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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended January 31, 2024

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from to

Commission File Number: 001-37883

 

NUTANIX, INC.

(Exact name of registrant as specified in its charter)

 

Delaware

 

27-0989767

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

1740 Technology Drive, Suite 150

San Jose, CA 95110

(Address of principal executive offices, including zip code)

 

(408) 216-8360

(Registrant's telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading symbol(s)

 

Name of each exchange on which registered

Class A Common Stock, $0.000025 par value per share

 

NTNX

 

Nasdaq Global Select Market

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

 

Accelerated Filer

 

Non-accelerated Filer

 

Smaller Reporting Company

 

 

 

 

Emerging Growth Company

 

 

 


 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

As of February 29, 2024, the registrant had 244,329,166 shares of Class A common stock, $0.000025 par value per share, outstanding.

 


 

 

TABLE OF CONTENTS

 

 

 

PAGE

PART I.

 

FINANCIAL INFORMATION

 

 

 

 

 

 

Item 1

Financial Statements (Unaudited)

6

 

 

 

 

 

Item 2

Management’s Discussion and Analysis of Financial Condition and Results of Operations

34

 

 

 

 

 

Item 3

Quantitative and Qualitative Disclosures About Market Risk

51

 

 

 

 

 

Item 4

Controls and Procedures

51

 

 

 

 

PART II.

 

OTHER INFORMATION

 

 

 

 

 

 

Item 1

Legal Proceedings

54

 

 

 

 

 

Item 1A

Risk Factors

54

 

 

 

 

 

Item 2

Unregistered Sales of Equity Securities and Use of Proceeds

54

 

 

 

 

 

Item 3

Defaults Upon Senior Securities

54

 

 

 

 

 

Item 4

Mine Safety Disclosures

54

 

 

 

 

 

Item 5

Other Information

55

 

 

 

 

 

Item 6

Exhibits

55

 

 

 

 

EXHIBIT INDEX

56

SIGNATURES

57

 

3


SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains express and implied forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which statements involve substantial risks and uncertainties. Other than statements of historical fact, all statements contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations and financial position, our business strategy and plans and our objectives for future operations, are forward-looking statements. The words "believe," "may," "will," "potentially," "estimate," "continue," "anticipate," "plan," "intend," "could," "would," "expect," or words or expressions of similar substance or the negative thereof, that convey uncertainty of future events or outcomes are intended to identify forward-looking statements. Forward-looking statements included in this Quarterly Report on Form 10-Q include, but are not limited to, statements regarding:

our future billings, revenue, cost of revenue and operating expenses, as well as changes in the cost of product revenue, component costs, contract durations, product gross margins and support, entitlements and other services revenue and changes in research and development, sales and marketing and general and administrative expenses;
our business plans, strategies, initiatives, objectives and outlook, as well as our ability to execute such plans, strategies, initiatives and objectives successfully and in a timely manner, and the benefits and impact of such plans, initiatives and objectives on our business, operations, and financial results, including any impact on our revenue and product mix, average contract duration lengths and discounting behavior;
our plans for, and the timing of, any current and future business model transitions, our ability to manage, complete or realize the benefits of such transitions successfully and in a timely manner, and the short-term and long-term impacts of such transitions on our business, operations and financial results;
the benefits and capabilities of our platform, solutions, products, services and technology, including the interoperability and availability of our solutions with and on third-party platforms;
our plans and expectations regarding new solutions, products, services, product features and technology, including those that are still under development or in process;
our growth strategy, our ability to effectively achieve and manage our growth, and the amount, timing and impact of any investments to grow our business, including any plans to increase or decrease investments in our global engineering, research and development and sales and/or marketing teams;
our go-to-market strategy and the impact of any adjustments thereto, including any adjustments to our go-to-market cost structure, in particular, our sales compensation structure, and the pricing and packaging of our product portfolio;
the success and impact of our customer, partner, industry, analyst, investor and employee events on our business, including on future pipeline generation;
the impact of our decision to use new or different metrics, or to make adjustments to the metrics we use, to supplement our financial reporting;
our reliance on key personnel;
anticipated trends, growth rates and challenges in our business and in the markets in which we operate, including the segmentation and productivity of our sales team;
market acceptance of new technology and recently introduced solutions;
our ability to increase sales of our solutions, particularly to large enterprise customers;
our ability to attract new end customers and retain and grow sales from our existing end customers;

