NTNX - Earnings call transcript Q4 2022

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

Operator

Good afternoon, and thank you for attending today’s Nutanix Fourth Quarter for Fiscal Year 2022 Conference Call. My name is Amber, and I will be your moderator for today’s call. 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 now have the pleasure of handing the conference over to our host, Rich Valera, Vice President of Investor Relations. Rich, please proceed.

Rich Valera

to fiscal call year fourth welcome results discuss XXXX. and our of quarter afternoon, today’s to conference the Good and full

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

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

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

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

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

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

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

will September be Technology call see at many and Sandler Sachs Growth the Lastly, Goldman to Conference you Rajiv. Communacopia with Rajiv? XXth, hope turn Nutanix and in the events. Conference participating and the these to that, I’ll XXth management Frontiers And on September on we of over Piper

Rajiv Ramaswami

a to Rich, We provided our and third Thank than afternoon, and in expected. continued delivered the guided our Supply had a quarter our fourth Against chain we performance outlook good while were you, we updated partners, relative all macro better quarter renewals good everyone. have exceeded backdrop, call. volatile our on we constraints remaining saw strong the with in quarter, metrics a business. challenge significant server

their aware businesses, with backdrop spend Nutanix macro to are for adopting operating modernizing incrementally the data fourth solid our has grown we businesses that While Cloud continued we centers on digital in multi-cloud challenging our see for and hybrid Platform to quarter, continuing transformation, models. demand more many

better-than-expected that our enthusiasm bookings they complexity of spent well as renewals I well of aided strong and above deals quarter, resonating support IT and to our relative environment and quarter, the expense better business. flow performance management our billings conversations the achieve expectations. free reducing in our meeting of focus a outperformance the by at positive drove I and substantially with received. which with customer us customer cost have our on by view our fourth This look the number energized person. than strong and quarter, Top-line products Nutanix expectations, These diligent fourth of time was on delight a continued unwavering the and customers. by Taking reinforced linearity customers obsession revenue face-to-face helped with the my During on a is in the as struck expansion delivered road, was their experience guidance. large closer their the cash our lot engagement overall outperformance, we for

better headwinds Given model we provides FYXX the our the subscription business its on that believe largely in supply progress transition. fourth chain-driven quarter, entirety made I affected looking our at of a picture

XX% Specifically, we saw XX% growth in FYXX. ACV from to year-over-year, billings accelerate up

operating X%. We points by XX year-over-year to improved margin non-GAAP percentage also minus saw

entire first Finally, the the XXXX, cash year. since time achieved fiscal we flow for for positive free

important progress with other strong our we product our pleased and continuing financial leadership our these partners to and simplified portfolio, our had in in FYXX. customers enhancing renewal Beyond reflected our accomplishments, scores as I’m our with Overall, achievements, including performance. high launching and performance making progress financial NPS team, delight

as Nutanix plans core customer to managing enable workloads. AWS of utilize bursting largest our their throughout also while to for of deploying enterprises Cloud and broaden a to Platform their some noted, by of see customers, into of Nutanix in bolstered I Database able cloud As this fourth A land databases and Service was was on our NCX million a with existing Cloud solutions Fortune double-digit the Platform both deal order adjacent as are the of dollar with in to a who and on their broadening deals public usage services Database an areas an is how good use and placed number Nutanix storage, a quarter world. as adoption we the XXX example expand a their cloud customer our This global Service example financial organization. large of with management. increasing their customer expansion such firm great their expansion including that We Nutanix-based standardizing

providing to EMEA-based full cloud. looking a also Nutanix services while to They scalability, Unified Our chose seamless Cloud public was Nutanix and to as infrastructure largest performance well storage offering required future needs, growth management aim great full for Cloud They Storage to quarter as our the modernize path new with of adopting access of we’re Database the customer database win automation in its is and Nutanix with an their that provider This support resources objectives X-tier our financial improving Nutanix simplicity as their added built-in Management benefits due the a stack. also of example and and Platform Service a respectively. customers automation for for Infrastructure seeing stack win Service. the

during excited for significantly that product the of which front, progressed our on we will NCX announce On preview broaden quarter public the were customers to pool offerings. Azure the cloud to

of our that Azure customer applications to and of of simplicity, first into Cloud One due onboarded to is based has global for leading management business-critical all cloud choice. Nutanix SQL Platform chose Nutanix travel customers standardized on performance, the seamlessly workloads. ability of public NCX and brewer its a its in our burst EMEA their to ease This

recent data on a focused which fourth demanding Go-to-market one development of comprehensive database services business-critical release leverage progress applications. we and during for release quarter. investment product our the on platform. security of priorities, to feature-packed front exciting improving required our and was workloads my see the AOS and with continued continue has and reflects in this X.X performance, features innovation X.X, and Another integrated Release top partners is

to wins our workloads cost running Platform, a growing Platform have of that with solution in show including whom Enterprise OpenShift central Red EMEA Hat offered Nutanix we their to of a by joint critical to a Our QX partnership region on joint Cloud resiliency, Red One Hat, of Cloud X-tier business ownership the number good continues Linux running competing of country example a is Nutanix OpenShift total due bank our scalability both, the for in and AHV reduced a shifted with solutions. on momentum. applications and from win Hypervisor Hat Red

