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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended January 31, 2021

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from                      to                     

Commission File Number: 001-37883

 

NUTANIX, INC.

(Exact name of registrant as specified in its charter)

 

Delaware

 

27-0989767

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

1740 Technology Drive, Suite 150

San Jose, CA 95110

(Address of principal executive offices, including zip code)

 

(408) 216-8360

(Registrant's telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading symbol(s)

 

Name of each exchange on which registered

Class A Common Stock, $0.000025 par value per share

 

NTNX

 

Nasdaq Global Select Market

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T  (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

 

Accelerated Filer

 

Non-accelerated Filer

 

Smaller Reporting Company

 

 

 

 

Emerging Growth Company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  


 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

As of February 28, 2021, the registrant had 193,515,427 shares of Class A common stock, $0.000025 par value per share, and 10,766,100 shares of Class B common stock, $0.000025 par value per share, outstanding.

 

 


 

 

TABLE OF CONTENTS

 

 

 

PAGE

PART I.

 

FINANCIAL INFORMATION

 

 

 

 

 

 

Item 1

Financial Statements (Unaudited)

5

 

 

 

 

 

Item 2

Management’s Discussion and Analysis of Financial Condition and Results of Operations

34

 

 

 

 

 

Item 3

Quantitative and Qualitative Disclosures About Market Risk

52

 

 

 

 

 

Item 4

Controls and Procedures

52

 

 

 

 

PART II.

 

OTHER INFORMATION

 

 

 

 

 

 

Item 1

Legal Proceedings

53

 

 

 

 

 

Item 1A

Risk Factors

53

 

 

 

 

 

Item 2

Unregistered Sales of Equity Securities and Use of Proceeds

53

 

 

 

 

 

Item 3

Defaults Upon Senior Securities

53

 

 

 

 

 

Item 4

Mine Safety Disclosures

53

 

 

 

 

 

Item 5

Other Information

53

 

 

 

 

 

Item 6

Exhibits

54

 

 

 

 

EXHIBIT INDEX

54

SIGNATURES

55

 

 

3


 

 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains express and implied forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended ("Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended ("Exchange Act"), which statements involve substantial risks and uncertainties. Other than statements of historical fact, all statements contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations and financial position, our business strategy and plans and our objectives for future operations, are forward-looking statements. The words "believe," "may," "will," "potentially," "estimate," "continue," "anticipate," "plan," "intend," "could," "would," "expect," or words or expressions of similar substance or the negative thereof, that convey uncertainty of future events or outcomes are intended to identify forward-looking statements. Forward-looking statements included in this Quarterly Report on Form 10-Q include, but are not limited to, statements regarding:

 

our future billings, revenue, cost of revenue and operating expenses, as well as changes in the cost of product revenue, component costs, product gross margins and support, entitlements and other services revenue and changes in research and development, sales and marketing and general and administrative expenses;

 

our business plans, strategies, initiatives, objectives and outlook, as well as our ability to execute such plans, strategies, initiatives and objectives successfully and in a timely manner, and the benefits and impact of such plans, initiatives and objectives on our business, operations, and financial results, including any impact on our revenue and product mix, average contract term lengths and discounting behavior;

 

our plans for, and the timing of, any current and future business model transitions, including our ongoing transition to a subscription-based business model, our ability to manage, complete or realize the benefits of such transitions successfully and in a timely manner, and the short-term and long-term impacts of such transitions on our business, operations and financial results;

 

the timing and potential impact of the COVID-19 pandemic on the global market environment and the IT industry, as well as on our business, operations and financial results, including changes we have made or anticipate making in response to the COVID-19 pandemic, our ability to manage our business during the pandemic, and the position we anticipate being in following the pandemic;

 

the benefits and capabilities of our platform, solutions, products, services and technology, including the interoperability and availability of our solutions with and on third-party platforms;

 

our plans and expectations regarding new solutions, products, services, product features and technology, including those that are still under development or in process;

 

our growth strategy, our ability to effectively achieve and manage our growth, and the amount, timing and impact of any investments to grow our business, including any plans to increase or decrease investments in our global engineering, research and development and sales and/or marketing teams;

 

our go-to-market strategy and the impact of any adjustments thereto, including any adjustments to our go-to-market cost structure, in particular, our sales compensation structure, and our plans regarding pricing and packaging of our product portfolio;

 

the success and impact of our customer, partner, industry, analyst, investor and employee events on our business, including on future pipeline generation;