4


our plans and expectations concerning the remediation of the material weakness previously identified by management;
our ability to maintain and strengthen existing strategic alliances and partnerships and address macroeconomic supply chain shortages, including our relationships with our channel partners and original equipment manufacturers, and to develop any new strategic alliances and partnerships, and the impact of any changes to such relationships on our business, operations and financial results;
the effects of seasonal trends on our results of operations;
our expectations concerning relationships with third parties;
our ability to maintain, protect and enhance our intellectual property;
our exposure to and ability to guard against cyber attacks and other actual or perceived security breaches;
our ability to continue to grow our business internationally;
the competitive market, including our ability to compete effectively, the competitive advantages of our products, and the effects of increased competition in our market;
anticipated capital expenditures;
future acquisitions or investments in complementary companies, products, services or technologies and the ability to successfully integrate completed acquisitions;
our ability to stay in compliance with laws and regulations that currently apply or may become applicable to our business both in the United States and internationally, including recent changes in global tax laws;
macroeconomic, geopolitical, and industry trends and environment, projected growth or trend analysis;
the impact of events that may be outside of our control, such as political and social unrest, terrorist attacks, hostilities, war, malicious human acts, climate change, natural disasters (including extreme weather), pandemics or other major public health concerns, and other similar events;
our ability to attract and retain qualified employees and key personnel; and
the sufficiency of cash balances to meet cash needs for at least the next 12 months.

We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives and financial needs in light of the information currently available to us. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described under the heading "Risk Factors" in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended July 31, 2023. Moreover, we operate in a very competitive and rapidly changing environment and new risks emerge from time to time. It is not possible for us to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained or implied in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and trends discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, performance, or events and circumstances reflected in the forward-looking statements will be achieved or will occur. The forward-looking statements in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation, and expressly disclaim any obligation, to update, alter or otherwise revise or publicly release the results of any revision to these forward-looking statements to reflect new information or the occurrence of unanticipated or subsequent events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements.

5


PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

 

 

Page

 

 

Condensed Consolidated Balance Sheets as of July 31, 2023 and January 31, 2024

7

 

 

Condensed Consolidated Statements of Operations for the Three and Six Months Ended January 31, 2023 and 2024

8

 

 

Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended January 31, 2023 and 2024

9

 

 

Condensed Consolidated Statements of Stockholders' Deficit for the Three and Six Months Ended January 31, 2023 and 2024

10

 

 

Condensed Consolidated Statements of Cash Flows for the Six Months Ended January 31, 2023 and 2024

12

 

 

Notes to Condensed Consolidated Financial Statements

13

 

 

Note 1: Overview and Basis of Presentation

13

Note 2: Revenue, Deferred Revenue and Deferred Commissions

15

Note 3: Fair Value Measurements

17

Note 4: Balance Sheet Components

19

Note 5: Convertible Senior Notes

22

Note 6: Leases

26

Note 7: Commitments and Contingencies

28

Note 8: Stockholders' Equity

28

Note 9: Equity Incentive Plans

29

Note 10: Income Taxes

31

Note 11: Restructuring Charges

32

Note 12: Net Loss Per Share

32

Note 13: Segment Information

33

 

6


NUTANIX, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

 

As of

 

 

 

July 31,
2023

 

 

January 31,
2024

 

 

 

(in thousands, except per share data)

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

512,929

 

 

$

679,246

 

Short-term investments

 

 

924,466

 

 

 

964,714

 

Accounts receivable, net of allowances of $733 and $1,080, respectively

 

 

157,251

 

