Executive Summary
Nutanix reported a strong QQ2 2024 quarter characterized by top-line momentum and expanding profitability within a challenging macro environment. Revenue reached $565.2 million, up 16% year over year and 10.6% quarter over quarter, while ARR grew 26% YoY to $1.74 billion, underscoring the company’s ability to monetize its hybrid multi-cloud platform through recurring software and services. Non-GAAP gross margin expanded to 87.3% and non-GAAP operating margin was 21.9%, driven by higher revenue and favorable hiring timing, with GAAP operating income turning positive at $37.0 million for the first time and GAAP net income of $33.0 million. Free cash flow reached $163 million (FCF margin ~29%), further supporting a robust cash-generative profile. Management raised guidance for the full year FY24 and provided a constructive Q3 outlook, reflecting confidence in renewals, larger deal momentum, and strategic initiatives (GPT-in-a-Box, Cisco collaboration, and a path to broader VMware/Broadcom-related opportunities). The quarter also highlighted meaningful strategic dynamics, including a large EU/EMEA automotive tech win, a hedge-fund VDI migration with substantial TCO benefits, and a major airline modernization deal, all validating Nutanix’s full-stack platform and its ability to manage workloads across on-prem, edge, and multi-cloud environments. While near-term macro headwinds persist and deal cycles elongate, Nutanix’s growth trajectory is being underpinned by a larger deal mix, ongoing product-ready readiness for large customers, and an improving path to profitability under a subscription-centric model.
Key Performance Indicators
QoQ: 749.23% | YoY:165.56%
QoQ: 306.87% | YoY:146.33%
QoQ: 298.17% | YoY:141.94%
Key Insights
Revenue: $565.2M (+16% YoY; +10.6% QoQ) | Gross margin (non-GAAP): 87.3% | Non-GAAP operating margin: 21.9% | GAAP operating income: $37.0M | GAAP net income: $33.0M | EPS (GAAP): $0.12; EPS (non-GAAP): $0.46 | ACV billings (Q2): $329M (+23% YoY) | ARR: $1.737B (+26% YoY) | Free cash flow: $163M (FCF margin 29%) | DSO: 31 days | Cash & equivalents: $679.2M | Total debt: ~$1.365B; Net debt: ~$0.686B | Shares (fully diluted): ~299–301M | Cash flow from operations: $186.4M | Capex: $23.76M | ...
Financial Highlights
Revenue: $565.2M (+16% YoY; +10.6% QoQ) | Gross margin (non-GAAP): 87.3% | Non-GAAP operating margin: 21.9% | GAAP operating income: $37.0M | GAAP net income: $33.0M | EPS (GAAP): $0.12; EPS (non-GAAP): $0.46 | ACV billings (Q2): $329M (+23% YoY) | ARR: $1.737B (+26% YoY) | Free cash flow: $163M (FCF margin 29%) | DSO: 31 days | Cash & equivalents: $679.2M | Total debt: ~$1.365B; Net debt: ~$0.686B | Shares (fully diluted): ~299–301M | Cash flow from operations: $186.4M | Capex: $23.76M | Free cash flow (FCF) after capex: $162.6M
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
565.23M |
16.18% |
10.60% |
| Gross Profit |
483.60M |
20.99% |
12.70% |
| Operating Income |
37.05M |
165.56% |
749.23% |
| Net Income |
32.80M |
146.33% |
306.87% |
| EPS |
0.13 |
141.94% |
298.17% |
Key Financial Ratios
operatingProfitMargin
6.55%
operatingCashFlowPerShare
$0.76
freeCashFlowPerShare
$0.67
priceEarningsRatio
104.47
Management Commentary
Management themes across the QQ2 2024 earnings call include: (1) Strong quarterly execution with record revenue and ARR growth, (2) Positive GAAP profitability for the first time and sustained non-GAAP profitability in a subscription-led model, (3) Large deal momentum and an expanding mix of larger contracts, (4) VMware Broadcom disruption creating a multi-year opportunity to win new customers and gain share, (5) Cisco partnership showing early progress with material impact expected in FY25, (6) AI initiatives (GPT in-a-Box) gaining traction, (7) Renewals strength driving higher ACV billings, and (8) Longer sales cycles but improving visibility into conversion probability as pipeline quality improves. Key quotes include: “We delivered record quarterly revenue of $565 million and grew our ARR 26% year-over-year to $1.74 billion.” (Rajiv Ramaswami) and “We are encouraged that the compelling value proposition of our cloud platform and the strength of our business model enable us to increase our top and bottom line outlook for fiscal 2024.” (Rajiv Ramaswami). A discussion on VMware-Broadcom dynamics underscored a view of a “significant multi-year opportunity for us to win new customers and to gain share,” with acknowledged timing variability as large deals emerge from a reshaped competitive landscape (Jim Fish, Piper Sandler; Rukmini Sivaraman). The call also highlighted renewals outperformance (ACV billings beat by 23%), the importance of migration tools (Move) for VMware-to-Nutanix transitions, and ongoing post-sale enablement with Cisco.
We delivered record quarterly revenue of $565 million and grew our ARR 26% year-over-year to $1.74 billion.
— Rajiv Ramaswami
We are encouraged that the compelling value proposition of our cloud platform and the strength of our business model enable us to increase our top and bottom line outlook for fiscal 2024.
— Rajiv Ramaswami
Forward Guidance
Guidance highlights reflect a cautiously constructive outlook given macro uncertainty and a higher mix of larger deals. Q3 FY24 guidance: ACV billings $265–275M; Revenue $510–520M; Non-GAAP gross margin ~85%; Non-GAAP operating margin 7.5–8.5%; shares ≈301M. Full-year FY24 guidance raised: ACV billings $1.09–$1.11B (+ ~15% at midpoint); Revenue $2.12–$2.15B (+ ~15% at midpoint); Non-GAAP gross margin 85–86%; Non-GAAP operating margin 12.5–13.5%; Free cash flow $420–$440M (~20% FCF margin). Management cites continued new and expansion opportunities amid macro uncertainty, modest elongation of sales cycles, and a higher mix of larger deals driving variability in timing. VMware-Broadcom dynamics are assumed to contribute some benefit to full-year results, with a smaller incremental contribution from Cisco in FY25. Monitoring points for investors include: (1) Actual impact and speed of VMware-related deals, (2) Cisco collaboration ramp and cross-sell velocity, (3) Evolution of ACV mix and renewal tailwinds, (4) Duration of sales cycles and conversion probability for larger deals, (5) AI adoption trajectory and GTM execution across verticals, and (6) macro shifts affecting enterprise IT budgets and procurement. Overall, Nutanix remains focused on sustainable, profitable growth through product diversification, channel enablement, and a robust FCF framework, while acknowledging the near-term revenue variability tied to large, multi-year contracts.