Nutanix: Preliminary 3FQ20 Financial Results

Highlights

• Expects TCV revenue and billings in line with guidance
• Saw strong increase in VDI and DaaS business to support remote work
• Withdraws FY20 guidance and calendar 2021 business model targets

Nutanix Inc. announced preliminary total revenue, software and support (TCV) (1) revenue, and TCV billings for the fiscal third quarter ended April 30, 2020.

Reconciliation of Preliminary Software and Support Revenue (TCV Revenue)
to Preliminary Software and Support Billings (TCV Billings)

For 3FQ20, the company expects total revenue to be between $312 and $317 million, up 8% to 10% Y/Y.

Total revenue growth rate reflects the top line compression resulting from the company’s ongoing transition to a subscription business model and away from selling hardware.

TCV revenue is expected to be between $307 and $312 million, up 16% to 17% Y/Y, in line with prior guidance of $300 to $320 million. TCV billings is expected to be between $371 and $376 million, up 14% to 16% Y/Y, in line with prior guidance of $365 to $385 million. The growth rates of TCV revenue and TCV billings reflect the top line compression resulting from the company’s ongoing transition to a subscription business model.

“Our business is taking important strides in digital prospecting, virtual selling, and remote work. A new company will emerge from this pandemic, and this quarter is just the beginning of that,” said Dheeraj Pandey, chairman, co-founder and CEO. “The recessionary macro environment makes our subscription transformation and our delightful zero-touch products even more impactful, as we enable our customers to be resilient, prepared, and productive. For example, we’ve seen an emerging tailwind in VDI and DaaS this past quarter. With our FastTrack program, we are doubling down with our channel partners and global system integrators to redefine the future of work. Corporate initiatives around remote work, hands-free IT automation, DR, and lift-n-shift to public cloud datacenters will be some of the pillars of digital transformation, and we believe we will be at the center of these conversations.”

“Thanks to the dedication, teamwork, and excellent customer service demonstrated by our employees and our partner community, we expect to meet our third quarter guidance for TCV billings and TCV revenue,” said Duston Williams, CFO. “While we have continued to see steady demand for our hybrid cloud solutions, there is a significant level of uncertainty regarding the ongoing impact of Covid-19 on our customers and end markets over the coming quarters. As we said we would in our last earnings call, we have been proactively and prudently managing expenses to help ensure the long-term health of our business during this pandemic. In addition, as a result of these uncertainties we are withdrawing our guidance for FY20, which we provided on February 26, 2020, as well as our business model targets for calendar 2021, which we discussed during our investor day in March 2019 and which included, among other things, a target for achieving $3 billion in TCV billings.”

(1) TCV, or Total Contract Value, for any given period is defined as the total software and support revenue or total software and support billings, as applicable, during such period, which excludes revenue and billings associated with pass-through hardware sales during the period.