Nutanix enjoyed a classic beat-and-raise results pattern in its latest quarterly earnings report.
Revenues in hyperconverged infrastructure software supplier Nutanix’s third fiscal 2025 quarter, ended April 30, were $637 million, beating its $630 million high-point estimate, and up 22 percent year-on-year. It reported $63.4 million of net profit (GAAP net income), roundly beating the year-ago $15.6 million loss.
President and CEO Rajiv Ramaswami, said: “We delivered solid third quarter results, above the high end of our guided ranges, driven by the strength of the Nutanix Cloud Platform and demand from businesses looking for a trusted long-term partner.”
Financial summary:
- ARR: $2.14 billion, up 18 percent
- Gross margin: 87 percent , up 2.2 percent year-on-year
- Free cash flow: $203.4 million vs year-ago $78.3 million
- Operating cash flow: $218.5 million vs $96.4 million last year
- Cash, cash equivalents, and short-term investments: $1.88 billion compared to $1.74 billion in the prior quarter.
Ramaswami noted in the earnings call that: “We exceeded all our guided metrics. … Our largest wins in the quarter demonstrated our ability to land and expand within some of the largest and most demanding organizations in the world as they look to modernize their IT footprints, including adopting hybrid multi-cloud operating models and modern applications, as well as those looking for alternatives in the wake of industry M&A.”
That last point was a thinly veiled reference to Broadcom raising prices at VMware, which it bought it boguht for $61 billion in 2022. Nutanix said that its business with the tier 2 Cloud Service Providers and MSPS, which has not been a focus before, is now picking up as these customers are looking for an alternative to VMware.
Ramaswami said: “We do think that that market actually for us represents a significant opportunity, given the big vacuum that’s out there now with VMware.” Nutanix has added some specific CSP and MSP programs, as well as product multi-tenancy, to grow this side business which was historically small for it. The European CSP sovereign cloud market is another CSP opportunity
Nutanix gained 620 new customers in the quarter, taking its total to 28,490. There has been a notable pick up in its new customer acquisition rate from a low point of 380 six quarters ago;
CFO Rukmini Sivaraman said in the earnings call: “We continue to see strength in landing new customers onto our platform from the various programs we have put in place to incentivize new logos from a general increase in engagement from customers, looking at us as an alternative in the wake of industry M&A, and helped by more leverage from our OEM and channel partners.”
Ramaswami noted Cisco has been a consistent contributor of new logos to Nutanix: “it’s still a minority contribution, but a steady contribution to our new logo growth.”
After announcing external storage sales agreements with Dell and Pure Storage in the quarter, Ramaswami said Nutanix is: “expanding our cloud platform to support Google Cloud, which will be in early access this summer.”
He added: “Our customers would like us to support every external storage array that’s out there. They want to see how we can make migration as easy as possible for them.”
Although Nutanix is an HCI company, much of the market consists of 3-tier users with external storage. Ramaswami recognizes this: “that’s really the reason why, from our perspective, it makes sense to go broader and think of ourselves as not just a HCI provider anymore, but now a platform company. And as a platform, you support a broad ecosystem around you. So you can have external storage or you can have our own storage.”
Nutanix is ramping up its sales and marketing headcount to pursue market opportunities, such as 3-tier enteroprise customers, VMware switchers, tier 2 CSPs and MSPs and sovereign clouds.
Asked about tariff impact Sivaramen said: “We don’t have a direct exposure to tariffs, and we haven’t seen an impact from tariffs to date.”
For the next quarter Nutanix assumes that the macro and demand environment will remain similar to what it saw in Q3. It expects to continue to add new customers, while noting that a strong performance in Q4 of its previous financial year presents a tough year-over-year comparison for new logo additions, when it added 670 new customers.
One problem is the US federal market where there are lots of personnel changes and additional reviews, meaning somewhat longer deal cycles and some variability across the Fed business. Longer term though, Nutanix is optimistic about its Fed business as the Feds need to modernize their IT and reduce total cost of ownership.
Next quarter’s revenue outlook is $640 million ± $5 million, a 16.8 percent uplift on the year-ago Q4. It has increased its full year fy2025 revenue guidance to $2.525 billion from the previous guidance of $2.505 billion.
