Nutanix, Inc. [NTNX] Filings

10-Q 1 ntnx-20231031.htm 10-Q 10-Q

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 October 31, 2023


☐	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 November 30, 2023, the registrant had 242,689,696 shares of Class A common stock, $0.000025 par value per share, outstanding.

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			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	35

	Item 3	Quantitative and Qualitative Disclosures About Market Risk	53

	Item 4	Controls and Procedures	53

PART II.		OTHER INFORMATION

	Item 1	Legal Proceedings	56

	Item 1A	Risk Factors	56

	Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	56

	Item 3	Defaults Upon Senior Securities	56

	Item 4	Mine Safety Disclosures	56

	Item 5	Other Information	56

	Item 6	Exhibits	57

EXHIBIT INDEX			58
SIGNATURES			59

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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;

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•

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, including our ability to compress and stabilize sales cycles;

•

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.

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)


	Page

Condensed Consolidated Balance Sheets as of July 31, 2023 and October 31, 2023	7

Condensed Consolidated Statements of Operations for the Three Months Ended October 31 , 2022 and 2023	8

Condensed Consolidated Statements of Comprehensive Loss for the Three Months Ended October 31, 2022 and 2023	9

Condensed Consolidated Statements of Stockholders' Deficit for the Three Months Ended October 31, 2022 and 2023	10

Condensed Consolidated Statements of Cash Flows for the Three Months Ended October 31, 2022 and 2023	11

Notes to Condensed Consolidated Financial Statements	12

Note 1: Overview and Basis of Presentation	12
Note 2: Correction to Prior Period Financial Statements	13
Note 3: Revenue, Deferred Revenue and Deferred Commissions	15
Note 4: Fair Value Measurements	17
Note 5: Balance Sheet Components	19
Note 6: Convertible Senior Notes	21
Note 7: Leases	25
Note 8: Commitments and Contingencies	28
Note 9: Stockholders' Equity	29
Note 10: Equity Incentive Plans	29
Note 11: Income Taxes	32
Note 12: Restructuring Charges	32
Note 13: Net Loss Per Share	33
Note 14: Segment Information	34

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NUTANIX, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


	As of
	July 31, 2023			October 31, 2023
	(in thousands, except per share data)
Assets
Current assets:
Cash and cash equivalents	$	512,929		$	612,462
Short-term investments		924,466			958,654
Accounts receivable, net of allowances of $733 and $1,360, respectively		157,251			133,716
Deferred commissions—current		120,001			126,195
Prepaid expenses and other current assets		147,087			86,920
Total current assets		1,861,734			1,917,947
Property and equipment, net		111,865			110,204
Operating lease right-of-use assets		93,554			96,301
Deferred commissions—non-current		237,990			226,698
Intangible assets, net		4,893			3,745
Goodwill		184,938			184,938
Other assets—non-current		31,941			30,807
Total assets	$	2,526,915		$	2,570,640
Liabilities and Stockholders’ Deficit
Current liabilities:
Accounts payable	$	29,928		$	35,795
Accrued compensation and benefits		143,679			136,258
Accrued expenses and other current liabilities		109,269			21,054
Deferred revenue—current		823,665			877,547
Operating lease liabilities—current		29,567			28,917
Total current liabilities		1,136,108			1,099,571
Deferred revenue—non-current		771,367			767,685
Operating lease liabilities—non-current		68,940			72,419
Convertible senior notes, net		1,218,165			1,239,189
Other liabilities—non-current		39,754			33,987
Total liabilities		3,234,334			3,212,851
Commitments and contingencies (Note 8)
Stockholders’ deficit:
Preferred stock, par value of $0.000025 per share— 200,000 shares authorized as of July 31, 2023 and October 31, 2023; no shares issued and outstanding as of July 31, 2023 and October 31, 2023		—			—
Common stock, par value of $0.000025 per share—1,000,000 Class A shares authorized as of July 31, 2023 and October 31, 2023; 239,607 and 243,052 Class A shares issued and outstanding as of July 31, 2023 and October 31, 2023, respectively		6			6
Additional paid-in capital		3,930,668			4,020,672
Accumulated other comprehensive loss		(5,171	)		(4,375	)
Accumulated deficit		(4,632,922	)		(4,658,514	)
Total stockholders’ deficit		(707,419	)		(642,211	)
Total liabilities and stockholders’ deficit	$	2,526,915		$	2,570,640

See the accompanying notes to condensed consolidated financial statements.