 

 

189,046

 

Deferred commissions—current

 

 

120,001

 

 

 

138,606

 

Prepaid expenses and other current assets

 

 

147,087

 

 

 

108,825

 

Total current assets

 

 

1,861,734

 

 

 

2,080,437

 

Property and equipment, net

 

 

111,865

 

 

 

115,224

 

Operating lease right-of-use assets

 

 

93,554

 

 

 

97,307

 

Deferred commissions—non-current

 

 

237,990

 

 

 

214,555

 

Intangible assets, net

 

 

4,893

 

 

 

6,884

 

Goodwill

 

 

184,938

 

 

 

185,235

 

Other assets—non-current

 

 

31,941

 

 

 

29,892

 

Total assets

 

$

2,526,915

 

 

$

2,729,534

 

Liabilities and Stockholders’ Deficit

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

29,928

 

 

$

39,544

 

Accrued compensation and benefits

 

 

143,679

 

 

 

177,837

 

Accrued expenses and other current liabilities

 

 

109,269

 

 

 

22,401

 

Deferred revenue—current

 

 

823,665

 

 

 

893,889

 

Operating lease liabilities—current

 

 

29,567

 

 

 

29,151

 

Total current liabilities

 

 

1,136,108

 

 

 

1,162,822

 

Deferred revenue—non-current

 

 

771,367

 

 

 

814,605

 

Operating lease liabilities—non-current

 

 

68,940

 

 

 

73,720

 

Convertible senior notes, net

 

 

1,218,165

 

 

 

1,250,434

 

Other liabilities—non-current

 

 

39,754

 

 

 

39,635

 

Total liabilities

 

 

3,234,334

 

 

 

3,341,216

 

Commitments and contingencies (Note 7)

 

 

 

 

 

 

Stockholders’ deficit:

 

 

 

 

 

 

Preferred stock, par value of $0.000025 per share— 200,000 shares
   authorized as of July 31, 2023 and January 31, 2024;
no shares
   issued and outstanding as of July 31, 2023 and January 31, 2024

 

 

 

 

 

 

Common stock, par value of $0.000025 per share—1,000,000 Class
   A shares authorized as of July 31, 2023 and January 31, 2024;
   
239,607 and 244,659 Class A shares issued and outstanding as
   of July 31, 2023 and January 31, 2024, respectively

 

 

6

 

 

 

6

 

Additional paid-in capital

 

 

3,930,668

 

 

 

4,039,779

 

Accumulated other comprehensive (loss) income

 

 

(5,171

)

 

 

879

 

Accumulated deficit

 

 

(4,632,922

)

 

 

(4,652,346

)

Total stockholders’ deficit

 

 

(707,419

)

 

 

(611,682

)

Total liabilities and stockholders’ deficit

 

$

2,526,915

 

 

$

2,729,534

 

 

 

See the accompanying notes to condensed consolidated financial statements.

7


NUTANIX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

Three Months Ended
January 31,

 

 

Six Months Ended
January 31,

 

 

 

2023

 

 

2024

 

 

2023

 

 

2024

 

 

 

(in thousands, except per share data)

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Product

 

$

250,538

 

 

$

299,660

 

 

$

459,112

 

 

$

546,582

 

Support, entitlements and other services

 

 

235,957

 

 

 

265,573

 

 

 

460,992

 

 

 

529,705

 

Total revenue

 

 

486,495

 

 

 

565,233

 

 

 

920,104

 

 

 

1,076,287

 

Cost of revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Product

 

 

15,506

 

 

 

9,402

 

 

 

28,022

 

 

 

19,636

 

Support, entitlements and other services

 

 

71,299

 

 

 

72,154

 

 

 

141,278

 

 

 

143,879

 

Total cost of revenue

 

 

86,805

 

 

 

81,556

 

 

 

169,300

 

 

 

163,515

 

Gross profit

 

 

399,690

 

 

 

483,677

 

 

 

750,804

 

 

 

912,772

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

229,788

 

