Nutanix(NTNX) - 2025 Q4 - Annual Results

Executive Summary Overall Performance Highlights Nutanix reported strong financial results for its fourth quarter and fiscal year ended July 31, 2025, achieving high-teens top-line growth, adding over 2,700 new customers, and demonstrating a good balance of top and bottom-line performance with a Rule of 40 score of 48 - Delivered high-teens top line growth and added over 2,700 new customers in fiscal 2025[2] - Made progress with partnerships, signing new or enhanced agreements with AWS, Pure Storage, NVIDIA, and Google[2] - Continued to innovate across the cloud platform, including modern applications and AI[2] - Achieved 18% year-over-year revenue growth and strong free cash flow generation for fiscal 2025, resulting in a Rule of 40 score of 48[2] Financial Performance Overview Fourth Quarter Fiscal 2025 Financial Summary Nutanix reported robust financial performance for Q4 FY25, with significant year-over-year growth in revenue, ARR, and non-GAAP operating income, alongside improved gross and operating margins | Metric | Q4 FY'25 | Q4 FY'24 | Y/Y Change | | :--- | :--- | :--- | :--- | | Annual Recurring Revenue (ARR) | $2.22 billion | $1.91 billion | 17% | | Average Contract Duration | 3.2 years | 3.1 years | 0.1 year | | Revenue | $653.3 million | $548.0 million | 19% | | GAAP Gross Margin | 87.2% | 85.2% | 200 bps | | Non-GAAP Gross Margin | 88.3% | 86.9% | 140 bps | | GAAP Operating Expenses | $538.2 million | $479.2 million | 12% | | Non-GAAP Operating Expenses | $457.2 million | $405.5 million | 13% | | GAAP Operating Income (Loss) | $31.2 million | $(12.2) million | $43.4 million | | Non-GAAP Operating Income | $119.5 million | $70.5 million | $49.0 million | | GAAP Operating Margin | 4.8% | (2.2)% | 700 bps | | Non-GAAP Operating Margin | 18.3% | 12.9% | 540 bps | | Net Cash Provided by Operating Activities | $219.5 million | $244.7 million | $(25.2) million | | Free Cash Flow | $207.8 million | $224.3 million | $(16.5) million | Fiscal Year 2025 Financial Summary For the full fiscal year 2025, Nutanix delivered strong results, including 18% revenue growth, substantial increases in GAAP and non-GAAP operating income, and significant free cash flow generation | Metric | FY'25 | FY'24 | Y/Y Change | | :--- | :--- | :--- | :--- | | Annual Recurring Revenue (ARR) | $2.22 billion | $1.91 billion | 17% | | Average Contract Duration | 3.1 years | 3.0 years | 0.1 year | | Revenue | $2.54 billion | $2.15 billion | 18% | | GAAP Gross Margin | 86.8% | 84.9% | 190 bps | | Non-GAAP Gross Margin | 88.1% | 86.7% | 140 bps | | GAAP Operating Expenses | $2.03 billion | $1.82 billion | 12% | | Non-GAAP Operating Expenses | $1.70 billion | $1.52 billion | 12% | | GAAP Operating Income | $172.5 million | $7.6 million | $164.9 million | | Non-GAAP Operating Income | $536.1 million | $347.1 million | $189.0 million | | GAAP Operating Margin | 6.8% | 0.4% | 640 bps | | Non-GAAP Operating Margin | 21.1% | 16.2% | 490 bps | | Net Cash Provided by Operating Activities | $821.5 million | $672.9 million | $148.6 million | | Free Cash Flow | $750.2 million | $597.7 million | $152.5 million | Recent Company Highlights Industry Recognition and Strategic Partnerships Nutanix received significant industry recognition for its multicloud container platforms and container management solutions, and secured a major long-term contract with a key European banking-IT service provider - Named a Leader in The Forrester Wave™: Multicloud Container Platforms, Q3 2025, following the launch of Nutanix Kubernetes Platform (NKP)[11] - Recognized as a Challenger in the 2025 Gartner® Magic Quadrant™ for Container Management, marking its first recognition in this category[11] - Finanz Informatik, a major European banking-IT service provider, signed a long-term strategic collaboration contract with Nutanix[11] Share Repurchase Authorization Increase Nutanix's Board of Directors authorized an additional $350 million for the company's existing share repurchase program - Board of Directors authorized an increase of $350 million of common stock to the existing share repurchase program[11] Financial Outlook First Quarter Fiscal 2026 Outlook Nutanix provided guidance for the first quarter of fiscal 2026, projecting revenue between $670 million and $680 million and a non-GAAP operating margin of 19.5% to 20.5% | Metric | Range | | :--- | :--- | | Revenue | $670 - $680 million | | Non-GAAP Operating Margin | 19.5% to 20.5% | | Weighted Average Shares Outstanding (Diluted) | Approximately 296 million | Fiscal Year 2026 Outlook For the full fiscal year 2026, the company anticipates revenue between $2.90 billion and $2.94 billion, a non-GAAP operating margin of 21% to 22%, and free cash flow between $790 million and $830 million | Metric | Range | | :--- | :--- | | Revenue | $2.90 - $2.94 billion | | Non-GAAP Operating Margin | 21% to 22% | | Free Cash Flow | $790 - $830 million | Webcast and Conference Call Information Conference Call and Webcast Details Nutanix held a conference call and live webcast on August 27, 2025, to discuss its financial results, with an archived replay available on its Investor Relations website - Conference call held on August 27, 2025, at 4:30 p.m. Eastern Time/1:30 p.m. Pacific Time[6] - Webcast and archived replay available on the Nutanix Investor Relations website at ir.nutanix.com[6] Definitions of Key Metrics Rule of 40 The Rule of 40 is a financial metric defined as the sum of the revenue growth rate and free cash flow margin for a given period - Defined as the sum of revenue growth rate and free cash flow margin for the period[7] Annual Recurring Revenue (ARR) ARR is calculated as the sum of the annualized contract value (ACV) for all subscription contracts in effect at the end of a specific period, excluding professional services and hardware. The calculation methodology will be updated starting Q1 FY26 - Defined as the sum of ACV for all subscription contracts in effect as of the end of a specific period[8] - Excludes all life-of-device contracts, professional services, and hardware[8] - Methodology for calculating ARR will be updated prospectively beginning with Q1 FY26 to align more closely with license availability timing[8] Average Contract Duration Average Contract Duration represents the dollar-weighted term, calculated on a billings basis, across all subscription contracts and life-of-device contracts, with an assumed five years term for life-of-device licenses - Represents the dollar-weighted term, calculated on a billings basis, across all subscription contracts and life-of-device contracts[9] - Uses an assumed term of five years for life-of-device licenses[9] Non-GAAP Financial Measures and Other Key Performance Measures Non-GAAP Adjustments and Rationale Nutanix utilizes non-GAAP financial measures, such as non-GAAP gross margin, operating expenses, operating income, operating margin, and free cash flow, to provide investors with supplemental information by excluding certain expenses like stock-based compensation, acquisition-related costs, and other non-recurring transactions, which may not be indicative of ongoing core business results - Non-GAAP financial measures exclude items such as stock-based compensation, acquisition costs (amortization of acquired intangible assets, income tax impact, other acquisition-related costs), restructuring charges, litigation settlement accruals, debt-related costs (amortization/conversion of debt discount, interest expense, inducement expense), and other non-recurring transactions[12] - These measures provide meaningful supplemental information regarding performance and liquidity by excluding expenses not indicative of ongoing core business operating results[12] - Free cash flow is defined as net cash provided by operating activities less purchases of property and equipment[12] - Forward-looking non-GAAP financial measures for Q1 FY26 and FY26 outlook are not reconciled to GAAP due to the unreasonable effort required to predict certain GAAP impacts[12] Forward-Looking Statements Nature and Risks of Forward-Looking Statements This section highlights that the press release contains forward-looking statements regarding business momentum, innovation, and financial outlooks, which are based on current expectations and are subject to various risks and uncertainties that could cause actual results to differ materially - Statements include those regarding business momentum, continued innovation across the cloud platform (including modern applications and AI), and financial outlooks for Q1 FY26 and full FY26[13] - Forward-looking statements are not historical facts and depend on future events, involving risks and uncertainties beyond the company's control[14] - Risks include failures in business plan implementation, market evolution, customer acceptance of new solutions, macroeconomic uncertainty, talent retention, and fluctuations in quarterly operating results[14] - The company assumes no obligation to update, alter, or revise any