Driven largely by growth in its subscription business, Nutanix Inc. reported a 15% increase in revenue to $433.6 million for its fiscal 2023 first quarter. The company also reported an increase of its annual recurring revenue, at $1.28 billion for the quarter.
The company saw a 27% year-over-year increase in its annual contract value billings to $231.9 million, which is the total annualized value of a contract excluding revenue related to materials and services. Additionally, Nutanix achieved positive quarterly revenue for the first time not in accordance with generally accepted accounting principles.
“Our growing renewable energy base [subscriptions] has been our anchor, despite the uncertain macro environment in which we have worked,” said Rajiv Ramaswami, President and CEO of Nutanix in an interview with TechTarget Editorial. “The renewal part of the business remains relatively robust as customers continue to use our products for critical applications.”
Subscription renewals are important to Nutanix because they guarantee future growth. So if Nutanix is looking to be potentially acquired, it wants to assure the investment community that the revenue stream is good for the long term.
Paul NashawatySenior Analyst, Corporate Strategy Group
Paul Nashawaty, Senior Analyst in TechTarget’s Business Strategy Group, said, “Subscription renewals are important to Nutanix because they ensure future growth and are better than a perpetual license where you’re one and done. So if Nutanix is looking to be potentially acquired, they want to assure the investment community that the revenue stream is long-term.”
Another contributing factor to revenue growth is the deepening cloud partnerships Nutanix has formed over the past two years, including with Microsoft and AWS. According to Ramaswami, what continues to attract users is the ability to run workloads on Microsoft Azure and AWS cloud platforms using Nutanix services.
“They value the ability to move workloads running on their private clouds and the public clouds of larger cloud providers using a cohesive set of governance and data services that we provide,” Ramaswami said. “And they can do it without the expense and time of refactoring their workloads.”
Using its own tools to allow users to manage workloads across multiple clouds can reduce complexity as well as cost, Nashawaty said.
“This approach gives users a single interface to view their entire ecosystem,” he said. “It also helps minimize skills within an organization. You don’t need a variety of experts to manage different platforms. Our recent study of 400 organizations shows that 67% are looking to hire IT generalists, not specialists.”
The company also recently added support for the AWS version of Kubernetes to go along with support offered for other container platforms, including Red Hat’s OpenShift and Google’s Anthos.
Finally, a number of VMware users have recently contacted Nutanix to inquire about a number of products and services, prompted by concerns surrounding VMware’s acquisition by Broadcom. The purchase is expected to be finalized in the fall of 2023.
“I had conversations with [VMware users] running mission-critical applications on VMware, and they’re concerned about things like future pricing, support and innovation reduction, and considering contingency plans,” Ramaswami said. “It could open up opportunities for us, but it won’t be something that happens in this exercise.”
Asked about rumors that surfaced earlier this year that Nutanix was considering going private through a deal with Bain Capital, the company’s largest investor, or being acquired by a major cloud provider, Ramaswami declined to comment. comment.
In other financial results, Nutanix reported that its annual recurring revenue was $1.28 billion, a 34% increase from a year ago. It closed the first fiscal quarter of 2023 with free cash flow of $45.8 million. Nutanix posted a net loss of $99.1 million, though the figure was an improvement from the $419 million loss reported in its first fiscal quarter last year.
As Editor-in-Chief of TechTarget’s News Group, Ed Scannell is responsible for writing and editing breaking news, news analysis, and articles focused on technology issues and trends affecting IT professionals. business computing.
