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Nutanix Reports Fourth Quarter and Fiscal 2019 Financial Results

August 28, 2019 4:02 PM

-- Delivers 71% of Billings from Subscriptions and Record 80% Gross Margin, Highlighting the Company’s Shift to Subscription Business Model

-- Grows Deals that Include Offerings Beyond Core HCI to 26%1

-- Expands Customer Base to Over 14,000 with 16% QoQ Growth in Number of Deals Over $1M and Strong QoQ Growth in New Global 2000 Customers

SAN JOSE, Calif.--(BUSINESS WIRE)-- Nutanix, Inc. (Nasdaq: NTNX), a leader in enterprise cloud computing, today announced financial results for its fourth quarter and fiscal year ended July 31, 2019.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20190828005652/en/

Nutanix Fiscal Q4 2019 Earnings Infographic (Graphic: Business Wire)

Nutanix Fiscal Q4 2019 Earnings Infographic (Graphic: Business Wire)

Q4 Fiscal 2019 Financial Highlights

Fiscal 2019 Financial Highlights

Reconciliations between GAAP and non-GAAP financial measures and key performance measures are provided in the tables of this press release.

“We delivered a solid fourth quarter and believe our performance reflects our execution improvements and the meaningful progress we have made transitioning our business to a subscription model,” said Dheeraj Pandey, Chairman, Founder and CEO of Nutanix. “We are encouraged by our record gross margins, strengthening pipeline, progress in sales hiring, and recent large customer wins. We have a strong set of tenured sales leaders in place and continue to lead the industry as an innovator with technology at the forefront of hybrid cloud transformation.”

“We are pleased by our Q4 results, and that the actions we have taken to strengthen lead generation and enhance sales execution are generating positive results. Our subscription transition continues to be ahead of schedule with subscriptions growing from 52% of total billings in the fourth quarter of fiscal 2018 to 71% in the fourth quarter of fiscal 2019,” said Duston Williams, CFO of Nutanix. “In addition, 26%1 of our deals included a product outside our core offering, as new and existing customers increasingly look to Nutanix to guide them on their journey to hybrid cloud.”

Recent Company Highlights

Q1 Fiscal 2020 Financial Outlook

For the first quarter of fiscal 2020, Nutanix expects:

1Based on a trailing four-quarter average.

Supplementary materials to this earnings release, including the company’s fourth quarter and fiscal 2019 investor presentation, can be found at https://ir.nutanix.com/company/financial.

All forward-looking non-GAAP financial measures contained in the section titled "Q1 Fiscal 2020 Financial Outlook" exclude stock-based compensation expense and amortization of intangible assets and may also exclude, as applicable, other special items. The company has not reconciled guidance for software and support billings, non-GAAP gross margin, non-GAAP operating expenses and non-GAAP loss per share to their most directly comparable GAAP measures because such items that impact these measures are not within its control and are subject to constant change. While the actual amounts of such items will have a significant impact on the company’s software and support billings, non-GAAP gross margin, non-GAAP operating expenses and non-GAAP loss per share, a reconciliation of the non-GAAP financial measure guidance to the corresponding GAAP measures is not available without unreasonable effort.

Webcast and Conference Call Information

Nutanix executives will discuss the company’s fourth quarter and fiscal 2019 financial results on a conference call at 4:30 p.m. Eastern Time/1:30 p.m. Pacific Time today. To listen to the call via telephone, dial 1-833-227-5841 in the United States or 1-647-689-4068 from outside the United States. The conference ID is 7478544. This call will be webcast live and available to all interested parties on our Investor Relations website at ir.nutanix.com. Shortly after the conclusion of the conference call, a replay of the audio webcast will be available on the Nutanix Investor Relations website. A telephonic replay will be available for one week by calling 1-800-585-8367 or 1-416-621-4642, and entering the conference ID 7478544.