forward-looking statements, except as required by law[15] About Nutanix Company Profile Nutanix is a leading provider of hybrid multicloud computing solutions, offering a secure, unified platform for running applications and AI and managing data. The company serves over 29,000 customers globally, helping them simplify operations and achieve digital transformation - Nutanix is a hybrid multicloud computing leader[16] - Offers a secure, unified platform for running applications and AI and managing data anywhere[16] - Trusted by more than 29,000 customers worldwide to simplify operations and power hybrid multicloud environments[16] Investor and Media Contacts Contact Information Contact details for investor relations and media inquiries are provided for Nutanix - Investor Contact: Richard Valera, ir@nutanix.com[18] - Media Contact: Jennifer Massaro, pr@nutanix.com[18] Consolidated Financial Statements Consolidated Balance Sheets The unaudited consolidated balance sheets show Nutanix's financial position as of July 31, 2024, and July 31, 2025, indicating a significant increase in total assets and liabilities, with a reduction in total stockholders' deficit | Metric | July 31, 2024 (in thousands) | July 31, 2025 (in thousands) | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $655,270 | $769,502 | | Short-term investments | $339,072 | $1,223,234 | | Total current assets | $1,481,294 | $2,589,166 | | Total assets | $2,143,918 | $3,283,194 | | Liabilities and Stockholders' Deficit | | | | Total current liabilities | $1,244,341 | $1,413,541 | | Deferred revenue—non-current | $918,163 | $1,058,731 | | Convertible senior notes, net | $570,073 | $1,343,818 | | Total liabilities | $2,872,066 | $3,977,714 | | Total stockholders' deficit | $(728,148) | $(694,520) | Consolidated Statements of Operations The unaudited consolidated statements of operations show Nutanix's transition from a net loss in FY24 to a significant net income in FY25, driven by strong revenue growth and improved operating income, despite increased operating expenses | Metric | Q4 FY'24 (in thousands) | Q4 FY'25 (in thousands) | FY'24 (in thousands) | FY'25 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Product revenue | $265,901 | $339,789 | $1,067,948 | $1,341,374 | | Support, entitlements and other services revenue | $282,051 | $313,478 | $1,080,868 | $1,196,553 | | Total revenue | $547,952 | $653,267 | $2,148,816 | $2,537,927 | | Gross profit | $466,974 | $569,434 | $1,824,704 | $2,203,145 | | Total operating expenses | $479,162 | $538,226 | $1,817,141 | $2,030,604 | | (Loss) income from operations | $(12,188) | $31,208 | $7,563 | $172,541 | | Net (loss) income | $(126,101) | $38,650 | $(124,775) | $188,366 | | Net (loss) income per share, diluted | $(0.51) | $0.13 | $(0.51) | $0.65 | | Category | Q4 FY'24 (in thousands) | Q4 FY'25 (in thousands) | FY'24 (in thousands) | FY'25 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Product cost of revenue | $1,621 | $399 | $6,822 | $2,824 | | Support, entitlements and other services cost of revenue | $6,595 | $6,814 | $27,285 | $27,582 | | Sales and marketing | $19,080 | $19,372 | $80,190 | $80,930 | | Research and development | $39,120 | $42,872 | $156,784 | $175,361 | | General and administrative | $15,158 | $15,714 | $62,752 | $64,893 | | Total stock-based compensation expense | $81,574 | $85,171 | $333,833 | $351,590 | | Category | Q4 FY'24 (in thousands) | Q4 FY'25 (in thousands) | FY'24 (in thousands) | FY'25 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Product cost of revenue | $766 | $105 | $3,392 | $2,185 | | Sales and marketing | $99 | $88 | $317 | $353 | | Total amortization of intangible assets | $865 | $193 | $3,709 | $2,538 | Consolidated Statements of Cash Flows The unaudited consolidated statements of cash flows indicate a substantial increase in net cash provided by operating activities in FY25, while investing activities shifted from a net inflow to a significant net outflow, and financing activities moved from a net outflow to a net inflow | Metric | FY'24 (in thousands) | FY'25 (in thousands) | | :--- | :--- | :--- | | Net (loss) income | $(124,775) | $188,366 | | Net cash provided by operating activities | $672,931 | $821,456 | | Net cash provided by (used in) investing activities | $529,589 | $(951,687) | | Net cash (used in) provided by financing activities | $(1,062,629) | $244,086 | | Net increase in cash, cash equivalents and restricted cash | $139,891 | $113,855 | | Cash and cash equivalents—end of period | $655,270 | $769,502 | Supplemental Financial Information Disaggregation of Revenue Nutanix disaggregates its revenue into subscription, professional services, and other non-subscription product categories, with subscription revenue being the dominant and fastest-growing component | Revenue Type | Q4 FY'24 (in thousands) | Q4 FY'25 (in thousands) | FY'24 (in thousands) | FY'25 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Subscription revenue | $518,695 | $615,974 | $2,016,776 | $2,410,751 | | Professional services revenue | $26,769 | $28,886 | $100,852 | $112,202 | | Other non-subscription product revenue | $2,488 | $8,407 | $31,188 | $14,974 | | Total revenue | $547,952 | $653,267 | $2,148,816 | $2,537,927 | - Subscription revenue includes software entitlement subscriptions, support subscriptions, subscription software licenses, and cloud-based SaaS offerings, recognized ratably or upfront[29][32] - Other non-subscription product revenue includes non-portable software and hardware, generally recognized upon transfer of control to the customer[31][39] Reconciliation of Revenue to Billings This reconciliation illustrates the relationship between reported revenue and total billings by adjusting for changes in deferred revenue, showing an increase in total billings for both the quarter and the fiscal year | Metric | Q4 FY'24 (in thousands) | Q4 FY'25 (in thousands) | FY'24 (in thousands) | FY'25 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Total revenue | $547,952 | $653,267 | $2,148,816 | $2,537,927 | | Change in deferred revenue | $124,903 | $73,625 | $258,940 | $203,764 | | Total billings | $672,855 | $726,892 | $2,407,756 | $2,741,691 | Annual Recurring Revenue (ARR) Nutanix's Annual Recurring Revenue (ARR) reached $2.22 billion as of July 31, 2025, reflecting a 17% year-over-year increase | Metric | July 31, 2024 (in thousands) | July 31, 2025 (in thousands) | | :--- | :--- | :--- | | Annual Recurring Revenue (ARR) | $1,907,982 | $2,223,197 | - ARR increased by 17% year-over-year[3] Reconciliation of GAAP to Non-GAAP Profit Measures This section provides detailed reconciliations of GAAP to non-GAAP profit measures for Q4 and FY25, highlighting adjustments for stock-based compensation, amortization of intangible assets, legal fees, and the income tax effect, which now uses a long-term projected non-GAAP tax rate of 20% retrospectively applied | Metric | GAAP Q4 FY'25 (in thousands) | Non-GAAP Adjustments (in thousands) | Non-GAAP Q4 FY'25 (in thousands) | | :--- | :--- | :--- | :--- | | Gross profit | $569,434 | $7,213 (SBC) + $105 (Amort.) | $576,752 | | Gross margin | 87.2% | 1.1% (SBC) | 88.3% | | Income from operations | $31,208 | $85,171 (SBC) + $193 (Amort.) + $2,971 (Legal) | $119,543 | | Operating margin | 4.8% | 13.0% (SBC) + 0.5% (Legal) | 18.3% | | Net income | $38,650 | $85,171 (SBC) + $193 (Amort.) + $2,971 (Legal) - $100 (Other) + $3,008 (Debt) - $20,784 (Tax) | $109,109 | | Net income per share, diluted | $0.13 | | $0.37 | | Metric | GAAP FY'25 (in thousands) | Non-GAAP Adjustments (in thousands) | Non-GAAP FY'25 (in thousands) | | :--- | :--- | :--- | :--- | | Gross profit | $2,203,145 | $30,406 (SBC) + $2,185 (Amort.) | $2,235,736 | | Gross margin | 86.8% | 1.2% (SBC) + 0.1% (Amort.) | 88.1% | | Income from operations | $172,541 | $351,590 (SBC) + $2,538 (Amort.) + $9,451 (Legal) | $536,120 | | Operating margin | 6.8% | 13.8% (SBC) + 0.1% (Amort.) + 0.4% (Legal) | 21.1% | | Net income | $188,366 | $351,590 (SBC) + $2,538 (Amort.) + $9,451 (Legal) - $310 (Other) + $11,347 (Inducement) + $8,377 (Debt) - $95,646 (Tax) | $475,713 | | Net income per share, diluted | $0.65 | | $1.62 | - Beginning in Q3 FY25, a long-term projected non-GAAP tax rate of 20% was adopted for non-GAAP net income and EPS, applied retrospectively to enhance consistency and comparability[40][42] Reconciliation of GAAP Net Cash Provided by Operating Activities to Non-GAAP Free Cash Flow This reconciliation details the calculation of non-GAAP free cash flow by subtracting purchases of property and equipment from GAAP net cash provided by operating activities, showing a significant increase in free cash flow for FY25 | Metric | Q4 FY'24 (in thousands) | Q4 FY'25 (in thousands) | FY'24 (in thousands) | FY'25 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $244,697 | $219,529 | $672,931 | $821,456 | | Purchases of property and equipment | $(20,439) | $(11,750) | $(75,252) | $(71,283) | | Free cash flow | $224,258 | $207,779 | $597,679 | $750,173 |