Executive Summary
Nutanix delivered a solid Q3 FY2024 with revenue of $525 million and ARR of $1.82 billion, representing a 24% year-over-year ARR increase and a mid-teens revenue rise. The quarter benefited from a strengthening mix of larger deals and a robust renewals engine, contributing to a non-GAAP gross margin of 86.5% and non-GAAP operating margin of around 14%. Free cash flow totaled $78 million, underscoring Nutanix’s ability to generate sustainable cash even as deal cycles elongated for larger opportunities. Management highlighted ongoing AI investments and strategic partnerships (Dell, Cisco) and a clear multi-year roadmap, including GPT-in-a-box 2.0, NKP for modern applications, and expanded AI capabilities, which should support longer-term expansion in enterprise data centers and hybrid clouds. Near-term guidance for Q4 and full-year FY2024 remains constructive but acknowledges the higher mix and longer durations of larger deals, with expectations for continued renewals strength and a potential offset via multi-year revenue recognition on large ACV transactions. This combination suggests Nutanix remains well positioned to capitalize on digital transformation and AI-driven modernization, albeit with ongoing execution risks tied to deal timing and competitive dynamics in a contested HCI/Hybrid Cloud market.
Key Performance Indicators
QoQ: -131.28% | YoY:80.24%
QoQ: -147.62% | YoY:78.00%
QoQ: -148.85% | YoY:81.86%
Key Insights
Revenue: $525.0M in Q3 FY2024, up 16.9% YoY and down 7.2% QoQ (per reported YoY/QoQ metrics). Gross margin (non-GAAP): 86.5% in Q3, above the guided ~85%. Operating margin (non-GAAP): ~14%, significantly above the guided 7.5-8.5% range, driven by higher gross margin and lower operating expenses. ACV billings: $289.0M in Q3, up about 20% YoY. ARR: $1.82B, up 24% YoY. Net income (GAAP): -$15.6M; EPS (GAAP): -$0.0635. Net income (non-GAAP): $85.0M; diluted EPS (non-GAAP): $0.28. Free cash flow: $78...
Financial Highlights
Revenue: $525.0M in Q3 FY2024, up 16.9% YoY and down 7.2% QoQ (per reported YoY/QoQ metrics). Gross margin (non-GAAP): 86.5% in Q3, above the guided ~85%. Operating margin (non-GAAP): ~14%, significantly above the guided 7.5-8.5% range, driven by higher gross margin and lower operating expenses. ACV billings: $289.0M in Q3, up about 20% YoY. ARR: $1.82B, up 24% YoY. Net income (GAAP): -$15.6M; EPS (GAAP): -$0.0635. Net income (non-GAAP): $85.0M; diluted EPS (non-GAAP): $0.28. Free cash flow: $78.0M; FCF margin: ~15% for Q3. Operating cash flow: $96.35M; capital expenditures: $18.03M; free cash flow per share: $0.319. DSO: 39 days. Cash and cash equivalents + short-term investments: $1.651B. Total debt: $1.386B; net debt: $0.788B. Deferred revenue (current): $923.6M; non-current: $823.9M. Balance sheet: Total assets $2.775B; Total liabilities $3.394B; stockholders’ equity negative at $-0.619B.
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
operatingProfitMargin
-2.21%
operatingCashFlowPerShare
$0.39
freeCashFlowPerShare
$0.32
priceEarningsRatio
-238.83
Management Commentary
Theme: Performance and guidance consistency
Quote: "We delivered a solid third quarter. With results that came in ahead of our guidance. We delivered quarterly revenue of $525 million and grew our ARR 24% year-over-year to $1.82 billion." (Rajiv Ramaswami, CEO)
Theme: AI strategy and ecosystem partnerships
Quote: "GPT in-a-box 2.0, which will deliver expanded GPU and large language model support. Automated configuration and management of model inference endpoints for gen AI applications, simplified model management and an expanded partner program. This includes a new partnership with Hugging Face to provide access to the Hugging Face library of large language models for Nutanix customers as well as an expanded partnership with NVIDIA that includes the planned integration of NVIDIA’s inference micro services or NIM, into our automated enterprise AI solution." (Rajiv Ramaswami, CEO)
Theme: Dell collaboration and go-to-market ramp
Quote: "We broaden our partnership with Dell... a tightly integrated hyper-converged solution combining the Nutanix Star platform software with Dell PowerEdge service. We expect this solution to be available later this calendar year. We will together deliver the Nutanix Start platform powered by AHV for compute and Dell PowerFlex for storage." (Rajiv Ramaswami, CEO)
Theme: Renewals and cash flow resilience
Quote: "ACV billings in Q3 were $289 million, above the guided range... ARR at the end of Q3 was $1.82 billion... Free cash flow in Q3 was $78 million, representing a free cash flow margin of 15%." (Rukmini Sivaraman, CFO)
Theme: Pipeline strength and deal variability
Quote: "The number of opportunities greater than $1 million in ACV in our pipeline has grown at higher than 30% for each of the last 3 quarters... the dollar amount of pipeline from opportunities greater than $1 million in ACV has grown at well over 50%." (Rukmini Sivaraman, CFO)
We delivered a solid third quarter. With results that came in ahead of our guidance. We delivered quarterly revenue of $525 million and grew our ARR 24% year-over-year to $1.82 billion.
— Rajiv Ramaswami
GPT in-a-box 2.0, which will deliver expanded GPU and large language model support. Automated configuration and management of model inference endpoints for gen AI applications, simplified model management and an expanded partner program. This includes a new partnership with Hugging Face to provide access to the Hugging Face library of large language models for Nutanix customers as well as an expanded partnership with NVIDIA that includes the planned integration of NVIDIA’s inference micro services or NIM, into our automated enterprise AI solution.
— Rajiv Ramaswami
Forward Guidance
Q4 FY2024 guidance: ACV billings of $295M–$305M; Revenue of $530M–$540M; Non-GAAP gross margin 85%–86%; Non-GAAP operating margin 9%–10%; Fully diluted shares ~302M. Full-year FY2024 guidance: ACV billings $1.12B–$1.13B (+~18% YoY at midpoint); Revenue $2.13B–$2.14B (+~15% YoY at midpoint); Non-GAAP gross margin ~86%; Non-GAAP operating margin ~15%; Free cash flow $520M–$540M (FCF margin ~25% at midpoint). Management notes continued robust opportunities and renewals strength but with higher variability due to larger, strategic deals, including longer sales cycles and timing; the eight-figure ACV deal booked in Q3 will contribute billings in Q4 with multi-year revenue recognition beginning FY25. The outlook assumes renewals remain strong, average contract duration flat to slightly down, and certain nonrecurring benefits included in OpEx to support free cash flow. Investors should monitor: (1) pipeline quality and duration of larger deals, (2) renewal rates and mix, (3) progress on Dell/Cisco collaboration and NKP adoption, (4) potential impact from Broadcom/Vmware dynamics on pricing and competitive landscape.