more that the we ASPs these focused quality are

Q –Unidentified Analyst

just let And it. Got Rukmini. one more could in, me if sneak I for

you had flat. term to average I be contract think guided

in I think to from XQ. it X.X years went up X.X a little bit

will I guiding as you're your So, well in would – that a this decline again the contract the trend well renewables average think renewables you XQ, ACV that you. would growth the your seasonality significant expect any how part quarter? contract do on is both billings, be given for of how the as the impacting business XQ that as federal XQ. you terms? more the – about term? have And fiscal that the thoughts of the business, How seasonality, should average we how term business revenues flat as think the say in and should billings average growth we Thank after that ACV in contract in

Rukmini Sivaraman

you question. Thank the Yes. for

question -- answer on contract the on So, to terms. your first

of to we which more we of So, we eventually X.X. I I'd I probably close think this is at to in in the But sort settle, had think was say higher of around mark, think laid year quarter point, so quite X QX, at we this had are terms, a will significant X.X sort what that came which that's terms couple out previously. where generally, transactions

are sort we'll where where given and maybe we're think close are a how think, again expect little level, quite to this you're for that as we down well. here right? projecting to settle. the are we at it we we to So not that close I too fluctuates and trend QX what we of but as And So point, slightly, dramatically seeing, bit

it your on the renewals as prepared build. calls, really ATR, well general I these what for what we think to continues talked us is in think question to is in time, and right, do about overall. about, ACV remarks, which what it second the the I which performed or does billings, we I'll go continues seasonality – renewals think, renewals we relates available to that talked on I as was base renewals over renew does and the in say before the of think And up as see I does on for

back, right? is outflow right? booked that business – has general ago, also say some imagine, has But ago, less in So point, those we three of renewals years new If when renew new going is the the it's years than two right came is not this seasonality, ACV seasonality, overall. as available would So I of that to that, in renewals you that perfectly at can seasonal just orders that But your correlated, that the as the which business what really that So did this somewhat ago, that think less quarters, renewals, We're seeing hope years it and same but business. answers overall, first year is I pattern question is I in our slightly follows well. again, new to renewal doing few so of business full closely. right? seasonal between of – our is sort continue we'll watch seasonality

Unidentified Analyst

it. Thank all Appreciate details. the you for

Operator

ahead. go next Fish Piper Please with James Sandler. The question you. from Thank comes

James Fish

guys. year had think have up ways there's flow then is million to out when way just actually by enough here cash backlog there to during – guide back, of or these on how in risk. the that million you the continue chain color for I put but now gave, think is another appreciate you supply $XX to you challenges. backlog your to should of the in a the that Thanks. want roughly get Hey, Are way, Is $XX the you you down fiscal delayed. come supply comes that multiple the orders And long your guiding do fiscal come free million expecting QX, $XXX all persist million of to of booked understanding $XXX persistence million, at puts XXXX? or that $XX issues there

Rukmini Sivaraman

can Rajiv. take I question. that that, for Jim you, Thank

said of couple to thoughts, what maybe color I'll we little more a and So a supply add about chain.

orders guide a we don't from of majority get And start have one implied percentage recall, availability estimate thought delta way we the talked booked, QX two in future orders those the One the to to supply you'll billings future the booked waiting what QX of as QX dates, dates. dates that trying went came go of late we to in to in when that in that up. ways. chain the significant QX at previous Rajiv in that And to that for full year, it to ACV and hardware. or percentage coming start start our our for customers QX as worsen looked quarter in because have start in guidance increase the things relative compared challenges, we and saw that orders up I are start about is for future are percentage significant said of And and modeling is came for with was what of majority QX, what and was about at of the to they talked the So date, modeling are it was we about, our with come shows we they're up or dates the but orders we QX. of come is future in

So that's it's your Jim, QX. that's it, if the how make So, of doesn't do booked dates. if even it how we're collect booked we on And do question, think, the piece, and to in Whereas do, I future license estimating up until and does with right? revenue, we've collected I even approached we up revenue able – to it shows date show we in want in point, starting. the ACV that it, revenue orders actual start have billings, and with the to

backlog. not deferred Jim, to would until expect your percentage with these backlog would that because up show upside just deferred margin so increased percentage sort on start the delayed there. of nuances we So, of to effect supply revenue. same question, some answer see on, improve in to of about decrease, this the we chain thinking of and that's are expect of those we kind I build coming revenue do of really and our start to of dates, deferred But that right? yet, and right? sort So, or characterize and starts would orders some backlog and And that So, to see topline how

