Nutanix FY 2026 net income hits $1.51B
Nutanix shifted from a stockholders’ deficit to positive equity in 2026, powered by double‑digit revenue growth, strong cash generation, and a large tax-related benefit.
Rhea-AI Filing Summary
Nutanix, Inc. (NTNX) reports strong results for the fiscal year ended July 31, 2026, as a hybrid cloud and AI platform provider focused on unified infrastructure software for applications, data, and AI across data centers, edge, and public clouds.
Total revenue reached $2.85 billion, up from $2.54 billion in 2025, with both product and support/services contributing to growth. Income from operations rose to $274.0 million from $172.5 million, while net income jumped to $1.51 billion, driven largely by a $1.18 billion tax benefit from releasing a valuation allowance on U.S. deferred tax assets.
Nutanix generated $916.7 million of net cash from operating activities and ended 2026 with $3.03 billion in current assets and a net deferred tax asset of $1.22 billion. The company repurchased $483.5 million of Class A shares under an expanded $1.45 billion authorization and raised $150.0 million via a private placement, while maintaining $1.36 billion of convertible senior notes and an undrawn $500.0 million revolving credit facility. Stockholders’ equity improved from a deficit of $694.5 million to positive equity of $702.6 million.
Positive
- Revenue grew to $2.85 billion in fiscal 2026 from $2.54 billion in 2025, reflecting healthy expansion in both product and support, maintenance and services.
- Income from operations rose to $274.0 million from $172.5 million, showing improved profitability before tax effects.
- Net income reached $1.51 billion, aided by a $1.18 billion income tax benefit from releasing a valuation allowance on U.S. deferred tax assets.
- Operating cash flow increased to $916.7 million in 2026 from $821.5 million in 2025, supporting continued investment and capital returns.
- Stockholders’ equity improved to a positive $702.6 million from a deficit of $694.5 million, significantly strengthening the balance sheet.
- The company holds a substantial $1.22 billion deferred tax asset, enhancing future after-tax earnings capacity if profitability is sustained.
Negative
- Nutanix carries $1.36 billion of convertible senior notes outstanding (2027 and 2029 Notes), representing a meaningful debt load with potential future dilution.
- Stock-based compensation expense remained high at $357.7 million in fiscal 2026, a significant non-cash cost impacting earnings per share.
- The company spent $483.5 million on share repurchases in 2026, a sizable cash outflow alongside continued investment needs.
Filing Explained
As of August 31, Nutanix reported 270,570,179 shares outstanding, updating the ownership denominator after the July 31 year-end.
Nutanix’s Form 10-K is the audited annual report for the year ended
The independent auditor issued an unqualified opinion that the financial statements fairly present the company’s financial position, results and cash flows under U.S. GAAP, and separately issued an unqualified opinion on internal control over financial reporting.
The filing also states that certain Part II and Part III information is incorporated by reference to a definitive proxy statement expected within 120 days after the fiscal year ended
Key Figures
Key Terms
hyperconverged infrastructure technical
agentic AI technical
subscription term-based licenses financial
deferred tax asset financial
convertible senior notes financial
Revolver financial
Earnings Snapshot
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Indicate by check mark whether the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes ☐
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.
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).
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.
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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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
The aggregate market value of the registrant's common stock held by non-affiliates of the registrant as of January 31, 2026 (the last business day of the registrant's most recently completed second fiscal quarter) was approximately $
As of August 31, 2026, the registrant had
DOCUMENTS INCORPORATED BY REFERENCE
As noted herein, certain information called for by Parts II and III is incorporated by reference to specified portions of the registrant’s definitive proxy statement to be filed in conjunction with the registrant’s 2026 annual meeting of stockholders, which is expected to be filed not later than 120 days after the registrant's fiscal year ended July 31, 2026.
Table of Contents
TABLE OF CONTENTS
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Special Note Regarding Forward-Looking Statements |
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PART I |
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Item 1. Business |
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Item 1A. Risk Factors |
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Item 1B. Unresolved Staff Comments |
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Item 1C. Cybersecurity |
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Item 2. Properties |
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Item 3. Legal Proceedings |
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Item 4. Mine Safety Disclosures |
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PART II |
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Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
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Item 6. [Reserved] |
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Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations |
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Item 7A. Quantitative and Qualitative Disclosures About Market Risk |
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Item 8. Financial Statements and Supplementary Data |
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Item 9. Change in and Disagreements with Accountants on Accounting Financial Disclosure |
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Item 9A. Controls and Procedures |
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Item 9B. Other Information |
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Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections |
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PART III |
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Item 10. Directors, Executive Officers and Corporate Governance |
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Item 11. Executive Compensation |
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Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
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Item 13. Certain Relationships and Related Transactions and Director Independence |
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Item 14. Principal Accountant Fees and Services |
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PART IV |
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Item 15. Exhibits and Financial Statement Schedules |
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Item 16. Form 10-K Summary |
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Exhibit Index |
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Signatures |
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains express and implied forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which statements involve substantial risks and uncertainties. Other than statements of historical fact, all statements contained in this Annual Report on Form 10-K 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 Annual Report on Form 10-K include, but are not limited to, statements regarding:
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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 in Part I, Item 1A. "Risk Factors" in this Annual Report on Form 10-K. 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 Annual Report on Form 10-K 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 Annual Report on Form 10-K 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.
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PART I
Item 1. Business
Overview
Nutanix, Inc. ("we," "us," "our," or "Nutanix") is a hybrid cloud and AI platform company, offering organizations a unified infrastructure software platform to run applications, data, and AI anywhere. Our vision is to simplify the deployment and operation of hybrid computing infrastructure and AI factories to support the increasingly distributed landscape of apps and data, including agentic AI, while freeing organizations to modernize their infrastructure and focus on business goals. Our mission is to delight customers with an open, secure platform with rich data services that increases their ability to take advantage of technologies such as cloud native and AI, optimizes how they run their organizations today, and accelerates innovation, efficiency, and growth.
The Nutanix Cloud Platform is designed to enable organizations to build hybrid cloud infrastructure. It provides a consistent cloud operating model with a single platform for running and managing applications, agentic AI workloads, and data in core data centers, at the edge, and in public clouds. We aim to provide customers with flexibility and choice across server platforms, storage options, virtualized and cloud-native environments, public clouds, and deployment models. The Nutanix Cloud Platform supports a wide variety of workloads with varied compute, storage, and network requirements. These workloads include traditional business-critical general-purpose applications, modern applications (including containerized applications running on Kubernetes), data platforms (including SQL, NoSQL and vector databases, as well as business intelligence applications), and enterprise AI workloads (including machine learning, generative AI, and agentic AI applications).
We first pioneered hyperconverged infrastructure ("HCI") by combining compute, storage and networking through a software-defined architecture. We subsequently developed Nutanix AHV, our native enterprise hypervisor. Building on this foundation, the Nutanix Cloud Platform has evolved into a unified infrastructure platform. The Nutanix Cloud Platform supports a broader range of architectures, applications and deployment models, across public clouds (including AWS, Azure, and Google Cloud), datacenters, and edge. This expansion includes support for qualified external storage systems, modern applications through our Kubernetes platform, and enterprise agentic AI workloads through our AI infrastructure and management offerings. Our research and development efforts on the agentic AI front aim to provide customers with an optimized full stack platform to run, control, and govern AI workloads.
Our business is organized into a single operating and reportable segment. We operate a subscription-based business model, meaning our products, including associated support and maintenance arrangements, are sold with a defined duration. For more information, see the section titled "Components of Our Results of Operations" included in Part II, Item 7, as well as Note 2 of Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.
The Nutanix Cloud Platform
The Nutanix Cloud Platform brings together infrastructure, application, data and management capabilities that enable organizations to run traditional, modern and AI workloads across hybrid multicloud environments. The Nutanix Cloud Platform’s scale-out architecture, common operating model, integrated data services and expanding support for server platforms, storage options, virtualized and cloud-native environments, and public and managed cloud environments provide organizations with flexibility in how they modernize and operate their environments.
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Nutanix Cloud Infrastructure (NCI) is a distributed HCI for enterprise IT applications. NCI software combines compute, storage, and networking resources from a cluster of servers into a single logical pool with integrated resiliency, security, performance, and simplified administration. NCI also supports qualified external storage systems in supported configurations. We believe this expands infrastructure choice for customers and allows organizations to modernize virtualization and cloud infrastructure while leveraging existing storage investments. NCI includes the following underlying features and services:
Nutanix Cloud Infrastructure with External Storage is an option for customers wishing to run Nutanix compute and network virtualization and data services with external storage. Organizations can leverage Nutanix Cloud Infrastructure for compute while integrating with qualified external storage solutions, including Dell Technologies PowerFlex and PowerStore platforms and Everpure, Inc. FlashArray storage systems. We have also announced support for NetApp ONTAP-based and Lenovo ThinkSystem external storage integrations, with the NetApp ONTAP-based solution currently available through limited-availability programs.
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Nutanix Cloud Manager (NCM) is a unified management solution for providing intelligent operations, self-service and orchestration, security compliance and visibility, and control of cloud costs. NCM includes the following underlying features and services:
Nutanix Kubernetes Platform (NKP) is an enterprise Kubernetes platform for deploying and managing modern, containerized applications across hybrid multicloud environments. NKP is designed to standardize application deployment and Day 2 operations across fleets of Kubernetes clusters while providing customers flexibility across infrastructure environments. We believe NKP expands the Nutanix Cloud Platform beyond traditional virtualized applications by enabling customers to operate virtualized, cloud-native and AI workloads through a more consistent operating model across virtual machines and Kubernetes environments.
Nutanix Enterprise AI (NAI) is a centralized fine-tuning and inferencing platform. NAI provides AI developers and infrastructure managers with access to models and AI services, with built-in resource management, control and governance capabilities for token economics, data privacy, and sovereignty management. NAI manages resources across GPUs, CPUs, DPUs, and other accelerators, for resource management, performance optimization and operational efficiency across AI workloads.
Nutanix Unified Storage (NUS) is a software-defined platform that consolidates file, object, and block storage into one intelligent data fabric. It features a compute-adjacent architecture that provides low-latency access to data for powering real-time AI pipelines and agentic AI workflows. NUS includes the following underlying features and services:
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Nutanix Database Service (NDB) is a platform that automates management of diverse database environments with a database-as-a-service platform functionality across on-premises and public cloud environments. NDB automates database lifecycle management and integrates with cloud-native development processes.
Delivery of Our Solutions
The Nutanix Cloud Platform can be deployed in core data centers, at the edge, or in public or managed clouds. The Nutanix Cloud Platform runs on a variety of qualified hardware platforms, in popular public cloud environments such as Amazon Web Services ("AWS"), Microsoft Azure ("Azure") and Google Cloud through NC2, or, in the case of our cloud-based software and software-as-a-service ("SaaS") offerings, via hosted service. Our subscription term-based licenses are sold separately and typically have durations ranging from one to five years. Our cloud-based SaaS subscriptions have durations extending up to five years. Our customers generally purchase their qualified hardware platforms for deployment of our software from one of our channel partners or original equipment manufacturers ("OEMs").
The Nutanix Cloud Platform typically includes support and entitlements. This provides customers with the right to software upgrades and enhancements as well as technical support. Purchases of term-based licenses and SaaS subscriptions have support and entitlements included within the subscription fees and are not sold separately. Purchases of non-portable software are typically accompanied by the purchase of separate support and entitlements.
Our Partners
We have established relationships with our channel, OEM, ecosystem and cloud partners, all of which help to drive the sale and adoption of our solutions with our end customers. Our solutions can be purchased through one of our channel partners or OEMs.
Channel Partners. Our channel partners sell our solutions to end customers, and in certain cases, may also deliver our solutions to end customers through a managed or integrated offering. Our Elevate Partner Program simplifies engagement for our partner ecosystem using a consistent set of tools, resources, and marketing platforms. Our channel partners include distributors, resellers, managed service providers, telcos, and global systems integrators. Our top two distributors to our end customers represented 47%, 41% and 39% of our total revenue for fiscal 2024, 2025 and 2026, respectively.
OEM Partners. Our software can run on qualified hardware from Cisco Systems, Inc. ("Cisco"), Dell Technologies ("Dell"), Fujitsu Technology Solutions GmbH ("Fujitsu"), Hewlett Packard Enterprise ("HPE"), and Lenovo Group Ltd. ("Lenovo"), as part of Cisco Compute Hyperconverged with Nutanix, Dell XC, Fujitsu XF, HPE DX, and Lenovo Converged HX, respectively. HPE also delivers our software with HPE DX servers as a service through the HPE GreenLake offering. Our OEM partners sell our solutions to end customers. We have also worked with Cisco to certify Cisco UCS blade servers for Nutanix AHV, enabling organizations to repurpose existing qualified server deployments.
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Ecosystem Partners. We have established relationships with a broad range of technology companies that help us deliver world-class solutions to our customers. Through the Technology Alliance Partner and AI Partner arms of our Elevate Partner Program, our developer, application, networking and security, data protection, hardware, infrastructure, and AI infrastructure partners receive access to resources that allow them to validate and integrate their products with Nutanix solutions and engage in joint sales training and enablement. Such integrations enable a simplified deployment and consumption experience for our customers and increase adoption of our platform. We have also developed and announced strategic technology partnerships that bring together best-in-class solutions across the ecosystem into integrated offerings and demonstrated interoperability and support for our customers, including partnerships with Advanced Micro Devices, Inc., Citrix Systems, Inc., Intel Corporation, NVIDIA Corporation, Omnissa, LLC, and Palo Alto Networks, Inc. In addition, we work closely with our technology partners through co-marketing and lead generation activities in an effort to broaden our marketing reach.
External Storage Partners. We partner with enterprise data infrastructure providers to integrate the Nutanix Cloud Platform with qualified external storage solutions. Current offerings include Dell Technologies PowerFlex and PowerStore platforms and Everpure, Inc. FlashArray storage systems. We have also announced support for NetApp ONTAP-based and Lenovo ThinkSystem external storage integrations, with the NetApp ONTAP-based solution currently available through limited-availability programs. These integrations enable customers to deploy NCI with external storage and manage workloads across hybrid multicloud environments.
Cloud Partners. Our partnerships with public cloud providers support our hybrid multicloud strategy. NC2 extends our platform to AWS, Azure, Google Cloud and OVHcloud, enabling organizations to run and manage workloads across private and public cloud environments with a consistent operating model.
Our Support Programs
Product Support. We offer varying levels of software support to our customers based on their needs. We also offer hardware support for customers who purchase the Nutanix-branded NX configured-to-order hardware platforms.
Professional Services. We provide consulting and implementation services to customers through our professional services team for assessment, design, deployment, and optimizing of their Nutanix environments.
Our End Customers
We have end customers across a broad range of industries, such as financial services, retail, manufacturing, public sector, automotive and other transportation, consumer goods, education, energy, healthcare, media, technology, and telecommunications. We also sell to service providers, which utilize the Nutanix Cloud Platform and Nutanix Cloud Infrastructure (NCI) to build new cloud-based service offerings, including solutions tailored to assist their customers seeking virtualization alternatives. We had a broad and diverse base of over 32,000 end customers as of July 31, 2026. We define the number of end customers as the number of end customers for which we have received an order by the last day of the period, excluding partners to which we have sold products for their own demonstration purposes. A single organization or customer may represent multiple end customers for separate divisions, segments, or subsidiaries, and the total number of end customers may contract due to mergers, acquisitions, or other consolidation among existing end customers.
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Growth Strategy
Key elements of our current growth strategy include:
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Sales and Marketing
Sales. We primarily engage with our end customers through our global sales force who directly interact with key IT decision makers while also providing sales development, opportunity qualification and support to our channel partners. We have established relationships with our channel partners, who represent many of the key resellers and distributors of data center infrastructure software and systems in each of the geographic regions where we operate. We also engage our end customers through our OEM partners, which license our software and package it with their hardware and sell through their direct sales forces and channel partners. We expect to continue leveraging our relationships with our channel and OEM partners, deepening relationships with our cloud and ecosystem partners, and expanding our strategic engagements with service providers and neoclouds, to reach our end customers.
Marketing. Our marketing team enables our global sales force and sales via our partner ecosystem. Our marketing focuses on educating our customers, prospects, partners, media and analysts, and influencers about the benefits and business outcomes our cloud software platform and solutions can deliver. The breadth of our product portfolio allows us to engage multiple buyer and user personas across the organization, including senior executives, IT professionals, and developers. Over the past year, we have focused on driving market awareness of our virtualization, cloud-native, and enterprise AI-ready capabilities amid ongoing industry disruption. In addition, we continue to drive market awareness of our evolution from a pioneer in HCI to a provider of a unified platform that helps enterprises manage the growing complexity of virtualized, containerized and enterprise AI workloads across hybrid multicloud environments. We seek to create and capture buyer demand through a variety of outbound and inbound marketing programs that include email, digital marketing, corporate and third-party events that generate customer and prospect awareness - including our annual user event, .NEXT, in-person and virtual demand generation activities, social media outreach, media and analyst relations activities, learning certifications, community programs, platform test drives, thought leadership, and our website. Our robust community empowers customers and partners to share and discuss best practices for leveraging our solutions as well as network with peers. We foster strategic marketing partnerships with our ecosystem of technology, channel, OEM, system integrator, and service provider partners, as well as emerging neoclouds, to expand market reach, increase brand awareness, and drive business growth. Through our unified Elevate Partner Program, we offer qualified partners access to market development funds, co-branded marketing campaigns, joint demand programs, and comprehensive learning paths.
Research and Development
Our research and development efforts are focused primarily on enhancing our existing technologies, developing new technologies in current and adjacent markets, and supporting existing end customer deployments. Our research and development teams include distributed systems software engineers, platform engineers, systems engineers, user interface engineers and user experience designers. A large portion of our research and development team is based in San Jose, California and India. We also maintain research and development centers in North Carolina, Washington, Serbia, Canada, Germany, Mexico, and the United Kingdom. We plan to dedicate significant resources to our continued research and development efforts and intend to continue to invest in our global research and development teams to support enhancements to our solutions, improve integration with ecosystem partners, and expand the range of technologies and features available through our platform. We believe that these investments will support our long-term growth strategy, although they may result in increased expenses and adversely affect our profitability in the near term.
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Manufacturing
We do not manufacture any hardware. The Nutanix-branded NX series hardware platforms are manufactured by Super Micro Computer, Inc. ("Supermicro"). Supermicro provides the server chassis, assembles and tests the Nutanix-branded NX series hardware platforms and it procures the components used in the NX series hardware platforms directly from third-party suppliers in accordance with our design specifications. Our agreement with Supermicro automatically renews annually in May for successive one-year periods thereafter, with the option to terminate upon each annual renewal. Distributors handle fulfillment and shipment to end customers on demand, but do not hold hardware or component inventory.
Competition
We operate in the intensely competitive cloud infrastructure, platform services and enterprise AI markets and compete with a broad range of companies that sell software and hardware to build and operate private clouds, integrated systems, standalone storage and servers, and platforms supporting modern and agentic AI workloads, as well as cloud services providers and managed service providers. These markets are characterized by constant change, rapid innovation, and evolving licensing and consumption models. We face competition from a broad range of providers, including, among others:
Competition generally varies by workload and customer segment, and customers often evaluate multiple alternatives simultaneously. Several of our competitors are also our partners, resellers, or OEMs in certain offerings. As the market in which we compete continues to develop, we expect it will continue to attract new companies as well as existing larger vendors. Some of our competitors may also expand their product and service offerings, acquire or invest in competing businesses or emerging technologies (including agentic AI and AI factories), offer differentiated pricing terms, bundle their products with other products and capabilities (including AI, agentic AI, machine learning, generative AI, and agentic AI capabilities), provide closed technology platforms, partner with other companies to develop joint solutions, or otherwise leverage their scale, brand recognition or ecosystem relationships to gain a competitive advantage. Furthermore, as we expand our product offerings, we may expand into new markets, and we may encounter additional competitors in such markets. Additionally, as companies increasingly offer competing solutions, they may be less willing to cooperate with us as an OEM or otherwise. We believe the principal competitive factors in our market include:
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We believe that we are positioned favorably against our competitors based on these factors. However, many of our competitors have substantially greater financial, technical and other resources, greater brand recognition, larger sales forces and marketing budgets, a larger existing customer base, broader distribution, and larger and more mature intellectual property portfolios.
Intellectual Property
Our success depends in part upon our ability to protect and use our core technology and intellectual property. We rely on patents, trademarks, copyrights and trade secret laws, confidentiality procedures, and employee nondisclosure and invention assignment agreements to protect our intellectual property rights. As of July 31, 2026, we had 626 U.S. patents that have been issued and 164 non-provisional patent applications pending in the United States. Our issued U.S. patents expire between 2033 and 2046. We also leverage some open source software in most of our products. See Item 1A, "Risk Factors," for further discussion of risks related to protecting our intellectual property.
Facilities
Our corporate headquarters are located in San Jose, California where, under lease agreements that expire through August 2030, we currently lease approximately 230,000 square feet of space. We also maintain offices in North America, Europe, Asia Pacific, the Middle East, Latin America, and Africa. We lease all of our facilities and do not own any real property. We believe that our facilities are adequate to meet our needs for the immediate future and that, should it be needed, we would be able to lease suitable additional space to accommodate our operations.
Government Regulation
Our business activities are subject to various federal, state, local, and foreign laws, rules and regulations. Compliance with these laws, rules and regulations has not had, and is not expected to have, a material effect on our capital expenditures, results of operations or competitive position as compared to prior periods. Nevertheless, compliance with existing or future governmental regulations, including, but not limited to, those pertaining to global trade, acquisitions, AI-related governance, data protection and data privacy, climate, employment and labor, and taxes could have a material impact on our business in subsequent periods. See Item 1A, "Risk Factors," for further discussion of risks related to the potential impact of government regulation on our business.
Employees and Human Capital
We had approximately 8,350 employees worldwide as of July 31, 2026. None of our employees in the United States are represented by a labor organization or are a party to any collective bargaining arrangement. In certain European countries in which we operate, we are subject to, and comply with, local labor law requirements in relation to the establishment of works councils and/or industry-wide collective bargaining agreements. We are often required to consult and seek the consent or advice of these works councils. We believe that our employee relations are strong and we have not experienced any work stoppages to date.
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We understand the importance of human capital and prioritize building our culture, talent development, and compensation and benefits. Our human capital objectives include attracting, retaining, and rewarding talent, as well as promoting the development and integration of our existing and new employees. The principal objectives of our equity and cash incentive plans are to attract, retain and reward personnel through stock-based and cash-based compensation awards, to drive stockholder value and the success of our company by motivating such individuals to align their work to company goals, and to perform to the best of their abilities and to achieve our objectives.
Culture
Our values are the framework that defines our culture and shape how we engage with one another, approach challenges, and work toward solutions:
Our culture principles also shape the way we work and define how we engage with each other and with our customers. These principles are designed to drive performance, foster innovation, and ensure that we remain focused on delivering value, both to our employees and our stakeholders:
Total Rewards
We believe a robust and competitive Total Rewards portfolio is essential to attracting and retaining diverse talent that moves Nutanix forward. Our comprehensive reward programs offer physical, mental/emotional, and financial support to our employees and their families. We regularly review our programs and encourage employee feedback about the rewards they value most. We tailor rewards programs specifically based on local market practice and the competitive landscape. We provide a range of globally-available support programs, such as an Employee Assistance Program, online health engagement, and child development support.
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Health, Wellness, and Safety
The health and safety of employees and others on our property are a top priority. We also focus on compliance with all health and safety laws applicable to our business. To that end, appropriate requirements are implemented, as needed, in order to comply with public health or safety obligations. We have a global physical security team that is empowered to protect the safety of our employees in the event of emergencies or disasters. In addition, we work with our employees and facilities management at our office locations to ensure that work areas are kept safe and free of hazardous conditions. Employees are required to be conscientious about workplace safety. In compliance with applicable laws, and to promote the concept of a safe workplace, we maintain an Injury and Illness Prevention Program. We also continue to support the well-being and continued development of our employees by offering well-being days, during which all employees may enjoy private time away from work requirements.
Growth and Development
We challenge our employees to constantly learn, continuously improve and evolve -- and to that end we invest in resources to foster a learning culture throughout our company. We empower our employees to drive their own personal and professional growth by equipping them with onboarding and learning programs. Our learning programs include digital learning, speed coaching, customized learning workshops, manager enablement and skills training for current, new and future managers, training on culture, language learning programs, and employee wellness programs. We believe that by empowering our employees as they strive to grow personally and professionally, we will be able to build a flexible and resilient workforce and maintain and nurture a robust pipeline of talent to fuel our future growth and strategy.
Information about Segment and Geographic Areas
The segment and geographic information required herein is contained in Note 13 of Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.
Corporate Information
We were incorporated in Delaware in September 2009 as Nutanix, Inc. Our principal executive offices are located at 1740 Technology Drive, Suite 150, San Jose, California 95110, and our telephone number is (408) 400-3125. We have operations throughout North America, Europe, Asia Pacific, the Middle East, Latin America, and Africa. Our website address is www.nutanix.com. Information contained on or accessible through our website is neither a part of this Annual Report on Form 10-K nor incorporated by reference herein, and any references to our website and the inclusion of our website address in this Annual Report on Form 10-K are intended to be inactive textual references only.
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Available Information
Our website is located at www.nutanix.com and our investor relations website is located at ir.nutanix.com. We file reports with the Securities and Exchange Commission ("SEC"), which maintains an internet site (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers, including us, that file electronically with the SEC. This Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as amended, are made available free of charge on the investor relations portion of our website as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. We also provide a link to the section of the SEC’s website at www.sec.gov that has, or will have, all of our public filings, including this Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, all amendments to those reports, our Proxy Statements, and other ownership-related filings. We use our investor relations website as well as social media as channels of distribution for important company information. For example, webcasts of our earnings calls and certain events we participate in or host with members of the investment community are on our investor relations website. Additionally, we announce investor information, including news and commentary about our business and financial performance, SEC filings, notices of investor events, and our press and earnings releases, on our investor relations website. It is possible that the information we post on social media could be deemed to be material information. Therefore, we encourage investors, the media and others interested in our company to review the information we post on social media channels listed on our investor relations website. Investors and others can receive notifications of new information posted on our investor relations website in real time by signing up for email alerts and RSS feeds. Further corporate governance information, including our corporate governance guidelines, board committee charters and code of business conduct and ethics, is also available on our investor relations website under the heading "Governance Documents." Information contained on or accessible through our websites is neither a part of nor incorporated by reference into this Annual Report on Form 10-K or any other report or document we file with or furnish to the SEC, and any references to our websites and the inclusion of our website addresses in this Annual Report on Form 10-K are intended to be inactive textual references only.
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Item 1A. Risk Factors
You should carefully consider the risks and uncertainties described below, together with all of the other information contained in this Annual Report on Form 10-K, including our consolidated financial statements and related notes, before making a decision to invest in our securities. The risks and uncertainties described below are not the only ones we face; additional risks and uncertainties that we are unaware of, or that we currently believe are not material, may also become important factors that affect our business. If any of the following risks occur, our business, financial condition, operating results, cash flows, and prospects could be materially harmed. In that event, the price of our securities could decline, and you could lose part or all of your investment. In addition, the global macroeconomic environment remains uncertain, which may adversely impact our business, operating results, cash flows, and prospects.
Summary Risk Factors
Our business and an investment in our securities are subject to a number of risks, including risks that may prevent us from achieving our business objectives or may adversely affect our business, financial condition, results of operations, cash flows, and prospects. These risks are discussed more fully below and include, but are not limited to, risks related to:
Risks Related to Our Business and Industry
Risks Related to Cybersecurity and Intellectual Property
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Risks Related to Employee Matters
Risks Related to Financial, Accounting, Regulatory, Tax, and Other Legal Matters
Risks Related to Our Convertible Senior Notes and Revolving Credit Facility
Risks Related to Ownership of our Securities
General Risks
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Risks Related to Our Business and Industry
Adverse or uncertain macroeconomic or geopolitical conditions or reduced IT spending by our end customers may adversely impact our business, revenues and profitability.
Our business, operations and performance are dependent in part on worldwide market, economic and financial conditions and events that may be outside of our control, such as global, regional, and local economic developments, fiscal, monetary and tax policies, high inflation, elevated interest rates, recessionary pressures, political and social unrest, geopolitical tensions, changes in domestic and international governmental policies and priorities, terrorist attacks, hostilities or the perception that hostilities may be imminent, military conflict, war, including the ongoing military conflict in Ukraine and related sanctions, continuing conflicts in the Middle East, including the conflict involving Iran, malicious human acts, climate change, natural disasters (including extreme weather), pandemics or other major public health concerns, and other similar events. These conditions and events may adversely affect demand for enterprise computing infrastructure solutions and reduce the economic health and IT spending budgets of our current and prospective end customers. The global macroeconomic environment has been, and may continue to be, inconsistent, challenging and unpredictable due to international trade disputes or tensions, the imposition or expansion of tariffs (including those imposed by the U.S. government targeting imports from numerous countries, which may increase the cost of IT products and services and thereby reduce available IT budgets or shift spending priorities away from our solutions), restrictions on sales and technology transfers, elevated interest and inflation rates, uncertainties related to changes in public policies such as domestic and international regulations and fiscal and monetary stimulus measures, and taxes, potential changes to international trade agreements, actual or potential government shutdowns, elections and any related political instability, geopolitical turmoil and civil unrest, instability in the global credit markets, and other disruptions to global and regional economies and markets.
These macroeconomic challenges and uncertainties have, and may continue to, put pressure on global economic conditions and overall IT spending. As a result, our current and prospective end customers may reprioritize spending, delay or cancel purchasing decisions, extend sales cycles, or seek lower pricing for our solutions. These factors may make it difficult for us to forecast sales and operating results, plan future investments, and could materially and adversely affect our business, operating results and financial condition.
The enterprise IT market is rapidly changing and expanding, and we expect competition to continue to intensify in the future from both established competitors and new market entrants.
We operate in the intensely competitive cloud infrastructure, platform services and enterprise AI markets and compete with a broad range of companies that sell software and hardware to build and operate private clouds, integrated systems, standalone storage and servers, and platforms supporting modern and agentic AI workloads, as well as cloud services providers and managed service providers. These markets are characterized by constant change, rapid innovation, and evolving licensing and consumption models. Competition generally varies by workload and customer segment, and customers often evaluate multiple alternatives simultaneously. Several of our competitors are also our partners, resellers, or OEMs in certain offerings. As the market in which we compete continues to develop, we expect it will continue to attract new companies as well as existing larger vendors. Some of our competitors may also expand their product and service offerings, acquire or invest in competing businesses or emerging technologies (including agentic AI and AI factories), offer lower pricing or aggressive discounting, bundle their products with other products and capabilities (including AI, machine learning, generative AI, and agentic AI capabilities), provide closed technology platforms, partner with other companies to develop joint solutions, or otherwise leverage their scale, brand recognition or ecosystem relationships to gain a competitive advantage. Furthermore, as we expand our product offerings, we may expand into new markets, and we may encounter additional competitors in such markets. Additionally, as companies increasingly offer competing solutions, they may be less willing to cooperate with us as an OEM or otherwise.
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Many of our existing competitors have, and some of our potential competitors may have, competitive advantages over us, such as longer operating histories, significantly greater financial, technical, marketing, or other resources, stronger brand awareness and name recognition, larger intellectual property portfolios, and broader global presence and distribution networks. They may be able to devote greater resources to the promotion and sale of products and services than we can, and they may offer heavy discounts, forcing us to compete aggressively on pricing. Moreover, our current or potential competitors may be acquired by third parties with greater available resources and the ability to initiate or withstand substantial price competition, such as the acquisition of VMware by Broadcom in November 2023. Furthermore, some of our competitors have access to larger customer bases and supply a wide variety of products to, and have well-established relationships with, our current and prospective end customers. Some of these competitors have in the past and may in the future take advantage of their existing relationships with end customers, distributors or resellers to provide incentives to such current or prospective end customers that make their products more economically attractive or to interfere with our ability to offer our solutions to our end customers. Our competitors may also be able to offer products or functionality similar to ours at a more attractive price, such as by integrating or bundling their solutions with their other product offerings or those of technology partners or establishing cooperative relationships with other competitors, technology partners or other third parties. Some potential end customers have preferred, and in the future may continue to prefer, to purchase from their existing suppliers rather than a new supplier, especially given the significant investments that they have historically made in their legacy infrastructures. Some of our competitors may also have stronger or broader relationships with technology partners than we do, which could make their products more attractive than ours. We have also ventured into a number of markets that are adjacent to our core HCI market, both through the expansion of HCI in hybrid multicloud environments as well as through our emerging products, and some of our competitors in these adjacent markets have more experience with those markets and more resources targeted at penetration of those markets than we do. As a result, we cannot assure you that our solutions will compete favorably, and any failure to do so could adversely affect our business, operating results and prospects.
In addition, in recent years, an increasing number of customers have been allocating their IT spending toward AI, machine learning, and agentic AI capabilities. The IT infrastructure market for AI, machine learning, and agentic AI workloads is also expected to be an intensely competitive and rapidly evolving market.
If we fail to anticipate and respond to rapidly evolving technologies, customer requirements and spending priorities, including developments in public cloud, cloud-native and AI technologies, demand for our solutions and our competitive position could be adversely affected.
The markets in which we compete are rapidly evolving. Our performance depends in part on how customers allocate spending among traditional servers, storage and virtualization products; private and hybrid cloud infrastructure; public cloud services; cloud-native technologies; and AI infrastructure and services. Customer demand and adoption rates in these markets are difficult to predict and may differ from our expectations. We must continually develop, commercialize and support new and enhanced solutions that address changing customer requirements for performance, scalability, security, interoperability, application mobility, reliability and cost. Our investments in new markets and technologies, including AI-related products and services, may not produce differentiated offerings, achieve broad market acceptance or generate anticipated returns. Delays in introducing announced solutions, or a failure to anticipate technological changes or evolving industry standards, could harm our reputation, reduce demand and impair our competitive position. If customers in these markets focus their new spending on, or shift their existing spending to, public cloud solutions or other solutions that do not interoperate with our solutions more quickly or more extensively than expected, our solutions may not compete as effectively, if at all. Public cloud providers may become more competitive as a result of lower prices, improved interoperability, performance, security or application compatibility, or increased customer demand for AI capabilities available through public cloud services. These developments could reduce demand for our solutions.
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We have estimated the size of our total addressable and serviceable available markets based on internally generated data and assumptions, as well as data published by third parties, which we have not independently verified. While we believe these estimates are reasonable, such information is inherently imprecise and subject to a high degree of uncertainty. If our third-party or internally generated data prove to be inaccurate or we make errors in our assumptions based on that data, our actual market may be more limited than our estimates. In addition, these inaccuracies or errors may cause us to misallocate capital and other critical business resources, which could harm our business. Even if our total addressable market meets our size estimates and experiences growth, we may not continue to grow our share of the market.
We may not be able to capitalize on opportunities resulting from Broadcom’s changes to VMware's products, pricing, licensing, business practices and broader ecosystem.
We believe that our opportunity to increase market share has grown since VMware (now known as VMware by Broadcom), one of our main competitors, was acquired by Broadcom in November 2023. Since the acquisition, Broadcom has made changes to VMware’s product portfolio, pricing, partner programs, support models, certification requirements and other aspects of the VMware ecosystem, which have led many VMware customers to evaluate, adopt or consider alternatives to VMware's virtualization and cloud infrastructure solutions. However, a variety of factors could adversely affect our ability to convert these opportunities and the timing and extent to which we may realize benefits from them. For example, some prospective customers may remain subject to multi-year contractual commitments, defer migration until their next hardware or software refresh cycle, or delay migration initiatives due to budgetary, operational or resource constraints, including the availability, cost and procurement lead times of server hardware and other infrastructure required to support a migration. Because customers’ contract renewal, infrastructure refresh, procurement and migration timelines vary, these opportunities may arise in multiple waves over an extended period and may not result in customer commitments or revenue within the periods we anticipate. In addition, customers evaluating alternative platforms may determine that the anticipated benefits of migration do not justify the associated costs, disruption, resource requirements or implementation risks and may elect to continue operating VMware environments rather than migrate to our platform. Customers may also migrate only a portion of their workloads to our platform, retain existing infrastructure, deploy workloads in public clouds or select other solutions, which could limit our opportunity even where we are selected as a vendor. Our ability to capitalize on these opportunities may also be limited by lengthy enterprise sales and evaluation cycles, the need to support customers’ existing infrastructure investments (including storage platforms and related technologies), hardware availability, the availability of qualified personnel and partner resources to plan and implement migrations, and customers’ prioritization of other technology initiatives. In addition, Broadcom has implemented, and may continue to implement, changes to VMware products, pricing, licensing, support models, technical requirements, certification programs, partner programs, migration tools, interfaces, interoperability resources, commercial terms or other aspects of the VMware ecosystem that may increase migration complexity and costs, delay customer migration projects, influence customer platform decisions, or otherwise reduce our ability to capitalize on these opportunities. Broadcom may continue to compete aggressively for these customers, and we may not be able to compete effectively for these opportunities across customer segments or geographies. If we are unable to capitalize on these opportunities in a timely or cost-effective manner, or if the timing or magnitude of these opportunities differs from our expectations, our business and operating results could be materially and adversely affected.