Non-GAAP Financial Measures and Other Key Performance Measures

To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use the following non-GAAP financial and other key performance measures: billings, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP net loss, non-GAAP net loss per share, free cash flow, software and support revenue, subscription revenue, software and support billings, subscription billings, and professional services billings. In computing these non-GAAP financial measures and key performance measures, we exclude certain items such as stock-based compensation and the related income tax impact, costs associated with our acquisitions (such as amortization of acquired intangible assets, revaluation of contingent consideration, income tax-related impact, and other acquisition-related costs), amortization of debt discount and issuance costs, other non-recurring transactions and the related tax impact, and the revenue and billings associated with pass-through hardware sales. Billings is a performance measure which our management believes provides useful information to investors because it represents the amounts under binding purchase orders received by us during a given period that have been billed, and we calculate billings by adding the change in deferred revenue between the start and end of the period to total revenue recognized in the same period. Free cash flow is a performance measure that our management believes provides useful information to management and investors about the amount of cash generated by the business after necessary capital expenditures, and we define free cash flow as net cash (used in) provided by operating activities less purchases of property and equipment. Non-GAAP gross margin, non-GAAP operating expenses, non-GAAP net loss, and non-GAAP net loss per share are financial measures which our management believes provide useful information to investors because they provide meaningful supplemental information regarding our performance and liquidity by excluding certain expenses and expenditures such as stock-based compensation expense that may not be indicative of our ongoing core business operating results. Software and support revenue and software and support billings are performance measures that our management believes provide useful information to our management and investors as it allows us to better track the true growth of our software business by excluding the amounts attributable to the pass-through hardware sales that we use to deliver our solutions. Subscription revenue, subscription billings, and professional services billings are performance measures that our management believes provide useful information to our management and investors as it allows us to better track the growth of the subscription-based portion of our business, which is a critical part of our business plan. We use these non-GAAP financial and key performance measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. However, these non-GAAP financial and key performance measures have limitations as analytical tools and you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP. Billings, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP net loss, non-GAAP net loss per share, and free cash flow are not substitutes for total revenue, gross margin, operating expenses, net loss, net loss per share, or net cash (used in) provided by operating activities, respectively; subscription revenue, software and support revenue and software and support billings are not substitutes for total revenue; and subscription and professional services billings are not a substitute for subscription and professional services revenue. In addition, other companies, including companies in our industry, may calculate non-GAAP financial measures and key performance measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures and key performance measures as tools for comparison. We urge you to review the reconciliation of our non-GAAP financial measures and key performance measures to the most directly comparable GAAP financial measures included below in the tables captioned “Reconciliation of Revenue to Billings,” “Disaggregation of Revenue and Billings,” “Reconciliation of Subscription and Professional Services Revenue to Subscription and Professional Services Billings,” “Reconciliation of Software and Support Revenue to Software and Support Billings,” “Reconciliation of GAAP to Non-GAAP Profit Measures,” and “Reconciliation of GAAP Net Cash Provided By Operating Activities to Non-GAAP Free Cash Flow,” and not to rely on any single financial measure to evaluate our business.

