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, 2022

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, 2022, the registrant had 230,110,596 shares of Class A 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	34
	Item 3	Quantitative and Qualitative Disclosures About Market Risk	53
	Item 4	Controls and Procedures	53
PART II.		OTHER INFORMATION
	Item 1	Legal Proceedings	54
	Item 1A	Risk Factors	54
	Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	54
	Item 3	Defaults Upon Senior Securities	54
	Item 4	Mine Safety Disclosures	54
	Item 5	Other Information	54
	Item 6	Exhibits	54
EXHIBIT INDEX			55
SIGNATURES			56

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 (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "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 reliance on key personnel;

•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 and address macroeconomic supply chain shortages, 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 grow our business 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, geopolitical, and industry trends and environment, 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, war, 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, 2022 and in Part II, Item 1A of 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, 2022 and October 31, 2022	7
Condensed Consolidated Statements of Operations for the Three Months Ended October 31, 2021 and 2022	8
Condensed Consolidated Statements of Comprehensive Loss for the Three Months Ended October 31, 2021 and 2022	9
Condensed Consolidated Statements of Stockholders' Deficit for the Three Months Ended October 31, 2021 and 2022	10
Condensed Consolidated Statements of Cash Flows for the Three Months Ended October 31, 2021 and 2022	11
Notes to Condensed Consolidated Financial Statements	12
Note 1: Overview and Basis of Presentation	12
Note 2: Revenue, Deferred Revenue and Deferred Commissions	13
Note 3: Fair Value Measurements	16
Note 4: Balance Sheet Components	18
Note 5: Convertible Senior Notes	20
Note 6: Leases	26
Note 7: Commitments and Contingencies	28
Note 8: Stockholders' Equity	29
Note 9: Equity Incentive Plans	29
Note 10: Income Taxes	31
Note 11: Restructuring Charges	32
Note 12: Net Loss Per Share	32
Note 13: Segment Information	33

6

NUTANIX, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	As of
	July 31, 2022			October 31, 2022
	(in thousands, except per share data)
Assets
Current assets:
Cash and cash equivalents	$	402,850		$	480,617
Short-term investments		921,429			907,441
Accounts receivable, net of allowances of $644 and $642, respectively		124,559			83,638
Deferred commissions—current		115,356			109,871
Prepaid expenses and other current assets		93,787			90,528
Total current assets		1,657,981			1,672,095
Property and equipment, net		113,440			111,361
Operating lease right-of-use assets		118,740			111,522
Deferred commissions—non-current		252,234			242,506
Intangible assets, net		15,829			12,670
Goodwill		185,260			185,260
Other assets—non-current		22,265			22,008
Total assets	$	2,365,749		$	2,357,422
Liabilities and Stockholders’ Deficit
Current liabilities:
Accounts payable	$	44,931		$	30,838
Accrued compensation and benefits		149,811			119,991
Accrued expenses and other current liabilities		49,232			46,151
Deferred revenue—current		720,993			768,918
Operating lease liabilities—current		39,801			36,296
Convertible senior notes, net—current		145,456			145,605
Total current liabilities		1,150,224			1,147,799
Deferred revenue—non-current		724,545			712,658
Operating lease liabilities—non-current		89,782			81,820
Convertible senior notes, net		1,156,205			1,176,259
Other liabilities—non-current		35,161			29,935
Total liabilities		3,155,917			3,148,471
Commitments and contingencies (Note 7)
Stockholders’ deficit:
Preferred stock, par value of $0.000025 per share— 200,000 shares    authorized as of July 31, 2022 and October 31, 2022; no shares issued    and outstanding as of July 31, 2022 and October 31, 2022		—			—
Common stock, par value of $0.000025 per share—1,042,004 (1,000,000     Class A, 42,004 Class B) shares authorized as of July 31, 2022 and    October 31, 2022; 226,938 and 230,108 Class A shares issued and    outstanding as of July 31, 2022 and October 31, 2022, respectively		6			6
Additional paid-in capital		3,583,928			3,685,805
Accumulated other comprehensive loss		(6,076	)		(9,718	)
Accumulated deficit		(4,368,026	)		(4,467,142	)
Total stockholders’ deficit		(790,168	)		(791,049	)
Total liabilities and stockholders’ deficit	$	2,365,749		$	2,357,422

See the accompanying notes to condensed consolidated financial statements.