James Fish

but-- on And Got $XXX table on free to cash far million that still the it. flow, just that that's I here? is million out, know $XXX

Rukmini Sivaraman

of reminding thank Yes, me for you that.

we are for below in chain. uncertainty can XXXX, respect the earlier are in XXXX, supply But anticipating exiting of and our we're the expectations -- to seeing we're So I what increased fiscal process as think you all fiscal we the imagine. planning

in our position plan for in we but So, more affirm specifically to QX the we earnings targets view provided now Jim, those update generally what I'm right XXXX do the to call.

However, I margin XXXX. I and profitable working think free fiscal worth non-GAAP growth generation towards and cash on to we prioritize focused and that -- will sustainable emphasizing say operating breakeven it's remain this flow in continue

James Fish

it's coming that what to of we should adopted? the primary Okay, would order add-on, third after are the but these follow-up modules packaging Thank fair are think are on How modules. My kind very guys packaging or being quarter enough. in know one, or that of or early, second about get two I be in especially new you packaging? new kind And third? second one into expecting package you rank actually timeframe new you. what the of were the

Rajiv Ramaswami

Yes.

initial quarter from pretty the that take been I'll last rollout at still our the if early, look Jim, one. was an So, So, but -- you deal of right? quarter largest they EMEA-based financial of good, services here Platform, by was the And has presented case, in use company. that pricing. of The Cloud way, new And it. Nutanix entire portfolio, the full right? all by the solution-based essentially this bought our It's

more couple seeing. things been specifically, we've of a Now,

our around Management to of of Nutanix seeing second, Cloud rapid this Infrastructure more new is utilizing notably First pricing higher are solution And power we solution. a our packaging. closure add-ons, to your Cloud attach and deals, question

adopted continues higher the products, in which portfolio see, the should velocity So, reps least our transactions and our an attach on packaging sales at our of expect we productivity more to and be to help partners. increased again, pace, new of solution

Operator

comes next Please Meta The you. Stanley. Thank from Marshall Morgan with proceed.

Meta Marshall

Great. valuations part any of be Thanks. of wanted adjustments kind And just seen some Thanks. But across you seeing in whether attrition, kind any reset a And as I of, stock-based just just just underlying it kind if business sales helpful? just that, there you attrition. you particular on stock-based on given and kind that you've seeing region as as of any lot in macro then noted planning a similar or increasing slowdown are just efforts names, that to were compensation of any briefly kind was given larger-than-expected of any comp retention of are making part trends. the would guys sounds of part is kind the vertical, of or clearly, core of of reps? touch activity

Rajiv Ramaswami

Yes.

I So Meta. think the on the first questions, – two

look, therefore There's quotas. focused of stock very on some includes of a achieve And to around first of overall, compensation includes, cash pressure enabling an inflationary has it's That salespeople much them course, compensation. quota-attainment. one, on that, it it course, price, and equity more overall focused clearly right? are And a the lot on On statement I is right? think

that's going through about the So, retention at better we of of them getting we degree because training, much or -- conversation factoring to it what helps that's I from that in better coverage our better some inflation there. in leverage ultimately, better achieving their segmentation, so, We're partners, work focused a it's forward perspective a shot And moved factoring talked has that on a into segmentation, right? overachieving think gives really This we and when quota, our also that models, them plans. have wages. are all

do quite for focused increasingly that the on verticals whether demand around say our the I any think, slowing believe thing and overall, other maybe so this with The that companies we especially in was that cash changes And some current environment, demand conserving talent, of in on would hiring back. customer Overall, hiring I But we should seeing is and which compete us. down changes need and spending. to and our are are sustained demand extent, is of on issues, perspective, dates reps start but focus ability these to well delayed that in we and the which delayed watching being it by orders any on against closely. supply the as demand seen execute macro haven't we causing a backdrop to some start-ups, actually and question, solid, I are second shortage notable remains demand chain we help forth.

platform is forms public legacy the by workloads, mission-critical digital transformation, and or including extending Our X-tier customers running databases fundamental our to into demand driven cloud. on of modernizing infrastructure, performance workloads and all accelerating

customer compared right, remarks, our that So, few during we a these. highlight wins about talked

Meta Marshall

Got it. Perfect. you. Thank

Operator

proceed. Chokshi question Nehal comes next from Northland The Markets. Please with Capital

Nehal Chokshi

you. start notice thank higher-than-expected you the in to Yep, quarter When sales did attrition?