Forward-Looking Statements

This press release contains express and implied forward-looking statements, including, but not limited to, statements regarding our business plans, initiatives and objectives, our ability to execute such plans, initiatives and objectives in a timely manner, and the benefits and impact of such plans, initiatives and objectives, the benefits and capabilities of our platform, products, services and technology, our plans and expectations regarding new products, services, product features and technology that are under development or in process, including our intention to seek FedRAMP Moderate Authorization for our Xi Government Cloud solutions, our continued investments in talent, technology, and marketing, and the success and impact of such investments, our plans and timing for, and the success and impact of, our transition to a subscription-based and recurring revenue business model, any impact of the actions we have undertaken to strengthen lead and pipeline generation and enhance sales execution, and anticipated future financial results, including but not limited to our guidance on estimated revenues, software and support revenues, billings, software and support billings, total billings from hardware sales, non-GAAP gross margin, non-GAAP operating expenses and non-GAAP net loss per share for future fiscal periods. These forward-looking statements are not historical facts and instead are based on our current expectations, estimates, opinions, and beliefs. Consequently, you should not rely on these forward-looking statements. The accuracy of such forward-looking statements depends upon future events and involves risks, uncertainties, and other factors beyond our control that may cause these statements to be inaccurate and cause our actual results, performance or achievements to differ materially and adversely from those anticipated or implied by such statements, including, among others: failure to successfully implement or realize the full benefits of, or unexpected difficulties or delays in successfully implementing or realizing the full benefits of, our business plans, initiatives and objectives; failure to develop, or unexpected difficulties or delays in developing, new products, services, product features or technology in a timely or cost-effective basis; delays in achieving FedRAMP Moderate Authorization; delays in or lack of customer or market acceptance of our new products, services, product features or technology; delays in the transition to a subscription-based and recurring revenue business model; failure of or delay in the actions we have undertaken to strengthen lead and pipeline generation and enhance sales execution; the rapid evolution of the markets in which we compete; our ability to sustain or manage future growth effectively; factors that could result in the significant fluctuation of our future quarterly operating results, including, among other things, anticipated changes to our revenue and product mix, including changes as a result of our transition to a subscription-based business model, which will slow revenue growth during such transitions and make forecasting future performance more difficult, the timing and magnitude of orders, shipments and acceptance of our solutions in any given quarter, our ability to attract new and retain existing end-customers, changes in the pricing of certain components of our solutions, and fluctuations in demand and competitive pricing pressures for our solutions; the introduction, or acceleration of adoption of, competing solutions, including public cloud infrastructure; and other risks detailed in our quarterly report on Form 10-Q for the fiscal quarter ended April 30, 2019, filed with the U.S. Securities and Exchange Commission, or the SEC, on June 5, 2019. Additional information will also be set forth in our Form 10-K that will be filed for the fiscal year ended July 31, 2019, which should be read in conjunction with this press release and the financial results included herein. Our SEC filings are available on the Investor Relations section of the company’s website at ir.nutanix.com and on the SEC's website at www.sec.gov. These forward-looking statements speak only as of the date of this press release and, except as required by law, we assume no obligation, and expressly disclaim any obligation, to update, alter or otherwise revise any of these forward-looking statements to reflect actual results or subsequent events or circumstances.

About Nutanix

Nutanix is a global leader in cloud software and hyperconverged infrastructure solutions, making infrastructure invisible so that IT can focus on the applications and services that power their business. Companies around the world use Nutanix Enterprise Cloud OS platform to bring one-click application management and mobility across public, private and distributed edge clouds so they can run any application at any scale with a dramatically lower total cost of ownership. The result is organizations that can rapidly deliver a high-performance IT environment on demand, giving application owners a true cloud-like experience. Learn more at www.nutanix.com or follow us on Twitter @nutanix.

© 2019 Nutanix, Inc. All rights reserved. Nutanix, the Nutanix logo, and all Nutanix product and service names mentioned herein are registered trademarks or trademarks of Nutanix, Inc. in the United States and other countries. All other brand names mentioned herein are for identification purposes only and may be the trademarks of their respective holder(s).

NUTANIX, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

As of

July 31,
2018

July 31,
2019

(in thousands)

Assets

Current assets:

Cash and cash equivalents

$

305,975

$

396,678

Short-term investments

628,328

512,156

Accounts receivable, net

258,289

245,475

Deferred commissions—current

33,691

46,238

Prepaid expenses and other current assets

36,818

74,665

Total current assets

1,263,101

1,275,212

Property and equipment, net

85,111

136,962

Deferred commissions—non-current

80,688

107,474

Intangible assets, net

45,366

66,773

Goodwill

87,759

185,180

Other assets—non-current

37,855

14,441

Total assets

$

1,599,880

$

1,786,042

Liabilities and Stockholders’ Equity

Current liabilities:

Accounts payable

$

65,503

$

74,047

Accrued compensation and benefits

85,398

99,804

Accrued expenses and other current liabilities

31,682

28,797

Deferred revenue—current

275,648

396,667

Total current liabilities

458,231

599,315

Deferred revenue—non-current

355,559

513,377

Convertible senior notes, net

429,598

458,910

Other liabilities—non-current

29,713

27,547

Total liabilities

1,273,101

1,599,149

Stockholders’ equity:

Common stock

4

5

Additional paid-in capital

1,355,907

1,835,528

Accumulated other comprehensive (loss) income

(1,002

)

669

Accumulated deficit

(1,028,130

)

(1,649,309

)

Total stockholders’ equity

326,779

186,893

Total liabilities and stockholders’ equity

$

1,599,880

$

1,786,042

NUTANIX, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

Three Months Ended
July 31,

Fiscal Year Ended
July 31,

2018

2019

2018

2019

(in thousands, except share and per share data)

