Hyperconverged infrastructure provider Nutanix reports bigger loss than turnover

Hyperconverged infrastructure software outfit Nutanix has almost, but not quite, stopped burning cash as its cash flow neared positivity in its latest set of results.

Back in September CEO, Rajiv Ramaswami told The Register that cash flow positivity was within reach, and last night's set of figures for the company's Q1 FY2022 indicate that he might just be right.

Cash flow was still negative for its Q1 ended 31 October, but at $1.9m it was impressively down on $16.3m for the same period a year ago. Revenues were up 21 per cent to $378.5m from $312.8m and the company's annual recurring revenue (ARR) was just shy of a billion at $952.6m, up from $569.5 at the same point last year.

Losses were, however, eyewatering at first glance. While losses from operations were down to $137.3m compared to $182m the same time last year, the "Other expense" column bled red to the tune of $278.6m, an almost $200m increase. It included a $198m charge in fair value of derivative liability, $90.5m for depreciation and amortisation, and $64m on debt repayments. Nutanix reported total net loss at $419.9m.

During a call with analysts, Ramaswami noted the shift to subscriptions was going well along with record Annual Contract Value (ACV) billings. He was also quick to point out that careful expense management had "enabled us to nearly achieve free cash flow breakeven in the quarter."

The buzzwords tripped off the CEO's tongue as he boasted of "strong adoption of our hybrid multi-cloud portfolio," customers signed up during the quarter (now standing at 20,700, a 15 per cent year-on-year growth), and deals made with the likes of Citrix, Lenovo, HPE, and Red Hat.

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It fell to CFO Duston Williams to tell analysts that thanks to the progress made on the move to a subscription model, annual guidance would now be "appropriate". Ramaswami's trumpeted cash-flow positivity would happen, and ACV billings for FY22 would be between $740m and $750m, with revenues somewhere between $1.615bn and $1.630bn. Higher than the expected operating expenses of around $1.48bn.

And as for supply chain issues? "Minimal impact," said Ramaswami, although he added: "We continue to watch the situation closely." While its customers and partners encounter challenges procuring hardware, Nutanix appears to be reaping the benefits of its move to software a few years ago.

Although the company did better than forecast, reaction from the markets was relatively muted, and the stock price remained stable – up on the same time last year, but down from the heady heights of September. ®