EPS of $0.10 increased by 267.7% from previous year
Gross margin of 86.0%
Net income of 29.93M
"We exceeded all our guided metrics. We delivered quarterly revenue of $591 million and grew our ARR 18% year-over-year to $1.966 billion." - Rajiv Ramaswami
Nutanix Inc (NTNX) QQ1 2025 Results Analysis: Robust Q1 Beat Driven by Renewals, ARR Growth to $1.97B, and AI Platform Advancements with AWS/Dell Collaborations
Executive Summary
Nutanix delivered a solid QQ1 2025 performance, topping guided metrics with a revenue print of $591 million, up 16% year over year, and ARR of $1.966 billion, up 18% YoY. The quarter featured continued strength in new logos and renewals, with non-GAAP gross margin of 87.5% and non-GAAP operating margin of 20%, well above the mid-point of prior guidance. Free cash flow reached $152 million (FCF margin 26%), underscoring healthy cash generation amid disciplined spend. Management highlighted a durable multi-cloud strategy, an accelerating AI portfolio (GPT-in-a-Box 2.0 and Nutanix Enterprise AI), and a strengthened partner ecosystem (AWS collaboration; Dell PowerFlex on the near-term roadmap) as levers for growth. Net dollar retention held at 110%, though expansion was seasonally softer in the U.S. federal segment due to timing and CR-related spending patterns. Looking ahead, Nutanix reaffirmed its FY25 guidance, with Q2 revenue guidance of $635–$645 million and full-year revenue guidance of $2.435–$2.465 billion, non-GAAP operating margin of 16–17%, and free cash flow of $560–$610 million, reflecting continued investments in sales, marketing, and R&D to capture large land-and-expand opportunities. The company also reiterated its leadership position in hybrid infrastructure, Gartner MQ leadership, and a rising role in AI applications across on-prem and multi-cloud environments.
Key Performance Indicators
Revenue
590.96M
QoQ: 7.85% | YoY:15.63%
Gross Profit
508.29M
86.01% margin
QoQ: 8.85% | YoY:18.46%
Operating Income
27.25M
QoQ: 323.58% | YoY:577.57%
Net Income
29.93M
QoQ: 123.73% | YoY:288.77%
EPS
0.11
QoQ: 121.57% | YoY:267.68%
Revenue Trend
Margin Analysis
Key Insights
Revenue: $591.0M, +16% YoY; +?% QoQ (Q4’24 was $547.95M; QoQ approx +7.9%) as per company disclosures and YoY/QoQ metrics.
ARR: $1.966B, +18% YoY; growth fueled by renewals and new logos, with OEM/partner leverage expanding the addressable market.
Operating margin (Non-GAAP): 20.0%; above the guided range of 14.5–15.5% due to higher revenue and moderate expense normalization.
Net income (Non-GAAP): $122.0M; EPS (diluted): $0.42; weighted-average shares ~289M.
Financial Highlights
Overview of key metrics and trends (QQ1 2025 vs prior periods):
- Revenue: $591.0M, +16% YoY; +?% QoQ (Q4’24 was $547.95M; QoQ approx +7.9%) as per company disclosures and YoY/QoQ metrics.
- ARR: $1.966B, +18% YoY; growth fueled by renewals and new logos, with OEM/partner leverage expanding the addressable market.
- Gross margin (Non-GAAP): 87.5%; implies favorable mix and scalable software/automation solutions.
- Operating margin (Non-GAAP): 20.0%; above the guided range of 14.5–15.5% due to higher revenue and moderate expense normalization.
- Net income (Non-GAAP): $122.0M; EPS (diluted): $0.42; weighted-average shares ~289M.
- Free cash flow: $152.0M; FCF margin ~26% for Q1.
- Cash and investments: End of period cash, equivalents, and short-term investments $1.076B; cash at end of period $716.99M; total debt $694.49M; net debt position approximately -$22.12M.
- NRR: 110% (renewals and expansions contributing to ARR growth, though Fed expansion faced headwinds).