GreenLake Year. are be see front, this as view Ecosystem with were with the we growing the testament opportunity HPE. partnership about our We Hat. XXXX on Also named Partner of the to award growing Red to excited We we a pleased pipeline partner HPE

on Now leadership sales our transition. to comment I’d recent like

company, over pursue understanding for Chief developed President Andrew has and Revenue as Operating with model, another and decision appointed strategies our go-to-market Delfino’s leader our years, and been opportunity Worldwide five Officer. deep Andrew business Dom Vice as as recently has new a Following our August with Xst, an we Brinded to technology sales on Senior operations. Officer, most of sales a Chief Sales us

leadership, the of to provide its thoughts Our Andrew’s sales under I’d working in forward him in and excellent and place In look closing, on take profitable outlook. that some broadly, I to with we’ve our to organization role. new priorities I feel stage More hands Nutanix team in next closely like to is his growth. confident got

on to this, diligently levels. our judiciously driving towards sustainable, remains renewals growth. priority of the will business, base of execute overarching the our manage we in growth continue invest To First, growing expense and enable profitable

our a a of headcount continue could towards Towards review this reduce decision made part and with operating other a to reduction to a actions, growth drive is number comprehensive it of we business by we our expense macroeconomic not important of approximately of model to difficult we lightly, that made This scenarios. variety end, ensuring decision our X%. but and profitable was as in along

companies to them cloud continuing We seeing challenging reduce the to hybrid these to platform, of also is further complexity as optimize cost and for providing which digital macro strength our playing believe their backdrop spend. environments. we’re prioritize However, their enables IT and transformation multi-cloud see businesses dynamics the to and the of IT incentive

be achieving Rukmini and and Finally, operating management. income a We of cautious positive of FYXX positive expense FYXX. and strong Sivaraman. to a line We And to the that, flow over through diligent with top optimism. do free us growth this it opportunity the Rukmini? we hand continued continuing in sense of enter and with see non-GAAP plan I’ll about combination business to remain confident excitement ahead cash

Rukmini Sivaraman

million. ACV last came call, due the million from Rajiv. expected. than few fourth our ‘XX earlier indicated large $XXX also The month. renewals forth in which in of were $XXX outperformance harder the QX that better to bookings fiscal a both, new Thank better you, was benefited set to are and of $XXX ACV million, deals, our The had in billings range earnings coming as forecast. for above this than QX we guidance quarter to expectations

X.X XXX. contract X.X in our in million. flat around end to were at was $XXX and million, years years QX for additions year-over-year. QX, $X.XXX XX% from billion of grew Revenue range Average in duration QX guidance ARR million logo the $XXX was was QX New $XXX QX. above of

with guidance during as QX as our expected, our described guidance. start assumption but on and relative forecast. orders key in than last QX of in larger call, the it a As in billings was This This our high dates revenue ACV impacted performance ‘XX, also higher a impact to as was percentage revenue. earnings with came not percentage future positively

in our in factors: two, management. forecast. than XX% expected better in QX. rep have use from revenue. and in expected future days our billion, our a server positive slightly loss impact linearity QX higher Non-GAAP QX three than from we of and million, was million, one, cash server of DSOs days from partner was orders guidance significantly coming historical line in linearity $X.XX XX.X%, $X.X no better had of than largest or QX good billings our net at our XX to in million in QX driven in challenges and were better start supply flow than $XX at While XX cash. range $XX We significant per other was productivity while our of share. previously $XXX than than This because of closed range did expected margin was $XXX $XXX expenses Billings partners. and percentage significant quarter by down dates with Sales a came QX, billion chain see of expected almost was operating $X.XXX Non-GAAP for with Free bookings cash was higher for diligent we equivalents expense guidance linearity; QX better with million ‘XX. during XX% the expected; in Non-GAAP year-over-year billings to million. gross QX than increased three, in QX. and QX, cash up of higher from

‘XX growth to year-over-year results. ‘XX. XX% fiscal year Moving was ‘XX full year-over-year year XX% million, fiscal year representing strong of in year $XXX billings of in compared growth ACV fiscal to

while grew renewals billings our expectations, challenges outperformed below year-over-year our came QX, identified the ACV in to due billings New in largely but ACV expectations.

billings share to more and new along renewals a As the we no total around transition subscription such between ACV breakdown ACV revenue plan as model to billings with with fully longer guidance, ARR, ACV disclosure we metrics and billings.

XXX%. of time fiscal largely of than be year retention to thesis better positive Our subscription million free year-over-year, non-GAAP Non-GAAP ‘XX. was saw greater diligent rate, expense fiscal ‘XX. went range. the to free our in fiscal and for was or growth first significant since around year our We business and and than target ‘XX the XX% due year $X.XXX or impact year was free of generated double-digit our grew in XX% for to since fiscal model to XX% in retention margin negative year first our expected approximately meaningful higher flow the flow ‘XX negative GRR, gross greater ‘XX fiscal operating and billion fiscal our rate Fiscal performing operating Net fruit, future gross in ‘XX year year with for year flow increased since at of from as the for management ‘XX continued within the fiscal fiscal start for journey. for year Revenue as year. to QX ‘XX was in around subscription start year XX%, XX%, despite cash we ‘XX positive expected. ‘XX, a dates start coming approximately beginning of cash the than journey, We delivered of $XX leverage revenue renewals margin guidance subscription year the bear X% cash returning

and demonstrated profitability. to progress of top couple we continued have growth year expect to over steady line As towards last years, continue we make each the

million QX $XXX year-over-year X% guidance The to the million, Now negative $XXX non-GAAP midpoint; at ‘XX now XX% of for of midpoint; guidance. revenue average $XXX approximately operating of turning QX $XXX of million; weighted of QX with million at shares to growth follows: context of billings non-GAAP $XXX approximately million. million, gross ACV non-GAAP margin a as is $XXX XX%; year-over-year million growth margin X% our provide operating some outstanding to of guidance. of $XXX to approximately the around I’ll expenses

has that QX First, that It the to to stay chain QX top-line the approximately U.S. ‘XX. given lower QX a compared would same seasonally also in that typically slightly supply assumes QX remain for assumes guidance contract dynamics is down contract flat ‘XX less to federal which ‘XX, or durations strong more QX duration. compared quarter,

