NTNX - Earnings call transcript Q1 2025

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Operator

Hello, and welcome to the Nutanix First Quarter 2025 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

It is now my pleasure to introduce Vice President of Investor Relations, Rich Valera.

Richard Valera

Good afternoon, and welcome to today's conference call to discuss first quarter fiscal year 2025 financial results.

Joining me today are Rajiv Ramaswami, Nutanix's President and CEO; and Rukmini Sivaraman, Nutanix's CFO. After the market closed today, Nutanix issued a press release announcing first quarter fiscal year 2025 results.

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

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

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

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

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

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

to at in Nutanix Francisco York Barclays some James New Consumer in and Conference XX; We December you on Technology Raymond is XX. hope December Conference of in Global the on these TMT San events. and participating see the

fiscal our XX. will Finally, quarter XXXX begin second period quiet on January

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

Rajiv Ramaswami

Thank you, Rich, and good afternoon, everyone.

in our guidance. of ahead happy are came quarter report to that We results first

their businesses our to continue transformation for optimize to by ownership, cost solutions infrastructure prioritizing total of TCO. digital We modernization see demand and their steady and driven initiatives looking our

metrics. We $XXX to revenue the first ARR $X.XXX quarter, billion. Taking exceeded million. XX% a our our of we at quarterly closer guided year-over-year all delivered We grew look

and cash strong another new in generation. solid saw quarter year-over-year growth also We free flow of logos

operating organizations M&A. in wins multi-cloud to are looking including and to also managing from their that Nutanix Our industry modern appeal disruption Platform through adopting while demonstrated IT the hybrid footprint, models applications the modernize the Cloud of largest quarter

wins their the the IT full us stack adding cloud largest of in with provider our areas Nutanix exposure of their automation This our also modern their of aimed expansion a region. workloads AI, reducing self-service shifting by to quarter while also customer our with a increase competitive to infrastructure capabilities APAC existing expansion One other them components of additional portfolio, and based generating of to Nutanix at with go-to-market platform, migrations. and global This services more their was consulting provider. the in expanded enabling incumbent applications and was practice strengthening

while ownership their competitor. them a or in running total exposure also with workloads their significant Nutanix by environment consolidating also American-based of This QX Fortune nearly along with win chose a the implement while of enables our reduce TCO running more services their their This on footprint. Cloud They cloud largest intent food of cost the XXX to platform, a Cloud data looking and was XX%, North expansion including in lowering customer with multi-cloud Clusters NCX, provider notable hybrid our Cloud products. Another reducing existing was to public projected Management. center of Nutanix their to the AWS, Nutanix and

announced general GPT-in-a-Box availability front, the recently product the of On we X.X.

and running and NAI, for AWS, A generative NAI Azure capabilities cloud data on-prem end or large simplifying independently, EKS AI for which the running platform all can within managing deployment such leading native offering on becoming the models. anywhere. our applications. new as These solution or services, influencing is help of GPT-in-a-Box further AKF. language edge and Our vision the or for at streamline points apps of of public of helps AI deployed Enterprise key component be Nutanix scaling this deployment

Nutanix demonstrated early This the chose customer modernize region logo new infrastructure full with modern new capabilities quarter our our GPT-in-a-Box Nutanix our AI a and and as generative solution A to to first Platform our of progress Kubernetes government their looking Unified offerings. solution support Nutanix Database X.X application development stack chose platform. Infrastructure, applications. the generative and They with and Nutanix EMEA was Cloud including and their Service the and in of Nutanix well deployment cloud-native ministry as storage AI

Moving on.

services progress simplify expanded an make front, AWS cloud to access will migrations to continue signing looking also partnership migrate and AWS. to to that partnership NCX with AWS We on for strategic customers offer on the

proof-of-concept licensing support NCX this As AWS to to the as migrating of Customers will credits credits AWS program. Nutanix migrations promotional well on AWS also accelerator customers and trials as and VMware to migration collaboration, access for can access VMware customer promotions. gain from workloads through AWS part cloud to promotional gain

Finally, Quadrant. our Magic QX, we the challenged infrastructure. distributed in for hybrid to Gartner position from providers, industry continue recognition of named the XXXX being leader leading the in receive cloud public in Quadrant Magic improving a XXXX some Alongside

pleased results. In solid first closing, I'm quarter with our

ongoing on we on applications its We progress Our and remain driving while continue on sustainable, platform, particularly and the generative modern our make with to innovation to AI focused for respect profitable cloud partnerships. growth. support on