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
590.96M
15.63%
7.85%
Gross Profit
508.29M
18.46%
8.85%
Operating Income
27.25M
577.57%
323.58%
Net Income
29.93M
288.77%
123.73%
EPS
0.11
267.68%
121.57%
Key Financial Ratios
currentRatio
1.25
grossProfitMargin
86%
operatingProfitMargin
4.61%
netProfitMargin
5.06%
returnOnAssets
1.37%
returnOnEquity
-4.37%
debtEquityRatio
-1.01
operatingCashFlowPerShare
$0.61
freeCashFlowPerShare
$0.57
priceToBookRatio
-24.15
priceEarningsRatio
138.28
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Key management takeaways from QQ1 2025 earnings call:
- Strategy and performance: "We exceeded all our guided metrics. We delivered quarterly revenue of $591 million and grew our ARR 18% year-over-year to $1.966 billion." (Rajiv Ramaswami)
- AI strategy and product momentum: "GPT-in-a-Box 2.0, our solution for simplifying the deployment of generative AI applications... NAI can be deployed within GPT-in-a-Box on-prem or at the edge or independently on native public-cloud services such as AWS EKS and Azure AKS." (Rajiv Ramaswami)
- AWS partnership and migration focus: "We continue to make progress on the partnership front, signing an expanded strategic partnership with AWS that will simplify cloud migrations and offer access to AWS services for customers looking to migrate to NC2 on AWS... Migration Accelerator program and credits." (Rajiv Ramaswami)
- Renewals and growth dynamics: "ARR at the end of Q1 was $1.966 billion, representing YoY growth of 18%... Renewals execution remained a strong driver of the revenue outperformance." (Rukmini Sivaraman)
- Federal sector headwinds and seasonal dynamics: "Expansion with existing customers was impacted largely by our U.S. federal business... Q1 is a seasonally strong quarter given their September 30 fiscal year-end." (Rukmini Sivaraman)
- Q2 and full-year guidance: "Revenue of $635 million to $645 million (Q2) and full-year guidance of $2.435 billion to $2.465 billion, non-GAAP operating margin of 16% to 17%, and free cash flow of $560 million to $610 million." (Rukmini Sivaraman)
- Channel and go-to-market evolution: "We took a subset of our customer base and handed them off entirely to the channel to go drive; we provided more incentives to channel partners to bring us business." (George Wang context: Rajiv Ramaswami)
- Competitive and market context: "The market continues to be dynamic... multiyear opportunity to gain share... Broadcom has been a factor in VMware dynamics, creating migration opportunities for us." (Rajiv Ramaswami)
- Operational discipline: "We remain focused on sustainable profitable growth, durable top-line growth and expanding margins." (Rukmini Sivaraman)
We exceeded all our guided metrics. We delivered quarterly revenue of $591 million and grew our ARR 18% year-over-year to $1.966 billion.
— Rajiv Ramaswami
Results in Q1 ’25 came in above the high end of our range across our guided metrics. Revenue in Q1 was $591 million, higher than the guided range of $565 million to $575 million, representing a year-over-year growth rate of 16%.
— Rukmini Sivaraman
Forward Guidance
Management commentary and assessment on the forward outlook:
- Q2’25 guidance: Revenue $635–$645M; Non-GAAP operating margin 20–21%; Shares outstanding ~289M.
- FY25 guidance: Revenue $2.435–$2.465B, representing ~14% YoY growth at the midpoint; Non-GAAP operating margin 16–17%; Free cash flow $560–$610M (FCF margin around 24% at midpoint).
- Growth drivers: Continued land-and-expand, expanding renewals, and rising pipeline for Nutanix Cloud Platform with emphasis on hybrid multi-cloud, generative AI, and cloud-native capabilities; ongoing investments in sales, marketing, and R&D to capture the large market opportunity.
- Risks and assumptions: Elongated average sales cycles and greater variability in deal structure/timing for larger opportunities; renewals are expected to perform well but timing remains uncertain; seasonality and Q3 revenue profile expected to resemble prior years; macro uncertainty (e.g., U.S. federal spend) could impact near-term results.
