UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported)
May 24, 2023
 
NUTANIX, INC.
(Exact name of registrant as specified in its charter)
 
Delaware
 
001-37883
 
27-0989767
(State or other jurisdiction of
incorporation)
 
(Commission File Number)
 
(IRS Employer
Identification No.)
 
1740 Technology Drive, Suite 150
San Jose, California 95110
(Address of principal executive offices, including zip code)
 
(408) 216-8360
(Registrant’s telephone number, including area code)

Not Applicable
(Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Securities registered pursuant to Section 12(b) of the Act:

Title of each class
  Trading symbol(s)
  Name of each exchange on which registered
Class A Common Stock, $0.000025 par value per share
  NTNX
  The Nasdaq Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐



Item 2.02.  Results of Operations and Financial Condition.
 
On May 24, 2023, Nutanix, Inc. (the “Company”) issued a press release announcing the Company’s financial results for its third fiscal quarter ended April 30, 2023. A copy of the Company’s press release is attached hereto as Exhibit 99.1.
 
The information provided pursuant to Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1 hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise be subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the rules and regulations of the Securities and Exchange Commission (the “SEC”) thereunder, or the Exchange Act or the rules and regulations of the SEC thereunder, except as shall be expressly set forth by specific reference in such filing or document.
 
Item 9.01.  Financial Statements and Exhibits.
 
(d) Exhibits.

 
Exhibit
Number
 
Description
       
  99.1
  Press release issued by Nutanix, Inc. on May 24, 2023



SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 

     
NUTANIX, INC.
       
Date: May 24, 2023
By:
/s/ Rukmini Sivaraman
     
Rukmini Sivaraman
     
Chief Financial Officer

Exhibit 99.1

Nutanix Reports Third Quarter Fiscal 2023 Financial Results

Delivers Outperformance Across All Fiscal Q3’23 Guided Metrics

Completes Audit Committee Investigation and Files Form 10-Q for Fiscal Q2’23

SAN JOSE, Calif.--(BUSINESS WIRE)--May 24, 2023--Nutanix, Inc. (NASDAQ: NTNX), a leader in hybrid multicloud computing, today announced financial results for its third quarter ended April 30, 2023.

“Our business performed well in the third quarter against an uncertain macro backdrop, as the value proposition of our cloud platform continued to resonate with customers,” said Rajiv Ramaswami, President and CEO of Nutanix. “We are also pleased to have completed the Audit Committee investigation regarding third-party software usage and to have filed our Form 10-Q for our second quarter of fiscal 2023.”

“Our third quarter results continued to demonstrate a good balance of growth and profitability, resulting in year-to-date ACV Billings growth exceeding 20%, combined with strong year-to-date free cash flow generation,” said Rukmini Sivaraman, CFO of Nutanix. “We continue to execute on our growing base of subscription renewals and remain focused on sustainable, profitable growth.”

Additionally, upon conclusion of its investigation related to third-party software usage, the Audit Committee determined that evaluation software from two software providers was used in a non-compliant manner over a multi-year period and that certain employees had concealed this non-compliant use of evaluation software in violation of the Company’s code of business conduct and ethics and other policies.

As a result of the investigation, the Company also identified a material weakness in its internal control over financial reporting, which resulted in an immaterial understatement of operating expenses and accrued expenses and other current liabilities for prior periods beginning in August 2014. The Company has accounted for the estimated financial impact of this past non-compliant usage of software from these two vendors by recording cumulative estimated expenses of $11 million as of the second quarter of fiscal 2023, which represents an estimated amount of future payments for past non-compliant usage of software from these two vendors, accrued over a multi-year period. The Company has accordingly also corrected the prior period financials presented in the Form 10-Q for its second quarter of fiscal 2023 filed today.

The Company expects the incremental ongoing annual impact to operating expenses of this third-party software usage to be approximately in the low-single-digit millions of dollars. The Company is also implementing, or plans on implementing, remedial measures, including remedial measures to address the material weakness and strengthen its overall internal control over financial reporting.


Additional information, including the complete results for the second quarter of fiscal 2023 and information about the estimated financial impact and remedial measures related to the third-party software review, can be found in the Form 10-Q for the second quarter of fiscal 2023.

Third Quarter Fiscal 2023 Financial Summary




 

 

Q3 FY’23

Q3 FY’22*

Y/Y Change

Annual Contract Value (ACV)1 Billings

$239.8 million

$204.7 million

17%

Annual Recurring Revenue (ARR)2

$1.47 billion

$1.11 billion

32%

Average Contract Term3

3.0 years

3.2 years

(0.2) year

Revenue4

$448.6 million

$403.7 million

11%

GAAP Gross Margin

81.4%

80.2%

120 bps

Non-GAAP Gross Margin

83.8%

83.3%

50 bps

GAAP Operating Expenses

$434.1 million

$416.5 million

4%

Non-GAAP Operating Expenses

$369.1 million

$342.1 million

8%

GAAP Operating Loss

$(68.9) million

$(92.7) million

$23.8 million

Non-GAAP Operating Income (Loss)

$7.0 million

$(5.8) million

$12.8 million

GAAP Operating Margin

(15.3)%

(23.0)%

7.7% pts

Non-GAAP Operating Margin

1.6%

(1.4)%

3.0% pts

Net Cash Provided by (Used in) Operating Activities

$64.3 million

$(3.2) million

$67.5 million

Free Cash Flow

$42.5 million

$(20.1) million

$62.6 million

*Q3 FY’22 results reflect the correction of an immaterial error in the reporting of expenses for software licenses and support. Reconciliation between the corrected Q3 FY’22 results and the Q3 FY’22 results as originally reported is provided in the tables of this press release.