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

Rukmini Sivaraman

results, us updated 'XX you, and QX QX for our everyone, first by I full Thank fiscal XXXX. an fiscal guidance thank will the today. and joining for Rajiv, followed you, year 'XX our outlook fiscal for discuss

us customers at from as looking outperformance billion, Results end renewals range of wake incentivize XX%. various ARR general increase metrics. higher in high channel the put from and came at our of We $X.XXX was in was was strength landing place $XXX programs helped more onto QX M&A. end by the million, saw rate million, have an and QX range logos growth XX%. the to year-over-year in in representing new engagement $XXX we representing OEM 'XX $XXX Revenue leverage from QX good partners million guided from year-over-year new across platform, in revenue alternative the execution. guided industry the in of to by in a than in of of driven our of our customers a our The above growth

end net by rate of is given fiscal retention the U.S. Expansion customers strong XX XXX%. with existing at dollar-based impacted a their was QX September our which NRR seasonally year-end. or for federal quarter largely business was QX

Our impacts U.S. year-over-year was lower continuing resulting spending performance Fed we business a Fed lighter strong our relative the in the is QX customers. which to from to resolution elongated ago, year from due comparison believe from

current to our the we levels, see business continued influenced environment historical which we in more on is elongated our expect believe we continue modestly macroeconomic to return In to compared on spend. levels U.S. performance by QX, Based second cycles scrutiny average quarter. normal federal to view, and the sales increased

in as close have discussed strategic variability our we and in continue longer addition, and believe deal to involve greater timing, larger land them the structure. calls, earnings and In opportunities expand to outcome decisions take C-suite and to approvals, pipeline during prior to causing

X.X These margin XX%, sequentially QX factors Non-GAAP our ARR Non-GAAP in was also margin and gross to QX growth. operating in smaller and of XX.X%. a impact to of years a as than higher our revenue Average to higher flat range XX.X% XX.X%, nonrecurring in was largely expenses result credits. lower duration quarter-over-quarter. including payments was due contract certain to extent, due guided QX

share cash in $XXX of free income shares. average fully million approximately GAAP was shares QX per a million, net QX based in flow net and diluted were on $XX $XXX and GAAP million, QX outstanding diluted flow $X.XX diluted of Free of representing respectively. Non-GAAP XX%. income million XXX per cash was weighted of EPS fully $X.XX fully margin EPS share, in

and equivalence Moving balance cash, billion investments sheet. at $X.XXX to $XXX of the million QX We cash from end short-term QX. with up the of ended

used million shares QX cash to their QX of Moving repurchased shares We $XX to related allocation. worth to of employees' about $XX our capital quarterly liability RSU million retire about vesting. STAC in for in and

'XX. Moving to QX

Revenue follows: Our margin non-GAAP weighted guidance for $XXX XX%, shares. average of XX% to million outstanding million; million of approximately operating QX XXX of diluted $XXX is fully to shares as

full $XXX $X.XXX Point of follows: approximately of 'XX the Third guidance. XX% year-over-year guidance no updated is representing billion Free million, and The a growth margin guidance cash an approximately year. our year fiscal a of our prior increase The our representing free midpoint. midpoint the and relative guidance. $XX initial of to operating from of initial to at billion, an at at non-GAAP to for increase of XX% as flow XX%, from $XXX to previous margin to change Revenue flow cash $X.XXX XX% Moving the million million

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

land-and-expand we opportunities solutions. seeing pipeline continued are and our for growing First, a

I which to expect relative mix mentioned we and of to the the the we to pipeline. as historical uncertain is which see uncertainty earlier, we continue. the modest structure a environment we And spending deals in larger have average continued have of expect previously, timing, as we growing from outcome However, elongation cycles deal in sales and to believe related levels, continued discussed

guidance continue the renewals year assumes well Second, in that fiscal perform to 'XX. will

average year of Fourth, that percentage to Third, non-GAAP development, continue to market fiscal margin guidance addressing assumes expected our sales opportunity. the targeted year. to and to as our the guidance the full investments grow course lower and year 'XX contract towards research ramp the marketing investments continue as duration in renewals large and flat operating incremental fiscal slightly Those prudent will assumes are compared of a be to billings. through

land current year our and renewal's similar in cohorts we on what expect in note QX saw revenue we visibility seasonality. a view to fiscal expand, QX 'XX. Finally, relative and into on seasonality of to be to Based fiscal

sustainable, to expanding employees, for customers, end us. trust that progress growth, In line of committed closing, growth top QX pleased high with exceeded in are we through of both and stated We and our durable like performance our partners, thank to philosophy aligned continued the guidance their our and continued investors would margins. remain our profitable stakeholders

operator, open questions. that, for With line please the

Operator

Pinjalim from [Operator of Instructions] first JPMorgan. question comes the line our with And Bora

Pinjalim Bora

to a act signs of to you from any Rajiv, talk VMS might with you about convince Trying or AWS. catalyst people of understand kind you this the seeing move if customers to one that? can Maybe around for It are offering? what partnership as are NCX hearing new to you.

