NTNX - Earnings call 4 2023

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Operator

Good day, and thank you for standing by, and welcome to the Nutanix Q4 2023 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would like to introduce your host for today's call, Richard Valera, VP of Investor Relations.

You may begin.

Richard Valera

Good afternoon, and welcome to today's conference call to discuss the fourth quarter and fiscal year 2023 financial results.

Rajiv CFO. President are Rukmini CEO; today Nutanix' Sivaraman, me Ramaswami, and Nutanix' and Joining

market today, financial the quarter After closed and announcing press fiscal fourth release year XXXX results. Nutanix issued a

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

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

business Our growth transition industry, geopolitical, and expectations and targets, market and regarding, other our competitive customer trends. our factors our position and driving the financial model performance profitability, demand, opportunity, macroeconomic, and and customer the of impact

forward-looking are which results from some these involve beyond cause risks differ statements. our those materially These and actual uncertainties, could adversely and by to which of statements anticipated control

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

on as our representing them rely views future. not should you the result, a As in

and we been financial referenced, on specifically measures Please today's certain basis all otherwise are on exclude charges. adjusted for have note, expressed call, unless use a non-GAAP to except revenue,

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

to Please turn to if Nutanix And Day Investor to with I'll holding website you the Nutanix Relations that, over go remind XXXX XX. the Rajiv? you'd City York will like register. Rajiv. like Investor be on section Events the call that September I'd of Lastly, in New its again to

Rajiv Ramaswami

the ahead and guidance, with Thank off a that was uncertain strong We in quarter unchanged of fourth a Rich, businesses we of for backdrop continue and their ownership. in fourth infrastructure our our afternoon, good everyone. digital The delivered QX. demand driven solutions our good see quarter. is in to steady compared This capping macro with their prioritizing XXXX. looking saw we optimize and modernization And quarter you, cost total prior by came transformation that results to largely fiscal initiatives

at quarter. guided revenue $X to million, were billings look closer of growth ACV a fourth our and strong metrics. We We record delivered rate. annualized the run a happy Taking exceeded quarterly billion nearly all have $XXX of

fiscal another generation our quarter Overall, good our despite a fourth free expected strong onetime year. was finish also of We to quarter some payments. cash performance financial had flow

we've the Our subscription fiscal full progress our XXXX year demonstrate model. made with results

Specifically, healthy of by led of business. we delivered year-over-year outperformance XX%, our ACV growth billings renewals

with first delivered also We of history X%. our of profitability in non-GAAP company's a operating the non-GAAP margin year

tenfold roughly in payments, despite Finally, fiscal of compared year. we increase of free million, generated cash our a impact $XXX flow the onetime to several excess prior

significant Beyond of fiscal aspects progress the financials, made XXXX. we business across our in all

Beacon as data services Microsoft we to portable areas our on with build defined services to availability applications. in On NCX and companies general Kubernetes, meaningful management new product Azure, announced enable cloud products delivered the of and such vision front, Project data

corporate to profile and We through also our of governance our bylaws incorporation. enhanced certificate amendments

success initiatives on and with deals our to we major on These the our of demonstrate strategic Finally, large closed more these transformation and transactions. customers' strategic multiple enterprise the customers. wins larger, platform focus front, relevance of government landing go-to-market the our key

free and renewables strong consistent fiscal longer-term Overall, in we continued cash on flow progress execution, performance, and solid top growth, XXXX, line sharp demonstrated strategic profitability for our improvements priorities.

integrated We our we opportunities partnership gaining their I how breed by the sales networking combine a along with about partners X our UCS integrated we a well security. priority made CEO. provide as It's market joined combining on, a milestone and management, since Cisco. larger Cisco. impact provide with as as interoperability leverage week, fully by of sold platform, compute go expanded would will be been that solution on strategic to Cisco within our partnerships support accounts. with focus that This this front more and in announcement to said best This partnership and with engineering cloud will the is has global more Nutanix a between cloud Moving on companies. deepening deeply joint we and their with

about on having with excited go-to-market and sell leading them their hybrid Cisco our software, are this We multi-cloud reach. working partnership extensive leveraging

seeing ACV to run U.K.'s about into This customer broader Cloud workloads demonstrated public QX to and already success footprint landing Now we and multimillion-dollar talk Storage demonstrate wins Unified this we've expansion the the deals. extend including platform. in and biggest a business Department has our significant a platform, example win good or won the for its public I'd Nutanix looking service our A adopted the of its Management department. in our DWP way Pensions, like Nutanix is was cloud. large to quarter, for value U.K.'s been having the capabilities cloud customers are in critical DWP, with which the Work

maintain extend journey. layer Furthermore, cloud lock-in". to DWP this of NCX's footprint avoid and for DWP and of the with use have to In ease ourselves We abstraction most enable migrations. ship to while words, for vendor shift public from critical enable and to lift their cloud, grateful partner said us on our better our into QX, a the effectiveness couldn't both the cost of the NCX that DWP are platform traditionally and workloads with chose their NCX associated opportunity on-premise cost avoiding the In cloud. cloud private public seamlessly to workloads "Nutanix allows