detailed about stated expect estimated conducted profitable reduce letting this we part our with Earlier our driving of headcount by annual we go line the which million of of planning towards approximately as headcount our of our to result in Second, in difficult $XX million. annualized reduction employees, sustainable, made X% month, $XX to to process. we priority of growth, XXX expense reviews expense total approximately decision

reductions in flow free million to related ‘XX be around for $XX severance onetime of approximately Finally, cash breakeven factoring the after payments to headcount we QX QX. expect in

for QX flow Excluding those million. would onetime free been expectations cash ‘XX have $XX around payments,

the of non-GAAP to as non-GAAP follows: billion XX% full midpoint; year The $XXX X% growth of approximately year-over-year Moving $X.XX midpoint; of of is billion, the to of of ‘XX billion. million, XX%; non-GAAP approximately growth $X.XX I’ll to margin now XX% ACV year-over-year revenue $XXX some fiscal gross million to billion with guidance. guidance margin billings $X.XX at provide expectations. operating for color expenses on year year our at $X.XX full operating of

fiscal slightly year supply also decrease start actual ACV orders The guidance of and more dynamics compared ease future year. with would year to reflected through first durations ‘XX. chain ‘XX or that in date. ‘XX revenue fiscal are same than contract to dates the growth billed the expected of in recognized that billings assumes that quarter would year be billings, Growth start our remain guidance only the because is to the First, the to half less start would in the fiscal modestly can half in assumes fiscal revenue revenue greater second but ACV in the be begin license of

Second, macroeconomic the considered our solutions solid, uncertain for has while environment our guidance. in the have remained we demand

to flow $XXX free year million expect for ‘XX. we cash million deliver fiscal Finally, about to $XX of

free target half excluding the onetime reiterate year being to as the fiscal stated happy previously flow the also ‘XX, are positive payments. first of We of of sustainably cash severance

add some year color to fiscal XXXX to on expectations. Moving

expect in revenue, around to to of We ‘XX year $XXX flow fiscal be free XX% cash cash free million representing least in XX% margin at flow.

questions. operator, also We make steady becoming for continue please the year line expect to towards a driving XX to With margins. progress up Rule that, of each by and growth company open

Operator

[Operator from Instructions] comes with Our James question Piper Fish first Sandler.

James Fish

leadership of on number? back guiding the reduction into guide guys. for especially for revenue how really kind the back bounce million ‘XX level, flow fiscal And headcount around year, And the much fiscal of know in in little good lower though, your chain the congrats good $XXX to the easing versus that much in in the and fiscal half that And that out supply reiteration million your reduction flows you of of the fiscal hear at really that dynamics for lower what’s macro, capacity second in really Rukmini, sales on confidence you’re change Hey, in quarter QX that really of Thanks had ‘XX to that a talking well the and came that the upside a that. level as the the QX fiscal I would, here of $XX about year. driving bit. as prior the that theory, quarter cash a fiscal ‘XX, and how on buy into questions.

Rukmini Sivaraman

Jim, question. you, the for Thank

maybe how about little ‘XX. me year fiscal we thought context around share let more So, a

that So, drivers there we are few considered. a here

talk we business. and think revenue, our new renewals about our about when we -- expansion both, is First, there and and billings

about renewals. talking first, So

well. the expect about we the ‘XX renewals, year a well. in perform renewals given growing talked ‘XX business strongly base continues really fiscal renewals renewals before, significant the to we’ve ‘XX. of to And expected to as from contribute of growth grow And majority As

We’re and when the expansion environment. And the exit of ‘XX QX business expecting business. I environment, backlog. -- also and new growth year to conservatism that expansion the it’s we with comments where factored relates macro and that’s But then, fiscal in around levels macroeconomic we some as alluded it record to new the have in in did

renewals expect us of And the talked think around that we’re year factoring healthy well more stay ease updated chain, the And And risk first keep But half modestly to the and in reduce to from backlog that fiscal ‘XX what or helps and so, the in into forecast. we we as position, less for then that especially same everybody the as half. go see of all combined, chain strong the the guide. will start maybe as we supply evolve, second we quarter-to-quarter. and again about, I here supply could and to Jim, sort related we’ll

James Fish

was sense. obviously, conference announcement. And in version, of Makes given functionality competitive that know competitor? to landscape how competitors Are and up I from that Rajiv, an primary what and terms that already concerns your it’s does that having around change XX announced, versus the then, VMware? I this only But new continues updated your color. in hours appreciate Nutanix a actually major user seeing and Nutanix week you differentiate stack been their release

Rajiv Ramaswami

there, going there on out VMware more a from as result level Yes, open they’re to of of couple higher first. and with what’s definitely points give I’ll you engagement customers Yes. is there discussions a of us. a

career out for seeing new more there opportunities. looking talent -- looking also VMware from We’re

feel at portfolio very point. portfolio respect is with we good to the Now, our this where about itself,

platform from number X We’ve right? if from haven’t complete problems products fundamental actually. look our simple, of and a these We really simplicity. to put differentiation, cloud solution different make very you one, the it’s or assets really, have beginning build simplicity. We together we And the beginning. the a lot That’s provides -- at -- that platform engineered X a

of provide freedom we that choice the is in. second no customers, to The our lock

support the customer our focus manage our of last terms delight, more is for data. on these architecture we in The and which even how now about how the third long bit our we all And days of customers is term. critical forms becoming is