Rajiv Ramaswami

Okay. Pinjalim, here. Rajiv

meant VMC said correct? you on think I AWS, You VMS...

Pinjalim Bora

VMC, Correct. correct.

Rajiv Ramaswami

AWS, correct. on VMC

All Okay. right.

offering. think it's us, be I happen as and with for what to an for much. might created opportunity seems not Broadcom their that focused an sure, are clearly, customers And to that as So offering on concerned is

version go the cloud their of Broadcom. deprecated offering, version cloud garment apparently example, was For by

one and actually about the AWS, did is have them customers with quarter exactly from this working of partnership one the on that We impetus EVM AWS. for migration are provide where talked that universities together to anyway. NCX of we went expanded And last leading for actually, we wins with onto that. the So BMC

working are of partnering impetus we AWS in who really credit. immigration migration off interested together the public offering help one is customers why to in offering program, be the They're this accelerator else something migrating on is So might us. with that The and to

Pinjalim Bora

It Yes. to Understood. trying understand very Rukmini, beat. One Rukmini. QX guidance. for a solid seems like the I'm

took the didn't numbers You second but QX year full seems implied like it's guide up. up, an take down the because number you half the

prudent on to first seasonality half that is on what there to a the second understand, any think lastly, that we're half from cycles, moved And trying sales you're I'm changed that of the So close bit? Were the just caution kind the you a seeing NRR? do trough around deals into

Rukmini Sivaraman

questions. first. Thank guidance start I'll revenue you, Both your good Pinjalim. with

half guide larger that average elongated causing administration were revenue to out. to think including new land to into of see finally, timing. related pipeline fiscal we've longer revenue remarks, and maintain historical strategic the And and And given as levels. prudent our a to but we rest is we prepared continue them we historically happy yes, So one a quarter second first seasonality better have uncertain until the are between top to U.S., QX year. we year fairly deal involve to we in have my line even modestly And perspective, year I it's cycles believe seen we variability a in the half the structure only decisions, sales to the more going in . And and year. performance, to these from expand of noted our environment, a the how continue take full play to view our outcome in split that and compared approvals of and opportunities greater close in fiscal the with

So that different seen from we've what our aren't expectations current historically.

Pinjalim. question, on the line that's So revenue guidance top

I think your second part was of NRR. around question the

So a few things on NRR.

given recent say will levels. disclose I not that our in while that said relative to GRR, that it past we changed it, significantly First, don't we've has the

saw ACV, right? of not, we strength from land the driver and ARR our largest on your land. question the expand does example, And is that net that, which given is So in new for benefit specifically

our And see start some clarifying performance. sort to the want between of divergence we that. first there I by So land in strength did

expand to we was from respect land the the lower impacted majority expand, the believe business, which strong and by with largely Now and with expand, our we year of which accounts is year-over-year QX the compare Fed existing CR which U.S. our had to the from continuing to relative ago, resolutions customers, was due in for a -- U.S.

so deal or expand that all sizes, sales the well, dynamics does large you And as about larger in impact various cycles talked sales Pinjalim. cycle,

did all number. into that So go the NRR

as by know. of -- low around, your is point the think the don't we to you -- We NRR, this talked impacted was I will question some NRR. like we we this But the these continue. some hit Now is cycles and deals for factors sort have guide to do about of when be expect of large expect sales that the we've that of that and mix

believe So explicitly we the case, that but to is NRR. we guide don't

Operator

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

Meta Marshall

Great. Maybe federal the following on up piece.

I you that or that wanted QX, second more. expect about be script kind then just to improve fiscal to explain kind administration the change, you just better. could would the commentary so maybe fiscal need until question. of expect expected a wouldn't federal listen to into would you in noted you You of of what maybe went that And but kind QX

kind kind of of of Dell would Just Just integration? there anything PowerFlex timing helpful. on be update any

Rajiv Ramaswami

visibility is on Meta, new the we terms administration question, of or in what federal do I have So not do. don't to the mean, going

after in. So the we can't really agitation talk new about comes happen what's to going

business a on on know we view to come normal QX, based why have have administration federal feel which more to levels see we of the what QX coming about So our what they comfortable we does after back And of course, we'll that's today. in. And board. in new near-term course, we on factored

question Now Dell the on specifically.

parts now the appliance will So we on combining to it's X hyper-converged our that. which quarter, One early that Dell solution days be That's and their as you been know, relationship. an there's Meta, still service. sale software in existing market this the by for is have, the

Your question PowerFlex. on

expect of it in We expect to have and some 'XX, that to contribution the see half in Calendar the revenue market in from we 'XX. first FY

