NTNX - Earnings call transcript Q4 2024

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Operator

Thank you for standing by, and welcome to Nutanix Fourth Quarter 2024 Earnings Conference Call. [Operator Instructions] As a reminder, today's program is being recorded.

And now I'd like to introduce your host for today's program, Rich Valera, Vice President of Investor Relations.

Richard Valera

Good afternoon, and welcome to today's conference call to discuss Nutanix' fourth quarter and fiscal year 2024 financial results.

Joining me today are Rajiv Ramaswami, Nutanix' President and CEO; and Rukmini Sivaraman, Nutanix's CFO. Nutanix year press XXXX today, quarter announcing closed fiscal and financial we issued release a fourth After results.

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

will today's involve by and our adversely differ statements uncertainties, control, make During could and statements. management forward-looking including actual These risks are financial which of anticipated materially cause from these statements, some which those forward-looking guidance. beyond to call, results

please and certainties, to of annual Form these quarterly our and filings, today. release as a our our reports earnings well For detailed including issued risk SEC more description report other on our on refer most recent press as Form XX-Q XX-K subsequent

to statements revise call. These this these and statements forward-looking as obligation of after apply today, no we undertake

result, except on financial expressed referenced, revenue, specifically predictions should them unless Please charges. certain today a all on events. adjusted non-GAAP you and rely on as for note use not have future of been basis to otherwise exclude a are measures we As

the Conference provided, financial on Piper We GAAP hope these Sachs X financial will of XX. non-GAAP see extent press and Growth participating reconciliations Sandler Technology Francisco Conference and our We available, to to release. Nutanix be in the on Printers at IR [indiscernible] September earnings on measures in in our events. measures Nashville San to website the Goldman these September have in you

period 'XX [ quiet fiscal will on quarter ] first XX. our Friday, begin Finally, October

call to And with Rajiv. Rajiv? that, I'll over turn the

Rajiv Ramaswami

afternoon, everyone. Thank and good you, Rich,

finish was fiscal quarter year. solid a XXXX our fourth Our to

flow up happy quarter, cash on guided exceeded of XX% of models optimize the modernization initiatives to year-over-year million, ownership. of $XXX driven metrics. solutions for their hybrid infrastructure total We fourth see while multi-cloud prioritizing strong to our cost saw adopt free continue We and demand delivered businesses our steady generation. looking and to quarter quarterly revenue another are all operating we In by have

number our highest X sign the seen of We of encouraging also new partnerships building years, go-to-market initiatives. in saw an some we've of and with logos traction

results of saw full we strong pipeline performance to number a infrastructure growth and XXXX our business. deals of saw prospects We driven in engagement upmarket Financially, from year delivered Our top larger alternatives demonstrated our shifted existing our we on line by renewals continued good performance solutions. looking for solid progress from their fronts. focus increased as

Even see, cycles of ] year-over-year XX% land and due revenue business up sales billion, $X.XX and as billion, XX% our longer-than-expected $X.XX related expectations [ ARR expand we to up we internal underperformed the our delivered to of year-over-year.

providing partnership enhanced and these available. line front bottom Dell pleased free than appliance XX flow margin even leverage. of In score progress expanding we XX. with with NVIDIA. flow performance in addressable higher [indiscernible] last our of a on offering HCI-based Dell the Our generally partnerships was resulting with Cisco, and Xx Rule Dell $XXX partnerships meaningful X, a We our We significant both us free year, new generated 'XX, turnkey or I'm now is see of with also million, FY and almost market saw new is that of cash stronger. XX% And cash go-to-market

new product innovate enhancements Nutanix we with Finally, continue FY in 'XX, our cloud to important platform. to releases and

of NKP, Kubernetes cloud native on-premises simplify public across consistent release to or NDK, any generative which data Kubernetes services for of of our platform best for our of becoming progress made of service. Nutanix offers management GPT-in-a-Box, the goal modern recent virtual and included Nutanix platform as container machines both stats, well solution applications, streamlining including meaningful AI We by launch and towards enterprises. the services data applications, as for the or These the in adoption modern of launch the

cloud of most the recent quarter that wake footprints as Nutanix alternatives in industry looking adopt wins M&A. platform their looking Our cloud the hybrid as for of demonstrated IT models in to and the modernize organizations the are operating appeal to well significant those

was services multimillion-dollar win largest American-based North QX with ACV deal in XXX Fortune company. a a Our financial

Following us, chose manager. solution Cloud X.X as roughly existing hypervisor including [indiscernible] replace to a their years Nutanix Nutanix with cloud engagement platform, well AX our they as

obviating been their of much This solution able existing using Nutanix utilize hardware software customer, in for who HCI hardware for a refresh. to footprint was deployment, had a the the need their competing

and workloads We wins also our and run significant Nutanix clusters capability, be clouds. in a seamlessly efficiently both that included private had to enables number cloud public NCX which of or

an was these looking run services. of of This public the workloads to One accelerate ensuring as once research to will workloads global cost migration EMEA-based with the was while customer, of an migrated, possible. their provider and cloud, the effectively existing as efficiently customer

the commitment Azure, Microsoft Nutanix Azure shift with to capability its made licenses Having workloads Azure. a cloud intent to already their utilizing the of to they marketplace purchased on-prem through NCX platform for

