Nutanix, Inc. Q1 FY2025 earnings call

• Exceeded all guided metrics for the first quarter.
• Delivered quarterly revenue of $591 million and grew ARR 18% year-over-year to $1.966 billion.
• Saw strong year-over-year growth in new logos and solid free cash flow generation.
• Highlighted large wins like a full stack expansion with a global IT consulting services provider and a significant expansion with a North American Fortune 100 food services provider.
• Announced general availability of GPT-in-a-Box 2.0, a solution for simplifying generative AI application deployment.
• Signed an expanded strategic partnership with AWS to simplify cloud migrations.
• Named a leader in the 2024 Gartner Magic Quadrant for distributed hybrid infrastructure.

In the first quarter, Nutanix delivered quarterly revenue of $591 million. ARR grew 18% year-over-year to $1.966 billion. NRR at the end of Q1 was 110%. Non-GAAP gross margin in Q1 was 87.5%, non-GAAP operating margin was 20%, and free cash flow was $152 million.

• Q2 fiscal 2025 guidance: Revenue of $635 million to $645 million, non-GAAP operating margin of 20% to 21%.
• Full year fiscal 2025 guidance: Revenue of $2.435 billion to $2.465 billion, non-GAAP operating margin of approximately 16% to 17%, free cash flow of $560 million to $610 million.

• Modestly elongated average sales cycles influenced by the macroeconomic environment and increased scrutiny on spend.
• Larger opportunities in the land and expand pipeline involve strategic decisions and C-suite approvals, causing longer closure and variability in timing, outcome, and deal structure.
• Impact of industry M&A on customer decisions and potential uncertainty in the timing, outcome, and deal structure of larger deals in the pipeline.

Q: Pinjalim Bora with JPMorgan asked about what's being heard from customers around VMC on AWS and the new partnership with AWS acting as a catalyst.

A: Rajiv Ramaswami responded about VMC on AWS being an opportunity due to Broadcom's focus, and the partnership with AWS to help customers migrate from VMC to NC2 on AWS.

Q: Meta Marshall with Morgan Stanley asked about the federal piece and Dell PowerFlex integration.

A: Rajiv Ramaswami talked about federal business expecting to improve in Q2 and Dell PowerFlex integration expected in first half of calendar 2025 with revenue contribution in FY '26.

Q: Jim Fish with Piper Sandler asked about federal vertical size and standalone AHV integration.

A: Rukmini Sivaraman mentioned Q1 is the seasonally strongest Fed quarter, and Rajiv Ramaswami spoke about plans to expand standalone AHV integration selectively to other storage arrays.

Q: Jason Ader with William Blair asked about operating margin and expense ramp.

A: Rukmini Sivaraman explained operating margin guide considering expense ramp in sales, marketing, and R&D.

Q: Ruplu Bhattacharya with Bank of America asked about available to renew pool and free cash flow.

A: Rukmini Sivaraman discussed available to renew pool growth and free cash flow progression considering expense ramp.

Q: Mike Cikos with Needham asked about operating margin and revenue seasonality.

A: Rukmini Sivaraman explained operating margin guide and revenue seasonality tied to year-end and sales incentives.

Q: Ben Bollin with Cleveland Research Company asked about enterprise refresh behavior and AI deployments.

A: Rajiv Ramaswami talked about HCI vs three tier and early stages of enterprise AI deployments.

Q: Victor Chiu with Raymond James asked about VMware transition and steps.

A: Rajiv Ramaswami discussed spectrum of VMware transition times depending on scale and complexity.

Q: Matt Hedberg with RBC Capital Markets asked about enterprise spending and December budget flush.

A: Rajiv Ramaswami said no significant change in enterprise spending and December budget flush can occur but factored into guidance.

Q: George Wang with Barclays asked about channel incentives and repatriation.

A: Rajiv Ramaswami spoke about channel incentives and no massive repatriation of workloads from public cloud.

Q: Nehal Chokshi with Northland Capital Markets asked about ARR deceleration.

A: Rukmini Sivaraman explained ARR deceleration due to factors like U.S. federal business impact and larger deal variability.

Q: Michael Tsvetanov with Wells Fargo asked about GPT-in-a-Box 2.0 and partnerships.

A: Rajiv Ramaswami discussed GPT-in-a-Box 2.0 focus on inferencing and impact of partnerships with Dell and Cisco on win rates