Summary
Nutanix closed FY2021 Q2 with total revenue of $346.4 million, flat versus the prior-year quarter. Gross profit rose to $275.4 million, up 1.4% from the prior-year quarter, and gross margin reached 79.5%, up 1.2 percentage points. The company reported an operating loss of $156.2 million for the quarter, up 24.5% from the prior-year quarter as the loss narrowed. Operating margin was negative 45.1%, up 14.6 percentage points. Net loss, however, widened to $287.4 million, down 32.1%, and diluted EPS loss widened to $1.42, down $0.29. The bottom line took a hit from non-operating items tied to the convertible notes, while the operating loss narrowed on lower operating expenses.
The sales metrics told a more upbeat story. ACV billings rose 14% to $159.2 million, and run-rate ACV rose 28% to $1.38 billion. The press release said new ACV from emerging products grew more than 100% year over year. Nutanix ended the quarter with approximately 18,770 end customers, including about 950 Global 2000 customers, after adding about 20 Global 2000 customers in the quarter. Management also highlighted the appointment of Rajiv Ramaswami as CEO and the promotion of Chris Kaddaras to Chief Revenue Officer. The company was named a Leader in the Gartner Magic Quadrant for Hyperconverged Infrastructure Software for the fourth year in a row. These operational wins support the subscription transition, though they did not lift total revenue above year-ago levels.
Cash generation improved from a low base. Operating cash flow was negative $15.6 million for the quarter, up from the prior-year quarter. Capital expenditures were $12.9 million, down 39.2% from the prior-year quarter. Free cash flow, a non-GAAP measure, was negative $28.5 million compared with negative $73.7 million a year earlier. Deferred revenue was $1.25 billion, up 18.0% from the prior-year quarter. Non-GAAP operating expenses were $353.5 million compared with $396.3 million a year earlier, and non-GAAP gross margin was 82.7% compared with 81.4%. The company still expects operating and free cash flow to be negative during the next 12 months.
For the third quarter of fiscal 2021, Nutanix guided ACV billings to $150 million to $155 million, non-GAAP gross margin to approximately 81%, non-GAAP operating expenses to $365 million to $370 million, and weighted average shares outstanding to approximately 207 million. The outlook covers the next quarter. Management said some operating expenses could increase from recent suppressed levels as pandemic-related cost savings measures expire. The company did not provide full-year guidance.
Risks remain substantial. The COVID-19 pandemic has curtailed demand, reduced IT spending, delayed purchases, lengthened sales cycles, disrupted supply chains, and raised component prices. The subscription transition also creates revenue timing pressure because subscription term-based licenses carry shorter average terms than life-of-device licenses. The total average contract term fell to 3.4 years in the quarter from 3.9 years a year earlier. That shift helps explain flat total revenue even as ACV billings and run-rate ACV grew. Customer retention and expansion will be critical, and management said about 68% of customers with 18 months or more of tenure made a repeat purchase as of January 31, 2021. Nutanix also faces competition from public cloud infrastructure and other vendors, and its cash flow is expected to stay negative for the next 12 months.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2021 | Q1 FY2021 | QoQ | Q2 FY2020 | YoY |
|---|---|---|---|---|---|
| Revenue | $346.4M | $312.8M | +10.8% | $346.8M | -0.1% |
| Gross profit | $275.4M | $244.8M | +12.5% | $271.5M | +1.4% |
| Gross margin | 79.5% | 78.3% | +1.3 pp | 78.3% | +1.2 pp |
| Research & development | $135.6M | $135.8M | -0.2% | $139.1M | -2.5% |
| Sales & marketing | $261.1M | $257.3M | +1.5% | $304.9M | -14.4% |
| General & administrative | $35.0M | $33.8M | +3.7% | $34.6M | +1.3% |
| Total operating expenses | $431.7M | $426.9M | +1.1% | $478.6M | -9.8% |
| Operating income (loss) | -$156.2M | -$182.1M | +14.2% | -$207.1M | +24.5% |
| Operating margin | -45.1% | -58.2% | +13.1 pp | -59.7% | +14.6 pp |
| Net income (loss) | -$287.4M | -$265.0M | -8.4% | -$217.6M | -32.1% |
| Net margin | -83.0% | -84.8% | +1.8 pp | -62.7% | -20.2 pp |
Risks
The 10-Q materially updated the key personnel risk because Nutanix recently appointed Rajiv Ramaswami as President and Chief Executive Officer. A failure to integrate him successfully, or the loss of his services, could disrupt the business, hurt operating results and future growth, and cause a significant decline in the Class A common stock price; Nutanix also has no life insurance covering executive officers or key employees.
MD&A states that as of January 31, 2021, approximately 81% of global sales team members were fully ramped while approximately 19% were still ramping. It warns that ineffective management of leadership transitions, especially in sales, or the inability of recently hired sales personnel to ramp to target productivity could negatively impact growth and operating margins.
MD&A attributes the decrease in product revenue for the three and six months ended January 31, 2021 to the shift toward subscription term-based licenses, which have shorter average terms; total average contract term decreased from approximately 3.9 years in the prior-year periods to approximately 3.4 years and 3.5 years in the current periods. The transition may compress billings, revenue and cash flow, and the fiscal 2021 shift to ACV-based sales compensation could further shorten subscription terms.
MD&A says COVID-19 has curtailed demand for certain solutions, reduced IT spending, delayed or caused abandonment of purchases, lengthened sales cycles, disrupted supply chains and increased component prices. Some cost savings are temporary and operating expenses may rise as proactive measures expire, though the company also saw increased demand for virtual desktop and end-user computing solutions.
MD&A states Nutanix expects operating and free cash flow to continue to be negative during the next 12 months. Other expense, net increased due primarily to additional expense from the new 2026 Notes, including the change in fair value of the derivative liability and interest expense from amortization of debt discount and issuance costs.
MD&A notes the subscription transition may cause pricing concerns or confusion among customers and slow adoption and renewal rates. As of January 31, 2021, approximately 68% of end customers who had been with Nutanix for 18 months or longer had made a repeat purchase, making renewals increasingly important to future revenue.
SaaS KPIs
All quarters →Free Cash Flow
Non-GAAP Gross Margin
Total Billings
Subscription Billings
Total end customers
Subscription Revenue
Non-GAAP Operating Expenses
ACV Billings
Summary, forecast, risks and KPIs are extracted from Nutanix, Inc.'s SEC filings for Q2 FY2021 (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.