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Our focus on larger enterprise customers and transactions may result in longer and less predictable sales cycles, greater costs and pricing pressure, and increased variability in our operating results.
Over time, our sales pipeline has evolved to include a higher mix of larger deal opportunities. Sales to these end customers involve risks that may not be present, or that are present to a lesser extent, with sales to smaller end customers. Large enterprise transactions generally involve longer and less predictable sales cycles, greater competition, increased customer negotiating leverage, more demanding contractual, implementation, support and acceptance requirements, greater payment flexibility, and increased variability in transaction timing, structure and outcomes. These factors may increase our costs of pursuing and supporting such opportunities and may delay revenue recognition or cash collections.
Large organizations often undertake a significant evaluation process, and customers may evaluate multiple vendors and consumption models simultaneously. Although we have a channel sales model, our sales representatives typically engage in direct interaction with our prospective end customers as well as our distributors and resellers. We may provide evaluation products and spend substantial time, effort and money without assurance of a sale. Such purchases may be delayed by budget constraints, multiple approvals, unanticipated administrative, processing and other delays, or customers' infrastructure refresh cycles. In addition, large customers often require broader functionality and services, extensive contractual commitments and pricing concessions, which can further extend sales cycles and make it difficult to predict whether and when a transaction will close or when related revenue or cash flows will be recognized. If we fail to realize an expected sale from a large end customer in a particular quarter or at all, our business and operating results could be adversely affected.
Our sales of offerings that support external storage may negatively impact sales of our core HCI offering and alter customer purchasing behavior, which could negatively impact our results of operations.
As part of our strategy to expand our addressable market and meet the needs of customers invested in legacy three-tier IT infrastructure, we have expanded our offerings to include support for qualified third-party external storage platforms. While we believe this flexibility may facilitate customer adoption of our platform in brownfield environments and enable longer-term expansion opportunities, it may change the mix, timing or economics of our sales, including by reducing sales of our core HCI offering. Supporting external storage may increase the complexity of our offerings and require additional resources for integration, testing, and customer success. It also increases our reliance on third-party technologies, over which we have limited control. If these third-party platforms experience performance issues, customer dissatisfaction, or changes in strategic direction that affect interoperability with our solutions, our reputation and customer relationships could be negatively impacted. If customer adoption or the resulting sales mix differs from our expectations, our investment in this capability may not yield the anticipated return, which could adversely affect our operating results.
If we do not effectively manage our operations, resources and investments as our business and product portfolio evolve, we may not achieve our strategic objectives.
We have expanded our overall business and operations significantly in prior periods. As our product portfolio, markets and operations evolve, we must appropriately allocate resources, manage organizational and operational changes, and align our personnel, systems and processes with our strategic priorities. The failure to manage these changes could significantly delay the achievement of our strategic objectives. We must continue to improve our IT and financial infrastructure, management systems and product management and sales processes. We may make investments or otherwise incur costs that may not result in anticipated benefits within the expected timeframe or at all.
If we are unable to manage our operations and resources effectively, we may not be able to take advantage of market opportunities, satisfy end customers’ requirements, maintain product quality, execute on our business plan, or respond to competitive pressures, any of which could adversely affect our business, operating results, financial condition, and prospects.
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If other IT vendors do not cooperate with us to ensure that our solutions interoperate with their products, including by providing us with early access to their new products or information about their new products, our product development efforts may be delayed or impaired, our solutions could become less attractive to end customers and our business, operating results and prospects may be adversely affected.
Our solutions must interoperate with our end customers’ existing hardware and software infrastructure, specifically their networks, servers, software, and operating systems, as well as the applications that they run on this infrastructure, which may be manufactured and provided by a wide variety of vendors and OEMs. In addition to ensuring that our solutions interoperate with these hardware and software products initially, we must regularly update our software to ensure that our solutions continue to interoperate with new or updated versions of these hardware and software products. Current or future providers of hardware, software applications, hypervisors, or data management tools could make changes that would diminish the ability of our solutions to interoperate with them. Such providers may also modify, limit, discontinue, or impose additional restrictions on access to software tools, interfaces, certifications, technical documentation, support arrangements, or other resources that are important to enabling interoperability with their products. Significant additional time and effort may be necessary to ensure the continued compatibility of our solutions, which might not be possible at all. Even if our solutions are compatible with those of other providers, if they do not certify or support our solutions for their systems or cooperate with us to coordinate troubleshooting and hand off of support cases, end customers may be reluctant to buy our solutions, which could decrease demand for our solutions and harm our ability to achieve a return on the investments and resources that we have dedicated to ensuring compatibility. Developing solutions that interoperate properly requires substantial partnering, capital investment and employee resources, as well as the cooperation of the vendors or developers of the software applications and hypervisors both with respect to product development, certification, and support processes. Vendors may not provide us with early or any access to their technology and products, assist us in these development efforts, certify our solutions, share with or sell to us any application programming interfaces ("APIs"), formats, or protocols we may need, or cooperate with us to support end customers. Vendors may also impose commercial, technical, contractual, certification, licensing, support, or other requirements that increase the complexity, cost, or time required for us to maintain compatibility with their products or support mutual customers. Such requirements may also adversely affect customer migration initiatives, increase switching costs, delay platform-transition decisions or otherwise reduce the attractiveness or practicality of alternative solutions. If they do not provide us with the necessary access, assistance or proprietary technology on a timely basis or at all, we may experience product development delays or be unable to ensure the compatibility of our solutions with such new technology or products. Some of these vendors also sell solutions that compete directly or indirectly with our solutions and therefore may not be incentivized to cooperate with us to ensure interoperability, certify our solutions, or support joint customers. To the extent that vendors develop products that compete with ours, they have in the past, and may again in the future, withhold their cooperation, decline to share access, certify our solutions or sell or make available to us their proprietary APIs, protocols or formats, limit access to interoperability tools or resources, or engage in practices to actively limit the functionality, compatibility, certification, or support of our products. If any of the foregoing occurs, our product development efforts may be delayed or impaired, our solutions could become less attractive to end customers resulting in a decline in sales, which could reduce demand for our solutions, impair our competitive position, and adversely affect our business, operating results, and prospects.
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Our continued investment in and integration of our AI technologies and capabilities exposes us to operational, legal, and security risks, which, if realized, could adversely impact our business.
We have made, and expect to continue making, investments in our AI technologies and capabilities across our business, products, and services, including efforts to position the Nutanix Cloud Platform as a preferred platform for running enterprise AI workloads. AI technologies are complex, rapidly evolving, and subject to significant uncertainty, including with respect to technical performance, reliability, customer adoption, competitive differentiation, and the legal and regulatory frameworks that may apply to their development, deployment, and use. Our development, integration, offering or use of AI technologies, including with or in new or existing products and services, may result in new or enhanced governmental or regulatory scrutiny, litigation, privacy, data protection, confidentiality, intellectual property or cybersecurity risks, ethical concerns, legal liability, or other complications that could adversely affect our business, reputation, or financial results. As we integrate more agentic AI workflows into our platform, actions taken or suggested by AI-powered agents acting without human oversight could be incorrect, unintended, unauthorized, or harmful, which could expose us to contractual disputes, indemnity obligations, litigation, regulatory investigations, and reputational harm.
The use of generative AI by our workforce in our operations and code development processes poses ownership and security risks with respect to our codebase, given legal uncertainties surrounding AI-generated works and the potential for security flaws in output code, and may lead to errors in our decision-making and solution development. Furthermore, our internal adoption of AI tools to optimize our own business processes may cause unforeseen operational disruptions, fail to deliver anticipated cost efficiencies, or introduce new vulnerabilities into our internal workflows.
The regulatory landscape governing AI technologies is rapidly evolving and increasingly fragmented across the United States, the European Union, and other jurisdictions and we are subject to an evolving and complicated legislative patchwork governing AI. For example, the European Union has enacted the AI Act and a number of U.S. states have enacted or proposed AI-related laws and regulations, including the Colorado AI Act, the California AI Transparency Act, the Utah Artificial Intelligence Policy Act, the Texas Responsible AI Governance Act, and other laws addressing automated decision-making, transparency, disclosure, risk management, and governance. Additional AI-related laws, regulations, standards, and guidance may be adopted at the federal, state, local, and international levels. These frameworks, laws, and regulations could require us to comply with various requirements depending on the purpose, functionality, and risk categorization of AI, the data processed, and our role. These emerging, changing, or conflicting AI-related compliance obligations may result in expending significant resources and additional costs to comply, change our business practices, or provide additional infrastructure, policies, safeguards and operational controls and testing, and personnel to support the ongoing governance and oversight of such AI technologies, including notice, transparency, and AI risk assessment and mitigation obligations. The current U.S. presidential administration has, and may continue to, issue, modify or rescind existing federal orders and/or administrative policies relating to AI technologies in the future. Any such changes at the federal level could require us to expend significant resources to modify our products, services, or operations to ensure compliance with old frameworks or meet new obligations.
The intellectual property ownership and license rights, including copyright, surrounding AI technologies have not been fully addressed by laws or regulations, and our use or adoption of third-party AI technologies into our business operations, products and services may result in exposure to claims of copyright infringement or other intellectual property misappropriation, as well as potential liability to customers.
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AI technologies may use algorithms, datasets, or training methodologies that may be flawed or contain deficiencies that may be difficult to detect during testing. AI technologies, including generative AI, may produce output or create content that appears correct but is factually inaccurate, flawed, biased, misleading, harmful, incomplete, or otherwise hallucinatory. Use of such content may be to the detriment of the user, or it may lead to discriminatory or other adverse outcomes, which may expose us to brand or reputational harm, competitive harm, regulatory scrutiny and fines, and/or legal liability. Our integration of third-party AI models introduces compounding uncertainties, as these providers may change model outputs, capabilities, accuracy, and behavior without advance notice, creating novel risks related to product reliability, data integrity, third-party claims, and regulatory compliance that we may not be able to anticipate or promptly mitigate. Further, AI technologies may repurpose data beyond its original intent or without the consent of an individual where required, or involve unintended cross-border transfers, challenging privacy principles and potentially resulting in privacy-related claims, liability, or regulatory scrutiny. As we expand our use of AI technologies, we may be required to update our agreements, policies, disclosures, governance programs, controls, and risk management processes to address these risks and meet evolving customer, legal, regulatory, and market expectations. We may not be able to do so in a timely, effective, or cost-efficient manner. If any of the foregoing risks materialize, or if our AI-related practices are perceived as insufficient, unlawful, unreliable, insecure, or inconsistent with customer, regulatory, or public expectations, our business, operations, financial condition, reputation, and prospects could be adversely affected.
Because our business depends on manufacturers of hardware and physical components, including our OEM partners, to timely and cost-effectively produce and ship the hardware platforms on which our software runs, we are susceptible to supply chain disruptions, delays, quality events, and pricing fluctuations, which have adversely affected, and could further adversely affect, our business.
Our business depends on manufacturers (including Supermicro and our OEM partners) to assemble and/or produce the hardware platforms on which our software runs (including both the Nutanix-branded NX series hardware platforms and the various third-party hardware platforms that are included on our server hardware compatibility and validation list) as well as various products that are beyond our control or the control of such manufacturers. This reliance exposes us to direct and indirect risks beyond our control, including reduced control over quality assurance, product costs, product availability, supply chain disruptions and delays, and potential reputational harm and brand damage. We may not be able to discover, manage, and/or remediate such risks in a timely manner or at all.
Key components of the server hardware on which our software is validated to run, including those sourced from limited or single-source suppliers, have in the past been, and may in the future be, affected by supply shortages or delivery delays. We generally acquire components only as needed and do not enter into long-term supply contracts for these components. Consequently, if we or our suppliers inaccurately forecast demand for our solutions, our suppliers may have inadequate inventory, which could increase the prices we must pay for substitute components. Our reliance on these suppliers exposes us to risks regarding production and component costs, timely delivery, and capacity constraints. Furthermore, qualifying a new component or changing key suppliers can be expensive and time-consuming, and could cause disruptions. In addition, increases in hardware platform prices, whether due to component shortages or other cost pressures, could reduce customer demand for our software if customers delay or scale back purchases of the hardware platforms that are validated to run our solutions. Customers may also respond to rising hardware costs by reevaluating their overall IT budgets or seeking to reduce total solution costs, which could adversely affect demand for our software and put pressure on pricing and margins. For example, beginning in the second quarter of fiscal 2026, we have faced constraints affecting the availability of certain hardware components at manufacturers. These constraints have resulted in higher hardware pricing in the market and extended hardware lead times, which vary across hardware vendors. Higher hardware pricing, together with extended hardware lead times, have impacted, and may continue to impact, customers' ability to deploy and consume our software, which may affect the timing of revenue recognition and cash flows from period to period and, in certain instances, may result in some customers delaying projects or otherwise seeking greater flexibility with licensing. Our business and results of operations will be significantly affected by our success in leveraging our relationships with our channel and OEM partners and expanding our network of cloud and ecosystem partners.
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Furthermore, fulfilling orders for the hardware platforms on which our software runs may not be a priority for such manufacturers in guiding their business decisions and operational commitments. If we fail to manage our relationships with such manufacturers effectively, or if such manufacturers experience delays, disruptions or increased manufacturing lead times, component lead-time disruptions, capacity constraints, or quality control problems in their operations or are unable to address our or our end customers’ requirements for or concerns about timely delivery, our ability to sell our solutions to our end customers could be severely impaired due to the lack of availability of validated physical hardware platforms, and our customers' ability, or willingness, to consume our software may be materially impacted or delayed, which could adversely affect our business and operating results, competitive position, brand and reputation, as well as our relationships with affected customers.
In particular, we rely substantially on Supermicro to manufacture, assemble and test, the Nutanix-branded NX series hardware platforms. Our agreement with Supermicro does not contain long-term manufacturing commitments or price assurances, and is subject to annual renewal and termination rights. Increases in component costs, without a corresponding increase in the price of our NX series solutions, could require a reduction to the amount that an end customer pays for our software, thereby adversely affecting our revenue. The inability of Supermicro or other OEM manufacturers to produce adequate supplies of hardware platforms could cause a delay in our customers’ ability to consume our software, adversely impacting our order fulfillment, business, operating results and prospects. If we are required to change the manufacturer for the assembly and testing of our NX-branded hardware platforms, we may lose revenue, incur increased costs and damage our channel partner and end customer relationships. We may also decide to switch or bring on additional hardware OEM manufacturers for the assembly and testing of our NX-branded hardware platforms in order to better meet our needs. Switching to or bringing on a new OEM partner and commencing production can be expensive and time-consuming and may cause delays in order fulfillment at our existing OEM partners and contract manufacturer or cause other disruptions. As of July 31, 2026, we had approximately $163.0 million in the form of guarantees to our contract manufacturer related to certain components.
We may not be able to sustain profitability on a GAAP or non-GAAP basis.
Although we generated GAAP net income in fiscal 2025 and 2026 and non-GAAP net income in fiscal 2024, fiscal 2025, and fiscal 2026, we may not be able to sustain profitability in future periods. We intend to continue investing in growth opportunities, including research and development, sales and marketing initiatives, infrastructure and other areas of our business. Balancing growth investments with operating discipline may make it challenging to sustain our current levels of profitability, operating margins, or cash generation over time. These investments may increase our expenses before generating corresponding revenue and may not produce their anticipated benefits. If we fail to grow our revenue, manage our operating expenses effectively, or realize the expected benefits of our investments, we may not be able to sustain profitability on a GAAP or non-GAAP basis. If we are unable to sustain profitability at levels anticipated by analysts or investors, the market price of our securities could decline, potentially significantly.
Our growth depends on our existing end customers renewing or upgrading their subscriptions and support and maintenance agreements and making additional purchases of software licenses and software upgrades, and the failure of our end customers to do so could harm our business and operating results.
Our future success depends on our existing end customers renewing or upgrading their subscription and support and maintenance agreements and making additional purchases of software licenses and software upgrades. If our end customers do not renew or upgrade their subscription and support and maintenance agreements and/or purchase additional software licenses or software upgrades, our revenue may decline, and our operating results may be harmed. In order for us to maintain or improve our operating results, we depend on our existing end customers renewing their subscription agreements as well as their support and maintenance agreements or purchasing additional solutions.
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End customers may choose not to renew their subscription agreements or support and maintenance agreements, or purchase additional solutions, because of several factors, such as dissatisfaction with our platform, solutions, support, or prices (including relative to competitive offerings), reductions in our end customers’ spending levels or other causes outside of our control. If our existing end customers do not purchase new solutions or renew or upgrade their subscription agreements or support and maintenance agreements, our revenue may grow more slowly than expected or may decline, and our business and operating results may be adversely affected.
We rely primarily on indirect sales channels for the distribution of our solutions, and disruption within these channels or underperformance by our channel partners could adversely affect our business, operating results and cash flows.
We primarily sell our solutions through indirect sales channels, including channel partners, such as distributors, our OEM partners, value added resellers, and system integrators. Our OEM partners may in turn distribute our solutions through their own networks of channel partners with whom we have no direct relationships. We rely, to a significant degree, on our channel partners to select, screen and maintain relationships with their distribution networks and to distribute our solutions in a manner that is consistent with applicable law, regulatory requirements and our quality standards. If our channel partners or a partner in their distribution network violates applicable law or regulations, misrepresents the functionality of our solutions, or otherwise engages in conduct that results in regulatory scrutiny or legal action, our reputation and brand could be damaged, and we could be subject to potential liability. Additionally, if we are unable to establish relationships with strong channel partners in key growth regions, our ability to sell our solutions in these regions may be adversely affected. Our agreements with our channel partners are generally non-exclusive, meaning our channel partners may offer end customers the products of several different companies, including products that compete with ours. As a result, our channel partners, including our OEM partners, may not be fully incentivized to prioritize or actively promote our solutions, particularly if they also sell their own products or those of our competitors. In addition, we have limited visibility into and control over the sales efforts and go-to-market strategies of our OEM partners, and their sales performance may not meet our expectations. If our OEM partners or other channel partners do not effectively market and sell our solutions, choose to allocate fewer resources to our solutions, or fail to meet the needs of our end customers, our business, operating results and prospects may be adversely affected. Our channel partners may cease marketing our solutions with limited or no notice and with little or no penalty. The loss of a substantial number of our channel partners, together with our inability to replace them, or the failure to recruit additional channel partners or establish an alternative distribution network could materially and adversely affect our business and operating results. Sales through our top two distributors to our end customers represented 39% of our total revenue for fiscal 2026. In addition, if a channel partner offers its own products or services that are competitive to our solutions, is acquired by a competitor or reorganizes or divests its reseller business units, our revenue derived from that partner may be adversely impacted or eliminated altogether.
Recruiting and retaining qualified channel partners and training them in the use of our technologies requires significant time and resources. If we fail to devote sufficient resources to support and expand our network of channel partners, our business may be adversely affected. Maintaining strong indirect sales channels for our products and effectively leveraging our channel partners and OEMs is important to our strategy, and the failure to effectively manage these relationships may lead to higher costs and reduced revenue. Our reliance on channel partners also may reduce our direct contact with end customers, making it more difficult to forecast demand, understand and respond to customer requirements, support customers and obtain renewals.
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Substantially all of our sales to government entities have been made indirectly through our channel partners. Government entities may have statutory, contractual or other legal rights to terminate contracts with our channel partners for convenience or due to a default. If a material portion of government contracts becomes subject to renegotiation or termination, any such renegotiation or termination may adversely impact our future operating results. We also sometimes rely on our channel partners to satisfy certain regulatory obligations that we would otherwise have to satisfy if we sold directly to the government entities, and our channel partners may be unable or unwilling to satisfy these obligations in the future. In addition, a channel partner may become restricted in its ability to conduct business with government entities due to its own regulatory or legal issues. If we are unable to transition to another qualified channel partner in a timely manner, our ability to sell to government entities could be negatively impacted. Governments routinely investigate and audit government contractors’ (including subcontractors') administrative processes, and any unfavorable audit could result in the government refusing to continue buying our solutions, our channel partners changing their business models or refusing to continue to sell our solutions under current models, a reduction of revenue or fines, or civil or criminal liability if the audit uncovers improper or illegal activities.
If our indirect distribution channel is disrupted, particularly if we are reliant on a fewer number of channel partners, or if we are required to directly satisfy certain regulatory obligations imposed by government entities as a result of our efforts to expand our sales to government entities, we may be required to devote more time and resources to distribute our solutions directly and support our end customers, which may not be as effective and could lead to higher costs, reduced revenue and growth that is slower than expected.
Our operating results and key financial and performance metrics may fluctuate significantly, which could make our future results difficult to predict and could cause our operating results to fall below expectations.
Our operating results and key financial and performance metrics, including revenue, ARR, and free cash flow, may fluctuate due to a variety of factors, many of which are outside of our control. As a result, comparing our operating results on a period-to-period basis may not be meaningful. If our operating results or any of our key financial and performance metrics in any particular period fall below analyst or investor expectations, the market price of our securities would likely decline, potentially significantly. Our operating results may fluctuate as a result of the timing and magnitude of bookings, license start dates, renewals, contract durations, customer purchasing decisions and the related timing of ARR and revenue recognition, which may not coincide. Demand for our solutions may be affected by customer budgets, purchasing cycles, transaction timing, competitive conditions, pricing pressures, changes in customer preferences and the pace of adoption of new and existing products and services. Our operating results may also be affected by our ability to attract and retain customers, changes in our relationships with channel, OEM, ecosystem and cloud partners, the mix of products and services we sell, the amount and timing of investments, acquisitions, integration activities, stock-based compensation and other expenses, and broader macroeconomic, political, supply-chain, industry and market conditions. In addition, future accounting pronouncements, changes in accounting policies, and changes in how we define or calculate key performance metrics may affect the comparability of our results between periods.
Any of these factors could negatively affect our operating results in a particular period and cause the price of our securities to decline.
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Because a significant portion of our revenue is recognized ratably over the term of the contractual service period, downturns or upturns in sales are not immediately reflected in full in our results of operations.
Subscription revenue accounts for the substantial majority of our revenue, comprising 94%, 95%, and 95% of our total revenue for fiscal 2024, 2025, and 2026, respectively. A significant portion of our subscription revenue is revenue from software maintenance subscriptions, support subscriptions and SaaS offerings, which is recognized ratably over the contractual service period. As a result, a significant portion of our revenue that we report for each fiscal quarter represents the recognition of deferred revenue from subscription agreements entered into during previous fiscal quarters. Consequently, any decline in any such subscriptions, whether new subscriptions or renewals, in any given fiscal quarter will not be fully or immediately reflected in our revenue for that quarter. However, any such decline will negatively affect our revenue for future quarters. Our subscription model also makes it more difficult for us to rapidly increase our revenue through additional sales in any period, as a significant portion of our revenue from additional sales must be recognized over the applicable subscription duration.
Our gross and operating margins are impacted by a variety of factors and may be subject to variation from period to period.
Our gross and operating margins may be affected by a variety of factors, including fluctuations in the pricing of our products (including as a result of competitive pricing pressures or increases in component pricing), the degree to which we are successful in selling the value of incremental feature improvements and upgrades, customer renewal rates and the degree to which renewals drive our top-line growth, changes in the mix between direct versus indirect sales, changes in the mix of products sold, and the timing and amount of recognized and deferred revenue, particularly as a result of our subscription-based business model. In addition, operating margin may be affected by changes in our cost structure, including investments in sales and marketing, research and development, and general and administrative functions, as well as the timing of those investments relative to revenue recognition. If we are unable to manage these factors effectively, our gross and operating margins may decline, and fluctuations in these metrics may make it difficult to manage our business and to maintain profitability, which could adversely affect our business and operating results.
Our ability to sell our solutions is dependent in part on ease of use and the quality of our technical support, and any failure to offer high-quality technical support would harm our business, operating results and financial condition.
Once our solutions are deployed, our end customers depend on our support organization to resolve any technical issues relating to our solutions. Furthermore, because of the emerging nature of our solutions, our support organization often provides support for and troubleshoots issues for products of other vendors running on our solutions, even if the issue is unrelated to our solutions. There is no assurance that we can solve issues unrelated to our solutions, or that vendors whose products run on our solutions will not challenge our provision of technical assistance to their products. Our ability to provide effective support is largely dependent on our ability to attract, train and retain personnel who are not only qualified to support our solutions, but also well versed in some of the primary applications and hypervisors that our end customers run on our solutions. Our international operations and expanding product portfolio further increase the complexity of providing timely support. Any failure to maintain high-quality installation and technical support, or a market perception that we do not maintain high-quality support, could harm our reputation and brand, adversely affect our ability to sell our solutions to existing and prospective end customers, and could harm our business, operating results and financial condition. While our support operations focus primarily on our software solutions, certain support offerings include the replacement of hardware parts. We outsource the warehousing and delivery of these parts to third-party logistics providers, and any disruptions or failures by these providers could impact our ability to meet specific support commitments.
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Our solutions are highly technical and may contain undetected defects, which could cause data unavailability, unauthorized access, disclosure, or loss of customer data, or corruption that might, in turn, result in liability to our end customers and harm to our reputation, brand and business.
Our solutions are highly technical and complex and are often used to store information critical to our end customers’ business operations. Our solutions may contain undetected errors, defects or security vulnerabilities that could result in data unavailability, unauthorized access to or disclosure of, loss, corruption, or other harm to our end customers’ data, including personal or identifying information regarding their employees, customers, and suppliers, as well as their finance and payroll data, and other sensitive business information. As we expand our platform and introduce new cloud-based products that process greater amounts of customer data, the potential impact of any such errors, defects or security vulnerabilities may increase. Some errors or defects in our solutions may only be discovered after they have been installed and used by end customers. In addition, we may make certain commitments to our OEMs regarding the time frames within which we will correct any security vulnerabilities in our software. If hardware or software errors, defects or security vulnerabilities are discovered following commercial release, we may experience lost revenue, delays in developing and deploying corrective measures, increased warranty, support and remediation costs, delays, cancellations or reductions of customer orders, product returns or discounts, loss of customers, OEMs or other channel partners, and damage to our reputation and brand.
In addition, we could face legal claims for breach of contract, product liability, tort, or breach of warranty. While many of our contracts with end customers contain provisions relating to warranty disclaimers and liability limitations, these provisions might not be upheld or might not provide adequate protection if we face such legal claims. Defending such claims could be costly, divert management attention and adversely affect market perceptions of us and our solutions. In addition, our insurance coverage may be inadequate to cover such claims or future coverage may be unavailable on acceptable terms. Any of these events could adversely affect our business, operating results, financial condition and reputation.
Our business depends, in part, on sales to government organizations, and significant changes in the contracting or fiscal policies of such government organizations could have an adverse effect on our business and operating results.
We derive a portion of our revenue from contracts with federal, state, local, and foreign governments, and we believe that the success and growth of our business will continue to depend on our successful procurement of government contracts. Certain government contracts and opportunities require us to maintain facility and personnel security clearances and comply with applicable industrial security requirements relating to the handling, safeguarding and protection of sensitive or classified information. Failure to obtain, maintain, renew or comply with such requirements could limit our ability to compete for, perform, renew or expand certain government contracts and opportunities and could result in increased compliance costs, audits, investigations, contractual remedies, suspension of work, loss of contract opportunities or other adverse consequences. However, demand from government organizations is often difficult to predict, and there can be no assurance that we will be able to maintain or grow our revenue from the public sector. Government agencies are subject to budgetary processes and expenditure constraints that could lead to delays or decreased capital expenditures in IT spending, particularly in light of continued uncertainties about government spending levels, such as recent changes to, or failure to appoint new, government leaders.
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We have also recently experienced longer sales cycles and increased variability in transactions involving federal government agencies, which we believe are due to internal personnel changes and more extensive procurement reviews within these organizations. The budget and approval process for government agencies can be longer than for other end customers, and it may be difficult for us to accurately forecast the impact of these contracts on our future operating results. If government organizations reduce or shift their capital spending patterns, our business, operating results and prospects may be harmed. Our ability to maintain or increase revenue from government customers may be adversely affected by changes in government funding levels, appropriations, budget priorities, fiscal or contracting policies, government programs, laws and regulations, agency staffing or organizational structures, or procurement practices. Government customers are also subject to evolving requirements relating to software supply chain security, domestic sourcing, cybersecurity, AI and data handling, and compliance with these requirements may require significant resources and increase the cost and complexity of selling to government customers. In addition, delays associated with procurement reviews, qualifying or maintaining status as a government vendor, or obtaining or maintaining required security clearances and authorizations may impair our ability to compete for or perform government contracts.
Any of these factors could cause government customers to delay, reduce or cancel purchases of our solutions, impair our ability to compete for or perform government contracts, and adversely affect our business, operating results and prospects.
Our international operations expose us to additional risks, and failure to manage those risks could adversely affect our business, operating results and cash flows.
We derive a significant portion of our revenue from end customers and channel partners outside the United States. We derived approximately 45%, 44% and 46% of our total revenue from our international customers based on bill-to location for fiscal 2024, 2025, and 2026, respectively. As of July 31, 2026, approximately 62% of our full-time employees were located outside of the United States. Operating internationally requires significant management attention and exposes us to additional operational, legal, regulatory and financial risks. We are subject to risks associated with having significant worldwide operations, including, but not limited to:
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Our success will depend, in large part, on our ability to anticipate and effectively manage these risks. These factors and other factors could harm our ability to maintain international operations and generate international sales and, consequently, materially impact our business, operating results and financial condition.
Risks Related to Cybersecurity and Intellectual Property
If we are the victim of a cyber attack or other cybersecurity incident and our networks, computer systems or software solutions are breached or unauthorized access to sensitive or proprietary information, including employee or customer data, otherwise occurs, our business operations may be interrupted, our reputation and brand may be damaged, and we may incur significant liabilities.
Cyber attacks designed to gain access to sensitive or proprietary information by breaching mission critical systems of large organizations are constantly evolving, and high-profile electronic security breaches and other cybersecurity incidents leading to the unauthorized release of sensitive or proprietary information, including employee and customer information, have occurred at a number of large companies in recent years. Companies in our industry have reported that they have been subject to such cyber attacks, including attacks potentially from nation-state actors, and we could be subject to similar attempted attacks. More generally, computer malware, viruses, social engineering (predominantly spear phishing attacks), and general hacking have become prevalent in our industry, particularly against cloud services, and we and companies like us can suffer security breaches and other cybersecurity incidents from a variety of causes, whether due to third-party action, software bugs or vulnerabilities or coding errors, physical break-ins, employee error, malfeasance, or otherwise. In addition, retaliatory acts by countries subject to Western sanctions could include cyber attacks that could disrupt the economy or that could also either directly or indirectly impact our operations. We also continue to incorporate AI solutions and features into our platform, which may result in security incidents, jailbreaking, or otherwise increase cybersecurity risks.
Additionally, AI and machine learning may increase the cybersecurity risks we face, including through unauthorized or misuse of public-facing AI features. Threat actors may use generative AI and other AI capabilities to increase the prevalence, frequency, severity, and volume of cyber attacks, including by creating more sophisticated phishing and social engineering attacks (including through the use of impersonation technology), accelerating or automating vulnerability exploitation, and developing more sophisticated malware that can evade conventional detection tools or otherwise overwhelm protection systems faster than we can effectively respond. As AI technologies evolve, we may not be able to recognize, anticipate, prevent, or timely respond to these emerging techniques, which could increase the likelihood and magnitude of harm from a cyber attack or other cybersecurity incident.
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While we regularly face a wide variety of attempted attacks and other cybersecurity incidents, our preventative and detective security systems and controls have protected us to-date from any such attack or incident having a significant impact on our business. However, there is no assurance that these systems and controls will prevent any future attacks or incidents that may have a significant impact on our business. As we transition to offering more cloud-based solutions, as well as those based on our partnerships with third-party public cloud providers, we and our third-party public cloud providers may increasingly be the target of cyber threats or be exposed to other types of cybersecurity incidents. We also use other third-party platforms and other services, and as a result, we have been exposed to in the past, and may be exposed to in the future, cybersecurity incidents related to such third-party services. Because the techniques used and vulnerabilities exploited to obtain unauthorized access or to sabotage systems change frequently, and generally are not identified until they are launched against a target, we may be unable to anticipate these techniques or vulnerabilities or implement adequate preventative measures. We may also experience security breaches that may remain undetected for an extended period.
If any unauthorized access to, or security breach of, or other cybersecurity incident affecting, our solutions occurs, such an event could result in the loss of data, loss of intellectual property or trade secrets, loss of business, severe reputational or brand damage adversely affecting end customer or investor confidence, regulatory investigations and orders and other enforcement actions, litigation, indemnity obligations, damages for contract breach, and penalties for violation of cybersecurity, privacy, data protection, AI, and other applicable laws, regulations or contractual obligations. We may also be subject to potentially significant costs for remediation that may include liability for stolen assets or information and repair of system damage that may have been caused or incentives offered to end customers or other business partners in an effort to maintain business relationships after a breach and other liabilities. Additionally, any such event or perceived event could impact our reputation and brand, harm customer confidence, hurt our sales and expansion into existing and new markets, or cause us to lose potential or existing end customers. Any actual, potential or anticipated attack or other cybersecurity incident may cause us to incur increasing costs, including costs to deploy additional personnel and protection technologies, train employees and engage third-party experts and consultants.
Furthermore, a high-profile security breach or incident suffered, or perceived to have been suffered, by an industry peer may entail a general loss of trust in our industry and thereby have a similar adverse impact on our business and financial performance as a direct breach suffered by us. We could be required to expend significant capital and other resources to alleviate problems caused by such actual or perceived breaches or incidents and to remediate our systems, and comply with legal obligations. We could be exposed to a risk of loss, litigation, regulatory actions or fines, or remediation costs associated with such an incident which may include forensic analysis, breach response, notification, and credit monitoring, and possible liability, and our ability to operate our business may be impaired.
In addition, if the security measures of our end customers, partners, vendors, or suppliers are compromised, even without any actual compromise of our own systems or of our solutions used by such end customers, partners, vendors, or suppliers, we may face negative publicity, reputational harm or brand damage if our end customers, partners, vendors, or suppliers or anyone else incorrectly attributes the blame for such incidents to us or our solutions. If end customers believe that our solutions do not provide adequate security for the storage of personal or other sensitive or proprietary information or the transmission of such information over the internet, our business will be harmed. End customers’ concerns about security or privacy may deter them from using our solutions for activities that involve personal or other sensitive information, which may significantly affect our business and operating results.
Moreover, to the extent we acquire or integrate companies, products, services, and technologies, we may be exposed to additional security vulnerabilities, compliance issues or other cybersecurity risks associated with such businesses or technologies. Although we devote resources to identifying and addressing such risks, we may not discover or remediate all issues prior to or following integration, which could adversely affect our business.
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Third-party claims that we are infringing intellectual property, whether successful or not, could subject us to costly and time-consuming litigation or expensive licenses, and our business could be harmed.
A number of companies, both within and outside of the enterprise and cloud computing infrastructure industry, hold a large number of patents covering aspects of storage, servers, networking, desktop, security, virtualization, containerization, database management, cloud services products, and other technologies relevant to our products. In addition to these patents, participants in these technology and market areas typically also protect their technology through copyrights, as trade secrets and by contractual means. As a result, there is frequent litigation based on allegations of infringement, misappropriation or other violations of intellectual property rights. We have received, and in the future may receive, inquiries from other intellectual property holders and may become subject to allegations and claims, in litigation and outside litigation, that we infringed or are infringing their intellectual property rights, particularly as we expand our presence in the market and face increasing competition. There can be no assurance that we will be successful in defending against these allegations or claims or in reaching a business resolution that is satisfactory to us, which could affect or even preclude our ability to sell our products in the relevant market and subject us to payment of damages and other financial remedies. In addition, parties may claim that the names and branding that we use for our company and our various products and services infringe their trademark rights in certain countries or territories. If such a claim were to prevail, we may have to change the names and branding that we use in the affected countries or territories and we could incur other costs.