So, from a portfolio. competitive portfolio very perspective, we a have

related Our our large our win our to both, X-tier against competition continue increase as legacy competition. rates to well as competitors

good about side So, we this. the pretty feel product of

Operator

Rod comes next from with Our question Hall Sachs. Goldman

Rod Hall

come some to full just of and that. is in I question the the sure the of I million it quarter. guess, guided impact make total or for you the year, is, that cost to $XX and have reductions I have savings a impact of timing what back proportion Rukmini, on how I it first you. million that’s to mean, $XX wanted about kind understand that whole I follow-up we to total the amount the is the then a talked So, quarter? my of impact Thank

Rukmini Sivaraman

for question. the Thanks

So, And are is annualized through most million expected $XX to the savings coming are we several headcount complete. of reductions. from million the $XX the those notifications; the reductions of

still we’re and all there However, that a some to exits due as global and are are we know, company, so happen. notifications

expected to in most largely to for I is sort we them And QX. by to said, but expect a are $XX Rod, QX. QX, that million but that of outstanding are annualized like have complete We be end number, of few the them complete be an million $XX then, of

Rod Hall

Most complete QX. in

Okay. Thanks, Rukmini.

So, then…

Rukmini Sivaraman

And the question. your finish go -- yes, sorry, ahead,

Rod Hall

please. no, Oh

Rukmini Sivaraman

annualized was and margin that just can guide to that imagine. operating as operating the of to $XX million, going you Rod, $XX in million expense I factors add, course,

impact million to actual annualized million and $XX So the that factors number. the in is $XX

Rod Hall

a even is given indicating quarter, of of Okay, doing quarterly what that you’re of not severance much this is just this, number that million, $XX great. the the balance of about curious you’re the and the thing in kind maybe or one X, is number if kind I’m quarter, U.S. it’s number the divide here. by suggests as overseas, severance more Rukmini, savings which was that the high going so but why and in is I other And $XX the I savings your at annualized high take to end the of million ask

Rukmini Sivaraman

Yes.

fully number And it So, a it any earnings I that priorities the to bonuses action what where loaded mentioned a is that XX includes like that, the right? for depending the it salaries, to right? don’t is to to, loaded So, of versus I number. the decided we XX to of alluded approximately So, we benefit, fully XX number, -- payroll is all it year, we’ve global optimize $XX a includes includes we’ve taxes. a or includes kind million our XX we’ve want on-time that full include of to or and as It’s taken, sort invest on seen want in certain -- areas.

global providing not assume breakdown I’m So, fair sort that think geography, a is I a but of it it by was to Rod, action.

Rod Hall

Great.

helpful. than very to much better well. what the really cash reduction here, the and as we cost That’s Okay. see good flow you. Thank expected It’s

Operator

from Pinjalim comes with question JP next Bora Our Morgan.

Pinjalim Bora

have Are not like a seems some be any much you but factored helpful. billings on ask you for It close there took to better quarter, here. that you business, elongation Congrats much of context business. into understand great the again, exactly assuming? you I’m the than renewals seems the to might guidance. like conservatism rates sales ACV I about, just assuming you trying expected you assuming cycles? new wanted deteriorate? to Maybe are would Are what into

Rukmini Sivaraman

the for Yes. you thank Pinjalim, Yes. question.

So, assuming beyond of what on guess, not we’ve we’re anything actually renewals, sort delivered. I

your and business far, some we’re Pinjalim. on continuing performance Again, what assuming impacted in new renewals the they’re -- I continued So, solid way be will to business, expansion the the is renewal in And we’re supply assuming be to that want question on this chain. piece, by business. so seeing demand clear

elongation. so not it’s much So,

like We so or haven’t cycles that in seen deep elongation anything an far.

the expansion they growth and be may will conditions, So, by be assuming business should new macro that impacted -- effectively we’re in happen.

the So, talked point. backlog for at about of piece that’s the number. right, ACV last this factored when I about And year healthy backlog full that the it’s piece, the what billings -- a thinking we which is sort in guidance

stress of sort about additional an ‘XX? reduced thinking us gives it fiscal of benefit So,

Pinjalim Bora

question One Understood. for Rajiv.

pricing in year. introduced packaging the and You earlier the

you adopting adopting guess, have in acquisition full starting I some You a largest your noted of the sense? change backdrop, are conversations, as customers Nutanix seeing end-to-end more of especially strategic -- you customers with kind broader of Are in turning one customer to Nutanix. a any meaningful with

Rajiv Ramaswami

Yes.

I think engagement level customers of terms seen definitely good this of what I’ll potentially open, a and What much higher in with course, is question, more a they’re Pinjalim. being say -- it’s happen. much concerned is might we’ve of

And so, the level of for gone engagement has up us. definitely

to terms in how some quickly We from will [ph] assumed this this look in of any do ‘XX what fiscal this assuming not our for -- benefits outlook. we’ve as and they’re alternatives. customers Now, benefit meaningful on stands see long-term expect from action

for Broadcom So, that’s situation. the what I would say VMware

sense that It’s of are -- we’re to upsize in terms helping in deals we the question the portfolio. portfolio Now, good being more seeing on the itself your of new consumed. portfolio, the certainly seeing traction portfolio definitely our with

especially of a For Management example, Nutanix Infrastructure. seeing Cloud Nutanix to level much Management, Cloud we’re Cloud attach higher Nutanix of

using grow larger upsized some our now, which customers deals are makes and so, with also contracted of portfolio, more has potentially the faster. deals these we’re seeing and the And the new being portfolio of deals actually

Operator

comes with question next Our Morgan from Marshall Meta Stanley.

