EPS of $-0.06 increased by 81.9% from previous year
Gross margin of 84.8%
Net income of -15.62M
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Nutanix Inc (0K9O.L) QQ3 2024 Results: Robust gross margins and cash generation offset by near-term profitability headwinds
Executive Summary
Nutanix delivered a solid top-line result for QQ3 2024, with revenue of $524.6 million representing a year-over-year increase of 16.9% and a sequential decline of 7.2%. The gross margin was exceptionally strong at 84.8%, supporting a positive EBITDA of $24.5 million, yet the company posted an operating loss of $11.6 million and a net loss of $15.6 million driven largely by non-cash items and operating costs. Free cash flow was healthy at $78.3 million, and cash from operations stood at $96.4 million, underscoring Nutanix’s capability to generate cash even as profitability compounds in the near term. Balance-sheet metrics show a robust liquidity position (cash and short-term investments totaling ~$1.65 billion) but a leveraged capital structure (total debt ~$1.386 billion and negative shareholders’ equity of ~$619.5 million), implying sensitivity to financing conditions and potential equity-related dilution headwinds if access to capital evolves.
Key drivers and takeaways:
- Margin profile remains highly attractive at the gross level, suggesting strong product economics and potential upside from cost discipline and mix shifts toward higher-margin software offerings.
- The operating loss and negative net income reflect ongoing investment in R&D and go-to-market costs, including stock-based compensation activity, which the company may seek to optimize to improve profitability over time.
- Cash flow generation continues to be a strength, with positive operating cash flow and free cash flow, providing a cushion to fund strategic initiatives and reduce leverage pressures if desired.
- Revenue deferrals (deferred revenue) and long-duration contracts indicate revenue visibility, but also necessitate careful monitoring of revenue recognition trends and renewal cycles.
- The market valuation implications remain sensitive to the pace at which Nutanix can convert cash flow gains into sustained earnings growth amid a competitive multi-cloud software landscape.
Key Performance Indicators
Revenue
524.58M
QoQ: -7.19% | YoY:16.94%
Gross Profit
444.86M
84.80% margin
QoQ: -8.01% | YoY:21.50%
Operating Income
-11.59M
QoQ: -131.28% | YoY:80.24%
Net Income
-15.62M
QoQ: -147.62% | YoY:78.00%
EPS
-0.06
QoQ: -148.85% | YoY:81.86%
Revenue Trend
Margin Analysis
Key Insights
Revenue: $524.577 million; YoY +16.9%; QoQ -7.19% (QQ3 2024)\n- Gross Profit: $444.859 million; Gross Margin 84.80%; YoY +21.50%; QoQ -8.01%\n- Operating Income (Loss): -$11.588 million; Operating Margin -2.21%; YoY +80.24%; QoQ -131.28%\n- EBITDA: $24.544 million; EBITDA Margin ~4.68% (EBITDAR ~4.68%)\n- Net Income: -$15.616 million; Net Margin -2.98%; YoY +78.00%; QoQ -147.62%\n- EPS (Diluted): -$0.0635; YoY +81.86%; QoQ -148.85%\nCash flow and capital structure:\n- Operating cash flow: $96.353 million; Free cash flow: $78.324 million; Capex: $18.029 million\n- Net cash from/used in financing activities: -$71.042 million; Net change in cash: -$81.219 million; Cash at end of period: $598.027 million; Cash & short-term investments: $1.651 billion (cash and short-term investments total)\n- Long-term debt: $1.358674 billion; Total debt: $1.386446 billion; Net debt: $788.419 million; Interest expense: $16.877 million; Deferred revenue: Current $923.559 million; Non-current $823.891 million; Total liabilities: $3.394384 billion; Total assets: $2.774924 billion; Stockholders’ equity: -$619.460 million (negative book value)\nLiquidity and efficiency:\n- Current ratio: 1.682; Quick ratio: 1.682; Cash conversion cycle: -5.60 days; Receivables turnover: 2.26; Payables turnover: 1.979; Free cash flow yield per share: $0.319; Operating cash flow per share: $0.392\nValuation metrics (contextual):\n- Price-to-sales: 28.70x; Enterprise value multiple: 645.44x; Price-to-book and price-to-book-value: negative due to negative equity; These reflect limited profitability and high leverage in the current quarter, underscoring a focus on cash generation and sustainable growth potential rather than near-term earnings normalization.
