Nutanix (NASDAQ: NTNX) reported Q2 EPS of ($0.60), $0.09 better than the analyst estimate of ($0.69). Revenue for the quarter came in at $346.8 million versus the consensus estimate of $341.09 million.

Q2 Fiscal 2020 Financial Highlights

• Revenue: $346.8 million, up from $335.4 million in the second quarter of fiscal 20191
• Billings: $428.1 million, up from $413.4 million in the second quarter of fiscal 20191
• Software and Support (TCV)2 Revenue: $338.2 million, up 14% year-over-year from $297.4 million in the second quarter of fiscal 20191
• Software and Support (TCV)2 Billings: $419.5 million, up 12% year-over-year from $375.5 million in the second quarter of fiscal 20191
• Gross Margin: GAAP gross margin of 78.3%, up from 74.4% in the second quarter of fiscal 2019; Non-GAAP gross margin of 81.4%, up from 76.8% in the second quarter of fiscal 2019
• Net Loss: GAAP net loss of $217.6 million, compared to a GAAP net loss of $122.8 million in the second quarter of fiscal 2019; Non-GAAP net loss of $116.3 million, compared to a non-GAAP net loss of $40.4 million in the second quarter of fiscal 2019
• Net Loss Per Share: GAAP net loss per share of $1.13, compared to a GAAP net loss per share of $0.68 in the second quarter of fiscal 2019; Non-GAAP net loss per share of $0.60, compared to a non-GAAP net loss per share of $0.23 in the second quarter of fiscal 2019
• Cash and Short-term Investments: $819.0 million, compared to $965.9 million in the second quarter of fiscal 2019
• Deferred Revenue: $1.06 billion, up 35% from the second quarter of fiscal 2019
• Operating Cash Flow: Use of $52.5 million, compared to generation of $38.5 million in the second quarter of fiscal 2019
• Free Cash Flow: Use of $73.7 million, compared to use of $4.1 million in the second quarter of fiscal 2019

“Our solutions-based approach to our go-to-market strategy is helping customers realize the benefits and power of our new products in conjunction with our core software. As a result, we increased the attach rate of our new products to 31%, up from 21% as of Q2 fiscal 2019,” said Dheeraj Pandey, Chairman, Co-founder and CEO of Nutanix. “We were also pleased with several other key drivers of growth for our business in the quarter, including our partnership with HPE and traction in the U.S. commercial segment.”

“We saw strong momentum in the shift of our business towards subscription. In the second quarter, 79% of billings came from subscription, surpassing our stated goal of 75% by the end of the fiscal year and well ahead of our internal plan, while still delivering on our guidance for top line growth,” said Duston Williams, CFO of Nutanix. “Looking forward, the change in our fiscal 2020 TCV guidance is driven by two factors – first, a much faster than expected shift to subscription, coupled with a more cautious view on business activities in the greater APJ region due to the anticipated impact of the coronavirus.”

GUIDANCE:

Nutanix sees Q3 2020 EPS of ($0.89), versus the consensus of ($0.74).

Nutanix’s TCV guidance for both the third quarter of fiscal 2020 and the full year of fiscal 2020 is impacted by the much faster than expected transition to subscription coupled with a more cautious view on business activities in the greater APJ region due to the anticipated impact of the coronavirus.

For the third quarter of fiscal 2020, Nutanix expects:

• Software and support (TCV) billings between $365 million and $385 million;
• Software and support (TCV) revenue between $300 million and $320 million;
• Non-GAAP gross margin of approximately 80%;
• Non-GAAP operating expenses between $420 million and $430 million; and
• Non-GAAP net loss per share of approximately $0.89, using approximately 196 million weighted shares outstanding.

For the full year of fiscal 2020, Nutanix updates its guidance as follows:

• Software and support (TCV) billings between $1.60 billion and $1.67 billion;
• Software and support (TCV) revenue between $1.29 billion and $1.36 billion;
• Non-GAAP gross margin of approximately 80.5%; and
• Non-GAAP operating expenses between $1.63 billion and $1.65 billion.

For earnings history and earnings-related data on Nutanix (NTNX) click here.