Another with platform start good our our on was significant example new win with top Most American prem. North customer of customers university. a a

decision AWS However, away at with customer recent using in cloud public machine platform to existing to were virtual this the at run to was a due scale competing they supplier. workloads changes on their motivated migrate from their by their dissatisfaction

also run cloud to to the public platform AWS, NCX their workloads. cloud migrate our on-prem cloud their Nutanix while running on platform chose in adopting They our applications to

our also a streamline automation, provider. and state. This operations, more across manager private consistent of example notable the service We Asia-based their to win and level on an solutions. cloud full their primary on with a for Nutanix is XXXX also reduce competitor, their expensive proprietary public dependence stack storage health [indiscernible] cloud is and plan A displacement final increase automation semiconductor their enables customer of win, which Global

our plans to database or by storage to customer third-party them expensive adopt of service, off multiple managed Nutanix of adoption to databases to unified NDD included their This replacing source commercial options. solutions, It enable databases open storage NDD. move also

the see the platform partnerships the towards enable value on innovation as including the of model, applications utilizing for and the to anywhere. fronts, closing, to to partnerships with and in in Azure as make with portability Azure our and we companies. AWS. and pleased for our our running of these wins efficient XXXX QX on as In and customers and well cloud Finally, solid continue operating financial multi-cloud our them see adopting on hybrid seamless leading our of becoming value shifts data ongoing we they workloads multiple our while applications our application our and managing shift IT cloud, to as goal look reflecting am also We results platform models I of public fiscal platform performing progress lift including acquired plan NCX

on some I capitalizing as gain in view of opportunity We face what wins also our we share a early of recent the industry successes, remain by to encouraged focused long-term just are including disruption on and highlighted.

my trust would our led in their these and like to investors, us to hard I employees Finally, work sincere to partners for that for express gratitude their our customers and to results.

I'll Sivaraman. that, hand over Rukmini? with And to Rukmini it

Rukmini Sivaraman

year-over-year full XXXX. for you, end 'XX the QX year our XXXX will for followed us. QX to a guided our of of million year our the metrics. $XXX range were QX XX%. million, I million, $XXX guidance above million 'XX full million, fiscal and of growth fiscal Results $XXX guided higher XX%. for million, and joining Thank growth QX high came thank in 'XX fiscal results and representing everyone, to ACV fiscal QX in in the range first representing Revenue range across was billings by than discuss Rajiv, $XXX the you, $XXX above in guided $XXX all year-over-year of of

of higher related result range of largely to lower agreements Non-GAAP X% Non-GAAP the average end items; sales XX.X% levels. was few to margin we to growth partnership a year-over-year Average to was cycles revenue. representing XX.X%, a higher modestly slightly duration QX gross gross one margin QX margin and XX% than of expenses year than QX in elongated due higher our X.X at to XX%. of billion, In as years, than compared $X.XXX to two, XX%, range of ARR XX%. higher-than-expected QX, and guided operating see our contract in operating QX was X.X one, other was nonrecurring payments our continue guided of historical higher QX. and in

margin $XXX QX. representing collection million, flow QX. flow in cash flow XX%. Non-GAAP fully diluted $XX on share in million on average was weighted revenue X-figure free QX from transaction receivable $X.XX of Free in net that or the QX outstanding in approximately was based Free income per fully XXX ] accounts of and [ booked AC of benefited on were diluted DSOs shares EPS based XX days cash QX ending the in fiscal was shares. million cash

fully included previously cash Please million from Moving $XXX ended for the the in shares, settlement Bain down than cash which our in $XX of approximately already stock. delivering that included The the conversion XX Capital's million to we value XX if-converted an conversion the announced average shares, investments and our share than common exclusively in the short-term by June. note the reason settled a balance sheet. the with had balance paying cash million in included diluted We of resulting basis. previously in and basis. primary $X.XXX QX million on billion portion issuance an on cash, entire if-converted been which QX cash of end million was We rather the of we count settled reduction at equivalence XX.X in in had of notes, that in $XXX.X actual $XX QX. The conversion approximately million, is weighted lower shares

worth 'XX allocation. share QX $XX million by the in million previously worth of in $XXX capital all repurchased authorized fiscal program shares our we Board of to Directors. of year shares about Moving repurchase and under of

'XX all of $X.XXX our financial in the of billings 'XX. year-over-year fiscal full for guided and at growth a ACV exceeded we higher end than fiscal $X.XX guidance billion, metrics billion XX%. our representing year of Looking year billion, were high $X.XX year to results,

ACV duration quarters annual to $X.XXX billion due the of of our billion billings than higher is and deals lower a fiscal reminder year. less $X.XX year-over-year than a of 'XX sum $X.XX the to than year in slightly guidance ACV that Revenue billings billion, the from with growth A for was adjustments XX%. the representing of X

revenue a fiscal of threshold $X growth fiscal have ARR ended as XX%. mentioned We year We in exceeded to 'XX. billion with year of billion, are $X.XXX 'XX an the year-over-year pleased earlier,

year NRR, rate, fiscal Net dollar-based 'XX end at retention was XXX%. of the or

levels. we close longer As and them fiscal larger take mix historical to greater causing continued C-suite elongation larger often progressed, previously, to involve mentioned a approvals year of have the we saw in These And pipeline. as sales have deals to structure. and modest we to opportunities of deal in our see variability cycles and higher average timing, strategic a outcome decisions to relative