Financial Highlights
Revenue and profitability snapshot:\n- Revenue: $524.577 million; YoY +16.9%; QoQ -7.19% (QQ3 2024)\n- Gross Profit: $444.859 million; Gross Margin 84.80%; YoY +21.50%; QoQ -8.01%\n- Operating Income (Loss): -$11.588 million; Operating Margin -2.21%; YoY +80.24%; QoQ -131.28%\n- EBITDA: $24.544 million; EBITDA Margin ~4.68% (EBITDAR ~4.68%)\n- Net Income: -$15.616 million; Net Margin -2.98%; YoY +78.00%; QoQ -147.62%\n- EPS (Diluted): -$0.0635; YoY +81.86%; QoQ -148.85%\nCash flow and capital structure:\n- Operating cash flow: $96.353 million; Free cash flow: $78.324 million; Capex: $18.029 million\n- Net cash from/used in financing activities: -$71.042 million; Net change in cash: -$81.219 million; Cash at end of period: $598.027 million; Cash & short-term investments: $1.651 billion (cash and short-term investments total)\n- Long-term debt: $1.358674 billion; Total debt: $1.386446 billion; Net debt: $788.419 million; Interest expense: $16.877 million; Deferred revenue: Current $923.559 million; Non-current $823.891 million; Total liabilities: $3.394384 billion; Total assets: $2.774924 billion; Stockholders’ equity: -$619.460 million (negative book value)\nLiquidity and efficiency:\n- Current ratio: 1.682; Quick ratio: 1.682; Cash conversion cycle: -5.60 days; Receivables turnover: 2.26; Payables turnover: 1.979; Free cash flow yield per share: $0.319; Operating cash flow per share: $0.392\nValuation metrics (contextual):\n- Price-to-sales: 28.70x; Enterprise value multiple: 645.44x; Price-to-book and price-to-book-value: negative due to negative equity; These reflect limited profitability and high leverage in the current quarter, underscoring a focus on cash generation and sustainable growth potential rather than near-term earnings normalization.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
524.58M
16.94%
-7.19%
Gross Profit
444.86M
21.50%
-8.01%
Operating Income
-11.59M
80.24%
-131.28%
Net Income
-15.62M
78.00%
-147.62%
EPS
-0.06
81.86%
-148.85%
Key Financial Ratios
currentRatio
1.68
grossProfitMargin
84.8%
operatingProfitMargin
-2.21%
netProfitMargin
-2.98%
returnOnAssets
-0.56%
returnOnEquity
2.52%
debtEquityRatio
-2.24
operatingCashFlowPerShare
$0.39
freeCashFlowPerShare
$0.32
priceToBookRatio
-24.3
priceEarningsRatio
-240.99
Net Income vs. Revenue
Expense Breakdown
Management Commentary
No earnings call transcript data provided in the source materials. As a result, the analysis relies on the disclosed QQ3 2024 results rather than management commentary. If a transcript becomes available, the highlights would be expected to cover: strategic priorities in multi-cloud governance, product roadmap (Prism Pro, Calm, Karbon, Frame), customer adoption trends, and commentary on cost discipline and path to sustained profitability.