Dave Nwokonko

for on Meta. Congrats on quarter. Nwokonko Dave the is This

Just was sales question. part follow-up with a the the wondering I major And CRO you’re transition, a transition. as changes of have organization then, I that if any seeing to

Rajiv Ramaswami

of He’s he’s Chief so, years, No, Andrew, our been region for to think, roles. for been variety subscription five over time. or throes us a period the moved had He Andrew also most Officer has journey. so inside Brinded our EMEA I And with of And Dom made -- some the been look, of we sales. used importantly, last of Yes. run the for Andrew he’s our CRO. in new sales he’s on, as actually year Operating

of And sales so, the he’s organization. the transformation driving entire been

very he’s We’ve -- very customer understands understands So the good He got well base. continue he and a understands to our He hear portfolio. set. product business. the

a smooth very transition. been it’s So,

last excited person kickoff first And we’ll left had super The just and week. years energized thing we three say, annual our the vision. sales in XXXX in about team other the since

invested enabling circular We lot what we reinstating also go a sell. training And call to highest in performing and for annual, our excellence salespeople. them we’re also our

in in we’re all, a from I perspective So, all into going think FYXX. a good place sales

Dave Nwokonko

Okay.

like sounds than that? below really it any not other So, Andrew, changes

Rajiv Ramaswami

wouldn’t I We’ve person enterprise came team. VMware -- that. for that. us. He their there below He brought no out. No, Americas We’ve changes there below on now Americas for are got as lead new was run changes it say some over from to the we from turns business are and

changes there been underneath as well. base is of and sure, a for knowledge have lot there the So, but of continuity

leadership very sales So, the at about place and deeper inside level, right couple below organization. in feel Not just but Andrew’s also we the team of now. that’s a good levels the level

Dave Nwokonko

Okay, then, guess, the quarter? last has mentioned new the productivity some And bringing estimate reps great. of that just line? seeing on, been an that do able you’re to I you that to their happen spend And have, turnover you time of

Rajiv Ramaswami

Yes.

quarter, see I the think retention in rep did our improve. we fourth

do drive levels quarter-over-quarter. was headcount our productivity. Our continuing sales modestly the on side, rep flat also current In FYXX, roughly expect grow to rep to we headcount from while

We’ve on focus significant segmentation in. talked selling. new refined our is about going We We’ve productivity. there So, portfolio. our talk solution about rep a

they’re training getting investing sellers the through and enabling We’re in leverage our and more partners.

which and it’s all that up going combination, been productivity our improve consistently. of So, continues to

Operator

with from comes Cikos Needham. Our next Mike question

Mike Cikos

you that greater-than-expected I question, parse help a have to growth through that of number question deals. to the well number top see, the then they much as sense? guys think And attributed guess want the that think expansion me to come could of think through How of just renewals Does prepared my team. for about see far reason quarter? base. the guess, keep here large and our here. that us forecast in different know first the getting those us strong performance on. quarter And line the in in contribute this in initiative on about when the as pressing did development large for versus renewals? your it you this I partially remarks, the secondly, Hi, talked from I those renewals upside you as I large -- is growth help just -- for would expansion potential to just components expansion this as that was a greater might quarter, deals I guys And strength that what Thanks make first, deals the we wanted

Rukmini Sivaraman

Let me you try Mike. and take a shot Thank the question. at that, for

So, talked QX. last the in undertaken for about change of were we business in of in last sort And much factors the right? the we’ve we’re to model, a that a see remarks, led years outperformance. to that and to more right, something how there that’s quarters, and renewals us few including all we alluded the over It’s bear fundamentally -- you few operate, starting QX, as that initiative. than So, it’s is several fruit, that to scripted

the on new not renewals deals outperformance expansion we did to really and the So, side, come in large the really The those contributed were renewals expected, expect ACV but so on the side. than and side. on continue. referring they much performance we we were And to better that the side, to expansion new are on

year we renewals QX, on And ‘XX, perform. forecast And to continues greater with on. entering as only our when our to, sort at Renewals, of outperformance. talked about that kind And are business are all alluded you GRR so, of the based know of renewals to And we’ve our look more a of into as in ‘XX I sold looked is generally thing those level backlog. what we healthy we the is back think renewal. really remind We will about, I customers. -- for also add when we at So renewals for fiscal I’ll forecast is target The that’s QX factored contracts the is I -- business XX% we’ve right? built up what sold, already or what is already our range. for

ACV just renewals growth. we And we Rajiv talked about forecast have sales on. predictable productivity in so, and as out continued that is new look very so to ‘XX. to And invest rep

‘XX And of assumptions as environment. to somewhat that’s moderated in new we’ve grow so, we do well, expect uncertain -- but in fiscal the ACV our macro light

for but we’re that realize, hope helps. not color here, it quantifying you Mike, So,

Mike Cikos

through year, I question, just providing I going if there, predictability and with detail philosophical it’s seat. maybe CFO you another I some this I team. you the when Thank for turnover, in But with our just past obviously, important about been more of in ask We the especially sitting the management the perspective. has think there does. definitely think when on about new now some business, have guess more our could we’re renewals very that It thesis side. If

at we help talking the the new call. you this point, Officer, been pieces We looking that’s flow think most Chief cash the articulating this have at Marketing target? now that in think guys for the also Engineering, Do new team of announcements as the parameters we’re Nutanix? free on year? Revenue just Head team fiscal Officer which get set this a the Chief leadership those recently, guidance we were we to through Is at have Can about ‘XX us the this place targets going have you about when around us that new to

Rajiv Ramaswami

in that phases companies market And me public be cycle, looked company. through there’s do that, some quite here. the natural -- transition there transition take terms is we these strong question -- for their to think life capitalize execs. we’ve we management. also as different as Let to talent a in of And and on it’s The in

on domain right, focused have that well, we an caliber we that hired some the believe been quite knowledge that have promoted team we’ve us brings within. stage growth. where we’re the significant So, serve that will experience about we others for and point have and from executive this profitable We that next talent outside from our of exec at excited

some evolves. like that’s, very of think transition so And natural said, as I company -- the I a them,

