Nutanix Inc (NTNX) Q2 2025 Earnings Report

- Revenue: $654.721 million, YoY +16%, QoQ +~11% (Q1 was $590.956 million). - Gross margin: 86.97% GAAP; Non-GAAP gross margin: 88.3%. - Non-GAAP operating margin: 24.6% (guidance range was 20%–21%). - Non-GAAP net income: $165.0 million; diluted EPS: $0.56. - GAAP net income: $56.0 million; GAAP EPS: $0.19. - Free cash flow: $187.1 million; FCF margin: 29%. - ARR: $2.06 billion, up 19% YoY. - Cash & equivalents + short-term investments: $1.743 billion (liquidity positioned for growth and optionality). - Net cash provided by operating activities: $221.7 million. - Capex: $34.6 million; Free cash flow to operations: ~0.70x FCF per share. - Balance sheet: total assets ~$2.989B; total liabilities ~$3.796B; total stockholders’ equity negative at roughly -$0.808B, driven by intangible assets and capitalization of cloud platform investments. - Debt: total debt ~$1.457B; long-term debt ~$1.435B; net debt ~$0.385B. - NRR: 110% (flat QoQ); ACV/land and expand improvements; average contract duration ~3 years.)

- Growth and strategy: Management highlighted that ARR grew 19% YoY to $2.06B and New Logo growth exceeded 50% YoY, supported by GTM programs, OEM/channel leverage, and a broadened partner ecosystem. Quote: ARR growth and free cash flow were emphasized as proof of sustainable demand. - AI / GenAI initiatives: Nutanix emphasized AI readiness through Nutanix Enterprise AI (NAI), Kubernetes platform, and multi-cloud automation, citing real-life GenAI deployments (e.g., multilingual translation and chatbots) as traction in financial services and public sector. - New logo wins and multi-cloud expansion: Notable wins include a Global 2000 energy company in North America, an APAC IT services provider expansion, and a National Health Ministry in EMEA leveraging NC2 on AWS, NKP, and Cloud Manager. - Debt, liquidity, and capital allocation: Convertible notes issued (~$862.5M) to retire a portion of 2027 debt, repurchase $200M of shares, and add cash for flexibility; a $500M revolving credit facility was also established. - Guidance and execution: Q3 guidance raised; FY2025 revenue guidance raised to $2.495B–$2.515B with non-GAAP operating margin 17.5%–18.5% and free cash flow target of $650–$700M, aided by continued new logo wins, steady expansion, and renewals; investments in S&M and R&D to ramp in H2. - Fed view: U.S. federal segment improved in Q2 but remains uncertain in its full-year impact; management sees ongoing modernization as a driver of total cost of ownership reduction for federal customers, which is supportive in the current environment.

Nutanix presents a compelling investment case as a software-centric cloud platform company with strong margin profile and durable growth drivers. The QQ2 2025 results underscore the company’s ability to monetize its multi-cloud and AI-enabled platform, evidenced by 19% ARR growth and 110% NRR in a challenging macro environment. Management’s guidance lift for FY2025, including revenue $2.495–$2.515 billion and free cash flow of $650–$700 million, signals confidence in continued new logo acquisitions, steady expansion within existing customers, and productive renewals. The AI narrative (NAI) and Kubernetes platform are material differentiators that position Nutanix to capture GenAI infrastructure demand and multi-cloud modernization within Global 2000 and government-related segments. The company’s balance sheet remains liquid with sizable cash and an accessible revolving facility, supporting ongoing R&D, GTM investments, and potential tuck-in M&A that could fill product gaps (as seen with IQ/Mesosphere lineage) without compromising balance sheet strength. Key drivers to watch include: (1) cadence and effectiveness of PowerFlex as a vehicle to insert Nutanix into three-tier storage environments and accelerate CT adoption; (2) the pace of NKP/NC2 adoption in AWS and other clouds and the resulting impact on ARR expansion and renewals; (3) the velocity of large account migrations away from VMware and the extent to which new logo momentum sustains above-trend levels; (4) federal sector pipeline and potential policy shifts that could alter procurement cycles. Given Nutanix’s high gross margins, strong FCF generation, and a clear platform strategy that aligns with cloud modernization and GenAI workloads, the stock could merit a valuation premium relative to legacy storage vendors, provided execution remains robust and the competitive environment remains favorable. Investors should monitor macro health, renewal volatility, and the tempo of large deal closure, as well as the integration and performance of new product areas (PowerFlex, NKP, NC2, and NAI) as well as any M&A activity that would complement the platform roadmap.