Nutanix: Fiscal 3Q22 Financial Results

(in $ million)	3Q21	3Q22	9 mo. 21	9 mo. 22
Revenue	344.5	403.7	1,004	1,195
*Growth*		17%		*19%*
Net income (loss)	(123.6)	(111.6)	(676.1)	(646.5)

Nutanix, Inc. announced financial results for its third quarter ended April 30, 2022.

“Our third quarter reflected continued solid execution, demonstrating strong Y/Y top and bottom line improvement,” said Rajiv Ramaswami, president and CEO. “Late in the third quarter, we saw an unexpected impact from challenges that limited our upside in the quarter and affected our outlook for the fourth quarter. Increased supply chain delays with our hardware partners account for the significant majority of the impact to our outlook, and higher-than-expected sales rep attrition in the third quarter was also a factor. We don’t believe these challenges reflect any change in demand for our hybrid multicloud platform, and we remain focused on mitigating the impact of these issues and continuing to execute on the opportunity in front of us.”

“I’m excited to be taking on the role of CFO at this important time in Nutanix’s journey,” said Rukmini Sivaraman, CFO. “We continue to see good execution on our building base of subscription renewals, which is helping us drive towards profitable growth.“

Recent Company Highlights
• Appointed Rukmini Sivaraman as CFO: Effective May 1, 2022, he previously served as SVP of financial planning and analysis and has held several roles instrumental to the company’s growth and transformation.
• Appointed Mandy Dhaliwal as CMO and Shyam Desirazu as head of engineering: Each brings more than 2 decades of experience building and scaling high-performing, mission-driven organizations.
• Recognized as a Gartner Peer Insights Customers’ Choice for Hyperconverged Infrastructure and Distributed File Systems and Object Storage: These customer review-driven awards reflect customer satisfaction with both the core Nutanix Cloud Platform and Unified Storage Solutions.
• Named a Major Player in IDC’s MarketScape in Distributed Scale-Out File System Market Worldwide Distributed Scale-Out File System 2022 Vendor Assessment.

Comments

Revenue for 3FQ22 was $404 million, representing Y/Y growth of 17% but down 2% Q/Q, exceeding guidance range of $395 million to $400 million.

It was nevertheless a solid quarter, and the company beats all its guided metrics. ACV billings was $205 million, representing a Y/Y growth of 28%, exceeding guidance range of $195 million to $200 million.

3FQ22 subcription highlights
Nutanix 3q22 F1

Customer growth
Nutanix 3q22 F2

Over $1 million customer growth
Nutanix 3q22 F3

Ramaswami commented: "The quarter didn't finish as we had expected. Late in the third quarter, when we typically book a significant portion of our orders, we saw an unexpected impact from challenges that limited our upside in the quarter and affected our outlook for the fourth quarter. Increased hardware supply chain delays resulted in an increasing percentage of our orders having start dates in future quarters, or in some cases being delayed, pending availability of hardware. This affected both our billings and revenue upside in 3FQ22, and we expect this trend to continue in 4FQ22."

In addition, after seeing firm's attrition rate among sales improved for each of the prior 2 quarters, the firm saw it worsen in Q3, driving a lower than expected rep headcount entering 4FQ22.

Head count grew slightly in 3FQ22, adding 586 new logos, in line with firm's historical seasonal trend in new logo additions from 2Q to 3Q.

The guidance for 4FQ22 is as follows, ACV billings to be between $175 million and $185 million; revenue to be between $340 million and $360 million; non-GAAP gross margin between 79% and 80%; non-GAAP operating expenses between $360 million and $365 million; and weighted average shares outstanding of approximately 225 million.

CFO said: "I'm disappointed with a weaker 4FQ22 outlook, due to the aforementioned supply chain and sales rep headcount issues."

Guidance
Revenue between $340 and $360 million or -19% to -11% for 4FQ22
Old FY22 guidance: $1.625 to $1.630 billion
New FY22 guidance: $1.535 to $1.555 billion, up 10% to 12%

Revenue and loss of Nutanix
(in $ million)

FY ended
in July

Revenue

Loss

2012

6.6

14.0

2013

30.5

44.7

2014

127.1