Rajiv Ramaswami

could I repeat catch question, it. couldn't you please? Nehal, the

Nehal Chokshi

When attrition Yes. rep in higher-than-expected to the sales quarter as rate? notice you start a

Rajiv Ramaswami

in the quarter, the Very, very literally last late of weeks quarter, Nehal. couple the third in

Nehal Chokshi

Okay.

expectations? X% were and much I where item most headcount so Can year would to expense lower lower indication XX%. mean, XX% What's some XX% down us than magnitude I marketing that XX% below ended is analysts it you to where Is think think is the line headcount -- fair your and your I it XX% lower? it sales here? rep your the here be that was is? lower sales So, rep relative up give sales say or

Rajiv Ramaswami

have Yeah. not Nehal, are we we exactly where at. quantified

year. to let's going We it, And to where slightly into be. to back get next it – want are like below fiscal are it we call doing up where can we be we're would to we everything we

Nehal Chokshi

it. Understood. Got

The Okay. last question…

Rukmini Sivaraman

– The that I one add thing would

Rajiv Ramaswami

go ahead. Rukmini,

Rukmini Sivaraman

sales that remarks, if I case, was QX item got line million was to line in-person one sales about mention item, and Nehal, highlight referring marketing but this QX, moved that just that Sorry, my from to QX. supposed QX did in there wanted be enablement to want just the $X OpEx in I in to point sort to you in of the I were that there, within event add

now the in it point was the as not in we QX, but in gave QX. that's I number out for that well. so just wanted guidance QX And to

Nehal Chokshi

point. Yes, Right. good very

sales demand is a demand. from correlated where away then is the to weak there towards terms it of outlook attrition flock is salespeople tend And and to Okay. in weakened often demand a as where there

on tends there. pushback to natural correlation that that be out So

Rajiv Ramaswami

Yeah.

the to our a look, these right? a typically said, of terms give reps segmentation, in demand, also think, like I our The sales I – competitive, every go, of that. end-up We've ability this at IPO them ups, make right? trip sure riches. numbers coverage start hit again, of our that cases, to reflection hit sales can to refining right, think reps don't making focusing many of and number, is their believe reps going do right? to it's I part the our sales that I promise – had quick need's – ones our refining – is, in environment model, Basically, in

as well. And starting some is that, moderate potentially of of course, to point this at

to to anything them demand their don't for with – has go ability to numbers. achieve believe do this the So I the or

Nehal Chokshi

the Great. Great. you Thank for questions. taking

Rukmini Sivaraman

rep recall, rep with we past, thing productivity line other time. And expectations And I'd the was in that the to expect you our quarter. is in thing said add go up like you the to the – if rep over point in

productive in demand. to was expected, in absolutely ground deals. means line So ear we our and on what we which our closing that with the terms that in our bringing said, of are reps, keeping That

Nehal Chokshi

you. Thank Awesome.

Operator

The Thank Sachs. Goldman question with comes Rod Please from you. next Hall proceed.

Rod Hall

aboard you you to anyway. or for Rukmini. Welcome guess, the have aboard, question. Good Thank markets Yeah. the I with aboard

on billings and about could just us the that. billings about your comment. expectations more you follow-up printed range say bit I'm and if what million? $X on then renewals? had color to you guidance upside little of that I the triangulate And to is actually the wonder, of on kind you on Are from question. you renewals that. you trying talking ACV I then And I question so into a the a for deviation then I the kind have ACV So comment that, give more little could your first number bit of a renewals end if representing high wonder,

Rukmini Sivaraman

our talked side the just continues as in the the by performance, really new this this on right. we said, been not our said we call, well. to we And have Those to last I I chain largely impacted that so do on about supply QX are business our challenges we've in – appreciate quarter, predominantly to headcount. think and overall rep affecting they ACV And outlook. due ACV said, was we what Rod. on that. Yeah, we've emphasize said, renewals Thank said on as you, outperformance billings think I

renewals gives and doing which outperformance I don't well. quarterly we color new for basis, that said, But that, I all of the some So, you what split provide on a on won't that QX renewals meant ACV, said Rod. give I so is when hopefully,