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Forward Guidance
Management guidance for QQ3 2024 in the supplied data is not present. Given the quarterly results, several qualitative factors are relevant for the forward view: the company continues to generate positive operating cash flow and free cash flow, which supports optionality to fund product development and potential deleveraging. However, profitability metrics remain pressured by non-cash and operating costs, including stock-based compensation. Investors should monitor: 1) trajectory of gross margins as software mix evolves and as SBC normalization occurs, 2) progression toward operating margin expansion through cost discipline and scalable go-to-market efficiency, 3) evolution of deferred revenue and renewal rates that affect revenue visibility, and 4) the balance sheet trajectory (debt levels and liquidity) in the context of potential financing needs and macro conditions. Absent explicit guidance, the scenario implies a cautious stance with upside if Nutanix accelerates margin improvement and achieves sustainable top-line growth in multi-cloud solutions.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
0K9O.L Focus
84.80%
-2.21%
2.52%
-240.99%
ONC.L
38.40%
-63.90%
86.10%
-3.63%
0QYK.L
33.10%
8.01%
11.40%
-82.96%
0R09.L
80.30%
7.75%
48.70%
63.78%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Nutanix presents a nuanced risk-reward profile. The quarter demonstrates durable cash flow generation and an enviable gross-margin profile, underpinning a credible path to profitability if operating costs stabilize and SBC impact moderates. The negative book value and elevated leverage are key headwinds that could pressure valuation until there is clearer evidence of sustained operating margin expansion and credible growth in software recurring revenue. The stock could merit a cautious stance with a focus on several catalysts: (1) improvement in operating margin as the company optimizes cost structures and scales a higher-margin software mix, (2) growth in multi-cloud adoption driving higher ARR and cross-sell, and (3) a disciplined balance-sheet strategy to reduce net debt and restore equity value. In the near term, investors should monitor renewal trends, deferral revenue dynamics, SBC cadence, and the competitive environment shaping Nutanix’s market share in enterprise cloud services.
Key Investment Factors
Growth Potential
Strong gross margins (~84.8%) and a broad enterprise cloud platform portfolio (Acropolis, Prism Pro, Karbon, Frame, Calm, Era) position Nutanix to monetize multi-cloud adoption, automation, and governance. Positive cash flow generation (operating cash flow $96.4M; free cash flow $78.3M in QQ3 2024) supports investments in software-based recurring revenue and cross-sell opportunities across Prism, Frame, and Frame-enabled DaaS offerings.
Profitability Risk
Negative equity (-$619.46M) and substantial long-term debt (~$1.36B) create balance-sheet leverage risks and financing sensitivity. Heavy stock-based compensation contributes to ongoing profitability headwinds. Deferred revenue is high ($923.559M current; $823.891M non-current), which can compress near-term revenue realization if churn or renewal rates falter. Competitive dynamics in enterprise cloud and HCI markets could pressure pricing and growth.
Financial Position
Liquidity remains robust with cash and short-term investments totaling ~$1.65B. Net debt of ~$788.4M indicates leverage, but the strong cash runway provides optionality to fund product development or deleverage over time. Asset quality shows substantial deferred revenue and good cash flow generation, yet negative equity highlights structural balance-sheet challenges that may influence investor sentiment and financing flexibility.
SWOT Analysis
Strengths
Very high gross margin (84.8%), indicating strong software economics and pricing power.
Positive operating cash flow ($96.353M) and free cash flow ($78.324M) in QQ3 2024 signaling cash-generation discipline.
Solid liquidity with cash and short-term investments totaling ~ $1.65B.
Diverse enterprise cloud product suite (Acropolis, Prism Pro, Karbon, Frame, Calm, Era) enabling multi-cloud adoption and automation.
Weaknesses
Net loss and negative shareholders’ equity despite positive cash generation.
Significant stock-based compensation contributing to operating losses
High indebtedness (net debt ~$788M; total debt ~$1.386B) which raises financing risk in adverse macro conditions.
Deferred revenue, while providing visibility, indicates reliance on customer prepayments and renewal cycles that require ongoing management.
Opportunities
Expansion of multi-cloud governance and automation capabilities to capture demand for cloud-native operations and Kubernetes-oriented management.
Cross-sell opportunities across Prism Pro, Nutanix Calm, Frame for DaaS, and Era for database automation.
Potential improvements in operating leverage as product mix shifts toward higher-margin software offerings and as SBC normalization occurs.
Threats
Intense competition in software-defined storage, virtualization, and multi-cloud management ecosystems.
Macro softness or delayed enterprise IT spending could impact new bookings and renewals.
Debt levels and equity negative positioning may affect financing costs and market perception.