Nutanix Layoffs Coming, Analysts Point to 'Significant Overspending'

Cloud computing company Nutanix expects to lay off 4% of its workforce, or 270 employees, by the end of October. According to a SEC filing, the reduction in headcount “is part of the company’s ongoing efforts to drive towards profitable growth.”

One analyst said the layoffs are “long overdue” and that the Nutanix CEO’s predecessors had “significantly overspent.”

A company spokesperson said: “As hard as it is to make decisions that impact employees, we believe this will enable Nutanix to be more efficient and flexible going forward as we navigate a challenging macroeconomic environment.”

The company estimates that it will “incur a pre-tax charge in the range of $20 million-$25 million during the fiscal quarter ending Oct. 31. This will consist of a one-time severance and other termination benefit costs, all of which are expected to result in future cash expenditures.”

Supply Chain Concerns

Nutanix’s latest quarterly report shows solid earnings. Third-quarter revenues were $404 million, up 17% year on year, with a net loss of roughly $112 million. Annual recurring revenue was up 46% on the year, or $1.1 billion. The company projected full 2022 revenue to be $1.55 billion, an 11% increase from 2021.

Nutanix’s Rajiv Ramaswami

Despite these projections, Nutanix CEO Rajiv Ramaswami said supply chain problems were of concern. During a May earnings call, he said that increased supply chain delays with hardware partners strongly influenced the company’s outlook. The company works with vendors such as HP, Lenovo, Dell and Supermicro. Channel Futures could not confirm if these firms were also experiencing supply chain concerns. Ramaswami said he expected supply chain challenges would persist for multiple quarters.

Although, he added: “We don’t believe these challenges reflect any change in demand for our hybrid multicloud platform, and we remain focused on mitigating the impact of these issues and continuing to execute on the opportunity in front of us.”

Nutanix will report its financial results for the fiscal fourth quarter on August 31.