 

the impact of our decision to use new or different metrics, or to make adjustments to the metrics we use, to supplement our financial reporting;

 

our ability to successfully manage or realize the benefits of our Chief Executive Officer transition, as well as the impact thereof on our business, operations and financial results;

 

anticipated trends, growth rates and challenges in our business and in the markets in which we operate, including the segmentation and productivity of our sales team;

 

market acceptance of new technology and recently introduced solutions;

 

our ability to increase sales of our solutions, particularly to large enterprise customers;

 

our ability to attract new end customers and retain and grow sales from our existing end customers;

 

our ability to maintain and strengthen existing strategic alliances and partnerships, including our relationships with our channel partners and original equipment manufacturers, and for any new strategic alliances and partnerships, and the impact of any changes to such relationships on our business, operations and financial results;

 

the effects of seasonal trends on our results of operations;

4


 

 

 

our expectations concerning relationships with third parties, including our ability to compress and stabilize sales cycles;

 

our ability to maintain, protect and enhance our intellectual property;

 

our exposure to and ability to guard against cyber attacks and other actual or perceived security breaches;

 

our ability to continue to expand internationally;

 

the competitive market, including our ability to compete effectively, the competitive advantages of our products, and the effects of increased competition in our market;

 

anticipated capital expenditures;

 

future acquisitions or investments in complementary companies, products, services or technologies and the ability to successfully integrate completed acquisitions;

 

our ability to stay in compliance with laws and regulations that currently apply or become applicable to our business both in the United States and internationally, including recent changes in global tax laws;

 

macroeconomic and industry trends, projected growth or trend analysis;

 

the impact of events that may be outside of our control, such as political and social unrest, terrorist attacks, hostilities, malicious human acts, climate change, natural disasters (including extreme weather), pandemics or other major public health concerns, and other similar events;

 

our ability to attract and retain qualified employees and key personnel; and

 

the sufficiency of cash balances to meet cash needs for at least the next 12 months.

We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives and financial needs in light of the information currently available to us. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described under the heading "Risk Factors" in Part I, Item 1A of our Annual Report on Form 10-K for our fiscal year ended July 31, 2020 and in Part II, Item 1A, "Risk Factors" in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment and new risks emerge from time to time. It is not possible for us to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained or implied in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and trends discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, performance, or events and circumstances reflected in the forward-looking statements will be achieved or will occur. The forward-looking statements in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation, and expressly disclaim any obligation, to update, alter or otherwise revise or publicly release the results of any revision to these forward-looking statements to reflect new information or the occurrence of unanticipated or subsequent events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements.

 

5


 

 

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

 

 

Page

 

 

Condensed Consolidated Balance Sheets as of July 31, 2020 and January 31, 2021

6

 

 

Condensed Consolidated Statements of Operations for the Three and Six Months Ended January 31, 2020 and 2021

7

 

 

Condensed Consolidated Statements of Comprehensive Loss for the Three and Six Months Ended January 31, 2020 and 2021

8

 

 

Condensed Consolidated Statements of Stockholders' Equity (Deficit) for the Three and Six Months Ended January 31, 2020 and 2021

9

 

 

Condensed Consolidated Statements of Cash Flows for the Six Months Ended January 31, 2020 and 2021

11

 

 

Notes to Condensed Consolidated Financial Statements

12

 

 

Note 1: Overview and Basis of Presentation

12

Note 2: Revenue, Deferred Revenue and Deferred Commissions

14

Note 3: Fair Value Measurements

16

Note 4: Balance Sheet Components

18

Note 5: Convertible Senior Notes

21

Note 6: Leases

26

Note 7: Commitments and Contingencies

27

Note 8: Stockholders' Equity

28

Note 9: Equity Incentive Plans

29

Note 10: Income Taxes

32

Note 11: Net Loss Per Share

32

Note 12: Segment Information

33

 

 

6


Table of Contents

 

 

NUTANIX, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

 

As of

 

 

 

July 31,

2020

 

 

January 31,

2021

 

 

 

(in thousands, except per share data)

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

318,737

 

 

$

298,701

 

Short-term investments

 

 

401,041

 

 

 

990,138

 

Accounts receivable, net of allowances of $804 and $419, respectively

 

 

242,516

 

 

 

164,868

 

Deferred commissions—current

 

 

68,694

 

 

 

92,025

 

Prepaid expenses and other current assets

 

 

63,032

 

 

 

69,994

 

Total current assets

 

 