We currently have a number of agreements in effect pursuant to which we have agreed to defend, indemnify and hold harmless our end customers, suppliers and channel and other partners from damages and costs which may arise from allegations of infringement, or actual infringement, by our products and services of third-party patents or other intellectual property rights in the United States and/or in other countries. The scope of these defense and indemnity obligations varies, but may, in some instances, include indemnification for damages and expenses, including attorneys’ fees. A claim that our solutions infringe a third party’s intellectual property rights, even if untrue, could harm our relationships with our end customers and/or channel partners, may deter future end customers from purchasing our solutions and could expose us to costly litigation and settlement expenses. Even if we are not a party to any litigation between a customer and a third party relating to infringement by our products or services, an adverse outcome in any such litigation could make it more difficult for us to defend our solutions against intellectual property infringement claims in any subsequent litigation in which we are a named party. Any of these results could harm our brand and operating results.
Our defense of intellectual property rights claims brought against us or our end customers, suppliers and channel partners, regardless of whether the claims have merit, could be time-consuming, expensive to litigate or settle, divert management resources and attention, and force us to acquire intellectual property rights and licenses, which may involve substantial royalty or other payments. Further, a party making such a claim, if successful, could secure a judgment that requires us to pay substantial damages. An adverse determination also could prevent us from offering or delivering our products and services to our end customers or channel partners and may require that we procure or develop substitute solutions that do not infringe, which could require significant effort and expense. We may have to seek a license for the technology at issue, which may not be available on terms favorable or acceptable to us or at all, and as a result may significantly increase our operating expenses or require us to restrict our business activities in one or more respects. Any of these events could adversely affect our business, operating results, financial condition, and prospects.
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The success of our business depends in part on our ability to protect and enforce our intellectual property rights.
We rely on a combination of patent, copyright, service mark, trademark, and trade secret laws, as well as confidentiality procedures and contractual restrictions and covenants, to establish and protect our proprietary rights, all of which provide only limited protection. Effective patent, trademark, service mark, copyright, and trade secret protection may not be available in every country in which our solutions are available. We cannot be certain that the steps we have taken will prevent unauthorized use of our technology or the reverse engineering of our technology. Moreover, others may independently develop technologies that are competitive to ours and reduce our sales or market advantages, or infringe our intellectual property. A reduction in our market advantages or an inability to adequately protect and enforce our intellectual property and other proprietary rights could seriously harm our business, operating results, financial condition, and prospects.
We cannot assure you that any patents will be issued with respect to our currently pending patent applications in a manner that gives us adequate defensive protection or competitive advantages, if at all, or that any patents issued to us will not be challenged, invalidated or circumvented. We have filed for patents in the United States and in certain international jurisdictions, but such protections may not be available in all countries in which we operate or in which we seek to enforce our intellectual property rights, or may be difficult to enforce in practice. Our currently issued patents and any patents that may be issued in the future with respect to pending or future patent applications may not provide sufficiently broad protection or they may not prove to be enforceable in actions against alleged infringers.
Protecting against the unauthorized use of our intellectual property, solutions and other proprietary rights is expensive and difficult, particularly internationally. Litigation via court proceedings, arbitrations or similar proceedings may be necessary in the future to enforce or defend our intellectual property rights or to determine the validity and scope of the proprietary rights of others. For example, in March 2024, we announced that we filed a lawsuit in U.S. District Court against Tessell, Inc. ("Tessell") alleging that Tessell engaged in willful copyright and patent infringement (including theft of our source code and intellectual property related to our database service offering) and commenced separate arbitration proceedings against Tessell’s founders, and those proceedings remain ongoing. Litigation and arbitration are unpredictable and we may not win a litigation or arbitration even if there is significant evidence supporting our claims and defenses. Further, these proceedings and any other similar proceedings could result in substantial costs and diversion of management resources, either of which could harm our business, operating results and financial condition. Further, many of our current and potential competitors have the ability to dedicate substantially greater resources to defending intellectual property infringement claims and to enforcing their intellectual property rights than we have. Attempts to enforce our rights against third parties could also provoke these third parties to assert their own intellectual property or other rights against us, or result in a holding that invalidates or narrows the scope of our rights, in whole or in part.
A number of our solutions incorporate, use, work with, or are based upon open source software and AI models that we obtained under open source licenses, some of which may restrict or impose certain obligations on how we use or distribute our solutions, subject us to various risks and challenges and could result in increased development expenses, delays or disruptions to the release or distribution of those solutions, an inability to protect our intellectual property rights, and increased competition.
A number of our solutions incorporate, use, work with, or are based upon open source software and AI models, and we may incorporate or base our solutions on them in the future. Such open source software and AI models are generally licensed under "permissive" and "copyleft" open source licenses, such as the Apache License 2.0, BSD 2-Clause License, Eclipse Public License 2.0, GNU General Public License, GNU Lesser General Public License, MIT License, the Mozilla Public License 2.0, and other open source licenses. The use of open source software and AI models subjects us to a number of risks and challenges, including, but not limited to:
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If we are unable to effectively manage our compliance obligations for open source software and AI model use, our business and operating results could be adversely affected and our development costs may increase.
Risks Related to Employee Matters
Our business and growth depend on our ability to attract and retain qualified personnel, including our management team and other key personnel, and the inability to attract, hire, integrate, train, retain, or motivate qualified personnel could harm our business and growth.
Our success and growth depend to a significant degree on the skills and continued services of our management team and other key personnel. If we lose the services of any member of management or any key personnel, we may encounter challenges or delays in identifying a suitable or qualified replacement, and we may incur additional expenses to recruit and train a replacement. In recent years, we have experienced changes in our management team resulting from the hiring or departure of executives and other key personnel. While we seek to manage these transitions carefully, these changes may result in a loss of institutional knowledge and may cause disruptions to our business and growth. If we fail to successfully integrate new key personnel into our organization or if key employees are unable to successfully transition into new roles, our business could be adversely affected. In addition, we do not have life insurance policies that cover any of our executive officers or other key employees. The loss of the services of any of our executive officers or key employees, and any failure to have in place and execute an effective succession plan for key executives, could disrupt our business and have a significant negative impact on our operating results, prospects and future growth.
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In addition, our success and growth also depend substantially on our ability to continue to attract, hire, integrate, train, retain, and adequately motivate qualified and highly skilled personnel, in particular, in sales and engineering. We have invested, and may need to continue to invest, significant amounts of cash and equity to attract and retain employees, and we may never realize returns on these investments. Moreover, ineffective management of any leadership transitions, especially within our sales organization, or the inability of our recently hired sales personnel to effectively ramp to target productivity levels could negatively impact our growth and operating margins. It requires a significant time investment to replace, train, and ramp sales representatives to full productivity. Competition for highly skilled personnel, particularly in sales and engineering, is frequently intense, especially in the San Francisco Bay Area, where we are headquartered and have a substantial need for engineering talent. This competition for highly skilled personnel results in increased costs in the form of cash and stock-based compensation. Furthermore, the industry in which we operate generally experiences periods of high employee attrition.
Although we have entered into employment offer letters with some of our key personnel, these agreements generally do not have a fixed duration or term. Volatility or underperformance in the price of our Class A common stock may also impact our ability to attract and retain key employees. There is no assurance that we will be able to successfully attract or retain qualified personnel. Additionally, potential changes in U.S. immigration and work authorization laws and regulations may make it difficult to renew or obtain visas for any highly skilled personnel that we have hired or are actively recruiting. Our inability to attract and retain the necessary personnel could adversely affect our business, operating results and financial condition.
Moreover, we believe that a key contributor to our success and our ability to retain a highly skilled workforce has been our company culture, which we believe fosters innovation, teamwork, and a passion for our products and customers. As we grow and evolve, we may find it difficult to maintain the beneficial aspects of our company culture globally. These difficulties may be further amplified by our globally distributed workforce, which could have a negative impact on our workplace culture and on the execution of our business plans and operations. An inability to maintain our company culture could adversely affect our ability to attract and retain employees, continue to perform at current levels, or execute on our business strategy.
If we do not effectively structure, compensate, train and motivate our sales force, we may be unable to add new end customers or increase sales to our existing end customers and our business will be adversely affected.
Although we have a channel sales model, our sales representatives typically engage in direct interaction with our prospective end customers. Therefore, we continue to be substantially dependent on our sales force to obtain new end customers and sell additional solutions to our existing end customers. Our growth depends in large part on our ability to structure our sales force and compensation plans in a way that aligns with our strategic priorities, particularly our focus on driving large orders from major enterprise accounts. We have made, and may continue to make, changes to our sales processes, segmentation, and leadership structures to drive this alignment, but these changes may take longer than anticipated to implement successfully or fail to yield the expected benefits.
There is significant competition for sales personnel with the skills and technical knowledge that we require, especially those experienced in targeting and penetrating large enterprise accounts. Our ability to increase sales will depend, in large part, on our success in structuring, compensating, training and motivating sales personnel. New hires require significant training and may take significant time before they achieve full productivity; we estimate based on past experience that our average sales team members typically do not fully ramp and are not fully productive until around the time of the start of their fourth quarter of employment with us. Our recent hires and planned hires may not become productive as quickly as we expect, and we may be unable to hire or retain sufficient numbers of qualified individuals, particularly individuals who are focused on sales of our solutions to new and existing large enterprises, service providers and government entities, in the markets where we do business or plan to do business. Hiring sales personnel in new countries also requires additional set up, upfront and ongoing costs that we may not recover if the sales personnel fail to achieve full productivity.
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If our new sales employees, particularly those focused on sales of our solutions to new and existing large enterprises, service providers and government entities, do not become fully productive on the timelines that we have projected, or if we are unable to ensure that our seasoned sales employees remain productive and appropriately incentivized, our sales will not increase at anticipated levels and our ability to achieve long-term projections may be negatively impacted. If we are unable to structure, compensate, train and maintain sufficient numbers of effective sales personnel, or our new or existing sales personnel are not successful in obtaining new end customers, convincing existing customers to renew their subscription-based purchases, or increasing sales to our existing customer base generally, our business, operating results and prospects will be adversely affected.
Risks Related to Financial, Accounting, Regulatory, Tax, and Other Legal Matters
If we fail to maintain an effective system of internal controls, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired.
As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002 ("Sarbanes-Oxley Act") and the rules and regulations of the Nasdaq Stock Market. We expect that the requirements of these rules and regulations will continue to increase our legal, accounting and financial compliance costs, make some activities more difficult, time-consuming and costly, and place significant strain on our personnel, systems and resources. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. We are continuing to develop and refine our disclosure controls, internal control over financial reporting and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we will file with the SEC, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that information required to be disclosed in reports under the Exchange Act is accumulated and communicated to our principal executive and financial officers.
Our current controls and any new controls that we develop may become inadequate because of changes in conditions in our business. Further, weaknesses in our internal controls may be discovered in the future. Any failure to develop or maintain effective controls, or any difficulties encountered in their implementation or improvement, could harm our operating results or cause us to fail to meet our reporting obligations and may result in a restatement of our financial statements for prior periods. Any failure to implement and maintain effective internal controls also could adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting that we are required to include in our periodic reports we will file with the SEC under Section 404 of the Sarbanes-Oxley Act. Ineffective disclosure controls and procedures and internal control over financial reporting could also cause investors to lose confidence in our reported financial and other information, which would likely have a negative effect on the market price of our securities.
In order to maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting to comply with the SEC rules that implement Sections 302 and 404 of the Sarbanes-Oxley Act, we have expended and anticipate that we may continue to expend significant resources and undertake various actions, including incurring accounting-related costs, implementing new internal controls and procedures, and providing significant management oversight. Any failure to maintain the adequacy of our internal controls, or consequent inability to produce accurate financial statements on a timely basis could increase our operating costs and could materially impair our ability to operate our business and could have a material and adverse effect on our operating results and could cause a decline in the price of our securities. In addition, if we are unable to continue to meet these requirements, we may not be able to maintain our listing on the Nasdaq Global Select Market.
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Any legal proceedings or claims we may be involved in could be costly and time-consuming to defend and could harm our reputation regardless of their outcome.
We are, and may in the future become, involved in various legal proceedings and claims, including cases involving our IP rights and those of others, commercial matters, employee-related claims, and other actions, including actions that arise in the ordinary course of business. Any litigation, whether meritorious or not, could result in substantial costs, divert our management’s attention and resources from our business, and adversely impact our reputation and brand. This could have an adverse effect on our business, operating results and financial condition. While we maintain insurance coverage for certain types of claims, such insurance coverage may be insufficient to cover all losses or all types of claims that may arise. If we are required to make substantial payments or implement significant changes to our operations as a result of legal proceedings or claims, our business, results of operations and financial condition could be adversely affected.
In addition, companies that experience volatility in their stock price, including us, have historically been subject to securities class action and derivative litigation and we may face similar claims in the future. For example, class action securities lawsuits and shareholder derivative lawsuits were filed against us in February 2019 and March 2023, which have since been resolved. Any such litigation instituted against us, whether meritorious or not, could result in substantial costs, divert management’s attention, and adversely affect our reputation, business, operating results, and financial condition.
Failure to comply with applicable laws and regulations could result in fines, penalties and reputational harm and could also cause us to lose end customers, including in the public sector, or negatively impact our ability to contract with the public sector.
Our business is subject to laws and regulations in the United States and internationally, including those related to employment and labor, antitrust, workplace safety, environmental, consumer protection, anti-bribery laws, import/export controls, trade and economic sanctions, securities, and taxation. In certain jurisdictions, these legal and regulatory requirements may be more stringent than in the United States. Noncompliance with applicable regulations or requirements could subject us to investigations, sanctions, mandatory product recalls, enforcement actions, disgorgement of profits, fines, damages, and civil and criminal penalties or injunctions. If any governmental sanctions are imposed, or if we do not prevail in any possible civil or criminal litigation, our business, reputation, operating results, and financial condition could be adversely affected. In addition, responding to any action will likely result in a significant diversion of management’s attention and resources and an increase in third-party professional fees. Enforcement actions and sanctions could harm our reputation, business, operating results and financial condition.
In addition, we must comply with laws and regulations relating to the formation, administration and performance of contracts with the public sector, including U.S. federal, state and local governmental organizations, which affect how we and our channel partners do business with governmental agencies. Selling our solutions to the U.S. government, whether directly or through channel partners, also subjects us to certain regulatory and contractual requirements, including meeting the compliance requirements necessary for maintaining any required security clearances for facilities and employees. Failure to comply with these requirements by either us or our channel partners could subject us to investigations, fines and other penalties, which could have an adverse effect on our business, operating results, financial condition, and prospects. For example, the U.S. Department of Justice ("DOJ") has identified procurement fraud as an enforcement priority, indicating an ongoing commitment to aggressive enforcement under the False Claims Act and other applicable laws. Violations of certain regulatory and contractual requirements could also result in us being suspended or debarred from future government contracting. Any of these outcomes could have an adverse effect on our revenue, operating results, financial condition, and prospects.
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These laws and regulations impose added costs on our business, and failure to comply with these or other applicable regulations and requirements, including noncompliance in the past, could lead to claims for damages from our channel partners, penalties, termination of contracts, loss of exclusive rights in our intellectual property, and temporary suspension or permanent debarment from government contracting. Any such damages, penalties, disruptions, or limitations in our ability to do business with the public sector could have an adverse effect on our business and operating results.
We are subject to stringent and rapidly changing laws, regulations, industry standards and frameworks, contractual requirements, and other obligations related to privacy, artificial intelligence, data protection, and information security, and our actual or perceived failure to comply with such obligations could adversely affect our business and operating results. Any inability to comply with such obligations could also impair our efforts to maintain and expand our customer base, lengthen sales cycles, increase costs, and thereby decrease our revenue.
Privacy, AI, data protection, and information security are significant issues in the United States and the other jurisdictions where we offer our solutions. The regulatory framework for privacy, AI, and security issues worldwide is rapidly evolving and is likely to remain uncertain for the foreseeable future. Our handling of data, including customer data, personal data, support data, telemetry, employee data, and other information processed in connection with our products, services, operations, and go-to-market activities, is subject to a variety of global laws and regulations, including regulation by various government agencies, including the U.S. Federal Trade Commission ("FTC") and various state, local and foreign bodies, data protection authorities, and agencies.
The U.S. federal and various state and foreign governments have adopted or proposed limitations on the collection, use, storage, retention, security, disclosure, sale, sharing, and transfer, localization, and deletion of personal information of individuals, including end customers and their personnel, partners, prospects, and employees. In the United States, the FTC, other federal agencies, and many state attorneys general are applying evolving federal and state laws and regulations governing consumer protection, privacy, cybersecurity, and unfair and deceptive trade practices to the online collection, use and dissemination of data, including restrictions on transfers of certain data categories with countries of concern. Additionally, many foreign countries and governmental bodies, including in Australia, Brazil, the European Economic Area ("EEA"), the UK, Switzerland, India, Japan, China, and numerous other jurisdictions in which we operate or conduct our business, have laws and regulations concerning the collection, use, transfer, storage, security, and deletion of personal information obtained from their residents or by businesses operating within their jurisdiction. These laws and regulations often are more restrictive than those in the United States. For example, the General Data Protection Regulation ("GDPR") the UK General Data Protection Regulation, and Brazil’s Lei Geral de Protecao de Dados ("LGPD"), impose more stringent data protection requirements, provide an enforcement authority which substantially increases compliance costs, and impose large penalties for noncompliance. Such laws and regulations may require companies to implement new privacy, security, retention, data governance and AI policies; conduct privacy, transfer, security, data protection, and AI impact assessments; respond to requests from individuals to access, correct, delete, restrict, port, or opt out of certain uses of personal information; notify individuals, customers, regulators, or other parties of security incidents or personal data breaches; impose restrictions on automated decision-making, profiling or certain AI-enabled uses; and, among others, obtain individuals’ consent or provide opt-out rights to use personal information for certain purposes. In addition, some countries have enacted, or are currently considering, legislation that requires local storage and processing of data to avoid any form of transfer to a third country, or impose sector-specific requirements for regulated industries and public sector customers, or other restrictions on transfer and disclosure of personal data outside of that country which may impact our compliance obligations, potentially exposing us to liability, require changes to our product architecture or service delivery model, and increase the cost and complexity of delivering our products and services.
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In addition to comprehensive data protection and privacy laws, we are subject, or may become subject, to a growing number of cybersecurity, digital resilience, and product security regulations globally, including the European Union's Network and Information Security Directive ("NIS2"), Cyber Resilience Act ("CRA"), and, indirectly through our customers and business partners, the Digital Operational Resilience Act ("DORA"). Compliance with these requirements may require significant operational, technical, and administrative efforts and could increase our costs and legal obligations. These regulatory frameworks continue to evolve, and their interpretation, implementation, and enforcement remain uncertain, which may create additional compliance risks and challenges.
We also expect that there will continue to be new proposed laws, regulations, enforcement actions, regulatory guidance, industry standards, and case law concerning privacy, AI, data protection, and information security in the United States, the EEA and other jurisdictions, and we cannot yet determine the impact these developments may have on our business. This includes laws and regulatory frameworks governing AI system development, deployment, transparency, governance, accuracy, bias, explainability, human oversight, prohibited or high-risk AI practices, cybersecurity, critical infrastructure, digital operational resilience, software supply chain security and the handling of sensitive data. These developments increase uncertainty and may require us to change our data and AI internal operations, security controls, and practices and/or change our technology solutions, business model or processes, which may in turn adversely affect demand for our products and services. Additionally, our sales cycles may lengthen due to increasingly rigorous and complex customer-driven security, AI, and privacy assessments as part of customers’ purchasing decisions.
While the EU-U.S. Data Privacy Framework accepted by the European Commission in July 2023 (as well as the UK Extension to the EU-U.S. DPF and Swiss-U.S. DPF) provides us with a transfer mechanism for data from the EEA, data transfers continue to be scrutinized by regulators in the EEA, the UK and other countries with similar transfer restrictions requiring organizations to ensure that the data is protected to a standard that is "essentially equivalent" to that under the GDPR, UK GDPR, Swiss Federal Data Protection Act, and/or other applicable laws and to document this.
As a result of these and future data transfer, localization, and sovereignty developments, we may experience a reluctance from current or prospective customers in the EEA, the UK, Switzerland, and other and jurisdictions with similar transfer restrictions to use our products and services, particularly where customer data, support data, telemetry, logs, metadata or other regulated data may be accessed, transferred, hosted or processed outside the customer’s preferred jurisdiction. We may find it necessary to make changes to our data transfer mechanisms and handling of personal data, including with respect to the provision of our products and services. Such changes may require additional engineering, operational, legal and compliance resources, may limit certain product capabilities or service models, and may adversely impact our business, financial condition, and operating results.
In the United States, more states are adopting their own data protection legislation, creating a complex privacy landscape from state to state. The California Consumer Privacy Act ("CCPA"), among other things, requires covered companies to provide disclosures to California consumers and afford such consumers new abilities to opt out of the sale of their personal information. The California Privacy Rights Act ("CPRA") generally expanded consumers’ privacy rights and protections with respect to their personal information. Various U.S. states have passed privacy legislation now in effect. We cannot yet predict the full impact of these laws on our business or operations, but it may continue to require us to modify our data processing practices and policies and to incur substantial costs and expenses in an effort to comply.
Moreover, as a result of current and proposed data protection and privacy laws addressing the use of personal data for marketing purposes, including the European Commission’s draft ePrivacy Regulation, which is intended to replace the ePrivacy Directive in the EEA, as well as the CCPA/CPRA and other U.S. state privacy laws, we face increased difficulty in marketing to current and potential customers, as these laws impact the ability to use internet-based services and tracking technologies, such as cookies, which impacts our ability to spread awareness of our products and services and, in turn, grow a customer base in some regions. We also expect to incur additional costs to comply with the requirements of these laws.
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We are positioned as a data processor with respect to the cloud-based services we offer and, as we expand our support offerings, professional services, telemetry-enabled features, and AI-enabled capabilities, we may increasingly act as a data processor, service provider, contractor, subprocessor, or similar regulated role. These roles impose additional obligations under the foregoing and other laws and regulations relating to privacy, cybersecurity, AI and data protection and may increase our compliance burden and liability exposure by operation of law, contract (including contracts with customers in regulated industries), or penalties for noncompliance. Additionally, we expect that existing laws, regulations and standards may be interpreted in new ways in the future. Current or future laws, regulations, standards, and other obligations, as well as changes in the interpretation of existing laws, regulations, standards, and other obligations could impair our or our customers’ ability to collect, use, disclose, retain, analyze, transfer, or otherwise process information relating to individuals, which could decrease demand for our solutions, require us to restrict our business operations, increase our costs, delay product development or deployment, and impair our ability to maintain and grow our customer base and increase our revenue.
Although we are working to comply with federal, state and foreign laws and regulations, industry standards, contractual obligations, and other legal obligations that apply to us, those laws, regulations, standards, and obligations are evolving and may be modified, interpreted and applied in an inconsistent manner from one jurisdiction to another, and may conflict with one another, other requirements or legal obligations, our practices or the product features, our use of third-party providers, or the design and operation of our solutions. As such, we cannot assure ongoing compliance with all such laws or regulations, industry standards, contractual obligations, and other legal obligations. Any failure or perceived failure by us or by our vendors, subprocessors, partners, or other third parties to comply with federal, state or foreign laws or regulations, industry standards, contractual obligations, or other legal obligations, or any actual or suspected cyberattack, security vulnerability, ransomware event, supply chain compromise, or other security incident, whether or not resulting in unauthorized access to, or acquisition, release or transfer of personal information, customer data, confidential information, intellectual property, telemetry, logs, metadata, or other data, may result in governmental enforcement actions and prosecutions, private litigation, fines and penalties, or adverse publicity and could cause our customers to lose trust in us, which could have an adverse effect on our reputation, brand and business. Any inability to adequately address privacy, data protection, AI, and security concerns, even if unfounded, or comply with applicable laws, regulations, policies, industry standards, contractual obligations, or other legal obligations could result in additional cost and liability to us, damage our reputation and brand, inhibit sales, delay or prevent deployments, and adversely affect our business and operating results.
Failure to comply with anti-corruption and anti-money laundering laws, including the U.S. Foreign Corrupt Practices Act of 1977, as amended, and similar laws associated with our activities outside of the United States could subject us to penalties and other adverse consequences.
We are subject to the FCPA, the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the U.S. Travel Act, the UK Bribery Act, and possibly other anti-bribery and anti-money laundering laws in countries in which we conduct activities. We face significant risks if we fail to comply with the FCPA and other anti-corruption laws that prohibit companies and their employees and third-party intermediaries from authorizing, offering or providing, directly or indirectly, improper payments or benefits to foreign government officials, political parties and private-sector recipients for the purpose of obtaining or retaining business, directing business to any person or securing any advantage. In many foreign countries, particularly in countries with developing economies, it may be a local custom that businesses engage in practices that are prohibited by the FCPA or other applicable laws and regulations. In addition, we use various third parties to sell our solutions and conduct our business abroad. We or our third-party intermediaries may have direct or indirect interactions with officials and employees of government agencies, or state-owned or affiliated entities and we can be held liable for the corrupt or other illegal activities of these third-party intermediaries, our employees, representatives, contractors, partners, and agents, even if we do not explicitly authorize such activities. We continue to update and implement our FCPA/anti-corruption compliance program and no assurance can be given that all of our employees and agents, as well as those companies to which we outsource certain of our business operations, will not take actions in violation of our policies and applicable law, for which we may be ultimately held responsible.
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Any violation of the FCPA, other applicable anti-corruption laws and anti-money laundering laws could result in whistleblower complaints, adverse media coverage, investigations, loss of export privileges, severe criminal or civil sanctions, and, in the case of the FCPA, suspension or debarment from U.S. government contracts, which could have a material and adverse effect on our reputation, brand, business, operating results, and prospects. In addition, responding to any enforcement action may result in a materially significant diversion of management’s attention and resources and significant defense costs and other third-party professional fees.
We are subject to governmental export and import controls and other trade restrictions that could impair our ability to compete in international markets or subject us to liability if violated.
Our solutions are subject to U.S. export controls, including the Export Administration Regulations and economic sanctions administered by the Office of Foreign Assets Control, and we incorporate encryption technology into certain of our solutions. These encryption products and the underlying technology may be exported outside of the United States only with the required export authorizations, including by license, a license exception or other appropriate government authorizations. Changes in export controls, sanctions, and related regulations, including emerging restrictions targeting AI technologies, may increase compliance costs, restrict access to technologies and AI hardware, or adversely affect our operations.
Furthermore, our activities are subject to U.S. and foreign economic sanctions laws and regulations that prohibit the export of certain products and services without the required export authorizations, including to countries, governments and persons targeted by U.S. or foreign embargoes or sanctions. Additionally, the U.S. government has recently been critical of existing trade agreements and may impose more stringent export and import controls. Obtaining the necessary export license or other authorization for a particular sale may be time-consuming and may result in the delay or loss of sales opportunities even if the export license ultimately may be granted. While we take precautions to prevent our solutions from being exported in violation of these laws, including obtaining authorizations for our encryption products, implementing IP address blocking and screenings against U.S. government and international lists of restricted and prohibited persons, we cannot guarantee that the precautions we take will prevent violations of export control and sanctions laws. Violations of U.S. or foreign sanctions or export control laws can result in significant fines or penalties. In addition, trade restrictions, new or increased tariffs (or the threat thereof), or disruptions affecting suppliers, OEM partners, or logistics providers could increase costs or delay product availability. For example, imports of foreign-origin hardware products into the United States may be subject to new or increased tariffs recently imposed by the U.S. government. In response to these new, increased, or threatened U.S. tariffs, foreign countries may impose retaliatory tariffs on U.S.-origin goods in response, which could also affect our products or business operations. If we fail to comply with applicable tariff laws, we may be subject to monetary fines, denial of import privileges, increased scrutiny, and other penalties.
If our channel, alliance and OEM partners fail to obtain appropriate import, export or re-export licenses or permits, or fail to comply with applicable import and export control laws and regulations, we may also be adversely affected, through reputational harm as well as other negative consequences including government investigations and penalties. We presently incorporate export control compliance requirements into our relevant partner agreements; however, no assurance can be given that our partners will, or will be able to, comply with such requirements.
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Also, various countries, in addition to the United States, regulate the import and export of certain encryption and other technology, including import and export licensing requirements, and have enacted laws that could limit our ability to distribute our solutions or could limit our end customers’ ability to implement our solutions in those countries. Changes in our solutions or future changes in export and import regulations may create delays in the introduction of our solutions in international markets, result in increased licensing requirements, prevent our end customers with international operations from deploying our solutions globally or, in some cases, prevent the export or import of our solutions to certain countries, governments, or persons altogether. From time to time, various governmental agencies have proposed additional regulation of encryption technology, including the escrow and government recovery of private encryption keys. Any change in export or import regulations, economic sanctions or related legislation, increased export and import controls stemming from U.S. government policies, or change in the countries, governments, persons or technologies targeted by such regulations, could result in decreased use of our solutions by, or in our decreased ability to export or sell our solutions to, existing or potential end customers with international operations. Any decreased use of our solutions or limitation on our ability to export or sell our solutions would adversely affect our business, operating results and prospects.
Taxing authorities may successfully assert that we should have collected or in the future should collect sales and use, value added or similar taxes, and we could be subject to liability with respect to past or future sales, which could adversely affect our operating results.
We do not collect sales and use, value added or similar taxes in all jurisdictions in which we have sales, and we have been advised that such taxes are not applicable to our products and services in certain jurisdictions. Sales and use, value added, and similar tax laws and rates vary greatly by jurisdiction. Certain jurisdictions in which we do not collect such taxes may assert that such taxes are applicable. If we are unsuccessful in collecting such taxes from our end customers, we could be held liable for such costs, which may adversely affect our operating results.
The application of tax laws to services provided electronically is evolving. New sales and use, value added or similar tax laws, statutes, rules, regulations, or ordinances could be enacted at any time. For example, California has recently amended its tax laws to subject certain retail sales of digital prewritten software, cloud-based applications, and software services to sales tax in California, effective January 1, 2027, which may increase the cost to our California-based customers of purchasing our products, and similarly may increase the costs to us of purchasing software products we use in our business.
Our international operations may subject us to potential adverse tax consequences.
We have expanded our international operations and staff to better support our growth into the international markets. Our corporate structure and associated transfer pricing policies contemplate the business flows and future growth into the international markets, and consider the functions, risks and assets of the various entities involved in the intercompany transactions. The amount of taxes we pay in different jurisdictions may depend on the application of the tax laws of the various jurisdictions, including the United States, to our international business activities, changes in tax rates, change in our geographical earnings mix, new or revised tax laws or interpretations of existing tax laws and policies and our ability to operate our business in a manner consistent with our corporate structure and intercompany arrangements. The taxing authorities of the jurisdictions in which we operate may challenge our methodologies for pricing intercompany transactions pursuant to the intercompany arrangements or disagree with our determinations as to the income and expenses attributable to specific jurisdictions. If such a challenge or disagreement were to occur, and our position was not sustained, we could be required to pay additional taxes, interest and penalties, which could result in one-time tax charges, higher effective tax rates, reduced cash flows and lower overall profitability of our operations. Our financial statements could fail to reflect adequate reserves to cover such a contingency.
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Changes in global tax laws could increase our worldwide tax rate and could have a material adverse effect on our business, cash flow, results of operations or financial conditions.
Global tax developments applicable to multinational businesses may have a material impact on our business, cash flow from operating activities, or financial results. The U.S. Department of Treasury has broad authority to issue regulations and interpretative guidance that may significantly impact how we comply with the law, which could affect our results of operations in the period issued.
The Organisation for Economic Cooperation and Development ("OECD") reached agreement among various countries to implement a global minimum tax framework, commonly referred to as Pillar Two, which imposes a minimum effective tax rate of 15% on certain multinational enterprises. On January 5, 2026, the OECD announced a side-by-side elective safe harbor that would exempt electing U.S.-parented multinationals from certain provisions of Pillar Two for fiscal years beginning on or after January 1, 2026, but does not provide an exemption from the "qualified domestic minimum top-up taxes" that many countries have enacted or begun the process of enacting laws based on Pillar Two proposals. The safe harbor must be adopted into the domestic laws of the relevant jurisdictions and the timing and the degree of adoption may vary by jurisdiction.
In addition, several countries have proposed or enacted digital services taxes, many of which would apply to revenues derived from digital services. We will continue to assess the ongoing impact of these current and pending changes to global tax legislation and the impact on our future financial statements upon the finalization of laws, regulations and additional guidance. In addition, as we continue to evaluate our corporate structure, any changes to the taxation of undistributed foreign earnings could also change our plans regarding reinvestment of such earnings. Due to the large scale of our U.S. and international business activities, many of these enacted and proposed changes to the taxation of our activities could increase our worldwide effective tax rate and have an adverse effect on our operating results, cash flow or financial condition.
We are subject to income taxes as well as non-income-based taxes, in both the U.S. and various foreign jurisdictions. Many judgments are required in determining our worldwide provision for income taxes and other tax liabilities, and we are under audit by various tax authorities, which often do not agree with positions taken by us on our income and non-income-based tax returns. Although we believe that our estimates are reasonable, the ultimate tax outcome may differ from the amounts recorded in our consolidated financial statements and may materially affect our financial results in the period or periods for which such determination is made.
Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.
In general, under Section 382 of the United States Internal Revenue Code of 1986, as amended (the "Code"), a corporation that undergoes an ownership change is subject to limitations on its ability to utilize its pre-change net operating losses ("NOLs"), and other tax attributes to offset future taxable income. An ownership change occurs when a company’s "five-percent shareholders" (as defined in Section 382 of the Code) collectively increase their ownership in the company by more than 50 percentage points (by value) over a rolling three-year period. Similar limitations may apply for state tax purposes. If our existing NOLs are subject to limitations arising from previous ownership changes, our ability to utilize NOLs could be limited by Section 382 of the Code. We may experience ownership changes in the future as a result of subsequent shifts in our stock ownership. In addition, at the state level, there may be periods during which the use of NOLs is suspended or otherwise limited.
Risks Related to Our Convertible Notes and Credit Facility
As of July 31, 2026, we had outstanding $500.0 million aggregate principal amount of 0.25% convertible senior notes due 2027 (the "2027 Notes") and $862.5 million aggregate principal amount of 0.50% convertible senior notes due 2029 (the “2029 Notes” and together with the 2027 Notes, collectively, the “Notes”). As of July 31, 2026, we also had outstanding a revolving credit agreement (the "Revolver") that provides for a senior secured revolving credit facility in an aggregate principal amount of $500.0 million.
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Servicing and repaying our indebtedness, including the 2027 Notes, the 2029 Notes and any borrowings under the Revolver, may require a significant amount of cash, and we may not have sufficient cash to pay our indebtedness.
As of July 31, 2026, we had outstanding $500.0 million aggregate principal amount of 2027 Notes and $862.5 million aggregate principal amount of 2029 Notes. Our ability to make scheduled payments in respect of, or to refinance, our indebtedness may depend on our future performance, which is subject to economic, financial, competitive, and other factors beyond our control. Our business may not be able to generate cash flows from operations in the future that are sufficient to service our debt and make necessary capital expenditures. If we are unable to generate such cash flows, we may be required to adopt one or more alternatives, such as obtaining additional debt financing or equity capital on terms that may be onerous or highly dilutive, restructuring debt, or selling assets. Any such financing or refinancing may not be available on acceptable terms, or at all, particularly during periods of higher interest rates, reduced credit availability or adverse market conditions. In addition, the Revolver contains restrictive covenants that limit us, and any of our future debt agreements may contain restrictive covenants that may limit or prohibit us, in each case, from adopting any of these alternatives. Our failure to comply with these covenants could result in an event of default, which could result in the acceleration of our debt. Our indebtedness could make us more vulnerable to adverse economic, industry and regulatory developments, limit our flexibility in planning for or responding to changes in our business, restrict our ability to obtain additional financing for working capital, acquisitions or other corporate purposes, expose us to interest-rate risks to the extent applicable, place us at a competitive disadvantage relative to less leveraged competitors, and make an acquisition of our company more difficult. Any of these factors could harm our business, results of operations, and financial condition. In addition, if we incur additional indebtedness, the risks related to our business and our ability to service or repay our indebtedness would increase.
We may not have sufficient cash or the ability to raise the funds necessary to settle conversions of the Notes in cash, to repay the Notes at maturity, or to repurchase the Notes upon a fundamental change.