Reconciliations between GAAP and non-GAAP financial measures and key performance measures, to the extent available, are provided in the tables of this press release.


Recent Company Highlights

  • Announced Webcast Information for Investor Day 2023: Nutanix announced it will be holding its Investor Day 2023 in New York City on September 26, 2023. The event will be webcast live beginning at 12:30 p.m. ET / 9:30 a.m. PT. Interested parties can access the webcast on the Company’s Investor Relations website here.
  • Released Fifth Global Enterprise Cloud Index (ECI) report: Nutanix announced the findings of its fifth ECI survey and research report, which measures enterprise progress with cloud adoption. Feedback from 1,450 IT decision-makers around the world showed that organizations want a single hybrid multicloud platform to run applications and manage data across diverse IT environments.
  • Nutanix Unifies Data Services Across Hybrid Multicloud Environments: Nutanix announced new capabilities in the Nutanix Cloud Platform to enable customers to integrate data management of containerized and virtualized applications on-premises, on public cloud, and at the edge. This includes comprehensive data services for Kubernetes applications as well as cross-cloud data mobility.
  • Nutanix Announces Nutanix Central, Cloud to Edge Management Solution: Nutanix announced Nutanix Central, a cloud-delivered solution that provides a single console for visibility, monitoring, and management across public cloud, on-premises, hosted or edge infrastructure. This will extend the universal cloud operating model of the Nutanix Cloud Platform to break down silos and simplify consistently managing apps and data anywhere.
  • Project Beacon: Nutanix Announces Vision for Hybrid Multicloud Platform-as-a-Service: Nutanix announced Project Beacon, a multi-year effort to deliver a portfolio of data-centric Platform as a Service (PaaS) level services available natively anywhere – including on Nutanix or on native public cloud. With a vision of decoupling the application and its data from the underlying infrastructure, Project Beacon aims to enable developers to build applications once and run them anywhere.

Fourth Quarter Fiscal 2023 Outlook

 

 

ACV Billings

$240 - $250 million

Revenue

$470 - $480 million

Non-GAAP Gross Margin

~84%

Non-GAAP Operating Margin

9% to 10%

Weighted Average Shares Outstanding (Diluted)

~282 million

Fiscal 2023 Outlook

 

 

ACV Billings

$915 - $925 million

Revenue

$1.84 - $1.85 billion

Non-GAAP Gross Margin

~84%

Non-GAAP Operating Margin

6% to 7%


Supplementary materials to this press release, including our third quarter fiscal 2023 earnings presentation, can be found at https://ir.nutanix.com/company/financial.

Reconciliations between GAAP and non-GAAP financial measures and key performance measures, to the extent available, are provided in the tables of this press release.

Webcast and Conference Call Information

Nutanix executives will discuss the Company’s third quarter fiscal 2023 financial results on a conference call at 4:30 p.m. Eastern Time/1:30 p.m. Pacific Time. Interested parties may access the conference call by registering at this link to receive dial in details and a unique PIN number. The conference call will also be webcast live on the Nutanix Investor Relations website at ir.nutanix.com. An archived replay of the webcast will be available on the Nutanix Investor Relations website at ir.nutanix.com shortly after the call.

Definitions and Total Revenue Impact

1Annual Contract Value, or ACV, is defined as the total annualized value of a contract, excluding amounts related to professional services and hardware. The total annualized value for a contract is calculated by dividing the total value of the contract by the number of years in the term of such contract, using, where applicable, an assumed term of five years for contracts that do not have a specified term. ACV Billings, for any given period, is defined as the sum of the ACV for all contracts billed during the given period.

2Annual Recurring Revenue, or ARR, for any given period, is defined as the sum of ACV for all non life-of-device contracts in effect as of the end of a specific period. For the purposes of this calculation, we assume that the contract term begins on the date a contract is booked, unless the terms of such contract prevent us from fulfilling our obligations until a later period, and irrespective of the periods in which we would recognize revenue for such contract.

3Average Contract Term represents the dollar-weighted term, calculated on a billings basis, across all subscription and life-of-device contracts, using an assumed term of five years for life-of-device licenses, executed in the period.

4Revenue was negatively impacted by a year-over-year decline in the average contract term associated with Nutanix’s ongoing transition to a subscription-based business model.