sites. as They Nutanix in electronic our EHR offering or are the also for Another the contribution our quarter partner in as hypervisor data seeing strategically platform, Unified project. Storage our notable full see servers system region implementing Nutanix government across located partner AHV XX EHR growing our testament chose customers image Management critical for provider see the to stack managing and adopting we host partners. service Nutanix win was the value to a with associated in This provider this from GPU-based record on We a a EMEA service the and health chose the a health applications cloud including ministry. that was win Cloud nationwide

workloads. deploy often to what now means for we use and already on Now AI assurance video agility, using about data from who sites, platform to AI, Today, at as the us customers like performance faster sensor other manufacturing I'd and future. talk our customers ranging running same They're and safety for Nutanix applications, deploying platform it and to our or inferencing protocols to checkout with from and retail cases are in construction applications. quality benefits seeing have TCO the ensuring compliance

the in cloud. demand there opportunity large has However, an date, in public for the investment a LLMs, To AI. running surging of lot language been in we models or emerging generative see

and models provide on compliance more there and demand an and organizations models tune will to We more these issues AI solution turnkey jumpstart initiatives. privacy, compact edge. leakage, at those AI However, be as property and for opportunity with we fine to run such the believe become intellectual to expect concerned there's premises become looking as a

our AI-ready to recently to launched we pre-trained allows fine-tune of maintaining our LLMs transformers GPT-in-a-Box. to and hardware the help That's why data a run GPTs, and and along This platform stack, platform. control configure deploy full applications. of software-defined leading frameworks size open using infrastructure easily deploy AI software curated to customers AI-ready and with source or on their while a services is It customers set generative

While it's are date GPT-in-a-Box. still initial we've pleased early, to with in seen interest the we

Mark the we of the a as for like of I Mark's knowledge software to combined strong I'd multi-cloud vision. cloud execute on, to company closely working our makes as CEO, with excellent with hybrid look recent to on forward addition center Board both infrastructure data an fit of Directors. domain public him previous him Templeton our and tenure Moving Nutanix. highlight

of see release, and an we Finally, million this earnings our the with flow cash and We program milestone Board share confidence repurchase announced authorization. subscription back strong free in in company's outlook on the of in Directors financial that our reflection journey. conjunction market performance has our our a of $XXX long-term FY in and important repurchase opportunity 'XX a as approved

fiscal forward with it initial Day strength on XXXX customers I our a model, focused for outlook top continuing from outlook encouraged while strong are cloud of to In providing longer-term that in at our improving we update Investor September. delighting enable sustainable, 'XX that, solid level. financial Rukmini? drive to look business growth. provide fiscal us cash growth, an our And free compelling on the our strategic continued with over profitability closing, We our growth priorities platform flow value the proposition we and an Sivaraman. to for solid remain line calls of profitable and And and to hand Rukmini

Rukmini Sivaraman

year outlook I on 'XX. results by year and provide 'XX 'XX 'XX Rajiv. results, for commentary you, and fiscal our Thank our QX will fiscal followed first QX

exceeded million. of we guided was the our Revenue million, was guidance $XXX metrics. to XX%. growth 'XX all year-over-year QX to which million. higher ARR higher end QX $XXX ACV at was QX $XXX of in million billion, billings our a million, $XXX QX good a than was $X.XXX guidance $XXX of million in than $XXX quarter of in

increased quarter, deal modest likely to of we sales cycles a elongation Similar due saw last inspection. to

than EPS XX.X%, our shares was Billings Non-GAAP $XX on New XX%. was QX. because outstanding fully QX certain in expected. net X income about based linearity in were margin nonrecurring our shares. and QX Non-GAAP timing hiring. of and revenue higher than than savings million expected, in $XXX additions approximately XXX of per or quarter-over-quarter was of $X.XX contract days operating Average was X% million. in weighted higher margin flat were operating logo Non-GAAP share of QX were to average guidance XX diluted XX%, DSOs million expenses good in duration higher years, QX Non-GAAP was of as QX. in gross XXX expectations

cash short-term in million, free ended to Free $X.XXX and equivalents billion, was and implying We better-than-expected X%, largely billion expectations, cash than flow higher from QX cash with margin of $X.XXX QX of our 'XX. cash, in collections. QX investments due billings flow $XX up

full billings year ACV the adjustments annual our than a year-over-year higher million, A the ACV a guidance all year. guided growth fiscal fiscal X our at $XXX slightly due less the quarters year financial XX%. of 'XX lower in $XXX $XXX duration we of and metrics the ACV for billings as of to million, were well. than year with of representing Looking deals results, exceeded 'XX from is billings that reminder sum than to million for