 

 

236,702

 

 

 

466,010

 

 

 

472,025

 

Research and development

 

 

142,301

 

 

 

160,401

 

 

 

291,744

 

 

 

312,376

 

General and administrative

 

 

84,109

 

 

 

49,529

 

 

 

130,213

 

 

 

97,032

 

Total operating expenses

 

 

456,198

 

 

 

446,632

 

 

 

887,967

 

 

 

881,433

 

(Loss) income from operations

 

 

(56,508

)

 

 

37,045

 

 

 

(137,163

)

 

 

31,339

 

Other (expense) income, net

 

 

(10,112

)

 

 

2,096

 

 

 

(23,528

)

 

 

(3,179

)

(Loss) income before provision for income taxes

 

 

(66,620

)

 

 

39,141

 

 

 

(160,691

)

 

 

28,160

 

Provision for income taxes

 

 

4,170

 

 

 

6,346

 

 

 

9,613

 

 

 

11,218

 

Net (loss) income

 

$

(70,790

)

 

$

32,795

 

 

$

(170,304

)

 

$

16,942

 

Net (loss) income per share attributable to Class A
   common stockholders, basic

 

$

(0.31

)

 

$

0.13

 

 

$

(0.74

)

 

$

0.07

 

Net (loss) income per share attributable to Class A
   common stockholders, diluted

 

$

(0.31

)

 

$

0.12

 

 

$

(0.74

)

 

$

0.09

 

Weighted average shares used in computing net (loss)
   income per share attributable to Class A common
   stockholders, basic

 

 

231,924

 

 

 

243,853

 

 

 

230,229

 

 

 

242,667

 

Weighted average shares used in computing net (loss)
   income per share attributable to Class A common
   stockholders, diluted

 

 

231,924

 

 

 

298,540

 

 

 

230,229

 

 

 

294,851

 

 

 

See the accompanying notes to condensed consolidated financial statements.

8


NUTANIX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

 

 

 

Three Months Ended
January 31,

 

 

Six Months Ended
January 31,

 

 

 

2023

 

 

2024

 

 

2023

 

 

2024

 

 

 

(in thousands)

 

Net (loss) income

 

$

(70,790

)

 

$

32,795

 

 

$

(170,304

)

 

$

16,942

 

Other comprehensive income (loss), net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

Change in unrealized loss on available-for-sale
   securities, net of tax

 

 

3,917

 

 

 

5,254

 

 

 

275

 

 

 

6,050

 

Comprehensive (loss) income

 

$

(66,873

)

 

$

38,049

 

 

$

(170,029

)

 

$

22,992

 

 

 

See the accompanying notes to condensed consolidated financial statements.

9


NUTANIX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(Unaudited)

 

 

 

Six Months Ended January 31, 2023

 

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Accumulated
Other
Comprehensive

 

 

Accumulated

 

 

Total
Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Deficit

 

 

 

(in thousands)

 

Balance - July 31, 2022

 

 

226,938

 

 

$

6

 

 

$

3,583,928

 

 

$

(6,076

)

 

$

(4,378,362

)

 

$

(800,504

)

Issuance of common stock through employee equity
   incentive plans

 

 

2,172

 

 

 

 

 

 

1,975

 

 

 

 

 

 

 

 

 

1,975

 

Issuance of common stock from ESPP purchase

 

 

998

 

 

 

 

 

 

18,947

 

 

 

 

 

 

 

 

 

18,947

 

Stock-based compensation

 

 

 

 

 

 

 

 

80,955

 

 

 

 

 

 

 

 

 

80,955

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(3,642

)

 

 

 

 

 

(3,642

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(99,514

)

 

 

(99,514

)

Balance - October 31, 2022

 

 

230,108

 

 

 

6

 

 

 

3,685,805

 

 

 

(9,718

)

 

 

(4,477,876

)

 

 

(801,783

)

Issuance of common stock through employee equity
   incentive plans

 

 

3,483

 

 

 

 

 

 