Holders of the Notes will have the right to require us to repurchase for cash all or a portion of their Notes upon the occurrence of a fundamental change before the applicable maturity date at a repurchase price equal to 100% of the principal amount of such Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date. In addition, upon conversion of the Notes, unless we elect to deliver solely shares of our Class A common stock to settle such conversion (other than paying cash in lieu of delivering any fractional share), we will be required to make cash payments in respect of the Notes being converted. Moreover, we will be required to repay the Notes in cash at their maturity unless earlier converted, redeemed or repurchased. We may not have enough available cash or be able to obtain financing at the time we are required to make repurchases of the Notes of a series surrendered therefor or pay cash with respect to the Notes of such series being converted or at their maturity. In addition, our ability to repurchase the Notes of a series or to pay cash upon conversions of such Notes or at their maturity may be limited by law, regulatory authority or agreements governing our future indebtedness. Our failure to repurchase the Notes of a series at a time when the repurchase is required by the applicable indenture or to pay cash upon conversions of such Notes or at their maturity as required by the applicable indenture would constitute a default under such indenture. A default under the applicable indenture or the fundamental change itself could also lead to a default under agreements governing our future indebtedness. Moreover, the occurrence of a fundamental change under the applicable indenture could constitute an event of default under any such agreement. If the payment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the indebtedness or to pay cash amounts due upon conversion, upon required repurchase or at maturity of the applicable series of the Notes.
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The conditional conversion feature of the 2027 Notes or the 2029 Notes, if triggered, may adversely affect our financial condition and operating results.
The 2027 Notes and the 2029 Notes are convertible under the circumstances described in Note 5 of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K. In the event the conditional conversion feature of the 2027 Notes or the 2029 Notes is triggered, holders of such Notes will be entitled to convert their Notes at any time during specified periods at their option. If one or more holders elect to convert their Notes, unless we elect to satisfy our conversion obligation by delivering solely shares of our Class A common stock (other than paying cash in lieu of delivering any fractional share), we would be required to settle a portion or all of our conversion obligation in cash, which could adversely affect our liquidity. In addition, even if holders of the Notes of a series do not elect to convert their Notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the Notes of such series as a current rather than long-term liability, which would result in a material reduction of our net working capital.
The accounting method for the Notes, which may be settled in cash upon conversion, has had, and may continue to have, a material effect on our reported or future financial results.
We utilize the if-converted method for our diluted earnings per share calculation, the effect of which is that the transaction is accounted for as if the outstanding Notes were to be converted into shares of our Class A common stock at the respective conversion rate in the beginning of the respective period, even if the Notes of a series are not yet then convertible and even if, upon any conversion of any Notes of a series, we may elect to settle the conversion using cash or a combination of cash and shares of our Class A common stock. As a result, our diluted earnings per share could be adversely affected.
Our revolving credit facility contains a financial covenant and other covenants that may restrict our actions, and a failure to comply with these covenants could have a material adverse effect on our financial condition.
In February 2025, we entered into the Revolver. The Revolver includes covenants that limit our ability to, among other things, incur liens, make investments, incur indebtedness, merge or consolidate with other companies, sell substantially all of our assets, make restricted payments, undergo certain fundamental changes, and prepay subordinated debt. In addition, the Revolver contains a financial covenant that requires us to maintain compliance with a maximum consolidated total leverage ratio, calculated as set forth in the Revolver and tested at the end of each fiscal quarter. As a result of these restrictions, we may be limited in how we conduct business, unable to raise additional debt or equity financing to operate during general economic or business downturns, or unable to compete effectively or to take advantage of new business opportunities. Our ability to comply with these covenants depends on many factors, some of which are beyond our control. The Revolver contains various events of default that include, among others, non-payment of principal, interest or fees, breach of covenants, inaccuracy of representations and warranties, cross defaults to certain other indebtedness, bankruptcy and insolvency events, material judgments, and events constituting a change of control, in each case subject to thresholds and cure periods as set forth in the Revolver. Upon the occurrence and during the continuance of such an event of default, our lenders would have the right to terminate their commitments and accelerate our obligations under the Revolver as well as exercise other rights and remedies provided for under the Revolver, the other loan documents and applicable law. If outstanding borrowings under the Revolver were to be accelerated, we may not have sufficient cash on hand or be able to borrow sufficient funds to refinance the debt or sell sufficient assets to repay the debt, which could immediately adversely affect our business, cash flows, results of operations, and financial condition.
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Risks Related to Ownership of Our Securities
The market price of our securities may be volatile and may decline, including if we fail to meet our publicly announced financial guidance or other expectations.
The market price of our securities has fluctuated and may continue to fluctuate substantially in response to a number of factors, including those described in this "Risk Factors" section, many of which are beyond our control and may be unrelated to our operating performance. Factors that could cause fluctuations in the market price of our securities include:
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We periodically provide financial guidance and other expectations regarding our future performance that represents our management’s assumptions and estimates as of the date of release. Some of those key assumptions relate to the macroeconomic environment, including supply chain and military conflicts, which are inherently difficult to predict. Other assumptions relate to the timing and structure of customer billings and payments. We may offer customers increased flexibility in payment arrangements, including annual payment schedules, financing arrangements or other payment alternatives. Changes in the mix of annual versus multi-year billings, customer payment preferences, financing arrangements, or other commercial terms could affect billings, deferred revenue, operating cash flow and free cash flow and may make forecasting such metrics more difficult. While presented with numerical specificity, our guidance is inherently speculative and subject to significant uncertainties and changing business assumptions beyond our control, which may cause actual results to vary materially from our projections. Furthermore, analysts and investors may develop and publish their own projections of our business, which may form a consensus about our future performance. Our actual business results may vary significantly from such guidance or that consensus due to a number of factors, many of which are outside of our control, including those described in this "Risk Factors" section, any of which or combination thereof could materially and adversely affect our business and future operating results. Certain financial and operating metrics, including billings, deferred revenue, operating cash flow and free cash flow, may be more sensitive to changes in customer billing and payment structures than revenue. Furthermore, if we make downward revisions to our previously announced guidance, if we withdraw our previously announced guidance, or if our publicly announced guidance regarding future operating results fails to meet expectations of securities analysts, investors or other interested parties, the price of our securities would decline.
In addition, the trading market for technology companies has experienced extreme price and volume volatility that have often been unrelated or disproportionate to the operating performance of those companies. Broad market and industry factors may seriously affect the market price of our securities, regardless of our actual operating performance. Furthermore, securities analysts may publish reports, forecasts, or recommendations regarding our business, and changes in analyst expectations regarding us or our industry could adversely affect the market price or trading volume of our securities. These fluctuations and conditions could cause you to lose all or part of your investment in our securities.
Sales of substantial amounts of our Class A common stock in the public markets, or the perception that they might occur, could reduce the price that our securities might otherwise attain and may dilute your voting power and your ownership interest in us.
Sales of a substantial number of shares of our Class A common stock in the public markets, particularly sales by our directors, executive officers and significant stockholders, or the perception that these sales could occur (including public disclosure of sales contemplated by 10b5-1 trading plans), could adversely affect the market price of our Class A common stock. We have reserved a substantial number of shares of our Class A common stock for issuance upon vesting or exercise of our equity compensation plans and upon conversion of the Notes. We have also registered the offer and sale of all shares of our Class A common stock that we may issue under our equity compensation plans. We may also issue our shares of Class A common stock or additional securities convertible into shares of our Class A common stock from time to time in connection with a financing, acquisition, investments, or otherwise. Any such issuance could result in substantial dilution to our existing stockholders and cause the market price of our Class A common stock to decline.
Conversion of the Notes may dilute the ownership interest of existing stockholders, or may otherwise depress the price of our securities.
The conversion of some or all of the Notes, to the extent we deliver shares upon conversion thereof, will dilute the ownership interests of existing stockholders, reduce our earnings per share and potentially have an adverse effect on the price of our securities. Any sales in the public market of our Class A common stock issuable upon such conversion could adversely affect prevailing market prices of our securities. In addition, the existence of the Notes may encourage short selling by market participants because the conversion of the Notes could be used to satisfy short positions, or anticipated conversion of the Notes into shares of our Class A common stock could depress the price of our securities.
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We cannot guarantee that our share repurchase program will be fully consummated or that it will enhance long-term stockholder value.
In August 2023, our Board of Directors authorized the repurchase of up to $350.0 million of our Class A common stock. In August 2025 and April 2026, our Board of Directors approved increases of $350.0 million and $750.0 million, respectively, to the share repurchase authorization, of which $728.9 million remained available for future share repurchases as of July 31, 2026. The authorization has no expiration date and does not obligate us to repurchase any minimum number of shares. The timing and amount of share repurchases will depend upon prevailing stock prices, business and market conditions, corporate and regulatory requirements, alternative investment opportunities, and other factors. We cannot guarantee that the share repurchase program will be fully executed or that it will enhance long-term stockholder value. Share repurchases under the program could affect, and increase the volatility of, the price of our Class A common stock and will diminish our cash reserves. In addition, as part of the Inflation Reduction Act signed into law in August 2022, the United States implemented a 1% excise tax on the value of certain stock repurchases by publicly traded companies. This tax may increase the costs to us of any share repurchases. The program may be modified, suspended or discontinued at any time, and any future announcement of a termination of the program could result in a decrease in the price of our Class A common stock.
Certain provisions in our charter documents and under Delaware law could make an acquisition of our company more difficult, limit attempts by our stockholders to replace or remove members of our Board of Directors or current management and may adversely affect the market price of our securities.
Our amended and restated certificate of incorporation and amended and restated bylaws contain provisions that could delay or prevent a change in control of our company. These provisions could also make it difficult for stockholders to elect directors that are not nominated by the current members of our Board of Directors or take other corporate actions, including effecting changes in our management. These provisions include, among other things, the ability of our Board of Directors to issue preferred stock without stockholder approval, restrictions on stockholder action by written consent and the calling of special meetings, advance notice requirements for stockholder nominations and proposals, limitations on the ability of stockholders to fill Board vacancies, and other provisions that may discourage, delay or prevent a change in control transaction or changes in the composition of our Board of Directors or management.
In addition, as a Delaware corporation, we are subject to Section 203 of the Delaware General Corporation Law. Section 203 generally restricts certain business combinations with stockholders owning 15% or more of our outstanding voting stock for a specified period of time, subject to certain exceptions. These provisions could discourage, delay or prevent transactions that stockholders may consider favorable, reduce the market's willingness to pay a premium for our securities, and limit stockholders' ability to influence corporate matters.
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Our amended and restated bylaws designate the Court of Chancery of the State of Delaware and, to the extent enforceable, the federal district courts of the United States of America as the exclusive forums for certain disputes between us and our stockholders, which will restrict our stockholders’ ability to choose the judicial forum for disputes with us or our directors, officers, or employees.
Our amended and restated bylaws provide that the Court of Chancery of the State of Delaware is the exclusive forum for certain actions and proceedings under Delaware law, including derivative actions, fiduciary duty claims, claims arising under the Delaware General Corporation Law, our certificate of incorporation or bylaws, and other claims governed by the internal affairs doctrine. This choice of forum provision does not apply to suits brought to enforce a duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. Our amended and restated bylaws provide that the federal district courts of the United States of America will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act. A stockholder may nevertheless seek to bring a claim in a venue other than those designated in the exclusive forum provisions. There can be no assurance that the provisions will be enforced by a court in those other jurisdictions. These choice of forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, or other employees. If a court were to find either provision in our amended and restated bylaws to be inapplicable or unenforceable, we may incur additional costs associated with resolving the dispute in other jurisdictions, which could harm our business.
We do not intend to pay dividends in the foreseeable future. As a result, your ability to achieve a return on your investment will depend on appreciation in the price of our Class A common stock.
We have never declared or paid any cash dividends on our Class A common stock. We do not anticipate paying any dividends on our Class A common stock in the foreseeable future. Any determination to pay dividends in the future will be at the discretion of our Board of Directors. Accordingly, investors must rely on sales of their Class A common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investments.
General Risk Factors
Our business is subject to the risks of natural disasters (including extreme weather), pandemics, man-made problems, and other similar events that may be outside of our control.
Significant natural disasters (such as earthquakes, fires, floods, and extreme weather), man-made problems (such as significant power outages, security breaches, acts of terrorism or war, civil unrest, or geopolitical turmoil), and other similar events that may be outside of our control could have an adverse impact on our business and operating results. For example, despite the implementation of network security measures, our networks also may be vulnerable to computer viruses, break-ins and similar disruptions from unauthorized tampering with our solutions. Further, both our corporate headquarters and our OEM and contract manufacturer are located in the San Francisco Bay Area, a region known for seismic activity. In addition, natural disasters (including extreme weather) and man-made problems could cause disruptions in our or our end customers’ or channel partners’ businesses, our suppliers’ and manufacturers’ operations or the global economy as a whole. Epidemics, pandemics such as the COVID-19 pandemic, other outbreaks of novel diseases or other major public health concerns could also cause disruptions in our or our end customers’ or channel partners’ businesses, our supply chain, our suppliers’ and manufacturers’ operations, or the global economy as a whole. We also rely on IT systems to communicate among our workforce and with third parties. Any disruption to our communications, whether caused by a natural disaster or by man-made problems, such as power disruptions, could adversely affect our business. To the extent that any such disruptions result in delays or cancellations of orders or impede our suppliers’ or our manufacturers’ ability to timely deliver our solutions and product components, or the deployment of our solutions, our business, operating results and financial condition would be adversely affected. Our business interruption insurance may not adequately cover our losses in the event of a significant disruption in our business.
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We may further expand through acquisitions of, or investments in, other companies (or vice versa through divestitures), each of which may divert our management’s attention, resulting in additional dilution to our stockholders and consumption of resources that are necessary to sustain and grow our business.
Our business strategy may, from time to time, include acquiring other complementary products, technologies or businesses or divesting certain products. We also may enter into relationships with other businesses in order to expand our solutions, which could involve preferred or exclusive licenses, additional channels of distribution or discount pricing or investments in other companies. Negotiating these transactions can be time-consuming, difficult and expensive, and our ability to close these transactions may be subject to third-party approvals, such as government regulatory approvals, beyond our control. Consequently, we cannot assure that these transactions, once undertaken and announced, will close. Acquisitions, divestitures or investments may result in unforeseen expenditures and operating and integration difficulties, especially if they are more complex in structure and scope, including due to the geographic location of the acquired company. In particular, we may encounter difficulties assimilating or integrating the businesses, technologies, products, personnel, or operations of companies that we may acquire, particularly if the key personnel of the acquired business choose not to work for us. We may have difficulty retaining the customers of any acquired business or the acquired technologies or research and development expectations may prove unsuccessful.
Acquisitions or divestitures may also disrupt our ongoing business, divert our resources, require significant management attention that would otherwise be available for development of our business, and may be viewed negatively by our end customers, investors or securities analysts. We may not successfully evaluate or utilize the acquired technology or personnel, or accurately forecast the financial impact of an acquisition or divestiture transaction, including accounting charges. Any acquisition or investment could expose us to unknown liabilities and risks, and we may incur additional costs and expenses necessary to address an acquired company’s failure to comply with laws and governmental rules and regulations. Moreover, we cannot assure you that the anticipated benefits of any acquisition or investment would be realized in a timely manner, if at all, or that we would not be exposed to unknown liabilities. In connection with these types of transactions, we may issue additional equity securities that would dilute our stockholders, use cash that we may need in the future to operate our business, incur debt on terms unfavorable to us or that we are unable to repay, incur large charges or substantial liabilities, encounter difficulties integrating diverse business cultures, and become subject to adverse tax consequences, substantial depreciation or deferred compensation charges. These challenges related to acquisitions, divestitures or investments could adversely affect our business, operating results, financial condition, and prospects.
We are exposed to fluctuations in currency exchange rates, which could negatively affect our operating results.
Our sales contracts are denominated in U.S. dollars; therefore, substantially all of our revenue is not subject to foreign currency risk. However, any strengthening of the U.S. dollar relative to foreign currencies could increase the effective cost of our solutions for customers outside the United States, which may adversely affect our financial condition and operating results. An increasing portion of our operating expenses is incurred outside the United States and denominated in foreign currencies, including the Euro, Pound Sterling, and Indian Rupee. We also have expenses in other currencies, which are smaller in magnitude but still subject to currency fluctuations. As a result, our total expense base is exposed to foreign exchange volatility. In particular, ongoing geopolitical instability and divergent fiscal and monetary policies across regions have caused, and may continue to cause, significant exchange rate volatility for the foreseeable future. If our exposure to foreign currency fluctuations continues to grow and we are unable to effectively hedge against this risk, our operating results could be negatively impacted. Additionally, such fluctuations may impair our ability to accurately forecast financial performance, particularly with respect to operating expenses and margins. To date, we have not entered into any hedging arrangements or used derivative instruments to manage foreign currency risk. We continue to monitor our exposure and evaluate the potential benefits of implementing a hedging program.
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Our marketable securities portfolio is subject to credit, liquidity, market, and interest rate risks that could cause its value to decline significantly and materially adversely affect our business, financial condition, results of operations, and prospects.
We maintain a portfolio of marketable securities through a professional investment advisor. The investments in our portfolio are subject to credit, liquidity, market-price, and interest-rate risks that could materially and adversely affect our business, financial condition, results of operations, and prospects. Under our corporate investment policy, we seek to preserve principal, maintain liquidity, avoid excessive credit concentrations, and capture a market rate of return. However, the portfolio’s value may decline due to changes in interest rates, instability in the global financial markets that reduces the liquidity of securities in our portfolio, and other factors. Even with diversification and ongoing risk-profile monitoring, we could experience significant losses or reduced liquidity. If we increase our holdings in these securities, our exposure to such risks would grow, potentially exacerbating any adverse impact.
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Item 1B. Unresolved Staff Comments
Not Applicable.
Item 1C. Cybersecurity
Cybersecurity is an important component of our overall enterprise risk management strategy. We are committed to protecting our information systems and data from a wide range of cybersecurity threats, including operational risks, intellectual property theft, fraud, extortion, privacy violations, legal risks, and reputational damage. Our approach integrates comprehensive processes and technologies designed to identify, assess, and mitigate these risks.
Risk Management and Strategy
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Information on the cybersecurity risks we face is discussed in Part I, Item 1A, “Risk Factors.”
Governance
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Item 2. Properties
Our corporate headquarters are located in San Jose, California where, under lease agreements that expire through August 2030, we currently lease approximately 230,000 square feet of space. We also maintain offices in North America, Europe, Asia Pacific, the Middle East, Latin America, and Africa. We lease all of our facilities and do not own any real property. We believe that our facilities are adequate to meet our needs for the immediate future and that, should it be needed, we would lease suitable additional space to accommodate our operations.
Item 3. Legal Proceedings
The information set forth under the "Legal Proceedings" subheading in Note 7 of Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K is incorporated herein by reference.
Item 4. Mine Safety Disclosures
Not Applicable.
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PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information for Common Stock
Our Class A common stock began trading publicly on the NASDAQ Stock Market under the ticker symbol "NTNX" on September 30, 2016. Prior to that time, there was no public market for our Class A common stock. The following table sets forth, for the periods indicated, the high and low sale prices of our Class A common stock as reported on the Nasdaq Global Select Market.
|
|
Fiscal 2025 |
|
|
Fiscal 2026 |
|
||||||||||
Fiscal Quarter: |
|
High |
|
|
Low |
|
|
High |
|
|
Low |
|
||||
First quarter |
|
$ |
64.97 |
|
|
$ |
46.00 |
|
|
$ |
81.12 |
|
|
$ |
66.06 |
|
Second quarter |
|
$ |
73.18 |
|
|
$ |
61.18 |
|
|
$ |
72.40 |
|
|
$ |
39.33 |
|
Third quarter |
|
$ |
83.07 |
|
|
$ |
58.17 |
|
|
$ |
42.00 |
|
|
$ |
34.41 |
|
Fourth quarter |
|
$ |
78.34 |
|
|
$ |
72.13 |
|
|
$ |
59.57 |
|
|
$ |
42.60 |
|
Holders of Record
As of July 31, 2026, there were 39 holders of record of our Class A common stock. This figure does not include a substantially greater number of "street name" holders or beneficial holders of our common stock whose shares are held of record by banks, brokers and other financial institutions.
Dividend Policy
We have never declared or paid cash dividends on our Class A common stock. We do not anticipate paying any dividends on our Class A common stock in the foreseeable future. Any future determination to declare dividends will be made at the discretion of our Board of Directors, subject to applicable laws and will depend on our financial condition, operating results, capital requirements, general business conditions and other factors that our Board of Directors may deem relevant.
Unregistered Sales of Equity Securities and Use of Proceeds
None.
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Purchases of Equity Securities by the Issuer
The following table summarizes the share repurchase activity for the three months ended July 31, 2026:
Period |
|
Total Number of Shares Purchased |
|
|
Average Price Paid Per Share |
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) |
|
|
Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (1) |
|
||||
|
|
(in thousands, except per share amounts) |
|
|||||||||||||
May 1 - 31, 2026 |
|
|
369 |
|
|
$ |
44.94 |
|
|
|
369 |
|
|
$ |
762,339 |
|
June 1 - 30, 2026 |
|
|
400 |
|
|
$ |
48.75 |
|
|
|
400 |
|
|
$ |
742,847 |
|
July 1 - 31, 2026 |
|
|
251 |
|
|
$ |
55.39 |
|
|
|
251 |
|
|
$ |
728,936 |
|
Total |
|
|
1,020 |
|
|
|
|
|
|
1,020 |
|
|
|
|
||
This table excludes shares withheld from stock awards to settle employee tax withholding obligations related to the vesting of such awards.
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Stock Performance Graph
The following graph shows a comparison from July 31, 2021 through July 31, 2026 of the cumulative five-year total shareholder return for our Class A common stock based on the closing price on the last day of each respective period. The graph assumes an initial investment of $100 on July 31, 2021 in the common stock of Nutanix, Inc., the NASDAQ Composite Index and NASDAQ Computer Index and assumes reinvestment of any dividends. The stock price performance on the following graph is not necessarily indicative of future stock price performance.
|
|
Fiscal Year |
|
|||||||||||||||||||||
|
|
7/31/21 |
|
|
7/31/22 |
|
|
7/31/23 |
|
|
7/31/24 |
|
|
7/31/25 |
|
|
7/31/26 |
|
||||||
Nutanix, Inc. |
|
$ |
100.00 |
|
|
$ |
42.00 |
|
|
$ |
83.84 |
|
|
$ |
140.23 |
|
|
$ |
208.69 |
|
|
$ |
163.83 |
|
Nasdaq Composite Index |
|
$ |
100.00 |
|
|
$ |
85.05 |
|
|
$ |
99.35 |
|
|
$ |
122.82 |
|
|
$ |
148.43 |
|
|
$ |
179.39 |
|
Nasdaq Computer Index |
|
$ |
100.00 |
|
|
$ |
84.44 |
|
|
$ |
107.18 |
|
|
$ |
141.53 |
|
|
$ |
175.59 |
|
|
$ |
229.88 |
|
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The information on the above graph shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section or Sections 11 and 12(a)(2) of the Securities Act, and shall not be incorporated by reference into any registration statement or other document filed by us with the SEC, whether made before or after the date of this Annual Report on Form 10-K, regardless of any general incorporation language in such filing, except as shall be expressly set forth by specific reference in such filing.
Securities Authorized for Issuance Under Equity Compensation Plans
The information required by this item is incorporated herein by reference to the information set forth in Part III, Item 12 of this Annual Report on Form 10-K.
Item 6. [Reserved]
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NUTANIX, INC.
Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition, results of operations and cash flows should be read in conjunction with the consolidated financial statements and the related notes thereto included elsewhere in this Annual Report on Form 10-K. The last day of our fiscal year is July 31. Our fiscal quarters end on October 31, January 31, April 30 and July 31. This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under "Risk Factors" or in other parts of this Annual Report on Form 10-K. See also "Special Note Regarding Forward-Looking Statements" above. For a discussion of our results of operations for the fiscal year ended July 31, 2025 as compared to the fiscal year ended July 31, 2024, please refer to Part II, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations,” of our Annual Report on Form 10-K filed with the SEC on September 24, 2025.
Overview
Nutanix, Inc. ("we," "us," "our," or "Nutanix") is a hybrid cloud and AI platform company, offering organizations a unified infrastructure software platform to run applications, data, and AI anywhere. Our vision is to simplify the deployment and operation of hybrid computing infrastructure and AI factories to support the increasingly distributed landscape of apps and data, including agentic AI, while freeing organizations to modernize their infrastructure and focus on business goals. Our mission is to delight customers with an open, secure platform with rich data services that increases their ability to take advantage of technologies such as cloud native and AI, optimizes how they run their organizations today, and accelerates innovation, efficiency, and growth.
The Nutanix Cloud Platform is designed to enable organizations to build hybrid cloud infrastructure. It provides a consistent cloud operating model with a single platform for running and managing applications, agentic AI workloads, and data in core data centers, at the edge, and in public clouds. We aim to provide customers with flexibility and choice across server platforms, storage options, virtualized and cloud-native environments, public clouds, and deployment models. The Nutanix Cloud Platform supports a wide variety of workloads with varied compute, storage, and network requirements. These workloads include traditional business-critical general-purpose applications, modern applications (including containerized applications running on Kubernetes), data platforms (including SQL, NoSQL and vector databases, as well as business intelligence applications), and enterprise AI workloads (including machine learning, generative AI, and agentic AI applications).
We first pioneered hyperconverged infrastructure ("HCI") by combining compute, storage and networking through a software-defined architecture. We subsequently developed Nutanix AHV, our native enterprise hypervisor. Building on this foundation, the Nutanix Cloud Platform has evolved into a unified infrastructure platform. The Nutanix Cloud Platform supports a broader range of architectures, applications and deployment models, across public clouds (including AWS, Azure, and Google Cloud), datacenters, and edge. This expansion includes support for qualified external storage systems, modern applications through our Kubernetes platform, and enterprise agentic AI workloads through our AI infrastructure and management offerings. Our research and development efforts on the agentic AI front aim to provide customers with an optimized full stack platform to run, control, and govern AI workloads.
Our business is organized into a single operating and reportable segment. We operate a subscription-based business model, meaning our products, including associated support and maintenance arrangements, are sold with a defined duration.
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NUTANIX, INC.
Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)
Our platform typically includes one or more years of support and maintenance, which provides customers with the right to software upgrades and enhancements as well as technical support. Purchases of term-based licenses and software-as-a-service ("SaaS") subscriptions have support and maintenance included within the subscription fees and are not sold separately.
We had a broad and diverse base of over 32,000 end customers as of July 31, 2026. We define the number of end customers as the number of end customers for which we have received an order by the last day of the period, excluding partners to which we have sold products for their own demonstration purposes. A single organization or customer may represent multiple end customers for separate divisions, segments or subsidiaries, and the total number of end customers may contract due to mergers, acquisitions, or other consolidation among existing end customers.
Our solutions are primarily sold through our channel partners or original equipment manufacturers ("OEMs") and delivered directly to our end customers. We have end customers across a broad range of industries, such as financial services, retail, manufacturing, public sector, automotive and other transportation, consumer goods, education, energy, healthcare, media, technology, and telecommunications. We also sell to service providers, who utilize our platform to provide a variety of cloud-based services to their customers.
Key Financial and Performance Metrics
We monitor the following key financial and performance metrics:
|
|
As of and for the Fiscal Year Ended July 31, |
|
|||||||||
|
|
2024 |
|
|
2025 |
|
|
2026 |
|
|||
|
|
(in thousands, except percentages) |
|
|||||||||
Total revenue |
|
$ |
2,148,816 |
|
|
$ |
2,537,927 |
|
|
$ |
2,853,545 |
|
Year-over-year percentage increase |
|
|
15 |
% |
|
|
18 |
% |
|
|
12 |
% |
Annual recurring revenue ("ARR") (1) |
|
$ |
1,873,251 |
|
|
$ |
2,201,672 |
|
|
$ |
2,548,797 |
|
Gross profit |
|
$ |
1,824,704 |
|
|
$ |
2,203,145 |
|
|
$ |
2,476,796 |
|
Non-GAAP gross profit |
|
$ |
1,862,203 |
|
|
$ |
2,235,736 |
|
|
$ |
2,510,666 |
|
Gross margin |
|
|
84.9 |
% |
|
|
86.8 |
% |
|
|
86.8 |
% |
Non-GAAP gross margin |
|
|
86.7 |
% |
|
|
88.1 |
% |
|
|
88.0 |
% |
Operating expenses |
|
$ |
1,817,141 |
|
|
$ |
2,030,604 |
|
|
$ |
2,202,826 |
|
Non-GAAP operating expenses |
|
$ |
1,515,096 |
|
|
$ |
1,699,616 |
|
|
$ |
1,835,306 |
|
Operating income |
|
$ |
7,563 |
|
|
$ |
172,541 |
|
|
$ |
273,970 |
|
Non-GAAP operating income |
|
$ |
347,107 |
|
|
$ |
536,120 |
|
|
$ |
675,360 |
|
Operating margin |
|
|
0.4 |
% |
|
|
6.8 |
% |
|
|
9.6 |
% |
Non-GAAP operating margin |
|
|
16.2 |
% |
|
|
21.1 |
% |
|
|
23.7 |
% |
Net cash provided by operating activities |
|
$ |
672,931 |
|
|
$ |
821,456 |
|
|
$ |
916,688 |
|
Free cash flow |
|
$ |
597,679 |
|
|
$ |
750,173 |
|
|
$ |
840,675 |
|
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NUTANIX, INC.
Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)
Disaggregation of Revenue
The following table depicts the disaggregation of revenue by type, consistent with how we evaluate our financial performance:
|
|
Fiscal Year Ended July 31, |
|
|||||||||
|
|
2024 |
|
|
2025 |
|
|
2026 |
|
|||
|
|
(in thousands) |
|
|||||||||
Disaggregation of revenue: |
|
|
|
|
|
|
|
|
|
|||
Subscription revenue |
|
$ |
2,016,776 |
|
|
$ |
2,410,751 |
|
|
$ |
2,712,274 |
|
Professional services and other revenue (1) |
|
|
132,040 |
|
|
|
127,176 |
|
|
|
141,271 |
|
Total revenue |
|
$ |
2,148,816 |
|
|
$ |
2,537,927 |
|
|
$ |
2,853,545 |
|
Subscription revenue — Subscription revenue includes any performance obligation which has a defined duration and is generated from the sales of software maintenance subscriptions, support subscriptions, subscription software licenses and cloud-based SaaS offerings.
Professional services and other revenue — Includes Professional services revenue and Other non-subscription product revenue, as described below:
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NUTANIX, INC.
Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)
Non-GAAP Financial Measures and Key Performance Measures
In addition to GAAP metrics, we regularly monitor ARR, non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP operating margin, and free cash flow, which are non-GAAP financial measures and key performance measures, to help us evaluate our growth and operational efficiencies, measure our performance, identify trends in our sales activity, and establish our budgets. We evaluate these measures because they:
ARR is a performance measure that we believe provides useful information to our management and investors as it allows us to better track the top-line growth of our subscription business (including our ability to acquire subscriptions with new customers and to retain and expand with existing customers), while normalizing for differences in contract durations. Non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, and non-GAAP operating margin are performance measures which we believe provide useful information to investors, as they provide meaningful supplemental information regarding our performance and liquidity by excluding certain expenses and expenditures, such as stock-based compensation expense, that may not be indicative of our ongoing core business operating results. Free cash flow is a performance measure that we believe provides useful information to management and investors about the amount of cash generated by the business after capital expenditures. We use these non-GAAP financial and key performance measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons.
Non-GAAP financial measures have limitations as analytical tools and they should not be considered in isolation or as substitutes for analysis of our results as reported under generally accepted accounting principles ("GAAP") in the United States. Non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP operating margin, and free cash flow are not substitutes for gross profit, gross margin, operating expenses, operating income, operating margin, or net cash provided by operating activities, respectively. There is no GAAP measure that is comparable to ARR, so we have not reconciled ARR numbers included in this Annual Report on Form 10-K to any GAAP measure. In addition, other companies, including companies in our industry, may calculate non-GAAP financial measures and key performance measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures and key performance measures as tools for comparison. We urge you to review the reconciliation of our non-GAAP financial measures and key performance measures to the most directly comparable GAAP financial measures included below and not to rely on any single financial measure to evaluate our business.
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NUTANIX, INC.
Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)
We calculate our non-GAAP financial and key performance measures as follows:
ARR — We calculate ARR as the sum of annual contract value ("ACV") for all subscription contracts from all customers in effect as of the end of a specific period, assuming any subscription contract that expires is renewed on its existing terms. ARR excludes the value of professional services, non-portable software and support contracts and hardware sales. For the purposes of this calculation, we generally assume that the contract term begins on the date when the software is made available to the customer. ACV is defined as the total annualized value of a contract. The total annualized value for a contract is calculated by dividing the total value of the contract by the number of years in the term of such contract. Beginning with the first quarter of fiscal 2026, our methodology for calculating ARR was updated to align more closely with the timing of when licenses are made available to customers. Our calculation of ARR is not adjusted for the impact of any known or projected future events (such as customer cancellations, expansion or contraction of existing customers relationships or price increases or decreases) that may cause any subscription contract not to be renewed on its existing terms. ARR is a performance measure that should be viewed independently of revenue and does not represent our revenue under GAAP on an annualized basis or a forecast of GAAP revenue. Investors should not place undue reliance on ARR as an indicator of our future or expected results. ARR does not have any standardized meaning and is therefore unlikely to be comparable to similarly titled performance measures presented by other companies.
Non-GAAP gross profit and Non-GAAP gross margin — We calculate non-GAAP gross margin as non-GAAP gross profit divided by total revenue. We define non-GAAP gross profit as gross profit adjusted to exclude stock-based compensation expense, amortization of acquired intangible assets, restructuring charges, and costs associated with certain other non-recurring transactions. Our presentation of non-GAAP gross profit and non-GAAP gross margin should not be construed as implying that our future results will not be affected by any recurring expenses or any unusual or non-recurring items that we exclude from our calculation of these non-GAAP financial measures.
Non-GAAP operating expenses — We define non-GAAP operating expenses as total operating expenses adjusted to exclude stock-based compensation expense, amortization of acquired intangible assets, restructuring charges, litigation settlement accruals and legal fees related to certain non-ordinary course litigation matters, and costs associated with certain other non-recurring transactions. Our presentation of non-GAAP operating expenses should not be construed as implying that our future results will not be affected by any recurring expenses or any unusual or non-recurring items that we exclude from our calculation of this non-GAAP financial measure.
Non-GAAP operating income and Non-GAAP operating margin — We calculate non-GAAP operating margin as non-GAAP operating income divided by total revenue. We define non-GAAP operating income as operating income adjusted to exclude stock-based compensation expense, amortization of acquired intangible assets, restructuring charges, litigation settlement accruals and legal fees related to certain non-ordinary course litigation matters, and costs associated with certain other non-recurring transactions. Our presentation of non-GAAP operating income and non-GAAP operating margin should not be construed as implying that our future results will not be affected by any recurring expenses or any unusual or non-recurring items that we exclude from our calculation of these non-GAAP financial measures.
Free cash flow — We calculate free cash flow as net cash provided by operating activities less purchases of property and equipment, which measures our ability to generate cash from our business operations after our capital expenditures.
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NUTANIX, INC.
Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)
The following table presents a reconciliation of non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP operating margin, and free cash flow to the most directly comparable GAAP financial measures, for each of the periods indicated:
|
|
Fiscal Year Ended July 31, |
|
|||||||||
|
|
2024 |
|
|
2025 |
|
|
2026 |
|
|||
|
|
(in thousands, except percentages) |
|
|||||||||
Gross profit |
|
$ |
1,824,704 |
|
|
$ |
2,203,145 |
|
|
$ |
2,476,796 |
|
Stock-based compensation |
|
|
34,107 |
|
|
|
30,406 |
|
|
|
29,740 |
|
Amortization of intangible assets |
|
|
3,392 |
|
|
|
2,185 |
|
|
|
424 |
|
Restructuring charges |
|
|
— |
|
|
|
— |
|
|
|
3,706 |
|
Non-GAAP gross profit |
|
$ |
1,862,203 |
|
|
$ |
2,235,736 |
|
|
$ |
2,510,666 |
|
|
|
|
|
|
|
|
|
|
|
|||
Gross margin |
|
|
84.9 |
% |
|
|
86.8 |
% |
|
|
86.8 |
% |
Stock-based compensation |
|
|
1.6 |
% |
|
|
1.2 |
% |
|
|
1.1 |
% |
Amortization of intangible assets |
|
|
0.2 |
% |
|
|
0.1 |
% |
|
|
— |
|
Restructuring charges |
|
|
— |
|
|
|
— |
|
|
|
0.1 |
% |
Non-GAAP gross margin |
|
|
86.7 |
% |
|
|
88.1 |
% |
|
|
88.0 |
% |
|
|
|
|
|
|
|
|
|
|
|||
Operating expenses |
|
$ |
1,817,141 |
|
|
$ |
2,030,604 |
|
|
$ |
2,202,826 |
|
Stock-based compensation |
|
|
(299,726 |
) |
|
|
(321,184 |
) |
|
|
(327,927 |
) |
Amortization of intangible assets |
|
|
(317 |
) |
|
|
(353 |
) |
|
|
(354 |
) |
Restructuring reversals (charges) |
|
|
194 |
|
|
|
— |
|
|
|
(23,932 |
) |
Litigation settlement accrual and legal fees |
|
|
(1,971 |
) |
|
|
(9,451 |
) |
|
|
(14,899 |
) |
Other |
|
|
(225 |
) |
|
|
— |
|
|
|
(408 |
) |
Non-GAAP operating expenses |
|
$ |
1,515,096 |
|
|
$ |
1,699,616 |
|
|
$ |
1,835,306 |
|
|
|
|
|
|
|
|
|
|
|
|||
Operating income |
|
$ |
7,563 |
|
|
$ |
172,541 |
|
|
$ |
273,970 |
|
Stock-based compensation |
|
|
333,833 |
|
|
|
351,590 |
|
|
|
357,667 |
|
Amortization of intangible assets |
|
|
3,709 |
|
|
|
2,538 |
|
|
|
778 |
|
Restructuring (reversals) charges |
|
|
(194 |
) |
|
|
— |
|
|
|
27,638 |
|
Litigation settlement accrual and legal fees |
|
|
1,971 |
|
|
|
9,451 |
|
|
|
14,899 |
|
Other |
|
|
225 |
|
|
|
— |
|
|
|
408 |
|
Non-GAAP operating income |
|
$ |
347,107 |
|
|
$ |
536,120 |
|
|
$ |
675,360 |
|
|
|
|
|
|
|
|
|
|
|
|||
Operating margin |
|
|
0.4 |
% |
|
|
6.8 |
% |
|
|
9.6 |
% |
Stock-based compensation |
|
|
15.5 |
% |
|
|
13.8 |
% |
|
|
12.6 |
% |
Amortization of intangible assets |
|
|
0.2 |
% |
|
|
0.1 |
% |
|
|
— |
|
Restructuring (reversals) charges |
|
|
— |
|
|
|
— |
|
|
|
1.0 |
% |
Litigation settlement accrual and legal fees |
|
|
0.1 |
% |
|
|
0.4 |
% |
|
|
0.5 |
% |
Other |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Non-GAAP operating margin |
|
|
16.2 |
% |
|
|
21.1 |
% |
|
|
23.7 |
% |
|
|
|
|
|
|
|
|
|
|
|||
Net cash provided by operating activities |
|
$ |
672,931 |
|
|
$ |
821,456 |
|
|
$ |
916,688 |
|
Purchases of property and equipment |
|
|
(75,252 |
) |
|
|
(71,283 |
) |
|
|
(76,013 |
) |
Free cash flow (non-GAAP) |
|
$ |
597,679 |
|
|
$ |
750,173 |
|
|
$ |
840,675 |
|
Factors Affecting Our Performance
We believe that our future success will depend on many factors, including those described below. While these areas present significant opportunity, they also present risks that we must manage to achieve successful results. Refer to Part I, Item 1A. "Risk Factors" in this Annual Report on Form 10-K for details. If we are unable to address these challenges, our business and operating results could be materially and adversely affected.
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NUTANIX, INC.
Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)
Investment in Profitable Growth
We plan to continue investing in initiatives that support our long-term growth, while also focusing on driving operational efficiencies and prioritizing resources across our business, including in our go-to-market functions. Consistent with these objectives, we regularly evaluate the allocation of resources across our business and expect to continue directing investments toward strategic growth areas, including our agentic and other AI solutions, cloud-native offerings, sales capacity and digital sovereignty-related offerings and capabilities.
Investment in Sales and Marketing – Our ability to drive top-line growth depends, in large part, on our ability to capitalize on our market opportunity, including our ability to recruit, train and retain sufficient numbers of ramped sales personnel. We plan to continue making targeted investments in sales and marketing functions, including initiatives focused on opportunities with major accounts, large deals, and commercial accounts, as well as other initiatives to increase our pipeline growth and support customer adoption of our broader platform capabilities. As we continue to invest in sales capacity and customer-facing resources, it will take time to train and ramp personnel to full productivity. These investments may increase our sales and marketing expense, although productivity initiatives, operational efficiencies and resource reallocations may offset a portion of such increases. We estimate, based on past experience, that our average sales team members typically become fully ramped up around the start of their fourth quarter of employment with us, and as our newer employees ramp up, we expect their increased productivity to contribute to our revenue growth. As we continue to focus some of our newer and existing sales team members on major accounts and large deals, and as we operate our subscription-based business model, it may take longer, potentially significantly, for these sales team members to become fully productive, and there may also be an impact to the overall productivity of our sales team. As part of our overall efforts to improve our operating margin performance, we have also proactively taken steps to increase our go-to-market productivity and over time, we intend to reduce our overall sales and marketing spend as a percentage of revenue. These measures include addressing a growing mix of renewals, which have a lower cost than landing new customers or expanding into our existing customer base, improving the efficiency of our demand generation spend, increasing leverage of our channel partners and OEMs, including supporting new OEMs, and aligning our sales and marketing resources with market opportunities.
Investment in Research and Development – We plan to continue investing in our global research and development teams to support enhancements to our solutions, improve integration with ecosystem partners and expand the range of technologies and features available through our platform. These investments are intended to strengthen our core offerings, expand platform capabilities and ecosystem integrations, and enable us to respond to evolving technology trends, including developments in generative and agentic AI, cloud-native offerings and modern applications across hybrid and multicloud environments.
We believe that these investments will support our long-term growth strategy, although they may result in increased expenses, may not produce the anticipated benefits, and may limit or adversely affect our profitability, operating margins or cash flow.
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NUTANIX, INC.
Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)
Our Subscription-Based Business Model
We operate a subscription-based business model to provide our customers with the flexibility to choose their preferred license levels and durations based on their specific business needs. A subscription-based business model means one in which our products, including associated support and maintenance arrangements, are sold with a defined duration. Subscription-based sales consist of subscription term-based licenses and offerings with ongoing performance obligations, including software maintenance subscriptions, support subscriptions and cloud-based SaaS offerings. Revenue from subscription term-based licenses is generally recognized upfront upon transfer of control to the customer, which occurs when we make the software available to the customer. Accordingly, any reduction in the total average contract duration of our subscription term-based licenses would decrease the amount of license revenue recognized upfront and could adversely affect our revenue for the applicable period. Revenue from software maintenance subscriptions, support subscriptions and cloud-based SaaS offerings is recognized ratably over the contractual service period. Accordingly, any decline in such subscriptions, whether new subscriptions or renewals, in any given fiscal quarter may not be fully or immediately reflected in our revenue for that quarter. For additional information on revenue recognition, see Note 2 of Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K and "Critical Accounting Estimates" later in this "Management’s Discussion and Analysis of Financial Condition and Results of Operations" section.
Market Adoption of Our Products
Hybrid and multicloud architectures, as well as trends in enterprise AI and modern containerized applications, have affected IT buyer expectations around the simplicity, agility, scalability, portability, and pay-as-you-grow economics of IT resources. A key focus of our sales and marketing efforts is creating market awareness of the benefits of our platform. This includes our newer solutions that extend beyond our core hyperconverged infrastructure offering, both as compared to traditional data center architectures, as well as the public cloud, particularly as we continue to pursue large enterprises and mission critical workloads. Our business and operating results will be significantly affected by the degree to and speed with which organizations adopt our platform.
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Table of Contents
NUTANIX, INC.
Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)
Leveraging Partners
We plan to continue to leverage our relationships with our channel and OEM partners and expand our network of cloud and ecosystem partners, all of which help to drive the adoption and sale of our solutions with our end customers. We sell our solutions primarily through our partners, and our solutions primarily run on hardware platforms that our customers often choose to purchase from our channel or OEM partners. We believe that increasing channel leverage, particularly as we expand our focus on opportunities in commercial accounts, by investing in sales enablement and co-marketing with our channel and OEM partners over the long term will extend and improve our engagement with a broad set of end customers. Our reliance on manufacturers to produce the hardware platforms on which our software typically runs exposes us to supply chain delays, which could impair our ability to deliver solutions to end customers in a timely manner, particularly to the extent that current supply and pricing dynamics continue. Beginning in the latter half of the second quarter of fiscal 2026, constraints affecting the availability of certain hardware components at manufacturers became increasingly acute. These constraints have resulted in higher hardware pricing in the market and extended hardware lead times, which vary across hardware vendors. Higher hardware pricing, together with extended hardware lead times, have impacted, and may continue to impact, customers' ability to deploy and consume our software, which affects the timing of revenue recognition and cash flows from period to period and, in certain instances, may result in some customers delaying projects or otherwise seeking greater flexibility with licensing. Our software platform provides customers with flexibility and choice across deployment options, including hardware vendors, public cloud environments, and a growing set of external storage options, which can help enable customers to better manage how and when they deploy our solutions in periods of supply and pricing volatility. While a majority of our customer transactions involve a software‑only fulfillment motion, in a subset of transactions, customers previously purchased our software in connection with Nutanix‑branded NX‑series hardware platforms. To provide customers in these transactions with greater flexibility when facing extended hardware lead times, beginning in the third quarter of fiscal 2026, we enabled these customers to purchase our software independently of hardware delivery, thereby aligning software provisioning for these transactions with our existing software‑only fulfillment motion. This may impact the timing of revenue recognition and our ARR. Our business and results of operations will be significantly affected by our success in leveraging our relationships with our channel and OEM partners and expanding our network of cloud and ecosystem partners.
Customer Acquisition, Retention and Expansion
Our business and operating results will depend on our ability to obtain new end customers and retain and sell additional solutions to our existing base of end customers. Our ability to obtain new end customers and retain and sell additional solutions to existing customers will in turn depend in part on a number of factors. These factors include our ability to: execute on our business plans, vision, and objectives (including our growth and go-to-market strategies), respond to competitive pressures, effectively maintain existing and future customer relationships, continue to innovate by adding new functionality and improving usability of our solutions in a manner that addresses our end customers’ needs and requirements, and optimally price our solutions in light of marketplace conditions, our ability to respond to competitive pressures, manage our costs, and anticipate and manage customer demand.
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NUTANIX, INC.
Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)
Our end customers typically deploy our technology for a specific workload initially. After a new end customer's initial order, which includes the product and associated software maintenance subscriptions, support subscription and services, we focus on expanding our footprint by serving more workloads. We also generate recurring revenue from renewals, and given our subscription-focused business model, these renewals are having an increasing significance for our future revenue streams as existing subscriptions come up for renewal. We view continued purchases and upgrades as critical drivers of our success. As of July 31, 2026, our net dollar-based retention rate ("NRR") was 106%, compared to 109% as of July 31, 2025. NRR is calculated as of the end of a twelve-month period. We calculate NRR by starting with the ARR for all customers with subscription contracts at the beginning of the period. We then divide end-of-the-period ARR for the same customer group by the beginning-of-the-period ARR. NRR is a performance measure that we believe provides useful information to our management and investors as it provides an indication of our ability to retain and expand ARR from our existing customer base.
Over time, our sales pipeline has evolved to include a higher mix of larger deal opportunities, which often take longer to close and require more levels of review from the customer's executive team, involve greater competition, and have greater variability in timing, outcome and deal structure. These trends drive greater variability in our ability to land new customers and expand sales to existing customers, and our top-line results may be adversely affected.
Macroeconomic Conditions
Our overall performance depends in part on worldwide economic and geopolitical conditions and their impact on customer and partner behavior. Macroeconomic conditions, including inflation, fluctuations in interest rates, foreign currency fluctuations, tariffs or other trade restrictions, geopolitical issues, changes in government policy or spending, and other changes in economic conditions, may adversely affect the buying patterns of our customers and prospective customers, including the length of sales cycles, our overall pipeline and pipeline conversion, and our top-line growth expectations. Due to our subscription-focused business model, any impact of the current macroeconomic environment on our business, particularly as a result of changes in our customer and partner behavior, may not be fully reflected in our results of operations until future periods, if at all. As we continue to monitor the direct and indirect impacts of the current environment, the broader implications of macroeconomic conditions on our business, results of operations and financial condition, particularly in the long term, remain uncertain.
Components of Our Results of Operations
Revenue
We generate revenue primarily from the sale of the Nutanix Cloud Platform, sold primarily as subscription term-based licenses, and which can be deployed on a variety of qualified hardware platforms or, in the case of our cloud-based SaaS offerings, via hosted service or delivered pre-installed on a server that is configured to order.
Our subscription term-based licenses are sold separately, or can be sold alongside configured-to-order servers. Our subscription term-based licenses typically have a term of one to five years. Our cloud-based SaaS subscriptions typically have terms extending up to five years.
Our customers generally purchase their qualified hardware platforms for deployment of our software from one of our channel partners or OEMs. Our platform typically includes one or more years of support and maintenance, which provides customers with the right to software upgrades and enhancements as well as technical support. Our platform is primarily sold through channel partners and OEMs. Revenue is recognized net of sales tax and withholding tax.
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NUTANIX, INC.
Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)
Product revenue — Product revenue primarily consists of software revenue. A majority of our product revenue is generated from the sale of the Nutanix Cloud Platform. We also sell renewals of previously purchased software licenses and SaaS offerings. We recognize revenue from our software products upon the transfer of control to the customer. For sales of our software purchased alongside a server from an OEM or other partner, revenue is typically recognized upon shipment of the server. For software sold separately from a server, revenue is typically recognized when the software is made available to the customer. For our SaaS offerings, revenue is typically recognized as the services are performed. In the infrequent transactions where the hardware is purchased directly from Nutanix, we consider ourselves to be the principal in the transaction, and we record revenue and costs of goods sold on a gross basis.
Support, maintenance and other services revenue — We generate our support, maintenance and other services revenue primarily from software maintenance subscriptions and support subscriptions, which include the right to software upgrades and enhancements as well as technical support. The majority of our product sales are sold in conjunction with software maintenance subscriptions and support subscriptions, with terms typically ranging from one to five years. Occasionally, we also sell professional services with our products. We recognize revenue from software maintenance subscriptions and support contracts ratably over the contractual service period, which typically commences upon transfer of control of the corresponding products to the customer. We recognize revenue related to professional services as they are performed.
Cost of Revenue
Cost of product revenue — Cost of product revenue consists of costs paid to OEM partners, hardware costs, personnel costs associated with our operations function, consisting of salaries, benefits, bonuses, and stock-based compensation, cloud-based costs associated with our SaaS offerings, and allocated costs. Allocated costs consist of certain facilities, depreciation and amortization, recruiting, and information technology costs that are allocated based on headcount.
Cost of support, maintenance and other services revenue — Cost of support, maintenance and other services revenue includes personnel and operating costs associated with our global customer support and services organization, as well as allocated costs. We expect our cost of support, maintenance and other services revenue to increase in absolute dollars as our support, maintenance and other services revenue increases.
Operating Expenses
Our operating expenses consist of sales and marketing, research and development and general and administrative expenses. The largest component of our operating expenses is personnel costs. Personnel costs consist of wages, benefits, bonuses and, with respect to sales and marketing expenses, sales commissions.
Sales and marketing — Sales and marketing expense consists primarily of personnel costs, including sales commissions. Sales and marketing expense also includes costs for promotional activities and other marketing costs, travel expenses, costs associated with demonstration units, including depreciation, and allocated costs. Commissions are deferred and recognized as we recognize the associated revenue. We expect sales and marketing expense to continue, in the long term, to increase in absolute dollars as part of our long-term plans to invest in our growth. However, as part of our overall efforts to improve our operating cash flow performance, we have also proactively taken steps to increase our go-to-market productivity and over time, we intend to reduce our overall sales and marketing spend as a percentage of revenue. As we continue to invest in sales capacity and customer-facing resources, it will take time to train and ramp personnel to full productivity. As a result, our sales and marketing expense may fluctuate.
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NUTANIX, INC.
Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)
Research and development — Research and development ("R&D") expense consists primarily of personnel costs, as well as other direct and allocated costs. We have devoted our product development efforts primarily to enhancing the functionality and expanding the capabilities of our solutions. R&D costs are expensed as incurred, unless they meet the criteria for capitalization. We expect R&D expense, in the long term, to increase in absolute dollars as part of our long-term plans to invest in our future products and services, including our newer subscription-based products, although R&D expense may fluctuate as a percentage of total revenue and, on an absolute basis, from quarter to quarter.
General and administrative — General and administrative ("G&A") expense consists primarily of personnel costs, which include our executive, finance, human resources, and legal organizations. G&A expense also includes outside professional services, which consists primarily of legal, accounting and other consulting costs, as well as insurance and other costs associated with being a public company and allocated costs. We expect G&A expense, in the long term, to increase in absolute dollars, particularly due to additional legal, accounting, insurance, and other costs associated with our growth, although G&A expense may fluctuate as a percentage of total revenue and, on an absolute basis, from quarter to quarter.
Other Income (Expense), Net
Other income (expense), net consists primarily of the amortization of the debt discount and debt issuance costs associated with our previously outstanding 2.50% convertible senior notes due 2026 (the "2026 Notes"), our outstanding 0.25% convertible senior notes due 2027 (the "2027 Notes"), and our outstanding 0.50% convertible senior notes due 2029 (the "2029 Notes"), the amortization of the debt issuance costs associated with our revolving credit agreement (the "Revolver"), non-cash interest expense on the 2026 Notes, interest expense related to the conversion of the 2026 Notes in full, interest expense on the 2027 Notes, 2029 Notes, and the Revolver, inducement expense related to the partial repurchase of the 2027 Notes, changes in the fair value of convertible notes receivable, interest income related to our short-term investments, and foreign currency exchange gains or losses.
Provision for Income Taxes
Provision for income taxes consists of federal and state income taxes in the United States and income taxes for foreign jurisdictions in which we conduct business. We regularly assess the need for a valuation allowance against our deferred tax assets based on historical taxable income, projected future taxable income, and the expected timing of the reversals of existing taxable temporary differences by jurisdiction. Ultimately, the realization of deferred tax assets is dependent upon the generation of future taxable income during those periods in which temporary differences become deductible and/or tax credits and tax loss carry-forwards can be utilized. In making that assessment, we consider both positive and negative evidence related to the likelihood of realization of deferred tax assets to determine, based on the weight of all available evidence, whether it is more-likely-than-not that some or all of the deferred tax assets will be realized.
As of July 31, 2026, we reported a cumulative three-year U.S. pre-tax profit and sustained profitability in recent operating periods. This information is both objective and verifiable; thereby representing strong positive evidence that carries significant weight. In addition, based on our available financial forecast, we expect continuing profitability in the U.S. We also considered forecasts of future taxable income and evaluated the utilization of net operating loss and tax credit carryforwards prior to their expiration. Based on all available positive and negative evidence, including the objective and verifiable positive evidence as described above and anticipated future earnings, we concluded it is more-likely-than-not that a majority of our U.S. federal and state deferred tax assets will be realizable. We continue to maintain a valuation allowance against the California R&D credits as of July 31, 2026, as we expect California R&D tax credit generation to exceed our ability to use these credits in future periods.
68
Table of Contents
NUTANIX, INC.
Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)
Results of Operations
The following tables set forth our consolidated results of operations in dollars and as a percentage of total revenue for the fiscal years presented. The period-to-period comparison of results is not necessarily indicative of results for future periods.
|
|
Fiscal Year Ended July 31, |
|
|||||||||
|
|
2024 |
|
|
2025 |
|
|
2026 |
|
|||
|
|
(in thousands) |
|
|||||||||
Revenue: |
|
|
|
|
|
|
|
|
|
|||
Product |
|
$ |
1,067,948 |
|
|
$ |
1,341,374 |
|
|
$ |
1,489,693 |
|
Support, maintenance and other services |
|
|
1,080,868 |
|
|
|
1,196,553 |
|
|
|
1,363,852 |
|
Total revenue |
|
|
2,148,816 |
|
|
|
2,537,927 |
|
|
|
2,853,545 |
|
Cost of revenue: |
|
|
|
|
|
|
|
|
|
|||
Product (1)(2) |
|
|
36,441 |
|
|
|
28,341 |
|
|
|
21,443 |
|
Support, maintenance and other services (1) |
|
|
287,671 |
|
|
|
306,441 |
|
|
|
355,306 |
|
Total cost of revenue |
|
|
324,112 |
|
|
|
334,782 |
|
|
|
376,749 |
|
Gross profit |
|
|
1,824,704 |
|
|
|
2,203,145 |
|
|
|
2,476,796 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|||
Sales and marketing (1)(2) |
|
|
977,286 |
|
|
|
1,056,465 |
|
|
|
1,150,278 |
|
Research and development (1) |
|
|
638,992 |
|
|
|
736,823 |
|
|
|
790,892 |
|
General and administrative (1) |
|
|
200,863 |
|
|
|
237,316 |
|
|
|
261,656 |
|
Total operating expenses |
|
|
1,817,141 |
|
|
|
2,030,604 |
|
|
|
2,202,826 |
|
Income from operations |
|
|
7,563 |
|
|
|
172,541 |
|
|
|
273,970 |
|
Other (expense) income, net |
|
|
(108,881 |
) |
|
|
39,107 |
|
|
|
53,138 |
|
(Loss) income before provision for (benefit from) income taxes |
|
|
(101,318 |
) |
|
|
211,648 |
|
|
|
327,108 |
|
Provision for (benefit from) income taxes |
|
|
23,457 |
|
|
|
23,282 |
|
|
|
(1,179,729 |
) |
Net (loss) income |
|
$ |
(124,775 |
) |
|
$ |
188,366 |
|
|
$ |
1,506,837 |
|
|
|
|
|
|
|
|
|
|
|
|||
(1) Includes stock-based compensation expense as |
|
|
|
|
|
|
|
|
|
|||
Product cost of revenue |
|
$ |
6,822 |
|
|
$ |
2,824 |
|
|
$ |
1,550 |
|
Support, maintenance and other services cost of revenue |
|
|
27,285 |
|
|
|
27,582 |
|
|
|
28,190 |
|
Sales and marketing |
|
|
80,190 |
|
|
|
80,930 |
|
|
|
82,402 |
|
Research and development |
|
|
156,784 |
|
|
|
175,361 |
|
|
|
180,844 |
|
General and administrative |
|
|
62,752 |
|
|
|
64,893 |
|
|
|
64,681 |
|
Total stock-based compensation expense |
|
$ |
333,833 |
|
|
$ |
351,590 |
|
|
$ |
357,667 |
|
|
|
|
|
|
|
|
|
|
|
|||
(2) Includes amortization of intangible assets as follows: |
|
|
|
|
|
|
|
|
|
|||
Product cost of revenue |
|
$ |
3,392 |
|
|
$ |
2,185 |
|
|
$ |
424 |
|
Sales and marketing |
|
|
317 |
|
|
|
353 |
|
|
|
354 |
|
Total amortization of intangible assets |
|
$ |
3,709 |
|
|
$ |
2,538 |
|
|
$ |
778 |
|
69
Table of Contents
NUTANIX, INC.
Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)
|
|
Fiscal Year Ended July 31, |
|
|||||||||
|
|
2024 |
|
|
2025 |
|
|
2026 |
|
|||
|
|
(as a percentage of total revenue) |
|
|||||||||
Revenue: |
|
|
|
|
|
|
|
|
|
|||
Product |
|
|
49.7 |
% |
|
|
52.9 |
% |
|
|
52.2 |
% |
Support, maintenance and other services |
|
|
50.3 |
% |
|
|
47.1 |
% |
|
|
47.8 |
% |
Total revenue |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
Cost of revenue: |
|
|
|
|
|
|
|
|
|
|||
Product |
|
|
1.7 |
% |
|
|
1.1 |
% |
|
|
0.8 |
% |
Support, maintenance and other services |
|
|
13.4 |
% |
|
|
12.1 |
% |
|
|
12.4 |
% |
Total cost of revenue |
|
|
15.1 |
% |
|
|
13.2 |
% |
|
|
13.2 |
% |
Gross profit |
|
|
84.9 |
% |
|
|
86.8 |
% |
|
|
86.8 |
% |
Operating expenses: |
|
|
|
|
|
|
|
|
|
|||
Sales and marketing |
|
|
45.5 |
% |
|
|
41.6 |
% |
|
|
40.3 |
% |
Research and development |
|
|
29.7 |
% |
|
|
29.0 |
% |
|
|
27.7 |
% |
General and administrative |
|
|
9.3 |
% |
|
|
9.4 |
% |
|
|
9.2 |
% |
Total operating expenses |
|
|
84.5 |
% |
|
|
80.0 |
% |
|
|
77.2 |
% |
Income from operations |
|
|
0.4 |
% |
|
|
6.8 |
% |
|
|
9.6 |
% |
Other (expense) income, net |
|
|
(5.1 |
)% |
|
|
1.5 |
% |
|
|
1.9 |
% |
(Loss) income before provision for (benefit from) income taxes |
|
|
(4.7 |
)% |
|
|
8.3 |
% |
|
|
11.5 |
% |
Provision for (benefit from) income taxes |
|
|
1.1 |
% |
|
|
0.9 |
% |
|
|
(41.3 |
)% |
Net (loss) income |
|
|
(5.8 |
)% |
|
|
7.4 |
% |
|
|
52.8 |
% |
70
Table of Contents
NUTANIX, INC.
Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)
Comparison of the Fiscal Years Ended July 31, 2025 and 2026
Revenue
|
|
Fiscal Year Ended |
|
|
Change |
|
||||||||||
|
|
2025 |
|
|
2026 |
|
|
$ |
|
|
% |
|
||||
|
|
(in thousands, except percentages) |
|
|||||||||||||
Product |
|
$ |
1,341,374 |
|
|
$ |
1,489,693 |
|
|
$ |
148,319 |
|
|
|
11 |
% |
Support, maintenance |
|
|
1,196,553 |
|
|
|
1,363,852 |
|
|
|
167,299 |
|
|
|
14 |
% |
Total revenue |
|
$ |
2,537,927 |
|
|
$ |
2,853,545 |
|
|
$ |
315,618 |
|
|
|
12 |
% |
|
|
Fiscal Year Ended |
|
|
Change |
|
||||||||||
|
|
2025 |
|
|
2026 |
|
|
$ |
|
|
% |
|
||||
|
|
(in thousands, except percentages) |
|
|||||||||||||
U.S. |
|
$ |
1,409,367 |
|
|
$ |
1,530,445 |
|
|
$ |
121,078 |
|
|
|
9 |
% |
Europe, the Middle |
|
|
685,569 |
|
|
|
831,422 |
|
|
|
145,853 |
|
|
|
21 |
% |
Asia Pacific |
|
|
392,744 |
|
|
|
417,787 |
|
|
|
25,043 |
|
|
|
6 |
% |
Other Americas |
|
|
50,247 |
|
|
|
73,891 |
|
|
|
23,644 |
|
|
|
47 |
% |
Total revenue |
|
$ |
2,537,927 |
|
|
$ |
2,853,545 |
|
|
$ |
315,618 |
|
|
|
12 |
% |
Product revenue increased year-over-year by approximately $148.3 million, or 11%, for fiscal 2026 due primarily to increases in software revenue as a result of increased adoption of our products, driven by growth in software renewals and the various programs we have put in place to attract new customers onto our platform and expand with existing customers.
Support, maintenance and other services revenue increased year-over-year by approximately $167.3 million, or 14%, for fiscal 2026 in conjunction with the growth of our end customer base, which grew approximately 11% during fiscal 2026, and the related software maintenance and support subscription contracts and renewals.
The total average contract duration was approximately 3.1 years and 3.2 years for fiscal 2025 and 2026, respectively. Total average contract duration represents the dollar-weighted term across all subscription contracts, as well as our limited number of life-of-device contracts, billed during the period, using an assumed term of five years for licenses without a specified term, such as life-of-device licenses.
Cost of Revenue and Gross Margin
|
|
Fiscal Year Ended |
|
|
Change |
|
||||||||||
|
|
2025 |
|
|
2026 |
|
|
$ |
|
|
% |
|
||||
|
|
(in thousands, except percentages) |
|
|||||||||||||
Cost of product revenue |
|
$ |
28,341 |
|
|
$ |
21,443 |
|
|
$ |
(6,898 |
) |
|
|
(24 |
)% |
Product gross margin |
|
|
97.9 |
% |
|
|
98.6 |
% |
|
|
|
|
|
|
||
Cost of support, |
|
$ |
306,441 |
|
|
$ |
355,306 |
|
|
$ |
48,865 |
|
|
|
16 |
% |
Support, maintenance |
|
|
74.4 |
% |
|
|
73.9 |
% |
|
|
|
|
|
|
||
Total gross margin |
|
|
86.8 |
% |
|
|
86.8 |
% |
|
|
|
|
|
|
||
71
Table of Contents
NUTANIX, INC.
Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)
Cost of product revenue
Cost of product revenue decreased year-over-year for fiscal 2026 due primarily to a decrease in overhead resulting from lower operating lease and finance lease costs.
Product gross margin increased by approximately 0.7 percentage points in fiscal 2026 due to product revenue increasing while cost of product revenue decreased.
Cost of support, maintenance and other services revenue
Cost of support, maintenance and other services revenue increased year-over-year for fiscal 2026 due primarily to higher personnel-related costs, including costs for contractors, resulting from growth in our global customer support organization, as well as an increase in severance expense due to the headcount reduction announced in August 2026. For additional information on the headcount reduction, refer to Note 10 of Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.
Support, maintenance and other services gross margin decreased by 0.5 percentage points in fiscal 2026 due primarily to personnel-related costs growing at a slightly faster rate than support, maintenance and other services revenue.
Operating Expenses
Sales and marketing
|
|
Fiscal Year Ended |
|
|
Change |
|
||||||||||
|
|
2025 |
|
|
2026 |
|
|
$ |
|
|
% |
|
||||
|
|
(in thousands, except percentages) |
|
|||||||||||||
Sales and marketing |
|
$ |
1,056,465 |
|
|
$ |
1,150,278 |
|
|
$ |
93,813 |
|
|
|
9 |
% |
Percent of total revenue |
|
|
41.6 |
% |
|
|
40.3 |
% |
|
|
|
|
|
|
||
Sales and marketing expense increased year-over-year due primarily to higher personnel-related costs, resulting from the 3% growth in our sales and marketing headcount from July 31, 2025 to July 31, 2026, as well as an increase in severance expense due to the headcount reduction announced in August 2026. For additional information on the headcount reduction, refer to Note 10 of Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.
Research and development
|
|
Fiscal Year Ended |
|
|
Change |
|
||||||||||
|
|
2025 |
|
|
2026 |
|
|
$ |
|
|
% |
|
||||
|
|
(in thousands, except percentages) |
|
|||||||||||||
Research and development |
|
$ |
736,823 |
|
|
$ |
790,892 |
|
|
$ |
54,069 |
|
|
|
7 |
% |
Percent of total revenue |
|
|
29.0 |
% |
|
|
27.7 |
% |
|
|
|
|
|
|
||
Research and development expense increased year-over-year due primarily to higher personnel-related costs, resulting from the 5% growth in our R&D headcount from July 31, 2025 to July 31, 2026, as well as an increase in severance expense due to the headcount reduction announced in August 2026. Research and development expense also increased due to higher IT and facilities costs, partially offset by an increase in reimbursements for technical costs related to certain partner programs. For additional information on the headcount reduction, refer to Note 10 of Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.
72
Table of Contents
NUTANIX, INC.
Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)
General and administrative
|
|
Fiscal Year Ended |
|
|
Change |
|
||||||||||
|
|
2025 |
|
|
2026 |
|
|
$ |
|
|
% |
|
||||
|
|
(in thousands, except percentages) |
|
|||||||||||||
General and administrative |
|
$ |
237,316 |
|
|
$ |
261,656 |
|
|
$ |
24,340 |
|
|
|
10 |
% |
Percent of total revenue |
|
|
9.4 |
% |
|
|
9.2 |
% |
|
|
|
|
|
|
||
General and administrative expense increased year-over-year due primarily to higher personnel-related costs resulting from the 9% growth in our G&A headcount from July 31, 2025 to July 31, 2026.
Other Income (Expense), Net
|
|
Fiscal Year Ended |
|
|
Change |
|
||||||||||
|
|
2025 |
|
|
2026 |
|
|
$ |
|
|
% |
|
||||
|
|
(in thousands, except percentages) |
|
|||||||||||||
Interest income, net |
|
$ |
62,310 |
|
|
$ |
76,647 |
|
|
$ |
14,337 |
|
|
|
23 |
% |
Amortization of debt |
|
|
(8,378 |
) |
|
|
(11,984 |
) |
|
|
(3,606 |
) |
|
|
(43 |
)% |
Inducement expense |
|
|
(11,347 |
) |
|
|
— |
|
|
|
11,347 |
|
|
|
100 |
% |
Other |
|
|
(3,478 |
) |
|
|
(11,525 |
) |
|
|
(8,047 |
) |
|
|
(231 |
)% |
Other income (expense), net |
|
$ |
39,107 |
|
|
$ |
53,138 |
|
|
$ |
14,031 |
|
|
|
36 |
% |
The increase in other income (expense), net for fiscal 2026 was due primarily to an increase in interest income from our short-term investments which increased from approximately $1,223.2 million as of July 31, 2025 to $1,584.2 million as of July 31, 2026, as well as approximately $11.3 million of one-time inducement expense recognized during the second quarter of fiscal 2025 related to the partial repurchase of the 2027 Notes. The increase in other income (expense), net was partially offset by the decrease in the fair value of our convertible note receivable, an increase in foreign exchange expense, and an increase in interest expense related to our convertible notes, as the 2029 Notes were issued during the second quarter of fiscal 2025.
Provision for Income Taxes
|
|
Fiscal Year Ended |
|
|
Change |
|
||||||||||
|
|
2025 |
|
|
2026 |
|
|
$ |
|
|
% |
|
||||
|
|
(in thousands, except percentages) |
|
|||||||||||||
Provision for (benefit from) income taxes |
|
$ |
23,282 |
|
|
$ |
(1,179,729 |
) |
|
$ |
(1,203,011 |
) |
|
|
(5167 |
)% |
The year-over-year decrease in the provision for income taxes in fiscal 2026 was due primarily to the release of $1,208.2 million of our valuation allowance on the majority of our U.S. federal and state deferred tax assets and the lapse of the statute of limitations for certain foreign uncertain tax positions.
Liquidity and Capital Resources
Our principal sources of liquidity are cash, cash equivalents and marketable securities and net accounts receivable. As of July 31, 2026, we had approximately $777.3 million of cash and cash equivalents, and $1,584.2 million of short-term investments, which were held for general corporate purposes. Our restricted cash balance was not material. Our cash, cash equivalents and short-term investments primarily consist of bank deposits, money market accounts and highly rated debt instruments of the U.S. government and its agencies and debt instruments of highly rated corporations. As of July 31, 2026, we had accounts receivable of approximately $289.3 million, net of allowances of $3.3 million.
73
Table of Contents
NUTANIX, INC.
Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)
In September 2021, we issued convertible senior notes with a 0.25% interest rate for an aggregate principal amount of $575.0 million due 2027, of which $477.3 million in principal amount was issued in exchange for approximately $416.5 million principal amount of the 2023 Notes and the remaining $97.7 million in principal amount was issued for cash. There are no required principal payments on the 2027 Notes prior to their maturity.
In December 2024, we issued convertible senior notes with a 0.50% interest rate for an aggregate principal amount of $862.5 million due 2029. We used approximately $95.5 million of the net proceeds from the offering to repurchase $75.0 million aggregate principal amount of the outstanding 2027 Notes. There are no required principal payments on the 2029 Notes prior to their maturity.
In February 2025, we entered into the Revolver, a revolving credit agreement that provides for a senior secured revolving credit facility in an aggregate principal amount of $500.0 million, including a $25.0 million sublimit for the issuance of letters of credit. The Revolver matures in February 2030, subject to earlier springing maturity under certain circumstances. As of July 31, 2026, we had no borrowings and an immaterial amount of letters of credit outstanding under the Revolver. The Revolver contains customary affirmative and negative covenants (including a financial covenant and restrictions on liens, investments, indebtedness, fundamental changes, restricted payments, transactions with affiliates, prepayments of subordinated debt and other matters, all subject to certain exceptions). The financial covenant requires us to maintain a total leverage ratio of less than or equal to 3.75:1.00, tested at the end of each fiscal quarter. As of July 31, 2026, we were in compliance with the financial covenant.
For additional information regarding our debt offerings, see Note 5 of Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.
In May 2026, we completed the issuance and sale of 4,136,789 shares of our Class A common stock to Advanced Micro Devices, Inc. at a purchase price of $36.26 per share, for aggregate cash proceeds of approximately $150.0 million.
