Nutanix reports double digit revenue gains for fiscal 2022 amid buyers interest from Bain Capital

Although Nutanix’ latest quarter’s revenues declined 1 percent year-on-year, however, full year results showed 13 percent growth and execs lauded its subscription billings performance.

Revenues in the fourth quarter ended July 31, 2022 were $385.5 million, with supply chain-driven headwinds limiting the growth. Nutanix reported a loss of $151 million, albeit better than the $358.2 million loss a year ago. This revenue dip perhaps helps explain last month’s layoff announcement.

Full fy2022 revenues were $1.58 billion, up 13 percent annually, with a loss of $797.5 million. That compares to the prior year’s loss of $1.03 billion.

Rajiv Ramaswami.

President and CEO Rajiv Ramaswami said: “Our fourth quarter capped off a fiscal year that showed strong year-over-year top and bottom line improvement. Fiscal 2022 was an important data point in demonstrating the long-term benefits of our subscription business model transition. We expect these benefits to compound further in the coming years as renewals become a bigger share of our business.”

CFO Rukmini Sivaraman, said: “Our Fiscal 2022 results reflect strong progress on our subscription model with 27 percent year-over-year ACV billings growth and achievement of positive free cash flow, which we expect to be sustainable on an annual basis.”

And profits? Sivaraman said: “We continue to see good execution on our building base of subscription renewals and remain focused on driving towards profitable growth.” Ramswami said In the earnings call: “Our overarching priority remains driving towards sustainable, profitable growth.”

How long will this take? Sivaraman didn’t commit to a timeline, saying: “We expect to continue to make steady progress each year towards continued top line growth and profitability.”

In Q4 fy2022 the red line turns down.

Ramaswami added: “We delivered bookings well above our expectations, aided by a number of large expansion deals and the continued strong performance of our renewals business. This drove billings and revenue outperformance relative to our guidance. Top-line outperformance, diligent expense management and better-than-expected linearity helped us achieve positive free cash flow in the quarter, which was substantially better than our expectations.”

Quarterly financial summary

  • Annual contract value billings: $193.2 million, up 10 percent annually
  • Annual recurring revenues: $1.2 billion, up 37 percent year-on-year
  • Gross margin: 79.3 percent
  • Free cash flow: $23.2 million

Even though revenues were down year-on-year, Nutanix beat its revenue guidance for the quarter ($340 – $360 million) and also its full year guidance of $1.535 billion – $1.555 billion. It gained 620 new customers and its total customer count is now 22,600. 

Nutanix said it is seeing positive effects from Broadcom buying Nutanix’ prime competitor VMware, with VMware customers willing to look at alternative suppliers.

Nutanix outlook

The outlook for Nutanix’ next quarter (Q1 fy 2023) is for revenues of between $410 and $415 million, $412.5 million at the mid-point which would be 9 percent higher than a year ago. That’s a sudden change from the current quarter’s 1 percent revenue decline.

Sivaraman said: “We did exit Q4 with a record backlog … and we typically use [that] backlog in Q1, and so we expect that to be the case this quarter as well.”

The full year revenue outlook is between $1.77 and $1.78 billion, meaning 10.8 percent annual growth at the mid-point.

Bain Capital

Lastly, the DealReporter merger and acquisitions outlet reported that Bain Capital was interested in taking Nutanix private. Nutanix has not commented on this. Bain already has a financial involvement with Nutanix through a $750 million convertible senior notes investment in August 2020, when Nutanix co-founder and then-CEO Dheeraj Pandey announced his retirement. Two Bain managing directors joined Nutanix’ board at that time.

Nutanix has a market capitalisation of $5.05 billion.