Operator

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

James Fish

for to build you off Meta's want did a fiscal Can can and talking big here QX what you in question that? how are there Pinjalim this impact of retention federal two bit. difference or I guys kind have seen or quantify a net versus little be of just And remind how of was? saw us to the you rate what would we vertical kind the versus we point actual about Like here? XXX that

Rukmini Sivaraman

I'll Jim. take that,

said quarter our which imagine QX the is also this as So the we've and strongest Fed, First, that, given that can Jim. year-end, federal before, it's seasonally XX. don't on typically But covers September quantification disclose of we you for

in disclose which don't not us But impact that our that we was one challenge is QX or did compare. by expand was by other similarly, last specifically last at It point. that going Fed we than saw strongest And year. right, see is QX but Fed any break for was a So overall NRR strong what we to lower the Jim, to sort out quarter. this fact and QX, relative a segmentation of we're to number, Fed

James Fish

And it. Rajiv, maybe you. Got for

other first some thinking when of of stand-alone half we're that all about go see about other PowerFlex. AHV anxious start Nutanix's XXX? 'XX see Dell faster stand-alone we And relationships to we into integration there? wouldn't just should why out getting about into of AHV to could we Obviously, how But calendar talked to arrays. storage of the seeing you more X% today the kind from providers to attach I think hear start

Rajiv Ramaswami

Yes, two questions Jim. I think there, are those different

question, one been the on the first so Dell we've think announced relationship. only I far PowerFlex that has clearly,

that very other the can right that arrays same plans can assume As that to make on whatever we have that preannounce you going time. on do opportunity we sure over expand now, I'm careful storage not for anything imagine, us At working but do focusing to selectively we to you in way. a to the market are is actually want time, also cannibalize doesn't opportunity. the expanding HCI and existing we

are like platform, the storage at vendors can full focused capture with HCI that with are would working that we would we necessarily our HCI So stack. that not array we to because specifically be on to own workload the with easier workloads do capture

even our And that time. those the goal is over time, in for full go we sell stack over do to

So you say the start comes options in stay over to storage don't mean, tuned. to I continue is point. can time the course, idea this to Dell will have explore we then at expand other market with to when of other and it more any But others. we, And to arrays. --

will support more like to I course, the our still course, your And and footprint. that. top to With But to goal to that more our continue into we think the this necessarily to we'll platform has always as accounts, hypervisor question hypervisors. migrate to ASV to there's don't to support of only penetration. see to be And well. Again, help we is AHV respect been be but need adoption multiple ESX, to cadence which buy would, over our continued it at VMware storage the and AHV we insert XXX%, philosophy increase I of because start to customers our on and has been a also support where running footprint want where frankly, of on amplify able are third-party having, AHV is it grow, is. we VMware forward natural going

Operator

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

Jason Ader

look you after at the margin when for the guidance for margin the QX. slightly and having second QX also the in half. operating pretty then But basically year, you to half second outperformance robust gave at So a and significant only I operating that looking quarter raised per guiding pretty revenue in

kind I So on be going weigh kind just half know I second of you want is going the expenses, nothing that there's that where to to sure down talk that ramp And And you're is second make idiosyncratic to about. to going said the can in margin. but come. operating you about be then that not half thinking implies the we're of to up spending ramping

said You buckets. you could be marketing specific R&D, sales more those and and within but

Rukmini Sivaraman

operating on first, margin. Jason,

you're So correct.

So historical question, to second we implied that half I to that's is split, earlier and response our with revenue I'll revenue. first, was to on patterns. half similar What even -- first -- an roughly start said in think our the based

other of While we course expenses operating like grow much fiscal year. the expect it hand, on the year, last the over to did

your to see fiscal expect margins operating year in and that lower to point, half So the will 'XX. the year of second you're we correct

to are dollars. overall, second see And improvement expect the where year then full your 'XX. However, year-over-year we fiscal relative spending question still on those for fiscal part we in of to year operating margin the to

about example, in stand-alone So first, investing, have in to support we the these stand-alone AHV arrays. storage R&D, for talked

investment. area So that's of one R&D

platform, have another or the it generative That's cloud containerized we making platform evolve. core our Some native that around right, up to include plus applications. our area continues to enterprise and ramped sure offerings other examples AI

our within platforms, drive. that even there we to continue So innovations are core

of where side, So on examples we're the R&D that's investing. some

some made our talked On focused we into and that. selling folks for sellers, we've helping some portfolio specialist we made our and are field do on example, go marketing continue product side, have last around year this and some entire who year, main the sellers sales about -- will investments

some and more have tiers. who some focused both land inside We investments the as example, on can mid-market around folks expansion around increased the another channel be driving sales

both and those sales So that some and areas investing are in R&D. examples in of marketing we're