684

 

 

 

 

 

 

 

 

 

684

 

Stock-based compensation

 

 

 

 

 

 

 

 

85,290

 

 

 

 

 

 

 

 

 

85,290

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

3,917

 

 

 

 

 

 

3,917

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(70,790

)

 

 

(70,790

)

Balance - January 31, 2023

 

 

233,591

 

 

$

6

 

 

$

3,771,779

 

 

$

(5,801

)

 

$

(4,548,666

)

 

$

(782,682

)

 

10


 

 

 

Six Months Ended January 31, 2024

 

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Accumulated
Other
Comprehensive

 

 

Accumulated

 

 

Total
Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

(Loss) Income

 

 

Deficit

 

 

Deficit

 

 

 

(in thousands)

 

Balance - July 31, 2023

 

 

239,607

 

 

$

6

 

 

$

3,930,668

 

 

$

(5,171

)

 

$

(4,632,922

)

 

$

(707,419

)

Issuance of common stock through employee equity
   incentive plans

 

 

3,274

 

 

 

 

 

 

547

 

 

 

 

 

 

 

 

 

547

 

Issuance of common stock from ESPP purchase

 

 

653

 

 

 

 

 

 

13,233

 

 

 

 

 

 

 

 

 

13,233

 

Repurchase and retirement of common stock

 

 

(482

)

 

 

 

 

 

(7,774

)

 

 

 

 

 

(9,739

)

 

 

(17,513

)

Stock-based compensation

 

 

 

 

 

 

 

 

83,998

 

 

 

 

 

 

 

 

 

83,998

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

796

 

 

 

 

 

 

796

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(15,853

)

 

 

(15,853

)

Balance - October 31, 2023

 

 

243,052

 

 

 

6

 

 

 

4,020,672

 

 

 

(4,375

)

 

 

(4,658,514

)

 

 

(642,211

)

Issuance of common stock through employee equity
   incentive plans

 

 

3,689

 

 

 

 

 

 

1,370

 

 

 

 

 

 

 

 

 

1,370

 

Shares withheld related to net share settlement of
  equity awards

 

 

(1,148

)

 

 

 

 

 

(53,180

)

 

 

 

 

 

 

 

 

(53,180

)

Repurchase and retirement of common stock

 

 

(934

)

 

 

 

 

 

(15,052

)

 

 

 

 

 

(26,627

)

 

 

(41,679

)

Stock-based compensation

 

 

 

 

 

 

 

 

85,969

 

 

 

 

 

 

 

 

 

85,969

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

5,254

 

 

 

 

 

 

5,254

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

32,795

 

 

 

32,795

 

Balance - January 31, 2024

 

 

244,659

 

 

$

6

 

 

$

4,039,779

 

 

$

879

 

 

$

(4,652,346

)

 

$

(611,682

)

 

 

See the accompanying notes to condensed consolidated financial statements.

11


NUTANIX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

Six Months Ended
January 31,

 

 

 

2023

 

 

2024

 

 

 

(in thousands)

 

Cash flows from operating activities:

 

 

 

 

 

 

Net (loss) income

 

$

(170,304

)

 

$

16,942

 

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

39,479

 

 

 

36,389

 

Stock-based compensation

 

 

166,245

 

 

 

169,967

 

Amortization of debt discount and issuance costs

 

 

21,082

 

 

 

22,300

 

Operating lease cost, net of accretion

 

 

18,158

 

 

 

16,046

 

Early exit of lease-related assets

 

 

(1,109

)

 

 

 

Non-cash interest expense

 

 

9,817

 

 

 

10,064

 

Other

 

 

(2,427

)

 

 

(8,859

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable, net

 

 

(28,649

)

 

 

(19,662

)

Deferred commissions

 

 

19,110

 

 

 

4,830

 

Prepaid expenses and other assets

 

 

(28,348

)

 

 

40,575

 

Accounts payable

 

 

(3,171

)

 

 

8,695

 

Accrued compensation and benefits

 

 