Operator

question next [ph] Our comes from Jeff Raymond Koch James. with

Unidentified Analyst

the how specifically that -- specifically -- with all on cuts? can then, that. cuts, on of think you there reinvestment have missed side? follow-up. Sorry So Is that the sales some the you you I guys I your targeting cost a competitors it G&A? do you those is on And coming there, some And if are where an opportunity

Rajiv Ramaswami

look within a was then across at just sales, and but rest majority areas. mostly function, other course, every look of every high We, the Yes. of non-quota-carrying the sales course, the we functional function view. I’ll salespeople. give then, it in And you benchmarks the of at and all And impact marketing. was level was across

Unidentified Analyst

Okay. are macro that holding can seeing point up there And like, to secondly, are verticals the then just given weakness, specific is strength that better? you you where the

Rajiv Ramaswami

are products broad-based. Our fairly

single NPS any course, of to good satisfaction already mind, be sold business base here. keep to point But we’ve very we we have higher customer a renewals renewed needs the is can’t in renewals I rates renew that renewal the that vertical given have. we that with So, provides renewals. and already and of a and And a strong And the business, foundation. score

So of foundation. that quarter, good -- vertical, in a great provides question regions, this we a strength particular saw good We, some strength very saw your We verticals. course, in as financials course. last to of on

out. so consistently East has high-performing -- while, that region but Middle our a for been a nothing think stands I

Unidentified Analyst

maybe more And I one guess I’ll in here. put

you think VMware where is optimistic about? acquired? seeing, are engagement most higher you That’s biggest opportunity you it. what guys, specifically that this maybe you can talk given Like, for with So, the getting you’re about

Rajiv Ramaswami

and on the No. are this where news think and relatively on we executing portfolio that very market in look, in a Again, are already of before are with we’re and doing this. I terms well we came focused even -- we and gaining share

uncertainty on news who they’ve broad could And what’s happen. customers right? there’s Now more And They’ve to are that just more all said uncertainty, all concerned about -- the with seen means public world, our happening. equates coming just there’s potentially to of base customers and the consider have heard alternatives. public. it’s -- what a risk across consider been this And more board, very what’s customers risk -- in which means

And tailwind we’re long it’s result in I comment premature so, I in in in in any a in little to see. that But that’s we FYXX not this think term, what And we’re too from planning. some us. we for sense like what for the this upside this should guided what on major said and earlier, factoring the us

Operator

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

Dan Bergstrom

Hedberg. for It’s our Thanks question. taking Dan Bergstrom Matt for

On you challenges, was the the sounded That’s supply noted the quarter, Was in about tracked to a or started the timing that. quarter, great wondering consistently quarter. this gradual improvement there through thought, expected. supply better Last you -- it late just very improvement than hear they like chain chain more than quarter? was better it of of

Rukmini Sivaraman

for question. you Thank the

Rajiv Ramaswami

ahead. Go ahead, Go Rukmini. ahead. Go

Rukmini Sivaraman

general want expected. saw, chain to as QX. add can to to QX, it did Yes. I in important did in just didn’t to in, I’ll in in. quarter. couple percentage clear the was month last it’s bad the that get date QX. thought, the have, that worse your more throughout as coming sort right? think going relative do be quite weeks and we on of practice, an you QX quarter. supply bookings of we I question, start, start I get It think your we we point in future just actually as was orders of challenges that see last QX came increase do that I the out in as of play that the a would our that improve question and say, did relative with I Rajiv, to linearity we in say To be not and how It of

So, that’s natural linearity. a

all going that tend does of it So, well. to the as to trends are -- reflect

come QX, we -- saw do QX. weeks, percentage higher wasn’t with drastic want quite I out in, as terms it a of we more gradual saw dates that. say the wouldn’t couple than So, in back in QX, as it in is was than was loaded I point in did it start it like see of But of in we but QX, QX did last that to sort as end we so

Dan Bergstrom

the Thanks Great. clarification. for

Rukmini Sivaraman

linearity maybe impacts. alluded the add QX, my I’ll is Yes. in things that flow, point as to the I better more helps cash as like for one to overall remarks, free which with was which well linearity And

Operator

George Wang Barclays. next Our from comes with question

George Wang

two the have Hey, quarter. Congrats questions. I guys. on

usage subscription? versus software companies consumption-based sort and versus more the is look which question adopting on model at more is based fee-based. you thoughts If consumption first companies, base, any more other of The on are

if curious just guys consumption. existing based you have just on So contracts

Rajiv Ramaswami

all of don’t have We would yet. consumption model. I do that here at we say Yes. by much a subscription way

Some that consumption-based deliver there of course, service. our partners, and take of

selling a example, managed growing as that business. very I we It’s have small. business but really, small still business. that provider -- For service could hopefully the call incubation it, be a But consumption MSPs would

just is Some of But might our all go way. business that effectively at subscription the business point. partners this

George Wang

Okay, great.

follow-up the compression. of term cadence is the So, about the kind curious of

You to of it’s going guys kind ‘XX, down. about slightly be FY talked for

versus your Just X.X that’s target to tracking of years. X.X how curious

Rukmini Sivaraman

the can take you question. I that. for Thank George,

and longer some expect would go we fiscal higher to our I outlined back settle X. deals ‘XX, at year, than ‘XX, expectations. say of year -- our that duration. XXXX, he I fiscal I if for think had to ‘XX Day year that had in -- were So large slightly said had X.X last Investor to actually what Duston of in in about we We at internal June came