Operator

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

Ruplu Bhattacharya

that who strong. in Ruplu today. How to the any for It's fiscal we there renew has the fiscal Wamsi pool in in renewals fiscal kind 'XX renewals growth versus a of fall is business. the Rukmini, cliff mix been to a 'XX it danger there should and cohort continues are going about enough large of think filling a that renewals Or in business 'XX? available And of customers in as fiscal in off grows renew strong 'XX? is growth

pool continuing renew So just see you your grow? thoughts to that on and available to how business

Rukmini Sivaraman

you, Thank Ruplu.

you're we did about renewals correct QX. for talk So well doing that

we grow of few last ATR pool is the year fiscal year years, versus to and nicely the nicely Ruplu. for gave 'XX. to or continue full grow initial to this quite 'XX, 'XX all in guide call think our terms referred Available earnings year over I the fiscal for when 'XX, we ATR expected In in you next we'll year-over-year to new

available not X I'm point. growth So for 'XX. only a going we next that our still quantification for years. fiscal to We're to yes, for in give cohorts this at renew 'XX But quarter renewal of the couple continue year expect to you into

Ruplu Bhattacharya

Were said I my years, a a don't And you you think get for you strong you've was had which had maybe XQ ask $XX any onetime question. terms last year Free million, that XQ. of last free very there had the million Okay. items? might cash cash from follow-up, quarter, said full over was in flow. the know benefit X, X such in think, you fiscal partner, $XXX It I flow I another strong. I'll for

-- guidance flow of the we should think second how cash versus free half first half this in any year? about on So progression

Rukmini Sivaraman

you to. as were Thank flow in you, alluded Ruplu. free our We performance cash QX, with happy

nothing would onetime. as out call So I significant,

did call terms little to wasn't not They come those Ruplu. continue might we're but in fiscal any those inconsistent I out year we There for thing So payments, quarter-to-quarter, right, and a would out. that quarterly, be partner in. 'XX breaking call of you're out X will

collected quarter, was July there that QX, did quarter. we we our one in that in significant call For deal example, out in

would example, of you I I guide your just, call that, I XXX. nothing of strong our XXX full And when for that year like part is XXX about there QX. was to out year, QX, a For more is think the think was question generally, think and rest

go just you through And remind the expenses of going so the that, up to year. are expected rest one, I'll up,

in So last mind, ramp expenses of keep they right, those that the much will over course year, did fiscal year. like the

that of So And typically from we our years in. multiple do collect cash upfront. customers

on some variation that cash so duration that free does we in deals, And quarter-to-quarter an larger mean or annual depending continue to depending on on that guide there is only. flow some can basis why be which number, really for

Operator

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

Michael Cikos

on a versus on additional we the ask informed Is build boring full view sales just had are was to are marketing a on profit. way in line potentially to going we quarter. QX. year seeing QX? your operating operating some and the and on the of you be operating the questioning where on better Mr. in margin I margin R&D? flagged XX% any going Rader one But of on Or wanted hiring I and view of that's that to here know something that previous for we're we after get and I'm guidance congratulations understanding investments the the in Because expected like behind potentially increasing exiting

wrestle wanted X to those items. Just

Rukmini Sivaraman

Thank question you, the the Mike. Always guide. welcome boring on

at practical. Not boring, actually. that. for It's all very thank very, So you

Mike. when planning So spend and our cycles, think of we

cycle. out So planning our we're of coming

will again, the to this, of course last we And deploy the year, of similar ramping so over be as year. this fiscal some

So that the is plan. in

QX, course, there's is would in different then out I other almost they next continue to see the that And year. So or for QX the we this quarter, or last unusual right? might for that people hire quarter, to happened partially so that relative right? they're that you'll call the over normalization nothing year quarter. that full of But necessarily course of be than, there there there for for the So year, as

margin the for into QX. And what guide so year that's op you full what's the saw to baked relative in

Michael Cikos

year, in is QX a QX. component? really appreciate comments, that. just further if you from that Is revenue What sequential comp maybe and movements to QX that about that Got then I'm about that properly, QX sales And make even to decline seasonality go ago, could. we're the about to commentary sure QX? it. we be your in in we're XQ year-end incentive coal it And one right I to far as tied if talking just beyond should I to X to the sequential to? versus your a sales tend X% as on last the as at years I for I far thinking we if on back here -- I feels force and revenue. know that thinking X%, this appreciate Is could seasonal but then driving well other, see X% as as I I QX qualitative just why wanted elaborate -- QX

Rukmini Sivaraman

Mike. You're exactly right,

end there. and signed the finish that have deals recency renewal top QX because reflective happened year-end. you perspective, some to and therefore, in fiscal quarters at from performance So year, strong layering QX a those the cohorts tend exactly What historically, tend to QX if be as line of we has December incentives tied just sales past our now the has and had is when were seasonally renewals to of outline they're in, look also land QX stronger the follow a And because our view. they performance, for the similarly expand

and historical of the have also now pattern. following expand, that are cohorts renewal we impact the but So land

a wanted of what guidance. sense to just to we to give So relative remind qualitatively, folks and of into going QX expect the QX that you

