Nutanix executives have taken a temporary 10 percent salary cut as the company transforms itself internally during the coronavirus pandemic by looking at various “smart savings” areas to help cut operating costs.
“While financial strength and flexibility are always a priority, we’re taking proactive steps to manage operating expenses and cash use to better position the business as we navigate through the pandemic and beyond,” said Nutanix CEO Dheeraj Pandey during the company’s third fiscal quarter earnings call Wednesday night. “We believe in sharing the burden across all levels of the organization. As such, our executive team took a 10 percent reduction in salary starting in April. Our efforts are not stopping there as we continue to look for areas to save on operating expenses more broadly.”
Pandey said other areas where Nutanix is driving “smart savings” are within its sales and marketing organization by pivoting to innovating and engaging around virtual solutions. “We’ve gone completely virtual and have seen comparable yields in terms of qualified leads and virtual meetings for our sales organization at less than half the cost,” he said.
This month, San Jose, Calif.-based Nutanix confirmed to CRN that it is furloughing a total of 1,465 employees in California, representing nearly 25 percent of the company’s worldwide headcount, due to “uncertain business conditions” stemming from the coronavirus pandemic. Nutanix has implemented two separate, one-week unpaid furloughs effecting at least 1,465 employees that will occur on a rolling basis from May 4 through July 26, followed by another round from Aug. 3 through Oct. 31.
Many IT companies like Hewlett Packard Enterprise, VMware and Dell Technologies have implemented similar measures such as temporary salary reductions or freezes to combat the financial uncertainty from COVID-19.
“We’ve coordinated these actions to minimize the impact for our customers and employees while prioritizing temporary measures such as furloughs instead of permanent changes like layoffs,” said Pandey. Nutanix also unveiled during the earnings call that it has temporarily halted bonuses.
Nearly 100 percent of Nutanix global employees are now working remotely, according to the company, compared to around 30 percent prior to the coronavirus pandemic.
“While this is a time of uncertainty, it is also a time of great opportunity. Most long-lasting companies that went past their first decade went through a kneeling process during a recession and came out stronger. We have been able to quickly assess the situation and make informed, real-time changes to how we operate our business,” said Pandey.
For its third fiscal quarter, which ended April 30, Nutanix reported total revenue of US$318 million, up 11 percent year over year. Software and support sales reached US$315 million, representing an increase of 18 percent compared to the same quarter one year ago.
Nutanix said its proactive operating expense management aided its bottom-line results.
However, Nutanix saw a net loss of US$241 million in its third quarter, compared to US$210 million in third quarter 2019. Operating expenses for the quarter reached US$476 million, up 14 percent from US$417 million year over year.
The company expanded its customer base to 16,580, with approximately 700 new customer wins during the quarter including Bausch Health Companies, LabCorp and Orient Securities.
Over the past two months, Nutanix has launched a slew of new offerings to help customers and channel partners get through the economic uncertainty caused by COVID-19. The company launched the Nutanix Special Financial Assistance Program to provide channel partners with extended payment terms as well as FastTrack for VDI, a new offering that enables partners to create a VDI environment for customers in days.
Nutanix stock was down 6 percent in after-hours trading at USUS$23.40 per share.
The company did not provide guidance for its current fourth fiscal quarter due to coronavirus uncertainty.