So, XXXX. higher expected fiscal than slightly in we it year came

do not a five-year economics year. while that making like that we’ll standpoint. to work we’d is will are our much, good, as our from kind watch said slightly, largely different make we we economics a expectation updated what slightly. But And managing obviously, sure or ultimately And we of expect, don’t want that that it’s around choose expect we there’s be three, to point, -- about for being at think three-year they a the last we’ll we’ll not or making out. it would this term, us I progresses. is met is do one-year everybody for but of let is to we this from go ‘XX, that sure by what any what three-year do, whether term and think, length keep plays So, what so too right? mark I closely. And see sure sort how Because customers down

Operator

with comes question Rakers Fargo. next Wells from Aaron Our

Jake Wilhelm

Congrats for on This the Aaron. is quarter. on great Jake

a degree in macro I starting Just color wondering XXXX if the could was the guide. you more of on slowdown embedded maybe give little out, bit have you

Rukmini Sivaraman

Yes, I can that. take

deep or just we that, So, now a things But as it’s to uncertain we’re of read are think as right in for the how -- consider are anything Jake. -- not newspaper. or the macroeconomic about think environment we like full-blown assuming recession we all believe prudent I we sort recession

new And are growth so, and we I factoring about that new think and say, our to that’s I would that tempered ACV, that thought in. ACV expansion sure why right, we’ve make somewhat,

kind characterize what of So in how I’d that’s of we assumed terms macro.

Jake Wilhelm

a Okay, around great. backlog the just drawing maybe as additional then, could and give you And color little a that when down? follow-up, you see

Rukmini Sivaraman

heard Jake? backlog… you that I question, repeat Can

Jake Wilhelm

was I color how you going asking and Yes. additional see around if just give could some XXXX. the you backlog that into

Rukmini Sivaraman

we then, to typically said, relatively the our which to the resilient And we’ll of forecast. then, our finish a and So, we well. some a backlog, base base account as macro growing question, and be reduce IT the since growth -- of here case record growth uncertainty ACV growing of I thought about guess, of as this significant But risk and as use help overall, it growth. be relates into Sure, challenging taking answer your that’s in environment, to sure. the want point backlog majority are with expect backlog macro quarter spending in to actually I which backlog, think in our generally right? and ‘XX the part I in to the in point, foundation provides we renewals between And that renewals, process Yes, new ‘XX the a did be I coming we on maybe can. just just into previous the for the actually well. to our QX, billings from as out do good growth is the so of exit And I QX expect this that reiterate we

Operator

Suppiger next question with from JMP. Our comes Erik

Erik Suppiger

Most making fiscal assumptions my And headcount have looking ‘XX. for you’re are asked, kind assume targeting question. Thanks congrats you but I into as the you of sales as still I’m of on growth questions marketing quarter. get good been for a out? you curious, revenue taking and for start What of mid-XXs-percent

Rukmini Sivaraman

overall assumptions will and answer that’s right? taken score that, giving thought so overall have that are it by global flow say year, on we So, Erik. Rule think as headcount to investment. specific we operating as profile. to lot of that, how I both Clearly, here obviously we into cash about Without about relates there’s actions our and go committed I free growth variables improving because on. a already expense and XX But we look, Maybe of Yes. will each growth our on right, company a a some focusing margin, really

Rajiv earlier the this sales we in majority the were did said, that and reductions of marketing. As quarter

invest to need we of growth. keeping that in profitable sort going are pieces where And going so, forward, overall prudently to sustainable, mind we’re

Rajiv Ramaswami

would in improvement What say, to invest productivity just to I continue innovation R&D on that, continue add in for and marketing. on sales to we focus and will innovation. continuing We’ll to

the for the at invest function up With we’ve expect in Day. future, lower a cost But last prudently We continue drop to base, our right? do Investor -- continue our of revenue will a growing we will cost marketing to that as indicated carefully. we and will manage coming renewal base renewals as sales cost

combine make function sure in that our with but and invest appropriate of investing are we innovation. down we that in is to amount going continue revenue. sure make marketing, and will percentage innovate sales that as spend We And a -- will the productivity

Operator

next from Research. comes with Bollin Our Cleveland question Ben

Ben Bollin

a I hypervisor a any focus think follow-up. how -- within we opportunity expansion? had this How wallet then, future as net share the about I about was infrastructure. gain bundled new do And a you could well share from hoping perspective influence and sales the And Rajiv, as little into bit could on hyperconverged opportunities? potential thoughts customer longer-term

Rajiv Ramaswami

Yes.

any see own displace continuing to I not so that of it’s and a think, HCI there’s right? here. really levers market first, at players. think continue hypervisor, core to storage largely X right, win AHV. if our that to deference a the look opportunity grow for one or we rates lever, We there improve VMware I tier -- as -- first of our instant say, hypervisor versus, core whether many software all or whether on running continue It’s itself, you regardless Hypervisor VMware the it’s other

-- that HCI a can run still that efficiently converted So lot be there opportunity and better with there’s I TCO. market of to mean X-tier more

it. piece So, of one that’s

of The more more. in HCS at the happening what’s we half we second, -- will the hypervisor. up. of mean, stack, point, I terms in to probably included is our see our terms our platform. by own for our customers this to than now cloud in think, of course, especially And path once folks to go will in offering with our we that hypervisor of that them get AHV. that And way, continue coming I use over converted do is potentially, are And see that, to

of rest them attach portfolio, the cloud. we We’re the public when not And take also we the to do that, separately. it to selling then get

And view Storage, get extend so, We they the to into attack Unified that then all Management, opportunity. attack service public this database we’ll expansion Nutanix Nutanix our Cloud on cloud. of and

all we position And think I as of industry, So, platform, sum the favorable the share. be -- whenever given long now But the this beyond when more pieces This case, -- other HCI. piece to the us lot have And it’s is disruption a there’s of I in areas including term, right, think as again, that today, see only those full opportunity cloud it somewhat much for this And going the HCI. there’s for least where this a total we a share in look we and significant. gains see help we as opportunity it’s you well, is don’t quite to here, at happening. at a conversion this well-established accelerate I think, to, I have us more happens -- in in it.