Non-GAAP Financial Measures and Other Key Performance Measures

To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, this press release includes the following non-GAAP financial and other key performance measures: non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income (loss), non-GAAP operating margin, free cash flow, Annual Contract Value Billings (or ACV Billings), Annual Recurring Revenue (or ARR), and Average Contract Term. In computing non-GAAP financial measures, we exclude certain items such as stock-based compensation and the related income tax impact, costs associated with our acquisitions (such as amortization of acquired intangible assets, income tax-related impact, and other acquisition-related costs), impairment and early exit of operating lease-related assets, restructuring charges, litigation settlement accruals and legal fees related to certain litigation matters, the change in fair value of the derivative liability, the amortization of the debt discount and issuance costs, interest expense related to convertible senior notes, loss on debt extinguishment, and other non-recurring transactions and the related tax impact. Non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income (loss), and non-GAAP operating margin are financial measures which we believe provide useful information to investors because they provide meaningful supplemental information regarding our performance and liquidity by excluding certain expenses and expenditures such as stock-based compensation expense that may not be indicative of our ongoing core business operating results. Free cash flow is a performance measure that we believe provides useful information to our management and investors about the amount of cash generated by the business after necessary capital expenditures, and we define free cash flow as net cash provided by (used in) operating activities less purchases of property and equipment. ACV Billings is a performance measure that we believe provides useful information to our management and investors as it allows us to better track the topline growth of our business during our transition to a subscription-based business model because it takes into account variability in term lengths. ARR is a performance measure that we believe provides useful information to our management and investors as it allows us to better track the topline growth of our subscription business because it takes into account variability in term lengths. We use these non-GAAP financial and key performance measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. However, these non-GAAP financial and key performance measures have limitations as analytical tools and you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP. Non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income (loss), non-GAAP operating margin, and free cash flow are not substitutes for gross margin, operating expenses, operating income (loss), operating margin, or net cash provided by (used in) operating activities, respectively. There is no GAAP measure that is comparable to ACV Billings, ARR, or Average Contract Term, so we have not reconciled the ACV Billings, ARR, or Average Contract Term data included in this press release to any GAAP measure. In addition, other companies, including companies in our industry, may calculate non-GAAP financial measures and key performance measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures and key performance measures as tools for comparison. We urge you to review the reconciliation of our non-GAAP financial measures and key performance measures to the most directly comparable GAAP financial measures included below in the tables captioned “Reconciliation of GAAP to Non-GAAP Profit Measures” and “Reconciliation of GAAP Net Cash Provided By Operating Activities to Non-GAAP Free Cash Flow,” and not to rely on any single financial measure to evaluate our business. This press release also includes the following forward-looking non-GAAP financial measures as part of our fourth quarter fiscal 2023 outlook and/or our fiscal 2023 outlook: non-GAAP gross margin and non-GAAP operating margin. We are unable to reconcile these forward-looking non-GAAP financial measures to their most directly comparable GAAP financial measures without unreasonable efforts, as we are currently unable to predict with a reasonable degree of certainty the type and extent of certain items that would be expected to impact the GAAP financial measures for these periods but would not impact the non-GAAP financial measures.


Forward-Looking Statements

This press release contains express and implied forward-looking statements, including, but not limited to, statements regarding: our business plans, strategies, initiatives, vision, objectives, and outlook (including our growth plan) as well as our ability to execute thereon successfully and in a timely manner and the benefits and impact thereof on our business, operations, and financial results (including our fourth quarter fiscal 2023 outlook, our fiscal 2023 outlook, our expectations regarding sustainable, profitable growth); our expectations regarding the incremental ongoing annual impact to operating expenses of the third-party software usage matter; our plans to implement remedial measures, including remedial measures to address the identified material weakness and strengthen our overall internal control over financial reporting; our plans for, and the timing of, any current and future business model transitions, including our ongoing transition to a subscription-based business model, our ability to manage, complete or realize the benefits of such transitions successfully and in a timely manner, and the short-term and long-term impacts of such transitions on our business, operations and financial results; the competitive market, including our competitive position and ability to compete effectively, the competitive advantages of our products, our projections about our market share and opportunity, and the effects of increased competition in our market; our ability to attract new end customers and retain and grow sales from our existing end customers; our customer needs and our response to those needs; our ability to form new, and maintain and strengthen existing, strategic alliances and partnerships and address macroeconomic supply chain shortages, including our relationships with our channel partners and original equipment manufacturers, and the impact of any changes to such relationships on our business, operations and financial results; the benefits and capabilities of our platform, solutions, products, services and technology, including the interoperability and availability of our solutions with and on third-party platforms; our plans and expectations regarding new solutions, products, services, product features and technology, including those that are still under development or in process; our plans regarding, and the timing and success of, our customer, partner, industry, analyst, investor and employee events and the impact thereof on our business, operations, and financial results; and our decision to use new or different metrics, or to make adjustments to the metrics we use, to supplement our financial reporting, and the impact thereof.


These forward-looking statements are not historical facts and instead are based on our current expectations, estimates, opinions, and beliefs. Consequently, you should not rely on these forward-looking statements. The accuracy of these forward-looking statements depends upon future events and involves risks, uncertainties, and other factors, including factors that may be beyond our control, that may cause these statements to be inaccurate and cause our actual results, performance or achievements to differ materially and adversely from those anticipated or implied by such statements, including, among others: failure to successfully implement or realize the full benefits of, or unexpected difficulties or delays in successfully implementing or realizing the full benefits of, our business plans, strategies, initiatives, vision, and objectives; our ability to achieve, sustain and/or manage future growth effectively; our ability to remediate the identified material weakness; matters arising out of or relating to the Audit Committee investigation (including risks associated with litigation and any regulatory investigations and proceedings); delays or unexpected accelerations in our current and future business model transitions; our ability to resolve the third-party software usage matter within estimates; our ability to implement remedial measures; the rapid evolution of the markets in which we compete, including the introduction, or acceleration of adoption of, competing solutions, including public cloud infrastructure; failure to timely and successfully meet our customer needs; delays in or lack of customer or market acceptance of our new solutions, products, services, product features or technology; macroeconomic or geopolitical uncertainty, including supply chain issues; factors that could result in the significant fluctuation of our future quarterly operating results, including, among other things, anticipated changes to our revenue and product mix, including changes as a result of our transition to a subscription-based business model, the timing and magnitude of orders, shipments and acceptance of our solutions in any given quarter, our ability to attract new and retain existing end-customers, changes in the pricing and availability of certain components of our solutions, and fluctuations in demand and competitive pricing pressures for our solutions, attrition among sales representatives or other employees; and other risks detailed in our Annual Report on Form 10-K for the fiscal year ended July 31, 2022 filed with the U.S. Securities and Exchange Commission, or the SEC, on September 21, 2022, our Quarterly Report on Form 10-Q for the fiscal quarter ended October 31, 2022 filed with the SEC on December 7, 2022, and our Quarterly Report on Form 10-Q for the fiscal quarter ended January 31, 2023 filed with the SEC on May 24, 2023. Additional information will also be set forth in our Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 2023, which should be read in conjunction with this press release and the financial results included herein. Our SEC filings are available on the Investor Relations section of our website at ir.nutanix.com and on the SEC's website at www.sec.gov. These forward-looking statements speak only as of the date of this press release and, except as required by law, we assume no obligation, and expressly disclaim any obligation, to update, alter or otherwise revise any of these forward-looking statements to reflect actual results or subsequent events or circumstances.