Largely and dynamics, due year the beginning of dynamics initial to continue. fiscal expectations we ACV these to these our and ARR performance our the fiscal year, expect below expand land and 'XX at were

Our lower year 'XX greater aggregate renewals a through continues 'XX a slightly and be duration. contract X.XX higher to larger than tend Average average reminder and to expected, to in contract that renewals was good due partly years, at land average with deals fiscal flattish performance expand. fiscal to year duration compared year than fiscal be the some and duration to

'XX research to 'XX sales we and was of XX%, XX.X%. an year-over-year. fiscal margin Non-GAAP investments was in in operating in points 'XX expenses in $X.XXX began and increase marketing. Non-GAAP fiscal of over year margin billion, gross improvement make basis primarily as and an representing year additional fiscal year-over-year year development operating X% Non-GAAP XXX were

million, year $XXX than Xx approximately $XXX year's $XXX shares fiscal income Free year fiscal outstanding based higher net of operating in guidance diluted weighted flow million million 'XX. fully XXX also positive full or GAAP We of million of higher of than in was Non-GAAP and free income almost average year diluted per last share cash of EPS our first $XXX million our delivered to shares. $X.XX 'XX flow. million, was on cash $X

previously flow percentage year cash 'XX expansion points approximately cash margin in nonrecurring 'XX fiscal related $XX in XX%, benefited partnership a year-over-year. year fiscal as Free to payments referenced. year-over-year. flow of Free of of margin was free from flow million cash million flow free in agreement, significant a revenue marking margin Overall, XX flow first fiscal cash generation at Significant free year 'XX GAAP growing ARR positive XX% while income, year, our year XX% operating $XXX at and XX%, cash was and with implying

year-over-year an of year We X percentage of higher and 'XX, also margin score a XX defined improvement compared delivered free the fiscal for ago. and cash Rule XX of percentage as XX to revenue XX sum points of flow years growth points

guidance $XXX a flow growth follows: some XX%, the XX.X% is free $X.XXX year of commentary the margin full margin of Moving Non-GAAP million year million XX% now of representing midpoint. 'XX to billion as provide for approximately billion, the to at of The a to cash free cash flow at $XXX regarding $X.XXX revenue fiscal operating 'XX. will year XX% guidance. approximately of fiscal midpoint. our to representing I year-over-year

mentioned First, not we Day, XXXX as ACV in by reporting are year our our at or fiscal Investor starting previously guiding 'XX. signing billings metrics

ACV was believe away time our that during the metric is evolution, as we intended metric. billings to a transitional now from evolve and subscription that

margin. our margin model guiding also to changes, gross GAAP business improvements as non-GAAP significant gross previously are longer no was to we We which leading navigated useful in

flow non-GAAP to subsequent quarter. margin annual guide will to and on cash to We the to guide an non-GAAP revenue free operating operating margin and and basis for continue revenue,

moving and and and our for solution. growing guidance, and pipeline significant in assumptions opportunities we our on expand seeing continued Second, are to a land

assumes to However, C-suite of greater a larger prospect, involve levels, continue mentioned to in we and the that opportunities structure. percentage decisions to well as non-GAAP to continue to or billings; variability perform sales renewals fifth, to average pipeline, at be our 'XX deal expect would guidance our market average the 'XX; year our bookings. towards a to approvals prudent flat margin sales we marketing we driving customer and see greater causing as relative large historical previously, our in in expand lower opportunity. year third, assumes targeted which often see will variability guidance close timing, assumes as of a continue the addressing to cycles compared continue; fourth, R&D, to and higher grow and These and in larger have year continue outcome fiscal land investments the take renewals is contract guidance deals them longer slightly strategic that to and of incremental we to duration full which elongation modest And mix in fiscal operating

$XX in annualized fiscal of to assumes made our factors also we in 'XX $XX of partnership relative year headwind also million incremental 'XX. rate the run in to It investments the to It agreement. one operating from fiscal a year million related expenses payments

fiscal year free operating we to 'XX $XX about guidance of reflects to as flow the an year million and and line be approximately was FY to anticipate invested headwind cash expense result [ interest of it there this million Specifically, convertible $XX 'XX, from $XX to the due to $XX million ] benefit a payment million notes. cash conversion year lower cash on the lower income in R&D of fiscal in 'XX, 'XX; relative fiscal sixth, the our

in benefit end free It in the year to to $XX is off of expect agreement, we expected to from We fiscal partnership flow related to saw a 'XX tail similar fiscal million cash the towards the year 'XX. fiscal approximately year nonrecurring in also benefit 'XX. payments

