Nutanix Revenue Up as Dell Partnership Poses Challenge to VMware

Nutanix, one of the vendors considered best positioned to capitalize on fallout from Broadcom’s acquisition of VMware, beat expectations for sales last quarter.

Nutanix’s revenue of $548 million last quarter beat the analysts’ consensus of $537 million and increased 11% year-over-year. Annual contract value (ACV) billings rose 21% to $338 million, annual recurring revenue increased 22%, and it generated free cash flow in of $224 million.

The earnings report follows a revamping of its partner program announced last week, which includes a new high-end tier.

“All of these were significant improvements, just even compared to where we were a year ago, and of course, where we were a few years ago,” Nutanix CEO Rajiv Ramaswami said in a media briefing after the earnings report. “From a financial perspective, I think it's very good execution and we’re poised for the future. I think we are setting ourselves up to be the platform for the future, for people to run applications and manage data anywhere.”

Investment bank Piper Sandler rated Nutanix as a “top pick” and increased its price target after the earnings report.

"Management still sees strong renewal activity going on, in addition to the various new business opportunities in-front of Nutanix, particularly around the partnerships, Cisco and Dell, and VMware replacements," Piper Sandler said in a note.

Related:Dell and Nutanix Collaborate on Hybrid Cloud Offerings

Nutanix and Dell launched Dell XC Plus, a turnkey hyperconverged infrastructure (HCI) appliance, in August. That is just starting to generate sales. The vendors are also working on integrating the Nutanix Cloud Platform with Dell PowerFlex external storage, which is expected later in the year.

Nutanix sells HCI, a hypervisor and a cloud storage platform, putting it in competition with VMware in those areas. Ramaswami cited a few large deals that Nutanix closed last quarter that were VMware customers, but cautioned that more wins like that will take time. He said customers – particularly large companies – are experiencing longer sales cycles.

“We’ve noticed the spend on us is not slowing down, but there's a lot more inspection on the spend,” he said. “What that means is that people are scrutinizing every dollar they spend of their IT budget because they’re making sure there's a significant ROI and approvals are happening further up in the food chain than they normally do.”

Still, he said customers are not happy with pricing changes made by Broadcom since it acquired VMware last year.

Nutanix's Rajiv Ramaswami

“That's triggering them to look for alternatives and then we are in the game,” he said. “The approach that Broadcom has taken is not a customer-first mindset. I'd say it’s a Broadcom-first mindset.”

Related:Nutanix Reveals Trio of Channel Leadership Promotions

Dell Not Yet Impacting Nutanix Revenue

Ramaswami said he expects Dell to make a significant contribution to Nutanix revenue in the coming fiscal year, which began Aug. 1. He said the new products launched this month will be sold through Dell partners.

“This offering is sold and serviced by Dell, so it would go through Dell's channel partners,” he said. “And Dell, as you know, has a very well-established network of partners. Dell’s sellers are compensated on it, so they have a lot more skin in the game now on their side.”

Nutanix Adds Premier Tier to Elevate Partner Program

Last week Nutanix added a Premier Level for its Elevate Partner Program in 2025, which includes a rebate for top-performing partners. 

To qualify for the Premier tier in the new Nutanix Elevate program, a partner must have a specific number of certified salespeople, technical pre-salespeople, and consultants. A partner must also resell a minimum of $3 million in Nutanix business per year or transact with a minimum of ten accounts that have never previously done business with Nutanix.

Partners will have until Jan. 31, 2025 to complete the revenue attainment and program requirements for the Premier level.

Related:The Broadcom VMware Acquisition: A Complete Timeline