UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 31, 2021

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-37883

NUTANIX, INC.

(Exact name of registrant as specified in its charter)

Delaware	27-0989767
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1740 Technology Drive, Suite 150

San Jose, CA 95110

(Address of principal executive offices, including zip code)

(408) 216-8360

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Class A Common Stock, $0.000025 par value per share	NTNX	Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	☒	Accelerated Filer	☐
Non-accelerated Filer	☐	Smaller Reporting Company	☐
		Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 30, 2021, the registrant had 214,714,323 shares of Class A common stock, $0.000025 par value per share, and 2,272,877 shares of Class B common stock, $0.000025 par value per share, outstanding.

TABLE OF CONTENTS

			PAGE
PART I.		FINANCIAL INFORMATION
	Item 1	Financial Statements (Unaudited)	6
	Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	36
	Item 3	Quantitative and Qualitative Disclosures About Market Risk	55
	Item 4	Controls and Procedures	55
PART II.		OTHER INFORMATION
	Item 1	Legal Proceedings	56
	Item 1A	Risk Factors	56
	Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	56
	Item 3	Defaults Upon Senior Securities	56
	Item 4	Mine Safety Disclosures	56
	Item 5	Other Information	56
	Item 6	Exhibits	56
EXHIBIT INDEX			57
SIGNATURES			58

3

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains express and implied forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended ("Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended ("Exchange Act"), which statements involve substantial risks and uncertainties. Other than statements of historical fact, all statements contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations and financial position, our business strategy and plans and our objectives for future operations, are forward-looking statements. The words "believe," "may," "will," "potentially," "estimate," "continue," "anticipate," "plan," "intend," "could," "would," "expect," or words or expressions of similar substance or the negative thereof, that convey uncertainty of future events or outcomes are intended to identify forward-looking statements. Forward-looking statements included in this Quarterly Report on Form 10-Q include, but are not limited to, statements regarding:

our future billings, revenue, cost of revenue and operating expenses, as well as changes in the cost of product revenue, component costs, contract terms, product gross margins and support, entitlements and other services revenue and changes in research and development, sales and marketing and general and administrative expenses;

our business plans, strategies, initiatives, objectives and outlook, as well as our ability to execute such plans, strategies, initiatives and objectives successfully and in a timely manner, and the benefits and impact of such plans, initiatives and objectives on our business, operations, and financial results, including any impact on our revenue and product mix, average contract term lengths and discounting behavior;

our plans for, and the timing of, any current and future business model transitions, including our ongoing transition to a subscription-based business model, our ability to manage, complete or realize the benefits of such transitions successfully and in a timely manner, and the short-term and long-term impacts of such transitions on our business, operations and financial results;

the timing, evolution and potential impact of the COVID-19 pandemic on the global market environment and the IT industry, as well as on our business, operations and financial results, including changes we have made or anticipate making in response to the COVID-19 pandemic, our ability to manage our business during the pandemic, and the position we anticipate being in following the pandemic;

the benefits and capabilities of our platform, solutions, products, services and technology, including the interoperability and availability of our solutions with and on third-party platforms;

our plans and expectations regarding new solutions, products, services, product features and technology, including those that are still under development or in process;

our growth strategy, our ability to effectively achieve and manage our growth, and the amount, timing and impact of any investments to grow our business, including any plans to increase or decrease investments in our global engineering, research and development and sales and/or marketing teams;

our go-to-market strategy and the impact of any adjustments thereto, including any adjustments to our go-to-market cost structure, in particular, our sales compensation structure, and our plans regarding pricing and packaging of our product portfolio;

the success and impact of our customer, partner, industry, analyst, investor and employee events on our business, including on future pipeline generation;

the impact of our decision to use new or different metrics, or to make adjustments to the metrics we use, to supplement our financial reporting;

our ability to successfully manage or realize the benefits of our Chief Executive Officer transition, as well as the impact thereof on our business, operations and financial results;

anticipated trends, growth rates and challenges in our business and in the markets in which we operate, including the segmentation and productivity of our sales team;

market acceptance of new technology and recently introduced solutions;

our ability to increase sales of our solutions, particularly to large enterprise customers;

our ability to attract new end customers and retain and grow sales from our existing end customers;