'XX. QX to Moving

guidance guidance for diluted [ $XXX follows: average margin exceeded QX fiscal of million XXX is In $XXX million, operating XX.X%. of QX that revenue million and metrics. XX.X% non-GAAP we outstanding 'XX shares pleased Our across closing, performance are shares. to all Fully weighted approximately of to ] year as

ability Nutanix' to deliver market for about and are customers opportunity long-term We excited outcomes and prospects. the compelling

for progress line the aligned our through questions. and with growth open With margins. sustainable, remain booked operator, committed please We expanding continued to that, of durable philosophy growth stated profitable top line

Operator

Barclays. from [Operator from the of George comes Instructions] Our line first question Wang

Dong Wang

to you especially because Broadcom just just of more after wave Broadcom kind some churn, last couple initial of back of about the on talked now just the the the have of slowed that update priority the of of initiatives retaining favor strong some in if in activity you Firstly, curious engagement, quarters, any working of customers. the be initial

has curious the dynamic Just changed. if

Rajiv Ramaswami

to gain unchanged multiyear an largely last like it's said -- we are we opportunity Yes, quarter. share,

a these far, on anticipated. rates we really we sales win changes the longer been our seen loss opportunities. bit in had has initially any than While Thus or side meaningful haven't

in I time. We examples over larger to remarks, we a As about of you in see gave prepared seeing talked remarks. do more that expect of few we some these close. And continue we'll opportunities are our the prepared these

Now engagement opportunities. segments, midsize seeing in increased the and significant less customer we're customer these related and as for smaller alternatives larger engagements many to of opportunity the and companies look generally smaller competitive

about -- for This partnerships logo we've also increased been have in well go-to-market our larger our talked our as with programs of drivers Along new our that has our place. leverage and from that our dynamic performance. one incentives as stronger we

Dong Wang

Great.

I it's the International hardware you to a for kind partnership, especially nice so hardware maybe give the you gaming changing little you guys can the about see quickly one related talk has are some the a of seems after sector of previously, better can on underlying now the hardware, upgrading kind constraints sort of you're guess, the in the -- we if removing squeeze path sites Services, without that. underlying going maybe wait Just [indiscernible] refresh more been hardware forward can [indiscernible] dating mentioned bit refresh of underlying I of color the to to

Rajiv Ramaswami

question, very that's good No, George. a

majority we but roughly the there if storage, we is X-tier what base HCI it exact the in as of compute know, today you you in data have market. a I installed And XX% the think look of call networking. don't at and around Separate have vast I out solution infrastructure. a it, centers, number,

require does And tier if it's long architecture, with better the X term, to a a cost-effective we hardware HCI, it replace want refresh. but more

and are of has XX% the of HCI, ] the some which remaining our a competition [ leader we is market Now rest.

was a to when example with hardware on about, the that having product. case, to been on existing talked software customer CI we've particular this on HCI, competing already hardware. because successful an it's able we our already already you're in Now run be And quite hit

what happened this account. in that's And particular

And migration That's of those cases, or so easier path on for we need subset already the happened are that a that is HCI, in some here. what customers refreshes. don't subset hardware

a it refresh. On X-tier, does the require hardware

point, market, Dell is of external they with support the storage, also said our would we addressing we -- would we that X-tier one would be that your we're to Dell partnership first PowerFlex. the Now at aspect

of doing find whole now out we to hardware. feature idea And is to without having change deployments the easier the insertion that an can now

Now in of to be that today. solution It's anticipate over And time, being sometime is not market support only set we third-party ways. storage year. available to broader a going next the offer able that to available

Operator

next Sandler. line Jim Piper comes question our And of from the from Fish

James Fish

seeing Rajiv, essentially a think I guess, around we've bit are AI, here. do about as workloads I alluded of you AI, core the sort well GPT-in-a-Box? of conference GPT-in-a-Box on talking little as got to private update back a of or workload but for to ask a any anymore want any you don't repatriation cloud of without trend call you -- just

Rajiv Ramaswami

Yes.

to give answer good a I'll Jim, question. that. you So X-point

in purpose second general GPT. First, work clouds and then on

lot in some goes deployment public For is repatriation. a seen your environment. because the to place much are on-prem workloads. of a whether seen terms on-prem people of deliberation locates of cloud the run enterprise general in We've conclusion We've cloud that much to getting also the workloads, still that for in think effective steady-state to more first workload it's more private to the cost purpose I point, those

cost the in them we So effectively of see steady-state trend to realization seeing labs. we're customers can private more workloads, run certainly and

either is simple, provides customer of visual end lot have in massive is of public the lot been is. language and [indiscernible] -- play platform a our specifically, data at centers in done other we to we of enterprise being a at or on don't But and of is wherever like AI applications. it easy-to-use, a the And in training are applications day, how edges, think fully. the don't the going there terms lot the cloud so Gen actually the on of use Gen the and sensitive inside AI think we that companies run cases, workloads, large going data bulk I Gen on-prem customer creation the to we data farms, hand, opportunity Now in of be models potentially very the because and secure, in and a a has GPT of GPT-in-a-Box AI LLM way have interest

document And so [indiscernible] have support the customer cases around been fraud detection. enhanced around that seen so we've far and our use around co-piloting, analysis,

seeing care, for across traction. certainly early are government. But continued financial verticals, services, us. multiple It's We health days still

and workloads, and in early be So to for cloud running close enterprise for augmented generation a in but terms way. going data market in private of the think days [indiscernible] finding a DPT the I these adoption -- private secure growing inferencing to that's AI for