Revenue:

Product

$

224,650

$

186,347

$

887,989

$

832,419

Support, entitlements and other services

79,098

113,529

267,468

403,724

Total revenue

303,748

299,876

1,155,457

1,236,143

Cost of revenue:

Product (1)(2)

41,068

28,323

276,127

143,078

Support, entitlements and other services (1)

32,197

40,640

109,903

161,050

Total cost of revenue

73,265

68,963

386,030

304,128

Gross profit

230,483

230,913

769,427

932,015

Operating expenses:

Sales and marketing (1)(2)

183,191

253,843

649,657

909,750

Research and development (1)

97,050

129,169

313,777

500,719

General and administrative (1)

29,472

30,420

86,401

119,587

Total operating expenses

309,713

413,432

1,049,835

1,530,056

Loss from operations

(79,230

)

(182,519

)

(280,408

)

(598,041

)

Other expense, net

(4,021

)

(4,705

)

(9,306

)

(15,019

)

Loss before provision for income taxes

(83,251

)

(187,224

)

(289,714

)

(613,060

)

Provision for income taxes

4,118

7,114

7,447

8,119

Net loss

$

(87,369

)

$

(194,338

)

$

(297,161

)

$

(621,179

)

Net loss per share attributable to Class A and Class B common stockholders—basic and diluted

$

(0.51

)

$

(1.04

)

$

(1.81

)

$

(3.43

)

Weighted average shares used in computing net loss per share attributable to Class A and Class B common stockholders—basic and diluted

171,197,547

186,370,867

164,091,302

181,030,964

(1) Includes the following stock-based compensation expense:

Three Months Ended
July 31,

Fiscal Year Ended
July 31,

2018

2019

2018

2019

(in thousands)

Product cost of revenue

$

692

$

1,012

$

2,580

$

3,535

Support, entitlements and other services cost of revenue

2,789

4,254

8,945

15,326

Sales and marketing

17,301

26,426

65,060

107,751

Research and development

25,350

32,566

74,389

140,519

General and administrative

9,264

9,149

26,894

39,598

Total stock-based compensation expense

$

55,396

$

73,407

$

177,868

$

306,729

(2) Includes the following amortization of intangible assets:

Three Months Ended
July 31,

Fiscal Year Ended
July 31,

2018

2019

2018

2019

(in thousands)

Product cost of sales

$

2,135

$

3,694

$

5,641

$

14,248

Sales and marketing

289

651

914

2,528

Total amortization of intangible assets

$

2,424

$

4,345

$

6,555

$

16,776

NUTANIX, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Fiscal Year Ended
July 31,

2018

2019

(in thousands)

Cash flows from operating activities:

Net loss

$

(297,161

)

$

(621,179

)

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization

50,302

77,612

Stock-based compensation

177,868

306,729

Amortization of debt discount and debt issuance costs

14,685

29,313

Change in fair value of contingent consideration

(2,423

)

(832

)

Other

(962

)

(2,786

)

Changes in operating assets and liabilities:

Accounts receivable, net

(79,273

)

15,704

Deferred commissions

(40,852

)

(39,333

)

Prepaid expenses and other assets (1)

(37,374

)

(12,037

)

Accounts payable

(16,469

)

13,508

Accrued compensation and benefits

27,877

14,406

Accrued expenses and other liabilities

34,295

(17,454

)

Deferred revenue

262,027

278,517

Net cash provided by operating activities (1)

92,540

42,168

Cash flows from investing activities:

Maturities of investments

297,461

588,763

Purchases of investments

(716,417

)

(468,144

)

Purchases of property and equipment

(62,372

)

(118,452

)

Payments for acquisitions, net of cash and restricted cash acquired

(22,227

)

(19,017

)

Net cash used in investing activities

(503,555

)

(16,850

)

Cash flows from financing activities:

Proceeds from sales of shares through employee equity incentive plans, net of repurchases

72,010

69,210

Payment of contingent consideration associated with a business combination

—

(1,040

)

Payment of debt in conjunction with business combinations

(1,696

)

(991

)

Proceeds from issuance of convertible senior notes, net

563,587

(75

)

Proceeds from issuance of warrants

87,975

—

Payments for the cost of convertible note hedges

(143,175

)