We believe that our cash, cash equivalents and short-term investments, available borrowing capacity under the Revolver, and our expected net cash provided by operating activities will be sufficient to meet our anticipated cash needs, including for working capital, capital expenditures, share repurchases (if any), the payment of taxes related to the net share settlement of equity awards, and interest and other obligations related to convertible notes, for at least the next 12 months. Our future cash needs will depend on many factors, including our growth strategy and plans, the timing and extent of spending to support research and development and engineering efforts; the expansion of sales and marketing activities; the introduction of new and enhanced product and service offerings; the continuing market acceptance of our products; our end customers and partners; any acquisitions of businesses, technologies or products; any share repurchases; the timing of customer billings and collections, including any increased flexibility we may offer in payment arrangements; and market, economic and financial conditions (including inflation and interest rates). Holders of the 2027 Notes or the 2029 Notes will be entitled to convert their 2027 Notes or 2029 Notes under certain circumstances as described in Note 5 of Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K. If one or more holders elect to convert their 2027 Notes or 2029 Notes, as applicable, we may elect to satisfy our conversion obligation by delivering shares of our Class A common stock or a combination of cash and shares of Class A common stock, rather than exclusively in cash. As of July 31, 2026, our Class A common stock price exceeded the conversion price of the 2027 Notes but not the conversion price of the 2029 Notes. Holders of the 2027 Notes and the 2029 Notes may become entitled to convert their notes upon satisfaction of the applicable conversion conditions described in Note 5 of Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.
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NUTANIX, INC.
Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)
Purchase Obligations, Lease Commitments and Other Obligations
As of July 31, 2026, we had non-cancelable contractual purchase obligations of $248.3 million, of which $219.1 million was short-term. These purchase obligations primarily include guarantees with our contract manufacturer and purchase obligations and other commitments pertaining to our daily business operations.
As of July 31, 2026, we had aggregate future minimum lease payments under non-cancelable operating leases and finance leases were $266.3 million, of which $60.2 million was short-term. Non-cancelable leases include leases that have been executed, but not yet commenced. We lease offices, research and development facilities, and data centers under operating leases expiring through April 2035 and lease certain data center equipment under finance leases.
As of July 31, 2026, we had accrued liabilities related to uncertain tax positions, which are reflected on our consolidated balance sheet. These accrued liabilities are not reflected in the contractual obligations disclosed above, as it is uncertain if or when such amounts will ultimately be settled. Uncertain tax positions are further discussed in Note 12 of Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.
Capital Return
In August 2023, our Board of Directors authorized the repurchase of up to $350.0 million of our Class A common stock. In August 2025 and April 2026, our Board of Directors approved increases of $350.0 million and $750.0 million, respectively, to the share repurchase authorization. Repurchases will be funded from available liquidity and may be made from time to time through open market purchases, through privately negotiated transactions, or by other means, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Exchange Act in accordance with applicable securities laws and other restrictions. The timing and amount of share repurchases will depend upon prevailing stock prices, business and market conditions, corporate and regulatory requirements, alternative investment opportunities, and other factors. The authorization has no expiration date, may be modified, suspended or discontinued at any time, and does not obligate us to repurchase any minimum number of shares. For more information on the share repurchase, refer to Note 8 of Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.
Cash Flows
The following table summarizes our cash flows for the periods presented:
|
|
Fiscal Year Ended July 31, |
|
|||||||||
|
|
2024 |
|
|
2025 |
|
|
2026 |
|
|||
|
|
(in thousands) |
|
|||||||||
Net cash provided by operating activities |
|
$ |
672,931 |
|
|
$ |
821,456 |
|
|
$ |
916,688 |
|
Net cash provided by (used in) investing activities |
|
|
529,589 |
|
|
|
(951,687 |
) |
|
|
(435,854 |
) |
Net cash (used in) provided by financing activities |
|
|
(1,062,629 |
) |
|
|
244,086 |
|
|
|
(473,029 |
) |
Net increase in cash, cash equivalents and restricted cash |
|
$ |
139,891 |
|
|
$ |
113,855 |
|
|
$ |
7,805 |
|
Cash Flows from Operating Activities
Net cash provided by operating activities was approximately $821.5 million and $916.7 million for fiscal 2025 and 2026, respectively, representing an improvement of approximately $95.2 million. The increase in cash generated from operating activities for fiscal 2026 was due primarily to the $1,318.5 million increase in our net income from operations, $357.7 million of stock-based compensation expense, and a $315.0 million increase in deferred revenue, partially offset by $1,198.9 million of deferred income taxes related to the release of our valuation allowance on the majority of our U.S. federal and state deferred tax assets.
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NUTANIX, INC.
Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)
Cash Flows from Investing Activities
Net cash used in investing activities of approximately $951.7 million for fiscal 2025 included approximately $1,359.6 million of short-term investment purchases and $71.3 million of purchases of property and equipment, partially offset by $476.2 million of maturities of short-term investments and $3.0 million of sales of short-term investments.
Net cash used in investing activities of approximately $435.9 million for fiscal 2026 included approximately $1,167.8 million of short-term investment purchases and $76.0 million of purchases of property and equipment, partially offset by $805.2 million of maturities of short-term investments and $2.8 million of sales of short-term investments.
Cash Flows from Financing Activities
Net cash provided by financing activities of approximately $244.1 million for fiscal 2025 included approximately $848.0 million of net proceeds from the issuance of the 2029 Notes and $68.9 million of proceeds from the sale of shares through employee equity incentive plans, partially offset by approximately $307.9 million of repurchases of our Class A common stock, $256.6 million of taxes paid related to the net share settlement of equity awards, $95.5 million related to the partial repurchase of the 2027 Notes, $6.6 million of other financing activities, $3.4 million of third-party debt issuance costs related to the issuance of the 2029 Notes, and $2.8 million of issuance costs related to the Revolver.
Net cash used in financing activities of approximately $473.0 million for fiscal 2026 included approximately $483.5 million of repurchases of our Class A common stock, $195.5 million of taxes paid related to the net share settlement of equity awards, and $5.4 million of other financing activities, partially offset by $150.0 million of proceeds from the sale of shares through private placement and $61.4 million of proceeds from the sale of shares through employee equity incentive plans.
Critical Accounting Policies and Estimates
Our consolidated financial statements are prepared in accordance with U.S. GAAP. The preparation of these consolidated financial statements requires management to make estimates, assumptions and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the applicable periods. We evaluate our estimates, assumptions and judgments on an ongoing basis. Our estimates, assumptions and judgments are based on historical experience and various other factors that we believe to be reasonable under the circumstances. Different assumptions and judgments would change the estimates used in the preparation of our consolidated financial statements, which, in turn, could change the results from those reported.
The critical accounting estimates, assumptions and judgments that we believe have the most significant impact on our consolidated financial statements are described below.
Revenue Recognition
Some of our contracts with customers contain multiple performance obligations. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. For these contracts, we account for individual performance obligations separately if they are distinct. The transaction price is allocated to the separate performance obligations on a relative standalone selling price ("SSP") basis. For deliverables that we routinely sell separately, such as software maintenance subscriptions and support subscriptions on our core offerings, we determine SSP by evaluating the standalone sales over the trailing 12 months. For those that are not sold routinely, we determine SSP based on our overall pricing trends and objectives, taking into consideration market conditions and other factors, including the value of our contracts, the products sold, and geographic locations.
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NUTANIX, INC.
Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)
If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative SSP. We determine SSP based on the price at which the performance obligation is sold separately. If the SSP is not observable through past transactions, we estimate the SSP, taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations. We apply judgment in determining the transaction price for contracts with alternative payment arrangements. Refer to Note 1 and Note 2 of Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional information on revenue recognition.
Income Taxes
The objectives of accounting for income taxes are to recognize the amount of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in an entity’s financial statements or tax returns. We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. We recognize uncertain tax positions only if it is more likely than not to be sustained based solely on its technical merits as of the reporting date. We consider many factors when evaluating and estimating our tax positions and tax benefits, which may require periodic adjustments and which may not accurately anticipate actual outcomes. Judgment is required in assessing the future tax consequences of events that have been recognized in our consolidated financial statements or tax returns. Variations in the actual outcome of these future tax consequences could materially impact our consolidated financial statements.
A valuation allowance is recorded to reduce deferred tax assets to the amount more likely than not to be realized. Significant judgment is required in determining any valuation allowance recorded against deferred tax assets. In assessing the need for a valuation allowance, we consider all available evidence, including past operating results, estimates of future taxable income, and the feasibility of tax planning strategies. In the event that we change our determination as to the amount of deferred tax assets that can be realized, we will adjust our valuation allowance with a corresponding impact to the provision for income taxes in the period in which such determination is made.
Stock-Based Compensation
We measure and recognize compensation expense for all stock-based awards, including stock options and purchase rights issued to employees under our 2016 Employee Stock Purchase Plan ("2016 ESPP"), based on the estimated fair value of the awards on the grant date. We use the Black-Scholes-Merton ("Black-Scholes") option pricing model to estimate the fair value of stock options and 2016 ESPP purchase rights. The fair value of restricted stock units ("RSUs") is measured using the fair value of our common stock on the date of the grant. The fair value of awards with a market-based condition is measured using a Monte Carlo simulation.
The fair value of stock options and RSUs with a service condition is recognized as expense on a straight-line basis over the requisite service period, which is generally four years. For stock-based awards granted to employees with a performance condition, we recognize stock-based compensation expense using the graded vesting attribution method over the requisite service period when management determines it is probable that the performance condition will be satisfied. For stock-based awards with a market-based condition, we recognize stock-based compensation expense using the graded vesting attribution method over the requisite service period, regardless of achievement, provided the requisite service condition is met. The fair value of the 2016 ESPP purchase rights is recognized as expense on a straight-line basis over the offering period. We account for forfeitures of all share-based awards when they occur.
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NUTANIX, INC.
Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)
Our use of the Black-Scholes option pricing model requires the input of subjective assumptions, including the fair value of the underlying common stock, expected term of the option, expected volatility of the price of our common stock, risk-free interest rates and the expected dividend yield of our common stock. The assumptions used in our option pricing model represent management’s best estimates. These estimates involve inherent uncertainties and the application of management’s judgment. If factors change and different assumptions are used, our stock-based compensation expense could be materially different in the future.
Legal and Other Contingencies
The outcomes of legal proceedings and claims brought against us are subject to significant uncertainty. An estimated loss from a loss contingency such as a legal proceeding or claim is accrued by a charge to income if it is probable that an asset has been impaired or a liability has been incurred and the amount of the loss can be reasonably estimated. In determining whether a loss should be accrued, we evaluate, among other factors, the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of loss. Changes in these factors could materially impact our consolidated financial statements.
Recent Accounting Pronouncements
Refer to "Recent Accounting Pronouncements" in Note 1 of Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.
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Item 7A. Quantitative and Qualitative Disclosures About Market Risk
We have operations both within the United States and internationally and we are exposed to market risk in the ordinary course of business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily a result of fluctuations in foreign currency exchange rates and interest rates.
Foreign Currency Risk
Our consolidated results of operations and cash flows are subject to fluctuations due to changes in foreign currency exchange rates. Substantially all of our sales contracts are denominated in U.S. dollars. Our expenses are generally denominated in the currencies of the countries where our operations are located. To date, we have not undertaken any hedging transactions related to foreign currency exposure, but we may do so in the future if our exposure to foreign currency should become more significant. As our international operations evolve, we will continue to reassess our approach to manage our risk relating to fluctuations in currency rates. In the event our foreign sales and expenses increase, our operating results may be more significantly affected by foreign currency exchange rate fluctuations, which can affect our operating income or loss. The effect of a hypothetical 10% change in foreign currency exchange rates on our non-U.S. dollar monetary assets and liabilities would not have had a material impact on our historical consolidated financial statements. Foreign currency transaction gains and losses and exchange rate fluctuations have not been material to our consolidated financial statements.
A hypothetical 10% decrease in the U.S. dollar against other currencies would result in a decrease in our operating income of approximately $70.4 million, $77.7 million and $91.6 million for fiscal 2024, 2025 and 2026, respectively. The increase in this hypothetical change in fiscal 2026 is due to an increase in our expenses denominated in foreign currencies. This analysis disregards the possibilities that rates can move in opposite directions and that losses from one geographic area may be offset by gains from another geographic area.
Interest Rate Risk
Our investment objective is to conserve capital and maintain liquidity to support our operations; therefore, we generally invest in highly liquid securities, consisting primarily of bank deposits, money market funds, commercial paper, U.S. government securities, and corporate bonds. Such fixed and floating interest-earning instruments carry a degree of interest rate risk. The fair market value of fixed income securities may be adversely impacted by a rise in interest rates, while floating rate securities may produce less income than predicted if interest rates fall. Due to the short-term nature of our investment portfolio, we do not believe an immediate 10% increase or decrease in interest rates would have a material effect on the fair market value of our portfolio. Therefore, we do not expect our operating results or cash flows to be materially affected by any sudden change in interest rates.
In February 2025, we entered into the Revolver, which provides for a senior secured revolving credit facility in an aggregate principal amount of $500.0 million, including a $25.0 million sublimit for the issuance of letters of credit. At our option, and subject to certain conditions, any borrowings under the Revolver bear interest at a variable rate tied to a base rate, a term Secured Overnight Financing Rate or an alternative currency term rate, plus, in each case, an applicable margin based on our total leverage ratio. Consequently, our interest expense could fluctuate as a result of the variable interest rates applicable to any borrowings under the Revolver. As of July 31, 2026, we had no borrowings and an immaterial amount of letters of credit outstanding under the Revolver.
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Table of Contents
As of July 31, 2026, we had outstanding $500.0 million aggregate principal amount of 2027 Notes and $862.5 million aggregate principal amount of 2029 Notes. The 2027 Notes and the 2029 Notes are not recorded at fair value but are measured at fair value on a quarterly basis for disclosure purposes. See Note 3 of Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K. The 2027 Notes and the 2029 Notes have a fixed annual interest rate and therefore we have no economic exposure to changes in interest rates. However, the fair value of the 2027 Notes and the 2029 Notes is affected by interest rates. Generally, the fair value of the 2027 Notes and the 2029 Notes will increase as interest rates decrease and decrease as interest rates increase. In addition, the fair values of the 2027 Notes and the 2029 Notes are affected by the price of our Class A common stock. The fair value of the 2027 Notes and the 2029 Notes will generally increase as the price of our Class A common stock increases and will generally decrease as the price of our Class A common stock decreases.
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Item 8. Financial Statements and Supplementary Data
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm (PCAOB ID No. |
82 |
Consolidated Balance Sheets |
84 |
Consolidated Statements of Operations |
85 |
Consolidated Statements of Comprehensive Income (Loss) |
86 |
Consolidated Statements of Stockholders’ Equity (Deficit) |
87 |
Consolidated Statements of Cash Flows |
88 |
Notes to Consolidated Financial Statements |
89 |
Note 1: Overview and Summary of Significant Accounting Policies |
89 |
Note 2: Revenue, Deferred Revenue and Deferred Commissions |
99 |
Note 3: Fair Value Measurements |
100 |
Note 4: Balance Sheet Components |
102 |
Note 5: Debt |
105 |
Note 6: Leases |
110 |
Note 7: Commitments and Contingencies |
111 |
Note 8: Stockholders' Equity |
113 |
Note 9: Equity Incentive Plans |
114 |
Note 10: Restructuring Charges |
117 |
Note 11: Net Income (Loss) Per Share |
118 |
Note 12: Income Taxes |
119 |
Note 13: Segment Information |
123 |
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Table of Contents
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the stockholders and the Board of Directors of Nutanix, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Nutanix, Inc. and subsidiaries (the "Company") as of July 31, 2026 and 2025, the related consolidated statements of operations, comprehensive income (loss), stockholders' equity (deficit), and cash flows, for each of the three years in the period ended July 31, 2026, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of July 31, 2026 and 2025, and the results of its operations and its cash flows for each of the three years in the period ended July 31, 2026, in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of July 31, 2026, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated September 17, 2026, expressed an unqualified opinion on the Company's internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
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Revenue Recognition — Refer to Notes 1 and 2 to the financial statements
Critical Audit Matter Description
The Company recognizes revenue upon transfer of control of promised products or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. The Company generates revenue primarily from the sale of subscription term-based licenses, and which can be deployed on a variety of qualified hardware platforms or, in the case of the Company’s cloud-based SaaS offerings, via hosted service or delivered pre-installed on a server that is configured to order. The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring goods or services to the customer. The majority of the Company’s customers invoiced upfront, including invoices for multi-year subscriptions, with payment terms of 30-45 days. In certain circumstances, customers may be invoiced under alternative payment arrangements, including installment billings. The Company applies judgment in determining the transaction price for contracts with alternative payment arrangements.
We identified revenue recognition in certain material contracts as a critical audit matter because of the significant judgments management makes in evaluating the impact of the alternative payment arrangements as they may impact the total transaction price. This required a high degree of auditor judgment and an increased extent of testing.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the Company’s revenue recognition for certain material contracts included the following, among others:
/s/ |
|
|
|
September 17, 2026 |
|
We have served as the Company’s auditor since 2013.
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Table of Contents
NUTANIX, INC.
CONSOLIDATED BALANCE SHEETS
|
|
As of |
|
|||||
|
|
July 31, |
|
|
July 31, |
|
||
|
|
(in thousands, except per share data) |
|
|||||
Assets |
|
|
|
|
|
|
||
Current assets: |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Short-term investments |
|
|
|
|
|
|
||
Accounts receivable, net of allowances of $ |
|
|
|
|
|
|
||
Deferred commissions—current |
|
|
|
|
|
|
||
Prepaid expenses and other current assets |
|
|
|
|
|
|
||
Total current assets |
|
|
|
|
|
|
||
Property and equipment, net |
|
|
|
|
|
|
||
Operating lease right-of-use assets |
|
|
|
|
|
|
||
Deferred commissions—non-current |
|
|
|
|
|
|
||
Intangible assets, net |
|
|
|
|
|
|
||
Goodwill |
|
|
|
|
|
|
||
Deferred tax asset (1) |
|
|
|
|
|
|
||
Other assets—non-current |
|
|
|
|
|
|
||
Total assets |
|
$ |
|
|
$ |
|
||
Liabilities and Stockholders’ (Deficit) Equity |
|
|
|
|
|
|
||
Current liabilities: |
|
|
|
|
|
|
||
Accounts payable |
|
$ |
|
|
$ |
|
||
Accrued compensation and benefits |
|
|
|
|
|
|
||
Accrued expenses and other current liabilities |
|
|
|
|
|
|
||
Deferred revenue—current |
|
|
|
|
|
|
||
Operating lease liabilities—current |
|
|
|
|
|
|
||
Total current liabilities |
|
|
|
|
|
|
||
Deferred revenue—non-current |
|
|
|
|
|
|
||
Operating lease liabilities—non-current |
|
|
|
|
|
|
||
Convertible senior notes, net |
|
|
|
|
|
|
||
Other liabilities—non-current |
|
|
|
|
|
|
||
Total liabilities |
|
|
|
|
|
|
||
|
|
|
|
|
|
|||
Stockholders’ (deficit) equity: |
|
|
|
|
|
|
||
Common stock, par value of $ |
|
|
|
|
|
|
||
Additional paid-in capital |
|
|
|
|
|
|
||
Accumulated other comprehensive income (loss) |
|
|
|
|
|
( |
) |
|
Accumulated deficit |
|
|
( |
) |
|
|
( |
) |
Total stockholders’ (deficit) equity |
|
|
( |
) |
|
|
|
|
Total liabilities and stockholders’ (deficit) equity |
|
$ |
|
|
$ |
|
||
See the accompanying notes to the consolidated financial statements.
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NUTANIX, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
Fiscal Year Ended July 31, |
|
|||||||||
|
|
2024 |
|
|
2025 |
|
|
2026 |
|
|||
|
|
(in thousands, except per share data) |
|
|||||||||
Revenue: |
|
|
|
|
|
|
|
|
|
|||
Product |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Support, maintenance and other services |
|
|
|
|
|
|
|
|
|
|||
Total revenue |
|
|
|
|
|
|
|
|
|
|||
Cost of revenue: |
|
|
|
|
|
|
|
|
|
|||
Product |
|
|
|
|
|
|
|
|
|
|||
Support, maintenance and other services |
|
|
|
|
|
|
|
|
|
|||
Total cost of revenue |
|
|
|
|
|
|
|
|
|
|||
Gross profit |
|
|
|
|
|
|
|
|
|
|||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|||
Sales and marketing |
|
|
|
|
|
|
|
|
|
|||
Research and development |
|
|
|
|
|
|
|
|
|
|||
General and administrative |
|
|
|
|
|
|
|
|
|
|||
Total operating expenses |
|
|
|
|
|
|
|
|
|
|||
Income from operations |
|
|
|
|
|
|
|
|
|
|||
Other (expense) income, net |
|
|
( |
) |
|
|
|
|
|
|
||
(Loss) income before provision for (benefit from) income taxes |
|
|
( |
) |
|
|
|
|
|
|
||
Provision for (benefit from) income taxes |
|
|
|
|
|
|
|
|
( |
) |
||
Net (loss) income |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||
Net (loss) income per share attributable to Class A |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||
Net (loss) income per share attributable to Class A |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||
Weighted average shares used in computing net |
|
|
|
|
|
|
|
|
|
|||
Weighted average shares used in computing net |
|
|
|
|
|
|
|
|
|
|||
See the accompanying notes to the consolidated financial statements.
85
Table of Contents
NUTANIX, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
|
|
Fiscal Year Ended July 31, |
|
|||||||||
|
|
2024 |
|
|
2025 |
|
|
2026 |
|
|||
|
|
(in thousands) |
|
|||||||||
Net (loss) income |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||
Other comprehensive income (loss), net of tax: |
|
|
|
|
|
|
|
|
|
|||
Change in unrealized gain (loss) on available-for-sale |
|
|
|
|
|
|
|
|
( |
) |
||
Comprehensive (loss) income |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||
See the accompanying notes to the consolidated financial statements.
86
Table of Contents
NUTANIX, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
|
|
Fiscal Year Ended July 31, 2026 |
|
|||||||||||||||||||||
|
|
Common Stock |
|
|
Additional |
|
|
Accumulated |
|
|
Accumulated |
|
|
Total |
|
|||||||||
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Income (Loss) |
|
|
Deficit |
|
|
(Deficit) Equity |
|
||||||
|
|
(in thousands) |
|
|||||||||||||||||||||
Balance - July 31, 2023 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|||
Issuance of common stock through employee equity |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Issuance of common stock from ESPP purchase |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Shares withheld related to net share settlement of |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Repurchase and retirement of common stock |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Issuance of common stock related to conversion of |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Other comprehensive income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Balance - July 31, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||||
Issuance of common stock through employee equity |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Issuance of common stock from ESPP purchase |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Shares withheld related to net share settlement of |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Repurchase and retirement of common stock |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Induced conversion of the 2027 Notes |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Other comprehensive income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Balance - July 31, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||||
Issuance of common stock through employee equity |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Issuance of common stock from ESPP purchase |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Issuance of common stock through private placement |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Shares withheld related to net share settlement of |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Repurchase and retirement of common stock |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Other comprehensive loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Balance - July 31, 2026 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||
See the accompanying notes to the consolidated financial statements.
87
Table of Contents
NUTANIX, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
Fiscal Year Ended July 31, |
|
|||||||||
|
|
2024 |
|
|
2025 |
|
|
2026 |
|
|||
|
|
(in thousands) |
|
|||||||||
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
|||
Net (loss) income |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||
Adjustments to reconcile net (loss) income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
|||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|||
Stock-based compensation |
|
|
|
|
|
|
|
|
|
|||
Amortization of debt discount and issuance costs |
|
|
|
|
|
|
|
|
|
|||
Conversion of convertible senior notes attributable to debt discount and issuance costs |
|
|
|
|
|
|
|
|
|
|||
Operating lease cost, net of accretion |
|
|
|
|
|
|
|
|
|
|||
Non-cash interest expense |
|
|
|
|
|
|
|
|
|
|||
Inducement expense from partial repurchase of the 2027 Notes |
|
|
|
|
|
|
|
|
|
|||
Deferred income taxes |
|
|
|
|
|
|
|
|
( |
) |
||
Other |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
|||
Accounts receivable, net |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Deferred commissions |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Prepaid expenses and other assets |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Accounts payable |
|
|
|
|
|
|
|
|
|
|||
Accrued compensation and benefits |
|
|
|
|
|
|
|
|
|
|||
Accrued expenses and other liabilities |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Operating leases, net |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Deferred revenue |
|
|
|
|
|
|
|
|
|
|||
Net cash provided by operating activities |
|
|
|
|
|
|
|
|
|
|||
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|||
Maturities of investments |
|
|
|
|
|
|
|
|
|
|||
Purchases of investments |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Sales of investments |
|
|
|
|
|
|
|
|
|
|||
Payments for acquisitions, net of cash acquired |
|
|
( |
) |
|
|
|
|
|
|
||
Purchases of property and equipment |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net cash provided by (used in) investing activities |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|||
Repayment of convertible notes |
|
|
( |
) |
|
|
|
|
|
|
||
Proceeds from sales of shares through employee equity incentive plans |
|
|
|
|
|
|
|
|
|
|||
Proceeds from sales of shares through private placement |
|
|
|
|
|
|
|
|
|
|||
Taxes paid related to net share settlement of equity awards |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Proceeds from the issuance of convertible notes, net of issuance costs |
|
|
|
|
|
|
|
|
|
|||
Payment of third-party debt issuance costs |
|
|
|
|
|
( |
) |
|
|
|
||
Partial repurchase of the 2027 Notes |
|
|
|
|
|
( |
) |
|
|
|
||
Payment of revolver issuance costs |
|
|
|
|
|
( |
) |
|
|
|
||
Repurchases of common stock |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Other financing activities, net |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net cash (used in) provided by financing activities |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Net increase in cash, cash equivalents and restricted cash |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Cash, cash equivalents and restricted cash—beginning of period |
|
|
|
|
|
|
|
|
|
|||
Cash, cash equivalents and restricted cash—end of period |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Restricted cash (1) |
|
|
|
|
|
|
|
|
|
|||
Cash and cash equivalents—end of period |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Supplemental disclosures of cash flow information: |
|
|
|
|
|
|
|
|
|
|||
Cash paid for income taxes |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Supplemental disclosures of non-cash investing and |
|
|
|
|
|
|
|
|
|
|||
Purchases of property and equipment included in accounts payable |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Forfeited paid-in-kind interest recognized in equity upon note conversion |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Unpaid taxes related to net share settlement of equity awards included |
|
$ |
|
|
$ |
|
|
$ |
|
|||
See the accompanying notes to the consolidated financial statements.
88
Table of Contents
NUTANIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. OVERVIEW AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 are a hybrid cloud and AI platform company, offering organizations a unified infrastructure software platform to run applications, data, and AI anywhere. The Nutanix Cloud Platform is designed to enable organizations to build hybrid cloud infrastructure. It provides a consistent cloud operating model with a single platform for running and managing applications, agentic AI workloads, and data in core data centers, at the edge, and in public clouds. The Nutanix Cloud Platform supports a wide variety of workloads with varied compute, storage, and network requirements. These workloads include traditional business-critical general-purpose applications, modern applications (including containerized applications running on Kubernetes), data platforms (including SQL, NoSQL and vector databases, as well as business intelligence applications), and enterprise AI workloads (including machine learning, generative AI, and agentic AI applications).
Our business is organized into a single operating and reportable segment. We operate a subscription-based business model, meaning our products, including associated support and maintenance arrangements, are sold with a defined duration. Our solutions are primarily sold through channel partners and original equipment manufacturers ("OEMs") (collectively, "Partners") and delivered directly to our end customers.
Principles of Consolidation
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes. Such management estimates and assumptions include, but are not limited to, the estimate of standalone 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 with market conditions; accounting for income taxes, including the valuation allowance on deferred tax assets and uncertain tax positions; purchase commitment liabilities to our contract manufacturer; sales commissions expense and the period of benefit for deferred commissions; whether an arrangement is or contains a lease; 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.
89
Table of Contents
NUTANIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Concentration of Risk
Credit Risk — Financial instruments that potentially subject us to concentrations of credit risk consist of cash and cash equivalents and receivables from customers. We invest only in high-quality credit instruments and maintain our cash and cash equivalents and available-for-sale investments in fixed income securities. Management believes that the financial institutions that hold our investments are financially sound and, accordingly, are subject to minimal credit risk. Our deposits are with multiple institutions, however such deposits may exceed federally insured limits. We provide credit, in the normal course of business, to a number of companies and perform credit evaluations of our customers.
Concentration of Revenue and Accounts Receivable — We sell our products primarily through our Partners and occasionally directly to end customers. For the fiscal years ended July 31, 2024, 2025 and 2026, no end customer accounted for more than
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 |
|
|
Accounts Receivable as of |
|
||||||||||||||
|
|
Fiscal Year Ended July 31, |
|
|
July 31, |
|
|
July 31, |
|
|||||||||||
Partners |
|
2024 |
|
|
2025 |
|
|
2026 |
|
|
|
|||||||||
Partner A |
|
( |
|
|
|
% |
|
|
% |
|
|
% |
|
|
% |
|||||
Partner B |
|
|
% |
|
|
% |
|
( |
|
|
( |
|
|
|
% |
|||||
Partner C |
|
( |
|
|
( |
|
|
( |
|
|
( |
|
|
|
% |
|||||
Partner D |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
|||||
Partner E |
|
|
% |
|
|
% |
|
|
% |
|
( |
|
|
( |
|
|||||
Summary of Significant Accounting Policies
Cash, Cash Equivalents and Short-Term Investments
We classify all highly liquid investments with original maturities of three months or less from the date of purchase as cash equivalents and all highly liquid investments with stated maturities of greater than three months as marketable securities.
We determine the appropriate classification of our marketable securities at the time of purchase and reevaluate such designation as of each balance sheet date. We classify and account for our marketable securities as available-for-sale securities. We classify our marketable securities with stated maturities greater than twelve months as short-term investments due to our intent and ability to use these securities to support our current operations.
Our marketable securities are recorded at their estimated fair value. Unrealized gains or losses on available-for-sale securities are reported in other comprehensive income (loss). We periodically review whether our securities may be other-than-temporarily impaired, including whether or not (i) we have the intent to sell the security or (ii) it is more likely than not that we will be required to sell the security before its anticipated recovery. If one of these factors is met, we will record an impairment loss associated with our impaired investment. The impairment loss will be recorded as a write-down of investments in our consolidated balance sheets and a realized loss within other expense in our consolidated statements of operations.
90
Table of Contents
NUTANIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Fair Value Measurement
We define fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, we consider the principal or most advantageous market in which to transact and the market-based risk. We apply fair value accounting for all assets and liabilities that are recognized or disclosed at fair value in our consolidated financial statements on a recurring basis. The carrying amounts reported in our consolidated financial statements for cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities approximate their fair values due to their short-term nature. The fair value of the outstanding
Convertible Senior Notes
Our convertible senior notes, including any embedded conversion features, are accounted for under the convertible debt accounting model and are treated as a liability, net of unamortized issuance costs. The carrying amount of the liability is classified as a current liability if we have committed to settle with current assets; otherwise, it is classified as a long-term liability, as we retain the option to settle conversion requests in shares of our Class A common stock. The embedded conversion features are not remeasured as long as they do not meet the separation requirement of a derivative; otherwise, they are classified as derivative instruments and accounted for as such. Issuance costs are amortized to interest expense using the effective interest rate method over the term of the notes. In accounting for a holder’s exercise in accordance with a note’s original conversion terms of a conversion option for which the carrying amount has previously been reclassified to equity, any unamortized discount remaining at the date of conversion is first recognized as interest, and then the remaining carrying amount of the converted notes is reduced by the cash transferred and then recognized in equity to reflect the shares issued, such that no gain or loss is recognized. In accounting for extinguishments of the notes, the reacquisition price of the extinguished notes is compared to the carrying amount of the respective extinguished notes and a gain or loss is recorded in other expense, net on our consolidated statements of operations.
Accounts Receivable and Allowance for Credit Losses
Accounts receivable are recorded at the invoiced amount, net of an allowance for credit losses. Credit is extended to customers based on an evaluation of their financial condition and other factors. We generally do not require collateral or other security to support accounts receivable. We perform ongoing credit evaluations of our customers and maintain an allowance for credit losses.
The allowance for credit losses is based on the best estimate of the amount of probable credit losses in existing accounts receivable. We assess credit losses on accounts receivable by taking into consideration past collection experience, the credit quality of the customer, the age of the receivable balance, current and future economic conditions, and forecasts that may affect the collectibility of the reported amount. In circumstances where we are aware of a specific customer’s inability to meet its financial obligations (e.g., bankruptcy filings or substantial downgrading of credit ratings), we record an allowance for credit losses in order to reduce the net recognized receivable to the amount we reasonably believe will be collected. For all other customers, we record an allowance for credit losses based on the length of time the receivable is past due and our historical experience of collections and write-offs.
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NUTANIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The changes in the allowance for credit losses are as follows:
|
|
Fiscal Year Ended July 31, |
|
|||||||||
|
|
2024 |
|
|
2025 |
|
|
2026 |
|
|||
|
|
(in thousands) |
|
|||||||||
Allowance for credit losses—beginning balance |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Charged to allowance for credit losses |
|
|
|
|
|
|
|
|
|
|||
Write-offs |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Allowance for credit losses—ending balance |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Property and Equipment
Property and equipment, including leasehold improvements, are stated at cost, less accumulated depreciation and amortization. We include the cost to acquire demonstration units and the related accumulated depreciation in property and equipment as such units are generally not available for sale. Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the related assets.
In June 2026, we completed a comprehensive operational assessment of our server, data center engineering, and other equipment and extended the estimated useful life of these assets from
Leases
We determine if an arrangement is or contains a lease at inception by evaluating various factors, including whether a vendor’s right to substitute an identified asset is substantive. Lease classification is determined at the lease commencement date when the leased assets are made available for our use. Operating leases are included in operating lease right-of-use assets, operating lease liabilities—current and operating lease liabilities—non-current in our consolidated balance sheets. Finance leases are included in property and equipment, net, accrued expenses and other current liabilities and other liabilities—non-current in our consolidated balance sheets.
Right-of-use assets ("ROU assets") represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make payments arising from the lease. ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. Lease payments consist primarily of fixed payments under the arrangement, less any lease incentives, such as rent holidays. Variable lease payments not dependent on an index or a rate are expensed as incurred and are not included within the ROU asset and lease liability calculation. Variable lease payments primarily include reimbursements of costs incurred by lessors for common area maintenance, property taxes and utilities. We use an estimate of our incremental borrowing rate ("IBR") based on the information available at the lease commencement date in determining the present value of lease payments, unless the implicit rate is readily determinable. In determining the appropriate IBR, we consider information including, but not limited to, our credit rating, the lease term and the currency in which the arrangement is denominated. Our lease terms may include renewal options, which are not included in the lease terms for calculating our lease liability, unless we are reasonably certain that we will exercise the renewal option at the time of the lease commencement. Lease costs are recognized on a straight-line basis as operating expenses within our consolidated statements of operations. We present lease payments within cash flows from operations within our consolidated statements of cash flows.
For our operating leases, we account for lease and non-lease components as a single lease component. Additionally, we do not record leases on our consolidated balance sheet that have a lease term of 12 months or less at the lease commencement date.
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NUTANIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Goodwill, Intangible Assets and Other Long-Lived Assets
Goodwill represents the future economic benefits arising from other assets acquired in a business combination or an acquisition that are not individually identified and separately recorded. The excess of the purchase price over the estimated fair value of net assets of businesses acquired in a business combination is recognized as goodwill.
Intangible assets consist of identifiable intangible assets, including developed technology, customer relationships and trade names, resulting from business combinations. Finite-lived intangible assets are recorded at fair value, net of accumulated amortization. Finite-lived intangible assets are amortized on a straight-line basis over their estimated useful lives. Amortization expense is included as a component of cost of product revenue and sales and marketing expense in our consolidated statements of operations. Amounts included in sales and marketing expense relate to customer relationships and trade names.
Goodwill and other intangible assets acquired in a business combination and determined to have an indefinite useful life are not amortized, but instead tested for impairment at least annually, in the fourth quarter of each fiscal year. Such goodwill and other intangible assets may also be tested for impairment between annual tests in the presence of impairment indicators such as, but not limited to: (i) a significant decrease in the market price of a long-lived asset (asset group); (ii) a significant adverse change in the extent or manner in which a long-lived asset (asset group) is being used or in its physical condition; (iii) a significant adverse change in legal factors or in the business climate that could affect the value of a long-lived asset (asset group), including an adverse action or assessment by a regulator; (iv) an accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of a long-lived asset (asset group); (v) a current-period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of a long-lived asset (asset group); or (vi) a current expectation that, more likely than not, a long-lived asset (asset group) will be sold or otherwise disposed of significantly before the end of its previously estimated useful life.
