EPS of $-0.51 decreased by 812.3% from previous year
Gross margin of 85.2%
Net income of -126.10M
""Our fourth quarter was a solid finish to our 2024 fiscal year. We delivered quarterly revenue of $548 million, up 11% on year-over-year and saw another quarter of strong free cash flow generation."" - Rajiv Ramaswami, President & CEO
Nutanix Inc (NTNX) QQ4 2024 Results Analysis: Upmarket Momentum, AI Enablement, and Strong Free Cash Flow Trajectory in a Changing Hybrid Cloud Landscape
Executive Summary
Nutanix delivered a solid Q4 and a FY2024 that largely exceeded guidance and set a constructive course for 2025 despite a shift in timing and deal structure in a larger, higher-upmarket TAM. Q4 revenue reached $547.95M, up 11% YoY, with ARR ending FY2024 at $1.908B (+22% YoY) and ACV billings of $338M in Q4 (+21% YoY). Free cash flow remained a core strength, with $224M generated in Q4 and $598M for the full year, driving a 28% FCF margin in FY2024. Non-GAAP gross margin stood at 86.9% in Q4 (vs. 85–86% guide) and non-GAAP operating margin at 12.9%, aided by one-time partnership-related items and modestly higher gross margins. Nutanix also reported its first full year of positive GAAP operating income ($8M) in FY2024, underscoring its progression toward sustainable profitability while investing in R&D and go-to-market initiatives. Management framed FY2025 guidance at revenue of $2.435–$2.465B (+~14% midpoint), non-GAAP operating margin of ~15.5–17%, and free cash flow of $540–$600M (~23% FCF margin). The company is continuing its strategic pivot up-market and toward large, multiyear deals, supported by partnerships (Cisco, Dell, NVIDIA) and new products (GPT-in-a-box, NKP, NDK). Additionally, Nutanix highlighted an improving but elongated sales cycle, ongoing Broadcom/Vmware dynamics, and a clear emphasis on renewals, multi-cloud portability, and consumable AI workloads in private/hybrid clouds. Investors should monitor how the mix of larger deals, renewals, and partner-driven deployments translate into ARR progression and free cash flow in 2025, as well as execution on Dell’s XC Plus integration and Azure-based NC2 deployments.**
Key Performance Indicators
Revenue
547.95M
QoQ: 4.46% | YoY:10.87%
Gross Profit
466.97M
85.22% margin
QoQ: 4.97% | YoY:12.86%
Operating Income
-12.19M
QoQ: -5.18% | YoY:-7.41%
Net Income
-126.10M
QoQ: -707.51% | YoY:-849.06%
EPS
-0.51
QoQ: -703.15% | YoY:-812.34%
Revenue Trend
Margin Analysis
Key Insights
Revenue (Q4 2024): $547.952M, YoY +11%, QoQ +4.46% (QoQ growth implied by $524.577M in Q3'24).
Non-GAAP gross margin (Q4 2024): 86.9% (guide was 85–86%).
Non-GAAP operating margin (Q4 2024): 12.9% (above guidance of 9–10%).
Net income (GAAP, Q4 2024): -$126.101M; EPS (GAAP/diluted): -$0.51.
Financial Highlights
- Revenue (Q4 2024): $547.952M, YoY +11%, QoQ +4.46% (QoQ growth implied by $524.577M in Q3'24).
- Gross profit (Q4 2024): $466.974M; gross margin 85.22%.
- Non-GAAP gross margin (Q4 2024): 86.9% (guide was 85–86%).
- Non-GAAP operating margin (Q4 2024): 12.9% (above guidance of 9–10%).
- Net income (GAAP, Q4 2024): -$126.101M; EPS (GAAP/diluted): -$0.51.
- EBITDA (Q4 2024): $19.17M; EBITDA margin ~3.5%.
- Free cash flow (Q4 2024): $224M; FCF margin 41%.
- ARR (end FY2024): $1.908B, YoY +22%.
- ACV billings (Q4 2024): $338M, YoY +21% (full-year ACV billings FY2024: $1.162B, YoY +21%).
- Cash and equivalents + short-term investments (end Q4 2024): $994M; cash balance down from $1.651B in Q3 due to Bain note conversion settlement (~$817.6M cash, ~17M shares issued).
- Net cash provided by operating activities (FY2024): $244.697M.