—

Payment of offering costs

(85

)

—

Net cash provided by financing activities

578,616

67,104

Net increase in cash, cash equivalents and restricted cash (1)

$

167,601

$

92,422

Cash, cash equivalents and restricted cash—beginning of period (1)

139,497

307,098

Cash, cash equivalents and restricted cash—end of period (1)

$

307,098

$

399,520

Restricted cash (1) (2)

1,123

2,842

Cash and cash equivalents—end of period

$

305,975

$

396,678

Supplemental disclosures of cash flow information:

Cash paid for income taxes

$

10,116

$

28,999

Supplemental disclosures of non-cash investing and financing information:

Issuance of common stock for acquisitions

$

63,780

$

103,305

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

$

13,444

$

8,074

Vesting of early exercised stock options

$

681

$

183

(1)

During the first quarter of fiscal 2019, we adopted Accounting Standards Update (ASU) No. 2016-18, which requires that the statement of cash flows explain the change during the period in the total of cash, cash equivalents and restricted cash. We adopted the standard retrospectively for the prior period presented. Our adoption of ASU 2016-18 did not have any significant impact on our consolidated statement of cash flows.

(2)

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

Reconciliation of Revenue to Billings

(Unaudited)

Three Months Ended
July 31,

Fiscal Year Ended
July 31,

2018

2019

2018

2019

(in thousands)

Total revenue

$

303,748

$

299,876

$

1,155,457

$

1,236,143

Change in deferred revenue, net of acquisitions (1)

91,318

71,782

262,027

278,517

Total billings

$

395,066

$

371,658

$

1,417,484

$

1,514,660

(1)

Amount for the fiscal year ended July 31, 2019 excludes approximately $0.3 million of deferred revenue assumed in a business combination.

Disaggregation of Revenue and Billings

(Unaudited)

Three Months Ended
July 31,

Fiscal Year Ended
July 31,

2018

2019

2018

2019

(in thousands)

Disaggregation of Revenue:

Subscription

$

113,977

$

195,636

$

330,645

$

648,415

Non-portable software

146,966

82,221

543,952

449,131

Hardware

35,860

13,002

257,314

105,321

Professional services

6,945

9,017

23,546

33,276

Total revenue

$

303,748

$

299,876

$

1,155,457

$

1,236,143

Disaggregation of Billings:

Subscription

$

203,482

$

263,308

$

581,923

$

916,000

Non-portable software

146,966

82,221

543,952

449,131

Hardware

35,860

13,002

257,314

105,321

Professional services

8,758

13,127

34,295

44,208

Total billings

$

395,066

$

371,658

$

1,417,484

$

1,514,660

Subscription — Subscription revenue is generated from the sales of software entitlement and support subscriptions, separately purchased software term-based licenses and cloud-based Software as a Service, or SaaS offerings. We recognize revenue from software entitlement and support subscriptions and SaaS offerings ratably over the contractual service period, while revenue from our separately purchased software term-based licenses is generally recognized upon transfer of control to the customer, which is when we make the software available to our customers.

Non-portable software — Non-portable software revenue includes sales of our software operating system 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 have a term equal to the life of the appliance it is delivered on. Revenue from our non-portable software products is generally recognized upon transfer of control to the customer.

Hardware — In transactions where we deliver the hardware appliance, 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.

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

Reconciliation of Subscription and Professional Services Revenue to Subscription and Professional Services Billings

(Unaudited)

Three Months Ended
July 31,

Fiscal Year Ended
July 31,

2018

2019

2018

2019

(in thousands)

Subscription revenue

$

113,977

$

195,636

$

330,645

$

648,415

Change in subscription deferred revenue, net of acquisitions (1)

89,505

67,672

251,278

267,585

Subscription billings

$

203,482

$

263,308

$

581,923

$

916,000

Professional services revenue

$

6,945

$

9,017

$

23,546

$

33,276

Change in professional services deferred revenue

1,813

4,110

10,749

10,932

Professional services billings

$

8,758

$

13,127

$

34,295

$

44,208

(1)

Amount for the fiscal year ended July 31, 2019 excludes approximately $0.3 million of deferred revenue assumed in a business combination.

