Q1 Fiscal 2020 Financial Highlights
Revenue: $314.8 million, up from $313.3 million in the first quarter of fiscal 2019, reflecting revenue compression from the company’s ongoing transition to subscription and the significant reduction of hardware revenue from the prior year
Billings: $380.0 million, down from $383.6 million in the first quarter of fiscal 2019, reflecting billings compression from the company’s ongoing transition to subscription and the significant reduction of hardware billings from the prior year
Software and Support (TCV)1 Revenue: $305.0 million, up 9% year-over-year from $280.7 million in the first quarter of fiscal 2019, reflecting revenue compression from the company’s ongoing transition to subscription
Software and Support (TCV) Billings: $370.3 million, up 5% year-over-year from $351.0 million in the first quarter of fiscal 2019, reflecting billings compression from the company’s ongoing transition to subscription
Gross Margin: GAAP gross margin of 77.1%, up from 76.3% in the first quarter of fiscal 2019; Non-GAAP gross margin of 80.1%, up from 78.6% in the first quarter of fiscal 2019
Net Loss: GAAP net loss of $229.3 million, compared to a GAAP net loss of $94.3 million in the first quarter of fiscal 2019; Non-GAAP net loss of $135.3 million, compared to a non-GAAP net loss of $23.7 million in the first quarter of fiscal 2019
Net Loss Per Share: GAAP net loss per share of $1.21, compared to a GAAP net loss per share of $0.54 in the first quarter of fiscal 2019; Non-GAAP net loss per share of $0.71, compared to a non-GAAP net loss per share of $0.13 in the first quarter of fiscal 2019
Cash and Short-term Investments: $889.4 million, compared to $965.0 million in the first quarter of fiscal 2019
Deferred Revenue: $975.3 million, up 39% from the first quarter of fiscal 2019
Operating Cash Flow: Use of $26.2 million, compared to generation of $49.8 million in the first quarter of fiscal 2019
Free Cash Flow: Use of $44.4 million, compared to generation of $20.0 million in the first quarter of fiscal 2019
Reconciliations between GAAP and non-GAAP financial measures and key performance measures are provided in the tables of this press release.
“Our solid Q1 performance, particularly in the Americas, gives us confidence that we have the right formula for global sales leadership as demonstrated by improved productivity and sales hiring over the last six months,” said Dheeraj Pandey, Chairman, Founder and CEO of Nutanix. “We have also seen momentum in key areas of our business, including the transition to subscription and an improved 28% attach rate of new products onto our core HCI platform.”
“We continued to make progress towards our goal of more than 75% of billings coming from subscription by the end of the fiscal year, further demonstrating that customers want the freedom and flexibility that a subscription software model offers,” said Duston Williams, CFO of Nutanix. “Our last two quarters of solid execution position us well to deliver on our growth plans for fiscal 2020.”
Recent Company Highlights
Continued Shift to Subscription Recurring Revenue Model: First quarter fiscal 2020 subscription billings grew 41% year-over-year to $276 million, representing 73% of total billings, and subscription revenue increased 72% year-over-year to $218 million, representing 69% of total revenue.
Expanded Customer Base and Closed Record Number of $1M+ Deals: Nutanix ended the first quarter with 14,960 total customers and closed a record high of 66 deals worth more than $1 million. First quarter customer wins included Anheuser-Busch InBev, Akron Children’s Hospital, Banco Patagonia S.A., Huaxia Bank, and The College of Education and Human Ecology at Ohio State University.
Grew Adoption of New Products: Nutanix saw continued new product traction with 28%2 of deals including at least one product outside of the company’s core offering.
Added Two New Executives in Key Functions: Tarkan Maner joined Nutanix as Chief Commercial Officer and is responsible for Nutanix’s global business development strategy, with a focus on partnerships, alliances, system integrators, and service providers. He will lead critical hybrid cloud-focused product teams including Nutanix Clusters, End-User Computing, Networking and Cloud Services, and Era. In addition, Christian Alvarez joined as the VP of Americas Channel to oversee building and managing the Nutanix Americas Channel team.
Hosted Ninth .NEXT User Conference: Nearly 4,500 attendees, including customers, prospects and partners, joined Nutanix in Copenhagen for its ninth .NEXT Conference, where attendees heard about Nutanix’s vision for the hybrid cloud. The venue was also the location for the largest EMEA Partner Xchange to date, with 1,200 Nutanix channel attendees.
Announced New IT Automation for Private Clouds: Nutanix and ServiceNow announced integration of Nutanix’s HCI platform and ServiceNow’s IT Operations Management solution to automate critical private cloud workflows. This solution enables IT teams to spend less time servicing incidents and issues and instead focus on offering a public cloud-like experience within the data center, competitive differentiation, and strategic planning in their digital transformation journey.
Announced General Availability of HPE GreenLake for Nutanix: The HPE GreenLake solution leverages Nutanix’s Enterprise Cloud OS software, including its built-in AHV hypervisor, to deliver a fully HPE-managed private cloud. It dramatically lowers total cost of ownership and accelerates time to value, allowing customers to pay for the service based on actual consumption.
Launched “All Together Now” Campaign to Expand Brand Reach into Market: The company introduced a new global brand campaign that simplifies and amplifies Nutanix’s vision for the hybrid and multi-cloud focusing on the simplicity, choice, and delight Nutanix brings to customers.
Released Results of Second Annual Enterprise Cloud Index: Nutanix engaged a third-party research firm to conduct a global survey of 2,650 IT leaders in mid-2019. A substantial majority (85%) of those respondents reaffirmed that hybrid cloud is the ideal IT model to strive for, and the majority have plans to aggressively shift investment to hybrid cloud architectures over the next three to five years. The research also found that the flexibility afforded by hybrid clouds to match and move applications to the right infrastructure in order to optimize cost, performance, security, and other variables as needed was what respondents value most about the hybrid model.
Named a Great Company for Millennials in the Bay Area: Nutanix was named one of the 18 great companies for millennials to work for in the San Francisco Bay Area by Comparably, a career data website. The rating was based on what millennials say they find most important in a job, including flexibility, benefits that match their values, social impact, and an opportunity to feel like valued contributors rather than just a number at work.
Named to the 50 Companies to Watch in 2020 List: This list of 50 companies worth watching was developed by analysts at Bloomberg Intelligence. When curating the list, they considered revenue growth, margins, market share, debt, and other factors such as economic conditions.
Q2 and Fiscal 2020 Financial Outlook
For the second quarter of fiscal 2020, Nutanix expects:
Software and support (TCV) billings between $410 million and $420 million;
Software and support (TCV) revenue between $330 million and $335 million;
Non-GAAP gross margin of approximately 80%;
Non-GAAP operating expenses between $400 million and $410 million; and
Non-GAAP net loss per share of approximately $0.70, using approximately 193 million weighted shares outstanding.
For the full year of fiscal 2020, Nutanix expects:
Software and support (TCV) billings between $1.65 billion and $1.75 billion;
Software and support (TCV) revenue between $1.30 billion and $1.40 billion;
Non-GAAP gross margin of approximately 80%; and
Non-GAAP operating expenses between $1.65 billion and $1.70 billion.
All forward-looking non-GAAP financial measures contained in the section titled "Q2 and 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 (TCV) billings, non-GAAP gross margin, non-GAAP operating expenses and non-GAAP net 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 (TCV) billings, non-GAAP gross margin, non-GAAP operating expenses and non-GAAP net loss per share, a reconciliation of the non-GAAP financial measure guidance to the corresponding GAAP measures is not available without unreasonable effort.
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.
2 Based on a rolling four-quarter average.