- Free cash flow (FY2024): $598M, FCF margin 28%.
- Net working capital and DSOs (Q4 2024): DSOs 39 days.
- Balance sheet: total assets $2.1439B; total liabilities $2.8721B; total stockholders’ equity negative at -$728.148M; book value negative reflecting accounting leverage and previous equity adjustments.
- FY2025 guidance (full year): Revenue $2.435–$2.465B (+14% midpoint); non-GAAP operating margin 15.5–17%; free cash flow $540–$600M (~23% FCF margin). Q1 2025 guidance: Revenue $565–$575M; non-GAAP operating margin 14.5–15.5%.
- Key profitability indicator: Rule of 40 for FY2024 stood at 43 (revenue growth + free cash flow margin).
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
547.95M
10.87%
4.46%
Gross Profit
466.97M
12.86%
4.97%
Operating Income
-12.19M
-7.41%
-5.18%
Net Income
-126.10M
-849.06%
-707.51%
EPS
-0.51
-812.34%
-703.15%
Key Financial Ratios
currentRatio
1.19
grossProfitMargin
85.2%
operatingProfitMargin
-2.22%
netProfitMargin
-23%
returnOnAssets
-5.88%
returnOnEquity
17.3%
debtEquityRatio
-0.94
operatingCashFlowPerShare
$0.99
freeCashFlowPerShare
$0.91
priceToBookRatio
-17.2
priceEarningsRatio
-24.82
Net Income vs. Revenue
Expense Breakdown
Management Commentary
- Strategy and market positioning: Rajiv Ramaswami emphasized an ongoing shift up-market with larger, multi-year opportunities and a growing pipeline, noting “the biggest TAM opportunity sits” at the higher end of the market and that Nutanix is pursuing these opportunities with GTM partners and new offerings. He highlighted the benefit of NC2 and hybrid multi-cloud capabilities as central to customer migrations.
- Partnerships and product expansion: Management highlighted strategic partnerships with Cisco, Dell, and NVIDIA, with Dell XC Plus now generally available, and emphasized ongoing investments in AI-enabled products (GPT-in-a-box, NKP, and NDK) to accelerate enterprise adoption of Gen AI.
- Customer wins and migration dynamics: The company cited several marquee wins including an eight-figure ACV deal with a Fortune 100 financial services company and NC2 deployments that enable workloads across private and public clouds. They described a migration path from VMware HCI to Nutanix AHV, noting significant cost savings and the ability to reuse existing hardware in certain cases.
- Broadcom/Vmware landscape and pricing discipline: Rajiv noted that Broadcom-related opportunities represent a “multiyear opportunity to gain share,” with longer sales cycles and higher engagement in large accounts, while mid-market activity remains robust. Pricing/discounting approaches were described as aggressive when needed, with partner-driven insertions and hardware-agnostic deployments to accelerate deals.
- AI and private cloud: Jim Fish and Rajiv discussed GPT-in-a-box as a pathway to on-prem Gen AI workloads, with early traction across healthcare, financial services, and government, indicating Nutanix’s belief that data locality and security favor on-prem/private cloud AI deployments in many enterprises.
- Financial results versus guidance: Rukmini highlighted Q4 outcomes “above the high end of our range across all guided metrics” and provided color on the drivers of higher-than-guided margins, including one-time partnership payments and higher gross margin.”, signifying execution above plan in several metrics, particularly gross margin and non-GAAP operating margin.
"Our fourth quarter was a solid finish to our 2024 fiscal year. We delivered quarterly revenue of $548 million, up 11% on year-over-year and saw another quarter of strong free cash flow generation."
— Rajiv Ramaswami, President & CEO
"Results in Q4 2024 came in above the high end of our range across all guided metrics."
— Rukmini Sivaraman, CFO
Forward Guidance
Nutanix’s FY2025 outlook reflects a deliberate transition away from ACV billings as a guiding metric, focusing instead on revenue, non-GAAP operating margins, and free cash flow. The guided midpoints imply a ~14% revenue uplift in FY2025 and robust FCF generation (midpoint $570M; ~23% FCF margin), underscoring management’s objective of sustainable, profitable growth. The company expects continued elongation of sales cycles, particularly for larger deals, and a higher mix of larger opportunities that can introduce timing variability but drive higher dollar value. Near-term catalysts include:
- The Cisco, Dell XC Plus, and NVIDIA partnerships, which expand addressable markets and enhance GTM leverage.
- NC2 on Azure and other cloud marketplaces that enable smoother migration of workloads to public clouds, potentially expanding addressable land and joint selling opportunities.
- GPT-in-a-box and NKP/NDK product initiatives to accelerate adoption of Generative AI and data services across Kubernetes and non-Kubernetes workloads in hybrid cloud environments.
- Ongoing renewal strength and a modest renewal duration that may drive predictable cash flows, though timing remains lumpy due to large deal dynamics.
Key risks include: longer-than-anticipated sales cycles for top-tier accounts, potential overshoot of gross margin improvements if partner-related headwinds normalize, and macro factors that could slow IT infrastructure modernization investments. Investors should monitor quarterly progression toward the FY2025 targets, the realization of Dell/Cisco/Dell XC Plus benefits, and the effective monetization of AI-enabled offerings in enterprise scenarios.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
NTNX Focus
85.22%
-2.22%
17.30%
-24.82%
MDB
75.00%
-15.50%
-5.19%
-130.62%
PANW
73.80%
10.90%
6.92%
80.32%
PATH
86.70%
3.72%
1.68%
96.12%
PSTG
67.50%
4.83%
3.25%
118.16%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Base Case: Nutanix is transitioning to a durable, profitable growth model centered on large, multi-cloud, hybrid IT deployments and AI-enabled workloads. The FY2025 guidance implies mid-teens revenue growth with solid FCF expansion and margin leverage, supported by a high-quality renewal base (NRR 114%), rising ACV billings tailwinds (though not guided), and a compelling AI-in-private-cloud narrative (GPT-in-a-box, NKP, NDK). The company’s investment in partnerships (Cisco, Dell, NVIDIA), a new external storage strategy (Dell XC Plus and PowerFlex), and Azure-focused NC2 deployments should broaden addressable TAM and accelerate top-line expansion while maintaining a strong FCF profile. Funding of this growth through a disciplined OpEx path (guided 15.5–17% non-GAAP operating margin) and a plan for limited incremental capital intensity supports a credible path to a Rule of 40+ trajectory.
Risks include elongated cycles for top-tier deals, potential revenue volatility linked to project-based large deals, and the challenge of achieving ARR progression without ACV billings metrics in guidance. Investors should monitor quarterly progress on large deal closure rates, execution of partner-driven insertions, and the realization of AI workloads in customer deployments, as well as any shifts in the Broadcom/Vmware displacement momentum that may influence Nutanix’s competitive positioning. Overall, Nutanix presents a solid risk-adjusted opportunity for exposure to AI-enabled private cloud adoption and hybrid multi-cloud modernization at scale, with a favorable FCF trajectory and improving profitability outlook in FY2025.
Key Investment Factors
Growth Potential
Up-market expansion into Fortune 100+ accounts combined with NC2, AI-enabled private-cloud offerings (GPT-in-a-box), and ongoing partnerships (Cisco, Dell, NVIDIA) position Nutanix to scale ARR and free cash flow while improving product differentiation. The 2024 outcomes (ARR +22%, revenue +15%, Rule of 40 +43) set a durable base for continued growth in FY2025, with a mid-teens revenue trajectory and mid-teens to high-teens margin profile on non-GAAP terms.
Profitability Risk
Key risks include elongated sales cycles for larger deals, greater deal structure variability, and limited clarity around ARR progression given the decision to discontinue ACV billings guidance. Dependence on major partnerships (Cisco, Dell) introduces execution risk if partner commitments lag. The Broadcom/Vmware displacement dynamics, while a multi-year tailwind, could see execution complexity and attribution challenges across deals. The company also contends with a negative GAAP equity base, a high valuation relative to some peers, and reliance on non-GAAP metrics to illustrate profitability.
Financial Position
FY2024 delivered positive GAAP operating income ($8M) and strong free cash flow ($598M, 28% FCF margin) with high gross margins (~86%). Net cash provided by operations was $244.7M; cash and short-term investments totaled $994M at quarter-end, after a Bain note conversion effect. Net debt stood at ~$39.9M with total debt ~ $695.2M. The balance sheet shows total liabilities of ~$2.872B and negative shareholders’ equity (~$728M), reflecting leverage from prior financing and balance-sheet dynamics, which the company appears to be addressing through cash generation and optionality around partnerships and financing activities.
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