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NUTANIX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	Three Months Ended October 31,
	2022			2023
	(in thousands, except per share data)
Revenue:
Product	$	208,574		$	246,922
Support, entitlements and other services		225,035			264,132
Total revenue		433,609			511,054
Cost of revenue:
Product		12,516			10,234
Support, entitlements and other services		69,979			71,725
Total cost of revenue		82,495			81,959
Gross profit		351,114			429,095
Operating expenses:
Sales and marketing		236,222			235,323
Research and development		149,443			151,975
General and administrative		46,104			47,503
Total operating expenses		431,769			434,801
Loss from operations		(80,655	)		(5,706	)
Other expense, net		(13,416	)		(5,275	)
Loss before provision for income taxes		(94,071	)		(10,981	)
Provision for income taxes		5,443			4,872
Net loss	$	(99,514	)	$	(15,853	)
Net loss per share attributable to Class A common stockholders —basic and diluted	$	(0.44	)	$	(0.07	)
Weighted average shares used in computing net loss per share attributable to Class A common stockholders —basic and diluted		228,544			241,490

See the accompanying notes to condensed consolidated financial statements.

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NUTANIX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)


	Three Months Ended October 31,
	2022			2023
	(in thousands)
Net loss	$	(99,514	)	$	(15,853	)
Other comprehensive income (loss), net of tax:
Change in unrealized loss on available-for-sale securities, net of tax		(3,642	)		796
Comprehensive loss	$	(103,156	)	$	(15,057	)

See the accompanying notes to condensed consolidated financial statements.

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NUTANIX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(Unaudited)


	Three Months Ended October 31, 2022
	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	)


	Three Months Ended October 31, 2023
	Common Stock					Additional Paid-In			Accumulated Other Comprehensive			Accumulated			Total Stockholders’
	Shares			Amount		Capital			Loss			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	)

See the accompanying notes to condensed consolidated financial statements.

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NUTANIX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Three Months Ended October 31,
	2022			2023
	(in thousands)
Cash flows from operating activities:
Net loss	$	(99,514	)	$	(15,853	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		19,839			18,187
Stock-based compensation		80,955			83,998
Amortization of debt discount and issuance costs		10,477			11,055
Operating lease cost, net of accretion		8,722			7,872
Early exit of lease-related assets		(304	)		—
Non-cash interest expense		4,894			5,017
Other		(776	)		(4,044	)
Changes in operating assets and liabilities:
Accounts receivable, net		40,838			23,656
Deferred commissions		15,213			5,098
Prepaid expenses and other assets		958			60,696
Accounts payable		(7,104	)		3,953
Accrued compensation and benefits		(29,820	)		(7,421	)
Accrued expenses and other liabilities		(3,076	)		(89,029	)
Operating leases, net		(11,910	)		(7,791	)
Deferred revenue		36,121			50,079
Net cash provided by operating activities		65,513			145,473
Cash flows from investing activities:
Maturities of investments		267,667			248,980
Purchases of investments		(256,202	)		(278,178	)
Purchases of property and equipment		(19,702	)		(13,020	)
Net cash used in investing activities		(8,237	)		(42,218	)
Cash flows from financing activities:
Proceeds from sales of shares through employee equity incentive plans		22,186			13,783
Repurchases of common stock		—			(17,513	)
Payment of finance lease obligations		(1,856	)		(637	)
Net cash provided by (used in) financing activities		20,330			(4,367	)
Net increase in cash, cash equivalents and restricted cash	$	77,606		$	98,888
Cash, cash equivalents and restricted cash—beginning of period		405,862			515,771
Cash, cash equivalents and restricted cash—end of period	$	483,468		$	614,659
Restricted cash (1)		2,851			2,197
Cash and cash equivalents—end of period	$	480,617		$	612,462
Supplemental disclosures of cash flow information:
Cash paid for income taxes	$	7,635		$	8,134
Supplemental disclosures of non-cash investing and financing information:
Purchases of property and equipment included in accounts payable and accrued and other liabilities	$	10,748		$	15,013
Finance lease liabilities arising from obtaining right-of-use assets	$	9,822		$	12,382

(1)

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

See the accompanying notes to condensed consolidated financial statements.

