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Nutanix, Inc. (NTNX)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 FY2025 revenue was $639.0M, above the high end of guidance ($620–$630M), with non-GAAP EPS $0.42; ARR reached $2.14B (+18% YoY), and free cash flow was $203.4M .
  • Results beat Wall Street consensus on revenue and EPS; sequential revenue declined modestly vs Q2 due to normal seasonality, while margins remained strong (non-GAAP GM 88.2%, OM 21.5%) .
  • FY2025 guidance was raised across all metrics: revenue to $2.52–$2.53B, non-GAAP operating margin ~20.5%, and free cash flow to $700–$730M; Q4 guidance introduced at $635–$645M revenue and 15.5%–16.5% non-GAAP OM .
  • Strategic catalysts: GA of Enterprise AI with deeper NVIDIA integration, Cloud Native AOS (Kubernetes data services without hypervisor), and external storage support (PowerFlex) with announced Pure Storage partnership, reinforcing platform breadth and partner leverage .

What Went Well and What Went Wrong

What Went Well

  • Beat-and-raise quarter: revenue above guidance; non-GAAP OM 21.5% vs guided 17%–18%; FCF of $203.4M (32% margin) and ARR +18% YoY to $2.14B .
  • New logos and enterprise wins; CEO: “We delivered solid third quarter results, above the high end of our guided ranges...reflect our continued focus on driving innovation and broadening our partnerships” .
  • Product innovation momentum: GA of Enterprise AI with NVIDIA NIM/NeMo integration; introduction of Cloud Native AOS; external storage support (PowerFlex) and Pure Storage partnership aimed at mission-critical workloads, including AI .

What Went Wrong

  • Sequential revenue down vs Q2 ($639.0M vs $654.7M) due to normal Q2/Q4 seasonal strength; Q4 guide embeds increased opex from hiring ramp, stepping down margins near term .
  • Sales cycles remain modestly elongated; variability in large-deal timing; U.S. Federal demand intermittent given personnel changes and reviews, lengthening deal cycles .
  • Support and entitlements growth slower vs product in Q3; CFO noted professional/support revenue can move with deferred revenue schedules and legacy device licenses, creating quarterly variability .

Financial Results

Core P&L and Cash Metrics (quarterly)

MetricQ1 FY2025Q2 FY2025Q3 FY2025
Revenue ($USD Millions)$591.0 $654.7 $639.0
GAAP Diluted EPS ($)$0.10 $0.19 $0.22
Non-GAAP Diluted EPS ($)$0.42 $0.56 $0.42
Non-GAAP Gross Margin %87.5% 88.3% 88.2%
Non-GAAP Operating Margin %20.0% 24.6% 21.5%
Free Cash Flow ($USD Millions)$151.9 $187.1 $203.4

Year-over-Year (Q3 FY2025 vs Q3 FY2024)

MetricQ3 FY2024Q3 FY2025
Revenue ($USD Millions)$524.6 $639.0
GAAP Gross Margin %84.8% 87.0%
Non-GAAP Gross Margin %86.5% 88.2%
GAAP Operating Margin %(2.2)% 7.6%
Non-GAAP Operating Margin %14.0% 21.5%
ARR ($USD Billions)$1.82 $2.14

Revenue Disaggregation

Category ($USD Millions)Q1 FY2025Q2 FY2025Q3 FY2025
Subscription Revenue$560.7 $624.4 $609.7
Professional Services Revenue$27.3 $28.0 $28.0
Other Non-Subscription Product Revenue$3.0 $2.3 $1.3
Total Revenue$591.0 $654.7 $639.0

KPIs and Operating Data

KPIQ1 FY2025Q2 FY2025Q3 FY2025
ARR ($USD Billions)$1.97 $2.06 $2.14
Average Contract Duration (years)3.1 3.0 3.1
Net Dollar-Based Retention (NRR)110% 110% 110%
Total Billings ($USD Millions)$591.4 $776.4 $647.0
Net Cash from Operating Activities ($USD Millions)$161.8 $221.7 $218.5

