Nutanix, Inc. Q2 FY2025 earnings call

Key Points

• Nutanix exceeded all guided metrics in Q2 2025, with ARR growing 19% YOY to $2.06 billion and strong free cash flow.
• Second consecutive quarter of year-over-year new logo growth exceeding 50%, with strength across all customer segments including Global 2000.
• Published the 7th Annual Enterprise Cloud Index Survey, showing over 80% of enterprises have started implementing GenAI strategies, with infrastructure modernization key to deploying GenAI.
• Highlighted significant wins, including a North American Global 2000 energy technology company and an EMEA National Health Ministry, leveraging the Nutanix Cloud Platform.
• Strengthened balance sheet with convertible notes issuance and a revolving credit facility.

In the second quarter of fiscal 2025, Nutanix reported record quarterly revenue of $655 million, a 16% year-over-year growth. ARR reached $2.06 billion, representing a 19% year-over-year growth. Non-GAAP gross margin was 88.3%, non-GAAP operating margin was 24.6%. Free cash flow in Q2 was $187 million, with a free cash flow margin of 29%.

Fiscal 2025 Guidance

• Q3 fiscal 2025: Revenue projected to be $620 million to $630 million, non-GAAP operating margin 17%-18%.
• Full fiscal year 2025: Revenue expected to be $2.495 billion to $2.515 billion (17% Y/Y growth), non-GAAP operating margin 17.5%-18.5%, free cash flow $650 million to $700 million.
• Updated guidance reflects continued strength in new logo acquisition, steady expansion in existing customer base, and good renewal performance.

Risks

• Market dynamics and competitive landscape, including customers having multiyear contracts with VMware and timing of hardware refreshes.
• Uncertainty in the U.S. federal vertical due to potential actions by the new administration.
• Variability in large deal timing and structure, which could impact financial results.

Q: Meta Marshall asked about new logo momentum and federal vertical.

A: Rajiv and Rukmini discussed new logo growth driven by pipeline maturation and go-to-market initiatives, and federal business performance and uncertainty.

Q: Jim Fish asked about Global 2000 wins and PowerFlex.

A: Rajiv talked about mix of HCI and CT, and PowerFlex coming to market with early interest.

Q: Pinjalim Bora asked about Kubernetes Platform and federal recovery.

A: Rajiv discussed Kubernetes Platform's role in app modernization, and Rukmini talked about federal performance and guidance.

Q: Ben Bollin asked about sales/marketing/R&D investment and migration to hyperconverged.

A: Rajiv and Rukmini discussed investment in sales, marketing, R&D, and customer willingness to migrate to hyperconverged.

Q: Jake asked about GenAI adoption and sales/marketing/R&D allocation.

A: Rajiv talked about GenAI adoption and Rukmini discussed investment areas.

Q: Ruplu Bhattacharya asked about AWS partnership, Cisco/Dell contribution, and seasonality.

A: Rajiv discussed AWS traction, Cisco/Dell contribution, and Rukmini talked about seasonality.

Q: Jason Ader asked about sales cycles, partner margins, and operating margins.

A: Rajiv and Rukmini discussed sales cycles, partner incentives, and margin guidance.

Q: Param Singh asked about VMware displacement challenges and M&A.

A: Rajiv talked about VMware migration challenges and M&A strategy.

Q: Jeff Hickey asked about partner growth and NRR.

A: Rajiv and Rukmini discussed partner growth and NRR mechanics.

Q: George Wang asked about private cloud repatriation and go-to-market.

A: Rajiv talked about private cloud trends and go-to-market approach.