4

our ability to maintain and strengthen existing strategic alliances and partnerships, including our relationships with our channel partners and original equipment manufacturers, and to develop any new strategic alliances and partnerships, and the impact of any changes to such relationships on our business, operations and financial results;

the effects of seasonal trends on our results of operations;

our expectations concerning relationships with third parties, including our ability to compress and stabilize sales cycles;

our ability to maintain, protect and enhance our intellectual property;

our exposure to and ability to guard against cyber attacks and other actual or perceived security breaches;

our ability to continue to expand internationally;

the competitive market, including our ability to compete effectively, the competitive advantages of our products, and the effects of increased competition in our market;

anticipated capital expenditures;

future acquisitions or investments in complementary companies, products, services or technologies and the ability to successfully integrate completed acquisitions;

our ability to stay in compliance with laws and regulations that currently apply or become applicable to our business both in the United States and internationally, including recent changes in global tax laws;

macroeconomic and industry trends, projected growth or trend analysis;

the impact of events that may be outside of our control, such as political and social unrest, terrorist attacks, hostilities, malicious human acts, climate change, natural disasters (including extreme weather), pandemics or other major public health concerns, and other similar events;

our ability to attract and retain qualified employees and key personnel; and

the sufficiency of cash balances to meet cash needs for at least the next 12 months.

We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives and financial needs in light of the information currently available to us. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described under the heading "Risk Factors" in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended July 31, 2021 and in Part II, Item 1A, "Risk Factors" in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment and new risks emerge from time to time. It is not possible for us to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained or implied in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and trends discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, performance, or events and circumstances reflected in the forward-looking statements will be achieved or will occur. The forward-looking statements in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation, and expressly disclaim any obligation, to update, alter or otherwise revise or publicly release the results of any revision to these forward-looking statements to reflect new information or the occurrence of unanticipated or subsequent events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements.

5

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

	Page
Condensed Consolidated Balance Sheets as of July 31, 2021 and October 31, 2021	7
Condensed Consolidated Statements of Operations for the Three Months Ended October 31, 2020 and 2021	8
Condensed Consolidated Statements of Comprehensive Loss for the Three Months Ended October 31, 2020 and 2021	9
Condensed Consolidated Statements of Stockholders' Deficit for the Three Months Ended October 31, 2020 and 2021	10
Condensed Consolidated Statements of Cash Flows for the Three Months Ended October 31, 2020 and 2021	11
Notes to Condensed Consolidated Financial Statements	12
Note 1: Overview and Basis of Presentation	12
Note 2: Revenue, Deferred Revenue and Deferred Commissions	14
Note 3: Fair Value Measurements	17
Note 4: Balance Sheet Components	20
Note 5: Convertible Senior Notes	22
Note 6: Leases	27
Note 7: Commitments and Contingencies	29
Note 8: Stockholders' Equity	30
Note 9: Equity Incentive Plans	31
Note 10: Income Taxes	33
Note 11: Net Loss Per Share	34
Note 12: Segment Information	35

