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 January 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 February 28, 2021, the registrant had 193,515,427 shares of Class A common stock, $0.000025 par value per share, and 10,766,100 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)	5
	Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34
	Item 3	Quantitative and Qualitative Disclosures About Market Risk	52
	Item 4	Controls and Procedures	52
PART II.		OTHER INFORMATION
	Item 1	Legal Proceedings	53
	Item 1A	Risk Factors	53
	Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	53
	Item 3	Defaults Upon Senior Securities	53
	Item 4	Mine Safety Disclosures	53
	Item 5	Other Information	53
	Item 6	Exhibits	54
EXHIBIT INDEX			54
SIGNATURES			55

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, 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 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;

• our ability to maintain and strengthen existing strategic alliances and partnerships, including our relationships with our channel partners and original equipment manufacturers, and for 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;

4

• 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 our fiscal year ended July 31, 2020 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, 2020 and January 31, 2021	6
Condensed Consolidated Statements of Operations for the Three and Six Months Ended January 31, 2020 and 2021	7
Condensed Consolidated Statements of Comprehensive Loss for the Three and Six Months Ended January 31, 2020 and 2021	8
Condensed Consolidated Statements of Stockholders' Equity (Deficit) for the Three and Six Months Ended January 31, 2020 and 2021	9
Condensed Consolidated Statements of Cash Flows for the Six Months Ended January 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	16
Note 4: Balance Sheet Components	18
Note 5: Convertible Senior Notes	21
Note 6: Leases	26
Note 7: Commitments and Contingencies	27
Note 8: Stockholders' Equity	28
Note 9: Equity Incentive Plans	29
Note 10: Income Taxes	32
Note 11: Net Loss Per Share	32
Note 12: Segment Information	33

6

NUTANIX, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	As of
	July 31, 2020			January 31, 2021
	(in thousands, except per share data)
Assets
Current assets:
Cash and cash equivalents	$	318,737		$	298,701
Short-term investments		401,041			990,138
Accounts receivable, net of allowances of $804 and $419, respectively		242,516			164,868
Deferred commissions—current		68,694			92,025
Prepaid expenses and other current assets		63,032			69,994
Total current assets		1,094,020			1,615,726
Property and equipment, net		143,172			131,971
Operating lease right-of-use assets		127,326			121,066
Deferred commissions—non-current		146,834			191,180
Intangible assets, net		49,392			40,702
Goodwill		185,260			185,260
Other assets—non-current		22,543			25,547
Total assets	$	1,768,547		$	2,311,452
Liabilities and Stockholders’ Deficit
Current liabilities:
Accounts payable	$	54,029		$	52,459
Accrued compensation and benefits		109,109			151,014
Accrued expenses and other current liabilities		25,924			26,130
Deferred revenue—current		534,572			578,664
Operating lease liabilities—current		36,569			41,309
Total current liabilities		760,203			849,576
Deferred revenue—non-current		648,869			667,627
Operating lease liabilities—non-current		116,794			107,784
Convertible senior notes, net		490,222			1,011,725
Derivative liability		—			397,290
Other liabilities—non-current		27,436			35,842
Total liabilities		2,043,524			3,069,844
Commitments and contingencies (Note 7)
Stockholders’ deficit:
Preferred stock, par value of $0.000025 per share— 200,000 shares    authorized as of July 31, 2020 and January 31, 2021; no shares    issued and outstanding as of July 31, 2020 and January 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, 2020 and    January 31, 2021; 201,949 (186,846 Class A and 15,103 Class B) and    204,238 (193,455 Class A and 10,783 Class B) shares issued and    outstanding as of July 31, 2020 and January 31, 2021		5			5
Additional paid-in capital		2,245,180			2,386,579
Accumulated other comprehensive income		2,030			557
Accumulated deficit		(2,522,192	)		(3,145,533	)
Total stockholders’ deficit		(274,977	)		(758,392	)
Total liabilities and stockholders’ deficit	$	1,768,547		$	2,311,452

See the accompanying notes to condensed consolidated financial statements.