(11,467

)

 

 

34,158

 

Accrued expenses and other liabilities

 

 

52,423

 

 

 

(86,009

)

Operating leases, net

 

 

(19,965

)

 

 

(14,884

)

Deferred revenue

 

 

78,723

 

 

 

101,329

 

Net cash provided by operating activities

 

 

139,597

 

 

 

331,881

 

Cash flows from investing activities:

 

 

 

 

 

 

Maturities of investments

 

 

529,112

 

 

 

429,219

 

Purchases of investments

 

 

(508,984

)

 

 

(455,254

)

Payments for acquisitions, net of cash acquired

 

 

 

 

 

(4,500

)

Purchases of property and equipment

 

 

(30,772

)

 

 

(36,784

)

Net cash used in investing activities

 

 

(10,644

)

 

 

(67,319

)

Cash flows from financing activities:

 

 

 

 

 

 

Repayment of convertible notes

 

 

(145,704

)

 

 

 

Proceeds from sales of shares through employee equity incentive plans

 

 

22,896

 

 

 

15,153

 

Taxes paid related to net share settlement of equity awards

 

 

 

 

 

(53,180

)

Repurchases of common stock

 

 

 

 

 

(59,192

)

Payment of finance lease obligations

 

 

(2,344

)

 

 

(1,758

)

Net cash used in financing activities

 

 

(125,152

)

 

 

(98,977

)

Net increase in cash, cash equivalents and restricted cash

 

$

3,801

 

 

$

165,585

 

Cash, cash equivalents and restricted cash—beginning of period

 

 

405,862

 

 

 

515,771

 

Cash, cash equivalents and restricted cash—end of period

 

$

409,663

 

 

$

681,356

 

Restricted cash (1)

 

 

3,062

 

 

 

2,110

 

Cash and cash equivalents—end of period

 

$

406,601

 

 

$

679,246

 

Supplemental disclosures of cash flow information:

 

 

 

 

 

 

Cash paid for income taxes

 

$

16,191

 

 

$

14,168

 

Supplemental disclosures of non-cash investing and
   financing information:

 

 

 

 

 

 

Purchases of property and equipment included in accounts payable
   and accrued and other liabilities

 

$

18,646

 

 

$

1,648

 

 

(1)
Included within other assets—non-current in the condensed consolidated balance sheets.

See the accompanying notes to condensed consolidated financial statements.

12


Table of Contents

NUTANIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1. OVERVIEW AND BASIS OF PRESENTATION

Organization and Description of Business

Nutanix, Inc. was incorporated in the state of Delaware in September 2009. Nutanix, Inc. is headquartered in San Jose, California, and together with its wholly-owned subsidiaries (collectively, "we," "us," "our" or "Nutanix"), has operations throughout North America, Europe, Asia Pacific, the Middle East, Latin America, and Africa.

We provide a leading enterprise cloud platform, which we call the Nutanix Cloud Platform, that consists of software solutions and cloud services that power our customers’ enterprise infrastructure. Our solutions deliver a consistent cloud operating model across edge, private-, hybrid- and multicloud environments for all applications and their data. Our solutions allow organizations to simply run and move their workloads, including enterprise applications, high-performance databases, end-user computing and virtual desktop infrastructure services, modern applications, analytics applications, and artificial intelligence ("AI") workloads, including machine learning and generative AI workloads, between on-premises and public clouds. Our solutions are primarily sold through channel partners and original equipment manufacturers ("OEMs") (collectively, "Partners"), and delivered directly to our end customers.

Principles of Consolidation and Significant Accounting Policies

The accompanying condensed consolidated financial statements, which include the accounts of Nutanix, Inc. and its wholly-owned subsidiaries, have been prepared in conformity with accounting principles generally accepted in the United States ("U.S. GAAP") and are consistent in all material respects with those included in our Annual Report on Form 10-K for the fiscal year ended July 31, 2023, filed with the Securities and Exchange Commission ("SEC") on September 21, 2023. All intercompany accounts and transactions have been eliminated in consolidation. The condensed consolidated financial statements are unaudited, but include all adjustments of a normal recurring nature necessary for a fair presentation of our quarterly results. The consolidated balance sheet as of July 31, 2023 is derived from audited financial statements; however, it does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes in our Annual Report on Form 10-K for the fiscal year ended July 31, 2023.