About Nutanix

Nutanix offers a single platform to run all your apps and data across multiple clouds while simplifying operations and reducing complexity. Trusted by companies worldwide, Nutanix powers hybrid multicloud environments efficiently and cost effectively. This enables companies to focus on successful business outcomes and new innovations. Learn more at Nutanix.com.

© 2023 Nutanix, Inc. All rights reserved. Nutanix, the Nutanix logo, and all Nutanix product and service names mentioned herein are registered trademarks or unregistered trademarks of Nutanix, Inc. in the United States and other countries. Other brand names and marks mentioned herein are for identification purposes only and may be the trademarks of their respective holder(s). This press release contains links to external websites that are not part of Nutanix.com. Nutanix does not control these sites and disclaims all responsibility for the content or accuracy of any external site. Our decision to link to an external site should not be considered an endorsement of any content on such a site.


 NUTANIX, INC.

 CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)




 

 

 

As of  

 

 

July 31,
2022
 

 

April 30,
2023
 

 

 

(in thousands)

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

402,850

 

 

$

439,918

 

Short-term investments

 

 

921,429

 

 

 

918,570

 

Accounts receivable, net

 

 

124,559

 

 

 

135,073

 

Deferred commissions—current

 

 

115,356

 

 

 

113,736

 

Prepaid expenses and other current assets

 

 

93,787

 

 

 

121,611

 

Total current assets

 

 

1,657,981

 

 

 

1,728,908

 

Property and equipment, net

 

 

113,440

 

 

 

115,465

 

Operating lease right-of-use assets

 

 

118,740

 

 

 

97,804

 

Deferred commissions—non-current

 

 

252,234

 

 

 

236,935

 

Intangible assets, net

 

 

15,829

 

 

 

7,334

 

Goodwill

 

 

185,260

 

 

 

185,260

 

Other assets—non-current

 

 

22,265

 

 

 

24,291

 

Total assets

 

$

2,365,749

 

 

$

2,395,997

 

Liabilities and Stockholders’ Deficit

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

44,931

 

 

$

34,235

 

Accrued compensation and benefits

 

 

149,811

 

 

 

152,167

 

Accrued expenses and other current liabilities

 

 

59,568

 

 

 

108,965

 

Deferred revenue—current

 

 

720,993

 

 

 

806,002

 

Operating lease liabilities—current

 

 

39,801

 

 

 

31,481

 

Convertible senior notes, net—current

 

 

145,456

 

 

 

 

Total current liabilities

 

 

1,160,560

 

 

 

1,132,850

 

Deferred revenue—non-current

 

 

724,545

 

 

 

737,338

 

Operating lease liabilities—non-current

 

 

89,782

 

 

 

73,036

 

Convertible senior notes, net

 

 

1,156,205

 

 

 

1,207,296

 

Other liabilities—non-current

 

 

35,161

 

 

 

34,544

 

Total liabilities

 

 

3,166,253

 

 

 

3,185,064

 

Stockholders’ deficit:

 

 

 

 

 

 

Common stock

 

 

6

 

 

 

6

 

Additional paid-in capital

 

 

3,583,928

 

 

 

3,845,059

 

Accumulated other comprehensive income

 

 

(6,076

)

 

 

(4,283

)

Accumulated deficit

 

 

(4,378,362

)

 

 

(4,629,849

)

Total stockholders’ deficit

 

 

(800,504

)

 

 

(789,067

)

Total liabilities and stockholders’ deficit

 

$

2,365,749

 

 

$

2,395,997

 


NUTANIX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)





 

 

 

Three Months Ended
April 30, 

 

Nine Months Ended
April 30, 

 

 

2022

 

2023

 

2022

 

2023

 

 

(in thousands, except per share data) 

Revenue:

 

 

 

 

 

 

 

 

Product

 

$

199,616

 

 

$

212,507

 

 

$

588,872

 

 

$

671,619

 

Support, entitlements and other services

 

 

204,042

 

 

 

236,074

 

 

 

606,384

 

 

 

697,066

 

Total revenue

 

 

403,658

 

 

 

448,581

 

 

 

1,195,256

 

 

 

1,368,685

 

Cost of revenue:

 

 

 

 

 

 

 

 

Product (1)(2)

 

 

13,739

 

 

 

12,832

 

 

 

43,056

 

 

 

40,854

 

Support, entitlements and other services (1)

 

 

66,110

 

 

 

70,506

 

 

 

198,208

 

 

 

211,784

 

Total cost of revenue

 

 

79,849

 

 

 

83,338

 

 

 

241,264

 

 

 

252,638

 

Gross profit

 

 

323,809

 

 

 

365,243

 

 

 

953,992

 

 

 

1,116,047

 

Operating expenses:

 

 

 

 

 

 

 

 

Sales and marketing (1)(2)

 

 

234,623

 

 

 

231,438

 

 

 

726,475

 

 

 

697,448

 

Research and development (1)

 

 

142,334

 

 

 

147,797

 