James Fish

ARR put and year? partnerships a as Rukmini renewals sure in guide, from I'm anticipating either VMware to is if But about are should guess installed about existing how actually the I Cisco that a however expansion you're want grabs bit ] it contribution already. accelerating Dell within to that the -- And certainly your where way little you we the expecting memory And exits the think this base a question think be how growth there this you this perspective, incremental opportunity, year. between of much dollar of much [ terms right versus 'XX

Rukmini Sivaraman

Jim, question. you, Thank that for

you out, in of some are happy terms about we've that, qualitative in contribution with you the So -- various general, from color our So generation give so right? buckets Jim, I'll called pipeline on overall. that talked we

with right, to growing pipeline complex the fact or and about more from so and or on. We growing respect that faster. have deal structures deals outcome pipeline lead to larger the that talked is And can timing the variability,

as we year. elongated continue with deals, some continue not across large just to sales modestly of the Similarly, just board, board, that expect and so expect the cycles year And we right, next but well. those next to dynamics across

do year we initial in contribution offering the new contribution small to do And year. expect Cisco, grow available a terms relative XC to the last from contribution expect Dell now. 'XX which fiscal we generally Plus, from In the is of Cisco that's

small from expect 'XX expect as well grow over that And initial we in that time. contribution and to

of you to the Jim, the 'XX And when renewables so top that to account business guide fiscal thing nicely think renewal other taken year-over-year. that all alluded -- is so year you provided. yes, into about line is grow we our continues

So that's And factored there as last in ARR. well. of was the your think around I question part

course, So providing on that -- we of quarterly to to ARR. a report continue for ARR noted for our will, internal not underperformed basis. expectations, And 'XX while year relative ARR guidance we fiscal we're

Rajiv Ramaswami

And only of explicitly I'll I to The continue. question been also our we've Rukmini, thing pass and that because Yes. that's that, also Jim, deals, in past X be you had the opportunity. think, difficult add it's largely but the I using, said, a very out to on VMware Broadcom would against been have historically, -- every competing like we

It's little the influence. are of -- only for why people to piece out us a only it these level separately. us. reason some there's hard come I So to

Rukmini Sivaraman

Thank you, attribution That nuanced. Yes. certainly is Rajiv.

wouldn't to it do on some, but to we expect we So that. overly precise contribute continue be

So Jim, thank you, the question. and thank for you, Rajiv,

Operator

Meta question the from line comes Morgan Marshall from Stanley. next our of And

Meta Marshall

of couple the Wanted asked get been sense kind question back times. of a circling maybe to a of that's to

are is any we've of are of are? early issues that as most or opportunities. refining out And or do -- kind you opportunities the but then it, of kind most Rukmini, feel of know just of should definition just [indiscernible] you Jim your terms are the years, of timing in Or be customer given couple Just where the some mindful co-terming you Broadcom of that we still where co-terming dynamics of mode of figured just renewal kind like into go past the asked I kind actionable think fiscal actionable what renewals we the kind 'XX. just out of figuring and had about over discovery of you've kind of kind in of where of you

Rajiv Ramaswami

enterprises Nutanix then call start side I are as of over towards what mid-market. last the that's I'll [indiscernible] and upmarket the quite and Independent smaller second Broadcom market, the But few in addressable can opportunity TAM because we underpenetrated has at answer we the enterprises Rukmini have would deliberately larger strong made of we sits. part. our historically, look and been of higher further commercial end the situation, a biggest where the years,

So focus on market. over past few our the realigned segmentation that we years have to more

Now products the ready. are

We a have work [indiscernible] we're now done of got product side. lot We've the ready. partnerships. on good right some The

also accounts, or the clearly GXK are that to the to example, the Fortune for large Now we you customers, when accounts, get more those XXX-type understand going be competitive.

some here, about fruitful And of last ACV starting that's do be tend very and And to talked but engagements And see those. more bigger, if those they Broadcom win are where tend to when win quarter. We is focused can to clearly we an on. be long, to we X-figure it. win you as

had multimillion win. we ACV quarter, dollar a This

are So when those worth tend to take well they time it do but happen.

sure. got there, we've focus a for So

bigger And easier a as focus to accounts. smaller and it's competitive or It focus side of also explicit the their mid-market The the migrations less on tends enterprises [indiscernible]. be for given also Broadcom, less the well. of

historical spot continues also sitting the So sweet is end used a the of us bigger now be But to to that opportunity be sweet the pyramid. at our is spot. top for growth

Rukmini Sivaraman

renewals Meta, and on for 'XX. And renewals the I'll in expectations question, year take fiscal

from team core did early term around have economics So in customer good earlier I as those well. good with come in they it at discipline point, we are give for commitment said, our we good earlier fiscal include really and mind just long terms as in us for in And the often and renew to cash renew 'XX, performance as willing of far us And renewals. think your the some in overall renewals good renewals. is pricing. include because to the and to us their as economics did the as It did

core managing terms course, and customer well both So simplification terms, the of real estate, of right? then of their us their And in the that's footprint.

