Nutanix Reports Fourth Quarter and Fiscal 2019 Financial Results
— Delivers 71% of Billings from Subscriptions and Record 80% Gross Margin, Highlighting the Company’s Shift to Subscription Business Model

— Grows Deals that Include Offerings Beyond Core HCI to 26%1

— Expands Customer Base to Over 14,000 with 16% QoQ Growth in Number of Deals Over $1M and Strong QoQ Growth in New Global 2000 Customers

SAN JOSE, Calif.–(BUSINESS WIRE)–August 28, 2019–Nutanix, Inc. (Nasdaq: NTNX), a leader in enterprise cloud computing, today announced financial results for its fourth quarter and fiscal year ended July 31, 2019.

Q4 Fiscal 2019 Financial Highlights

Revenue: $299.9 million, down from $303.7 million in the fourth quarter of fiscal 2018, reflecting the reduction of pass-thru hardware from $35.9 million in the fourth quarter of fiscal 2018 to $13.0 million in the fourth quarter of fiscal 2019, and the revenue compression from the company’s ongoing transition to subscription
Billings: $371.7 million, down from $395.1 million in the fourth quarter of fiscal 2018, reflecting the reduction of pass-thru hardware from $35.9 million in the fourth quarter of fiscal 2018 to $13.0 million in the fourth quarter of fiscal 2019, and the billings compression from the company’s ongoing transition to subscription
Software and Support Revenue: $286.9 million, up 7% year-over-year from $267.9 million in the fourth quarter of fiscal 2018, reflecting the revenue compression from the company’s ongoing transition to subscription
Software and Support Billings: $358.7 million, down slightly year-over-year from $359.2 million in the fourth quarter of fiscal 2018, reflecting the billings compression from the company’s ongoing transition to subscription
Gross Margin: GAAP gross margin of 77.0%, up from 75.9% in the fourth quarter of fiscal 2018; Non-GAAP gross margin of 80.0%, up from 77.7% in the fourth quarter of fiscal 2018
Net Loss: GAAP net loss of $194.3 million, compared to a GAAP net loss of $87.4 million in the fourth quarter of fiscal 2018; Non-GAAP net loss of $105.8 million, compared to a non-GAAP net loss of $19.0 million in the fourth quarter of fiscal 2018
Net Loss Per Share: GAAP net loss per share of $1.04, compared to a GAAP net loss per share of $0.51 in the fourth quarter of fiscal 2018; Non-GAAP net loss per share of $0.57, compared to a non-GAAP net loss per share of $0.11 in the fourth quarter of fiscal 2018
Cash and Short-term Investments: $908.8 million, down from $934.3 million in the fourth quarter of fiscal 2018
Deferred Revenue: $910.0 million, up 44% from the fourth quarter of fiscal 2018
Operating Cash Flow: Use of $9.7 million, compared to generation of $22.7 million in the fourth quarter of fiscal 2018
Free Cash Flow: Use of $33.3 million, compared to generation of $6.5 million in the fourth quarter of fiscal 2018
Fiscal 2019 Financial Highlights

Revenue: $1.24 billion, up from $1.16 billion in fiscal 2018, reflecting the reduction of pass-thru hardware from $257.3 million in fiscal 2018 to $105.3 million in fiscal 2019, and the revenue compression from the company’s ongoing transition to subscription
Billings: $1.51 billion, up from $1.42 billion in fiscal 2018, reflecting the reduction of pass-thru hardware from $257.3 million in fiscal 2018 to $105.3 million in fiscal 2019, and the billings compression from the company’s ongoing transition to subscription
Software and Support Revenue: $1.13 billion, up 26% year-over-year from $898.1 million in fiscal 2018, reflecting the revenue compression from the company’s ongoing transition to subscription
Software and Support Billings: $1.41 billion, up 21% year-over-year from $1.16 billion in fiscal 2018, reflecting the billings compression from the company’s ongoing transition to subscription
Gross Margin: GAAP gross margin of 75.4%, up from 66.6% in fiscal 2018; Non-GAAP gross margin of 78.1%, up from 68.1% in fiscal 2018
Net Loss: GAAP net loss of $621.2 million, compared to a GAAP net loss of $297.2 million in fiscal 2018; Non-GAAP net loss of $272.9 million, compared to a non-GAAP net loss of $101.5 million in fiscal 2018
Net Loss Per Share: GAAP net loss per share of $3.43, compared to a GAAP net loss per share of $1.81 in fiscal 2018; Non-GAAP net loss per share of $1.51, compared to a non-GAAP net loss per share of $0.62 in fiscal 2018
Operating Cash Flow: Generation of $42.2 million, compared to generation of $92.5 million in fiscal 2018
Free Cash Flow: Use of $76.3 million, compared to generation of $30.2 million in fiscal 2018
Reconciliations between GAAP and non-GAAP financial measures and key performance measures are provided in the tables of this press release.