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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, container-based modern applications, and analytics applications, 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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NUTANIX, INC.

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 months ended October 31, 2022 and 2023, 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 October 31,						July 31, 2023			October 31, 2023
Partners	2022			2023
Partner A		17	%		15	%		19	%		19	%
Partner B		32	%		29	%		17	%		17	%
Partner C	(1)			(1)				11	%		11	%
Partner D		13	%		13	%	(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.

Recent Accounting Pronouncements

We have implemented all applicable accounting pronouncements that are in effect and there are no new accounting pronouncements that have been issued that would have a material impact on our condensed consolidated financial statements.

NOTE 2. 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 determined to prospectively correct our previously issued financial statements to reflect the correction of this error rather than record a cumulative out-of-period adjustment for this error in the current period. As a result, we have corrected the accompanying condensed consolidated financial statements as of and for the three months ended October 31, 2022, from amounts previously reported to reflect the correction of this error. The correction reflects our estimates of future payments for past non-compliant use of third-party software. Actual amounts may vary materially from these estimates.

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NUTANIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The following tables summarize the effects of the correction:


	Three Months Ended October 31, 2022
	As Previously Reported			Adjustments			As Corrected
	(in thousands)
Condensed Consolidated Statement of Operations:
Sales and marketing	$	236,072		$	150		$	236,222
Research and development	$	149,195		$	248		$	149,443
Total operating expenses	$	431,371		$	398		$	431,769
Loss from operations	$	(80,257	)	$	(398	)	$	(80,655	)
Loss before provision for income taxes	$	(93,673	)	$	(398	)	$	(94,071	)
Net loss	$	(99,116	)	$	(398	)	$	(99,514	)
Net loss per share attributable to common stockholders—basic and diluted	$	(0.43	)	$	(0.01	)	$	(0.44	)


	Three Months Ended October 31, 2022
	As Previously Reported			Adjustments			As Corrected
	(in thousands)
Condensed Consolidated Statement of Comprehensive Loss:
Net loss	$	(99,116	)	$	(398	)	$	(99,514	)
Comprehensive loss	$	(102,758	)	$	(398	)	$	(103,156	)


	As Previously Reported			Adjustments			As Corrected
	(in thousands)
Condensed Consolidated Statement of Stockholders' Deficit:
Accumulated Deficit as of:
October 31, 2022	$	(4,467,142	)	$	(10,734	)	$	(4,477,876	)

Total Stockholders' Deficit as of:
October 31, 2022	$	(791,049	)	$	(10,734	)	$	(801,783	)

Net Loss for the Three Months Ended:
October 31, 2022	$	(99,116	)	$	(398	)	$	(99,514	)


	Three Months Ended October 31, 2022
	As Previously Reported			Adjustments			As Corrected
	(in thousands)
Condensed Consolidated Statement of Cash Flows:
Net loss	$	(99,116	)	$	(398	)	$	(99,514	)
Accrued expenses and other liabilities	$	(3,474	)	$	398		$	(3,076	)

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NUTANIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

NOTE 3. REVENUE, DEFERRED REVENUE AND DEFERRED COMMISSIONS

Disaggregation of Revenue and Revenue Recognition

We generate revenue primarily from the sale of our enterprise cloud platform, which can be delivered pre-installed on an appliance that is configured to order or delivered separately to be utilized on a variety of certified hardware platforms. When the software license is not portable to other appliances, it can be used over the life of the associated appliance, while subscription term-based licenses typically have a term of one to five years. Configured-to-order appliances, including our Nutanix-branded NX hardware line, can be purchased from one of our OEMs or in limited cases, directly from Nutanix. Our enterprise cloud platform typically includes one or more years of support and entitlements, which provides customers with the right to software upgrades and enhancements as well as technical support. A substantial portion of sales are made through channel partners and OEM relationships.