supply 'XX representing in a our year Revenue challenges. billion start approximately in late deferred year our 'XX 'XX in guidance this dynamic, recognized of fiscal included of million of license year-over-year partner $XX was 'XX year that in because been chain A growth that dates, billion, to and revenue the fiscal orders revenue of fiscal reminder with higher year revenue would fiscal have $X.XX the resulting benefit Largely instead. from billion normalization benefited XX%. $X.XXX $X.XX from than of future

of year-over-year retention retention rate NRR, ended fiscal percent, end XX%. year net billion, a rate 'XX or fiscal of XXX%. gross GRR as year the We and or ARR an XX-plus of at with mentioned was 'XX growth was $X.XXX earlier,

by below below previously ACV impacted well, new business was perform and we new performed uncertainty to we have renewals expansion average longer-term at our to expansion be our it tends expectations contract the year and its the what lower and The is. year duration business. compared and a believe fiscal potential aggregate some slightly Our continues to entering performance macro of discussed and

Average was in X%, X% operating Non-GAAP an year were $XXX team has of increase relative than over 'XX 'XX margin and margin economics income non-GAAP year-over-year. fiscal outstanding share renewals X their billion, on average of year was shares. per in first to execution. operating or as Non-GAAP was also year EPS as contract 'XX 'XX years years, have in based year year fiscal year of improved gross $X.XX operating was renewals fiscal representing of duration our profit. in time expenses X.X in fully fiscal XX.X%. weighted approximately diluted improve continued 'XX fiscal million Our million, XXX the net shares $X.XXX Non-GAAP expected. the lower Non-GAAP

year our of cash margin million, in at expansion XX% X%, significant representing implying a in non-GAAP with year 'XX cash XX% operating percentage was margin free fiscal of ARR macroeconomic flow flow points margin a while $XXX revenue was a all XX%, first generation free XX growing an year at uncertain free cash over marking year, year-over-year. 'XX $XXX fiscal year-over-year, Free flow flow Overall, of significant positive and at cash environment. million growing

to XX%. Moving $XXX X% The 'XX follows: of revenue million, margin XX%, QX. of $XXX billings to to on for to of margin gross of $XXX is non-GAAP ACV non-GAAP outlook million approximately QX as operating $XXX million, million

year-over-year XX% $X of non-GAAP billion gross as at of cash follows: midpoint, for to and ACV billion to guidance the XX%; to revenue midpoint $X.XXX of billings year-over-year $XXX XX%; flow $X.XXX billion, of the billion, of of operating of at the $X.XXX representing to XX% fiscal approximately The million. margin 'XX growth range; exceeding threshold billion representing full of and $X.XXX million year margin non-GAAP growth year the is XX% free $XXX

some provide commentary year fiscal 'XX guidance. now will our I regarding

expansion we for macro uncertain continued solutions our the despite opportunities new are First, and environment. seeing

previously, mentioned we as cycles. However, a we elongation modest sales see continued have to of

some year 'XX outlook impact expansion performance assumes new these dynamics. fiscal macro Our ACV and from

year on is well. Second, ATR but assumes expected to in pace view. to year-over-year, slower based continue the available 'XX business our while to current growing year will or at in continues is guidance our fiscal fiscal our 'XX, to that grow renewal a reaccelerate perform it pool renew And

year decrease as guidance contract a the 'XX full duration slightly average renewals to grow Third, assumes of the year that our would as to compared continue percentage fiscal billings.

confident to investments around of and we and to margin in prudent significant improving a a expansion large as growing solutions line a growth, market multiyear remain period. And regarding growing into invest and innovation make we cash continue our our mix flow engine our for our in and profitability year-over-year. renewals go-to-market will margin growth Overall, a targeted our continue bottom combined with free while guidance, to view billings of over and driver both

our business focused support also our today that investing of with reflection of opportunity of to in on program returns consistent a share up a these growth we strong confidence We objectives on repurchase for repurchase delivering We profitable announced authorized has in Board program and shareholders. This Directors million. long-term our have the share is our outlook. remain market $XXX to and and financial

expect closing, pleased continue that, With profitable towards the continued reflect In and stated year our we line questions. are for results of we execution that sustainable, please our fiscal 'XX to focus. operator, growth, objective open that our

Operator

comes from [Operator JPMorgan. Instructions] question first And Pinjam our from Bora

Pinjalim Bora

is bundled software like kind Congrats functionality with that seems across about with understand, market that And it on kind How pricing? you are have GPT-in-a-Box, the wanted offering, quarter. of an Or it? integrated talk thinking developed. of spans is Rajiv, a it help any hardware, going and there us services. to to of you largely of I AI. The new kind

Rajiv Ramaswami

Yes.

first the open of largely all, we terms offering platform source out of Nutanix services it's that the this platform, top So of a customers integrated curated as and together helps box. put with on all same standard And of the of set models, is of software part GPUs server the LLMs, that, solution, the add deploy platforms MLOps, we and that in okay? with with what NVIDIA cloud

models the been we in a these see usage you're the is the where Now when edge these, it to applications, place. the their generative data it training they there's on-prem gathering in what cloud. perhaps is lot to about sensitive large use companies of what in data these AI enterprise is of a lot actually But data of public actual models where to do comes first focus locations LLM need AI with So run see what going stored for? they're is. applications, And or at

these AI applications, what by more and make call run LLM use with their the data. using compact and deliver So run it models models data trained this, with in public fine-tuning we applications they they have public that cloud been They can find them AI can their own GPT-in-a-Box, tune large to foundational on-prem.

that's So the offering.

