Nutanix Grows New Customers As Channel Engagement Increases, CEO Says

'We’ve seen an increase in channel partners’ engagement with us over the last year or two. Some of it is just what they’re seeing with Broadcom, some of that is our own incentives that we are offering,' Nutanix CEO Rajiv Ramaswami tells investors.

Hyperconverged infrastructure juggernaut Nutanix beat all of its quarterly guidance as its annual recurring revenue rose 18 percent, and revenue was up 16 percent as steady demand for infrastructure modernization led to a strong growth in new logos driven by channel partners.

“We’ve seen an increase in channel partners’ engagement with us over the last year or two. Some of it is just what they’re seeing with Broadcom, some of that is our own incentives that we are offering,” Nutanix CEO Rajiv Ramaswami told investors on a call with investors and analysts covering the company’s first fiscal quarter that ended October 31.

The most significant wins of the quarter were a global IT services provider in the APAC region and a Fortune 100 food service provider, which each wanted to “decrease exposure to a large competitor.”

“This enabled them to reduce their TCO by nearly 50 percent while consolidating their existing data center,” Ramaswami said. “I’m pleased with our solid 1Q results, our ongoing innovation on our cloud platform, particularly with respect to support for generative AI and modern applications.”

The outperformance in revenue was driven by good renewals and winning new customers to the Nutanix platform, said CFO Rukmini Sivaraman.

“We saw strength in landing new customers onto our platform helped by more leverage from our OEM and channel partners from the various programs we have put in place to incentivize new logos and from a general increase in engagement from customers looking at us as an alternative in the wake of industry M&A,” she told investors.

San Jose, Calif-based Nutanix said its sales cycles are running longer than average on a historic basis, due to spending patterns and the complex nature of the technology, which is something that partners have echoed to CRN.

For the most recent quarter, Nutanix’s annual recurring revenue rose to $1.97 billion from $1.66 billion. Quarterly revenue was up to $591 million from $511 million a year ago. Operating income was $27.3 million, down $5.7 million.

Nutanix expects revenue for its next quarter to rise to between $635 million and $645 million. The company estimates it’ll see fiscal year revenue rise to between $2.43 billion and $2.46 billion.

Ramaswami said AI spending is still in the early days. The bulk of AI spending that Nutanix has seen for its GPT In A Box 2.0 has not been widespread in the enterprise but has been focused withing large hyperscalers and the buildout “of these massive clusters to train these LLMs.”

Investors wanted to know when Nutanix would expand the availability of its Acropolis Hypervisor from Dell storage to other OEMs. Nutanix and Dell have been working on a PowerFlex offering that will be available in the first half of FY 25, and will be contributing to revenue in FY 26, Ramaswami said.

“We’ll continue to explore other options in the market when it comes to other storage arrays,” he said during the call. “The idea is to start with Dell and over time expand to others.”

Nutanix stock rose more than 3 percent in after-hours trading Tuesday to $75 a share.