1,094,020

 

 

 

1,615,726

 

Property and equipment, net

 

 

143,172

 

 

 

131,971

 

Operating lease right-of-use assets

 

 

127,326

 

 

 

121,066

 

Deferred commissions—non-current

 

 

146,834

 

 

 

191,180

 

Intangible assets, net

 

 

49,392

 

 

 

40,702

 

Goodwill

 

 

185,260

 

 

 

185,260

 

Other assets—non-current

 

 

22,543

 

 

 

25,547

 

Total assets

 

$

1,768,547

 

 

$

2,311,452

 

Liabilities and Stockholders’ Deficit

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

54,029

 

 

$

52,459

 

Accrued compensation and benefits

 

 

109,109

 

 

 

151,014

 

Accrued expenses and other current liabilities

 

 

25,924

 

 

 

26,130

 

Deferred revenue—current

 

 

534,572

 

 

 

578,664

 

Operating lease liabilities—current

 

 

36,569

 

 

 

41,309

 

Total current liabilities

 

 

760,203

 

 

 

849,576

 

Deferred revenue—non-current

 

 

648,869

 

 

 

667,627

 

Operating lease liabilities—non-current

 

 

116,794

 

 

 

107,784

 

Convertible senior notes, net

 

 

490,222

 

 

 

1,011,725

 

Derivative liability

 

 

 

 

 

397,290

 

Other liabilities—non-current

 

 

27,436

 

 

 

35,842

 

Total liabilities

 

 

2,043,524

 

 

 

3,069,844

 

Commitments and contingencies (Note 7)

 

 

 

 

 

 

 

 

Stockholders’ deficit:

 

 

 

 

 

 

 

 

Preferred stock, par value of $0.000025 per share— 200,000 shares

   authorized as of July 31, 2020 and January 31, 2021; no shares

   issued and outstanding as of July 31, 2020 and January 31, 2021

 

 

 

 

 

 

Common stock, par value of $0.000025 per share—1,200,000 (1,000,000

   Class A, 200,000 Class B) shares authorized as of July 31, 2020 and

   January 31, 2021; 201,949 (186,846 Class A and 15,103 Class B) and

   204,238 (193,455 Class A and 10,783 Class B) shares issued and

   outstanding as of July 31, 2020 and January 31, 2021

 

 

5

 

 

 

5

 

Additional paid-in capital

 

 

2,245,180

 

 

 

2,386,579

 

Accumulated other comprehensive income

 

 

2,030

 

 

 

557

 

Accumulated deficit

 

 

(2,522,192

)

 

 

(3,145,533

)

Total stockholders’ deficit

 

 

(274,977

)

 

 

(758,392

)

Total liabilities and stockholders’ deficit

 

$

1,768,547

 

 

$

2,311,452

 

 

See the accompanying notes to condensed consolidated financial statements.

 

7


Table of Contents

 

 

NUTANIX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

Three Months Ended

January 31,

 

 

Six Months Ended

January 31,

 

 

 

2020

 

 

2021

 

 

2020

 

 

2021

 

 

 

(in thousands, except per share data)

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product

 

$

213,547

 

 

$

174,798

 

 

$

405,991

 

 

$

330,550

 

Support, entitlements and other services

 

 

133,220

 

 

 

171,584

 

 

 

255,544

 

 

 

328,586

 

Total revenue

 

 

346,767

 

 

 

346,382

 

 

 

661,535

 

 

 

659,136

 

Cost of revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product

 

 

20,676

 

 

 

13,784

 

 

 

41,909

 

 

 

26,598

 

Support, entitlements and other services

 

 

54,547

 

 

 

57,170

 

 

 

105,515

 

 

 

112,315

 

Total cost of revenue

 

 

75,223

 

 

 

70,954

 

 

 

147,424

 

 

 

138,913

 

Gross profit

 

 

271,544

 

 

 

275,428

 

 

 

514,111

 

 

 

520,223

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

304,936

 

 

 

261,071

 

 

 

596,774

 

 

 

518,361

 

Research and development

 

 

139,088

 

 

 

135,571

 

 

 

277,294

 

 

 

271,375

 

General and administrative

 

 

34,579

 

 

 

35,034

 

 

 

67,439

 

 

 

68,808

 

Total operating expenses

 

 

478,603

 

 

 

431,676

 

 

 

941,507

 

 

 

858,544

 

Loss from operations

 

 

(207,059

)

 

 

(156,248

)

 

 

(427,396

)

 