Rod Hall

-- that, there. ATR, Rukmini. an the really guess, answer since little what bit And On more there's on were lower the seasonality then about guess than Okay. following modeling a seasonality, double for I ATR Thanks up was. it we would double we more little obviously, that a is And not just color quarter.

a ATR, on more quarter-on-quarter quarter of development quarter-on-quarter Is was this double ATR? in little for than that ballpark terms. growth the at look you next If what it quarter,

Rukmini Sivaraman

sure So, make I can understand. you

is exactly double in what estimate? your So,

Rod Hall

quarter-on-quarter rate. The growth

this the we about talking quarter ATR fiscal over seasonality, talk when about quarter QX, we're before. at So,

least And we'd I was of fiscal so and kind if we in little but than it triangulate I at just look to what we're kind at double the on QX, that. -- it's fiscal in more would QX ballpark over of that make the say like a sure QX, that

Rukmini Sivaraman

I double. talked is of the last -- we there where have and about into think, not double, than are There dynamics Yes, had on, right? it's So, The is, as right? not nearly Rod, not we is there's but that some dynamics so early said, that high. quarter going ATR delta growth does large. a it's higher QX I The also, not

Rod Hall

all selling with necessity Rajiv, along come this waterfalling I for with had it that to a piece back of hardware there on just any most a or quantify and new wanted of hardware there the you proportion of And not? to a how you're license to of -- Can to That's much attached you is stuff attach. I license? you -- can trouble software it, and Is it is the isn't -- the really Right. are ship Right. versus software ask to hardware thank that out. attached guys then the you to way

Rajiv Ramaswami

clear, So, I way, be the we hardware, not shipping are mean, just software. By to Yes. the a we're getting right?

Rod Hall

saying I'm with the new your a hardware clear, we the along that. customer license, piece be model. just of of software delivery know I to for to understand take

Rajiv Ramaswami

your No, Rod. understand I question,

to actually hard view that. it's for have pretty on So, us a

Renewals much. software, all are renewals pretty all, hardware, right? of are First largely independent of

on license once they to software people, likely renew that same they're have a from the So, go hardware. us,

business largely that is renewals by hardware and issues. being all chain decoupled supply So, the our or not impacted

it the new good to of customers of really, orders, buying right? out chunk. to some yes, new tied are those those a fact, down orders, comes in hardware, So, is And

it hardware is then of software them right, software to have they go and some in buying available, And just just hardware. and is buying may already run the

of much apart for So, on hard to It make and that. a it's tease clear us tends vary pattern to also.

right, the tied is have the to specific just we what be to be because impact can what in So, gets the a we significant delay portion saw other hardware don't a software-only you, tell I to it gets what But that the hardware, independent portion proportion of can we side say hardware. of the availability. hardware, of

Rod Hall

right. much. Okay, Thanks all very

Operator

JMP Securities. The with next Erik Suppiger comes proceed. you. from Please question Thank

Erik Suppiger

understand, Yes, migrate can thanks flexibility question. for to that your that customers terms different good was weren't Why choose had the platforms platform from just to chain in supply from. some the they constraints trying pretty able guess, have to another? of one I taking they I

Rajiv Ramaswami

platforms most good we many question. the is managing, across a this is But And exactly the look, that is, essentially, the had quarter, the flexibility. here we're we -- started were last what not people Yes. way, until with. problem exactly And this future by were And right? partner if seeing several

not most how not supplier and on. providers we it's our hardware of and go what running to that with, customers are issue, the want. It's it's a least partnered different across-the-board software get customers and or hardware an our like an with So at they our can isolated

Erik Suppiger

give is majority at the of you are solutions that sense? this Can us it hardware mean, a seeing I constraints? point

Rajiv Ramaswami

major item to it that’s different across not would supply partners It's are constraints I much all are pretty across chain we But issue And seems be seeing causing different different seem across providers. our say, in Yes. this. constraints all chain. different the just have their providers; to the providers one supply

Erik Suppiger

Supermicro? this largest the is is at And partner point still Okay.

