Nutanix Wins New Logos, Boosts Outlook Amid Channel Push And OEM Deals With AWS, Cisco, Dell

‘Our pipeline has matured over time, and we’ve seen the impact from some of our recent go-to-market initiatives, seeing the benefit from our customers, our sales and partner incentive programs. We’re also seeing more leverage from our OEM and channel partners, who are contributing to our new logo growth as well,’ Nutanix CEO Rajiv Ramaswami says on the company’s earnings call.

Nutanix revenue jumped 16 percent year over year, beating its Wall Street guidance as VMware’s largest competitor added bigger customers more quickly this quarter, Nutanix CEO Rajiv Ramaswami (pictured) told investors during the company’s second-quarter earnings call.

“Now clearly you’ve seen our new logos grow 50 percent year over year for the last couple of quarters, and it’s driven by, I would say, a couple of things,” Ramaswami said during Wednesday’s call. “Our pipeline has matured over time, and we’ve seen the impact from some of our recent go-to-market initiatives, seeing the benefit from our customers, our sales and partner incentive programs. We’re also seeing more leverage from our OEM and channel partners, who are contributing to our new logo growth as well.”

The San Jose, Calif.-based company reported $654.7 million in sales for the quarter ended Jan. 31, beating the high end of its guidance by $9.7 million. Nutanix raised its full-year revenue guidance from $2.46 billion to $2.51 billion.

Ramaswami credited much of the revenue growth to Nutanix’s hyperfocus on the channel.

“We are a very partner-centric company. All our business pretty much goes through the partner community, and we have continued to make enhancements to our channel programs and incentives,” he told investors. “For example, we have new logo incentives for these partners to bring us business. They may not be new logos for them, but they’re new logos to Nutanix and so we’ve been working very hard to make it worthwhile for the channel to do business with us, and that’s certainly helping and contributing.”

In May it will be three years since Broadcom announced its intention to buy VMware, an event that spurred existing customers to renew their typical three-year deals to lock in pricing. Since then, the cost of VMware and products available to customers has changed. Broadcom has eliminated perpetual licensing and bundled existing products into four options, which are priced per core of compute.

“So what we see is, as a result, customers are moving more toward, ‘OK, I need a modern stack. I need something that can handle virtual machines and containers. I need something that can work on-prem, but also in the public cloud,’ and that's the kind of platform that we are providing today in the market,” Ramaswami said on the call. “So from that perspective, if there’s an impetus for a customer to migrate away from VMware, then it’s also an impetus for them to look at what is their long-term architectural endgame, and that’s exactly what we are positioning with them.”

Ramaswami highlighted several new logo wins, including one with an energy technology company that saw a 200 percent price increase with its existing IT infrastructure provider and sought out Nutanix.

“They were looking for an alternative solution that could also meet their cybersecurity requirements and desire for improved operational efficiency,” Ramaswami said. “They chose the Nutanix platform, including Nutanix Cloud Manager, which will enable them to streamline their operations through increased automation and reduced their existing IT footprint by over 30 percent.”

Over the last year, Nutanix has struck partnerships with Dell, Cisco and cloud giant AWS to provide its software baked into their products, while also presenting another off-ramp to VMware users. Ramaswami said the partnerships are part of the multiyear opportunity Nutanix sees in the market around the adoption of its hyperconverged infrastructure and are bearing fruit.

“With AWS, we’ve seen early traction with some customers migrating already from VMware Cloud on AWS over to our offering, and also sometimes from on-prem into the public cloud,” he said. “And so we’ve seen some of these customers actually move fairly quickly from where they were to being able to be running on a Nutanix platform within a matter of a month. Because one of the things that we don’t have to worry about in a cloud-to-cloud migration is the hardware refresh, [which] is not an issue anymore.”

He said the partnership with Cisco contributed to new logos in the most recent quarter and he expects that to grow as they work “very closely” together. Dell—the market leader worldwide in the sale of servers and storage—sells Nutanix HCI, which resulted in some sales this quarter. However, later this year Nutanix will be available on Dell’s PowerFlex storage.

“I think we should be looking at every PowerFlex customer out there, and future PowerFlex customer out there, and looking at this and saying, ‘OK, here’s now a hypervisor solution from a trusted partner that’s going to support them for over time, that they can work seamlessly with,’” he said. “PowerFlex works with their existing environments. They don’t have to go replace their hardware. That’s the value proposition that we bring to the table there.”