 

 

428,731

 

 

 

439,541

 

General and administrative (1)

 

 

39,552

 

 

 

54,861

 

 

 

123,871

 

 

 

185,074

 

Total operating expenses

 

 

416,509

 

 

 

434,096

 

 

 

1,279,077

 

 

 

1,322,063

 

Loss from operations

 

 

(92,700

)

 

 

(68,853

)

 

 

(325,085

)

 

 

(206,016

)

Other expense, net

 

 

(15,676

)

 

 

(7,169

)

 

 

(309,557

)

 

 

(30,697

)

Loss before provision for income taxes

 

 

(108,376

)

 

 

(76,022

)

 

 

(634,642

)

 

 

(236,713

)

Provision for income taxes

 

 

3,611

 

 

 

5,161

 

 

 

12,967

 

 

 

14,774

 

Net loss

 

$

(111,987

)

 

$

(81,183

)

 

$

(647,609

)

 

$

(251,487

)

Net loss per share attributable to Class A and Class B  common stockholders—basic and diluted (3)

 

$

(0.50

)

 

$

(0.35

)

 

$

(2.96

)

 

$

(1.09

)

Weighted average shares used in computing net loss per share attributable to Class A and Class B common stockholders—basic and diluted (3)

 

 

222,473

 

 

 

234,735

 

 

 

218,888

 

 

 

231,702

 

___________________

(1) Includes the following stock-based compensation expense:





 

 

 

Three Months Ended
April 30,
 

 

Nine Months Ended
April 30,
 

 

 

2022  

 

2023  

 

2022  

 

2023  

 

 

(in thousands)

 

Product cost of revenue

 

$

1,830

 

 

$

1,831

 

 

$

5,529

 

 

$

6,103

 

Support, entitlements and other services cost of revenue

 

 

7,307

 

 

 

6,565

 

 

 

23,564

 

 

 

20,083

 

Sales and marketing

 

 

25,463

 

 

 

19,383

 

 

 

80,975

 

 

 

63,425

 

Research and development

 

 

35,467

 

 

 

32,003

 

 

 

109,709

 

 

 

107,116

 

General and administrative

 

 

14,439

 

 

 

13,126

 

 

 

43,321

 

 

 

42,426

 

Total stock-based compensation expense

 

$

84,506

 

 

$

72,908

 

 

$

263,098

 

 

$

239,153

 


(2) Includes the following amortization of intangible assets:





 

 

 

Three Months Ended
April 30,
 

 

Nine Months Ended
April 30,
 

 

 

2022  

 

2023  

 

2022  

 

2023  

 

 

(in thousands)

 

Product cost of revenue

 

$

3,368

 

 

$

2,438

 

 

$

10,212

 

 

$

7,779

 

Sales and marketing

 

 

651

 

 

 

169

 

 

 

1,953

 

 

 

716

 

Total amortization of intangible assets

 

$

4,019

 

 

$

2,607

 

 

$

12,165

 

 

$

8,495

 

















 

(3) Effective January 3, 2022, all of the then outstanding shares of Nutanix, Inc. Class B common stock were automatically converted into the same number of shares of Nutanix, Inc. Class A common stock.


NUTANIX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



 

 

 

Nine Months Ended
April 30, 

 

 

2022

 

2023

 

 

(in thousands) 

Cash flows from operating activities:

 

 

 

 

Net loss

 

$

(647,609

)

 

$

(251,487

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

 

Depreciation and amortization

 

 

67,123

 

 

 

59,078

 

Stock-based compensation

 

 

263,098

 

 

 

239,153

 

Change in fair value of derivative liability

 

 

198,038

 

 

 

 

Loss on debt extinguishment

 

 

64,910

 

 

 

 

Amortization of debt discount and issuance costs

 

 

29,929

 

 

 

31,767

 

Operating lease cost, net of accretion

 

 

27,496

 

 

 

27,065

 

Early exit of lease-related assets

 

 

 

 

 

(1,109

)

Non-cash interest expense

 

 

14,408

 

 

 

14,772

 

Other

 

 

7,181

 

 

 

(6,275

)

Changes in operating assets and liabilities:

 

 

 

 

Accounts receivable, net

 

 

4,193

 

 

 

(4,768

)

Deferred commissions

 

 

(10,377

)

 

 

16,919

 

Prepaid expenses and other assets

 

 

(31,723

)

 

 

(33,858

)

Accounts payable

 

 

4,159

 

 

 

(5,106

)

Accrued compensation and benefits

 

 

(46,379

)

 

 

2,356

 

Accrued expenses and other liabilities

 

 

5,570

 

 

 

53,451

 

Operating leases, net

 

 

(35,743

)

 

 

(30,134

)

Deferred revenue

 

 

115,265

 

 

 

92,056

 

Net cash provided by operating activities

 

 

29,539

 

 

 

203,880

 

Cash flows from investing activities:

 

 

 

 

Maturities of investments

 

 

778,914

 

 

 

722,983

 

Purchases of investments

 

 

(794,180

)

 

 

(711,253

)

Sales of investments

 

 

17,999

 

 

 

 

Purchases of property and equipment

 

 

(34,279

)

 

 

(52,603

)

Net cash used in investing activities

 

 

(31,546

)

 

 

(40,873

)

Cash flows from financing activities:

 

 

 

 

Proceeds from sales of shares through employee equity incentive plans

 

 

66,644

 

 

 

23,268

 

Repayment of convertible notes

 

 

 

 

 

(145,704

)

Payments of debt extinguishment costs

 

 

(14,709

)

 

 

 

Proceeds from unwinding of convertible note hedges

 