 

(338,321

)

Other expense, net

 

 

(5,863

)

 

 

(126,001

)

 

 

(10,903

)

 

 

(204,733

)

Loss before provision for income taxes

 

 

(212,922

)

 

 

(282,249

)

 

 

(438,299

)

 

 

(543,054

)

Provision for income taxes

 

 

4,642

 

 

 

5,141

 

 

 

8,565

 

 

 

9,384

 

Net loss

 

$

(217,564

)

 

$

(287,390

)

 

$

(446,864

)

 

$

(552,438

)

Net loss per share attributable to Class A and Class B

   common stockholders—basic and diluted

 

$

(1.13

)

 

$

(1.42

)

 

$

(2.34

)

 

$

(2.72

)

Weighted average shares used in computing net loss

   per share attributable to Class A and Class B

   common stockholders—basic and diluted

 

 

192,727

 

 

 

202,520

 

 

 

191,199

 

 

 

202,798

 

 

See the accompanying notes to condensed consolidated financial statements.

 

8


Table of Contents

 

 

NUTANIX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)

 

 

 

Three Months Ended

January 31,

 

 

Six Months Ended

January 31,

 

 

 

2020

 

 

2021

 

 

2020

 

 

2021

 

 

 

(in thousands)

 

Net loss

 

$

(217,564

)

 

$

(287,390

)

 

$

(446,864

)

 

$

(552,438

)

Other comprehensive loss, net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in unrealized (loss) gain on available-for-sale

   securities, net of tax

 

 

(96

)

 

 

(323

)

 

 

469

 

 

 

(1,473

)

Comprehensive loss

 

$

(217,660

)

 

$

(287,713

)

 

$

(446,395

)

 

$

(553,911

)

 

See the accompanying notes to condensed consolidated financial statements.

 

9


Table of Contents

 

 

NUTANIX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(Unaudited)

 

 

 

Six Months Ended January 31, 2020

 

 

 

Common Stock

 

 

Additional

Paid-In

 

 

Accumulated

Other

Comprehensive

 

 

Accumulated

 

 

Total

Stockholders’ Equity

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income

 

 

Deficit

 

 

(Deficit)

 

 

 

(in thousands)

 

Balance - July 31, 2019

 

 

188,595

 

 

$

5

 

 

$

1,835,528

 

 

$

669

 

 

$

(1,649,309

)

 

$

186,893

 

Issuance of common stock through employee equity incentive

   plans

 

 

2,620

 

 

 

 

 

 

2,608

 

 

 

 

 

 

 

 

 

2,608

 

Issuance of common stock from ESPP purchase

 

 

959

 

 

 

 

 

 

21,337

 

 

 

 

 

 

 

 

 

21,337

 

Stock-based compensation

 

 

 

 

 

 

 

 

81,426

 

 

 

 

 

 

 

 

 

81,426

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

565

 

 

 

 

 

 

565

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(229,300

)

 

 

(229,300

)

Balance - October 31, 2019

 

 

192,174

 

 

 

5

 

 

 

1,940,899

 

 

 

1,234

 

 

 

(1,878,609

)

 

 

63,529

 

Issuance of common stock through employee equity incentive

   plans

 

 

2,480

 

 

 

 

 

 

2,414

 

 

 

 

 

 

 

 

 

2,414

 

Stock-based compensation

 

 

 

 

 

 

 

 

85,615

 

 

 

 

 

 

 

 

 

85,615

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(96

)

 

 

 

 

 

(96

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(217,564

)

 

 

(217,564

)

Balance - January 31, 2020

 

 

194,654

 

 

$

5

 

 

$

2,028,928

 

 

$

1,138

 

 

$

(2,096,173

)

 

$

(66,102

)

10


Table of Contents

 

 

 

 

 

Six Months Ended January 31, 2021

 

 

 

Common Stock

 

 

Additional

Paid-In

 

 

Accumulated

Other

Comprehensive

 

 

Accumulated

 

 

Total

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income

 

 

Deficit

 

 

Deficit

 

 

 

(in thousands)

 

Balance - July 31, 2020

 

 

201,949

 

 

$

5

 

 

$

2,245,180

 

 

$

2,030

 

 

$

(2,522,192

)

 

$

(274,977

)

Issuance of common stock through employee equity incentive

   plans

 

 

3,117

 

 

 

 

 

 

1,631

 

 

 

 

 

 

 

 

 

1,631

 

Issuance of common stock from ESPP purchase

 

 

