Nutanix Stock Soars On Improving Net Loss, Free Cash Flow

‘We’ve always competed against VMware and won some. And that continues. We haven’t seen a sea change in deals closing yet. What we have seen is a lot more engagement with customers worried about VMware and talking to us,’ Nutanix CEO Rajiv Ramaswami tells CRN following the company’s Thursday earnings call.

Nutanix went from “burning cash” three years ago to generating positive free cash flow last year and it is now repurchasing $350 million in shares, the company announced during its earnings call yesterday.

“It reflects the confidence that we have,” CEO Rajiv Ramaswami said in response to a CRN question. “Three years ago we were burning cash. Last year we generated $20 million. This year we generated $200 million and our guide for the coming year calls for continued free cash flow generation. We feel like now we are at a point where we can give some of that back to our shareholders.”

During its Q4 2023 earnings call after the market closed Thursday, Nutanix announced that its annual revenue rose 17.7 percent to $1.86 billion up from $1.58 billion last year. Quarterly revenue was also up 28.2 percent from $385.5 million to $494.2 million. Also, for the quarter Nutanix improved its net loss from the same period a year ago: $13.3 million this quarter versus $151 million.

Investors took notice in after-hours trading Thursday, sending Nutanix shares up 15.91 percent to $36.05.

Still, Ramaswami does not attribute much of the positive earnings news to uncertainty around chief rival VMware.

“We’ve always competed against VMware and won some. And that continues. We haven’t seen a sea change in deals closing yet. What we have seen is a lot more engagement with customers worried about VMware and talking to us,” he said in response to a CRN question. “Some of those have closed. For example, last quarter we talked about a seven-figure deal with a Fortune 100 customer that decided to do more with us given their concerns on VMware. We’re starting to see those, but it’s not a big factor.”

It’s been a busy quarter for Nutanix with the company debuting new multi-cloud solutions at its flagship conference NEXT, as well as announcing Nutanix GPT-In-a-Box Solution for customers looking to jump-start AI applications. Last month, the company announced that it had added former Citrix President and CEO Mark Templeton to its board of directors. Templeton left Citrix in 2015.

Citrix, was bought and taken private in January 2022. It now operates under Cloud Software Group with CEO Thomas Krause installed. Prior to being named CEO, Krause was leading Broadcom’s effort to buy VMware. He introduced the deal to investors on May 26, 2022 alongside Broadcom CEO Hock Tan. Krause, as then-president of Broadcom Software Group, quit in July 2022.

[RELATED: Nutanix Partners See Project Beacon, Other New Offerings As ‘Milestone’]

At NEXT, the company’s show this year in Chicago, Nutanix unveiled its latest HCI innovation Project Beacon which promises to upend the cloud chaos paradigm by making workloads portable no matter where a customer stores them: the public cloud, colocation or on premise. The San Jose, Calif.-based company said it is giving customers the ability to pick up and move data, applications and the supporting compute and storage with a single click.

The product is designed to help IT roles such as over tasked database managers, developers who are slowed down because they need access to the database, as well as those looking to move away from proprietary databases to open-source databases. Nutanix supports five popular databases: Postgres, MongoDB, MySQL, Oracle Database and Microsoft SQL Server. On stage Nutanix demonstrated using the technology to move a database from AWS to Azure in one motion.