The following table depicts the disaggregation of revenue by revenue type, consistent with how we evaluate our financial performance:


	Three Months Ended October 31,
	2022		2023
	(in thousands)
Subscription	$	402,924	$	479,478
Professional services		22,278		22,835
Other non-subscription product (1)		8,407		8,741
Total revenue	$	433,609	$	511,054

(1)

Prior to the fiscal quarter ended October 31, 2023, disclosed as Non-portable software and Hardware, as described below. The prior period has been updated to conform with current period presentation.

Subscription revenue — Subscription revenue includes any performance obligation which has a defined term and is generated from the sales of software entitlement and support subscriptions, subscription software licenses and cloud-based software as a service ("SaaS") offerings.

•

Ratable — We recognize revenue from software entitlement and support subscriptions and SaaS offerings ratably over the contractual service period, the substantial majority of which relate to software entitlement and support subscriptions. These offerings represented approximately $213.4 million and $253.5 million of our subscription revenue for the three months ended October 31, 2022 and 2023, respectively.

•

Upfront — Revenue from our subscription software licenses is generally recognized upfront upon transfer of control to the customer, which happens when we make the software available to the customer. These subscription software licenses represented approximately $189.5 million and $226.0 million of our subscription revenue for the three months ended October 31, 2022 and 2023, respectively.

Professional services revenue — We also sell professional services with our products. We recognize revenue related to professional services as they are performed.

Other non-subscription product revenue — Other non-subscription product revenue includes $7.8 million and $8.1 million of non-portable software revenue for the three months ended October 31, 2022 and 2023, respectively, and $0.6 million and $0.6 million of hardware revenue for the three months ended October 31, 2022 and 2023, respectively.

•

Non-portable software revenue — Non-portable software revenue includes sales of our enterprise cloud platform when delivered on a configured-to-order appliance by us or one of our OEM partners. The software licenses associated with these sales are typically non-portable and can be used over the life of the appliance on which the software is delivered. Revenue from our non-portable software products is generally recognized upon transfer of control to the customer.

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NUTANIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

•

Hardware revenue — In transactions where the hardware appliance is purchased directly from Nutanix, we consider ourselves to be the principal in the transaction and we record revenue and costs of goods sold on a gross basis. We consider the amount allocated to hardware revenue to be equivalent to the cost of the hardware procured. Hardware revenue is generally recognized upon transfer of control to the customer.

Contracts with multiple performance obligations — The majority of our contracts with customers contain multiple performance obligations. For these contracts, we account for individual performance obligations separately if they are distinct. The transaction price is allocated to the separate performance obligations on a relative standalone selling price ("SSP") basis. For deliverables that we routinely sell separately, such as software entitlement and support subscriptions on our core offerings, we determine SSP by evaluating the standalone sales over the trailing 12 months. For those that are not sold routinely, we determine SSP based on our overall pricing trends and objectives, taking into consideration market conditions and other factors, including the value of our contracts, the products sold and geographic locations.

Contract balances — The timing of revenue recognition may differ from the timing of invoicing to customers. Accounts receivable are recorded at the invoiced amount, net of an allowance for credit losses. A receivable is recognized in the period in which we deliver goods or provide services, or when our right to consideration is unconditional. In situations where revenue recognition occurs before invoicing, an unbilled receivable is created, which represents a contract asset. The balance of unbilled accounts receivable, included in accounts receivable, net on the condensed consolidated balance sheets, was $16.3 million and $16.5 million as of July 31, 2023 and October 31, 2023, respectively.

Payment terms on invoiced amounts are typically 30-45 days. We assess credit losses on accounts receivable by taking into consideration past collection experience, the credit quality of the customer, the age of the receivable balance, current and future economic conditions, and forecasts that may affect the collectability of the reported amount. The balance of accounts receivable, net of allowance for credit losses, as of July 31, 2023 and October 31, 2023 is presented in the accompanying condensed consolidated balance sheets.