ISVs together. market Now in customers go-to-market, team of of We're an expand working ecosystem small focused partners and terms we us that's tiger our SI take put this use have building to a scale. cases on that our very can and help we as with also

excited where early So going. is I'm this it's about still but days,

Pinjalim Bora

for ATR that just in year. it? us one baking understand And because from about then case? be Is talked this up bit this Is any events? opportunity Rukmini, help the the adding understood. slower a VMware why year? Rukmini. to Yes, that are of was ACV kind in Maybe would little you that slowing upside that And you

Rukmini Sivaraman

on question on the ATR. So first

natural choose or rate of renewals in shifting other to variation, cycles to that continued slower of year expected their 'XX in at good ACV and But due So see, our remarks, renewals renewals ACV 'XX, we fiscal on noted 'XX be the right, in in XX-plus is some fiscal factors. grow growth -- prepared from in based we renew to a we co-terming as 'XX continues largely will renewals and said our the the to to our than due as and business we percent. 'XX that customers to expect do as you expect some timing GRR at budget

it's renew to or expect view our 'XX, total a reaccelerate also continue of this time multiyear that ATR. growth our of to mix on And based to In that emphasize to be fiscal year a driver and both margin go renewals think I of continues as available important a growing to we of billings over we expansion over current renewals billings proportion period. believe our to

question, related your and around these to XXX opportunities X-figure potential ACV any of deal benefit from we few see think was with opportunities spending acquisition QX, concerns company. VMware and significant including baked we to see transaction. continue second I Fortune close the Pinjalim, Broadcom, a so in in around did by And have we that And engagement a

of difficult from talked the while just because it's transaction that do wins of and this some expect in benefit we've we dynamics about some have of our predict by to these these deals influenced the guidance. before, into the So timing market, factored as

Operator

question from And our from Sandler. comes next Jim Fish Piper

James Fish

customers, year we that item into does could just on be Day being front retention for. we million the retention nice million that should walk thinking to [indiscernible] close be an should with through north to new guide what's rate year, how also quarter, appreciate on 'XX? Nice here. there's anything is understanding $XXX $XXX given anything question for the the I net customers be causing this the quarter in this seasonality And environment patient kind that But see of with about details guide. the rates? in some particular and new the this in up to going competitive But on that kind XXX thinking see including well of flow can pick to cash the we again, net Or of about fiscal here. next last Analyst you retention mean the us net of was

Rajiv Ramaswami

Yes.

I'll outlook, Jim. X, focus there, financial take the the questions first can competitive X and questions. Maybe which the then are logos Rukmini around on there new and is think I

It's is account. new to logo them Most course, higher continue that on the we logos, ASP new weaker certainly. on these quality, and new saw higher focus and seasonally, the you us seeing focusing speaking. relatively on strong a of But of front, we quarter QX strengthened on logos more logos. for larger, also there, transactions, we new are just strategic So we're - success

logo new the that's So piece.

in vendor, already some the seen seen this talked the Clearly, one who the close. price lot we've VMware about From variability on customers risk a truly then starting how VMware might bringing who use a there. reducing and provider. there. we've And an there's Clearly, a to just of us swing of their lower to about competitive to at from a dynamic terms second going engagement Rukmini deals grow is still to customers pendulum from alternative see level perspective, get with us

we'll in really piece hybrid is see work more terms that us customers of The to So starting out. of the plays in have how using cloud. cloud to public

well. working is it of piece that So

Our partnership also coming actually regard. through in nicely with hyperscalers that is actually the

So the good FY NRR about address positioning and perhaps competitive into our can get we you Rukmini, we 'XX. other questions? as feel

Rukmini Sivaraman

Jim, 'XX. you so year say Yes. the we should for giving business, happy Investor of about fiscal And on we sort of specific is more that reported number we Jim, does expansion, part that Yes. at come before. and expansion to color I NRR, year what or terms fiscal majority new assume with were a that in our like think still on that X.X% 'XX, from come talked out but not Day. the We're Jim, today, I

on flow, of grow we similarly, cash to that I'll top guide free to beyond sort happy I intend our outlook growing Day. free to be for And to all of but say, 'XX. specific cash flow time, be for comment that on on of profitable What flow to growth at free million our continue is we're -- continues million focused we to the right? Investor cash fiscal will the continue Investor year evolve our the more to again, line, $XXX intent, do which elements margins, And margins over Day. piece, though, $XXX while any means hold to that 'XX So sort yes,

