Nutanix Q2 Earnings Call Highlights

Key Points

• Nutanix topped guidance in Q2 with revenue of $723 million, ARR of $2.356 billion (+16% YoY), a net dollar retention rate of 107%, strong non‑GAAP margins (gross 88.6%, operating 26.2%), and repurchased $333 million of stock.
• The company announced a multi‑year strategic partnership with AMD that includes a $150 million equity investment and up to $100 million to fund R&D and go‑to‑market work for a full‑stack “agentic AI” platform, with the first jointly developed platform expected in late 2026.
• Management said worsening server and memory supply constraints will mainly affect the timing of revenue and free cash flow recognition (more FCF weighted to Q4), and updated guidance to Q3 revenue of $680–$690 million and FY26 revenue of $2.8–$2.84 billion.

Nutanix NASDAQ: NTNX reported fiscal second-quarter 2026 results that management said exceeded the high end of guidance across all guided metrics, driven by what executives described as healthy demand for its cloud platform offerings and strong bookings. The company also announced a multi-year strategic partnership with AMD focused on building an “agentic AI” platform for enterprises and service providers.

Q2 results topped guidance as bookings remained strong

For the second quarter, Nutanix posted revenue of $723 million, above its guided range of $705 million to $715 million. Annual recurring revenue (ARR) ended the quarter at $2.356 billion, up 16% year over year, while net dollar-based retention rate (NRR) was 107%.

Chief Executive Officer Rajiv Ramaswami said the company delivered “strong bookings and outperformance versus our guided metrics,” and added that demand was being driven by businesses modernizing IT footprints, adopting hybrid cloud operating models, and deploying cloud-native applications including AI.

Chief Financial Officer Rukmini Sivaraman said results were “above the high end of the range for all guided metrics.” She also noted that land-and-expand bookings were higher than expected, which the company believes was partially influenced by customers anticipating server hardware shortages and price increases.

• Non-GAAP gross margin: 88.6%
• Non-GAAP operating margin: 26.2% (above guidance of 20.5% to 21.5%)
• Non-GAAP net income: $164 million, or $0.56 per share (fully diluted)
• GAAP net income: $103 million, or $0.36 per share (fully diluted)
• Free cash flow: $191 million (26% margin)

Sivaraman attributed the non-GAAP operating margin outperformance primarily to lower operating expenses related to hiring timing and higher-than-expected revenue.

AMD partnership targets agentic AI platform, includes equity investment

Ramaswami highlighted a new strategic partnership with AMD centered on what he called the “growth opportunity in agentic AI.” Under the agreement, AMD will make a $150 million strategic investment in Nutanix common stock and fund up to $100 million for R&D and go-to-market efforts for the combined solutions. Nutanix said it expects to deliver the first jointly developed platform from the partnership in late 2026.

On the call, Ramaswami described the target as a full-stack platform to support inferencing and agentic applications. He said the target customer base is enterprises—particularly those in regulated industries and those concerned with data sovereignty—along with service providers offering “GPU as a service” to enterprise customers.

Ramaswami also addressed a question about the rationale for accepting AMD’s equity investment, saying it helps align AMD’s interests with Nutanix’s success as an ecosystem partner. He acknowledged dilution but described it as small, “slightly over 1%.”

Supply chain constraints shift revenue and cash flow timing

Both Ramaswami and Sivaraman emphasized that worsening server supply constraints emerged as a more pronounced issue later in the quarter, citing shortages and price increases for memory as well as shortages of CPUs. Management repeatedly characterized the impact as primarily a timing issue, particularly for revenue and free cash flow conversion from certain bookings.

Ramaswami said longer lead times—driven largely by CPU availability—have been a bigger challenge than pricing, and that Nutanix expects these lead times to affect the timing of near-term revenue and free cash flow from land-and-expand activity. He said the company has “factored this anticipated impact into our updated outlook,” while also stating that “the amount of revenue and free cash flow we expect to recognize over time from business booked in FY 2026 remains unchanged.”

Sivaraman detailed that a minority of Nutanix bookings are tied to shipment of third-party server hardware, including orders sold through OEM partners such as Cisco, Dell, and Lenovo, as well as an integrated offering with Supermicro. For those orders, the company can only recognize software revenue and collect cash alongside the shipment of the server hardware, leading to a greater expected impact on free cash flow timing than on revenue.

Guidance updated: Q3 outlook and full-year ranges

For fiscal third quarter 2026, Nutanix guided to revenue of $680 million to $690 million and non-GAAP operating margin of 16% to 17%, with fully diluted weighted average shares outstanding of approximately 288 million.

For the full fiscal year 2026, the company updated guidance to:

• Revenue: $2.8 billion to $2.84 billion
• Non-GAAP operating margin: 21% to 22% (unchanged)
• Free cash flow: $745 million to $775 million

Sivaraman said that absent the worsening supply chain dynamics, the company “would have been in a position to raise all guided metrics” following strong Q2 bookings. She added that Nutanix expects total contract value (TCV) bookings growth to exceed revenue growth for fiscal 2026.

She also noted that free cash flow in the second half of the year is expected to be more weighted toward the fourth quarter than the third quarter, based on visibility into supply constraints.

Customer wins, VMware migration commentary, and product updates

Ramaswami said Nutanix added more than 1,000 new customers in the quarter, which he called the company’s strongest quarterly new logo performance in eight years. He also said AHV hypervisor adoption reached an all-time high, and in response to a question about the VMware replacement opportunity, he said the opportunity has not changed and remains a “multi-year journey.”

Management highlighted several customer examples, including a Global 2000 financial services provider that selected the Nutanix Cloud Platform and Nutanix Cloud Manager, and a healthcare services provider that opted to use NC2 on AWS to accelerate migration ahead of an incumbent renewal. The company also cited an expansion win with an EMEA-based IT services provider using Nutanix Enterprise AI and Nutanix Kubernetes Platform to deploy additional AI use cases, alongside Nutanix Database Service and Nutanix Unified Storage.

Nutanix also discussed progress supporting external storage platforms, referencing wins supporting Dell PowerFlex, general availability for its offering supporting “Everpure” (formerly Pure Storage), and initial wins for that new offering.

On capital allocation, Sivaraman said Nutanix repurchased $333 million of common stock during Q2 under its existing authorization, including completion of a $300 million accelerated share repurchase. The company ended the quarter with $1.874 billion in cash, cash equivalents, and short-term investments.

About Nutanix NASDAQ: NTNX

Nutanix, Inc is an enterprise cloud computing company that develops software to simplify the deployment and management of datacenter infrastructure. Founded in 2009 and headquartered in San Jose, California, Nutanix is best known for pioneering hyperconverged infrastructure (HCI), an approach that integrates compute, storage and virtualization into a single software-defined platform aimed at reducing complexity and operational overhead in private and hybrid cloud environments.

The company's product portfolio centers on the Nutanix Cloud Platform, which includes its core AOS software for HCI, Prism for infrastructure management and automation, and a suite of additional services such as Calm for application automation, Files and Volumes for file and block services, Karbon for Kubernetes orchestration, and Era for database management.

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