Nutanix, Inc. is a global leader in cloud software, offering organizations a single platform for running applications and managing data, anywhere. The company's mission is to delight customers with an open hybrid multicloud platform with rich data services to run and manage any application, anywhere.
Company Overview
Nutanix was founded in 2009 with the vision of making hybrid multicloud deployments simple and freeing customers to focus on achieving their business outcomes. The company's Nutanix Cloud Platform is designed to enable organizations to build a hybrid multicloud infrastructure, providing a consistent cloud operating model with a single platform for running applications and managing data in core data centers, at the edge, and in public clouds, all while supporting a variety of hypervisors and container platforms.
Incorporated in Delaware in September 2009, Nutanix is headquartered in San Jose, California, with operations spanning North America, Europe, Asia Pacific, the Middle East, Latin America, and Africa. As a pioneer in the hyperconverged infrastructure market, Nutanix faced initial challenges in establishing its presence in the competitive enterprise IT infrastructure market, which was dominated by large incumbent vendors. The company invested heavily in sales and marketing to educate the market about the benefits of its hyperconverged approach compared to traditional three-tier architectures and to build brand awareness.
History and Milestones
A significant milestone in Nutanix's history was its initial public offering in 2016, which provided the company with additional capital to fund its growth initiatives. Following the IPO, Nutanix focused on enhancing its core hyperconverged platform and expanding its product portfolio to address a wider range of enterprise workloads, including virtual desktop infrastructure, databases, and big data analytics. Throughout its journey, Nutanix has faced competition from established vendors like VMware and emerging players in the hyperconverged and cloud infrastructure markets, prompting the company to adapt its go-to-market strategy and product roadmap to maintain its competitive edge.
Business Model and Customer Base
Nutanix's subscription-based business model provides customers with the flexibility to choose their preferred license levels and durations based on their specific needs. The company's solutions are primarily sold through channel partners and original equipment manufacturers (OEMs), and delivered directly to end customers. Nutanix has a broad and diverse base of over 27,870 end customers as of January 31, 2025, including approximately 1,070 Global 2000 enterprises.
Recent Performance
In the second quarter of fiscal 2025, Nutanix reported record quarterly revenue of $654.7 million, representing a 16% year-over-year increase. The company's annual recurring revenue (ARR) also reached a new milestone, surpassing $2 billion and growing 19% year-over-year to $2.06 billion. Nutanix's strong performance was driven by the strength of its Nutanix Cloud Platform, increased demand from businesses seeking a trusted long-term partner, and the leverage gained from its partnerships and programs.
Key Success Factors
One of the key factors contributing to Nutanix's success is its focus on supporting modern applications and hybrid multicloud environments. In the second quarter, the company highlighted a significant new logo win with a National Health Ministry in the EMEA region that chose the Nutanix Cloud Platform, including Nutanix Cloud Clusters (NC2) running on AWS, as well as the Nutanix Kubernetes Platform (NKP) and Nutanix Cloud Manager for deploying and managing their container-based applications in a standardized self-service manner.
Nutanix's ability to cater to the evolving needs of its customers is further exemplified by its recent partnerships and product developments. The company announced the availability of its PowerFlex storage solution, which is expected to expand its addressable market by enabling easier integration with existing three-tier infrastructure environments. Additionally, Nutanix's Enterprise AI (NAI) platform is helping customers deploy and run their generative AI applications on the company's hybrid multicloud platform.
Financials
Financially, Nutanix has maintained a strong balance sheet, with cash and cash equivalents of $1.074 billion and short-term investments totaling $1.743 billion as of the end of the second quarter. The company has also increased its financial flexibility by issuing convertible notes at attractive terms and putting in place a $500 million revolving credit facility on February 12, 2025.
For the second quarter of fiscal 2025, Nutanix reported total revenue of $654.72 million, a 16% increase year-over-year. The company's net income for the quarter was $56.427 million. Operating cash flow (OCF) for the quarter stood at $221.67 million, while free cash flow (FCF) was $187.063 million.
Nutanix's revenue is divided into two main segments: Product revenue and Support, entitlements and other services revenue. Product revenue, which primarily consists of software revenue from the sale of the Nutanix Cloud Platform, represented 53% of total revenue for the three months ended January 31, 2025. Support, entitlements and other services revenue, which includes software entitlement and support subscriptions, accounted for 47% of total revenue for the same period.
The company's gross margins remain strong, with product gross margin at 97.5% and support/services gross margin at 74.6% for the three months ended January 31, 2025. The overall gross margin for the quarter was 87%.
Liquidity
Nutanix's liquidity position remains solid, with a current ratio and quick ratio both at 1.77. The company does not provide a debt-to-equity ratio. The recent addition of a $500 million senior secured revolving credit facility further enhances Nutanix's financial flexibility.
Outlook
Looking ahead, Nutanix has raised its full-year fiscal 2025 guidance, projecting revenue growth of approximately 17% to $2.495 billion to $2.515 billion. The company also expects to maintain its focus on profitable growth, guiding for non-GAAP operating margins of 17.5% to 18.5% and free cash flow of $650 million to $700 million, representing a free cash flow margin of approximately 27%.
For the third quarter of fiscal 2025, Nutanix guided revenue of $620 million to $630 million, non-GAAP operating margin of 17-18%, and weighted average shares outstanding of approximately 296 million.
The increase in revenue was driven by strong new logo acquisition, with new customers landing on the Nutanix platform through various incentive programs. The company also saw increased customer engagement from those looking for alternatives amid industry M&A. Additionally, Nutanix benefited from stronger support from its OEM and channel partners.
Despite the broader macroeconomic uncertainty, Nutanix has demonstrated its ability to navigate the dynamic IT landscape and capitalize on the growing demand for hybrid multicloud solutions. The company's strong customer base, innovative product portfolio, and expanding partner ecosystem position it well to continue its profitable growth trajectory in the years to come.
Nutanix continues to invest in the profitable growth of its business, including the development of its solutions and investing in sales and marketing to capitalize on its market opportunities, while also improving its operating cash flow performance by focusing on creating operational efficiencies. With its robust financial performance, strong product offerings, and strategic focus on hybrid multicloud solutions, Nutanix appears well-positioned to maintain its growth momentum in the evolving enterprise IT landscape.