Summary
Nutanix closed its fiscal third quarter with revenue of $448.58 million, up 11.1% from $403.66 million a year earlier. The nine-month total reached $1.37 billion, up 14.5% from $1.20 billion. Total billings were $461.9 million, and subscription billings were $428.96 million. Growth arrived against what management described as an uncertain macro backdrop, and the mix keeps tilting toward recurring subscriptions. Annual recurring revenue rose 32% to $1.47 billion, while ACV billings increased 17% to $239.8 million. A shorter average contract term, now 3.0 years versus 3.2 years a year ago, continues to weigh on reported revenue as more deals convert to subscriptions. Deferred revenue ended the period at $1.54 billion, up 7.8% from $1.43 billion.
Profitability improved across the board. Gross profit was $366.15 million for the quarter, and gross margin rose to 81.6% from 80.2%. The operating loss narrowed to $58.64 million from $92.70 million, which lifted operating margin to negative 13.1% from negative 23.0%. The net loss improved to $70.97 million from $111.99 million. Diluted loss per share was $0.30, better than $0.50 a year ago. Over the first nine months, the net loss narrowed to $241.27 million from $647.61 million.
Cash generation was the standout. Operating cash flow was $74.50 million for the quarter, a swing from the $3.17 million used in the prior-year period. Through nine months, operating cash flow reached $214.09 million versus $29.54 million. Capital expenditures were $21.83 million for the quarter, up 29.3%.
Operationally, Nutanix reported 24,050 end customers as of April 30, 2023, up from 21,980 a year earlier, and roughly 74% of customers with at least 18 months of tenure made a repeat purchase. On the product side, the company rolled out Nutanix Central, a cloud-delivered management console, expanded data services for Kubernetes, and introduced Project Beacon, a multi-year plan to deliver data-centric platform services. The quarter also carried a governance overhang. An Audit Committee investigation found that evaluation software from two third-party vendors was used in a non-compliant manner over a multi-year period, and that certain employees concealed that use in violation of company policy. The company identified a material weakness in internal control over financial reporting, corrected prior period statements, and said it expects the incremental ongoing annual impact to operating expenses from the third-party software to be in the low-single-digit millions of dollars. Management also flagged higher than normal attrition among sales representatives, with about 75% of the global sales team fully ramped and the remainder still ramping.
Guidance points to a stronger fiscal fourth quarter. For the next quarter, management guided revenue of $470 million to $480 million, ACV billings of $240 million to $250 million, non-GAAP gross margin of roughly 84%, and a non-GAAP operating margin of 9% to 10%. For the full fiscal year, Nutanix guided revenue of $1.84 billion to $1.85 billion, ACV billings of $915 million to $925 million, non-GAAP gross margin of roughly 84%, and a non-GAAP operating margin of 6% to 7%. Executives pointed to year-to-date ACV billings growth exceeding 20% and strong free cash flow generation as evidence of balanced growth and profitability. The risks are familiar: a soft macro backdrop, the drag from shorter contract terms, sales execution while new representatives ramp, and the work still ahead to remediate the material weakness.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2023 | Q2 FY2023 | QoQ | Q3 FY2022 | YoY |
|---|---|---|---|---|---|
| Revenue | $448.6M | $486.5M | -7.8% | $403.7M | +11.1% |
| Gross profit | $366.2M | $399.7M | -8.4% | $323.8M | +13.1% |
| Gross margin | 81.6% | 82.2% | -0.5 pp | 80.2% | +1.4 pp |
| Research & development | $143.0M | $142.3M | +0.5% | $142.1M | +0.7% |
| Sales & marketing | $229.3M | $229.8M | -0.2% | $234.5M | -2.2% |
| General & administrative | $52.5M | $84.1M | -37.6% | $39.6M | +32.8% |
| Total operating expenses | $424.8M | $456.2M | -6.9% | $416.2M | +2.1% |
| Operating income (loss) | -$58.6M | -$56.5M | -3.8% | -$92.3M | +36.5% |
| Operating margin | -13.1% | -11.6% | -1.5 pp | -22.9% | +9.8 pp |
| Net income (loss) | -$71.0M | -$70.8M | -0.3% | -$111.6M | +36.4% |
| Net margin | -15.8% | -14.6% | -1.3 pp | -27.7% | +11.8 pp |
| Diluted EPS | -$0.30 | -$0.31 | +$0.01 | — | — |
Risks
The company identified a material weakness in internal control over financial reporting tied to non-compliant use of third-party evaluation software and intentional employee misconduct. Remediation is not yet considered effective, and failure to remediate could impair timely accurate financial reporting, require restatement, or affect Nasdaq listing.
The Audit Committee investigation and related matters have led to a putative federal securities class action and a putative stockholder derivative action, and may lead to SEC investigation or enforcement. The company has incurred significant legal, accounting, and professional services expenses and may face penalties, injunctions, or damages.
The company has recently seen higher than normal attrition among sales representatives, and as of April 30, 2023 approximately 75% of its global sales team was fully ramped while about 25% was still ramping. This may delay revenue growth and cause sales and marketing expense to fluctuate or decline in the near term.
The shift to subscription term-based licenses and ACV-based sales compensation may compress average contract terms, with total average contract term at approximately 3.0 years for both the three and nine months ended April 30, 2023, compared to 3.2 years and 3.1 years in the prior-year periods. Shorter terms and customer requests to pay only the initial year upfront could negatively impact billings, revenue, and cash flow.
If the SEC were to commence an investigation or legal action related to the Audit Committee investigation, the company could incur significant additional time and expense and be required to pay significant penalties or become subject to injunctions, a cease and desist order, and other equitable remedies.
The ongoing subscription transition and updated pricing and packaging may cause customer concerns or confusion about pricing models, which can slow adoption and renewal rates among current and future customers. Renewals are increasingly significant as existing subscriptions come up for renewal.
The company relies on channel and OEM partners to produce hardware appliances on which its software runs, exposing it to supply chain delays that can impair its ability to provide services to end customers in a timely manner.
SaaS KPIs
All quarters →Annual Recurring Revenue (ARR)
Non-GAAP Gross Margin
Total Billings
Subscription Billings
Average Contract Term
ACV Billings
Summary, forecast, risks and KPIs are extracted from Nutanix, Inc.'s SEC filings for Q3 FY2023 (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.