6

NUTANIX, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	As of
	July 31, 2021			October 31, 2021
	(in thousands, except per share data)
Assets
Current assets:
Cash and cash equivalents	$	285,723		$	350,985
Short-term investments		928,006			925,116
Accounts receivable, net of allowances of $892 and $486, respectively		180,781			116,944
Deferred commissions—current		110,935			110,468
Prepaid expenses and other current assets		56,816			48,882
Total current assets		1,562,261			1,552,395
Property and equipment, net		131,621			120,596
Operating lease right-of-use assets		105,903			100,665
Deferred commissions—non-current		232,485			239,177
Intangible assets, net		32,012			27,885
Goodwill		185,260			185,260
Other assets—non-current		27,954			28,588
Total assets	$	2,277,496		$	2,254,566
Liabilities and Stockholders’ Deficit
Current liabilities:
Accounts payable	$	47,056		$	43,184
Accrued compensation and benefits		162,337			122,372
Accrued expenses and other current liabilities		39,404			33,509
Deferred revenue—current		636,421			662,501
Operating lease liabilities—current		42,670			43,221
Total current liabilities		927,888			904,787
Deferred revenue—non-current		676,502			670,833
Operating lease liabilities—non-current		86,599			77,675
Convertible senior notes, net		1,055,694			1,261,656
Derivative liability		500,175			—
Other liabilities—non-current		42,679			38,354
Total liabilities		3,289,537			2,953,305
Commitments and contingencies (Note 7)
Stockholders’ deficit:
Preferred stock, par value of $0.000025 per share— 200,000 shares    authorized as of July 31, 2021 and October 31, 2021; no shares    issued and outstanding as of July 31, 2021 and October 31, 2021		—			—
Common stock, par value of $0.000025 per share—1,200,000     (1,000,000 Class A, 200,000 Class B) shares authorized as of July 31,    2021 and October 31, 2021; 214,210 (208,579 Class A and 5,631 Class B)    and 216,959 (211,386 Class A and 5,573 Class B) shares issued and    outstanding as of July 31, 2021 and October 31, 2021, respectively		5			5
Additional paid-in capital		2,615,317			3,292,255
Accumulated other comprehensive loss		(8	)		(659	)
Accumulated deficit		(3,627,355	)		(3,990,340	)
Total stockholders’ deficit		(1,012,041	)		(698,739	)
Total liabilities and stockholders’ deficit	$	2,277,496		$	2,254,566

See the accompanying notes to condensed consolidated financial statements.

7

NUTANIX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended October 31,
	2020			2021
	(in thousands, except per share data)
Revenue:
Product	$	155,752		$	180,105
Support, entitlements and other services		157,002			198,412
Total revenue		312,754			378,517
Cost of revenue:
Product		12,814			14,221
Support, entitlements and other services		55,145			67,225
Total cost of revenue		67,959			81,446
Gross profit		244,795			297,071
Operating expenses:
Sales and marketing		257,290			250,033
Research and development		135,804			144,266
General and administrative		33,774			40,028
Total operating expenses		426,868			434,327
Loss from operations		(182,073	)		(137,256	)
Other expense, net		(78,732	)		(278,549	)
Loss before provision for income taxes		(260,805	)		(415,805	)
Provision for income taxes		4,243			4,047
Net loss	$	(265,048	)	$	(419,852	)
Net loss per share attributable to Class A and Class B    common stockholders—basic and diluted	$	(1.31	)	$	(1.95	)
Weighted average shares used in computing net loss    per share attributable to Class A and Class B    common stockholders—basic and diluted		203,095			215,499

See the accompanying notes to condensed consolidated financial statements.

8

NUTANIX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)

	Three Months Ended October 31,
	2020			2021
	(in thousands)
Net loss	$	(265,048	)	$	(419,852	)
Other comprehensive loss, net of tax:
Change in unrealized loss on available-for-sale    securities, net of tax		(1,150	)		(651	)
Comprehensive loss	$	(266,198	)	$	(420,503	)

See the accompanying notes to condensed consolidated financial statements.

9

NUTANIX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(Unaudited)

	Three Months Ended October 31, 2020
	Common Stock					Additional Paid-In			Accumulated Other Comprehensive			Accumulated			Total Stockholders’
	Shares			Amount		Capital			Income			Deficit			Deficit
	(in thousands)
Balance - July 31, 2020		201,949		$	5	$	2,245,180		$	2,030		$	(2,522,192	)	$	(274,977	)
Issuance of common stock through employee equity    incentive plans		3,117			—		1,631			—			—			1,631
Issuance of common stock from ESPP purchase		1,456			—		18,070			—			—			18,070
Repurchase and retirement of common stock		(5,176	)		—		(54,176	)		—			(70,903	)		(125,079	)
Stock-based compensation		—			—		89,198			—			—			89,198
Other comprehensive loss		—			—		—			(1,150	)		—			(1,150	)
Net loss		—			—		—			—			(265,048	)		(265,048	)
Balance - October 31, 2020		201,346		$	5	$	2,299,903		$	880		$	(2,858,143	)	$	(557,355	)