1,456

 

 

 

 

 

 

18,070

 

 

 

 

 

 

 

 

 

18,070

 

Repurchase and retirement of common stock

 

 

(5,176

)

 

 

 

 

 

(54,176

)

 

 

 

 

 

(70,903

)

 

 

(125,079

)

Stock-based compensation

 

 

 

 

 

 

 

 

89,198

 

 

 

 

 

 

 

 

 

89,198

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(1,150

)

 

 

 

 

 

(1,150

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(265,048

)

 

 

(265,048

)

Balance - October 31, 2020

 

 

201,346

 

 

 

5

 

 

 

2,299,903

 

 

 

880

 

 

 

(2,858,143

)

 

 

(557,355

)

Issuance of common stock through employee equity incentive

   plans

 

 

2,892

 

 

 

 

 

 

2,222

 

 

 

 

 

 

 

 

 

2,222

 

Stock-based compensation

 

 

 

 

 

 

 

 

84,454

 

 

 

 

 

 

 

 

 

84,454

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(323

)

 

 

 

 

 

(323

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(287,390

)

 

 

(287,390

)

Balance - January 31, 2021

 

 

204,238

 

 

$

5

 

 

$

2,386,579

 

 

$

557

 

 

$

(3,145,533

)

 

$

(758,392

)

 

See the accompanying notes to condensed consolidated financial statements.

 

11


Table of Contents

 

 

NUTANIX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

Six Months Ended

January 31,

 

 

 

2020

 

 

2021

 

 

 

(in thousands)

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(446,864

)

 

$

(552,438

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

45,540

 

 

 

47,087

 

Stock-based compensation

 

 

167,041

 

 

 

173,652

 

Change in fair value of derivative liability

 

 

 

 

 

166,380

 

Amortization of debt discount and issuance costs

 

 

15,398

 

 

 

28,796

 

Operating lease cost, net of accretion

 

 

14,539

 

 

 

16,930

 

Impairment of lease-related assets

 

 

3,002

 

 

 

2,822

 

Non-cash interest expense

 

 

 

 

 

6,615

 

Other

 

 

(236

)

 

 

4,354

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable, net

 

 

(1,848

)

 

 

79,173

 

Deferred commissions

 

 

(35,422

)

 

 

(67,677

)

Prepaid expenses and other assets

 

 

9,064

 

 

 

(9,217

)

Accounts payable

 

 

(3,428

)

 

 

(2,602

)

Accrued compensation and benefits

 

 

20,085

 

 

 

39,593

 

Accrued expenses and other liabilities

 

 

974

 

 

 

2,100

 

Operating leases, net

 

 

(13,039

)

 

 

(16,523

)

Deferred revenue

 

 

146,540

 

 

 

61,325

 

Net cash used in operating activities

 

 

(78,654

)

 

 

(19,630

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Maturities of investments

 

 

299,380

 

 

 

260,852

 

Purchases of investments

 

 

(416,636

)

 

 

(859,576

)

Sales of investments

 

 

24,147

 

 

 

2,999

 

Purchases of property and equipment

 

 

(39,451

)

 

 

(25,168

)

Net cash used in investing activities

 

 

(132,560

)

 

 

(620,893

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Proceeds from sales of shares through employee equity incentive plans

 

 

26,486

 

 

 

21,904

 

Proceeds from the issuance of convertible notes, net of issuance costs

 

 

 

 

 

723,617

 

Repurchases of common stock

 

 

 

 

 

(125,079

)

Net cash provided by financing activities

 

 

26,486

 

 

 

620,442

 

Net decrease in cash, cash equivalents and restricted cash

 

$

(184,728

)

 

$

(20,080

)

Cash, cash equivalents and restricted cash—beginning of period

 

 

399,520

 

 

 

321,991

 

Cash, cash equivalents and restricted cash—end of period

 

$

214,792

 

 

$

301,911

 

Restricted cash (1)

 

 

3,099

 

 

 

3,210

 

Cash and cash equivalents—end of period

 

$

211,693

 

 

$

298,701

 

Supplemental disclosures of cash flow information:

 

 

 

 

 

 

 

 

Cash paid for income taxes

 

$

11,195

 

 

$

8,999

 

Supplemental disclosures of non-cash investing and financing

   information:

 

 

 

 

 

 

 

 

Purchases of property and equipment included in accounts payable and

   accrued and other liabilities

 

$

13,997

 

 

$

7,621

 

Finance lease liabilities arising from obtaining right-of-use assets

 

$

 

 

$

1,960

 

 

 

(1)

Included within other assets—non-current in the condensed consolidated balance sheets.