- Investor takeaway: The company is guiding to solid top-line growth with a path to margin expansion over time as revenue scales and as investments ramp in targeted areas (AI, cloud orchestration, and channel expansion). Monitor ARR growth cadence, NRR dynamics, the ramp of AI-related offerings, and the effectiveness of AWS/Dell partnerships in accelerating migrations and new logos.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
NTNX Focus
86.01%
4.61%
-4.37%
138.28%
MDB
72.20%
-21.80%
-6.35%
-82.68%
PANW
74.10%
13.40%
5.93%
83.95%
PATH
83.30%
-14.80%
-1.42%
-94.06%
PSTG
71.50%
-3.73%
-2.55%
-124.28%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Nutanix is positioned as a multi-cloud platform cornerstone for modern enterprises, with a solid QQ1 2025 beat, a robust ARR trajectory, and a clear AI growth agenda. The combination of a high-margin software business, strong cash generation, and AI-enabled products (GPT-in-a-Box 2.0 and NAI) supports a constructive long-term view. Near-term risks center on elongated sales cycles and macro-led variability, particularly in federal segments. The AWS alliance and Dell integration should serve as accelerants for migrations and new-logo acquisition, potentially lifting ARR growth and expanding total addressable market. Given the guidance for FY25 (revenue $2.435–$2.465B, non-GAAP op margin 16–17%, FCF $560–$610M) and the ongoing investments to capture large opportunities, the stock could offer upside if AI adoption accelerates and enterprise buyers accelerate migrations to Nutanix’s platform. Investors should monitor (i) ARR/NRR trajectory and renewal pools, (ii) the progression of NC2 on AWS migrations, (iii) AHV expansion beyond Dell and additional storage-array partnerships, and (iv) macro-driven order visibility and federal budgets.
Key Investment Factors
Growth Potential
AI-driven platform expansion (GPT-in-a-Box 2.0, Nutanix Enterprise AI) positions Nutanix to monetize data gravity across on-prem, edge, and multi-cloud environments. AWS collaboration and Dell PowerFlex integration broaden the addressable market for NC2 and AHV, potentially accelerating migrations and new logo wins. ARR growth of 18% YoY and 2H seasonality tailwinds support sustained revenue acceleration as land-and-expand opportunities mature.
Profitability Risk
Elongated sales cycles and greater deal variability in larger opportunities; dependence on renewals mix and federal budgets (U.S. Fed softness); execution risk around AHV expansion into more storage arrays and maintaining AHV share without cannibalizing core HCI opportunities; competitive pressure from VMware and Broadcom dynamics; macroeconomic uncertainties could delay enterprise IT capex decisions.
Financial Position
Strong cash generation with FCF of $152M in Q1 and FY25 FCF guidance of $560–$610M; liquidity remains robust with cash and short-term investments of ~$1.08B and net cash around -$22M. Despite a negative book equity figure (-$685M), Nutanix maintains healthy operating cash flow and a scalable software-centric margin profile (Non-GAAP gross margin 87.5%, Non-GAAP operating margin 20% in Q1).
SWOT Analysis
Strengths
Durable software-first model with high gross margins (Non-GAAP GM ~87.5%) and strong FCF generation (Q1 FCF $152M; FY guidance $560–610M).
Healthy ARR growth (18% YoY to $1.97B) and solid new logo momentum.
Strategic AI initiatives (GPT-in-a-Box 2.0, Nutanix Enterprise AI) with multi-cloud deployment options and edge/on-prem capabilities.
Industry recognition (2024 Gartner Magic Quadrant Leader in distributed hybrid infrastructure).
Weaknesses
NRR expansion remains challenged by select segments (e.g., U.S. Federal) and elongated sales cycles for large deals.
Equity position shows negative stockholders’ equity, reflecting prior capital structure and accounting effects; balance sheet remains leverage-sensitive in some scenarios.
Channel execution depends on partner incentives and ecosystem health, exposing the model to partner-dependent revenue volatility.
Opportunities
AHV expansion into additional storage arrays beyond Dell PowerFlex to widen installation base and increase AHV penetration.
Deeper penetration of GPT-in-a-Box/NAI across on-prem, edge, and cloud deployments; potential pull-through into enterprise software and services.
Migration credits and accelerators with AWS to drive NC2 on AWS adoption and VMware Cloud on AWS migrations.
Continued large land-and-expand deals with cross-sell of cloud management, Kubernetes, and database automation tools.
Threats
Macro uncertainty and continued scrutiny of IT spend could extend sales cycles and delay large deals.
Competitive pressure from VMware and ecosystem players (e.g., Broadcom’s influence on VMware relationships) affecting customer migrations.
Seasonality and federal budget volatility could impact quarterly cadence and ARR growth in certain segments.