Summary
Nutanix ended fiscal 2021 with record fourth-quarter ACV billings and revenue. Revenue reached $390.7 million, up 19.2% from the prior-year quarter. ACV billings were $176.3 million, up 26%. Annual recurring revenue was $878.7 million, up 83%. Run-rate ACV was $1.54 billion, up 26%. The average contract term slipped to 3.4 years from 3.8 years, a decline of 0.4 year. That shorter term reflects the company's subscription transition and affects how quickly revenue is recognized. For the full fiscal year, revenue was $1.39 billion, up 6.6%, while ACV billings were $594.3 million, up 18%.
Profitability showed mixed signals. GAAP gross margin was 79.9%, up 0.3 percentage points from 79.6%. Non-GAAP gross margin was 82.9%, down 10 basis points from 83.0%. GAAP operating loss was $141.9 million, narrower than the $171.4 million loss in the prior-year quarter. Operating margin improved to -36.3% from -52.3%, a gain of 15.9 percentage points. Net loss, however, widened to $358.2 million from $185.3 million. Non-GAAP net loss was $55.4 million, better than the $79.0 million non-GAAP net loss a year earlier. For the fiscal year, GAAP gross margin was 79.1%, up 1.0 percentage point from 78.1%, and operating margin was -47.4%, up 16.0 percentage points from -63.4%. Diluted EPS for the fiscal year was -$5.01, compared with -$4.48.
Cash generation remains a pressure point. Operating cash flow was -$24.6 million in the quarter, down from $3.6 million in the prior-year quarter. Free cash flow was -$42.2 million, $28.4 million lower than the -$13.8 million reported a year earlier. For the fiscal year, operating cash flow was -$99.8 million, an improvement from -$159.9 million. Free cash flow for the fiscal year was -$158.5 million, a $90.9 million improvement from -$249.4 million. Capital expenditures were $17.5 million in the quarter, up 0.7%, and $58.6 million for the fiscal year, down 34.5%. Deferred revenue was $343.4 million, up 59.3% from the prior-year quarter. Management expects operating and free cash flow to remain negative during the next 12 months.
Guidance for the first quarter of fiscal 2022 calls for ACV billings of $172 million to $177 million, non-GAAP gross margin of approximately 81.5%, and non-GAAP operating expenses of $365 million to $370 million. The company also reported roughly 20,130 end customers as of July 31, 2021, including about 980 Global 2000 enterprises. About 70% of customers with 18 months or more of tenure made a repeat purchase. Their lifetime orders averaged more than 6.3 times their initial order, and that multiple rose to about 16.4 times for Global 2000 customers. Risks include the COVID-19 pandemic, supply chain disruptions, higher component prices, sales representative attrition, and the subscription transition. Nutanix said about 75% of its global sales team was fully ramped as of July 31, 2021, while 25% was still ramping. It recently cut global headcount by 2.5%, mostly in sales and marketing. Competition from public cloud providers and customer confusion over pricing models also remain concerns.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2021 | Q3 FY2021 | QoQ | Q4 FY2020 | YoY |
|---|---|---|---|---|---|
| Revenue | $390.7M | $344.5M | +13.4% | $327.9M | +19.2% |
| Gross profit | $312.2M | $270.0M | +15.6% | $260.9M | +19.7% |
| Gross margin | 79.9% | 78.4% | +1.5 pp | 79.6% | +0.3 pp |
| Research & development | $140.7M | $144.9M | -2.9% | $135.3M | +3.9% |
| Sales & marketing | $270.8M | $263.4M | +2.8% | $264.5M | +2.4% |
| General & administrative | $42.6M | $42.3M | +0.7% | $32.5M | +31.4% |
| Total operating expenses | $454.1M | $450.6M | +0.8% | $432.3M | +5.1% |
| Operating income (loss) | -$141.9M | -$180.6M | +21.4% | -$171.4M | +17.2% |
| Operating margin | -36.3% | -52.4% | +16.1 pp | -52.3% | +15.9 pp |
| Net income (loss) | -$358.2M | -$123.6M | -189.7% | -$185.3M | -93.2% |
| Net margin | -91.7% | -35.9% | -55.8 pp | -56.5% | -35.1 pp |
Risks
The pandemic has caused reduced IT spending, delayed or abandoned purchases, lengthened sales cycles, supply chain disruptions, and higher component prices for hardware platforms. It may also lead customers to purchase shorter subscription terms or pay only the initial year upfront, which could negatively impact billings, revenue, and cash flow.
The ongoing transition to a subscription-based business model compresses topline results because subscription licenses generally have shorter average terms than life-of-device licenses. MD&A reports total average contract term declined from approximately 3.8 years in fiscal 2020 to 3.4 years in fiscal 2021, and ACV-based sales compensation could further compress terms and hurt operating and free cash flows.
Customers may, including due to COVID-19 uncertainty, purchase on shorter subscription terms than historically or request to pay only the initial year of a multi-year subscription term upfront. This could negatively impact billings, revenue, and operating and free cash flows, potentially significantly, and may require the company to raise additional capital.
The company recently decreased global headcount by 2.5%, primarily in sales and marketing, and has seen higher than normal attrition among sales representatives. As of July 31, 2021, approximately 75% of global sales team members were fully ramped and 25% were still ramping, so failure to replace, train, and ramp sales staff could impair growth.
Competition is intensifying from software providers such as VMware, traditional IT vendors such as Cisco, Dell, HPE, IBM, and Lenovo, and public cloud providers such as Amazon, Google, and Microsoft. Public cloud alternatives and competitor bundling or pricing pressure could reduce demand for Nutanix's platform.
The 2023 and 2026 convertible notes create risks including inability to raise funds to settle conversions or repurchase upon a fundamental change, potential reclassification of note principal to current liability if the conditional conversion feature is triggered, and accounting under ASU 2020-06 requiring the if-converted method for diluted EPS. Other expense, net increased in fiscal 2021 due primarily to the new 2026 Notes, including change in fair value of the derivative liability and interest expense.
The subscription model depends on maintaining high renewal rates and minimizing churn because subscriptions are generally shorter than historical life-of-device licenses. If customers do not renew, renew only for a portion of solutions, or demand less favorable pricing, total billings and revenue would decline.
Multiple class action securities lawsuits and shareholder derivative claims have been filed against the company, including following the February 2019 earnings release. Additional securities litigation could result in substantial costs, divert management attention, and adversely impact reputation and brand.
The company appointed Rajiv Ramaswami as President and CEO in December 2020, and loss of his services or other key personnel could disrupt business and negatively impact operating results and future growth. The company does not have life insurance policies covering executive officers or key employees.
COVID-19 has caused delays and disruptions in supply chains and data center operations, including procuring and shipping hardware appliances and components. Reduced manufacturing capacity may increase component prices and the price of hardware platforms for end customers, which could delay transaction closings or revenue recognition.
SaaS KPIs
All quarters →Free Cash Flow
Annual Recurring Revenue (ARR)
Non-GAAP Gross Margin
Total Billings
Subscription Billings
Total end customers
Annual Contract Value (ACV) Billings
Average Contract Term
Subscription Revenue
Global 2000 End Customers
Non-GAAP Operating Expenses
Run-rate Annual Contract Value (ACV)
Summary, forecast, risks and KPIs are extracted from Nutanix, Inc.'s SEC filings for Q4 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 1, 2026.