See the accompanying notes to condensed consolidated financial statements.

 

 

12


Table of Contents

 

 

NUTANIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1. OVERVIEW AND BASIS OF PRESENTATION

Organization and Description of Business

Nutanix, Inc. was incorporated in the state of Delaware in September 2009. Nutanix, Inc. is headquartered in San Jose, California, and together with its wholly-owned subsidiaries (collectively, "we," "us," "our" or "Nutanix"), has operations throughout North America, Europe, Asia Pacific, the Middle East, Latin America and Africa.

We provide a leading enterprise cloud platform, which we call the Nutanix Hybrid Cloud Platform, that consists of software solutions and cloud services that power our customers' hybrid cloud and multicloud strategies. Our solutions run across private-, hybrid- and multicloud environments, and allow organizations to seamlessly "lift and shift" their workloads, including enterprise applications, high-performance databases, end-user computing and virtual desktop infrastructure ("VDI") services, cloud native workloads, and analytics applications, between different cloud environments. Our solutions are primarily sold through channel partners, including distributors, resellers and original equipment manufacturers ("OEMs") (collectively, "Partners"), and delivered directly to our end customers.

Principles of Consolidation and Significant Accounting Policies

The accompanying condensed consolidated financial statements, which include the accounts of Nutanix, Inc. and its wholly-owned subsidiaries, have been prepared in conformity with accounting principles generally accepted in the United States ("U.S. GAAP") and are consistent in all material respects with those included in our Annual Report on Form 10-K for the fiscal year ended July 31, 2020, filed with the Securities and Exchange Commission ("SEC") on September 23, 2020. All intercompany accounts and transactions have been eliminated in consolidation. The condensed consolidated financial statements are unaudited, but include all adjustments of a normal recurring nature necessary for a fair presentation of our quarterly results. The consolidated balance sheet as of July 31, 2020 is derived from audited financial statements, however, it does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes in our Annual Report on Form 10-K for the fiscal year ended July 31, 2020, which was filed with the SEC on September 23, 2020.

Use of Estimates

The preparation of interim condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Such management estimates and assumptions include, but are not limited to, the best estimate of selling prices for products and related support; useful lives and recoverability of intangible assets and property and equipment; allowance for credit losses; determination of fair value of stock-based awards; accounting for income taxes, including the valuation allowance on deferred tax assets and uncertain tax positions; warranty liability; purchase commitment liabilities to our OEMs; sales commissions expense and the period of benefit for deferred commissions; whether an arrangement is or contains a lease; the incremental borrowing rate to measure the present value of operating right-of-use assets and lease liabilities; the inputs used to determine the fair value of the contingent liability associated with the conversion feature of the convertible senior notes due in 2026; and contingencies and litigation. Management evaluates these estimates and assumptions on an ongoing basis using historical experience and other factors and makes adjustments when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could materially differ from those estimates and assumptions.

In response to the ongoing and rapidly evolving COVID-19 pandemic, we considered the impact of the estimated economic implications on our critical and significant accounting estimates, including assessment of collectibility of customer contracts, valuation of accounts receivable, provision for purchase commitments to our OEMs and impairment of long-lived assets, right-of-use assets, and deferred commissions.

Concentration of Risk

Concentration of revenue and accounts receivable—We sell our products primarily through our Partners and occasionally directly to end customers. For the three and six months ended January 31, 2020 and 2021, no end customer accounted for more than 10% of total revenue or accounts receivable.

13


Table of Contents

NUTANIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

 

For each significant Partner, revenue as a percentage of total revenue and accounts receivable as a percentage of total accounts receivable, net are as follows:

 

 

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

January 31,

 

 

Six Months Ended

January 31,

 

 

Accounts Receivable

as of

 

Partners

 

2020

 

 

2021

 

 

2020

 

 

2021

 

 

July 31,

2020

 

 

January 31,

2021

 

Partner A

 

 

32

%

 

 

34

%

 

 

30

%

 

 

31

%

 

 

33

%

 

 

33

%

Partner B

 

 

(1

)

 

 

(1

)

 

 

(1

)

 

 

11

%

 

 

(1

)

 

 

11

%

Partner C

 

 

(1

)

 

 

(1

)

 

 

(1

)

 

 

(1

)

 

 

(1

)

 

 

11

%

Partner D

 

 

14

%