Summary
Nutanix reported fiscal 2026 third quarter revenue of $703.1 million, up 10.0% from $639.0 million in the prior-year quarter. Annual recurring revenue climbed 15% to $2.43 billion from $2.12 billion. Average contract duration extended to 3.4 years from 3.1 years, and total end customers reached 31,710, up from 28,490 a year earlier. Through the first nine months of fiscal 2026, revenue was $2.10 billion, up 11.2% from $1.88 billion.
Profitability improved faster than the top line. Gross profit was $610.8 million, up 9.9%, while gross margin eased to 86.9% from 87.0%. Operating income rose 44.9% to $70.5 million, lifting operating margin to 10.0% from 7.6%. Net income was $72.1 million, up 13.8%, and diluted EPS was $0.25 against $0.22. Non-GAAP operating income was $156.5 million and non-GAAP operating margin was 22.3%, up from 21.5%. Year to date, net income reached $237.2 million, up 58.4%, and diluted EPS was $0.82 versus $0.52.
Cash generation was mixed. Operating cash flow for the quarter was $207.5 million, down 5.0% from $218.5 million, and capital expenditures fell 31.6% to $10.3 million. Free cash flow, a non-GAAP measure, was $197.2 million versus $203.4 million. Year to date, operating cash flow was $601.7 million, essentially flat against $601.9 million, while free cash flow was $563.1 million. Deferred revenue ended the quarter at $2.31 billion, up 13.7% from $2.03 billion.
The quarter carried a heavy product and partnership cadence. Nutanix unveiled its Agentic AI full stack software solution at NVIDIA GTC 2026 and held its .NEXT conference in Chicago on April 7 to 9, 2026. There it announced a strategic alliance with NetApp to integrate NetApp enterprise storage with the Nutanix Cloud Platform and AHV hypervisor later this year, introduced NKP Metal for bare-metal Kubernetes, and added a certified MongoDB Ops Manager integration to Nutanix Database Service. The company also outlined plans to extend Agentic AI capabilities to neocloud providers in the second half of 2026.
Guidance points higher. For the fourth quarter of fiscal 2026, management guided a non-GAAP operating margin of 21% to 23% and roughly 292 million weighted average diluted shares. For the full fiscal year 2026, the company raised its outlook to a non-GAAP operating margin of approximately 22.5% and free cash flow of $760 million to $780 million.
Supply chain pressure is the sharpest near-term risk. Constraints on certain hardware components grew more acute in the latter half of the second quarter of fiscal 2026, driving higher hardware prices and longer lead times. That can delay customer deployments and shift revenue recognition and cash flow between periods. Net dollar-based retention slipped to 106% from 110%, and larger deals take longer to close. The board added $750 million to the share repurchase authorization in April 2026. In May 2026, Nutanix sold 4,136,789 Class A shares to Advanced Micro Devices at $36.26 per share for about $150.0 million.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2026 | Q2 FY2026 | QoQ | Q3 FY2025 | YoY |
|---|---|---|---|---|---|
| Revenue | $703.1M | $722.8M | -2.7% | $639.0M | +10.0% |
| Gross profit | $610.8M | $631.6M | -3.3% | $556.0M | +9.9% |
| Gross margin | 86.9% | 87.4% | -0.5 pp | 87.0% | -0.1 pp |
| Research & development | $196.1M | $202.3M | -3.0% | $186.4M | +5.2% |
| Sales & marketing | $283.6M | $277.5M | +2.2% | $260.4M | +8.9% |
| General & administrative | $60.6M | $67.6M | -10.4% | $60.5M | +0.1% |
| Total operating expenses | $540.3M | $547.4M | -1.3% | $507.3M | +6.5% |
| Operating income (loss) | $70.5M | $84.1M | -16.2% | $48.6M | +44.9% |
| Operating margin | 10.0% | 11.6% | -1.6 pp | 7.6% | +2.4 pp |
| Net income (loss) | $72.1M | $103.0M | -30.0% | $63.4M | +13.8% |
| Net margin | 10.3% | 14.3% | -4.0 pp | 9.9% | +0.3 pp |
| Diluted EPS | $0.25 | $0.36 | -$0.11 | $0.22 | +$0.03 |
| Net retention rate | 106.0% | 107.0% | -1.0 pp | 110.0% | -4.0 pp |
Risks
Constraints affecting the availability of certain hardware components at manufacturers became increasingly acute beginning in the latter half of the second quarter of fiscal 2026, producing higher hardware pricing and extended lead times that vary across hardware vendors. These dynamics have impacted, and may continue to impact, customers' ability to deploy and consume Nutanix software, affecting the timing of revenue recognition and cash flows and, in certain instances, causing customers to delay projects or seek greater flexibility with licensing.
Net dollar-based retention rate declined to 106% as of April 30, 2026, compared to 110% as of April 30, 2025. With renewals carrying increasing significance for future revenue under the subscription model, a lower expansion rate within the existing customer base pressures top-line growth.
The sales pipeline has evolved to include a higher mix of larger deal opportunities that often take longer to close, require more levels of review from the customer's executive team, involve greater competition, and carry greater variability in timing, outcome and deal structure. These trends drive greater variability in landing new customers and expanding sales to existing customers, and top-line results may be adversely affected.
Nutanix estimates that sales team members typically become fully ramped around the start of their fourth quarter of employment, and sales and marketing headcount grew 7% from April 30, 2025 to April 30, 2026. As newer and existing sales team members are focused on major accounts and large deals, it may take longer, potentially significantly, to become fully productive, with a possible impact to overall sales team productivity.
Revenue from subscription term-based licenses is generally recognized upfront upon transfer of control, so any reduction in the total average contract duration would decrease upfront license revenue and could adversely affect revenue for the applicable period. Total average contract duration was approximately 3.4 years for the three months ended April 30, 2026, and the company also enabled certain customers to purchase software independently of hardware delivery beginning in the third quarter of fiscal 2026, which may impact the timing of revenue recognition and ARR.
SaaS KPIs
All quarters →Summary, forecast, risks and KPIs are extracted from Nutanix, Inc.'s SEC filings for Q3 FY2026 (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 1, 2026.