Summary
Nutanix reported results for the first quarter of fiscal 2022, ended October 31, 2021. Revenue reached $378.5 million, up 21.0% from the prior-year quarter. Gross profit was $297.1 million, up 21.4%. Gross margin was 78.5%, up 0.2 percentage points. The operating loss narrowed 24.6% to $137.3 million, and operating margin was -36.3%, up 22.0 percentage points. Net loss widened 58.4% to $419.9 million. Diluted EPS was -$1.95. The gap between the two loss lines came from non-operating items, including the change in fair value of the derivative liability and debt extinguishment costs tied to the convertible note exchange. Operating cash flow was $6.9 million, up from the prior-year quarter. Capital expenditures were $8.8 million, down 27.8%. Deferred revenue was $1.33 billion, up 10.5%. Free cash flow was negative $1.9 million, compared with negative $16.3 million a year earlier. Non-GAAP gross margin was 82.1%, compared with 81.9%, and non-GAAP operating expenses totaled $352.6 million.
Operational metrics carried the quarter. ACV billings hit a record $183.3 million, up 33% year over year. Annual recurring revenue was $952.6 million, up 67%. Run-rate ACV was $1.59 billion, up 23%. Total billings were $398.0 million and subscription billings were $359.3 million. Average contract term slipped to 3.1 years from 3.5 years, in line with the subscription transition. Nutanix served approximately 20,700 end customers, including approximately 950 Global 2000 enterprises. Roughly 71% of customers with 18 months or more of tenure made a repeat purchase. Those customers' lifetime orders ran more than 6.4 times their initial order on average, and about 17.7 times for Global 2000 accounts. Management said 74% of the global sales team was fully ramped, leaving 26% still ramping. The company cut global headcount by 2.5%, mostly in sales and marketing, and sales and marketing headcount dropped 13% from October 31, 2020 to October 31, 2021.
The quarter brought several business announcements. Nutanix formed a strategic partnership with Citrix to deliver secure, on-demand access to apps, desktops, and data. Gartner named Nutanix a leader in the Magic Quadrant for Hyperconverged Infrastructure for the fifth time in a row, and also named it a Visionary in the October 2021 Magic Quadrant for Distributed Files and Objects Storage. The company appointed Dominick Delfino as Chief Revenue Officer, effective December 6, 2021, and named Anja Hamilton as Chief People Officer, effective January 4, 2022. It hosted its .NEXT Digital Experience and launched AOS 6.0 with zero-trust security, disaster recovery, and virtual networking features.
Guidance points to continued growth. For the second quarter of fiscal 2022, Nutanix guided ACV billings to $195 million to $200 million, non-GAAP gross margin to approximately 82% to 82.5%, and non-GAAP operating expenses to $360 million to $365 million. It guided weighted average shares outstanding to approximately 218 million. For the full fiscal year 2022, the company guided ACV billings to $740 million to $750 million, non-GAAP gross margin to approximately 82%, and non-GAAP operating expenses to $1.48 billion to $1.49 billion. Management repeated its target of free cash flow break-even in the second half of calendar 2022 and a 25 percent-plus ACV billings CAGR through fiscal 2025.
Risks remain material. The COVID-19 pandemic continues to affect demand, IT spending, sales cycles, supply chains, and the ability to deliver on-site services, and reduced manufacturing capacity is expected to raise prices for certain hardware components. Nutanix also faces higher than normal attrition among sales representatives, and its subscription transition shortens average contract terms, which can pressure billings and revenue in a given period. Competition in hybrid cloud and hyperconverged infrastructure is intense. Management expects operating and free cash flow to stay negative during the next 12 months. The quarter delivered solid revenue growth, a narrower operating loss, and positive operating cash flow, but the net loss widened and cash profitability remains thin.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2022 | Q4 FY2021 | QoQ | Q1 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $378.5M | $390.7M | -3.1% | $312.8M | +21.0% |
| Gross profit | $297.1M | $312.2M | -4.8% | $244.8M | +21.4% |
| Gross margin | 78.5% | 79.9% | -1.4 pp | 78.3% | +0.2 pp |
| Research & development | $144.3M | $140.7M | +2.6% | $135.8M | +6.2% |
| Sales & marketing | $250.0M | $270.8M | -7.7% | $257.3M | -2.8% |
| General & administrative | $40.0M | $42.6M | -6.1% | $33.8M | +18.5% |
| Total operating expenses | $434.3M | $454.1M | -4.4% | $426.9M | +1.7% |
| Operating income (loss) | -$137.3M | -$141.9M | +3.3% | -$182.1M | +24.6% |
| Operating margin | -36.3% | -36.3% | +0.1 pp | -58.2% | +22.0 pp |
| Net income (loss) | -$419.9M | -$358.2M | -17.2% | -$265.0M | -58.4% |
| Net margin | -110.9% | -91.7% | -19.3 pp | -84.8% | -26.2 pp |
Risks
Nutanix disclosed higher than normal attrition among its sales representatives and a recent 2.5% reduction in global headcount, primarily in sales and marketing, with sales and marketing headcount down 13% from October 31, 2020 to October 31, 2021. As of October 31, 2021, only approximately 74% of global sales team members were considered fully ramped, and new hires typically take until around their fourth quarter of employment to become fully productive.
The shift to subscription term-based licenses is compressing contract duration, with total average contract term falling to approximately 3.1 years for the three months ended October 31, 2021 from approximately 3.5 years in the prior year period, and ACV-based sales compensation could compress terms further. Customers may also choose shorter subscription terms or pay only the initial year of a multi-year term upfront, which the company says could negatively impact billings, revenue and cash flow in a given period.
Management expects operating and free cash flow to continue to be negative during the next 12 months due to business investments and the subscription transition, even though operating cash flow was $6.9 million for the quarter ended October 31, 2021 (up from negative $4.1 million in the prior year quarter) and free cash flow improved to negative $1.9 million from negative $16.3 million.
Other expense, net increased to $278.5 million for the quarter ended October 31, 2021 from $78.7 million in the prior year quarter, driven primarily by a $198.0 million change in fair value of the derivative liability tied to the 2026 Notes and $64.9 million of debt extinguishment costs from exchanging $416.5 million principal of 2023 Notes for $477.3 million principal of 2027 Notes. Net loss widened to $419.9 million for the quarter from $265.0 million in the prior year quarter, a decline of 58.4%.
The COVID-19 pandemic continues to create uncertainty, with the company citing curtailed demand, reduced IT spending, lengthened sales cycles particularly with new customers and partners, supply chain disruptions, and reduced manufacturing capacity expected to raise prices of components used in hardware platforms, which may increase hardware prices for end customers.
Nutanix relies on channel partners, distributors, resellers and OEMs for the substantial majority of its sales and had $105.7 million of guarantees with OEMs outstanding as of October 31, 2021, all due in less than one year, tied to minimum financial commitments for joint solution investments. Failure to leverage and expand this partner network would significantly affect results of operations.
SaaS KPIs
All quarters →Free Cash Flow
Annual Recurring Revenue (ARR)
Non-GAAP Gross Margin
Total Billings
Subscription Billings
Total end customers
Repeat purchase rate (18+ months)
Annual Contract Value (ACV) Billings
Average Contract Term
Global 2000 enterprises
Subscription Revenue
Run-rate Annual Contract Value (ACV)
Summary, forecast, risks and KPIs are extracted from Nutanix, Inc.'s SEC filings for Q1 FY2022 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.