Reconciliation of Software and Support Revenue to Software and Support Billings

(Unaudited)

Three Months Ended
July 31,

Fiscal Year Ended
July 31,

2018

2019

2018

2019

(in thousands)

Software revenue

$

188,790

$

173,345

$

630,675

$

727,098

Hardware revenue

35,860

13,002

257,314

105,321

Product revenue

224,650

186,347

887,989

832,419

Support, entitlements and other services revenue

79,098

113,529

267,468

403,724

Total revenue

$

303,748

$

299,876

$

1,155,457

$

1,236,143

Total software and support revenue (2)

$

267,888

$

286,874

$

898,143

$

1,130,822

Change in software and support deferred revenue, net of acquisitions (1)

91,318

71,782

262,027

278,517

Software and support billings (2)

$

359,206

$

358,656

$

1,160,170

$

1,409,339

(1)

Amount for the fiscal year ended July 31, 2019 excludes approximately $0.3 million of deferred revenue assumed in a business combination.

(2)

Software and support revenue and billings include software and support, entitlements and other services revenue and billings.

Reconciliation of GAAP to Non-GAAP Profit Measures

(Unaudited)

GAAP

Non-GAAP Adjustments

Non-GAAP

Three Months
Ended July
31, 2019

(1)

(2)

(3)

(4)

(5)

Three Months
Ended July
31, 2019

(in thousands, except share and per share data)

Gross profit

$

230,913

$

5,266

$

3,694

$

—

$

—

$

—

$

239,873

Gross margin

77.0

%

1.8

%

1.2

%

—

—

—

80.0

%

Operating expenses:

Sales and marketing

253,843

(26,426

)

(651

)

—

—

—

226,766

Research and development

129,169

(32,566

)

—

—

—

—

96,603

General and administrative

30,420

(9,149

)

—

(156

)

—

—

21,115

Total operating expenses

413,432

(68,141

)

(651

)

(156

)

—

—

344,484

Loss from operations

(182,519

)

73,407

4,345

156

—

—

(104,611

)

Net loss

$

(194,338

)

$

73,407

$

4,345

$

156

$

7,511

$

3,086

$

(105,833

)

Weighted shares outstanding, basic and diluted

186,370,867

186,370,867

Net loss per share, basic and diluted

$

(1.04

)

$

0.39

$

0.02

$

—

$

0.04

$

0.02

$

(0.57

)

(1)

Stock-based compensation expense

(2)

Amortization of intangible assets

(3)

Other

(4)

Amortization of debt discount and issuance costs

(5)

Income tax effect primarily related to stock-based compensation expense

GAAP

Non-GAAP Adjustments

Non-GAAP

Fiscal Year
Ended July
31, 2019

(1)

(2)

(3)

(4)

(5)

(6)

(7)

Fiscal Year
Ended July
31, 2019

(in thousands, except share and per share data)

Gross profit

$

932,015

$

18,861

$

14,248

$

—

$

—

$

—

$

163

$

—

$

965,287

Gross margin

75.4

%

1.5

%

1.2

%

—

—

—

—

—

78.1

%

Operating expenses:

Sales and marketing

909,750

(107,751

)

(2,528

)

—

—

—

—

—

799,471

Research and development

500,719

(140,519

)

—

—

—

—

—

—

360,200

General and administrative

119,587

(39,598

)

—

(721

)

832

—

(204

)

—

79,896

Total operating expenses

1,530,056

(287,868

)

(2,528

)

(721

)

832

—

(204

)

—

1,239,567

Loss from operations

(598,041

)

306,729

16,776

721

(832

)

—

367

—

(274,280

)

Net loss

$

(621,179

)

$

306,729

$

16,776

$

721

$

(832

)

$

29,313

$

367

$

(4,752

)

$

(272,857

)

Weighted shares outstanding, basic and diluted

181,030,964

181,030,964

Net loss per share, basic and diluted

$

(3.43

)

$

1.70

$

0.09

$

—

$

—

$

0.16

$

—

$

(0.03

)

$

(1.51

)

(1)

Stock-based compensation expense

(2)

Amortization of intangible assets

(3)

Acquisition-related costs

(4)

Change in fair value of contingent consideration assumed in a business combination

(5)

Amortization of debt discount and issuance costs

(6)

Other

(7)