 

39,880

 

 

 

 

Payments for unwinding of warrants

 

 

(18,390

)

 

 

 

Proceeds from the issuance of convertible notes, net of issuance costs

 

 

88,687

 

 

 

 

Repurchases of common stock

 

 

(58,570

)

 

 

 

Payment of finance lease obligations

 

 

(626

)

 

 

(3,711

)

Net cash provided by (used in) financing activities

 

 

102,916

 

 

 

(126,147

)

Net increase in cash, cash equivalents and restricted cash

 

$

100,909

 

 

$

36,860

 

Cash, cash equivalents and restricted cash—beginning of period

 

 

288,873

 

 

 

405,862

 

Cash, cash equivalents and restricted cash—end of period

 

$

389,782

 

 

$

442,722

 

Restricted cash (1)

 

 

3,061

 

 

 

2,804

 

Cash and cash equivalents—end of period

 

$

386,721

 

 

$

439,918

 

Supplemental disclosures of cash flow information:

 

 

 

 

Cash paid for income taxes

 

$

17,101

 

 

$

21,578

 

Supplemental disclosures of non-cash investing and financing information:

 

 

 

 

Purchases of property and equipment included in accounts payable and accrued and other liabilities

 

$

20,026

 

 

$

16,214

 

Finance lease liabilities arising from obtaining right-of-use assets

 

$

11,159

 

 

$

13,408

 

___________________
(1)

Included within other assets—non-current in the condensed consolidated balance sheets. 


 Reconciliation of Revenue to Billings 

(Unaudited)







 

 

 

Three Months Ended
April 30,

 

 

Nine Months Ended
April 30,

 

 

 

2022

 

 

2023

 

 

2022

 

 

2023

 

 

 

(in thousands)

 

Total revenue

 

$

403,658

 

 

$

448,581

 

 

$

1,195,256

 

 

$

1,368,685

 

Change in deferred revenue

 

 

44,297

 

 

 

13,333

 

 

 

115,265

 

 

 

92,056

 

Total billings

 

$

447,955

 

 

$

461,914

 

 

$

1,310,521

 

 

$

1,460,741

 

Disaggregation of Revenue and Billings

(Unaudited)







 

 

 

Three Months Ended
April 30,

 

 

Nine Months Ended
April 30,

 

 

 

2022

 

 

2023

 

 

2022

 

 

2023

 

 

 

(in thousands)

 

Disaggregation of revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Subscription revenue

 

$

370,496

 

 

$

417,516

 

 

$

1,083,141

 

 

$

1,271,388

 

Non-portable software revenue

 

 

9,368

 

 

 

8,345

 

 

 

38,247

 

 

 

27,003

 

Hardware revenue

 

 

1,329

 

 

 

619

 

 

 

5,245

 

 

 

2,473

 

Professional services revenue

 

 

22,465

 

 

 

22,101

 

 

 

68,623

 

 

 

67,821

 

Total revenue

 

$

403,658

 

 

$

448,581

 

 

$

1,195,256

 

 

$

1,368,685

 

Disaggregation of billings:

 

 

 

 

 

 

 

 

 

 

 

 

Subscription billings

 

$

412,720

 

 

$

428,959

 

 

$

1,199,447

 

 

$

1,364,752

 

Non-portable software billings

 

 

9,368

 

 

 

8,345

 

 

 

38,247

 

 

 

27,003

 

Hardware billings

 

 

1,329

 

 

 

619

 

 

 

5,245

 

 

 

2,473

 

Professional services billings

 

 

24,538

 

 

 

23,991

 

 

 

67,582

 

 

 

66,513

 

Total billings

 

$

447,955

 

 

$

461,914

 

 

$

1,310,521

 

 

$

1,460,741

 

 Subscription — Subscription revenue includes any performance obligation which has a defined term, and is generated from the sales of software entitlement and support subscriptions, subscription software licenses and cloud-based Software as a Service, or SaaS offerings.

  • Ratable We recognize revenue from software entitlement and support subscriptions and SaaS offerings ratably over the contractual service period, the substantial majority of which relate to software entitlement and support subscriptions.
  • Upfront Revenue from our subscription software licenses is generally recognized upfront upon transfer of control to the customer, which happens when we make the software available to the customer.

Non-portable software — Non-portable software revenue includes sales of our enterprise cloud platform when delivered on a configured-to-order appliance by us or one of our OEM partners. The software licenses associated with these sales are typically non-portable and have a term equal to the life of the appliance on which the software is delivered. Revenue from our non-portable software products is generally recognized upon transfer of control to the customer.

Hardware — In transactions where we deliver the hardware appliance, we consider ourselves to be the principal in the transaction and we record revenue and costs of goods sold on a gross basis. We consider the amount allocated to hardware revenue to be equivalent to the cost of the hardware procured. Hardware revenue is generally recognized upon transfer of control to the customer.

Professional services — We also sell professional services with our products. We recognize revenue related to professional services as they are performed.


