Summary
Nutanix ended fiscal 2023 with fourth quarter revenue of $494.2 million, up 28.2% from the prior-year quarter. Gross margin was 83.7%, up 4.4 percentage points. The company reported an operating loss that narrowed to $11.3 million and a net loss that narrowed to $13.3 million. Operating cash flow was $58.3 million, up 53.4%. Capital expenditures were $12.8 million, down 13.4%. Deferred revenue was $1.60 billion, up 10.3%. For the full fiscal year, revenue was $1.86 billion, up 17.8%. Gross margin was 82.2%, up 2.5 percentage points. The full-year operating loss narrowed to $207.2 million, and the full-year net loss narrowed to $254.6 million. Diluted EPS improved to -$1.09. Full-year operating cash flow was $272.4 million, up 303.3%. Full-year capital expenditures were $65.4 million, up 33.3%.
The quarter's non-GAAP results and key metrics showed similar momentum. ACV billings were $278.7 million, up 44% from $193.2 million. ARR was $1.56 billion, up 30% from $1.20 billion. Average contract term was 3.0 years, down from 3.2 years. Non-GAAP gross margin was 85.8% versus 82.6%. Non-GAAP operating income was $63.6 million versus a loss of $37.8 million. Free cash flow was $45.5 million versus $23.2 million. For the full year, ACV billings were $956.8 million, up 27% from $756.3 million. ARR was $1.56 billion, up 30%. Non-GAAP operating income was $161.0 million versus a loss of $87.2 million. Free cash flow was $207.0 million versus $18.5 million. Operating cash flow and free cash flow are different measures; the company reports both.
Guidance for the first quarter of fiscal 2024 calls for ACV billings of $260 million to $270 million. Non-GAAP gross margin is expected at approximately 84%, and non-GAAP operating margin at 9% to 11%. Diluted weighted average shares are expected at approximately 290 million. For the full fiscal year 2024, Nutanix guides ACV billings to $1.075 billion to $1.095 billion, non-GAAP gross margin at approximately 84%, non-GAAP operating margin at 11% to 12%, and free cash flow at $280 million to $300 million. The board authorized a share repurchase program of up to $350 million. Recent operational highlights include a global strategic partnership with Cisco, the launch of Nutanix GPT-in-a-Box, the appointment of Mark Templeton to the board, and an Investor Day scheduled for September 26, 2023.
Risks remain. The company operates against an uncertain macro backdrop. It has seen higher-than-normal attrition among sales representatives. As of July 31, 2023, approximately 80% of its global sales team members were fully ramped, while about 20% were still ramping. The subscription transition can compress average contract terms and affect billings, revenue, and cash flow. Nutanix also disclosed a material weakness in internal control over financial reporting that has not been fully remediated. The audit committee investigation into third-party software usage found non-compliant use over a multi-year period and intentional misconduct by certain employees. Other risks include supply chain delays, competition, customer adoption, and the ability to retain and expand its base of over 24,000 end customers, including approximately 1,020 Global 2000 enterprises.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2023 | Q3 FY2023 | QoQ | Q4 FY2022 | YoY |
|---|---|---|---|---|---|
| Revenue | $494.2M | $448.6M | +10.2% | $385.5M | +28.2% |
| Gross profit | $413.8M | $366.2M | +13.0% | $305.6M | +35.4% |
| Gross margin | 83.7% | 81.6% | +2.1 pp | 79.3% | +4.4 pp |
| Research & development | $146.2M | $143.0M | +2.2% | $144.0M | +1.5% |
| Sales & marketing | $229.4M | $229.3M | +0.1% | $252.5M | -9.1% |
| General & administrative | $49.5M | $52.5M | -5.8% | $42.5M | +16.3% |
| Total operating expenses | $425.1M | $424.8M | +0.1% | $439.1M | -3.2% |
| Operating income (loss) | -$11.3M | -$58.6M | +80.6% | -$133.4M | +91.5% |
| Operating margin | -2.3% | -13.1% | +10.8 pp | -34.6% | +32.3 pp |
| Net income (loss) | -$13.3M | -$71.0M | +81.3% | -$151.0M | +91.2% |
| Net margin | -2.7% | -15.8% | +13.1 pp | -39.2% | +36.5 pp |
| Diluted EPS | -$0.06 | -$0.30 | +$0.24 | -$0.68 | +$0.62 |
Risks
The company disclosed a material weakness in internal control over financial reporting tied to non-compliant use of third-party evaluation software and failure to reinforce timely ethics concerns, and management determined it has not yet been fully remediated as of FY2023 Q4. The error required prospective correction of prior-period expenses beginning August 2014 and could impair timely accurate financial reporting or Nasdaq listing.