Goodwill is tested for impairment by comparing the reporting unit's carrying value, including goodwill, to the fair value of the reporting unit. We operate under one reporting unit and for our annual goodwill impairment test, we determine the fair value of our reporting unit based on our enterprise value. We may elect to utilize a qualitative assessment to determine whether it is more likely than not that the fair value of our reporting unit is less than its carrying value. If, after assessing the qualitative factors, we determine that it is more likely than not that the fair value of our reporting unit is less than its carrying value, an impairment analysis will be performed. We compare the fair value of our reporting unit with its carrying amount and if the carrying value of the reporting unit exceeds its fair value, an impairment loss will be recognized.
Long-lived assets, such as property and equipment and finite-lived intangible assets subject to depreciation and amortization, are evaluated for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Among the factors and circumstances we consider in determining recoverability are: (i) a significant decrease in the market price of a long-lived asset; (ii) a significant adverse change in the extent or manner in which a long-lived asset is being used or in its physical condition; (iii) a significant adverse change in legal factors or in the business climate that could affect the value of a long-lived asset, including an adverse action or assessment by a regulator; (iv) an accumulation of costs significantly in excess of the amount originally expected for the acquisition; and (v) current-period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of a long-lived asset. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset.
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NUTANIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Revenue Recognition
We generate revenue primarily from the sale of the Nutanix Cloud Platform, sold primarily as subscription term-based licenses, and which can be deployed on a variety of qualified hardware platforms or, in the case of our cloud-based SaaS offerings, via hosted service or delivered pre-installed on a server that is configured to order.
Our subscription term-based licenses are sold separately, or can be sold alongside configured-to-order servers. Our subscription term-based licenses typically have a term of one to five years. Our cloud-based SaaS subscriptions typically have terms extending up to five years.
Our customers generally purchase their qualified hardware platforms for deployment of our software from one of our channel partners or OEMs. Our platform typically includes one or more years of support and maintenance, which provides customers with the right to software upgrades and enhancements as well as technical support. Our platform is primarily sold through channel partners and OEMs. Revenue is recognized net of sales tax and withholding tax.
Product revenue — Product revenue primarily consists of software revenue. A majority of our product revenue is generated from the sale of the Nutanix Cloud Platform. We also sell renewals of previously purchased software licenses and SaaS offerings. We recognize revenue from our software products upon the transfer of control to the customer. For sales of our software purchased alongside a server from an OEM or other partner, revenue is typically recognized upon shipment of the server. For software sold separately from a server, revenue is typically recognized when the software is made available to the customer. For our SaaS offerings, revenue is typically recognized as the services are performed. In the infrequent transactions where the hardware is purchased directly from Nutanix, we consider ourselves to be the principal in the transaction, and we record revenue and costs of goods sold on a gross basis.
Support, maintenance and other services revenue — We generate our support, maintenance and other services revenue primarily from software maintenance subscriptions and support subscriptions, which include the right to software upgrades and enhancements as well as technical support. The majority of our product sales are sold in conjunction with software maintenance subscriptions and support subscriptions, with terms typically ranging from one to five years. Occasionally, we also sell professional services with our products. We recognize revenue from software maintenance subscriptions and support contracts ratably over the contractual service period, which typically commences upon transfer of control of the corresponding products to the customer. We recognize revenue related to professional services as they are performed.
The core principle of Accounting Standards Codification ("ASC") 606 is to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration the entity expects to be entitled to in exchange for those goods or services. This principle is achieved by applying the following five-step approach:
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NUTANIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Contracts with multiple performance obligations — The majority of our contracts with customers contain multiple performance obligations. For these contracts, we account for individual performance obligations separately if they are distinct. The transaction price is allocated to the separate performance obligations on a relative SSP basis. For deliverables that we routinely sell separately, such as software maintenance subscriptions and support subscriptions on our core offerings, we determine SSP by evaluating the standalone sales over the trailing 12 months. For those that are not sold routinely, we determine SSP based on our overall pricing trends and objectives, taking into consideration market conditions and other factors, including the value of our contracts, the products sold, and geographic locations.
Contract balances — The timing of revenue recognition may differ from the timing of invoicing to customers. Our customers are typically invoiced upfront, including invoices for multi-year subscriptions, with payment terms of 30-45 days. In certain circumstances, customers may be invoiced under alternative payment arrangements, including installment billings. Invoices issued under these arrangements generally have payment terms of 30-45 days. We assess credit losses on contract balances by taking into consideration past collection experience, the credit quality of the customer, the age of the receivable balance, current and future economic conditions, and forecasts that may affect the collectibility of the reported amount. Accounts receivable are recorded at the invoiced amount, net of an allowance for credit losses. A receivable is recognized in the period in which we deliver goods or provide services, or when our right to consideration is unconditional. The balance of accounts receivable, net of allowance for credit losses, as of July 31, 2025 and 2026, is presented in the accompanying consolidated balance sheets.
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NUTANIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In situations where the revenue recognized on a contract exceeds billings, and our right to consideration is conditional on something other than the passage of time, we record a contract asset. A contract asset becomes a receivable when invoiced, at which point the right to consideration becomes unconditional. As of July 31, 2026, our consolidated balance sheets included current contract assets of $
Costs to obtain and fulfill a contract — We capitalize commissions paid to sales personnel and the related payroll taxes when customer contracts are signed. These costs are recorded as deferred commissions in our consolidated balance sheets, current and non-current. We determine whether costs should be deferred based on our sales compensation plans if the commissions are incremental and would not have been incurred absent the execution of the customer contract. Commissions paid upon the initial acquisition of a contract are recognized over the estimated period of benefit, which may exceed the term of the initial contract if the commissions expected to be paid upon renewal are not commensurate with that of the initial contract. Accordingly, deferred costs are recognized on a systematic basis that is consistent with the pattern of revenue recognition allocated to each performance obligation over the entire period of benefit and included in sales and marketing expense in our consolidated statements of operations. We determine the estimated period of benefit by evaluating the expected renewals of customer contracts, the duration of relationships with our customers, customer retention data, our technology development lifecycle, and other factors. Deferred costs are periodically reviewed for impairment.
Taxes assessed by a government authority that are both imposed on and concurrent with specific revenue transactions between us and our customers are presented on a net basis in our consolidated statements of operations.
Deferred revenue — Deferred revenue primarily consists of amounts that have been invoiced but not yet recognized as revenue and primarily pertains to software maintenance subscriptions, support subscriptions and professional services. The current portion of deferred revenue represents the amounts that are expected to be recognized as revenue within one year of the consolidated balance sheet date.
Cost of Revenue
Cost of revenue consists of cost of product revenue and cost of support, maintenance and other services revenue. Personnel costs associated with our operations and global customer support organizations consist of salaries, benefits and stock-based compensation. Allocated costs consist of certain facilities, depreciation and amortization, recruiting, and information technology costs, allocated based on headcount.
Warranties
We generally provide a replacement or bug fix warranty for licensed software to conform to our documented specifications for a period of
Given the warranty agreement with our OEMs and considering that substantially all products are sold together with PCS agreements, we generally have very limited exposure related to warranty costs and therefore no warranty reserve has been recognized.
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NUTANIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Research and Development
Our research and development expense consists primarily of product development personnel costs, including salaries and benefits, stock-based compensation and allocated facilities, IT, and recruiting costs. Research and development costs are expensed as incurred. Currently, we expense software development costs as incurred, as from the inception of the product development, our software products are primarily intended to be marketed and sold to customers on-premises, either standalone and/or with other product offerings.
Stock-Based Compensation
Stock-based compensation expense is measured based on the grant date fair value of share-based awards. The fair value of the purchase rights under our 2016 Employee Stock Purchase Plan ("2016 ESPP") is estimated using the Black-Scholes-Merton ("Black-Scholes") option pricing model, which is impacted by the fair value of our common stock, as well as changes in assumptions regarding a number of subjective variables. These variables include the expected common stock price volatility over the term of the awards, the expected term of the awards, risk-free interest rates, and expected dividend yield. The fair value of restricted stock units ("RSUs") is determined using the fair value of our common stock on the date of grant. The fair value of awards with a market-based condition is measured using a Monte Carlo simulation, which requires the use of various assumptions, including the stock price volatility and risk-free interest rate as of the valuation date corresponding to the length of time remaining in the performance period and expected dividend yield.
We grant stock awards that are subject to either standalone service conditions, or a combination of service and performance or market-based conditions. We recognize stock-based compensation expense for employee stock awards with a service condition only using the straight-line method over the requisite service period of the awards, which is generally the vesting period. We use the graded vesting attribution method to recognize stock-based compensation expense related to employee stock awards that contain both service and performance or market-based conditions. The fair value of the 2016 ESPP purchase rights is recognized as expense on a straight-line basis over the offering period. We account for forfeitures of all share-based awards when they occur.
Foreign Currency
The functional currency of our foreign subsidiaries is the U.S. dollar. Transactions denominated in currencies other than the functional currency are remeasured at the average exchange rate in effect during the reporting period. At the end of each reporting period all monetary assets and liabilities of our subsidiaries are remeasured at the current U.S. dollar exchange rate at the end of the reporting period. Remeasurement gains and losses are included within other expense, net in our consolidated statements of operations. During the fiscal years ended July 31, 2024, 2025 and 2026, we recognized foreign currency losses of $
Segments
Our chief operating decision maker is our Chief Executive Officer. This individual allocates resources and assesses financial performance based upon discrete financial information at the consolidated level. Accordingly, we have determined that we operate as a single operating and reportable segment. For additional details, refer to Note 13.
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NUTANIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Income Taxes
We account for income taxes using the asset and liability method. Deferred income taxes are recognized by applying enacted statutory tax rates applicable to future years to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The measurement of deferred tax assets is reduced, if necessary, by a valuation allowance on amounts that are more likely than not to be realized.
We record a liability for uncertain tax positions if it is not more likely than not to be sustained based solely on its technical merits as of the reporting date. We consider many factors when evaluating and estimating our tax positions and tax benefits, which may require periodic adjustments and may not accurately anticipate actual outcomes.
Advertising Costs
Advertising costs are charged to sales and marketing expense as incurred in our consolidated statements of operations. During the fiscal years ended July 31, 2024, 2025 and 2026, advertising expense was $
Recently Adopted Accounting Pronouncements
In November 2024, the Financial Accounting Standards Board (the "FASB") issued accounting standards update ("ASU") 2024-04, Debt—Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments, which clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. We early adopted the new standard during the fiscal quarter ended January 31, 2025 and applied it on a prospective basis.
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires disclosure of incremental segment information on an annual and interim basis. We adopted this standard during the fiscal quarter ended July 31, 2025 and applied it on a fully retrospective basis.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which provides for improvements to income tax disclosures. The standard requires disaggregated information about a reporting entity's effective tax rate reconciliation as well as information on income taxes paid by significant jurisdiction. We adopted this standard during the fiscal year ended July 31, 2026 and applied it on a prospective basis. For additional details, refer to Note 12.
Recently Issued and Not Yet Adopted Accounting Pronouncements
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires additional disaggregated disclosures in the notes to financial statements for certain categories of expenses that are included on the face of the statement of operations. This new ASU is effective for fiscal years beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. This ASU will be effective for us beginning in fiscal 2028. We are currently evaluating the impact this new standard will have on our disclosures.
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NUTANIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which removes all references to software development stages and clarifies the threshold entities apply to begin capitalizing costs. This new ASU is effective for fiscal years beginning after December 15, 2027, and interim reporting periods within those annual reporting periods, with early adoption permitted. This ASU will be effective for us beginning in fiscal 2029. We are currently evaluating the impact this new standard will have on our consolidated financial statements.
NOTE 2. REVENUE, DEFERRED REVENUE AND DEFERRED COMMISSIONS
Disaggregation of Revenue and Revenue Recognition
The Nutanix Cloud Platform can be deployed in core data centers, at the edge, or in public clouds, running on a variety of qualified hardware platforms (including our Nutanix-branded NX hardware line), in popular public cloud environments such as Amazon Web Services and Microsoft Azure through Nutanix Cloud Clusters, or, in the case of our cloud-based software and software-as-a-service ("SaaS") offerings, via hosted service. Our subscription term-based licenses are sold separately, or can also be sold alongside configured-to-order servers. Our subscription term-based licenses typically have durations ranging from to
The following table depicts the disaggregation of revenue by revenue type, consistent with how we evaluate our financial performance:
|
|
Fiscal Year Ended July 31, |
|
|||||||||
|
|
2024 |
|
|
2025 |
|
|
2026 |
|
|||
|
|
(in thousands) |
|
|||||||||
Subscription |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Professional services and other (1) |
|
|
|
|
|
|
|
|
|
|||
Total revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Subscription revenue — Subscription revenue includes any performance obligation which has a defined duration and is generated from the sales of software maintenance subscriptions, support subscriptions, subscription software licenses and cloud-based SaaS offerings.
Professional services and other revenue — Includes Professional services revenue and Other non-subscription product revenue, as described below:
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NUTANIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Significant changes in the balance of deferred revenue (contract liability) and deferred commissions (contract cost asset) for the periods presented are as follows:
|
|
Deferred |
|
|
Deferred |
|
||
|
|
(in thousands) |
|
|||||
Balance as of July 31, 2024 |
|
$ |
|
|
$ |
|
||
Additions |
|
|
|
|
|
|
||
Revenue/commissions recognized |
|
|
( |
) |
|
|
( |
) |
Balance as of July 31, 2025 |
|
|
|
|
|
|
||
Additions |
|
|
|
|
|
|
||
Revenue/commissions recognized |
|
|
( |
) |
|
|
( |
) |
Balance as of July 31, 2026 |
|
$ |
|
|
$ |
|
||
During the fiscal year ended July 31, 2025, we recognized revenue of approximately $
Many of our contracted but not invoiced performance obligations are subject to cancellation terms. Revenue allocated to remaining performance obligations represents contracted revenue that has not yet been recognized, which includes deferred revenue and non-cancelable amounts that will be invoiced and recognized as revenue in future periods and excludes performance obligations that are subject to cancellation terms. As of July 31, 2025, we had approximately $
NOTE 3. FAIR VALUE MEASUREMENTS
The authoritative guidance on fair value measurements establishes a three-tier fair value hierarchy based on the observability of the inputs available in the market used to measure fair value as follows:
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NUTANIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Assets Measured at Fair Value on a Recurring Basis
Cash Equivalents and Short-Term Investments
Our money market funds are classified within Level I due to the highly liquid nature of these assets and have unadjusted inputs, quoted prices in active markets for these assets at the measurement date from the financial institution that carries these investment securities. Our investments in available-for-sale debt securities such as commercial paper, corporate bonds and U.S. government securities are classified within Level II. The fair value of these securities is priced by using inputs based on non-binding market consensus prices that are corroborated by observable market data, quoted market prices for similar instruments, or pricing models such as discounted cash flow techniques.
The fair value of our financial assets measured on a recurring basis is as follows:
|
|
As of July 31, 2025 |
|
|||||||||||||
|
|
Level I |
|
|
Level II |
|
|
Level III |
|
|
Total |
|
||||
|
|
(in thousands) |
|
|||||||||||||
Financial Assets, Current: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash equivalents: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market funds |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
U.S. Government securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commercial paper |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Short-term investments: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate bonds |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commercial paper |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Government securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total measured at fair value |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Cash |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total cash, cash equivalents and short-term investments |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
Financial Assets, Non-Current: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Convertible note receivable |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
As of July 31, 2026 |
|
|||||||||||||
|
|
Level I |
|
|
Level II |
|
|
Level III (1) |
|
|
Total |
|
||||
|
|
(in thousands) |
|
|||||||||||||
Financial Assets, Current: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash equivalents: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market funds |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
U.S. Government securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commercial paper |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Short-term investments: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate bonds |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commercial paper |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Government securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total measured at fair value |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Cash |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total cash, cash equivalents and short-term investments |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
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NUTANIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Financial Instruments Not Recorded at Fair Value on a Recurring Basis
We report our financial instruments at fair value, with the exception of the 2027 Notes and 2029 Notes (collectively, the "Notes"). Financial instruments that are not recorded at fair value on a recurring basis are measured at fair value on a quarterly basis for disclosure purposes.
|
|
As of July 31, 2025 |
|
|
As of July 31, 2026 |
|
||||||||||
|
|
Carrying |
|
|
Estimated |
|
|
Carrying |
|
|
Estimated |
|
||||
|
|
(in thousands) |
|
|||||||||||||
2027 Notes |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
2029 Notes |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The carrying value of the 2027 Notes as of July 31, 2025 and 2026 was net of unamortized debt issuance costs of $
The carrying value of the 2029 Notes as of July 31, 2025 and 2026 was net of unamortized debt issuance costs of $
The total estimated fair values of the Notes were determined based on the closing trading price per $
NOTE 4. BALANCE SHEET COMPONENTS
Short-Term Investments
The amortized cost of our short-term investments approximates their fair value. Unrealized losses related to our short-term investments are generally due to interest rate fluctuations, as opposed to credit quality. However, we review individual securities that are in an unrealized loss position in order to evaluate whether or not they have experienced or are expected to experience credit losses that would result in a decline in fair value. As of July 31, 2025 and 2026, unrealized gains and losses from our short-term investments were not material and were not the result of a decline in credit quality. As a result, as of July 31, 2025 and 2026, we did
The following table summarizes the estimated fair value of our investments in marketable debt securities by their contractual maturity dates:
|
|
As of |
|
|
|
|
(in thousands) |
|
|
Due within one year |
|
$ |
|
|
Due in one to three years |
|
|
|
|
Total |
|
$ |
|
|
102
Table of Contents
NUTANIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consists of the following:
|
|
As of |
|
|||||
|
|
July 31, |
|
|
July 31, |
|
||
|
|
(in thousands) |
|
|||||
Prepaid operating expenses |
|
$ |
|
|
$ |
|
||
VAT receivables |
|
|
|
|
|
|
||
Other current assets |
|
|
|
|
|
|
||
Total prepaid expenses and other current assets |
|
$ |
|
|
$ |
|
||
The increase in other current assets from July 31, 2025 to July 31, 2026 was due primarily to the addition of $
Property and Equipment, Net
Property and equipment, net consists of the following:
|
|
|
|
As of |
|
|||||
|
|
Estimated |
|
July 31, |
|
|
July 31, |
|
||
|
|
(in months) |
|
(in thousands) |
|
|||||
Computer, production, engineering and other equipment |
|
|
$ |
|
|
$ |
|
|||
Demonstration units |
|
|
|
|
|
|
|
|||
Leasehold improvements |
|
(1) |
|
|
|
|
|
|
||
Software |
|
(2) |
|
|
|
|
|
|
||
Furniture and fixtures |
|
|
|
|
|
|
|
|||
Total property and equipment, gross |
|
|
|
|
|
|
|
|
||
Less: accumulated depreciation |
|
|
|
|
( |
) |
|
|
( |
) |
Total property and equipment, net |
|
|
|
$ |
|
|
$ |
|
||
Depreciation expense related to our property and equipment was $
103
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NUTANIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Intangible Assets, Net
Intangible assets, net consists of the following:
|
|
As of |
|
|||||
|
|
July 31, |
|
|
July 31, |
|
||
|
|
(in thousands) |
|
|||||
Developed technology |
|
$ |
|
|
$ |
|
||
Customer relationships |
|
|
|
|
|
|
||
Trade name |
|
|
|
|
|
|
||
Total intangible assets, gross |
|
|
|
|
|
|
||
Less: |
|
|
|
|
|
|
||
Accumulated amortization of developed technology |
|
|
( |
) |
|
|
( |
) |
Accumulated amortization of customer relationships |
|
|
( |
) |
|
|
( |
) |
Accumulated amortization of trade name |
|
|
( |
) |
|
|
( |
) |
Total accumulated amortization |
|
|
( |
) |
|
|
( |
) |
Total intangible assets, net |
|
$ |
|
|
$ |
|
||
Amortization expense related to our intangible assets is recognized in our consolidated statements of operations within product cost of revenue for developed technology and sales and marketing expense for customer relationships and trade name. Amortization expense was $
The changes in the net book value of intangible assets, net are as follows:
|
|
As of July 31, |
|
|||||
|
|
2025 |
|
|
2026 |
|
||
|
|
(in thousands) |
|
|||||
Intangible assets, net—beginning balance |
|
$ |
|
|
$ |
|
||
Amortization of intangible assets (1) |
|
|
( |
) |
|
|
( |
) |
Intangible assets, net—ending balance |
|
$ |
|
|
$ |
|
||
The estimated future amortization expense of our intangible assets is as follows:
Fiscal Year Ending July 31: |
|
Amount |
|
|
|
|
(in thousands) |
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
2030 |
|
|
|
|
2031 |
|
|
|
|
Total |
|
$ |
|
|
104
Table of Contents
NUTANIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Goodwill
There have been no changes to the carrying amount of goodwill during the periods presented.
Accrued Compensation and Benefits
Accrued compensation and benefits consists of the following:
|
|
As of |
|
|||||
|
|
July 31, |
|
|
July 31, |
|
||
|
|
(in thousands) |
|
|||||
Accrued commissions and taxes |
|
$ |
|
|
$ |
|
||
Accrued bonus |
|
|
|
|
|
|
||
Accrued vacation |
|
|
|
|
|
|
||
Accrued severance |
|
|
|
|
|
|
||
Payroll taxes payable |
|
|
|
|
|
|
||
Contributions to ESPP withheld |
|
|
|
|
|
|
||
Accrued benefits |
|
|
|
|
|
|
||
Accrued wages and taxes |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Total accrued compensation and benefits |
|
$ |
|
|
$ |
|
||
NOTE 5. DEBT
2026 Notes
In September 2020, we issued $
On June 6, 2024, Bain delivered a notice of conversion to convert $
The 2026 Notes were converted in accordance with their original terms and conditions. Upon conversion, because the carrying amount of the conversion option was previously reclassified to equity, the unamortized discount remaining at the date of conversion was recognized as interest expense. The remaining carrying amount of the 2026 Notes was reduced by the cash transferred and then recognized in equity, such that no gain or loss was recognized. In addition, the accrued and unpaid interest as of the conversion date was forgiven pursuant to the terms of the indenture and recognized in equity.
105
Table of Contents
NUTANIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following table sets forth the total interest expense recognized related to the 2026 Notes:
|
|
Fiscal Year Ended July 31, |
|
|||||||||
|
|
2024 |
|
|
2025 |
|
|
2026 |
|
|||
|
|
(in thousands) |
|
|||||||||
Interest expense related to amortization of debt discount |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Interest expense related to amortization of debt issuance |
|
|
|
|
|
|
|
|
|
|||
Non-cash interest expense |
|
|
|
|
|
|
|
|
|
|||
Interest expense related to conversion of 2026 Notes |
|
|
|
|
|
|
|
|
|
|||
Total interest expense |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Non-cash interest expense was related to the
2027 Notes
In September 2021, we issued $
The partial exchange of the 2023 Notes and issuance of the 2027 Notes was accounted for as a debt extinguishment. The $
In December 2024, we issued $
The 2027 Notes bear interest at a rate of
The 2027 Notes are convertible into cash, shares of our Class A common stock, or a combination of cash and shares of Class A common stock, at our election. Each $
106
Table of Contents
NUTANIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Upon conversion of the 2027 Notes, we will pay or deliver, as the case may be, cash, shares of our Class A common stock or a combination of cash and shares of Class A common stock, at our election.
The conversion rate will be subject to adjustment in certain events, but will not be adjusted for any accrued or unpaid interest. Holders who convert their 2027 Notes in connection with certain corporate events that constitute a "make-whole fundamental change" (as defined in the indenture governing the 2027 Notes) are, under certain circumstances, entitled to an increase in the conversion rate. In addition, if we undergo a "fundamental change" (as defined in the indenture governing the 2027 Notes) prior to the maturity date, holders of the 2027 Notes may require us to repurchase for cash all or a portion of their 2027 Notes at a repurchase price equal to
The 2027 Notes consisted of the following:
|
|
As of |
|
|||||
|
|
July 31, |
|
|
July 31, |
|
||
|
|
(in thousands) |
|
|||||
Principal amounts: |
|
|
|
|
|
|
||
Principal |
|
$ |
|
|
$ |
|
||
Unamortized debt issuance costs (1) |
|
|
( |
) |
|
|
( |
) |
Net carrying amount |
|
$ |
|
|
$ |
|
||
As of July 31, 2026, the remaining life of the 2027 Notes was approximately
The following table sets forth the total interest expense recognized related to the 2027 Notes:
|
|
Fiscal Year Ended July 31, |
|
|||||||||
|
|
2024 |
|
|
2025 |
|
|
2026 |
|
|||
|
|
(in thousands) |
|
|||||||||
Contractual interest expense |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Interest expense related to amortization of debt issuance |
|
|
|
|
|
|
|
|
|
|||
Total interest expense |
|
$ |
|
|
$ |
|
|
$ |
|
|||
107
Table of Contents
NUTANIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2029 Notes
In December 2024, we issued $
We used approximately $
The 2029 Notes bear interest at a rate of
The 2029 Notes are convertible into cash, shares of our Class A common stock, or a combination of cash and shares of Class A common stock, at our election. Each $
Upon conversion of the 2029 Notes, we will pay or deliver, as the case may be, cash, shares of our Class A common stock or a combination of cash and shares of Class A common stock, at our election.
The conversion rate will be subject to adjustment in certain events but will not be adjusted for any accrued or unpaid interest. Holders who convert their 2029 Notes in connection with certain corporate events that constitute a "make-whole fundamental change" (as defined in the indenture governing the 2029 Notes) are, under certain circumstances, entitled to an increase in the conversion rate. In addition, if we undergo a "fundamental change" (as defined in the indenture governing the 2029 Notes) prior to the maturity date, holders of the 2029 Notes may require us to repurchase for cash all or a portion of their 2029 Notes at a repurchase price equal to
108
Table of Contents
NUTANIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The 2029 Notes consisted of the following:
|
|
As of |
|
|||||
|
|
July 31, |
|
|
July 31, |
|
||
|
|
(in thousands) |
|
|||||
Principal amounts: |
|
|
|
|
|
|
||
Principal |
|
$ |
|
|
$ |
|
||
Unamortized debt issuance costs (1) |
|
|
( |
) |
|
|
( |
) |
Net carrying amount |
|
$ |
|
|
$ |
|
||
As of July 31, 2026, the remaining life of the 2029 Notes was approximately
The following table sets forth the total interest expense recognized related to the 2029 Notes:
|
|
Fiscal Year Ended July 31, |
|
|||||||||
|
|
2024 |
|
|
2025 |
|
|
2026 |
|
|||
|
|
(in thousands) |
|
|||||||||
Contractual interest expense |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Interest expense related to amortization of debt issuance |
|
|
|
|
|
|
|
|
|
|||
Total interest expense |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Revolving Credit Agreement
In February 2025, we entered into a revolving credit agreement (the "Revolver") that provides for a senior secured revolving credit facility in an aggregate principal amount of $
Borrowings, if any, under the Revolver will bear interest, at our option, at a base rate plus an applicable margin ranging from
The Revolver contains customary affirmative and negative covenants (including a financial covenant and restrictions on liens, investments, indebtedness, fundamental changes, restricted payments, transactions with affiliates, prepayments of subordinated debt and other matters, all subject to certain exceptions). The financial covenant requires us to maintain a total leverage ratio of less than or equal to
As of July 31, 2026, we had
109
Table of Contents
NUTANIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 6. LEASES
We have operating leases for offices, research and development facilities and data centers and finance leases for certain data center equipment. Our leases have remaining lease terms of
Total operating lease cost was approximately $
In fiscal 2026, we executed an agreement to reduce the term and payments of a lease for a data center facility. The agreement was accounted for as a lease modification under ASC 842. Accordingly, the lease liability was remeasured resulting in a $
Supplemental balance sheet information related to our leases is as follows:
|
|
As of |
|
|||||
|
|
July 31, |
|
|
July 31, |
|
||
|
|
(in thousands) |
|
|||||
Operating leases: |
|
|
|
|
|
|
||
Operating lease right-of-use assets, gross |
|
$ |
|
|
$ |
|
||
Accumulated amortization |
|
|
( |
) |
|
|
( |
) |
Operating lease right-of-use assets, net |
|
$ |
|
|
$ |
|
||
Operating lease liabilities—current |
|
$ |
|
|
$ |
|
||
Operating lease liabilities—non-current |
|
|
|
|
|
|
||
Total operating lease liabilities |
|
$ |
|
|
$ |
|
||
Weighted average remaining lease term (in years): |
|
|
|
|
|
|
||
Weighted average discount rate: |
|
|
% |
|
|
% |
||
|
|
As of |
|
|||||
|
|
July 31, |
|
|
July 31, |
|
||
|
|
(in thousands) |
|
|||||
Finance leases: |
|
|
|
|
|
|
||
Finance lease right-of-use assets, gross (1) |
|
$ |
|
|
$ |
|
||
Accumulated amortization (1) |
|
|
( |
) |
|
|
( |
) |
, net (1) |
|
$ |
|
|
$ |
|
||
(2) |
|
$ |
|
|
$ |
|
||
(3) |
|
|
|
|
|
|
||
|
$ |
|
|
$ |
|
|||
Weighted average remaining lease term (in years): |
|
|
|
|
|
|
||
Weighted average discount rate: |
|
|
% |
|
|
% |
||
110
Table of Contents
NUTANIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Supplemental cash flow and other information related to our leases is as follows:
|
|
Fiscal Year Ended July 31, |
|
|||||||||
|
|
2024 |
|
|
2025 |
|
|
2026 |
|
|||
|
|
(in thousands) |
|
|||||||||
Cash paid for amounts included in the measurement of |
|
|
|
|
|
|
|
|
|
|||
Operating cash flows from operating leases |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Operating cash flows from finance leases |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Financing cash flows from finance leases |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Lease liabilities arising from obtaining right-of-use assets: |
|
|
|
|
|
|
|
|
|
|||
Operating leases |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Finance leases |
|
$ |
|
|
$ |
|
|
$ |
|
|||
The undiscounted cash flows for our lease liabilities as of July 31, 2026 were as follows:
Fiscal Year Ending July 31: |
|
Operating |
|
|
Finance |
|
|
Total |
|
|||
|
|
(in thousands) |
|
|||||||||
2027 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
2028 |
|
|
|
|
|
|
|
|
|
|||
2029 |
|
|
|
|
|
|
|
|
|
|||
2030 |
|
|
|
|
|
|
|
|
|
|||
2031 |
|
|
|
|
|
|
|
|
|
|||
Thereafter |
|
|
|
|
|
|
|
|
|
|||
Total lease payments |
|
|
|
|
|
|
|
|
|
|||
Less: imputed interest |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Total lease obligation |
|
|
|
|
|
|
|
|
|
|||
Less: current lease obligations |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Long-term lease obligations |
|
$ |
|
|
$ |
|
|
$ |
|
|||
As of July 31, 2026, we had additional operating lease commitments of approximately $
NOTE 7. COMMITMENTS AND CONTINGENCIES
Purchase Commitments
In the normal course of business, we make commitments with our contract manufacturer to ensure them a minimum level of financial consideration for their investment in our joint solutions. These commitments are based on performance targets or on-hand inventory and non-cancelable purchase orders for non-standard components. We record a charge related to these items when we determine that it is probable a loss will be incurred and we are able to estimate the amount of the loss. Our historical charges have not been material. As of July 31, 2026, we had approximately $
111
Table of Contents
NUTANIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Guarantees and Indemnifications
We have entered into agreements with some of our Partners and customers that contain indemnification provisions in the event of claims alleging that our products infringe the intellectual property rights of a third party. The scope of such indemnification varies, and may include, in certain cases, the ability to cure the indemnification by modifying or replacing the product at our own expense, requiring the return and refund of the infringing product, procuring the right for the partner and customer to continue to use or distribute the product, as applicable, and/or defending the partner or customer against and paying any damages from third-party actions based upon claims of infringement. Other guarantees or indemnification arrangements include guarantees of product and service performance.
We have also agreed to indemnify our directors, executive officers and certain other officers for costs associated with any fees, expenses, judgments, fines, and settlement amounts incurred by any of these persons in any action or proceeding to which any of those persons is, or is threatened to be, made a party by reason of the person’s service as a director or officer, including any action by us, arising out of that person’s services as a director or officer of our company or that person’s services provided to any other company or enterprise at our request. We maintain director and officer insurance coverage that may enable us to recover a portion of any future amounts paid.
The fair value of liabilities related to indemnifications and guarantee provisions are not material and have not had any material impact on our consolidated financial statements to date.
Legal Proceedings
The U.S. Department of Justice (the "DOJ") has been investigating U.S. federal government IT purchases, including historical conduct by a former employee involving one of our federal customers. After the former employee left our company, we learned that he was charged and pleaded guilty to conspiracy to defraud the United States and wire fraud related to a 2019 procurement that allegedly resulted in a loss to the government. With outside counsel’s assistance, we commenced an internal investigation into the former employee’s and some third-party partners’ activities on procurement opportunities with this customer in several prior fiscal years and identified some historical conduct that appears inconsistent with our Code of Business Conduct and Ethics and related policies. We have been cooperating fully with the DOJ, including responding to a grand jury subpoena. Our internal investigation is ongoing, and we cannot predict the outcome or reasonably estimate any potential loss at this time. At this time, we do not expect this matter to have a material adverse effect on our consolidated results of operations, financial position, or liquidity.
On March 17, 2026, Tessell, Inc. and related parties filed a complaint against us and certain current and former officers in the U.S. District Court for the Northern District of California. The complaint asserts claims, including defamation and trade libel, arising from certain public statements made by us in connection with an ongoing intellectual property dispute between the parties, including a press release issued by us in March 2024, and seeks unspecified damages and equitable relief. In May 2026, the court granted the parties' stipulation and ordered that this action be stayed pending the resolution of an arbitration proceeding between the parties concerning intellectual property and related contractual claims arising from the same dispute. We intend to defend the matter vigorously if and when the stay is lifted. At this time, we are unable to predict the ultimate outcome of the lawsuit or estimate the amount or range of any potential loss, if any.
We are not currently a party to any other legal proceedings that we believe to be material to our business or financial condition. From time to time, we may become subject to various lawsuits, claims, investigations, and proceedings that arise in the ordinary course of business.
112
Table of Contents
NUTANIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 8. STOCKHOLDERS’ EQUITY
We have
Holders of Class A common stock are entitled to
Share Repurchases
In August 2023, our Board of Directors authorized the repurchase of up to $
During the fiscal year ended July 31, 2025, we repurchased approximately
In December 2024, we used approximately $
In December 2025, we entered into an accelerated share repurchase ("ASR") agreement with Bank of America, N.A. Under the terms of the ASR, we repurchased $
113
Table of Contents
NUTANIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Common Stock Reserved for Issuance
As of July 31, 2026, we had reserved shares of common stock for future issuance as follows:
|
|
As of July 31, 2026 |
|
|
|
|
(in thousands) |
|
|
Shares reserved for future equity grants |
|
|
|
|
Shares underlying outstanding stock options |
|
|
|
|
Shares underlying outstanding restricted stock units |
|
|
|
|
Shares reserved for future employee stock purchase plan awards |
|
|
|
|
Total |
|
|
|
|
NOTE 9. EQUITY INCENTIVE PLANS
Stock Plans
We have
Under the 2016 Plan, we may grant incentive stock options, non-statutory stock options, restricted stock, RSUs, stock appreciation rights, performance units, and performance shares to employees, directors and consultants. As of July 31, 2026, we had reserved a total of approximately
Restricted Stock Units
RSUs settle into shares of Class A common stock upon vesting. We fund withholding taxes due on the vesting of employee RSUs by net share settlement. The payment of the withheld taxes to the tax authorities is reflected as a financing activity within the consolidated statements of cash flows.
Performance RSUs
From time to time, we grant RSUs that have both service and performance conditions to our executives and employees ("PRSUs"). Vesting of PRSUs is subject to continuous service and the satisfaction of certain performance targets. While we recognize cumulative stock-based compensation expense for the portion of the awards for which both the service condition has been satisfied and it is probable that the performance conditions will be met, the actual vesting and settlement of PRSUs are subject to the performance conditions actually being met.
In January 2024, the Compensation Committee of our Board of Directors approved the grant of approximately
114
Table of Contents
NUTANIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Market Stock Units
We also grant RSUs that have both service and market-based conditions to our executives and employees ("MSUs"). Vesting of MSUs is subject to continuous service and the satisfaction of certain market-based performance targets. While we recognize cumulative stock-based compensation expense for the portion of the awards for which the service condition has been satisfied, regardless of achievement of the specified targets, the actual vesting and settlement of MSUs are subject to the market-based conditions actually being met.