Annual Contract Value Billings and Annual Recurring Revenue

(Unaudited)







 

 

 

Three Months Ended
April 30,

 

 

Nine Months Ended
April 30,

 

 

 

2022

 

 

2023

 

 

2022

 

 

2023

 

 

 

(in thousands)

 

Annual Contract Value Billings (ACV Billings)

 

$

204,724

 

 

$

239,810

 

 

$

577,519

 

 

$

698,378

 

Annual Recurring Revenue (ARR)

 

$

1,114,420

 

 

$

1,467,178

 

 

$

1,114,420

 

 

$

1,467,178

 

Reconciliation of Subscription and Professional Services Revenue to Subscription and Professional Services Billings

(Unaudited)






 

 

 

Three Months Ended
April 30,

 

 

Nine Months Ended
April 30, 

 

 

2022

 

 

2023

 

 

2022

 

 

2023

 

 

 

(in thousands) 

Subscription revenue

 

$

370,496

 

 

$

417,516

 

 

$

1,083,141

 

 

$

1,271,388

 

Change in subscription deferred revenue

 

 

42,224

 

 

 

11,443

 

 

 

116,306

 

 

 

93,364

 

Subscription billings

 

$

412,720

 

 

$

428,959

 

 

$

1,199,447

 

 

$

1,364,752

 

 

 

 

 

 

 

 

 

 

 

 

Professional services revenue

 

$

22,465

 

 

$

22,101

 

 

$

68,623

 

 

$

67,821

 

Change in professional services deferred revenue

 

 

2,073

 

 

 

1,890

 

 

 

(1,041

)

 

 

(1,308

)

Professional services billings

 

$

24,538

 

 

$

23,991

 

 

$

67,582

 

 

$

66,513

 


Reconciliation of GAAP to Non-GAAP Profit Measures

(Unaudited)










 

 

 

GAAP  

 

Non-GAAP Adjustments  

 

Non-GAAP  

 

 

Three Months
Ended April 30,
2023
 

 

(1)  

 

(2)  

 

(3)  

 

(4)  

 

(5)  

 

Three Months
Ended April 30,
2023
 

 

 

(in thousands, except percentages and per share data)

 

Gross profit

 

$

365,243

 

 

$

8,396

 

 

$

2,438

 

 

$

 

 

$

 

 

$

 

 

$

376,077

 

Gross margin

 

 

81.4

%

 

 

1.9

%

 

 

0.5

%

 

 

 

 

 

 

 

 

 

 

 

83.8

%

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

231,438

 

 

 

(19,383

)

 

 

(169

)

 

 

 

 

 

 

 

 

 

 

 

211,886

 

Research and development

 

 

147,797

 

 

 

(32,003

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

115,794

 

General and administrative

 

 

54,861

 

 

 

(13,126

)

 

 

 

 

 

(314

)

 

 

 

 

 

 

 

 

41,421

 

Total operating expenses

 

 

434,096

 

 

 

(64,512

)

 

 

(169

)

 

 

(314

)

 

 

 

 

 

 

 

 

369,101

 

(Loss) income from operations

 

 

(68,853

)

 

 

72,908

 

 

 

2,607

 

 

 

314

 

 

 

 

 

 

 

 

 

6,976

 

Operating margin

 

 

(15.3

)%

 

 

16.2

%

 

 

0.6

%

 

 

0.1

%

 

 

 

 

 

 

 

 

1.6

%

Net (loss) income

 

$

(81,183

)

 

$

72,908

 

 

$

2,607

 

 

$

314

 

 

$

16,188

 

 

$

669

 

 

$

11,503

 

Weighted shares outstanding, basic

 

 

234,735

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

234,735

 

Weighted shares outstanding, diluted (6)

 

 

234,735

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

282,362

 

Net (loss) income per share, basic

 

$

(0.35

)

 

$

0.32

 

 

$

0.01

 

 

$

-

 

 

$

0.07

 

 

$

-

 

 

$

0.05

 

Net (loss) income per share, diluted

 

$

(0.35

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

0.04

 

___________________
(1)

Stock-based compensation expense 

(2)

Amortization of intangible assets

(3)

Litigation settlement accrual and legal fees

(4)

Amortization of debt discount and issuance costs and interest expense related to convertible senior notes

(5)

Income tax effect primarily related to stock-based compensation expense

(6)

Includes 47,627 potentially dilutive shares related to convertible senior notes and the issuance of shares under employee equity incentive plans

 

 

GAAP  

 

Non-GAAP Adjustments

 

 

Non-GAAP  

 

 

Nine Months
Ended April 30,
2023
 

 

(1)  

 

(2)  

 

(3)  

 

(4)  

 

(5)  

 

(6)  

 

(7)

 

 

Nine Months
Ended April 30,
2023
 

 

 

(in thousands, except percentages and per share data)

 

Gross profit

 

$

1,116,047

 

 

$

26,186

 

 

$

7,779

 

 

$

 

 

$

230

 

 

$

 

 

$

 

 

$

 

 

$

1,150,242

 

Gross margin

 

 

81.5

%

 

 

1.9

%

 

 

0.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

84.0

%

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

697,448

 

 

 

(63,425

)

 

 

(716

)

 

 

 

 

 

(3,283

)

 

 

 

 

 

 

 

 

 

 

 

630,024

 

Research and development

 

 

439,541

 

 

 

(107,116

)

 

 

 

 

 

 

 

 

(1,661

)

 

 

 

 

 

 

 

 

 

 

 

330,764

 

General and administrative

 

 

185,074

 

 

 

(42,426

)

 

 

 

 

 

(1,726

)

 

 

(129

)

 

 

(38,499

)

 

 

 

 

 

 

 

 

102,294

 

Total operating expenses

 

 

1,322,063

 

 

 

(212,967

)

 

 

(716

)

 

 

(1,726

)

 

 

(5,073

)

 

 

(38,499

)

 

 

 

 

 

 

 

 

1,063,082

 

(Loss) income from operations

 

 

(206,016

)

 

 

239,153

 

 

 

8,495

 

 

 

1,726

 

 

 

5,303

 

 

 

38,499

 

 

 

 

 

 

 

 

 

87,160

 

Operating margin

 

 

(15.1

)%

 

 

17.6

%

 

