Nutanix is successfully shifting to a software company as it posted huge gains in deferred revenue and million-dollar deals during its second fiscal quarter.
"Our software and support business is growing at a significant pace. That business has now reached over US$1 billion annualised run rate," said Dheeraj Pandey, Nutanix's CEO, founder and chairman, during the company's quarterly earnings call on Thursday.
"Very few public software companies have achieved this milestone. This move to a software-defined business model has helped us accelerate our large deal momentum."
The company reported US$478 million in deferred revenues for its second fiscal quarter, an increase of 57 percent year-over-year. Nutanix also generated 57 new customer deals worth over US$1 million for the quarter, up 104 percent compared to the same quarter one year ago. The company now has over 8870 customers.
"As people decouple software and hardware consumption, we're also seeing deals becoming bigger," said Pandey. "Software appreciates over time and hardware depreciates over time. We are seeing this resonate with our customer base today… Our channel partners see value where they can go make more money by selling software, and we're sharing our margins with them."
Nutanix said its increasingly becoming ubiquitous in terms of the number of hardware platforms it now runs on. "For instance, a customer [can] procure 75 nodes of software licenses from Nutanix and deploy 25 of these nodes on Dell servers, another 25 nodes on HPE servers, and the remaining 25 nodes on Cisco servers without our knowledge regarding the exact deployment details," said Nutanix CFO Dustin Williams.
The company also announced during its earnings report that it had acquired Minjar to boost Nutanix's multi-cloud capabilities. Minjar's Botmetric solution helps enterprises embrace the cloud effectively and optimises multi-cloud environments for performance and cost.
"Botmetric will enable our customer to embrace multi-cloud architectures, giving cloud operators the freedom to choose the best environment for their business applications and data," said Pandey.
For Nutanix's overall second fiscal quarter, which ended 31 January, 2018, the company reported US$287 million in revenues, up 44 percent year over year, "even with the elimination of US$14 million in pass-through hardware revenue," said Pandey.
The company reported record billings of US$356 million, an increase of 57 percent year over year. Nutanix posted a non-GAAP gross profit of US$182 million, an increase of 45 percent.
Nutanix shares were up 2 percent in after-hours trading.
For its upcoming third fiscal quarter, Nutanix expects to generate between US$275 million and US$280 million in revenues, with non-GAAP gross margins projected to be between 67 percent and 68 percent.