Storage Soup

Sep 5 2017   7:40AM GMT

Nutanix revenue jumps as competition grows

Dave Raffo Dave Raffo Profile: Dave Raffo

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Nutanix

Hyper-converged pioneer Nutanix grew revenue 72% in its first year as a public company.

Nutanix revenue grew to $767 million during a span in which competition intensified. Dell EMC, Hewlett Packard Enterprise and Cisco increased their investment in hyper-converged infrastructure (HCI) appliances, and VMware’s vSAN hyper-converged software matured and sales spiked.

Nutanix, which completed its initial public offering Sept. 30, 2016, reported its fiscal fourth-quarter earnings last week. Nutanix revenue of $226.1 million for the quarter represented a 62% increase over the same quarter last year.

As the Nutanix revenue increases, the competition keeps getting fiercer. Cisco last month acquired its HCI software partner Springpath to give it greater control over development of its HyperFlex appliance. NetApp HCI is due to launch by year’s end, and Lenovo last week launched a new vSAN-powered branded HCI appliance (Lenovo also sells appliances with Nutanix software).

Nutanix CEO Dheeraj Pandey said hardware vendors can only go so far in taking hyper-convergence to the next step: hybrid cloud.

“I think [Cisco] and HPE and NetApp are still playing a hardware game in HCI,” he said on the Nutanix earnings call. “I think the real game that’s being played is in pure software, about the entire opening system itself.”

Pandey maintains hyper-convergence is a stepping stone towards building enterprise clouds. He also claims Nutanix’s Acropolis services and Prism management software make it one of three vendors that can provide the full stack for a hybrid cloud. Microsoft and VMware are the others.

“We’ve always had this fundamental view that hyper-convergence is not a destination, it’s a milestone in the journey for a true cloud experience,” Pandey said. “It’s not about software-defined storage alone, it’s also about hypervisor software-defined networking, security, automation, operations, and systems management and also migration.”

Nutanix forecast revenues of between $240 and $250 million for this quarter. That compares to $167 million for the same quarter in 2016.

The flip side of the Nutanix revenue growth is widening losses. It lost $458 million for the past fiscal year, compared to $170 million over the previous year. Nutanix lost $91 million in the fourth quarter, nearly double its $50 million in losses for that quarter in the previous year.

With $350 million in cash and investments, Nutanix can sustain losses for now but won’t be able to remain in pure growth mode for long.

Other highlights from the quarter:

  • Nutanix added 875 customers last quarter and 3,300 for the last year, for a total of 7,051. It closed 43 deals of $1 million or more, including an insurance company with more than $2 million in billings.
  • Adoption of Nutanix AHV hypervisor increased 75% from the previous year.
  • Virtual desktop infrastructure, an early HCI staple, came in at the lowest percentage of deals in the vendor’s history.

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