7

NUTANIX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended October 31,
	2021			2022
	(in thousands, except per share data)
Revenue:
Product	$	180,105		$	208,574
Support, entitlements and other services		198,412			225,035
Total revenue		378,517			433,609
Cost of revenue:
Product		14,221			12,516
Support, entitlements and other services		67,225			69,979
Total cost of revenue		81,446			82,495
Gross profit		297,071			351,114
Operating expenses:
Sales and marketing		250,033			236,072
Research and development		144,266			149,195
General and administrative		40,028			46,104
Total operating expenses		434,327			431,371
Loss from operations		(137,256	)		(80,257	)
Other expense, net		(278,549	)		(13,416	)
Loss before provision for income taxes		(415,805	)		(93,673	)
Provision for income taxes		4,047			5,443
Net loss	$	(419,852	)	$	(99,116	)
Net loss per share attributable to Class A and Class B    common stockholders—basic and diluted (1)	$	(1.95	)	$	(0.43	)
Weighted average shares used in computing net loss    per share attributable to Class A and Class B    common stockholders—basic and diluted (1)		215,499			228,544

(1)Effective January 3, 2022, all of the then outstanding shares of Nutanix, Inc. Class B common stock were automatically converted into the same number of shares of Nutanix, Inc. Class A common stock. See Note 8 for further details.

See the accompanying notes to condensed consolidated financial statements.

8

NUTANIX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)

	Three Months Ended October 31,
	2021			2022
	(in thousands)
Net loss	$	(419,852	)	$	(99,116	)
Other comprehensive loss, net of tax:
Change in unrealized loss on available-for-sale    securities, net of tax		(651	)		(3,642	)
Comprehensive loss	$	(420,503	)	$	(102,758	)

See the accompanying notes to condensed consolidated financial statements.

9

NUTANIX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(Unaudited)

	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	)

	Three Months Ended October 31, 2022
	Common Stock				Additional Paid-In		Accumulated Other Comprehensive			Accumulated			Total Stockholders’
	Shares		Amount		Capital		Loss			Deficit			Deficit
	(in thousands)
Balance - July 31, 2022		226,938	$	6	$	3,583,928	$	(6,076	)	$	(4,368,026	)	$	(790,168	)
Issuance of common stock through employee equity    incentive plans		2,172		—		1,975		—			—			1,975
Issuance of common stock from ESPP purchase		998		—		18,947		—			—			18,947
Stock-based compensation		—		—		80,955		—			—			80,955
Other comprehensive loss		—		—		—		(3,642	)		—			(3,642	)
Net loss		—		—		—		—			(99,116	)		(99,116	)
Balance - October 31, 2022		230,108	$	6	$	3,685,805	$	(9,718	)	$	(4,467,142	)	$	(791,049	)

See the accompanying notes to condensed consolidated financial statements.

10

NUTANIX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Three Months Ended October 31,
	2021			2022
	(in thousands)
Cash flows from operating activities:
Net loss	$	(419,852	)	$	(99,116	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		23,291			19,839
Stock-based compensation		90,547			80,955
Change in fair value of derivative liability		198,038			—
Loss on debt extinguishment		64,910			—
Amortization of debt discount and issuance costs		9,831			10,477
Operating lease cost, net of accretion		9,189			8,722
Early exit of lease-related assets		—			(304	)
Non-cash interest expense		4,773			4,894
Other		3,072			(776	)
Changes in operating assets and liabilities:
Accounts receivable, net		64,740			40,838
Deferred commissions		(6,225	)		15,213
Prepaid expenses and other assets		6,751			958
Accounts payable		(3,139	)		(7,104	)
Accrued compensation and benefits		(39,965	)		(29,820	)
Accrued expenses and other liabilities		(6,207	)		(3,474	)
Operating leases, net		(12,323	)		(11,910	)
Deferred revenue		19,508			36,121
Net cash provided by operating activities		6,939			65,513
Cash flows from investing activities:
Maturities of investments		272,024			267,667
Purchases of investments		(290,050	)		(256,202	)
Sales of investments		17,999			—
Purchases of property and equipment		(8,844	)		(19,702	)
Net cash used in investing activities		(8,871	)		(8,237	)
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