Use of Estimates

The preparation of interim condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Such management estimates and assumptions include, but are not limited to, the best estimate of selling prices for products and related support; useful lives and recoverability of intangible assets and property and equipment; allowance for credit losses; determination of fair value of stock-based awards; accounting for income taxes, including the valuation allowance on deferred tax assets and uncertain tax positions; purchase commitment liabilities to our contract manufacturers; sales commissions expense and the period of benefit for deferred commissions; whether an arrangement is or contains a lease; the incremental borrowing rate to measure the present value of right-of-use assets and lease liabilities; the inputs used to determine the fair value of the contingent liability associated with the conversion feature of the 2.50% convertible senior notes due 2026 (the "2026 Notes"); and contingencies and litigation. Management evaluates these estimates and assumptions on an ongoing basis using historical experience and other factors and makes adjustments when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could materially differ from those estimates and assumptions.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Concentration of Risk

Concentration of revenue and accounts receivable — We sell our products primarily through our Partners and occasionally directly to end customers. For the three and six months ended January 31, 2023 and 2024, no end customer accounted for more than 10% of total revenue or accounts receivable.

For each significant Partner, revenue as a percentage of total revenue and accounts receivable as a percentage of total accounts receivable, net are as follows:

 

 

 

Revenue

 

 

Accounts Receivable as of

 

 

 

Three Months Ended
January 31,

 

 

Six Months Ended
January 31,

 

 

July 31,
2023

 

 

January 31,
2024

 

Partners

 

2023

 

 

2024

 

 

2023

 

 

2024

 

 

 

 

 

 

 

Partner A

 

(1)

 

 

(1)

 

 

(1)

 

 

(1)

 

 

 

11

%

 

 

19

%

Partner B

 

 

33

%

 

 

32

%

 

 

32

%

 

 

31

%

 

 

17

%

 

 

15

%

Partner C

 

 

12

%

 

 

16

%

 

 

15

%

 

 

15

%

 

 

19

%

 

 

12

%

Partner D

 

 

10

%

 

 

11

%

 

 

11

%

 

 

12

%

 

(1)

 

 

(1)

 

 

(1)
Less than 10%

Summary of Significant Accounting Policies

There have been no changes to our significant accounting policies described in our Annual Report on Form 10-K for the fiscal year ended July 31, 2023, filed with the SEC on September 21, 2023, that have had a material impact on our condensed consolidated financial statements.

Recently Issued and Not Yet Adopted Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board (the "FASB") issued accounting standards update ("ASU") 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which provides for improvements to income tax disclosures. The standard requires disaggregated information about a reporting entity's effective tax rate reconciliation as well as information on income taxes paid. The amendments in this update are effective for fiscal years beginning after December 15, 2024, with early adoption permitted. We are currently evaluating the impact this new standard will have on our disclosures.

Correction to Prior Period Financial Statements

In connection with the completed Audit Committee investigation, as initially disclosed in our Annual Report on Form 10-K/A filed with the SEC on May 24, 2023, and subsequent to the issuance of the condensed consolidated financial statements for the fiscal quarter ended October 31, 2022, we discovered an error in the reporting of expenses for software licenses and support for each prior period beginning in August 2014, resulting in an immaterial understatement of operating expenses and accrued expenses and other current liabilities for these prior periods. We have evaluated the materiality of this error and determined that the impact is not material to our previously issued financial statements. We have prospectively corrected our previously issued financial statements to reflect the correction of this error rather than record a cumulative out-of-period adjustment. The correction reflects our estimates of future payments for past non-compliant use of third-party software. Actual amounts may vary from these estimates.
 

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