Nutanix CEO Calls Cisco Partnership, Broadcom-VMware Deal A ‘Tailwind’ In Filing
By 2027, Nutanix CEO Rajiv Ramaswami says the company expects to have free cash flow of $700 million to $900 million, on the back of $3 billion in annual recurring revenue, double the $1.56 billion ARR it reported at the end of fiscal year 2023. That itself was a 30-percent increase over fiscal 2022.
Nutanix in a Monday regulatory filing – six days before Broadcom’s anticipated deal-close date with VMware – CEO Rajiv Ramaswami highlighted his company’s partnership with Cisco and told shareholders that a “changing competitive landscape” has led to “early wins but a lot more to come.”
“The changing competitive landscape is also proving to be a tailwind,” he wrote in the company’s proxy filing. “We recently announced a strategic and OEM partnership with Cisco. This brings the scale of Cisco’s go-to-market engine to expand our reach. Finally, the pending acquisition of our leading competitor is increasing customer interest in our solutions and has been helping build a strong pipeline that we expect will extend for years to come,” he told shareholders in a letter attached to the annual filing.
“There are some early wins but a lot more to come in the next several quarters,” he said.
Ramaswami said IDC and Bain Capital estimate that just 17 percent of the total addressable market for business critical apps and data management and 16 percent of general purpose IT workloads have been modernized. Nutanix has a “large opportunity” to seize share in the more than 80-percent of the market that has yet to upgrade its infrastructure.
“For IT teams building new apps today, a container-based approach is largely preferred for portability across platforms,” he wrote. “Nutanix offers a choice of major Kubernetes platforms to run on, resulting in improved developer productivity with self-service APIs and tools, lower total cost of ownership with our scale-out architecture, and faster time to market with pre-validated designs. This differentiation has helped us land some large customer wins recently.”
On the topic of generative AI, Ramaswami said several use cases are emerging at the edge in the areas of fraud detection, customer service, and search and analysis. To enable these efforts, Nutanix GPT-in-a-Box is a full AI stack that is deployable anywhere, he said.
“We expect generative AI to be deployed everywhere – training models with large data sets in the public cloud, fine tuning these models with proprietary datasets at the core data centers, and finally running apps with compact AI inference at the edge,” he wrote. “Through GPT-in-a-Box, Nutanix offers a full AI stack that can be delivered anywhere, from small-scale edge to large-scale private clouds.”
Underpinning these efforts has been Nutanix’s financial performance over recent quarters. In three years, the HCI all-star has turned from cash negative to cash positive, with $200 million in free cash flow at the end of last quarter, and a plan to buy back $350 million in stock. By 2027, Ramaswami said the company expects to have free cash flow of $700 million to $900 million, on the back of $3 billion in annual recurring revenue, double the $1.56 billion ARR it reported end of fiscal year 2023. That itself was a 30-percent increase over fiscal 2022.
“As we emerge from the transformation phase of our subscription journey and enter into the scaling phase, I’m more optimistic than ever that we are well-positioned for multi-year profitable growth. Our product strategy and vision are strongly aligned with customer needs in a hybrid multicloud world,” he wrote.
Ramaswami said Nutanix is focusing its direct sales force on the 25,000 customers where the company sees greater than 90-percent of its serviceable available market.
“Our channel partners have full autonomy to focus on the next tier of 75,000 potential customers aided by strong enablement and incentives,” he wrote. “In parallel, we are investing in product specialists that can help sell the full stack and drive adoption with customers.”
In the proxy letter, Nutanix introduced four items for shareholders to vote upon executive compensation, electing directors to its board, ratifying its accountant, and for the approval of an amendment to Nutanix certificate of incorporation that would permit the exculpation of officers.
The company’s annual meeting will be held Dec. 8 at 9 a.m. pacific time.
There are three board members on the ballot for re-election: Max de Groen, Steven J. Gomo, and Mark Templeton, whose terms will expire at the Annual Meeting, unless re-elected.
Groen is the youngest member of the board at 38 years old, and has been a director since 2020. Nutanix has nominated him based on a strong background in corporate finance, and business expertise in the venture capital and IT industries, working at both Bain Capital Private Equity, as well as The Boston Consulting Group, Nutanix wrote.
Gomo, who also sits on the board of Micron Technology, was recommended for another term for his corporate fovernance, operation and financial expertise as executive vice president and chief financial officer at NetApp.
Templeton was named to the board last year. He also sits on the boards of Equifax, Inc., Arista Networks, and Health Catalyst, Inc. Nutanix said its board will benefit from his broadmanagement experience and his roles as CEO at DigitalOcean, Inc., and Citrix.