Nutanix Partners Unfazed By Stock Drop And Sales ‘Hiccup’

‘The end users I deal with are not the least bit hesitant about Nutanix right now,’ says Tim Joyce, president and CEO of Roundstone Solutions.

Nutanix partners CRN spoke with are still bullish about the company’s future even after the hyper-converged infrastructure pioneer reported lower-than-expected revenue for its recent third fiscal quarter that sent Nutanix stock down more than 16 percent.

Tim Joyce, president and CEO of Roundstone Solutions, an Orinda, Calif.-based Nutanix partner, said Roundstone Solutions’ Nutanix sales are growing in the triple digits this year.

“Our business has dramatically increased with Nutanix over just the last six months. Nutanix’s platform is way more innovative than the rest of the three-tier world,” said Joyce. “Part of the issue right now is that what they’re doing—changing their business from hardware to subscription—is hard. Customers are very pleased with it and have expanded their installations. … I look at this as really more of a hiccup than anything, but the business itself in front of the end user—they’re good with it.”

[Related: Nutanix CEO ‘Looking Forward’ To Outlast Naysayers After Stock Drop]

Joyce said customers are buying Nutanix, which is ranked No. 2 in worldwide hyper-converged market share, because the company’s technology is renowned for its reliability. Roundstone Solutions recently was awarded a contract by the state of California to supply Nutanix products for the next three to five years.

“In short, it works. It’s simple. It saves them money. The truth is that the manufacturer goes to the end user and says, ‘We think we can do this for you’—it doesn’t always work. Nutanix actually does it and they do it better than expected. That’s why customers love it and that’s why their NPS [Net Promoter Score] is so high,” said Joyce. “The end users I deal with are not the least bit hesitant about Nutanix right now.”

Last week, San Jose, Calif.-based Nutanix reported third fiscal quarter revenue of $288 million, representing flat sales compared with the $289 million the company reported for the same quarter one year ago. Billings for the third quarter 2019 slightly fell from $351 million to $346 million year over year. In addition, Nutanix Chief Product and Development Officer Sunil Potti announced he was resigning from his position in order to join Google.

In a recent interview with CRN, Nutanix CEO and founder Dheeraj Pandey said his company is in the midst of a “tough” transition to becoming a software-only, subscription-based vendor.

“Doing subscription is not easy. We decided to go through the transformation because when we come out of this on the other side, we’ll be a company that can call itself a true cloud operating system software company where you can have both on-premise and off-premise in subscription,” Pandey said. “We are ahead of the curve in terms of the schedule of the transformation. We talked about some of the pipeline issues last quarter and we really come out well in terms of building the pipeline and we just have to execute on that over the next quarter or two.”

Nutanix’s CEO said two years ago that “we were a hardware company.” The transition away from selling Capex hardware is affecting overall sales for the company relative to year-over-year revenue figures. Hardware sales for Nutanix’s third fiscal quarter hit a historic low, representing less than 8 percent of the company’s total revenue.

Nutanix has hired around 50 new sales reps to improve revenue and boost demand generation.

Chris Gross, vice president of IT for Sanity Solutions, a Denver-based Nutanix partner that made CRN’s Tech Elite 250 list, said Nutanix sales are steadily growing this year with no expectations of slowing down.

“We’re not backing off Nutanix at all,” said Gross. “Our Nutanix sales have been very good. … Where we are seeing a lot of our growth on the Nutanix side is outside of the core platform in a lot of the additional product that they’ve added over the last year or two years.”

Nutanix’s innovation engine has been roaring as the company continuously launches new products and features as well as solutions that take Nutanix into new markets.

Gross said he’s seeing new sales growth and high demand for Nutanix Files, a software-defined scale-out storage offering for unstructured data, and Nutanix Flow, an application security and networking automation offering. “We’re investing resources into Nutanix,” he said.

Nutanix stock is trading at around $28 per share as of Wednesday afternoon, approximately half of what it was one year ago at $57 per share in June 2018. Nutanix currently has a market cap of $5.12 billion.

Pandey told CRN that Nutanix “naysayers” will actually fuel growth and innovation at his company.

“I think we’ve been ‘naysaid’ for the last 10 years. Five, six years ago, these same competitors tried to actually become really hostile with us and tried to kill us. That’s when our AHV [hypervisor] was born, our idea of virtualization software and us taking over our destiny. That’s how this company has always operated,” said Pandey. “When the going gets tough is when this company really gets going. So we are looking forward to the challenge.”