Operator

line Research the of question next from our comes Company. And Bollin Cleveland Ben with

Benjamin Bollin

thoughts a Any in Rajiv, evolving on enterprise I particular, perspective refresh the deployments? wanted bigger HCI? on-prem around tier rate you of X picture versus around get how on to and see customers AI pace enterprise your behavior,

Rajiv Ramaswami

TCO Yes, XX% to want. if X a XX% is proposition questions continue X-tier HCI. the I'll those you validate to don't expand think provides cloud, also lower take separately. to still with you much with We platform really which to changed becoming X-tier -- I has companies and XX% respect into Ben SCI the versus of what your it replace that hybrid

to And I see expect time, so continue HCI do to the legacy over gain X-tier into offering.

hasn't that changed. part dynamics really changed. The So really haven't

hardware your usually refreshing when instead Of on customers and put storage a servers is you refresh buy they And tied tell HCI here course, storage cycle what it. just it's of refresh when because that's arrays. simple we to

change that no So front. really on

the the language bulk what we see of spend very from really large been AI, enterprise enterprise, they huge not handful these with models in is but out providers. that clusters small a train to of in as build investments again hyperscalers On massive large these have far these the large so

we So that for see sure.

are, drive fine-tuning going early the most They're the but models models. train is going say, stages. Generative within pre-existing deploying clusters. use inferencing largely long to market RAG AI, use I of enterprise, the into stages to that for of and more in segment are generation that relative to and these They're them would think and then that, in smaller Now early enterprises inferencing. cost-effective, We not

our EMEA know, about. of things we set in we enterprises applications adoption, that's We most for stages legal productivity we're developers, our as manage where a Even early of the would contracts. X.X have are see starting seen government use gain how to talked ourselves, GPT come our improvements say offering. this this in including about XX% the I targeting like to customer you in first quarter,

are emerge. at kind into use looking are days. starting getting to the we're act enterprise. But only in is I early These Most the this grow that of next incubation years, I cases detection. companies it's fraud the do few would say to see think now applications. enterprises still of but build point to in it's space this largely continue over at going the these that trying to And the So

Benjamin Bollin

you the in of That's Rukmini, quarter? had that some if million-plus remainder the great. provided And the any deals on In updates Curious of could. metric on pipeline you perspective business. the exiting your I past, the if to have relative X growth

Rukmini Sivaraman

talked interest we've larger specifically not of in from including I basis. the are Ben. we about X growth sort we are But to updating engagement growth that metrics continued we're Thank see a pipeline, and those Ben, cohorts quarterly say and in before, more you, continuing will nice generally. seeing for and on pipeline our million-plus yes, deals those

Operator

Leopold Our Simon Raymond next James. comes line of the from question with

W. Chiu

continue? in for previously an and drill I VMware acceleration is that around maybe Basin. help incremental your so, Simon if that to you Chiu were us Leopold. us expect help customer what's commentary was observing? the what to If to understand into driving this wanted understand increased This Victor you engagement relative if from Maybe

Rajiv Ramaswami

in continues So from dynamic. Victor, it's perspective, But share. of our be opportunity to a still it's largely terms gain -- the unchanged multiyear to our market opportunity,

Dell the existing sometimes Broadcom the it's dynamic in software is -- the So base to expanding I'll the quarter that behavior a when like coming meaningful doing say that real we for X-tier we we our capture cycles. to what we HCI on a we our hardware have seen to tied customers that really. we've our this significant are are any haven't the our seen ability of haven't like, deals lot of And rate although continuing able these several on try hardware or those these changes large to ones. to And to as from around a refresh, in change aggressive compared before, be to ELA to customers, don't size see already installed work solutions we're sense for They existing right, -- keep very already last with VMware deploy also their up BMS renewal especially well said work example, course, a customers. opportunities. market quarters in win-loss

nothing I has changed. net-net, say, much So really, would

W. Chiu

kind if are they do the wanted a involved that organization And the something from to customer away VMware move on that decides that how long of, transition for what of typically? required And like kind Okay. that? to average, is steps

Rajiv Ramaswami

It complexity Correct. depends the and their on of scale deployment.

for give I'll bookends. So if the they are example, you X --

question It's on side, a -- a are vSphere large other as goes to can spectrum can It these X cloud. years their are there end be in we within relatively a public to if the of about multiple easy public VMS A they small those they're Cloud and there, the the products a of migration. migrate on with be tan We very replace customer migrate. many massive have to say, X can this was off offer. on actually a just And the the for is AWS. at customers easy that a small migration. So to VMware cloud month, hardware. scale. earlier can that or Again, use very Those well. automated offerings customers largely willing do estates. and are easy that to month a off it years. Same But on And lot

of migrate requirement because the services more they VMS is made of convert Just on customer they custom over can't on a for once, professional it engagement their scripts, a of there complex return investments top some to portfolio. they've have all at

professional a migrations and services complex, years. few So those to be tend take require

entire So across there's spectrum an those.

