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Nutanix, Inc. (NTNX)

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Nutanix (NTNX)

Q3 2018 Earnings Conference Call

May 24, 2018 04:30 PM ET

Executives

Tonya Chin - IR

Dheeraj Pandey - CEO

Duston Williams - CFO

Analysts

Matt Hedberg - RBC Capital Markets

Alex Kurtz - KeyBanc Capital Markets

Aaron Rakers - Wells Fargo

Katy Huberty - Morgan Stanley

Rod Hall - Goldman Sachs

Jayson Noland - Baird

Wamsi Mohan - Bank of America Merrill Lynch

Jason Ader - William Blair

Simon Leopold - Raymond James

Andrew Nowinski - Piper Jaffray

Presentation

Operator

Good afternoon. My name is Mike and I’ll be your conference operator today. At this time, I would like to welcome everyone to the Nutanix Q3 FY 2018 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions]

I will now turn the call over to Tonya Chin, VP of Investor Relations and Corporate Communications. You may begin your conference.

Tonya Chin

Thanks. Good afternoon and welcome to today’s conference call to discuss the results of our third quarter of fiscal 2018. This call is also being broadcast live over the web and can be accessed in the Investor Relations section of the Nutanix Web site. Joining me today are Dheeraj Pandey, Nutanix’s CEO; and Duston Williams, Nutanix’s CFO.

After the market closed today, Nutanix issued a press release announcing the financial results for its third quarter of fiscal 2018. If you’d like a copy of the release, you can find it in the Press Releases’ section of the Company’s Web site.

We would like to remind you that during today’s call, management will make forward-looking statements within the meaning of the Safe Harbor provisions of federal securities laws, regarding the Company’s anticipated future revenue, billings, gross margins, operating expenses, net loss, loss per share, free cash flow, business plans and objective, product sales, plans and timing for, and the impact of our transition to focus more on software-only sales, expectations regarding product, services, product features, and technology that are under development, competitive and industry dynamics, new strategic partnership and acquisitions, our intend to acquire new technology, changes in sales productivity, expectations regarding increasing software sales, potential market opportunities and other financial and business related information.

These forward-looking statements involve a number of risks and uncertainties, some of which are beyond our control, which could cause actual results to differ materially and adversely from those anticipated by these statements. These forward-looking statements apply as of today and you should not rely on them as representing our views in the future. We undertake no obligation to update these statements after this call.

For a more detailed description of these risks and uncertainties, please refer to our quarterly report on Form 10-Q for the second quarter of fiscal 2018 filed with the SEC on March 15, 2018, as well as our earnings release posted a few minutes ago on our Web site. Copies of these documents may be obtained from the SEC or by visiting the Investor Relations section of our Web site.

Also please note that unless otherwise specifically referenced, all financial measures we use on this call today are expressed on a non-GAAP basis and have been adjusted to exclude certain charges. We have provided reconciliations of these non-GAAP financial measures to GAAP financial measures in the Investor Relations section of our Web site and in our earnings press release.

As a reminder, all results included in today’s call and press release, are using the newly adopted revenue standard ASC 606. Lastly, Nutanix will be at the Stifel Conference in Boston on June 12th and also at the NASDAQ European Conference in London also on June 12 and we hope to see many of you there.

Now, let's turn the call over to Dheeraj. Dheeraj?

Dheeraj Pandey

Thank you, Tonya. Good afternoon, everyone. Q3 was a quarter in which we accelerated growth, while operating at above a $1 billion run rate. It was strong across the board with billings, revenue and gross margins all ahead of consensus. This is the third quarter in our transition towards a software defined business model and I can say that we’ve managed change immensely well.

Our results were bolstered by strong AHV adoption as well as continued penetration of the Global 2000. We are just back from our fourth .NEXT user conference in New Orleans and I couldn't be more excited about the way this event has evolved. Just three short years since our first . NEXT conference, attendance has grown from approximately 900 to nearly 5,000 attendees, raising the total to more than 20,000 who have joined us at our global. NEXT event over the past year.

What I'm proud of is that .NEXT continues to be hyper focused on our customers. From our first hackathon, where customers like the County of San Mateo, Cardinal Innovations Healthcare and Tucson Medical Center, developed exciting new projects for our ecosystem to do..NEXT awards where we recognized Home Depot, JetBlue, The Multi Commodity Exchange of India and CSRA for their contributions. Our customers are at the center of our success and we’re delighted to be able to celebrate them each year.

We’re also pleased by the positive reaction to the three announcements we made at .NEXT. These three new additions to our product portfolio, Nutanix Beam, Era, and Flow, are important not only for their strategic value to our business, but also for the new opportunities they open for customers in our platform. These offerings will help our customers better manage their hybrid cloud environment, while helping to solidify our unique thesis of building an enterprise operating system from the ground up for a multi-cloud world.

I'd like to take a few minutes to tell you about each of these offerings, so you can better understand the opportunity they present. When we introduced HCI in 2011, we disrupted the status quo by collapsing storage and computing to an easy-to-use platform. Legacy infrastructure companies weren't listening to their customers who complain about the cost and complexity of their legacy 3-tier architectures. The same was true when we collapsed hypervisor into our stack for the introduction of AHV in 2015.

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