Nutanix, Inc. Q3 FY2025 earnings

Nutanix reported FY2025 Q3 revenue of $638.98 million, up 21.8% from the prior-year quarter. Year-to-date revenue reached $1.88 billion, up 17.7%. Gross profit was $555.99 million for the quarter, up 25.0%, and $1.63 billion year to date, up 20.3%. Gross margin expanded to 87.0% from 84.8%, a 2.2 percentage point increase. Year-to-date gross margin was 86.7%, up 1.9 percentage points. The company swung to an operating profit of $48.64 million from a prior-year operating loss. Operating margin was 7.6%, up 9.8 percentage points. Year-to-date operating income was $141.33 million, up 615.6%, with a 7.5% operating margin, up 6.3 percentage points. Net income was $63.36 million, up 505.8% and a swing to profit. Diluted EPS was $0.22, up $0.28 and 466.7%. Year-to-date net income was $149.72 million, up 11,190.8%, and diluted EPS was $0.52, up $0.47 and 940.0%.

Operating cash flow was $218.51 million for the quarter, up 126.8% from the prior-year quarter. Year-to-date operating cash flow was $601.93 million, up 40.6%. Capital expenditures were $15.10 million for the quarter, down 16.3%; year-to-date capital expenditures were $59.53 million, up 8.6%. Deferred revenue was $2.03 billion at April 30, 2025, up 16.1% from the prior-year quarter. Free cash flow, a non-GAAP measure, was $203.4 million for the quarter, compared with $78.3 million in the prior-year quarter. Year-to-date free cash flow was $542.4 million. ARR grew 18% year over year to $2.14 billion. Average contract duration was 3.1 years, compared with 3.0 years. Non-GAAP gross margin was 88.2%, compared with 86.5%. Non-GAAP operating margin was 21.5%, compared with 14.0%.

Nutanix held its .NEXT conference in Washington, D.C. on May 7 to 9. The company announced general availability of Nutanix Cloud Infrastructure for External Storage, with Dell PowerFlex as the first supported solution. It also announced a partnership with Pure Storage to integrate NCI, powered by the AHV hypervisor, Nutanix Flow virtual networking and security, with Pure Storage FlashArray for high-demand workloads, including AI. Cloud Native AOS extends Nutanix enterprise storage and advanced data services to hyperscaler Kubernetes services and cloud-native bare-metal environments without requiring a hypervisor. The latest release of Nutanix Enterprise AI adds integration with NVIDIA AI Enterprise, including NVIDIA NIM microservices and the NVIDIA NeMo framework, to speed deployment of agentic AI applications. The MD&A reports total end customers of 28,490 as of April 30, 2025, up from 25,860, growth of approximately 10%. Net dollar-based retention rate was 110%, compared with 117% as of April 30, 2024. Approximately 77% of end customers with 18 months or more of tenure made a repeat purchase. Those customers had lifetime orders more than 9.4x greater than their initial order on average, and Global 2000 customers in that group had lifetime orders about 39.3x greater, on average. Management said approximately 80% of global sales team members were fully ramped, while about 20% were still ramping.

For the fourth quarter of fiscal 2025, Nutanix guided revenue to $635 million to $645 million and a non-GAAP operating margin of 15.5% to 16.5%. It expects weighted average diluted shares outstanding of approximately 297 million. For the full fiscal year 2025, the company guided revenue to $2.52 billion to $2.53 billion, a non-GAAP operating margin of approximately 20.5%, and free cash flow of $700 million to $730 million. The fiscal 2025 outlook is for the full fiscal year, not the next quarter.

Risks include macroeconomic and geopolitical uncertainty, inflation, fluctuations in interest rates, foreign currency movements, tariffs or other trade restrictions, changes in government policy or spending, and other changes in economic conditions. Management said these factors may affect customer and partner buying patterns, sales cycle length, pipeline conversion, and top-line growth. The MD&A notes modestly elongated average sales cycles compared with historical levels, influenced by the macroeconomic environment and increased scrutiny on spend. Nutanix relies on channel and OEM partners to produce hardware platforms, which exposes it to supply chain delays. Competition, including public cloud infrastructure, remains intense. The subscription-based model may cause concerns or confusion among customers about pricing over time, which can slow adoption and renewal rates. The company plans to keep investing in sales and marketing, research and development, and general and administrative functions. Sales and marketing headcount grew 5%, R&D headcount grew 9%, and G&A headcount grew 12%. The company has convertible notes due 2027 and 2029 and a $500.0 million revolving credit facility.