W. Chiu

of a of general of the fruit" easy And Do what... estimation is you ballpark of have kind maybe kind kind what "low-hanging percentage

Rajiv Ramaswami

if say the big be the -- think, are those a are would I The X to ones of look smaller easy of, if I Yes. vast at the customers right? go going difficult, are global to you more you with accounts, side. that on Tier large majority the exception

Operator

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

Matthew Hedberg

perspective on do enterprise some sounds like ago? a I a good deteriorated but enterprise many business, obviously, but versus days a just the like last think trying Rajiv, it just to ask, just maybe kind finer wanted it seems point your sort thought revolve, question, to on from federal because did Maybe business spending today versus quarter? demand headwinds. it Just of the simple had of like you get

Rajiv Ramaswami

in very of saw Broadcom we clear well with just saw due is situation. logos for the some -- the quite happening what's new sure. landing it clearly, that course, actually, Matt, a perhaps people doing we've We at was migrating. and that broader Yes. softness to been But again, of I enterprise, Fed The cut.

So higher how the talk we looking we in of haven't we've we in is on the chain, been to seen our have a this TCO. decline in course, in plays more enterprise what and spend articles quarters, being in Fed or carefully, talking about going less more willingness Matt, What lot inspection a to and seen, multiple spend. benefit at food some lot can about which, more we TCO required is this environment reduce approvals

now quarters. So has several been that dynamic on for going

We a haven't of seen much change.

to quarters. to this demand, it So change I a have for the broader compared seen the we net-net, quarter prior say haven't enterprise

Matthew Hedberg

And into question I imagine very another your a from see you're maybe for That's flush an I baking that clear. guidance. of, Rukmini. it. do macro but Got budget Obviously, it's enterprise guess, not sort typically then you year-end, December can't percent?

it of kind of year December, curious do when lose kind your calendar it comes it customers on end? you spend see historically, Just to mentality or

Rajiv Ramaswami

say probably have I into but some your to QX. have right? that available budget you mean we our that would We whatever think again, will I for they factor a well, for can on that -- guide this We've is year. probably if some of mean, company -- past. see in I certainly, spend yes, do cycle, have calendar see mean we will as I year budget not this sometimes, that's I seen mean may the they I right?

prior different really to year years. nothing So compared this

Matt, so driven end a spending year. people the in the to at QX. that we typically, see of And that's part you seasonal the QX And by in what fact compared but increase alluded to,

Operator

line Wang Barclays. next of our And comes question with George from the

Unknown Analyst

had quick I just ones. two

incentives in the can channel Nutanix X of terms changed at the and contract? of especially terms maybe place months ago for in incentives double-click the kind Firstly, the backdrop of what you of promo of has VMware channel, the versus to or providing in overlapping kind

Rajiv Ramaswami

change, made by we we Joe. going side. We recent there, the channel on a But no made did -- few is that this mean did, I changes, while things way, we couple Yes. nothing the a ago. months ago the what a of that

First took drive. customer our handed prospects to subset a them of entirely to channel thing off we did was and base, we the target go our

to us we channel those don't more business. so to have the partners And We reps channel, accounts. leave our we to and it those on incentives bring provided

us to the they to are So bring incentives all of the partners rewards in logos to have deals get bring committed sense also we in go -- seen We've new through we for terms new the to they channel channel will our in place our us. that rewards more when that channel logos partners.

them deals. of to or trying them work of not around out shut we're any So the

over that, increase all significant us channel of And so we've engagement the year of seen, certainly, a in or last partner X. as with a result

it more it we time to we products they're coming And migrate for they're incentives us, of over. example, is to have offering that them of they're Broadcom, licenses of for of go spending child Some tide our course, fully VMware on for to incentives just ready still them migrations, help them offer help until seeing a over is, to with own free some the as So right? end them. well, partners are can our what customer we for to while period get going on money also

Unknown Analyst

Okay.

if a Just I follow-up, can.

kind just which benefits repatriation, theme, as of terms Nutanix. of a on in Just

versus the quarter? has anything any additional on repenetration, if curious last points changed Just data

Rajiv Ramaswami

Yes.