“We delivered a solid fourth quarter and believe our performance reflects our execution improvements and the meaningful progress we have made transitioning our business to a subscription model,” said Dheeraj Pandey, Chairman, Founder and CEO of Nutanix. “We are encouraged by our record gross margins, strengthening pipeline, progress in sales hiring, and recent large customer wins. We have a strong set of tenured sales leaders in place and continue to lead the industry as an innovator with technology at the forefront of hybrid cloud transformation.”

“We are pleased by our Q4 results, and that the actions we have taken to strengthen lead generation and enhance sales execution are generating positive results. Our subscription transition continues to be ahead of schedule with subscriptions growing from 52% of total billings in the fourth quarter of fiscal 2018 to 71% in the fourth quarter of fiscal 2019,” said Duston Williams, CFO of Nutanix. “In addition, 26%1 of our deals included a product outside our core offering, as new and existing customers increasingly look to Nutanix to guide them on their journey to hybrid cloud.”

Recent Company Highlights

Continued Accelerated Shift to Subscription Recurring Revenue Model: Fourth quarter subscription billings increased to 71% of total billings, up 6 percentage points from the previous quarter, and subscription revenue reached $195.6 million in the fourth quarter, representing 65% of total revenue.
Expanded Customer Base: Nutanix ended the fourth quarter of fiscal 2019 with 14,180 end-customers, adding 990 new customers in the quarter, including 31 from the Global 2000. Fourth quarter customer wins included Boardriders, Inc., Daiwa Institute of Research Ltd., Freeport-McMoRan, ICICI Bank, ING Bank Australia Limited, Johns Hopkins University Applied Physics Laboratory, and Noble Energy, Inc.
General Availability of DX Platform with HPE: Shortly after the close of the fourth quarter, the HPE Proliant DX platform, based on Nutanix software, became generally available to customers.
Appointed New Sales Leader in EMEA: Promoted longtime Nutanix sales leader Sammy Zoghlami to Senior Vice President of Sales in the EMEA Region.
Continued AHV Penetration: The company saw the number of NX nodes sold utilizing AHV grow to 47%, up from 35% as of the fourth quarter of fiscal 20181.
Nutanix Xi Government Cloud Listed as FedRAMP In Process on FedRAMP Marketplace: As announced in a separate release today, the company achieved new In Process designation for Nutanix Xi Government Cloud solutions, a step toward a full FedRAMP Moderate Authorization, which will enable federal government agencies to take advantage of our Xi Government Cloud solutions.
Certified as Great Place To Work: Nutanix was certified as a Great Place to Work in 2019 by a Great Place to Work Institute survey of US-based Nutanix employees. 87 percent of those surveyed highlighted the company as a great place to work, with more than 90 percent noting that when employees join Nutanix, they are made to feel welcome by the culture.
Q1 Fiscal 2020 Financial Outlook

For the first quarter of fiscal 2020, Nutanix expects:

Software and support revenue between $290 million and $300 million;
Software and support billings between $360 million and $370 million;
Total hardware to be 3% or less of total billings;
Non-GAAP gross margin of approximately 80%;
Non-GAAP operating expenses between $385 million and $390 million; and
Non-GAAP net loss per share of approximately $0.75, using approximately 190 million weighted shares outstanding.
1Based on a trailing four-quarter average.

Supplementary materials to this earnings release, including the company’s fourth quarter and fiscal 2019 investor presentation, can be found at https://ir.nutanix.com/company/financial.

All forward-looking non-GAAP financial measures contained in the section titled “Q1 Fiscal 2020 Financial Outlook” exclude stock-based compensation expense and amortization of intangible assets and may also exclude, as applicable, other special items. The company has not reconciled guidance for software and support billings, non-GAAP gross margin, non-GAAP operating expenses and non-GAAP loss per share to their most directly comparable GAAP measures because such items that impact these measures are not within its control and are subject to constant change. While the actual amounts of such items will have a significant impact on the company’s software and support billings, non-GAAP gross margin, non-GAAP operating expenses and non-GAAP loss per share, a reconciliation of the non-GAAP financial measure guidance to the corresponding GAAP measures is not available without unreasonable effort.

Webcast and Conference Call Information

Nutanix executives will discuss the company’s fourth quarter and fiscal 2019 financial results on a conference call at 4:30 p.m. Eastern Time/1:30 p.m. Pacific Time today. To listen to the call via telephone, dial 1-833-227-5841 in the United States or 1-647-689-4068 from outside the United States. The conference ID is 7478544. This call will be webcast live and available to all interested parties on our Investor Relations website at ir.nutanix.com. Shortly after the conclusion of the conference call, a replay of the audio webcast will be available on the Nutanix Investor Relations website. A telephonic replay will be available for one week by calling 1-800-585-8367 or 1-416-621-4642, and entering the conference ID 7478544.

Read the full story directly from their press release here.