During fiscal 2024, 2025 and 2026, the Compensation Committee of our Board of Directors approved the grant of approximately
In January 2024, the Compensation Committee of our Board of Directors approved the grant of approximately
Below is a summary of RSU activity and PRSU and MSU (collectively, "PSU") activity under the Stock Plans:
|
|
RSUs |
|
|
PSUs |
|
||||||||||
|
|
Number of |
|
|
Weighted Average |
|
|
Number of |
|
|
Weighted Average |
|
||||
|
|
(in thousands) |
|
|
|
|
|
(in thousands) |
|
|
|
|
||||
Outstanding at July 31, 2023 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Granted (1) |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Released (1) |
|
|
( |
) |
|
$ |
|
|
|
( |
) |
|
$ |
|
||
Forfeited |
|
|
( |
) |
|
$ |
|
|
|
( |
) |
|
$ |
|
||
Outstanding at July 31, 2024 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Granted (1) |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Released (1) |
|
|
( |
) |
|
$ |
|
|
|
( |
) |
|
$ |
|
||
Forfeited |
|
|
( |
) |
|
$ |
|
|
|
( |
) |
|
$ |
|
||
Outstanding at July 31, 2025 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Granted (1) |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Released (1) |
|
|
( |
) |
|
$ |
|
|
|
( |
) |
|
$ |
|
||
Forfeited |
|
|
( |
) |
|
$ |
|
|
|
( |
) |
|
$ |
|
||
Outstanding at July 31, 2026 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
The aggregate grant date fair value of RSUs, including PSUs, vested was $
115
Table of Contents
NUTANIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Stock Options
Our Board of Directors determines the period over which stock options become exercisable and stock options generally vest over a
Below is a summary of stock option activity under the Stock Plans:
|
Fiscal Year Ended July 31, |
|
|||||||||||||||||||||||||||||||||||||||||||||
|
2024 |
|
|
2025 |
|
|
2026 |
|
|||||||||||||||||||||||||||||||||||||||
|
Number of |
|
|
Weighted |
|
|
Weighted |
|
|
Aggregate |
|
|
Number of |
|
|
Weighted |
|
|
Weighted |
|
|
Aggregate |
|
|
Number of |
|
|
Weighted |
|
|
Weighted |
|
|
Aggregate |
|
||||||||||||
|
(in thousands) |
|
|
|
|
|
(in years) |
|
|
(in thousands) |
|
|
(in thousands) |
|
|
|
|
|
(in years) |
|
|
(in thousands) |
|
|
(in thousands) |
|
|
|
|
|
(in years) |
|
|
(in thousands) |
|
||||||||||||
Outstanding at beginning of period |
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||||||||||
Options granted |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
||||||||||||
Options exercised |
|
( |
) |
|
$ |
|
|
|
|
|
|
|
|
|
( |
) |
|
$ |
|
|
|
|
|
|
|
|
|
( |
) |
|
$ |
|
|
|
|
|
|
|
|||||||||
Options canceled/forfeited |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
||||||||||||
Outstanding at end of period |
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||||||||||
Exercisable at end of period |
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||||||||||
The aggregate intrinsic value of stock options exercised during the fiscal years ended July 31, 2024, 2025 and 2026 was $
Employee Stock Purchase Plan
In December 2015, our Board of Directors adopted the 2016 Employee Stock Purchase Plan, which was subsequently amended in January 2016 and September 2016 and approved by our stockholders in March 2016 (the "Original 2016 ESPP"). The Original 2016 ESPP became effective in connection with our IPO. Our stockholders subsequently approved amendments to the Original 2016 ESPP in December 2019 and December 2022 (as amended, the "2016 ESPP"). Under the 2016 ESPP, the maximum number of shares of Class A common stock available for sale is
The 2016 ESPP allows eligible employees to purchase shares of our Class A common stock at a discount through payroll deductions of up to
116
Table of Contents
NUTANIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
On each purchase date, participating employees will purchase Class A common stock at a price per share equal to
During the fiscal year ended July 31, 2026, approximately
We use the Black-Scholes option pricing model to determine the fair value of shares purchased under the 2016 ESPP with the following weighted average assumptions on the date of grant:
|
|
Fiscal Year Ended July 31, |
|
|||||||||
|
|
2024 |
|
|
2025 |
|
|
2026 |
|
|||
Expected term (in years) |
|
|
|
|
|
|
|
|
|
|||
Risk-free interest rate |
|
|
% |
|
|
% |
|
|
% |
|||
Volatility |
|
|
% |
|
|
% |
|
|
% |
|||
Dividend yield |
|
|
% |
|
|
% |
|
|
% |
|||
Stock-Based Compensation
Total stock-based compensation expense recognized in our consolidated statements of operations is as follows:
|
|
Fiscal Year Ended July 31, |
|
|||||||||
|
|
2024 |
|
|
2025 |
|
|
2026 |
|
|||
|
|
(in thousands) |
|
|||||||||
Cost of revenue: |
|
|
|
|
|
|
|
|
|
|||
Product |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Support, maintenance and other services |
|
|
|
|
|
|
|
|
|
|||
Sales and marketing |
|
|
|
|
|
|
|
|
|
|||
Research and development |
|
|
|
|
|
|
|
|
|
|||
General and administrative |
|
|
|
|
|
|
|
|
|
|||
Total stock-based compensation expense |
|
$ |
|
|
$ |
|
|
$ |
|
|||
As of July 31, 2026, unrecognized stock-based compensation expense related to outstanding stock awards was approximately $
NOTE 10. RESTRUCTURING CHARGES
As of July 31, 2026, we recognized total of approximately $
117
Table of Contents
NUTANIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
During the fiscal year ended July 31, 2026, we did
NOTE 11. NET INCOME (LOSS) PER SHARE
Basic net income (loss) per share is computed using the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share is computed by factoring in potentially dilutive common stock equivalents outstanding during the period, provided their effect is dilutive. Potentially dilutive common shares include shares issuable upon the exercise of stock options, the vesting of RSUs and PSUs, each purchase under the 2016 ESPP, and common stock issuable upon the conversion of convertible debt under the if-converted method.
In loss periods, basic net loss per share and diluted net loss per share are the same, as the effect of potential common shares is antidilutive and therefore excluded.
The computation of basic and diluted net income (loss) per share attributable to common stockholders is as follows:
|
|
Fiscal Year Ended July 31, |
|
|||||||||
|
|
2024 |
|
|
2025 |
|
|
2026 |
|
|||
|
|
(in thousands, except per share data) |
|
|||||||||
Numerator: |
|
|
|
|
|
|
|
|
|
|||
Net (loss) income |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||
Add: Interest expense related to convertible senior |
|
|
|
|
|
|
|
|
|
|||
Diluted net (loss) income |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||
Denominator: |
|
|
|
|
|
|
|
|
|
|||
Weighted average shares, basic |
|
|
|
|
|
|
|
|
|
|||
Add: Dilutive effect of common stock equivalents |
|
|
|
|
|
|
|
|
|
|||
Weighted average shares, diluted |
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Net (loss) income per share attributable to Class A |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||
Net (loss) income per share attributable to Class A |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||
The following shares of common stock were excluded from the computation of diluted net income (loss) per share for the periods presented, as their effect would have been antidilutive:
|
|
Fiscal Year Ended July 31, |
|
|||||||||
|
|
2024 |
|
|
2025 |
|
|
2026 |
|
|||
|
|
(in thousands) |
|
|||||||||
Outstanding stock options, RSUs and PSUs |
|
|
|
|
|
|
|
|
|
|||
Employee stock purchase plan |
|
|
|
|
|
|
|
|
|
|||
Common stock issuable upon the conversion of convertible notes |
|
|
|
|
|
|
|
|
|
|||
Total |
|
|
|
|
|
|
|
|
|
|||
Shares that will be issued in connection with our stock awards and shares that will be purchased under the employee stock purchase plan are generally automatically converted into shares of our Class A common stock. Common stock issuable upon the conversion of convertible notes represents the antidilutive impact of the 2026 Notes and 2027 Notes under the if-converted method.
118
Table of Contents
NUTANIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 12. INCOME TAXES
Income Taxes
(Loss) income before provision for (benefit from) income taxes by fiscal year consisted of the following:
|
|
Fiscal Year Ended July 31, |
|
|||||||||
|
|
2024 |
|
|
2025 |
|
|
2026 |
|
|||
|
|
(in thousands) |
|
|||||||||
Domestic |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||
Foreign |
|
|
|
|
|
|
|
|
|
|||
(Loss) income before provision for (benefit from) income taxes |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||
|
|
Fiscal Year Ended July 31, |
|
|||||||||
|
|
2024 |
|
|
2025 |
|
|
2026 |
|
|||
|
|
(in thousands) |
|
|||||||||
Current: |
|
|
|
|
|
|
|
|
|
|||
U.S. federal |
|
$ |
|
|
$ |
|
|
$ |
|
|||
State and local |
|
|
|
|
|
|
|
|
|
|||
Foreign |
|
|
|
|
|
|
|
|
|
|||
Total current taxes |
|
|
|
|
|
|
|
|
|
|||
Deferred: |
|
|
|
|
|
|
|
|
|
|||
U.S. federal |
|
|
|
|
|
|
|
|
( |
) |
||
State and local |
|
|
|
|
|
|
|
|
( |
) |
||
Foreign |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Total deferred taxes |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Provision for (benefit from) income taxes |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
||
119
Table of Contents
NUTANIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
A reconciliation of the benefit from income taxes to the amount computed by applying the
|
|
Fiscal Year Ended July 31, 2026 |
|
|||||
|
|
(in thousands) |
|
|
|
|
||
income tax at statutory rate |
|
$ |
|
|
|
% |
||
State and local income taxes (1) |
|
|
( |
) |
|
|
( |
)% |
Foreign tax effects |
|
|
|
|
|
% |
||
Effect of cross-border tax laws |
|
|
|
|
|
|
||
Effect of foreign branches |
|
|
|
|
|
% |
||
Tax credit |
|
|
|
|
|
|
||
Foreign tax credits |
|
|
( |
) |
|
|
( |
)% |
Research and development tax credits |
|
|
( |
) |
|
|
( |
)% |
Changes in valuation allowances (2) |
|
|
( |
) |
|
|
( |
)% |
Nontaxable or nondeductible items |
|
|
|
|
|
|
||
Stock-based compensation |
|
|
( |
) |
|
|
( |
)% |
Other |
|
|
|
|
|
% |
||
Changes in unrecognized tax benefits |
|
|
( |
) |
|
|
( |
)% |
Other adjustments |
|
|
( |
) |
|
|
( |
)% |
Effective tax rate |
|
$ |
( |
) |
|
|
( |
)% |
For the fiscal years ended July 31, 2024 and 2025, the provision for income taxes differs from the amount computed by applying the statutory federal income tax rate, in accordance with the guidance prior to the adoption of ASU 2023-09, as follows:
|
|
Fiscal Year Ended July 31, |
|
|||||
|
|
2024 |
|
|
2025 |
|
||
|
|
(in thousands) |
|
|||||
income tax at statutory rate |
|
$ |
( |
) |
|
$ |
|
|
Change in valuation allowance |
|
|
|
|
|
|
||
Stock-based compensation |
|
|
( |
) |
|
|
( |
) |
Effect of foreign operations |
|
|
( |
) |
|
|
( |
) |
Research and development tax credits |
|
|
( |
) |
|
|
( |
) |
Non-deductible expenses |
|
|
|
|
|
|
||
Change in unrecognized tax benefit |
|
|
|
|
|
( |
) |
|
State income taxes |
|
|
|
|
|
|
||
Tax impact of debt conversion |
|
|
|
|
|
|
||
Other |
|
|
( |
) |
|
|
|
|
Total |
|
$ |
|
|
$ |
|
||
During the fiscal years ended July 31, 2024 and 2025, our provision for income taxes was primarily attributable to foreign tax provisions in certain foreign jurisdictions in which we conduct business. During the fiscal year ended July 31, 2026, our benefit from income taxes was primarily attributable to the release of our valuation allowance on the majority of our U.S. federal and state deferred tax assets.
120
Table of Contents
NUTANIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following table summarizes income taxes paid, net of refunds, exceeding five percent of total income taxes paid, net of refunds, in the following jurisdictions:
|
|
Fiscal Year Ended July 31, 2026 |
|
|
|
|
(in thousands) |
|
|
U.S. state and local |
|
$ |
|
|
Foreign |
|
|
|
|
Netherlands |
|
|
|
|
India |
|
|
|
|
Other |
|
|
|
|
Total cash taxes paid, net of refund |
|
$ |
|
|
The temporary differences that give rise to significant portions of deferred tax assets and liabilities are as follows:
|
|
As of July 31, |
|
|||||
|
|
2025 |
|
|
2026 |
|
||
|
|
(in thousands) |
|
|||||
Deferred tax assets: |
|
|
|
|
|
|
||
Net operating loss carryforward |
|
$ |
|
|
$ |
|
||
Tax credit carryforward |
|
|
|
|
|
|
||
Deferred revenue |
|
|
|
|
|
|
||
Capitalized research expenses |
|
|
|
|
|
|
||
Leases |
|
|
|
|
|
|
||
Accruals and reserves |
|
|
|
|
|
|
||
Stock-based compensation |
|
|
|
|
|
|
||
Intangibles and goodwill |
|
|
|
|
|
|
||
Property and equipment |
|
|
|
|
|
|
||
Other assets |
|
|
|
|
|
|
||
Total deferred tax assets |
|
|
|
|
|
|
||
Deferred tax liabilities: |
|
|
|
|
|
|
||
Deferred commission expense |
|
|
( |
) |
|
|
( |
) |
Leases |
|
|
( |
) |
|
|
( |
) |
Prepaid expenses |
|
|
( |
) |
|
|
( |
) |
Property and equipment |
|
|
( |
) |
|
|
|
|
Intangibles and goodwill |
|
|
( |
) |
|
|
( |
) |
Other |
|
|
( |
) |
|
|
( |
) |
Total deferred tax liabilities |
|
|
( |
) |
|
|
( |
) |
Valuation allowance |
|
|
( |
) |
|
|
( |
) |
Net deferred tax assets |
|
$ |
|
|
$ |
|
||
We regularly assess the need for a valuation allowance against our deferred tax assets based on historical taxable income, projected future taxable income, and the expected timing of the reversals of existing taxable temporary differences by jurisdiction. Ultimately, the realization of deferred tax assets is dependent upon the generation of future taxable income during those periods in which temporary differences become deductible and/or tax credits and tax loss carry-forwards can be utilized. In making that assessment, we consider both positive and negative evidence related to the likelihood of realization of deferred tax assets to determine, based on the weight of all available evidence, whether it is more-likely-than-not that some or all of the deferred tax assets will be realized.
121
Table of Contents
NUTANIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of July 31, 2026, we reported a cumulative three-year U.S. pre-tax profit and sustained profitability in recent operating periods. This information is both objective and verifiable; thereby representing strong positive evidence that carries significant weight. In addition, based on our available financial forecast, we expect continuing profitability in the U.S. We also considered forecasts of future taxable income and evaluated the utilization of net operating loss and tax credit carryforwards prior to their expiration. Based on all available positive and negative evidence, including the objective and verifiable positive evidence as described above and anticipated future earnings, we concluded it is more-likely-than-not that a majority of our U.S. federal and state deferred tax assets will be realizable. We continue to maintain a valuation allowance against the California R&D credits as of July 31, 2026, as we expect California R&D tax credit generation to exceed our ability to use these credits in future periods.
The valuation allowance on deferred tax assets was $
As of July 31, 2026, we had approximately $
Utilization of the net operating loss and tax credit carryforwards may be subject to an annual limitation due to the ownership change limitations provided by the Internal Revenue Code of 1986, as amended, and similar state provisions. Any annual limitation may result in the expiration of net operating losses and credits before utilization. If an ownership change occurred, utilization of the net operating loss and tax credit carryforwards could be significantly reduced.
We do not provide for federal income taxes on the undistributed earnings of our foreign subsidiaries, as such earnings are to be reinvested offshore indefinitely. It is not practicable to estimate the withholding tax liability if these earnings were to be repatriated.
We recognize uncertain tax positions in our financial statements if that position will more likely than not be sustained on audit, based on the technical merits of the position.
|
|
Fiscal Year Ended July 31, |
|
|||||
|
|
2025 |
|
|
2026 |
|
||
|
|
(in thousands) |
|
|||||
Balance at the beginning of the year |
|
$ |
|
|
$ |
|
||
Increases related to current year tax positions |
|
|
|
|
|
|
||
Increases related to prior year tax positions |
|
|
|
|
|
|
||
Decreases related to prior year tax positions |
|
|
( |
) |
|
|
( |
) |
Lapse of statute of limitations/Settlements/Other |
|
|
( |
) |
|
|
( |
) |
Balance at the end of the year |
|
$ |
|
|
$ |
|
||
As of July 31, 2026, if uncertain tax positions are fully recognized in the future, it would result in a $
We recognize interest and/or penalties related to income tax matters as a component of income tax expense. As of July 31, 2026, we had recognized $
122
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NUTANIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
We file income tax returns in the U.S. federal jurisdiction as well as various U.S. states and foreign jurisdictions. The tax years 2009 and forward remain open to examination by the major jurisdictions in which we are subject to tax. These fiscal years outside the normal statute of limitation remain open to audit by tax authorities due to tax attributes generated in those early years, which have been carried forward and may be audited in subsequent years when utilized. We are subject to the continuous examination of income tax returns by various tax authorities. We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of the provision for income taxes. We believe that adequate amounts have been reserved for any adjustments that may ultimately result from these examinations.
The Organisation for Economic Co-operation and Development has established a framework for a global minimum corporate tax of
The One Big Beautiful Bill Act ("OBBBA") includes significant changes to U.S. income tax laws, including the repeal of mandatory capitalization of domestic research and development expenditures, extensions of bonus depreciation, and modifications to the international tax regimes. The effects of these provisions have been evaluated and reflected in our income tax provision for the fiscal year ended July 31, 2026.
NOTE 13. SEGMENT INFORMATION
Our chief operating decision maker ("CODM") is our Chief Executive Officer, who reviews financial information presented on a consolidated basis. Accordingly, we have a operating and reportable segment. The CODM uses net income, as reported on our consolidated statements of operations, as the measure of segment profit or loss to allocate resources and evaluate financial performance. The significant expenses regularly provided to the CODM are those expenses presented in our consolidated statements of operations and related notes to consolidated financial statements. There is no expense or asset information that is supplemental to the information disclosed in these consolidated financial statements.
The following table sets forth revenue by geographic location based on bill-to location:
|
|
Fiscal Year Ended July 31, |
|
|||||||||
|
|
2024 |
|
|
2025 |
|
|
2026 |
|
|||
|
|
(in thousands) |
|
|||||||||
United States |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Europe, the Middle East and Africa |
|
|
|
|
|
|
|
|
|
|||
Asia Pacific |
|
|
|
|
|
|
|
|
|
|||
Other Americas |
|
|
|
|
|
|
|
|
|
|||
Total revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|||
For the fiscal years ended July 31, 2024, 2025 and 2026,
123
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NUTANIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following table sets forth long-lived assets, which primarily include property and equipment, net, by geographic location:
|
|
As of |
|
|||||
|
|
July 31, |
|
|
July 31, |
|
||
|
|
(in thousands) |
|
|||||
United States |
|
$ |
|
|
$ |
|
||
International |
|
|
|
|
|
|
||
Total long-lived assets |
|
$ |
|
|
$ |
|
||
124
Table of Contents
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and our principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended ("Exchange Act")), as of the end of the period covered by this Annual Report on Form 10-K. Based on our management’s evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were, in design and operation, effective at the reasonable assurance level as of July 31, 2026.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) and Rule 15d-15(f) of the Exchange Act. Internal control over financial reporting consists of policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (2) are designed and operated to provide reasonable assurance regarding the reliability of our financial reporting and our process for the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.
Our management evaluated the effectiveness of our internal control over financial reporting using the criteria set forth in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the "COSO Framework"). Based on our management’s evaluation, our management concluded that our internal control over financial reporting was effective as of July 31, 2026.
The effectiveness of our internal control over financial reporting as of July 31, 2026 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report, which appears below.
Limitations on the Effectiveness of Controls
Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements and projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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Table of Contents
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the stockholders and the Board of Directors of Nutanix, Inc.
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Nutanix, Inc. and subsidiaries (the "Company") as of July 31, 2026, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of July 31, 2026, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended July 31, 2026, of the Company and our report dated September 17, 2026, expressed an unqualified opinion on those financial statements.
Basis for Opinion
The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
126
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/s/ DELOITTE & TOUCHE LLP |
|
San Jose, California |
|
September 17, 2026 |
|
127
Table of Contents
Item 9B. Other Information
Rule 10b5-1 Trading Plans
On
On
On
Other than as set forth above, during the three months ended July 31, 2026, no director or Section 16 officer
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
128
Table of Contents
PART III
Item 10. Directors, Executive Officers and Corporate Governance
The information required by this item is incorporated herein by reference to our definitive proxy statement for our 2026 annual meeting of stockholders ("2026 Proxy Statement"), which will be filed not later than 120 days after the end of our fiscal year ended July 31, 2026.
Item 11. Executive Compensation
The information required by this item is incorporated herein by reference to our 2026 Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by this item is incorporated herein by reference to our 2026 Proxy Statement.
Item 13. Certain Relationships and Related Transactions and Director Independence
The information required by this item is incorporated herein by reference to our 2026 Proxy Statement.
Item 14. Principal Accountant Fees and Services
The information required by this item is incorporated herein by reference to our 2026 Proxy Statement.
129
Table of Contents
PART IV
Item 15. Exhibits and Financial Statement Schedules
(a)(1) Consolidated Financial Statements
We have filed the consolidated financial statements listed in the Index to Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.
(a)(2) Financial Statement Schedules
All financial statement schedules have been omitted because they are not applicable, not material, or the required information is shown in the consolidated financial statements or the notes thereto.
(a)(3) Exhibits
See the Exhibit Index below in this Annual Report on Form 10-K.
Item 16. Form 10-K Summary
None.
130
Table of Contents
EXHIBIT INDEX
|
|
Incorporated by Reference |
|
|||
Number |
Exhibit Title |
Form |
File No. |
Exhibit |
Filing |
Filed |
3.1 |
Complete copy of the Amended and Restated Certificate of Incorporation, as amended, consisting of (i) the Amended and Restated Certificate of Incorporation filed on December 9, 2022 and (ii) the Certificate of Amendment filed on December 8, 2023. |
10-Q |
001-37883 |
3.1 |
3/7/2024 |
|
3.2 |
Second Amended and Restated Bylaws. |
8-K |
001-37883 |
3.1 |
3/26/2026 |
|
3.3 |
Certificate of Retirement of Class B Common Stock. |
8-K |
001-37883 |
3.1 |
1/4/2022 |
|
4.1 |
Specimen Class A Common Stock Certificate of the Registrant. |
S-1/A |
333-208711 |
4.2 |
4/4/2016 |
|
4.2 |
Description of Class A Common Stock. |
10-K |
001-37883 |
4.4 |
9/21/2023 |
|
4.3 |
Indenture, dated as of September 22, 2021, by and between the Registrant and U.S. Bank National Association, as Trustee. |
8-K |
001-37883 |
4.1 |
9/23/2021 |
|
4.4 |
Form of 0.25% Convertible Senior Notes due 2027 (included in Exhibit 4.3). |
8-K |
001-37883 |
4.2 |
9/23/2021 |
|
4.5 |
Indenture, dated as of December 16, 2024, by and between the Registrant and U.S. Bank Trust Company National Association, as Trustee. |
8-K |
001-37883 |
4.1 |
12/16/2024 |
|
4.6 |
Form of 0.50% Convertible Senior Notes due 2029 (included in Exhibit 4.5) |
8-K |
001-37883 |
4.2 |
12/16/2024 |
|
10.1 |
Form of Indemnification Agreement by and between the Registrant and each of its directors and executive officers. |
10-Q |
001-37883 |
10.1 |
6/3/2021 |
|
10.2+ |
Second Amended and Restated Outside Director Compensation Policy. |
10-K |
001-37883 |
10.2 |
9/21/2021 |
|
10.3+ |
First Amendment to Second Amended and Restated Outside Director Compensation Policy. |
10-Q |
001-37883 |
10.1 |
6/2/2022 |
|
10.4+ |
Second Amendment to Second Amended and Restated Outside Director Compensation Policy. |
10-Q |
001-37883 |
10.1 |
12/7/2022 |
|
10.5+ |
Third Amendment to Second Amended and Restated Outside Director Compensation Policy. |
10-Q |
001-37883 |
10.1 |
5/29/2026 |
|
10.6+ |
2010 Stock Plan and forms of equity agreements thereunder. |
S-1/A |
333-208711 |
10.2 |
8/16/2016 |
|
10.7+ |
2011 Stock Plan and forms of equity agreements thereunder. |
S-1 |
333-208711 |
10.3 |
12/22/2015 |
|
10.8+ |
Nutanix, Inc. Amended and Restated 2016 Equity Incentive Plan. |
8-K |
001-37883 |
10.1 |
12/15/2025 |
|
10.9+ |
Form of Global Restricted Stock Unit Agreement for Performance-Based Restricted Stock Units (Fiscal Year 2024) under the 2016 Equity Incentive Plan. |
10-K |
001-37883 |
10.10 |
9/21/2023 |
|
10.10+ |
Form of Global Restricted Stock Unit Agreement for Performance-Based Restricted Stock Units (Fiscal Year 2025) under the 2016 Equity Incentive Plan. |
10-K |
001-37883 |
10.11 |
9/19/2024 |
|
10.11+ |
Form of Global Restricted Stock Unit Agreement for Performance-Based Restricted Stock Units (Fiscal Year 2026) under the 2016 Equity Incentive Plan. |
10-Q |
001-37883 |
10.1 |
12/4/2025 |
|
10.12+ |
Amended and Restated 2016 Employee Stock Purchase Plan and forms of equity agreements thereunder. |
10-Q |
001-37883 |
10.1 |
5/24/2023 |
|
131
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|
|
Incorporated by Reference |
|
|||
Number |
Exhibit Title |
Form |
File No. |
Exhibit |
Filing |
Filed |
10.13+ |
Executive Incentive Compensation Plan. |
S-1 |
333-208711 |
10.14 |
12/22/2015 |
|
10.14+ |
Offer Letter, dated as of December 7, 2020, by and between Nutanix, Inc. and Rajiv Ramaswami. |
8-K |
001-37883 |
10.1 |
12/9/2020 |
|
10.15+ |
Offer Letter, dated as of April 10, 2022, by and between the Registrant and Rukmini Sivaraman. |
8-K |
001-37883 |
10.1 |
4/12/2022 |
|
10.16+ |
Form of Global Restricted Stock Unit Agreement for the Stock Price Performance-Based Restricted Stock Units under the 2016 Equity Incentive Plan. |
8-K |
001-37883 |
10.1 |
1/9/2024 |
|
10.17+†† |
Form of Global Restricted Stock Unit Agreement for the Operational Metrics Performance-Based Restricted Stock Units. |
8-K |
001-37883 |
10.2 |
1/9/2024 |
|
10.18+ |
Offer Letter, dated as of April 29, 2024, by and between the Registrant and Brian Martin. |
10-K |
001-37883 |
10.21 |
9/19/2024 |
|
10.19+ |
Change of Control and Severance Policy. |
10-K |
001-37883 |
10.16 |
9/21/2022 |
|
10.20+ |
Executive Severance Policy. |
10-K |
001-37883 |
10.17 |
9/21/2021 |
|
10.21† |
Original Equipment Manufacturer (OEM) Purchase Agreement, dated as of May 16, 2014, by and among the Registrant, Nutanix Netherlands B.V. and Super Micro Computer Inc., as amended by Amendment One to Original Equipment Manufacturer (OEM) Purchase Agreement, dated as of November 13, 2017 and Amendment Two to Original Equipment Manufacturer (OEM) Purchase Agreement dated as of October 31, 2018. |
10-Q |
001-37883 |
10.2 |
6/5/2019 |
|
10.22†† |
Amendment Two to Original Equipment Manufacturer (OEM) Purchase Agreement, dated as of October 31, 2018, by and between the Registrant and Super Micro Computer, Inc. |
10-Q |
001-37883 |
10.1 |
6/10/2024 |
|
10.23 |
Participation Agreement to the Original Equipment Manufacturer Purchase Agreement, entered into as of September 26, 2019, by and between the Registrant, Nutanix Netherlands B.V. and Super Micro Computer, Inc. |
10-Q |
001-37883 |
10.5 |
12/5/2019 |
|
10.24† |
Amendment Three to Original Equipment Manufacturer (OEM) Purchase Agreement, dated as of December 20, 2020, by and between the Registrant and Super Micro Computer Inc. |
10-Q |
001-37883 |
10.1 |
3/4/2021 |
|
10.25† |
Amendment Four to Original Equipment Manufacturer (OEM) Purchase Agreement, dated as of November 5, 2021, by and between the Registrant and Super Micro Computer Inc. |
10-Q |
001-37883 |
10.1 |
3/10/2022 |
|
10.26 |
Office Lease, dated as of August 5, 2013, as amended to date, by and between the Registrant and CA-1740 Technology Drive Limited Partnership. |
S-1/A |
333-208711 |
10.15 |
8/16/2016 |
|
10.27 |
Office Lease, dated as of April 23, 2014, as amended to date, by and between the Registrant and CA-Metro Plaza Limited Partnership. |
S-1/A |
333-208711 |
10.16 |
8/16/2016 |
|
10.28 |
Sixth Amendment to the Office Lease dated as of January 29, 2018, by and between the Registrant and Hudson 1740 Technology, LLC. |
10-Q |
001-37883 |
10.1 |
6/12/2018 |
|
10.29 |
Seventh Amendment to the Office Lease dated as of April 4, 2018, by and between the Registrant and Hudson 1740 Technology, LLC. |
10-Q |
001-37883 |
10.2 |
6/12/2018 |
|
132
Table of Contents
|
|
Incorporated by Reference |
|
|||
Number |
Exhibit Title |
Form |
File No. |
Exhibit |
Filing |
Filed |
10.30 |
Eighth Amendment to the Office Lease, dated as of November 23, 2020, by and between the Registrant and Hudson 1740 Technology, LLC. |
10-Q |
001-37883 |
10.3 |
12/3/2020 |
|
10.31 |
Ninth Amendment to the Office Lease dated as of August 23, 2021, by and between the Registrant and Hudson 1740 Technology, LLC. |
10-Q |
001-37883 |
10.1 |
12/2/2021 |
|
10.32 |
Tenth Amendment to the Office Lease dated as of May 18, 2022, by and between the Registrant and Hudson 1740 Technology, LLC. |
10-Q |
001-37883 |
10.3 |
6/2/2022 |
|
10.33 |
Eleventh Amendment to the Office Lease dated as of June 28, 2022, by and between the Registrant and Hudson 1740 Technology, LLC. |
10-K |
001-37883 |
10.34 |
9/21/2022 |
|
10.34 |
Twelfth Amendment to the Office Lease dated as of August 31, 2022, by and between the Registrant and Hudson 1740 Technology, LLC. |
10-K |
001-37883 |
10.35 |
9/21/2022 |
|
10.35 |
Thirteenth Amendment to the Office Lease dated as of November 16, 2023, by and between the Registrant and Hudson 1740 Technology, LLC. |
10-Q |
001-37883 |
10.1 |
12/7/2023 |
|
10.36 |
Fourth Amendment to the Office Lease dated as of April 4, 2018, by and between the Registrant and Hudson Metro Plaza, LLC. |
10-Q |
001-37883 |
10.3 |
6/12/2018 |
|
10.37 |
Fifth Amendment to the Office Lease dated as of October 1, 2018, by and between the Registrant and Hudson Metro Plaza, LLC. |
10-Q |
001-37883 |
10.1 |
12/10/2018 |
|
10.38 |
Sixth Amendment to the Office Lease dated as of April 5, 2019, by and between the Registrant and Hudson Metro Plaza, LLC. |
10-K |
001-37883 |
10.28 |
9/24/2019 |
|
10.39 |
Seventh Amendment to the Office Lease dated as of April 25, 2019, by and between the Registrant and Hudson Metro Plaza, LLC. |
10-K |
001-37883 |
10.29 |
9/24/2019 |
|
10.40†† |
Eighth Amendment to the Office Lease, dated as of September 17, 2019, by and between the Registrant and Hudson Metro Plaza, LLC. |
10-Q |
001-37883 |
10.1 |
12/5/2019 |
|
10.41 |
Ninth Amendment to the Office Lease, dated as of November 23, 2020, by and between the Registrant and Hudson Metro Plaza, LLC. |
10-Q |
001-37883 |
10.5 |
12/3/2020 |
|
10.42 |
Tenth Amendment to the Office Lease, dated as of June 28, 2022, by and between the Registrant and Hudson Metro Plaza, LLC. |
10-K |
001-37883 |
10.42 |
9/21/2022 |
|
10.43 |
Eleventh Amendment to the Office Lease, dated as of August 31, 2022, by and between the Registrant and Hudson Metro Plaza, LLC. |
10-K |
001-37883 |
10.43 |
9/21/2022 |
|
10.44††† |
Credit Agreement, dated as of February 12, 2025, among Nutanix, Inc., as borrower, Bank of America, N.A., as administrative agent, collateral agent and L/C issuer, and the lenders party thereto. |
8-K |
001-37883 |
10.1 |
2/12/2025 |
|
19.1 |
Insider Trading Policy. |
|
|
|
|
X |
21.1 |
List of significant subsidiaries of the Registrant. |
|
|
|
|
X |
23.1 |
Consent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm. |
|
|
|
|
X |
24.1 |
Power of Attorney (included on the Signatures page of this Annual Report on Form 10-K). |
|
|
|
|
X |
133
Table of Contents
|
|
Incorporated by Reference |
|
|||
Number |
Exhibit Title |
Form |
File No. |
Exhibit |
Filing |
Filed |
31.1 |
Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14a and 15d-14a, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
|
|
X |
31.2 |
Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14a and 15d-14a, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
|
|
X |
32.1 |
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.* |
|
|
|
|
X |
32.2 |
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.* |
|
|
|
|
X |
97.1 |
Compensation Recovery Policy. |
10-K |
001-37883 |
97.1 |
9/19/2024 |
|
101.INS |
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
|
|
|
|
X |
101.SCH |
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents. |
|
|
|
|
X |
104 |
Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibit 101) |
|
|
|
|
X |
† Confidential treatment has been requested for portions of this exhibit. These portions have been omitted and have been filed separately with the Securities and Exchange Commission.
†† Certain confidential information contained in this exhibit was omitted by means of marking such portions with brackets because the identified confidential information is both (i) not material and (ii) the type of information that the registrant treats as private or confidential.
††† The schedules and exhibits to this exhibit have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The registrant agrees to furnish supplementally a copy of any such omitted schedule or exhibit, or any section thereof, to the SEC upon request.
* These exhibits are furnished with this Annual Report on Form 10-K and are not deemed filed with the Securities and Exchange Commission and are not incorporated by reference in any filing of Nutanix, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general incorporation language contained in such filings.
+Indicates a management contract or compensatory plan or arrangement.
134
Table of Contents
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
NUTANIX, INC. |
|
|
|
|
Date: September 17, 2026 |
By: |
/s/ Rajiv Ramaswami |
|
|
Rajiv Ramaswami Chief Executive Officer (Principal Executive Officer) |
135
Table of Contents
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Rajiv Ramaswami and Rukmini Sivaraman, jointly and severally, his or her attorneys-in-fact, each with the power of substitution, for him or her in any and all capacities, to sign any amendments to this report, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature |
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Title |
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Date |
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/s/ Rajiv Ramaswami |
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Chief Executive Officer (Principal Executive Officer) |
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September 17, 2026 |
Rajiv Ramaswami |
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/s/ Rukmini Sivaraman |
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Chief Financial Officer (Principal Financial and Accounting Officer) |
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September 17, 2026 |
Rukmini Sivaraman |
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/s/ Eric K. Brandt |
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Director |
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September 17, 2026 |
Eric K. Brandt |
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/s/ Craig Conway |
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Director |
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September 17, 2026 |
Craig Conway |
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/s/ Max de Groen |
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Director |
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September 17, 2026 |
Max de Groen |
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/s/ Virginia Gambale |
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Director |
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September 17, 2026 |
Virginia Gambale |
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/s/ Steven J. Gomo |
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Director |
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September 17, 2026 |
Steven J. Gomo |
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/s/ Greg Lavender |
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Director |
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September 17, 2026 |
Greg Lavender |
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/s/ Gayle Sheppard |
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Director |
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September 17, 2026 |
Gayle Sheppard |
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/s/ Mark Templeton |
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Director |
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September 17, 2026 |
Mark Templeton |
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