that. of did have we some So

at grow. similar be continues year pool, look similar to renewals can a -- what year-over-year 'XX. it strong 'XX, as fiscal to we about think pipeline growth. continues roughly we to when a growth effectively for it's our Now And to renew year-over-year available you fiscal year in saw It's

fiscal QX around terms perhaps of question around fiscal sort of that. I But Meta. your like our general, flush are that. to given year-end then move and and It things calendar And timing, in us, QX there a bit. incentives year And that, of budget does and of has course, quarters year seasonality in for be QX the little of of higher our tend end fiscal QX was and sort think around is

QX and QX. the to opportunity But pools QX in relative 'XX. available year higher about started in of to we sort renewal So that's fiscal think new how and general, have to the QX

Operator

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

Ruplu Bhattacharya

It's trade Nutanix. And induced gains share smaller can a how one Ruplu more for have Is different about I faster you follow-up share ago? in Rukmini. a their example, and team, for as from Rukmini. Rajiv, for materially pricing said for some one talk today. to pricing environment maybe environment? for may with to is past can you've that And you customer a the think wait be filling in the gain you margins? for use drive I depreciated. management Rajiv days demand the Specifically, go Wamsi do customers to XX And hardware can be have a lever versus I off

Rajiv Ramaswami

stable. those has At top level, a and it's Yes, good demand changed, not the very questions. environment all been fairly are

more getting we several of of they the over seeing more before and awareness are we As purchasing the said some cycles, TCO make decision. elongated quarters, people sales last approvals

has part not So changed. that

look at we how the of opportunity. terms in Now

Now do a be a to on a see, mean I hardware refresh, of need factor hardware as you terms tends right, that when refresh, can we customers' significant in deal. timing

other the hardware [indiscernible] for use mind cycle, points. hardware X, years Now able keep various at the on orders state a say, not the size insertion is a in time just be now. in insertion. can to an of be refresh key things not workload and getting points that may because point we one over the this portion refreshes secure one It replaced, where may from year the maybe depending multiple we of And refreshed of those is hardware happen replaced insert get at in full hardware to hardware time, portions we gets the X is to and

of that's engagement. So normal sort

Now licenses providing offered for some overlapping in some customers promotions can of we to of terms a discounted of have them give them windows where sort time. we period

tend Now be I hardware to say will significant. costs quite that

hardware [indiscernible] more necessarily we not interested it's with able subsidize may costs okay? are But to So in that sometimes to themselves. hardware doing partners, are we ourselves, that able be work

have the margins. significant aggressive are we that And And go -- time there bounds these incentives the promotions what of deals, to already terms and do in it be the within can win to especially as aggressive protecting reasonable quite out to we our will while is look, for same we it customers. comes a when needed possibility at customers, think new when well ones, So to then, landing I be hardware comes costs. willing

a I broad would that's are wherever being say So aggressive [indiscernible], needed. we probably answer.

can servers invested even as our existing to in. to some we places time, or to Ruplu, customers if support, of also then refresh, do more over to [indiscernible] are third-party broaden we at insert that. of without get hardware in can working And And the we'll requiring hardware opportunities. refresh environments set with better same the keep the able mitigate working mind, where storage a We may ability reuse that more are we see be -- time, we partners already

Ruplu Bhattacharya

to fiscal say, you that second Day, first X dynamics and revenue versus as at And what the fiscal to I guided that be the strong, to outer Or renew very Investor prior year, acceleration well should expectations cadence investors the there thought, is the half half had of lower you of you, logos for XXXX above the next flow the Rukmini, that, Day that expect fiscal had given should in also given as you're the in it is lower? Analyst 'XX available winning? could over years, a material what reasonable be the is of for look it renewables ask then about guidance. How end cash 'XX for free we 'XX. we think the now the wanted metrics, example, guidance your remaining is at when of

Rukmini Sivaraman

Thank you for that question.

first think free So first, flow. I your question cash was around

our cash the fiscal are flow and what where as last performance you in flow out high cash of did, 'XX we to to at the our free had put And noted, Day. which, year the pleased happy free so Investor guide with range we above is midpoint end we year of

don't, cash there, transaction, in we meaningful some upfront, we can free last multiple cadence those couple so flow because Ruplu. or a -- where years are of be quarterly pointed of terms if then Ruplu, course, collect quarterly in longer deals generally, right, there that there, can duration as cash to including, the the we if that of swings, larger collect cash guide quarters cost variation for Now upfront there for it's deals, out

guide say plus raises that going annualized and about time. in quarterly, to because you and margin all think OpEx so increase implied some run marketing for year-over-year will into and to sales are quality employees And rate time, right, over investments -- of when our yes, our that's gradual example, R&D So that for be don't the guide. of in over salary can talked of the be effective. operating We've we're that the the includes became will growth you annualized sort does OpEx time. in from but of The over color. expense it those -- see all that include, 'XX, 'XX, more on sort we would I of about invest

more as rate others spend into be more those of will some over we So the are gradual and time. run ramp

question. of that's So first your part the

last more of think I put financial second around our out at medium- to the Investor the that part And sort we was targets longer-term Day.