Ben Bollin

commonalities have yourselves, makes duration? last? When And Okay. big could experiences? of any on those think long engineering you lift you long Any that? from that share transition party part. long Thanks. idea so that that have second that about the How the customer could an another How to from be, that seen you’ve thoughts to tail decision we a might effort, how you how just average takes

Rajiv Ramaswami

Yes.

the automate EFX time We very a very gotten been be tools over migration. to we’ve good We’ve a have say, to doing to specific there. lot AHV gotten from, migrations that. And of at of lot

Move, it. We called that have piece a tool of handles which actually

initial And they they once want have so they means needed. workloads quite smooth. appropriate Once done the of is run difficult. sure -- this work make run and that a it actual couple months planning, the is can usually. they bit that We qualification to ecosystem support do customers, that the that And is it move that that we that platform on not of initial done, the part serves get within of qualify

play part invested their have the they comes potentially here with top integrate environment. to other scripts rest their the the and is Now, of automation of on the that existing that environment into

And But will of to to as then over fair also work. well. all got migrate don’t in to services do of Other customers do platform. that have that’s customizations, automation a invest done a of much that help that. and done of some we’ve doable, custom have some customers lot our if we So they’ve amount they that

The make that’s happen. a quite some vary lot that complexity yes, of migration it’s a straightforward. this invested happening. of of they’ve little bit So, a lot no it’s critics here can hypervisor takes more migration prevents to automation and If hypervisor, that time just in, simple it actually degree a that depending services migration, on, there’s that from were and

Operator

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

Ruplu Bhattacharya

Ruplu Wamsi in of questions. I actually today. filling It’s couple for a have

positively First, ranges that had billings what impacted orders was revenue? and revenues. impact Rukmini, given a the ACV and to you a dates billings how on ACV benefit there about future the talked of way with percent the you had versus larger quantify guidance Is for the start

Rukmini Sivaraman

you Hi. for Thank Yes. the question.

revenue if right, after right, the say and we I invoice ACV be So, right? think and in billings my is as sort would soon about more quarter being do talked for on the whereas start last forward, bookings looking when general, which we right, only the collect quarter, about -- billings, it ‘XX. happens, ACV license in that was impacted than can in So, recognized what of assumed that fiscal revenue you’ve you comment even QX received, date

percentage and two. lesser we right? numbers in future degree. out, for kind was -- in as start QX, to QX, saw and was QX the what of in a somewhere QX, we’re we but actual Ruplu, that assumed will in percentage For say not dates what So And the it a those ACV assume for you I reflected number, it billings sort see lower, came breaking of what between revenue right, when specifically, that of but what but in between that’s we the

Ruplu Bhattacharya

but guidance, did And then, XX% full you looking can you, I margin the at ‘XX ‘XX. XX%, ask fiscal in year you’re guiding fiscal to gross

lower basis you’re guiding margins. points So, on revenues the on gross year-on-year, XXX higher

the that? What year? some how of margins we -- drivers should any think this about are gross So, for

Rukmini Sivaraman

Yes.

product we that. remained on don’t to and say I’d steady, gross So, gross changes our expect margins have fairly any margins,

focused the like makes things and of that to. customers there’s we the make One that it’s things that they are and sure significant making to so, in as described, to for sense attaching situations just solutions on, just of the do we Rajiv deployed, we are using it that intend them we adopting are and mentioned are or at services, a because where interesting One example, portfolio one Rajiv want right? them our are looking services is where sure

in fiscal as ‘XX we through might uptick here. see slight services we So, go a

we provided. that XX% into factored that’s that So, guidance

Ruplu Bhattacharya

customers. Rajiv. one Okay. I you for Got it. And added Rajiv, quarter, this new XXX just if in can more sneak

the a And forward? I think new is fourth then you XXX adds? talked average was quarter, customer in this to think last quality metric focusing I versus focus about And you. that added on do on how customers quantity. But Thank about think even year, mean, the you’ve also you’ve I of traditionally. XXX. you going done

Rajiv Ramaswami

a question good there. It’s Yes.

QX. us stronger new adds -- roughly quarter seasonally to last that line with historical for than And well. customer with respect is we seasonality QX So, saw just in as

that so ASP, higher your on have focused to new we Now logos, quality, higher just than point, count. more been And logo raw new continues.

well. new again, we ASP in year-over-year QX as quarter, see this So, continue growth logo to

So, want the this new now, as we forward, enabling partner-based to terms go in do by of more logos, we drive more of selling.

and that business appropriate this in partners place. that go program enabling which autonomy, to internally strategic incentives We to partners we sales and is leverage continuing themselves to some get have by drive our really sure we making have the call also

on. add to to coming continuing we making new continue with So, for logos new also sure sure, logos focused also ones the those and on, that but ASPs with can are in higher build right yes, we are

So, that’s probably way think to it. about the

new long and is business And it if at business looks to renewals new then who big our to because customers. expansion a then, the at right, fire we with that. land fuel we expansion have first these the when renewals. a and are lot over to to there’s And of mean, and cases, it grow look many new and look land, logos. with a to slate, there’s with continues customers you many our so, always grow. The new a When -- some continue chunk, term, of small is going provides portions continues you -- expansion, deal business, entire in then new what I it’s do provide so the our

All important. equally the all are and legs the business three expansion new existing So, at all stool: logos; to are these renewals model. customers; of important

Operator

concludes you That your call. conference Thank today’s Thank participation. session. you. And question-and-answer today’s for that ends

may your disconnect You now line.

Nutanix (NTNX) 1 Sep 222022 Q4 Earnings call transcript