characterize that say I of right? where back the massive of cloud some a of it the again, what past That's compared is, We we put workloads quarter. to not there terms has here can public about is But would cloud. are repatriation, go In I repatriation from what careful in much haven't see I there, would I seen changed they like think people see we see cloud. more coming and

the are more circumspect in workloads public enterprise So cloud not cloud. for. that the vast majority in the CIOs to now public keep being still mind And about what on-prem, of use are

workloads, realization we that efficiently on-prem in a public workloads those there's run example, the more For cloud. can be have steady-state if than

public I'm so workload going to going And therefore keep the to saying, cloud. not that on-prem. this CIO well, of that to move I'm

that's what seeing. we are So

Operator

question next line the Markets. Capital with comes our And Northland from Chokshi of Nehal

Nehal Chokshi

year ARR ago a the the October or That's as new quarter, lot though, well. quarter-over-quarter really down strong I to I'm the Congrats ARR, the decelerating if why put up you're change i.e., incremental on to the year-over-year. X% to seeing? that really trying given logo quarter, that relative And is strong then land look was impressive. at

the backdrop metrics? WAN So thoughts there characteristics, why strong incremental a that on ARR weak you're are having such such given especially

Rukmini Sivaraman

thank Nehal, you.

things point your I'll on few net ARR. start new a So to with -- about

new net versus quarter of prior difference pointed relative recent drivers that is And you the biggest is expand the has quarter the which and of our to ARR in given simply, land ARR, as One changed not ACV. significantly So levels. this out, between historical GRR

land the about divergence, we expand, of so see out performance versus you and land of And some the point the think business. you did in portion when as expand our

strength customers. about why saw the is. new talked And we we've in that So

with happy so performance. really And that

customers, the and believe and actually accounts the was with our Nihal, U.S. of we case. talked for by expand we've impacted federal largely business, will why majority land which existing that be the Expansion about

by way, we've expand close timing, -- opportunities and right, taking outcome longer and these the so and in land in talked overall, about deal to are structure. data pipeline our And which variability and larger have

also factors impact ARR our do those all So of growth.

ARR ARR. just and So to that's about how new think net

Operator

comes line Wells question Our with Michael of the next from Fargo.

Unknown Analyst

as to I'll you GPT the I kind -- ask a sit just in think X-tier differ they these on mature X.X solutions or relative market the where guess, marketplace ask of a How of forward? I'm I solution. guess just X.X or going move in AI enterprise positioning GPT-in-a-Box as in NVIDIA's the Aaron. architecture I to maybe software market you stack see with about, one of suite. opportunity want to about full The that do behalf do of up that these curious, terms

Rajiv Ramaswami

some mean and between a inferencing. of also I training Yes. that difference is

example. smaller of focused clusters, clusters cost-effective I'll you And Smaller that deploy models. more has compute one language then use into internally, We are massive example, search actually can Nutanix service for trade in AI interface applications. cases the where application one incoming running cluster, natural on to accelerate use largely on and our to that that's that's ability the service on AI -- customer query leaving was okay, that the where the use they an inferencing with internally. upstarting through give And on we're already model. want support answer case a all-on-one We, with influencing, a inferencing to look support models have use from using the kind that which of use And funds engineer try a customer first your focusing we language the enterprises our on GPT-in-a-Box source our through cases. enabling are enter not small request ticket, GPT-in-a-Box you issue. do basis of is existing to open your to secure and kind a large fine-tuned it, case your you enterprise, pretrained, the for but that just data,

solution way, do solution. all partnered we their using cost-optimized inferencing we a are the by And the work course, with as with immediate the on as, that's So well NVIDIA that GPUs hard needed to of because work here.

mostly on very which distinguish again, training just versus we large influencing we to think clusters. small clusters, do So what want of is between I

Unknown Analyst

in. one That's sneak more can if helpful. I And

as we an that of about end we within think for an Obviously, as opportunity server Just presents refresh X-tier improving demand architecture. cycles. think and about insertion environment you sort guys traditional

kind with broader you curious your you those I'm Or to your Have the new rates win deals? seen of at do anticipate and partnerships given those improving changing? enter Dell So ability all with Cisco.

Rajiv Ramaswami

Yes.

quarter. Cisco And That I well contributor new as I us. selling of think been I say, course, we that's I refreshes with good independent our X-tier will of displace a and Because our for are Second, with very And still, get also important, Cisco quarter all, of when First days refresh those last the has think Dell to products us. think, to help, not, storage positive cycles, architectures this or early for is, would as right? logos right? that's freshers to the opportunity HCI respect server cycle yes, but refresh of footprint. server is

matter. both So

so, significantly course, will I the friends say I the existing or helps. the and server time, as storage deployments. think -- and into in would HCI fresh Dell having refresh same Cisco us cycles market, more refresh at insert help of And

Operator

does participating. for disconnect. you now today's Thank may program, This and thanks and conclude you,

Nutanix (NTNX) 26 Nov 242025 Q1 Earnings call transcript