So 'XX put of midpoint range And guidance while have guide targets time. are note Day. fiscal financial basis, the we happy at flow we cash within what don't the Ruplu, we we medium-term out 'XX is that the on an you as at revenue the range said, just free that have to on Investor is year plan that those at interim above our year commenting on provided initial fiscal

flow We over free margin on expanding and a and cash at durable time. and of to plus operating sustainably growth driving to driving top focus continue XX operating line rule

we that's not of continue So philosophy, commenting we're and and our specifically to on drive this philosophy, sort been that those at point. numbers

Operator

Blair. the question Ader William next line of from our Jason comes And from

Jason Ader

kind look recognize One is then schedule rev for deal? on that you what's you particular revenue rec like transaction? quick deal Did of X-figure from And this on one quarter. announced that last quarter any the that the

Rukmini Sivaraman

Thank Yes. Jason. you,

So starting year we transaction. I of did over fiscal value entire PCV of of all said, the as multiple that we for that think is cash years revenue recognition the the in quarter, sort collect last transaction, 'XX. But

So didn't in all there a and in was -- QX, Jason, the revenue license 'XX fiscal services that think but small we professional I is no, began portion year beyond.

Jason Ader

have the misalignment is Rajiv, do of right then, you, just enterprise. of like couple last question frame of moving in yet customers bunch think years you end of this end asked coming lower of from a targeting that bit kind the wanted the think to for this, -- the types and you're low-hanging of from in have the a you over just which kind disruption low go-to-market of more you're fruit because of is And of VMware seems standpoint market of it But and opportunity. end the now terms -- most I people low it market I up VMware the around displacement like a of little

Rajiv Ramaswami

pyramid, mean, So the which the right? miss have away reason focused well our the our will focused to dollar higher we up right? and our haven't to And on and customers, is dollar the on very from end of I installed -- sitting and sweet still have to are That's of already we resources can grow, penetrated right? that's better continue capture the we is -- us line more don't that's Jason, we and same base, where because customers. that. targeting equally Broadcom for a opportunity those So go GTM more clear, we see where We maximum lies, we in opportunity by be the spot, are the there, in much lower I moved market, we in

are from retailers We are a sweet spot. to everything of types, sector. types restricts talking public to These much very all those about cool ready

opportunities us, for pyramid. sitting the certainly But the bigger in SAM of the top

company, a as be to, have we to so successful. And

last have the that we when rate saw win can know we for. we the be won But We opportunity have harder be to with Yes, you right? are those, quarter, going DTM. after go products, those And we have figure like those significant. them, the we to do pretty

Jason Ader

the thought you cycle X.X But I was quarter you. won or one that Broadcom. X-figure -- Got like that related X-year a the wasn't year sales last really to

Rajiv Ramaswami

soon do. the as very is wait going close, to are and It customers so. Well, Broadcom. to Broadcom of partly a to thinking the customers sensitive but to to them we attribute started as deal with many for what what they're the much the to about it's lot think very engaged aware for related it's of to pyramid mean, at smaller of the going the didn't Broadcom announced, I top again, were hard deal thing, years, X the was unlike big like, very XXX% they I happen. see everything Yes,

So and Broadcom boost. -- value we thinking in this in then our certainly added a the of unique an customer course, had use proposition piece, the that cases was

Broadcom much much by this So is Broadcom, where things hard a of with But XXX attribute also to Similarly, very Fortune driven good financial it's these the this one customer same, right, something is much how it much it's from example the else? the how services example. call situation. very that's quarter's of

Operator

from comes line James. And our Leopold from next Raymond question of the Simon

W. Chiu

better more that. existing be or on their some to virtualization forms application kind kind on fairly what married HP functionalities you footprint those of advanced easily that Simon. would VMware's initially kind of VMware Victor you and of migrations. to of able Chiu to adapt their is to percentage up follow about us I This X-tier kind that because -- wanted Can Within of regarding described. question worse customer for customers for dependency of help what infrastructure of in on the last the think

Rajiv Ramaswami

Yes.

technical good would at where edges on are and say well I perhaps VMware on the on that's majority that's a certification of vast an be as well. last can And provider X-tier certified There application hinder them. run So There out certified question, very AHV. HP running not things but it's the environment. a applications Victor. on more ecosystem HCI some not high gaps, built the over it's we've that really on ESX, that gaps might might years, few of

other that are certified. and there going of some on barriers HCI pretty we much refresh for is run But anything be address on Nutanix on the timing on about, that not not other but that there's infrastructure some cycles barrier. it's renewal. But running the X-tier talked So AHV. VMware right, to a hardware conditions part, effectively in of to are the still then a technical that the factor terms things that in, we and we Those most the of can have are

W. Chiu

economic us it how of different? kind does is will margin of capabilities just economics, materially help economics in differ Nutanix more very platform, of thing. That's maybe having an with helpful. compare the the you make that then into Or kind a having And of the included can about head a hypervisor a AHV, think the

Rajiv Ramaswami

case Health deployment. I so from everything, say savings. XX%, it hardware is They on TCO the of Yes, as factor the when clearly, at right? a deployment substantial XX%, cost, -- think over operating pretty has of the been all so to Victor customer X-tier including a They a save that We again, migrates lot, this least a cost, costs. historically, in

to continues hardware, case I you've go and battery, [ to that you is is it of that HCI hardware. -- very invested the value savings think related ] established course, But those actually of before depreciate continues. buy today, the and you've to the so you And the in X-tier new got want right? be

W. Chiu

an to for HCS VMware transition the existing is Nutanix much And easier?