 

0.6

%

 

 

0.1

%

 

 

0.4

%

 

 

2.8

%

 

 

 

 

 

 

 

 

6.4

%

Net (loss) income

 

$

(251,487

)

 

$

239,153

 

 

$

8,495

 

 

$

1,726

 

 

$

5,303

 

 

$

38,499

 

 

$

47,805

 

 

$

1,716

 

 

$

91,210

 

Weighted shares outstanding, basic

 

 

231,702

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

231,702

 

Weighted shares outstanding, diluted (8)

 

 

231,702

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

279,238

 

Net (loss) income per share, basic

 

$

(1.09

)

 

$

1.02

 

 

$

0.04

 

 

$

0.01

 

 

$

0.02

 

 

$

0.17

 

 

$

0.21

 

 

$

0.01

 

 

$

0.39

 

Net (loss) income per share, diluted

 

$

(1.09

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

0.33

 

___________________
(1)

Stock-based compensation expense 

(2)

Amortization of intangible assets 

(3)

Costs related to early exit of existing leases 

(4)

Restructuring charges 

(5)

Litigation settlement accrual and legal fees 

(6)

Amortization of debt discount and issuance costs and interest expense related to convertible senior notes 

(7)

Income tax effect primarily related to stock-based compensation expense

(8)

Includes 47,536 potentially dilutive shares related to convertible senior notes and the issuance of shares under employee equity incentive plans


 

 

GAAP  

 

Non-GAAP Adjustments  

 

Non-GAAP  

 

 

Three Months
Ended April 30,
2022
 

 

(1)  

 

(2)  

 

(3)  

 

(4)  

 

(5)  

 

Three Months
Ended April 30,
2022
 

 

 

(in thousands, except percentages and per share data)

 

Gross profit

 

$

323,809

 

 

$

9,137

 

 

$

3,368

 

 

$

 

 

$

 

 

$

 

 

$

336,314

 

Gross margin

 

 

80.2

%

 

 

2.3

%

 

 

0.8

%

 

 

 

 

 

 

 

 

 

 

 

83.3

%

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

234,623

 

 

 

(25,463

)

 

 

(651

)

 

 

 

 

 

 

 

 

 

 

 

208,509

 

Research and development

 

 

142,334

 

 

 

(35,467

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

106,867

 

General and administrative

 

 

39,552

 

 

 

(14,439

)

 

 

 

 

 

1,578

 

 

 

 

 

 

 

 

 

26,691

 

Total operating expenses

 

 

416,509

 

 

 

(75,369

)

 

 

(651

)

 

 

1,578

 

 

 

 

 

 

 

 

 

342,067

 

Loss from operations

 

 

(92,700

)

 

 

84,506

 

 

 

4,019

 

 

 

(1,578

)

 

 

 

 

 

 

 

 

(5,753

)

Operating margin

 

 

(23.0

)%

 

 

21.0

%

 

 

1.0

%

 

 

(0.4

)%

 

 

 

 

 

 

 

 

(1.4

)%

Net loss

 

$

(111,987

)

 

$

84,506

 

 

$

4,019

 

 

$

(1,578

)

 

$

15,325

 

 

$

(940

)

 

$

(10,655

)

Weighted shares outstanding, basic and diluted

 

 

222,473

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

222,473

 

Net loss per share, basic and diluted

 

$

(0.50

)

 

$

0.37

 

 

$

0.02

 

 

$

(0.01

)

 

$

0.07

 

 

$

-

 

 

$

(0.05

)

___________________
(1)

Stock-based compensation expense 

(2)

Amortization of intangible assets 

(3)

Other 

(4)

Amortization of debt discount and issuance costs and interest expense related to convertible senior notes 

(5)

Income tax effect primarily related to stock-based compensation expense and release of acquisition-related unrecognized tax positions

 

 

GAAP  

 

Non-GAAP Adjustments

 

 

Non-GAAP  

 

 

Nine Months
Ended April 30,
2022
 

 

(1)  

 

(2)  

 

(3)  

 

(4)

 

 

(5)

 

 

(6)

 

 

(7)

 

 

Nine Months
Ended April 30,
2022
 

 

 

(in thousands, except percentages and per share data)

 

Gross profit

 

$

953,992

 

 

$

29,093

 

 

$

10,212

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

993,297

 

Gross margin

 

 

79.8

%

 

 

2.4

%

 

 

0.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

83.1

%

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

726,475

 

 

 

(80,975

)

 

 

(1,953

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

643,547

 

Research and development

 

 

428,731

 

 

 

(109,709

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

319,022

 

General and administrative

 

 

123,871

 

 

 

(43,321

)

 

 

 

 

 

(432

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

80,118

 

Total operating expenses

 

 

1,279,077

 

 

 

(234,005

)

 

 

(1,953

)

 

 

(432

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,042,687

 

Loss from operations

 

 

(325,085

)

 

 

263,098

 

 

 

12,165

 

 

 

432

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(49,390

)

Operating margin

 

 

(27.2

)%

 

 

22.1

%

 

 

1.0

%

 

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4.1

)%

Net loss

 

$

(647,609

)

 

$

263,098

 

 

$

12,165

 

 

$

432

 

 

$

198,038

 

 

$

45,207

 

 

$

64,911

 

 

$

(247

)

 

$

(64,005

)

Weighted shares outstanding, basic and diluted

 

 

218,888

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

218,888

 

Net loss per share, basic and diluted

 

$

(2.96

)

 

$

1.20

 

 

$

0.06

 

 

$

-

 

 

$

0.90

 

 

$

0.21

 

 

$

0.30

 

 

$

-