Income tax effect primarily related to stock-based compensation expense and the partial release of valuation allowance in connection with a business combination and tax effect of a change in law

GAAP

Non-GAAP Adjustments

Non-GAAP

Three Months
Ended July
31, 2018

(1)

(2)

(3)

(4)

(5)

(6)

Three Months
Ended July
31, 2018

(in thousands, except share and per share data)

Gross profit

$

230,483

$

3,481

$

2,135

$

—

$

—

$

—

$

—

$

236,099

Gross margin

75.9

%

1.1

%

0.7

%

—

—

—

—

77.7

%

Operating expenses:

Sales and marketing

183,191

(17,301

)

(289

)

—

—

—

—

165,601

Research and development

97,050

(25,350

)

—

—

—

—

—

71,700

General and administrative

29,472

(9,264

)

—

(948

)

(714

)

—

—

18,546

Total operating expenses

309,713

(51,915

)

(289

)

(948

)

(714

)

—

—

255,847

Loss from operations

(79,230

)

55,396

2,424

948

714

—

—

(19,748

)

Net loss

$

(87,369

)

$

55,396

$

2,424

$

948

$

714

$

7,031

$

1,834

$

(19,022

)

Weighted shares outstanding, basic and diluted

171,197,547

171,197,547

Net loss per share, basic and diluted

$

(0.51

)

$

0.32

$

0.02

$

0.01

$

—

$

0.04

$

0.01

$

(0.11

)

(1)

Stock-based compensation expense

(2)

Amortization of intangible assets

(3)

Change in fair value of contingent consideration assumed in a business combination

(4)

Acquisition-related costs

(5)

Amortization of debt discount and debt issuance costs

(6)

Income tax effect primarily related to stock-based compensation expense and the migration of certain intangible assets

GAAP

Non-GAAP Adjustments

Non-GAAP

Fiscal Year
Ended July
31, 2018

(1)

(2)

(3)

(4)

(5)

(6)

Fiscal Year
Ended July
31, 2018

(in thousands, except share and per share data)

Gross profit

$

769,427

$

11,525

$

5,641

$

—

$

—

$

—

$

—

$

786,593

Gross margin

66.6

%

1.0

%

0.5

%

—

—

—

—

68.1

%

Operating expenses:

Sales and marketing

649,657

(65,060

)

(914

)

—

—

—

—

583,683

Research and development

313,777

(74,389

)

—

—

—

—

—

239,388

General and administrative

86,401

(26,894

)

—

2,423

(1,757

)

—

—

60,173

Total operating expenses

1,049,835

(166,343

)

(914

)

2,423

(1,757

)

—

—

883,244

Loss from operations

(280,408

)

177,868

6,555

(2,423

)

1,757

—

—

(96,651

)

Net loss

$

(297,161

)

$

177,868

$

6,555

$

(2,423

)

$

1,757

$

14,685

$

(2,819

)

$

(101,538

)

Weighted shares outstanding, basic and diluted

164,091,302

164,091,302

Net loss per share, basic and diluted

$

(1.81

)

$

1.08

$

0.04

$

(0.01

)

$

0.01

$

0.09

$

(0.02

)

$

(0.62

)

(1)

Stock-based compensation expense

(2)

Amortization of intangible assets

(3)

Change in fair value of contingent consideration assumed in a business combination

(4)

Acquisition-related costs

(5)

Amortization of debt discount and debt issuance costs

(6)

Income tax effect primarily related to release of valuation allowance due to acquisitions, stock-based compensation expense and the migration of certain intangible assets

Reconciliation of GAAP Net Cash Provided by Operating Activities to Non-GAAP Free Cash Flow

(Unaudited)

Three Months Ended
July 31,

Fiscal Year Ended
July 31,

2018

2019

2018

2019

(in thousands)

Net cash provided by (used in) operating activities

$

22,736

$

(9,656

)

$

92,540

$

42,168

Purchases of property and equipment

(16,283

)

(23,637

)

(62,372

)

(118,452

)

Free cash flow

$

6,453

$

(33,293

)

$

30,168

$

(76,284

)

Investor Contact:

Tonya Chin

408-560-2675

[email protected]

Media Contact:

Jennifer Massaro

408-309-6886

[email protected]

Source: Nutanix, Inc.

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