Rajiv Ramaswami

business do smaller Dell, Lenovo. the us, players Fujitsu we with significant fair right, with a and amount And for others. do like still a -- amount HP. of We have business still at we -- very have but We fair then is Supermicro

Erik Suppiger

you. Okay. Thank

Operator

next from Aaron question The proceed. comes Fargo. Wells Rakers with Please

Jake Wilhelm

Thanks in what's Could competitive about in that applications VMware increased likes dynamics bit question. maybe Hi. a talk the for not Jake and maybe confidence the is This cloud. public you're are landscape say, Aaron. the some the versus you for little giving or on competitive a you others of shift seeing

Rajiv Ramaswami

Yes.

we rates, win solutions. improvement -- a as So, first in as well rates against win all, competitor legacy both our year-over of our year of in largest in actually improvement XQ, terms three-tier against saw

more actually we So that that. on is think focused much well, I going And right? are

AWS we to -- changed we've the And don't the people recently. Now, is think hybrid the that's applications, I that, also we and and cloud to of but think in I cloud changed, with at be are we so, the of solutions has for don't the mean to continuing a use looking And right? are itself, in there showing, but cloud multi-cloud they're dynamic for respect new that moving soon mean, been have running right, while. some the And right? also dynamics we and a to participating don't the that world everywhere, -- are examples I where in with significantly any Azure. sense workloads right, our there been in

journey cloud that in participating as customers. well, are our we So with

win side, continuing have seen would on on that changes rates front. the any haven't been to say, we I year-over-year. So significant And our increase on-prem

Jake Wilhelm

then, Okay, great. a space? remains visibility? strong. having maybe you follow-up, about visibility, What as just major you Are demand especially noted pretty any enterprise in guys in And the changes

Rajiv Ramaswami

visibility in in it part when orders? And how the going in compared the worse it that, that going quarter right? been is don't of think pipeline, of a we is, start And set come biggest question realized is to have future the That's with around dates. what have is know, part much opportunities we -- this quarter. to that assuming I is that getting to be we actually when last

But changed. is be demand the can demand realized the question perspective what not on, So, point with -- our hardware fundamental the really. these has like issues from fundamental

Jake Wilhelm

Thank you. Great. Okay.

Operator

comes from question Raymond proceed. James. Please Leopold next The Simon with

Simon Leopold

adoption to Thanks opportunities I for as and customers potentially the taking the cloud to be public make question. essentially thoughts of facing not who the these your you cause for or kinds accelerate that that to whether business circumstances had public see cloud just reduced, is, some does wanted will if adoption? you for of out on-premise regardless if building they're challenges, supplier software of given the datacenters, accelerate

Rajiv Ramaswami

Yes, that's a good question.

with First their I also own. to of will to cloud is our all, issues, initiative strategic But public right? also for say a with customers. think second, providers that They I cloud hardware have have deal deal

move are run and on get for way and applications. been And be prem, the customers about that of customers going systems run to applications can't out simple it's public be right? going clearly, them we lot applications platform, them in And they a do going what largely, we run Nutanix – applications reasons people those platform, just that have mission-critical And the right? the have So, run-on the to to reactive available they what or They in public using have the to are they to right? in yet, figuring have do also so an manner might are very the for with cloud. to and what that's And public to good they cloud can temporarily to they right? what we they cloud, new they they want the move cloud. customers because not decide cloud seen cloud. hardware might thoughtful So quick on-prem, cloud on-prem, for record seen decide our haven't on-prem And a are provide our so, they platform, of they who applications. hardware, a Because happening haven't

locality may have issues. or So, they data privacy

for thoughtful. easy those not cloud, to it the right? of to take and been So, just them they all it's public take have So,

measure of the they So, can't is this hardware seen a question, reactive cloud get the no, to to on-prem. haven't people more because going answer we as Simon, I public your think

Simon Leopold

you Great. to about developing as but sales your reps, which essentially more take the follow-up, or a which trade-off you're trying experienced for more about process? reps, How in And you that do alternatively may the cost rebuilding and reps, new do grooming sales money rebuilding thinking then about cost less, think sales potentially hire think time. when strategy

Rajiv Ramaswami

Yes.

both, other. of think one I combination it's right? I it's not mean a or the

career people the become many with there’s with clearly are combination example, as accountant of of skillsets. a graduated inside So we people own development. for year, to sales having and the of part we Last experience our their

And so, that and our we thing them provide there them a taking whether for done taking have potentially customer combine and the whether sales, are opportunity inside past in go another on rep success, with from, a training they road to to people as account forward that's career an to and hiring. they're

together, both it's you So, taking questions. Thank for other. or Great. the one it's the not

Operator

today's well today's your Thank session you. disconnect as Q&A call. joining. lines. Thank you That concludes Please as for

Nutanix (NTNX) 25 May 222022 Q3 Earnings call transcript