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ4 FY2025N/A$635–$645M Introduced
Non-GAAP Operating MarginQ4 FY2025N/A15.5%–16.5% Introduced
Diluted Shares (WASO)Q4 FY2025N/A~297M Introduced
RevenueFY2025$2.495–$2.515B $2.52–$2.53B Raised
Non-GAAP Operating MarginFY202517.5%–18.5% ~20.5% Raised
Free Cash FlowFY2025$650–$700M $700–$730M Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 FY25)Previous Mentions (Q2 FY25)Current Period (Q3 FY25)Trend
AI/Technology InitiativesGA of GPT-in-a-Box 2.0; expanded AWS partnership for NC2 migration; early enterprise AI inferencing use cases Enterprise AI (NAI) positioning; Kubernetes platform adoption; client wins in EMEA FS and public sector GA of Enterprise AI with NVIDIA NIM/NeMo; Cloud Native AOS for Kubernetes without hypervisor; external storage support Accelerating
Federal/Policy & MacroSeasonally strong Q1; lower YoY due to CR elongation; elongated sales cycles Fed improved with solid YoY growth; caution given new administration dynamics Continued variability; longer deal cycles in Fed; macro dynamic but tariffs not impacting software Stabilizing with uncertainty
Partner EcosystemExpanded AWS partnership; pipeline leverage Cisco/Dell contributing new logos; convert note-funded buybacks and RCF PowerFlex GA; Pure Storage partnership; Cisco steady contributor; early Dell contributions Improving
VMware/Broadcom Competitive DynamicsMultiyear displacement opportunity; migrations cloud-to-cloud and on-prem New logos +50% YoY; large enterprise wins; variability tied to ELAs & hardware refresh Continued traction; more AHV starts; CSP/MSP route to market emerging Positive momentum
Sales Cycle & Deal StructureModestly elongated cycles; larger-deal variability Cycles modestly elongated; more large deals closed; billings variabilities Elongation persists; Q3 beat despite variability; hiring ramp to support growth Stable
Non-GAAP Tax Rate6% FY2024 context —Shift to long-term projected 20% non-GAAP effective tax rate; cash taxes mid-high single digits Policy change enacted

Management Commentary

  • CEO: “We delivered solid third quarter results, above the high end of our guided ranges, driven by the strength of the Nutanix Cloud Platform and demand from businesses looking for a trusted long-term partner” .
  • CEO on innovation: support for external storage (PowerFlex), Pure Storage partnership, and Cloud Native AOS broaden the platform for modern apps and AI .
  • CFO: “Non-GAAP net income in Q3 was $125 million, or fully diluted EPS of $0.42… Non-GAAP operating margin in Q3 was 21.5%, higher than our guided range… We are adopting a long-term projected non-GAAP tax rate of 20% starting in Q3” .

Q&A Highlights

  • Macrotone & Tariffs: Software-centric model implies no direct tariff exposure; Fed deal cycles lengthened with personnel changes, factored into outlook .
  • ARR vs Revenue Dynamics: Upfront license recognition and duration drive revenue lumpiness; example of prior eight-figure ACV phasing into Q3 revenue .
  • CSP/MSP Opportunity: Historically small but growing; multi-tenant capabilities and sovereign cloud angle (e.g., OVH) provide new route-to-market .
  • Dell/Cisco traction: Cisco a steady new-logo contributor; Dell early-stage HCI resell and now aligned with PowerFlex; expect revenue contribution in FY2026 .
  • Renewals and ATR: Renewals solid; ATR expected to grow nicely in FY2025 and beyond; early renewals welcomed if economics favorable .

Estimates Context

MetricQ1 FY2025Q2 FY2025Q3 FY2025
Revenue Consensus Mean ($USD Millions)572.16*642.91*626.75*
Revenue Actual ($USD Millions)590.96 654.72 638.98
EPS Consensus Mean ($)0.318*0.472*0.381*
EPS Actual (Non-GAAP Diluted, $)0.42 0.56 0.42

Values retrieved from S&P Global.*

  • Q3 FY2025: revenue beat by ~$12.2M (~1.9%) and EPS beat by ~$0.04; similar beats registered in Q1 and Q2 .

Key Takeaways for Investors

  • The beat-and-raise profile, with elevated FY2025 margin and FCF guidance, indicates durable operating leverage even as opex ramps for growth initiatives .
  • Platform expansion (Enterprise AI, Cloud Native AOS, external storage integrations) increases TAM and reduces migration friction, supporting land-and-expand and partner-led motions .
  • Seasonality and elongated sales cycles persist; expect lower Q4 margins vs Q3 as hiring timing flows through, but FY2025 non-GAAP OM raised to ~20.5% .
  • Competitive displacements remain a multiyear opportunity tied to VMware ELAs and hardware refresh cycles; new-logo momentum and AHV adoption support share gains .
  • Renewals and ATR are key drivers of stability; NRR at 110% and raised FY FCF ($700–$730M) suggest robust cash generation to fund growth and buybacks .
  • Watch Q4 execution on external storage (PowerFlex) and early Pure Storage integration; near-term revenue contribution is limited, but strategic positioning is favorable .
  • Risk monitoring: Fed timing under new administration, large-deal variability, and macro scrutiny on spend—all embedded within guidance .

Appendix: Additional Data

Disaggregation Detail (YoY snapshot)

Category ($USD Millions)Q3 FY2024Q3 FY2025
Subscription Revenue$486.6 $609.7
Professional Services Revenue$26.2 $28.0
Other Non-Subscription Product Revenue$11.7 $1.3

Non-GAAP Reconciliations (Quarterly excerpts)

MetricQ3 FY2024Q3 FY2025
Non-GAAP Gross Margin %86.5% 88.2%
Non-GAAP Operating Margin %14.0% 21.5%
Non-GAAP Diluted EPS ($)0.24 0.42

Notes: Company also disclosed a methodology change to a long-term projected non-GAAP tax rate of 20% starting Q3 FY2025 .