Hyper-Converged Startup Nutanix Files For IPO, Had $241 Million In Revenue In 2015

Nutanix filed for an initial public offering Tuesday, ending months of speculation over when the highly regarded hyper-converged infrastructure startup would decide it's ready for prime time.

In its S-1 filing with the Securities and Exchange Commission, Nutanix said it's looking to raise up to $200 million in the IPO and will trade under the symbol NTNX.

Nutanix reported $241.4 million in revenue for its fiscal year ended July 31, up 90 percent from the previous year. For the quarter ended Oct. 31, Nutanix reported revenue of $87.8 million, compared with $46.1 million during the same period last year.

[Related: 5 Reasons Nutanix Says VMware Is Terrified Of Its Data Center Market Momentum]

However, Nutanix -- which has landed $312 million in funding since its founding in 2009 and has a valuation north of $2 billion -- said it has also racked up losses in the course of developing its technology and expanding its sales and marketing coverage.

Nutanix reported a net loss of $126.1 million in its fiscal 2015, compared with $84 million in 2014 and $44.7 million in 2013, according to the S-1 filing. Nutanix had an accumulated deficit of $312 million as of the end of October.

"We have incurred net losses in all periods since our inception, and we expect that we will continue to incur net losses for the foreseeable future," Nutanix said in the S-1 filing.

Nutanix's employee count has grown from 247 in July 2014 to 1,368 at the end of October. The startup said in the filing that it expects "to have significant headcount increases in the future."

Hyper-converged infrastructure refers to software that combines compute, storage, networking and virtualization and typically runs on industry-standard x86 servers.

Nutanix's technology is used to build private clouds and also runs on Amazon Web Services and the Google Cloud Platform through a partnership with startup Ravello Systems. San Jose, Calif.-based Nutanix has OEM agreements with Dell and Lenovo, and it also ships its own appliances on white-box hardware from Supermicro.

Nutanix channel partners told CRN they believe an IPO will help spark more interest in hyper-converged infrastructure technology.

"Nutanix is doing something disruptive by changing the economics and architecture in the data center," said Tim Joyce, CEO of Roundstone Solutions, a San Francisco-based Nutanix partner. "I see adoption of their technology accelerating because once users deploy it for a project, they find additional uses for it."

Jim Steinlage, president of Choice Solutions, a Nutanix partner in Overland Park, Kan., said going public will help Nutanix partners get more visibility, credibility and recognition with customers.

"Nutanix just works," Steinlage said. "It has simple, linear, predictable, scalable, economical, open and high-performing architecture that allows IT departments to stay much more relevant to the business unit and their demands."

Nutanix came out of stealth in 2011 and was a close partner of VMware early on. But over time, Nutanix has morphed into something resembling a full-blown competitor.

In June, Nutanix unveiled its own KVM-based server virtualization hypervisor and management software, along with technology that automatically migrates VMware-based workloads to KVM and Microsoft Hyper-V.

Nutanix's other competitors, as listed in the S-1, include storage vendors EMC, NetApp and Hitachi Data Systems; and systems vendors Hewlett-Packard, Cisco Systems, Lenovo, IBM and Dell.

Unlike some other startups, Nutanix has gone to market with a sales model that puts channel partners front and center. Unsurprisingly, this has helped Nutanix build a loyal following of partners who are champing at the bit to help drive their hyper-converged businesses to the next level.

"Their sales organization knows how to work well with partners," Chris Becerra, vice president of sales at Terrapin Systems, a Morgan Hill, Calif.-based Nutanix partner, told CRN. "They're not just taking all the big deals direct and giving the small ones to channel partners."

Nutanix -- and SimpliVity, its main rival in the hyper-converged market -- have attracted the attention of larger enterprise technology players. Earlier this year, Cisco made a bid to acquire Nutanix but was rebuffed because the price offered was too low, sources familiar with the matter told CRN recently.

Nutanix CEO Dheeraj Pandey issued a statement in May indicating that Dell, by virtue of its June 2014 OEM agreement with Nutanix, would have first shot at an acquisition if the startup ever decided to sell.

Sources said Nutanix has been approached by numerous other suitors, but rejected them because it believes it can become just as disruptive a force in the data center as VMware when it launched nearly 20 years ago.

"Nutanix will be a stand-alone player in the space. They created it and will live on for some time," said Jeff Guenthner, director of solutions architecture at CMI, a Mill Valley, Calif.-based Nutanix partner.

PUBLISHED DEC. 23, 2015