Summary
Nutanix ended fiscal 2022 with a mixed fourth quarter. Revenue for the quarter was $385.5 million, down 1.3% from the prior-year quarter. Full-year revenue reached $1.58 billion, up 13.4%. Gross profit for the quarter was $305.6 million, down 2.1%, while full-year gross profit was $1.26 billion, up 14.3%. Gross margin slipped to 79.3% in the quarter, a decline of 0.6 percentage points. For the full year, gross margin improved to 79.7%, up 0.6 percentage points.
The bottom line showed improvement. Operating loss for the quarter was $133.4 million, a loss that narrowed 6.0% from the prior-year quarter. Full-year operating loss was $457.4 million, a loss that narrowed 30.8%. Net loss for the quarter was $151.0 million, a loss that narrowed 57.8%. Full-year net loss was $797.5 million, a loss that narrowed 22.9%. Diluted EPS for the full year was -$3.62, a loss that narrowed 27.7%. Operating cash flow turned positive. The quarter generated $38.0 million in operating cash flow, up 254.3% from the prior-year quarter. Full-year operating cash flow was $67.5 million, up 167.7%. Capital expenditures were $14.8 million in the quarter, down 15.7%, and $49.1 million for the full year, down 16.4%. Deferred revenue ended the year at $1.45 billion, up 10.1%.
Non-GAAP metrics point to a subscription business gaining scale. Total billings for fiscal 2022 were $1.71 billion. Subscription billings were $1.56 billion. ACV billings were $756.3 million. ARR reached $1.20 billion, and run-rate ACV was $1.80 billion. Free cash flow for the full year was $18.5 million. Non-GAAP operating expenses were $1.40 billion. The customer base grew to 22,600 end customers, including approximately 980 Global 2000 enterprises. Among customers with 18 months or more of tenure, 73% made a repeat purchase. Their lifetime orders averaged 6.9 times the initial order, and Global 2000 customers averaged 20.9 times.
Operationally, the sales force remains a work in progress. As of July 31, 2022, 73% of global sales team members were fully ramped, while 27% were still ramping. The total average contract term was 3.2 years in fiscal 2022, down from 3.4 years in fiscal 2021 and 3.8 years in fiscal 2020. Management announced in August 2022 a global headcount reduction of approximately 4%, primarily in sales and marketing. The filing cites higher-than-normal attrition among sales representatives and sales headcount below targets. Other risks include COVID-19 disruptions, supply chain delays for hardware, longer sales cycles, customer decisions to buy shorter subscription terms or pay only the initial year upfront, and execution risk in the subscription transition.
The annual report does not provide specific next-quarter or full-year guidance figures. Management instead frames the outlook around long-term investment in profitable growth and go-to-market efficiencies. The company lists $1.84 billion in total material cash requirements as of July 31, 2022. That includes $1.50 billion in principal payable on convertible senior notes, $160.8 million in operating leases, $88.7 million in other commitments, and $82.3 million in guarantees with contract manufacturers. Management believes its cash and short-term investments will meet anticipated needs for at least the next 12 months. The main risks remain the pandemic, supply chain constraints, sales attrition, and the shift to subscription and SaaS delivery.
Forecast
No forward guidance in this quarter's filings.
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2022 | Q3 FY2022 | QoQ | Q4 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $385.5M | $403.7M | -4.5% | $390.7M | -1.3% |
| Gross profit | $305.6M | $323.8M | -5.6% | $312.2M | -2.1% |
| Gross margin | 79.3% | 80.2% | -0.9 pp | 79.9% | -0.6 pp |
| Research & development | $144.0M | $142.1M | +1.4% | $140.7M | +2.4% |
| Sales & marketing | $252.5M | $234.5M | +7.7% | $270.8M | -6.8% |
| General & administrative | $42.5M | $39.6M | +7.6% | $42.6M | -0.2% |
| Total operating expenses | $439.1M | $416.2M | +5.5% | $454.1M | -3.3% |
| Operating income (loss) | -$133.4M | -$92.3M | -44.5% | -$141.9M | +6.0% |
| Operating margin | -34.6% | -22.9% | -11.7 pp | -36.3% | +1.7 pp |
| Net income (loss) | -$151.0M | -$111.6M | -35.3% | -$358.2M | +57.8% |
| Net margin | -39.2% | -27.7% | -11.5 pp | -91.7% | +52.5 pp |
| Diluted EPS | -$0.68 | — | — | — | — |
Risks
The company has recently seen higher-than-normal attrition among sales representatives and overall sales headcount is below targets, with only approximately 73% of global sales team members fully ramped as of July 31, 2022 and 27% still ramping. This may negatively impact billings and revenue growth while replacements are recruited, trained, and ramped.
Adverse macroeconomic and geopolitical conditions, including inflation, rising interest rates, recession risk, the war in Ukraine and related sanctions, may reduce IT spending and cause customers to delay or abandon purchases, lengthening sales cycles and making forecasting difficult.
Supply chain delays for hardware appliances, including the Nutanix-branded NX hardware line, have increased the percentage of orders with start dates in future quarters and caused some customers to delay software purchases pending hardware availability. This can delay revenue recognition and impair the ability to close transactions.
The ongoing transition to a subscription-based business model has compressed topline results. The ACV-based sales compensation structure has caused average contract term lengths to decline, and customers may pay only the first year of multi-year subscriptions upfront, negatively impacting billings, revenue, and cash flow.
Shorter subscription terms make maintaining high renewal rates and minimizing churn increasingly important. Customers have no obligation to renew and may renew for fewer solutions or on less favorable pricing, while pricing and packaging changes may cause confusion and slow adoption.
The enterprise infrastructure market is intensely competitive, with competitors including VMware (which has agreed to be acquired by Broadcom), Cisco, Dell, HPE, IBM, Lenovo, Pure Storage, NetApp, AWS, Google Cloud, and Microsoft Azure. Competitors may bundle, discount, or withhold cooperation, and shifts toward public cloud may reduce demand for the company's solutions.
As of July 31, 2022, $145.7 million principal of the 0% convertible senior notes due 2023 remains outstanding and matures in January 2023, which the company intends to settle in cash. Total principal payable on convertible notes is $1.498 billion, and servicing, repurchasing, or refinancing this debt may require significant cash or dilutive financing, especially if interest rates remain elevated.
In August 2022, the company announced a decrease in global headcount by approximately 4%, primarily in sales and marketing, as part of efforts to drive sustainable profitable growth. This restructuring may strain operations and affect execution during the subscription transition.
Following the February 2019 earnings release, multiple class action securities lawsuits and shareholder derivative claims were filed against the company. These matters, and any additional securities litigation, could result in substantial costs and divert management attention and resources.
The ongoing COVID-19 pandemic continues to cause disruptions, reduced IT spending, lengthened sales cycles, supply chain challenges, and uncertainty for the company, its customers, and partners. The duration and ultimate impact remain highly uncertain and may exacerbate other risks.
SaaS KPIs
All quarters →Total end customers
Global 2000 enterprises
Summary, forecast, risks and KPIs are extracted from Nutanix, Inc.'s SEC filings for Q4 FY2022 (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.