Nutanix Confirms Furloughs Of Nearly 1,500 Employees

‘Nutanix services will remain fully available, and the furloughs have been structured so that our customers should experience little or no changes from the normal course during this period,’ says Nutanix in a statement to CRN.

Nutanix is furloughing a total of 1,465 employees in California, representing nearly 25 percent of the company’s worldwide headcount, due to “uncertain business conditions” stemming from the coronavirus pandemic.

Nutanix confirmed to CRN that it is implementing two separate, one-week unpaid furloughs effecting at least 1,465 employees that will occur on a rolling basis effective May 4 through July 26, followed by another round from Aug. 3 through Oct. 31.

In a statement to CRN, Nutanix said it is taking “deliberate and proactive expense-reduction measures that we believe to be prudent” as the company manages through the uncertain business conditions brought on by the COVID-19 pandemic.

“These measures include two, week-long furloughs for many of our employees over the course of the next six months. Nutanix services will remain fully available, and the furloughs have been structured so that our customers should experience little or no changes from the normal course during this period,” said Nutanix to CRN. “We are taking this precautionary measure to help ensure our business remains healthy in the long term. Our philosophy as we navigate the COVID-19 pandemic is to do the ‘most good’ with the least amount of harm for all of our employees."

[Related: Nutanix Channel Chief On Driving VDI To Combat Coronavirus]

Last week, the San Jose, Calif.-based company reported to the California Employment Development Department that it was furloughing a total of 1,465 employees in California alone. A total of 1,434 furloughs will come from the company’s headquarters in San Jose, while 31 employees will be furloughed in San Francisco, San Mateo and Redding. Nutanix gave employees notice about the unpaid furloughs on April 21.

Nutanix said the furloughs will not be permanent. Nutanix did not comment on whether there are additional employees being furloughed who work outside of California.

The company reported a worldwide headcount of 6,100 during its second fiscal quarter, which ended Jan. 31, 2020, along with approximately 16,000 customers.

“Due to the COVID-19 emergency and related government order and/or instructions and/or business circumstances, Nutanix is implementing two separate, one-week unpaid furloughs,” Nutanix said in a recent letter to the California Employment Development Department (EDD). “This action is expected to be temporary, conditioned upon the status of the COVID-19 emergency, any applicable government orders and instructions, and business circumstances at that time.”

In an interview with CRN last month, Nutanix’s channel chief Christian Alvarez said the majority of Nutanix’s global workforce is working from home.

“We are here. We are operating. We’re supporting our customers. We’re fielding support calls. We’re helping our partners with deployments. We are fulfilling deployments,” Alvarez said. “For us, aside from this horrific situation we’re all in as humans, we are full steam ahead.”

Bob Venero, CEO of Future Tech Enterprise, No. 101 on the CRN SP500, said he expects many manufacturers similar to the size of $1.3 billion Nutanix to have trouble weathering the financial impact of the pandemic.

“Some of these smaller companies like Nutanix are going to be in a very precarious situation because they don’t have the financial coffers of companies like Dell Technologies and HP Inc.,” he said. “It is going to be much harder for those smaller companies to be able to sustain current business and at the same time spend money on R&D. What we are seeing is a lot of smaller companies doing fire sales to keep sales revenue coming in.”

Venero said he expects to see more smaller companies take drastic actions like layoffs and furloughs. “I don’t think we have hit the pinnacle of the financial impact from this pandemic,” he said. “There is a financial cliff coming that a lot of companies are going to fall off of.”

In an interview last week with CNBC, Nutanix Founder and CEO Dheeraj Pandey said many of Nutanix’s sellers faced the challenge of needing to adapt to the “new reality of not having any physical meetings” with customers due to the coronavirus pandemic.

“It’s been a really good thing for us in the last one month alone to really do things digitally and virtually, but over the course of this coming six months, we’ll probably have to adapt even more so,” said Pandey.

The San Jose, Calif.-based company has launched a slew of new offerings this month to help customers and channel partners get through the economic uncertainty from COVID-19. The hybrid cloud specialist and hyperconverged infrastructure pioneer launched its new Nutanix Special Financial Assistance Program to provide channel partners with extended payment terms. The company also launched FastTrack for VDI, a new offer that enables channel partners to create a VDI environment for customers in days.

For its recent second fiscal quarter earnings, Nutanix posted total revenue of $347 million, up four percent year over year, with software and support sales reaching $338 million, up 14 percent year over year.

Nutanix stock is down 4 percent on Monday to $17.54 per share.