Costs to obtain and fulfill a contract — We capitalize commissions paid to sales personnel and the related payroll taxes when customer contracts are signed. These costs are recorded as deferred commissions in the condensed consolidated balance sheets, current and non-current. We determine whether costs should be deferred based on our sales compensation plans, if the commissions are incremental and would not have been incurred absent the execution of the customer contract. Commissions paid upon the initial acquisition of a contract are recognized over the estimated period of benefit, which may exceed the term of the initial contract if the commissions expected to be paid upon renewal are not commensurate with that of the initial contract. Accordingly, deferred costs are recognized on a systematic basis that is consistent with the pattern of revenue recognition allocated to each performance obligation over the entire period of benefit and included in sales and marketing expense in the condensed consolidated statements of operations. We determine the estimated period of benefit by evaluating the expected renewals of customer contracts, the duration of relationships with our customers, customer retention data, our technology development lifecycle and other factors. Deferred costs are periodically reviewed for impairment.

Taxes assessed by a government authority that are both imposed on and concurrent with specific revenue transactions between us and our customers are presented on a net basis in our condensed consolidated statements of operations.

Deferred revenue — Deferred revenue primarily consists of amounts that have been invoiced but not yet recognized as revenue and primarily pertain to software entitlement and support subscriptions and professional services. The current portion of deferred revenue represents the amounts that are expected to be recognized as revenue within one year of the condensed consolidated balance sheet date.

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NUTANIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Significant changes in the balance of deferred revenue (contract liability) and deferred commissions (contract asset) for the periods presented are as follows:


	Deferred Revenue			Deferred Commissions
	(in thousands)
Balance as of July 31, 2023	$	1,595,032		$	357,991
Additions (1)		561,254			42,350
Revenue/commissions recognized		(511,054	)		(47,448	)
Balance as of October 31, 2023	$	1,645,232		$	352,893

(1)

Includes both billed and unbilled amounts.

During the three months ended October 31, 2022, we recognized revenue of approximately $210.9 million pertaining to amounts deferred as of July 31, 2022. During the three months ended October 31, 2023, we recognized revenue of approximately $244.2 million pertaining to amounts deferred as of July 31, 2023.

Many of our contracted but not invoiced performance obligations are subject to cancellation terms. Revenue allocated to remaining performance obligations represents contracted revenue that has not yet been recognized ("contracted not recognized"), which includes deferred revenue and non-cancelable amounts that will be invoiced and recognized as revenue in future periods and excludes performance obligations that are subject to cancellation terms. Contracted not recognized revenue was approximately $1.8 billion as of October 31, 2023, of which we expect to recognize approximately 55% over the next 12 months, and the remainder thereafter.

NOTE 4. FAIR VALUE MEASUREMENTS

The fair value of our financial assets measured on a recurring basis is as follows:


	As of July 31, 2023
	Level I		Level II		Level III		Total
	(in thousands)
Financial Assets, Current:
Cash equivalents:
Money market funds	$	211,319	$	—	$	—	$	211,319
U.S. Government securities		—		6,999		—		6,999
Commercial paper		—		34,830		—		34,830
Short-term investments:
Corporate bonds		—		452,703		—		452,703
Commercial paper		—		215,219		—		215,219

Nutanix, Inc. [NTNX] Filings
10-Q	[2023-12-07]
10-K	[2023-09-21]
10-Q	[2023-06-02]
10-Q	[2023-05-24]
10-Q	[2022-12-07]
10-K	[2022-09-21]
10-Q	[2022-06-02]
10-Q	[2022-03-10]
10-Q	[2021-12-02]
10-K	[2021-09-21]
10-Q	[2021-06-03]
10-Q	[2021-03-04]
10-Q	[2020-12-03]
10-K	[2020-09-23]
10-Q	[2020-06-04]
10-Q	[2020-03-05]
10-Q	[2019-12-05]
10-K	[2019-09-24]
10-Q	[2019-06-05]
10-Q	[2019-03-12]
10-Q	[2018-12-10]
10-K	[2018-09-24]
10-Q	[2018-06-12]
10-Q	[2018-03-15]
10-Q	[2017-12-13]
10-K	[2017-09-18]
10-Q	[2017-06-02]
10-Q	[2017-03-10]
10-Q	[2016-12-08]
S-1	[2015-12-22]