	Three Months Ended October 31, 2021
	Common Stock					Additional Paid-In			Accumulated Other Comprehensive			Accumulated			Total Stockholders’
	Shares			Amount		Capital			Loss			Deficit			Deficit
	(in thousands)
Balance - July 31, 2021		214,210		$	5	$	2,615,317		$	(8	)	$	(3,627,355	)	$	(1,012,041	)
Adoption of ASU 2020-06		—			—		(148,598	)		—			100,585			(48,013	)
2026 Notes derivative liability reclassification		—			—		698,213			—			—			698,213
Issuance of common stock through employee equity    incentive plans		2,809			—		1,352			—			—			1,352
Issuance of common stock from ESPP purchase		1,309			—		28,786			—			—			28,786
Repurchase and retirement of common stock		(1,369	)		—		(14,852	)		—			(43,718	)		(58,570	)
Unwinding of 2023 Notes hedges		—			—		39,880			—			—			39,880
Unwinding of 2023 Notes warrants		—			—		(18,390	)		—			—			(18,390	)
Stock-based compensation		—			—		90,547			—			—			90,547
Other comprehensive loss		—			—		—			(651	)		—			(651	)
Net loss		—			—		—			—			(419,852	)		(419,852	)
Balance - October 31, 2021		216,959		$	5	$	3,292,255		$	(659	)	$	(3,990,340	)	$	(698,739	)

See the accompanying notes to condensed consolidated financial statements.

10

NUTANIX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Three Months Ended October 31,
	2020			2021
	(in thousands)
Cash flows from operating activities:
Net loss	$	(265,048	)	$	(419,852	)
Adjustments to reconcile net loss to net cash (used in) provided by    operating activities:
Depreciation and amortization		23,499			23,291
Stock-based compensation		89,198			90,547
Change in fair value of derivative liability		64,740			198,038
Loss on debt extinguishment		—			64,910
Amortization of debt discount and issuance costs		11,708			9,831
Operating lease cost, net of accretion		8,347			9,189
Impairment of lease-related assets		2,822			—
Non-cash interest expense		1,952			4,773
Other		1,671			3,072
Changes in operating assets and liabilities:
Accounts receivable, net		60,094			64,740
Deferred commissions		(28,230	)		(6,225	)
Prepaid expenses and other assets		6,222			6,751
Accounts payable		(4,075	)		(3,139	)
Accrued compensation and benefits		10,041			(39,965	)
Accrued expenses and other liabilities		(1,238	)		(6,207	)
Operating leases, net		(7,970	)		(12,323	)
Deferred revenue		22,194			19,508
Net cash (used in) provided by operating activities		(4,073	)		6,939
Cash flows from investing activities:
Maturities of investments		97,578			272,024
Purchases of investments		(513,998	)		(290,050	)
Sales of investments		—			17,999
Purchases of property and equipment		(12,252	)		(8,844	)
Net cash used in investing activities		(428,672	)		(8,871	)
Cash flows from financing activities:
Payments of debt extinguishment costs		—			(14,709	)
Proceeds from unwinding of convertible note hedges		—			39,880
Payments for unwinding of warrants		—			(18,390	)
Proceeds from sales of shares through employee equity    incentive plans		19,600			30,139
Proceeds from the issuance of convertible notes, net of    issuance costs		723,757			89,128
Repurchases of common stock		(125,079	)		(58,570	)
Payment of finance lease obligations		—			(219	)
Net cash provided by financing activities		618,278			67,259
Net increase in cash, cash equivalents and restricted cash	$	185,533		$	65,327
Cash, cash equivalents and restricted cash—beginning of period		321,991			288,873
Cash, cash equivalents and restricted cash—end of period	$	507,524		$	354,200
Restricted cash (1)		3,042			3,215
Cash and cash equivalents—end of period	$	504,482		$	350,985
Supplemental disclosures of cash flow information:
Cash paid for income taxes	$	5,050		$	6,181
Supplemental disclosures of non-cash investing and    financing information:
Purchases of property and equipment included    in accounts payable and accrued and other liabilities	$	2,948		$	12,099
Finance lease liabilities arising from obtaining right-of-use    assets	$	—		$	7,857
Convertible senior notes offering costs included in accrued liabilities	$	—		$	700

(1)Included within other assets—non-current in the condensed consolidated balance sheets.