Rajiv Ramaswami

replace exactly Fortune their for because an deployed. this The other about easier they HCI could just change of Yes, didn't was migration It them, offerings situation. had easier. to have Much we out software. hardware. was win that We the XXX a lot competitive talked without that customer software

Operator

question comes Matt line Markets. from next of our Hedberg RBC the from And Capital

Unknown Analyst

of out Can Hedberg. large looking Congrats this far then what August? of just ahead, within being XXXX, Matt This is on have quarter. more deals so just the may the And large some any uncertainty deal in you the trends pushed quarter? And have the one. And or did see you you pulled deals of in these seeing linearity on quarter? touch Simon then general maybe on given early been for timing. linearity for

Rukmini Sivaraman

I'll take in. that, Rajiv, you should add proceed to

we more So linearity expected. it would say as less I was for or in QX

can But I like given I be was in largely was approvals, large question they that. QX things about deals. unpredictable. talked of we've those think And the be your linearity It portions specifically would unpredictable business expected. other on with often say involved more as C-suite to linearity is more can respect strategic, than overall, to tend more be

In of terms there, as at we push year. the coming I QX question pull would in, think part think Nothing the out note. unusual last next into I this of about or

of expect think that what it of year. think we sort I time would was for

in our that call overall it's earlier, about closely. mix to the become that year deals there. linearity I said fiscal to and end that. ability federal large we're and thing flow little unusual because a on can again, factored think as again, guidance I things it of over and collect in like cash as into grows the the out of watch we time, free is But think that's U.S. unpredictable is nothing of And continuing QX all So of only then [indiscernible], September, course. how But to something the

Operator

next Cikos Needham. question from our comes And from line Mike the of

Michael Cikos

pipeline, last longer opportunities the start a than enough ACV more have QX? to cycles really some these these Did hold on to million just wanted growing dollar gave if growing of color number on know XX% how the ask, And year-on-year, dollar sizable are I a it I statistics at still understanding the plus quarter, much these company we great sales do deals? in we for cohort look in basis. XX%

Rukmini Sivaraman

good question. Yes,

metric quarterly, those overall happy are necessarily So said, segments. provide we're going we creation are meaningful we that opportunities pipe as larger But I deal with with think and not seeing to Mike.

that be we do good continues question [indiscernible] So around And think to points pipe early. enough your second I relatively data of in terms have creation.

we've of another quarter X.X The deals grown give it it X where But can example years, talked has X pipeline I would years. about here, where nicely. larger these long was was this really time, some as a take one

can so it long. take is it And variable and

data have previous say asked conclusions tracking of that's of deals a but close, draw multiple of don't we get terms even our do sort that. -- we something closely, And points so too to right? think lot If us ways I'd about to or we in the also could deals, from is watch many we under X do here that to it thinking or in those the was A&B number, get what enough And Y that question belt of don't -- right and data there. have terms right, that have I deals close other

have internally and So we that's guidance. discussion a into our definitely factor that that

Michael Cikos

call I any Is from it a color is Again, payment. $XX it, kind back-to-back assumptions free us Can we're second this year. would the the the same the receiving just now Got I the color just we're because of help understand partner here. this benefit? guess quick for essentially that you quarter cash it. to -- appreciate this other follow-up. be benefit -- expecting on payments year flow And million all we're

Rukmini Sivaraman

that Thank clarify I think to happy Yes. because -- would be for it's that. I Mike, you, question

nonrecurring there So and partner, payments this this and a is cash -- there are free from between OpEx these difference timing flow.

had in fiscal had becomes course $XX in And commentary the year million we expect to the $XX same -- million fiscal was year R&D we year it million $XX OpEx about right, the more in that like line so million and of benefit over fiscal benefit, $XX a provided year 'XX we that the to 'XX.

headwind the year [ million So ] [ $XX that's was fiscal ] to referring I 'XX OpEx, 'XX. relative that to in

that commentary. So is operating expense of all

cash delay to a payment. that cash of in there's bit flow, free look Now you when comes in at a relative the when

cash $XX benefit fiscal about 'XX. of year we So million from got in that

end nonrecurring be an months X this And it's off. We in do in that ongoing But time, expect into may this then fully fiscal in another $XX we taper as year because didn't million there we portion will it small and a 'XX, taper be will year, then off, 'XX is don't expect but it would 'XX. about continuing think thing. over anticipate we we this It which ago. taper to off it

Operator

for does program. ladies conclude session This participation. as and gentlemen, your the Thank well question-and-answer today's you, as

You may now Good disconnect. day.

Nutanix (NTNX) 28 Aug 242024 Q4 Earnings call transcript