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Nutanix Cuts 270 Jobs After Supply Chain Warning

O’Ryan Johnson

‘As hard as it is to make decisions that impact employees, we believe this will enable Nutanix to be more efficient and flexible going forward as we navigate a challenging macroeconomic environment,’ the company said in a statement.

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Nutanix is laying off 270 employees “to drive towards profitable growth,” the company wrote in an U.S. Securities and Exchange Commission filing this week, which followed warnings in May of supply chain disruptions and higher-than-expected turnover.

During the company’s most recent earnings call, CEO Rajiv Ramaswami warned that supply chain disruptions late in the third quarter, as well as higher-than-expected attrition among its sales employees, put pressure on revenue upsides experienced during the quarter.

The San Jose, Calif.-based hyperconverged infrastructure software and rising hybrid cloud player said this week that the layoffs represent 4 percent of its global workforce. The cuts are expected to be completed by Oct. 31, 2022.

“As hard as it is to make decisions that impact employees, we believe this will enable Nutanix to be more efficient and flexible going forward as we navigate a challenging macroeconomic environment,” the company said in a statement from a spokesperson Thursday. “We are committed to treating our impacted employees with respect and supporting them through the transition.”

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In May Nutanix reported “solid” third-quarter earnings the company said, with $403.0 million in revenue, which represented 17 percent year-over-year growth, but those numbers came with a warning.

“Increased hardware supply chain delays resulted in an increasing percentage of our orders having start dates in future quarters, or in some cases being delayed, pending availability of hardware,” Ramaswami said on the earnings call. “This affected both our billings and revenue upside in Q3, and we expect this trend to continue in Q4.”

Nutanix said during the call that its customers are struggling to purchase the servers needed to run its software. The downstream impact are contracts with start dates delayed by multiple quarters, when the customer is able to find servers at all, the company said.

Nutanix is expecting a rough fourth quarter as a result.

For its fourth quarter, the company is expecting ACV billings to be between $175 million and $185 million, roughly on par with the year-ago quarter when ACV was $176.3 million.

Nutanix told investors to look for fourth-quarter revenue to fall between $340 million and $360 million, a drop of between 7 percent and 12 percent from the $390 million Nutanix made in its fourth quarter a year ago.

“We don‘t believe our reduced outlook is a reflection of any change in our market opportunity or demand for our solutions,” Ramaswami told investors in May. “That said, we are focused on mitigating the impact of these challenges and continuing to drive towards profitable growth.”

Severance and termination benefits were expected to cost between $20 million and $25 million in cash expenditures, the company said.

O’Ryan Johnson

O’Ryan Johnson is a veteran news reporter. He covers the data center beat for CRN and hopes to hear from channel partners about how he can improve his coverage and write the stories they want to read. He can be reached at ojohnson@thechannelcompany.com..

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