See the accompanying notes to condensed consolidated financial statements.

11

NUTANIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1. OVERVIEW AND BASIS OF PRESENTATION

Organization and Description of Business

Nutanix, Inc. was incorporated in the state of Delaware in September 2009. Nutanix, Inc. is headquartered in San Jose, California, and together with its wholly-owned subsidiaries (collectively, "we," "us," "our" or "Nutanix"), has operations throughout North America, Europe, Asia Pacific, the Middle East, Latin America, and Africa.

We provide a leading enterprise cloud platform, which we call the Nutanix Cloud Platform, that consists of software solutions and cloud services that power our customers' enterprise infrastructure. Our solutions run across private-, hybrid- and multicloud environments, and allow organizations to seamlessly "lift and shift" their workloads, including enterprise applications, high-performance databases, end-user computing and virtual desktop infrastructure ("VDI") services, cloud native workloads, and analytics applications, between different cloud environments. Our solutions are primarily sold through channel partners, including distributors, resellers and original equipment manufacturers ("OEMs") (collectively, "Partners"), and delivered directly to our end customers.

Principles of Consolidation and Significant Accounting Policies

The accompanying condensed consolidated financial statements, which include the accounts of Nutanix, Inc. and its wholly-owned subsidiaries, have been prepared in conformity with accounting principles generally accepted in the United States ("U.S. GAAP") and are consistent in all material respects with those included in our Annual Report on Form 10-K for the fiscal year ended July 31, 2021, filed with the Securities and Exchange Commission ("SEC") on September 21, 2021. All intercompany accounts and transactions have been eliminated in consolidation. The condensed consolidated financial statements are unaudited, but include all adjustments of a normal recurring nature necessary for a fair presentation of our quarterly results. The consolidated balance sheet as of July 31, 2021 is derived from audited financial statements; however, it does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes in our Annual Report on Form 10-K for the fiscal year ended July 31, 2021.

Use of Estimates

The preparation of interim condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Such management estimates and assumptions include, but are not limited to, the best estimate of selling prices for products and related support; useful lives and recoverability of intangible assets and property and equipment; allowance for credit losses; determination of fair value of stock-based awards; accounting for income taxes, including the valuation allowance on deferred tax assets and uncertain tax positions; warranty liability; purchase commitment liabilities to our OEMs; sales commissions expense and the period of benefit for deferred commissions; whether an arrangement is or contains a lease; the incremental borrowing rate to measure the present value of right-of-use assets and lease liabilities; the inputs used to determine the fair value of the contingent liability associated with the conversion feature of the 2.50% convertible senior notes due 2026 (the "2026 Notes"); and contingencies and litigation. Management evaluates these estimates and assumptions on an ongoing basis using historical experience and other factors and makes adjustments when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could materially differ from those estimates and assumptions.

In response to the ongoing and rapidly evolving COVID-19 pandemic, we considered the impact of the estimated economic implications on our critical and significant accounting estimates, including assessment of collectibility of customer contracts, valuation of accounts receivable, provision for purchase commitments to our OEMs and impairment of long-lived assets, right-of-use assets, and deferred commissions.

12

NUTANIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Concentration of Risk

Concentration of revenue and accounts receivable—We sell our products primarily through our Partners and occasionally directly to end customers. For the three months ended October 31, 2020 and 2021, no end customer accounted for more than 10% of total revenue or accounts receivable.

For each significant Partner, revenue as a percentage of total revenue and accounts receivable as a percentage of total accounts receivable, net are as follows:

Revenue	Accounts Receivable as of
Three Months Ended October 31,	July 31, 2021