James Fish

enough. Fair

me, mean, shareholder is 'XX? server much one demand relative I nice this? for smaller getting Or Rajiv, Cisco were think best fiscal sales expect impact more how much your the of as any some this. Cisco a one to that on partners any Just 'XX, probably motions that of how last the out have and market to impact for UCS you partnership, there Cisco for but for about? should with Just understanding fiscal to other minimums But has are of we there

Rajiv Ramaswami

Yes.

there. me again, it out So let pass

first of deployments. UCS see Cisco. yes, seen requests customers. for large past There us we Jim, They all, have and like joint would solution many customers in are with So this to customer the from

that that. we're ours. customers Also bigger to So XX,XXX for able Cisco announce it the roughly much least we're importantly us, -- go-to-market market that's today in XXX,XXX. has XX We are our that happy but at have than a addressable fact call about machine about terms of customers

And so Cisco's get entries. broad us help initial those market reach could

as Cisco And a just the in in an again, hardware work, with everything the be the helping this Cisco, we're Cisco. much customer from larger them of going cloud in from the the going aspects going us, and expansion as of look they virtual as them to the be the And both platform a with us to base. solution terms for right? of There's platform, networking security front for this opportunity this. an integrated terms along storage co-sell is buying terms customer data of we're at to well and need I Good for but way. in center, selling features servers

this. about excited are we So

of training, a et Now here. cetera. we of process expect literally what we the whole And just -- numbers, terms we feel there's announced in enabling the is it

in likely So certainly a momentum build half here time. amount small the over expect in more our in but we we like QX, are to year, of the factoring later this

Operator

Marshall from Stanley. from Morgan question Meta next our And comes

Meta Marshall

focus Maybe more initial the just any there anything cohort of way just in metric. guys deal purely first And Great. quantify sales new understanding Do 'XX elongation need kind the that you you is to just the that Like and right of fiscal higher re-acceleration have larger for of now, on a the do macro? the is macro? that kind is in of kind kind main terms reverting that that to and said what makes of matter customer kind that, or point terms you what of a cohort see a on kind kind of it, of catalyst multi-cloud spending? in what on as catalyst re-acceleration? size is kind just cycles just Is of think customers. do you Or of question, of kind is for of -- then general that quality of think

Rajiv Ramaswami

first add on. me Rukmini a Let crack can at take the and part

certainly So new focus. ASP ASPs for are our given for year-over-year up us logo new these the

a back it, we We $X perhaps looking example, could that of to the our an action on you at, number come haven't with customers one put many for for but how do, of Day things for with as to we take Investor over million, have example ARR.

want have -- But our a general, rest? we ASPs going you new back do to it's yes, will been a good to the question, come up color. you logo we So take with more in as result of focus. Rukmini,

Rukmini Sivaraman

question. the thanks Yes. Sure. Meta, for

-- you question, think Meta. the of a had things into couple woven in I So your

of there, think, of to right? the -- right, sort was, I and sales new and So talked which one see about we the in just continue that's those of past, a see only really elongation so to continues are of in is 'XX what cycles, factors sort affecting some around that to we've macro we and as And and factored business, sort our continue new our outlook expansion expansion portion. into modest

we about growth ACV as to and the then talked acceleration renewals it -- think you in 'XX rate. I Now that our relates referenced

when as 'XX just so purchases and some to the on. timing What we've make just as grow in their 'XX, ACV said talked for between of because So variations timing at to to due and some co-terming, 'XX the renewals ACV to continue but some at about renewals past. while largely the we a growth than of 'XX cycles year-over-year budget choose is was due their customers relates again, to will a reemphasize, also because it to pace slower

so view at in 'XX, 'XX. as And But that for available we 'XX. when see in pool we effect re-acceleration renew that we look to

portion your expansion I And the So I to hope were referencing. answers versus make on that just clear wanted I sure we and that's new question. was Meta,. what renewals. the

Operator

And Cikos from our Mike question comes Needham. next from

Michael Cikos

the -- parameters generate? come macro guys to the I some What I congrats Can believe we sounds like -- able about was ACV you for different contributed ACV it outperformance? but drove just And think you when finer I want it, a -- relatively to did on cited execution, billing outperformance the guidance. potentially the second. that how guide? on to the it it to I outperformance put around for were pieces have back Like billings. from that whether the stemming be guys do conservatism specifically that renewals know view better stable, you was the outperformance

