Nutanix hails partnership progress as annual contract billings climb 18%

Nutanix came away from its fiscal Q3 with a net loss of $123.6 million, marking an improvement from a net loss of $240.7 million in the year-ago quarter. (Getty Images)

Executives at cloud software company Nutanix talked up growth generated by key partnerships with Lenovo and HPE as the company posted strong results for its fiscal Q3 (ended April 30, 2021).

Responding to an analyst question on the company’s earnings call, Nutanix CEO Rajiv Ramaswami pointed to HPE as the partnership that’s “been growing the fastest for us,” adding Lenovo “continues to be, from a server perspective, also continuously a very good partner for us.” The quarter was Ramasami's first full period as CEO.

Nutanix inked a deal with HPE in 2019 to offer an integrated hybrid cloud-as-a-service product, and has been working with Lenovo in the server space since 2015. In April, it expanded its partnership with Lenovo to offer an as-a-service solution for hosted desktops. Earlier this month, Nutanix notably struck a deal with Amazon to extend its platform to Amazon Web Services’ public sector GovCloud.

Ramaswami said in a statement the company was “pleased with our progress on key priorities, including bolstering our ecosystem with our extended partnership with Lenovo, continued momentum with our core cloud software platform and an increased attach rate of our emerging products.”

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Fiscal Q3 revenue increased 8% year on year to $344.5 million. Nutanix posted a net loss of $123.6 million, marking an improvement from a net loss of $240.7 million in the year-ago quarter.

The company said it ended the quarter with a total of 19,430 end-customers, up from 16,580 in fiscal Q3 2020. Record annual contract value (ACV) billings of $159.9 million were up 18% year on year, while run-rate annual contract value increased 25% to $1.45 billion.

In a statement, CFO Duston Williams noted Nutanix’s “growing renewals pipeline will help to drive future top line growth, offer substantial sales and marketing efficiencies and increase the predictability in our business.”

The average term of the company’s contracts dipped to 3.3 years, down from 3.8. On the company’s earnings call, Williams explained “term compression is highly correlated to better deal economics” and said the figure was expected to drop further in the coming years though not at a rapid pace.

“I think as we have more time and as reps have more discussions with customers, they’re naturally going to try to move them from five to three or shorter,” he said. “As average contract term lengths do begin to stabilize, we expect reported year-over-year revenue growth to move closer to ACV billings growth over time.”

For its fiscal Q4, Nutanix forecast ACV billings of between $170 million and $175 million.