The completed Audit Committee investigation and related matters have led to a putative federal securities class action and a derivative action, with a proposed $71.0 million settlement and $39.9 million recoverable under insurance policies in fiscal 2023. Additional SEC or future lawsuits could result in significant expense and management diversion.
An increasing number of customers are allocating IT spending toward AI, machine learning, and generative AI capabilities, and the IT infrastructure market for these workloads is expected to be intensely competitive. Nutanix introduced GPT-in-a-Box and is investing in AI, but faces evolving regulatory, intellectual property, privacy, and security risks.
Large enterprise, service provider, and government sales involve longer sales cycles, increased customer purchasing leverage, stricter support requirements, and acceptance provisions that can delay revenue recognition. Macroeconomic uncertainty may cause customers to delay or abandon purchasing decisions and further lengthen sales cycles.
The company has seen higher-than-normal attrition among sales representatives and overall sales headcount below targets; as of July 31, 2023, approximately 80% of global sales team members were fully ramped while 20% were still ramping. Failure to recruit, train, and retain sufficient sales personnel could impair billings and revenue growth.
The transition to a subscription-based business model can reduce upfront revenue because certain subscription revenue is recognized ratably, and the total average contract term decreased to approximately 3.0 years in fiscal 2023 from 3.2 years in fiscal 2022 and 3.4 years in fiscal 2021. Customers may also request shorter terms or pay only the initial year upfront, pressuring billings, revenue, and cash flow.
The enterprise IT infrastructure market is intensely competitive, with software providers such as VMware (pending Broadcom acquisition), public cloud providers such as AWS, Google Cloud, Oracle Cloud, and Microsoft Azure, and traditional vendors such as Dell, HPE, and NetApp. Competitors may bundle AI capabilities or offer lower prices, and some may withhold OEM cooperation.
Global macroeconomic and geopolitical conditions remain uncertain, including high inflation, rising interest rates, recession risk, supply-chain disruptions, and the ongoing war in Ukraine and related sanctions. These factors may pressure IT spending and cause customers to modify spending priorities or delay purchases.
Nutanix relies on channel and OEM partners to produce hardware appliances, exposing it to supply chain delays and partner cooperation risk. If partners do not cooperate or prioritize competing products, product development, sales, and support could suffer.
As of July 31, 2023, Nutanix had $750.0 million of 2.50% convertible senior notes due 2026 and $575.0 million of 0.25% convertible senior notes due 2027. Servicing or settling conversions may require significant cash, and conversion could dilute existing stockholders.
Future success depends on existing end customers renewing or upgrading subscriptions and support agreements and making additional purchases. If customers do not renew or buy additional solutions due to dissatisfaction with prices or features or reduced spending, revenue may decline.
Nutanix has incurred GAAP net losses in all periods since inception, including a $254.6 million net loss in fiscal 2023 and an accumulated deficit of $4.6 billion as of July 31, 2023. Although it achieved non-GAAP profitability in fiscal 2023, failure to increase revenue and manage expenses could prevent maintaining non-GAAP profitability or achieving GAAP profitability.
SaaS KPIs
All quarters →Free Cash Flow
Non-GAAP Gross Margin
Total Billings
Subscription Billings
Non-GAAP Operating Margin
Total end customers
Repeat purchase rate (18+ months)
Average Contract Term
Global 2000 enterprises
ACV Billings
Non-GAAP operating income
Summary, forecast, risks and KPIs are extracted from Nutanix, Inc.'s SEC filings for Q4 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.