Rukmini Sivaraman

thanks for the question. Mike,

So of talk there anything to, a components Rajiv that and add he welcome like. else I were maybe would that to couple I'll

discipline the in one is is which some about say [indiscernible] improving those are transaction renewals we contributing continued the are which renewals around ones So that that sometimes we mean of original economics, the seeing as to also outperformance. what to what is right? sort improvement compared was, outperformed we that we've first earnings, transact before, right, renewals renewals we more renewals, So what we're difficult is when forecast. to around see And as talked

billings. big driver, a in And I Mike, outperformance the that ACV was would so say,

performance was that for our billings. of really So ACV driver the QX largest

Michael Cikos

if kind of the Great. maybe this actually guys help as I it why guess you've X it up QX for the think the of One let's can ACV recent But gone QX earlier, down deal first X guidance from that part with a And that we over sequentially. down deals of sequentially. Maybe about parter has say, And years, from have to today if it's in you on us guide the QX. up in, look co-terming QX cited ACV most to -- or would as you in VMware those QX that's again. we that down came about follow-up. think billings, a the I be I billings some far the ACV effect that Can sequentially. do question, being [indiscernible]

were or I into initially anticipated? what expect the this quantify gross guess, us hiring timing been more you of had from The nonrecurring hire the -- guys dollar the should Can timing you -- second I Or nonrecurring what what and actually then you -- help can the or year? and out is benefit prove margins, that's that savings of was a for efficient in this we figure what hiring. cited unpack savings you guys hiring, versus is to that we is know

Rukmini Sivaraman

Mike. Okay,

Let one that me take by one.

characterize would is supply disruptions recall some QX this degree, are to on So being impacting the go typical from typically, that it's the lower, high given are which seasonally sequential lower bit QX. of for our year and QX of and an 'XX, affecting is sort QX, I of a QX And in are a normal, our in have also led us impact how motivated, because 'XX QX actually some right? a us was it's This year-end, So increase was to you a Mike. chain is quarter saw the Mike, to number last right? to QX, right? more that, Last Because therefore, right, partners probably good we QX -- sellers year. is actually seasonality if anomaly, artificially

And your question we margin, then on things a to gross few said so there.

So expected. one than was higher revenue

think straightforward. X. your on I was other question And the that's

say mean sometimes attrition takes as we boundaries. when happens, can sort so levels what So to and attrition timing sometimes backfill normal that hiring of is on, cross so of we it quarter but of time

probably And so be some really in that and we in right, Those QX. in to order short we would saw of backfilled people hired QX. expect here,

range. that see savings and margins a nonrecurring is we're approximately QX and you'll QX So XX% remember our are in COGS right? bit well line you if is I but and a over the QX little here take us, guide, were year, not those margin margin QX for And QX why QX as tick But the don't that higher overall much high expenses saying fiscal top in seasonally look year at operating higher amounts, which up and is QX, lower in because and quarters that fluctuate also as just 'XX gross Mike. think gross huge

Operator

George comes [ next our ] And from question from Wang Barclays.

Unknown Analyst

which just trends, [indiscernible], of repatriation the sort on-prem, about you on repatriation to benefit increased are on Congrats guys quarter. may to especially update ask want seeing Nutanix? any the given I

Rajiv Ramaswami

Yes.

I that well. have other is what in so stuck repatriation as public saying now this these with quickly certainly applications seen cloud they're large instances some as as to to also saying, is people have in really And public is we've to We've George, to I spend So to much repatriation. they interesting seen they'd it that like is are increased spend I we've and would committed commitments. say cloud of I direction, already. they're the can't see money not the of stuff seen their say which able to What committed public cloud because get

available saying, that some their and the which come they're software public because looking of in and them this now we've so are through Azure to seen seen AWS we've through people And Azure we commitment spend. And the purchasing AWS. us our retire marketplace help of marketplace, at

world first a cloud. think I systemic repatriated being very about cloud from the hybrid, I we But We spots in the it's conscious the a that hybrid, are say versus in place. point. put this are see yes, the the wholesale at wouldn't trend public So loads see much some in trend. public how much necessarily much is more being yet people being to world work

Unknown Analyst

Okay. Great.

upsell? high-level cloud and to Just simplified can, you of and Nutanix full of a on rate approach. cloud the manager follow-up, quick platform kind talk kind I attach we if maybe kind Can commentary portfolio about of platform cross-sell

Rajiv Ramaswami

Yes.

questions So that's X I there. think

cloud On seen portfolio our attach since with our for the revised biggest of have infrastructure. that attach much the was launched rate we higher sure, change management for portfolio, cloud the we along

sale, really, also easiest to built In cloud. attach fact, the right? the the Everybody operate who cloud that wants is

cloud So it's our is the platform cloud together our natural That's course, -- management nicely. very a public is our operations, really We've infrastructure. natural with which naturally cloud seen, attach extension extension, ties of to also cloud and attaching it best seen. NCX, we've

attach in customer small terms and is relatively that another customers, of quarter accounts. still number of that's So for us, but customers growing every

to the a our other Nutanix to with Unified storage attach see actually is is we really we well. The sell of have work the portfolio specialist that that one as team with databases reasonable that people to the of specialist skills, database requires because a are more stack and much largely level or portfolio a at in that's sold managing more either specialist developers up that who skill. element

Operator

from from Hosseini our And comes next question SIG. Mehdi

Mehdi Hosseini

Yes, by need year answer X% I back the understand would your want do for deal help? the and your take the OpEx would into or collaboration but some your Or savings cost go 'XX guide. If coming, Is like with scales is Cisco I Cisco seems to that to any it just of midpoint, into growth grow actually model? I product. fiscal these bake the OpEx as account? does you account assumptions Or built already to

Rukmini Sivaraman

then me any So potential let first from Cisco. impact the address talk about we'll OpEx point,

on X over the operating course, So the if to down years, the ARR expense we've that -- at $X.X ago, about actually kind continuing right? grow flat last look you of It's ACV since billings, years last of about of X and time. profile our and billion, was it over while, was $X.X it several billion year over last so since years, really kept revenue it sort to

efficiency sort improved So and we've on been of OpEx and about cautious productivity. then focusing really

our Where I making targeted prudent, some in are we is we say, very go-to-market engine. are and now our investments would innovation that and in

in is capitalize [indiscernible] that. about growing believe talked to market, large order go on we and As we and

are targeted we making investments some that on So front.

last additive but the to expenses any operating line, about do think relative we year, productivity So for Cisco and what to overall continue Cisco. to the right? Cisco be how impact piece, potential Now sort also for think is up to our that's help go really we partnership us of top expect to I on our should relative to

Mehdi Hosseini

for onetime as a investment actually existing models cloud infrastructure want for to go or But to prepared privacy, follow-up well just trying Rajiv. scale just on-prem, security, I one kind into would I'm with additional better to compliance to no? of remarks. about would require bode you customer enterprises I your think that trained your CapEx And or agree understand, with the prospective AI. back And from that Okay. you actually moving

Rajiv Ramaswami

Yes.

resources, what So that GPUs on with right? It I they've several -- mean obviously, depends requires platforms AI only to it. requires this attached compute

compact are But to So to public new the going software new put to when on-prem, and available specific they're they're so would it. the customer, publicly have what their clearly, likely it the own going they do, bring -- to and it workloads potentially with on fine this, on trained tune in data. clarify What are buy data would just our that models hardware, right, more combinational for are cloud. make then these do, they they models

us internal have it's to A a terms support, design good that this in example in documentation how as just works, example, -- well. documents see we take put as maybe internal an of cloud, of even support the public don't a as lot support, we

at root a AI of answers So cause imagine end and to to try quickly questions. be to customer support through go generative arrive and arrive back able or using that at all try and

secure our to want that is where location we or in data a run So on-prem stored.

on, will models our DJI] with we servers stack. GPU that so run with typically again, And standard accelerators, [Ronin

Mehdi Hosseini

additional come partner required? actually that Is a and to investment that become where Cisco could facilitate in

Rajiv Ramaswami

with Cisco the we decouple right? -- think let the think just I way, servers. I piece, this me that, Because AI everybody's works by should piece

Dell So or customers a partners been variety from or HP and years. have of supporting and buy GPUs of have for we can Lenovo we them, server servers wide multiple or any

So only we need necessarily this don't Cisco. to be

long sell in go-to-market, of ability our expect their be they broader can Cisco So their from their partners. they in the into able a What that is significant from expansion their should we a like footprint, terms customer with right, to much that term. and to go-to-market reach, buy where base benefit server we with

Operator

Erik comes from question next our And from JMP Suppiger Securities.

Erik Suppiger

quarter. on a good Congrats

GPT-in-the-Box, secondly, are language software using their customers developing own ahead. the those on -- go that large third-party then are And on in they off, the box? First model or

Rajiv Ramaswami

most I of not language think them models. the Erik, that that would their would models foundational Yes, They answer large are own use build available.

well. models. the own available data probably like of there. coming in that don't But use much fine open could, what's use will out they ones new they out the would think that have. develop but like I models, as Most there course, their GPT if LAMAX it are of customers source. there's example, enterprise, with They They tune are the For

Erik Suppiger

Okay. in comped with reps Nutanix are Cisco the makes selling That the sense. the then Cisco, software? on sales getting And secondly, partnership

Rajiv Ramaswami

they're just selling were if comped they Yes, as getting Cisco products.

XXX% So service. for compensation their

Operator

question our of And next Wamsi from America. Mohan Bank from comes

Ruplu Bhattacharya

couple one It's things for specifically for Rajiv Ruplu can question on of a Wamsi comment filling and vertical. in Rajiv, had you I today. one for Rukmini. by demand

quarter. you now? the 'XX? pricing talked pressure? can that then environment? And this heading on is fiscal How any it holding that elevated? pricing You about steady? Has about Or backlog talk view you your share are seeing Is into Or some the gains normalized is still

Rajiv Ramaswami

Yes.

attaching go in any up, on toward significant our as in the pricing example, portfolio And this attach for tend our of portfolio. quarter. more haven't more right, seen the quarter of change pricing, general, last because we the we, we're to So our to simply products ASPs with compared

haven't any we in seen or shift So pricing big change dynamics. our

on any backlog I can't difference. there's to say verticals, that significant with Now the respect again, and

of dictates deal that than and vertical volume us. factors related and size discounts function rather particular for I any think it's more a

respect going Now backlog, the to Rukmini to let on that. I'm comment with

Rukmini Sivaraman

Thank Yes. Rajiv. you,

it year 'XX. So on expected that a increase outlook actually talked year-over-year. the dollars last backlog are fiscal did backlog, in 'XX we course slight for as think, of year year backlog, 'XX, we fiscal year around the into Despite during that, about, we I as ended fiscal asset move 'XX. And for factoring

to we is as backlog the absolute like the possible range dollar are environment an could increase And this consumed time. just expected outcomes before. continue over wider year. to macro grow, as I over the than of be be But also the So in, generally, more expect we uncertain course of some one continue think we're in number to backlog of to

Ruplu Bhattacharya

ask it the at can year go as looking the year. like I versus margin you, XQ If fiscal 'XX, guidance through for operating Okay. full you improvement looks the fiscal there's

should if drivers we the your renewables then you think expect growing. expect to are is to talk -- XQ that the billings. business So ACV decline, XQ, And seasonality we looking level you what about of same that? in should for can Again, the going from

thoughts any in how on model billings we just fiscal ACV So 'XX? should

Rukmini Sivaraman

Okay.

were questions a there. there couple of So

first just the stronger seasonally is again, I QX there, have QX margin I'll and folks annual you budget us. remind a quarter on was think operating that, December year one I general, seasonally QX which and in customers. think so are QX full for for in versus because flush many

reason is QX year-end. so for QX and is And that our stronger fiscal

to stronger XQ. line look which much, year quarters, means also strong QX seasonally general the stronger in compared margins full to look QX, that QX So versus don't that's on in of piece and goods and one QX QX sort although tend the vary QX, margin does as QX right? out so and cost the of call on therefore, in top And and margins, and expenses sold operating and QX

the patterns we variation normal any to to we'll sure seasonality, to that, generally, I And also sort of follow fairly your should I and with that regard expect slight Ruplu. was follows for I still call expect ATR somewhat out. extent now, in between should a some top in I think, new said, seasonality on say, generally, And that XQ you just to line of second as as does then Therefore, you make well. expansion. would XQ and think renewals pattern decline question, a that More But expect as that.

Operator

Chokshi Markets. from our question Northland And from comes Capital next Nehal

Nehal Chokshi

strong And a congrats quarter. on

of That's another nice talk fantastic. the allocating to the about what debt? priority buyback announced. You relative say, down to capital to buyback being And paying Could one. see is you had

Rukmini Sivaraman

Yes, sure.

very talk I'll So generally. just more

investments. focus of to happy your we've flow thoughtful -- prudent short-term to last continues growth, and and the year $XXX on over innovation sustainable have generated said into of as make billion to be We're said $X.X to we first possible engine, as of I cash our Our million cash investments continue answer and and earlier, have go-to-market question. cash

to confidence capital strategic and optionality authorization long-term as that other to And we so this we a returning share of think continue growth to have our financial to reflection outlook repurchase by in in priorities. invest our of the ensuring shareholders while

paying question that. look your we do debt, at to how down a And on take

before look due at all alternative for XX they're of on basis our of our public years. decision. pay those, the any we we cash converged, making another uses few points course, Of not and And

sense our And all options the more of and the so of cash, sort sort to it of that made us. use the holistically available best authorization about to us think share other for given believe that repurchase is we doing of

Nehal Chokshi

then? of anticipation buyback utilization authorization the of that pace what's So your of

Rukmini Sivaraman

does We not a expiration specific given an time authorization have frame, Nehal, not and have date.

and can including and as will a timing factors. imagine, factors, prices variety the conditions, depend right, so on other amounts And just you of business stock

leave And there. so I'll that

Nehal Chokshi

cash be fair a flow that a basis? you to percentage go-forward to say Would return it on free want of certain

Rukmini Sivaraman

we out We to I'd use giving this our take are about of to a talk this a not we're just more certain Investor sort about generally percentage -- at our at specific how sort Day talk we as will capital then. well, and right? at more not plan committing that we point, So point, be more Nehal. of percentage. happy But But to allocation cash

Operator

concludes showing call. you This I'm further no for Thank today's conference And participating. questions.

now may You disconnect.

Nutanix (NTNX) 31 Aug 232023 Q4 Earnings call transcript