7

NUTANIX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended January 31,						Six Months Ended January 31,
	2020			2021			2020			2021
	(in thousands, except per share data)
Revenue:
Product	$	213,547		$	174,798		$	405,991		$	330,550
Support, entitlements and other services		133,220			171,584			255,544			328,586
Total revenue		346,767			346,382			661,535			659,136
Cost of revenue:
Product		20,676			13,784			41,909			26,598
Support, entitlements and other services		54,547			57,170			105,515			112,315
Total cost of revenue		75,223			70,954			147,424			138,913
Gross profit		271,544			275,428			514,111			520,223
Operating expenses:
Sales and marketing		304,936			261,071			596,774			518,361
Research and development		139,088			135,571			277,294			271,375
General and administrative		34,579			35,034			67,439			68,808
Total operating expenses		478,603			431,676			941,507			858,544
Loss from operations		(207,059	)		(156,248	)		(427,396	)		(338,321	)
Other expense, net		(5,863	)		(126,001	)		(10,903	)		(204,733	)
Loss before provision for income taxes		(212,922	)		(282,249	)		(438,299	)		(543,054	)
Provision for income taxes		4,642			5,141			8,565			9,384
Net loss	$	(217,564	)	$	(287,390	)	$	(446,864	)	$	(552,438	)
Net loss per share attributable to Class A and Class B    common stockholders—basic and diluted	$	(1.13	)	$	(1.42	)	$	(2.34	)	$	(2.72	)
Weighted average shares used in computing net loss    per share attributable to Class A and Class B    common stockholders—basic and diluted		192,727			202,520			191,199			202,798

See the accompanying notes to condensed consolidated financial statements.

8

NUTANIX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)

	Three Months Ended January 31,						Six Months Ended January 31,
	2020			2021			2020			2021
	(in thousands)
Net loss	$	(217,564	)	$	(287,390	)	$	(446,864	)	$	(552,438	)
Other comprehensive loss, net of tax:
Change in unrealized (loss) gain on available-for-sale    securities, net of tax		(96	)		(323	)		469			(1,473	)
Comprehensive loss	$	(217,660	)	$	(287,713	)	$	(446,395	)	$	(553,911	)

See the accompanying notes to condensed consolidated financial statements.

9

NUTANIX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(Unaudited)

	Six Months Ended January 31, 2020
	Common Stock				Additional Paid-In		Accumulated Other Comprehensive			Accumulated			Total Stockholders’ Equity
	Shares		Amount		Capital		Income			Deficit			(Deficit)
	(in thousands)
Balance - July 31, 2019		188,595	$	5	$	1,835,528	$	669		$	(1,649,309	)	$	186,893
Issuance of common stock through employee equity incentive    plans		2,620		—		2,608		—			—			2,608
Issuance of common stock from ESPP purchase		959		—		21,337		—			—			21,337
Stock-based compensation		—		—		81,426		—			—			81,426
Other comprehensive income		—		—		—		565			—			565
Net loss		—		—		—		—			(229,300	)		(229,300	)
Balance - October 31, 2019		192,174		5		1,940,899		1,234			(1,878,609	)		63,529
Issuance of common stock through employee equity incentive    plans		2,480		—		2,414		—			—			2,414
Stock-based compensation		—		—		85,615		—			—			85,615
Other comprehensive loss		—		—		—		(96	)		—			(96	)
Net loss		—		—		—		—			(217,564	)		(217,564	)
Balance - January 31, 2020		194,654	$	5	$	2,028,928	$	1,138		$	(2,096,173	)	$	(66,102	)

10

	Six Months Ended January 31, 2021
	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	)
Issuance of common stock through employee equity incentive    plans		2,892			—		2,222			—			—			2,222
Stock-based compensation		—			—		84,454			—			—			84,454
Other comprehensive loss		—			—		—			(323	)		—			(323	)
Net loss		—			—		—			—			(287,390	)		(287,390	)
Balance - January 31, 2021		204,238		$	5	$	2,386,579		$	557		$	(3,145,533	)	$	(758,392	)

See the accompanying notes to condensed consolidated financial statements.

11

NUTANIX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended January 31,
	2020	2021
	(in thousands)
Cash flows from operating activities: