Nutanix (NTNX) 28 Feb 242024 Q2 Earnings call transcript

Good day, and thank you for standing by. Welcome to the Nutanix Second Quarter 2024 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Rich Valera, Vice President of Investor Relations. Please go ahead.

to XXXX call financial welcome quarter discuss and year fiscal results. afternoon, today's to conference second Good

Joining me market today quarter CEO; issued and are press fiscal Rajiv Ramaswami, Sivaraman, a results. CFO. Nutanix' year Nutanix' XXXX After announcing the release closed financial Nutanix Rukmini today, second President and

release, to Press visit Releases section If you'd please website. like of read the the our IR

our statements call, control, involve results materially statements, These these including today's financial which actual forward-looking are could statements. management of which make beyond and cause to risks and forward-looking those will uncertainties, adversely some During anticipated guidance. differ from by

year on For please call. Form as statements July our forward-looking and description refer of our as obligation to XX, statements detailed a SEC XX-Q our and today. fiscal our filings, including revise more Form we other no well ended apply uncertainties, issued release to on earnings undertake quarterly annual these subsequent XXXX, this risks reports and report press these for These of and today, as after XX-K

are today's non-GAAP our certain except you adjusted charges. financial result, representing them measures as referenced, Please in use exclude otherwise the rely basis future. we and on on have a should note, revenue, all a not for unless As expressed to views on specifically call, been

financial on IR website our We have our provided, measures press to the extent release. available, measures financial to and reconciliations of these GAAP non-GAAP earnings in

Stanley the there. participating We be will in you Morgan to in Conference of hope on San some Nutanix X. TMT Francisco see March

period third on quarter April begin XX. our XXXX quiet will Finally, fiscal Tuesday,

Rajiv. to over call the turn I'll that, with And Rajiv?

came macro ahead quarter everyone. but our We quarter backdrop of relative remain prior with and our good results a delivered you, quarter. The the afternoon, solid to Rich, stable second uncertain, in guidance. second in that Thank

for or initiatives cost demand by optimize digital and their transformation looking steady businesses see and TCO. total of infrastructure driven our ownership, modernization solutions prioritizing to to continue We their

were our and happy of to We second to quarterly million billion. quarter, year-over-year guided closer XX% metrics. record at look we delivered grew our all ARR have $XXX a Taking the $X.XX exceeded of revenue

another had also free flow generation. We cash of quarter strong

GAAP profitability in QX, progress subscription make operating time achieved on leverage demonstrating for operating the our in driving we to continue model. Finally, quarterly we the first

continued second quarter execution. financial our Overall, performance reflected disciplined

largest multi-cloud some organizations all the through the of TCO, operating the of disruption in Our wins adopt managing appeal to industry Nutanix improve and quarter hybrid their the the optimize Platform of are M&A. demonstrated from models, Cloud looking that to workloads performance their while recent

win had vendor of X-figure cloud global via move in This public ability built of potentially was automotive its X-tier a as their hypervisor Cloud new to the refresh, provider but and of They future. looking AHV our increases to by TCO have need the also footprint was automation their our as the solutions. incumbent Cloud superior of a transition choose flexibility is to Management cloud public a the well workloads with solution. Service Nutanix example a EMEA-based seamlessly on frustrated footprint its our including good based Infrastructure to and price Nutanix to technology customer for A in NCX some an recent existing Platform, in as

plus TCO performance on growing Nutanix traders. public providing is cost value servers, and repatriate example a good a to win modernization this on a meaningful as cloud. cloud mitigate large XX% a cloud the improvement in with VDI, the public see infrastructure, second resulting the platform hedge their in that win They We was and to Cloud pathway demand example looking hosted a good performance A responsive a meet savings. seamless GPU-based of more for of VDI desktop American-based both its customers the solution in see North and its for virtual or to to of the an fund chose our to estimated Platform

the A We our new edge CTL achieved, modernize the a quarter global final on-premise, was believe customer the public EMEA TCO of Nutanix performance based demonstrates with wins or seamlessly can hybrid run example this while manage in optimal the and whether win is a looking of one enabling environment. to the and airline in at to ability be that the Cloud multi-cloud in their largest the region cloud. infrastructure workloads wherever Platform

a adopted throughout in chose managing as customer and win run Management, the Service Cloud data Cloud their Storage for They and in and value Nutanix to applications, including this our automation Database Platform, also the Nutanix This simplicity full solution. needs. Unified Nutanix stack as of built evidence We service organization business-critical Service. deploying unstructured Infrastructure see see its leveraging their Nutanix databases to company their their adopting for

Moving on, is of adopting customers. and of benefiting generative many mind our from top for AI

GPT-in-a-Box our first for use enables we our multiple additional the wins their secure. our quarter, in high GenAI-ready customers generative win across to accelerate remains their AI while of with offering. federal saw keeping a large quarter, this enterprises interest which And saw such, we for offering, GPT-in-a-Box data our infrastructure As Last agency.

excited about While potential longer-term GPT-in-a-Box. numbers still days small, early and the it's remain the for I'm

with with I'm early our the progress happy the seeing partner Cisco on partnership. Finally, we're front,

for in interest offering We saw in our it and quarter. customer additional wins good second continue see the to joint

partnership, far. in While it's so still I'm early by seen we've encouraged what this

outlook sustainable, profitable XXXX. we our continuing customers proposition that of to strength the for top our while growth. drive enabled compelling In to model the value remain our business platform cloud fiscal delighting bottom our We on of encouraged and increase us focused closing, are and line

to Sivaraman. And Rukmini? Rukmini it I'll with that, hand over

representing QX I Results fiscal 'XX fiscal 'XX fiscal provide $XXX $XXX year our XX%. review 'XX of QX guided QX above came in of of in results, full metrics. Thank of our and than range year-over-year you, QX guided million, the view all growth guidance. were will higher million, by our range end for updated Rajiv. the $XXX an followed to guidance first billings in high finally across ACV 'XX million year

higher combination to good the renewals performance and and QX better-than-expected $XXX $X.XXX rate a year-over-year in representing The than of a year-over-year was improved performance was range the early as around renewals Revenue million, XX%. at to renewal of outperformance $XXX billion, well was co-term million XX%. on-time as million end renewals. growth $XXX QX guided driven ARR of of the of due discipline by economics, growth

our than see expectations. less sales modestly QX, in In QX line in in and more historical Average continue to was lower gross to contract margin QX average cycles compared slightly levels. elongated X.X QX or years, revenue our Non-GAAP with XX%. duration to our margin we result largely operating a XX.X%, lower than expenses higher as guided range of XX% to XX.X%, higher guided was of XX% of of XX%, timing operating due and was range to Non-GAAP than higher hiring.

based $X.XX was or positive weighted approximately EPS per of ever EPS million GAAP marked quarter diluted our of fully shares. share on $XXX million of share. GAAP per shares Non-GAAP diluted average positive GAAP and outstanding operating of income fully with of of $XX first $X.XX million income $XX fully income net diluted XXX million QX net a

$X.XXX operating expect cash receivable flow were in revenue ending QX. and near we DSOs the on to days QX Free variability profit term. based GAAP timing quarterly XX in level margin at free not the accounts representing from in expected be would over expenses, revenue consistently short-term was lower cash profitable Given of and $X.XXX of We due up million, expenses with of billion, QX a the of than higher higher in and cash, to quarter. $XXX XX%, cash end billings investments billion QX. expectations flow our the and ended equivalents at

We continued in QX under repurchasing by previously of the share authorized Board repurchase Directors. our shares program

with to employees' QX to liability going of RSU tax of flow sustainable cash us for vesting and us Our continue settlement share manage will from pay to help forward free sell previous to our share dilution. generation in program, This, to transition cover. repurchase our on method enabled along net

Moving to QX 'XX.

to for fully guidance gross $XXX of outstanding billings and of shares. revenue as XXX ACV million approximately shares is margin to of X.X% of million; non-GAAP $XXX X.X%; Our million; QX XX%; $XXX million diluted $XXX approximately million non-GAAP operating margin follows: of to

updated $XXX all $X.XX year-over-year 'XX $X.XX of XX% previously fiscal at which at of of a of the billion, The to follows: flow XX% to XX%; $XXX range; growth free billings of $X.XX of ACV fiscal year cash provided is higher margin midpoint XX% at representing for to XX.X% billion representing revenue XX% across million, margin to growth as year million 'XX, of gross billion, non-GAAP free midpoint. year-over-year of flow a representing the is guidance year the billion cash full margin operating to XX.X%; guidance a of non-GAAP metrics midpoint; $X.XX than our the

year fiscal updated commentary I will our provide now some guidance. regarding 'XX

the we First, and solutions, expansion seeing uncertain for environment. continued are our macro opportunities new despite

cycles mentioned modest historical to we have see to elongation average we previously, as sales However, relative continued a of levels.

year 'XX and fiscal outlook these some assumed ACV impact Our new macro performance dynamics. from expansion

mix our also expansion of are new the a and variability is We deals larger of seeing pipeline, in timing in our higher driving greater business. which

renewals guidance to continue will the Second, our assumes business well. that perform

lower guidance full duration X that total contracts straight billing quarters the fiscal less as ACV billings. continues the contract year the to reminder our sum percent of a the compared Third, duration a renewals X to assume is to 'XX the year year. not of year to than of continue full to as that grow be with flat would ACV slightly Fourth, billings average due

the to billings. full X% X% to be than quarters ACV the sum expect We lower year about ACV X billings of

exceeded sustainable, capture the In consistent to QX full us and please stated with closing, remain line prudently for guidance growth top on growth the are we our questions. profitable results fiscal that line line and operator, and raise our that pleased significant growth. of open for focused With are to philosophy We ahead investing year. of opportunity that, guidance driving for bottom our the

Instructions] will of Piper Sandler. [Operator Jim the Our from question line Fish come from first

on quarter ask of sure top here. you're Look, mind, going I'm for. to prepared I'm the and everybody's that's totally obvious Awesome

Rukmini, mentioned pipeline. you the deals a even mix you're of seeing just higher On opportunity, VMware larger in the and

bookings you you of to or terms pipeline is, seen stage kind well direct this my as So coming question of you customers of in year partners over to you last sort relative coming either have sign-ups? to or built between to what

Yes. Jim, don't on Rukmini and Why color can the start, you pipeline. give I

said, multiyear you VMware from win there of to I and opportunity all, regarding we And as So to is think, a are for I acquisition. that customers this concerns significant the new think share. customers mean, Broadcom us gain first significant

your Now question a the and unpredictable. to getting a is magnitude deals bit timing of these here, bit

pipeline is Our substantial quite and growing.

number the build expect So and -- the reasons. of a from are for right? contribution reasons, opportunity gradually, to we Now here

many is prior ELAs, deal agreement, signed customers Jim, X that X one, the multi-year enterprise VMware to first years. closing The to with

decisions. make to time some them buys it So

X-tier which of the VMware could from converting or also accounts in second cases, accounts, the impact which storage and/or timing requires would many a X, legacy make the chunk footprint, good X a okay? their of The VMware software servers, of that potential they purchases us, storage is of refresh with right,

have like typically And expand with the these a last all we land and accounts, piece is motion.

smaller, take this? of first deal the a then So that. than for you further And be and potential lot then to Rukmini, expansion do there's could want

to larger and add pipeline. thing, And to upmarket, segmentation in before timing larger that And product because mentioned that impacts of contributing we're and question, deals is my to and our of larger larger expansion close. that our I'll deals we as those in Yes, the believe, the we from higher I your the in is readiness variability, acquisition regarding Sure. VMware. larger greater the business of potentially this mix one dynamics higher concerns talked about this by: regarding new customers; of our talked as driven secondly, do about longer deals driving longer improved believe Rajiv prepared sales average take the well from is about for Jim, that mix as pipeline remarks to the customers that we've one, tend Broadcom's the already seeing in cycles of some

from into impact of our And some outlook. to so all updated continue and fiscal 'XX continued these factor the we year have dynamics of

you VMware follow-up actually just if of that bit what sense. Rajiv, And There's between a here. do what what the do? can exist? kind features And with I can differences on Nutanix plan so vSphere, apples-to-apples the out differences can't VMware of if functions tell Makes versus or order compare? confusion between there exist, example, for What add Platform a any, in Nutanix in from conversations or it investors platform make to Acropolis any, features an exist, or to the

what really closer from market deal on perception just is that every can't of And most really, start guys Or here get to you that you wouldn't a attach thing see rate legacy to forward? XXX% simply that Acropolis why VMware it address kind of on do? could we signed

Yes.

all, the our all if that goes Cloud Cloud compare against head-to-head got So Broadcom Jim, BMI of much I We've with that to you offering think, first that, Nutanix full -- was Platform Foundation, stack and capabilities. the pretty right?

full software-defined management. that's includes So a the that the stack storage, and networking Hypervisor,

compare well, stack and comparable do we're very that able go to very So we full right, a offering. with --

And hypervisor, indeed, is our we as about penetration That can customers our AHV our who in is installed own Hypervisor see, our are start new with our you seeing full -- base correct. and adopt part stack right, XX%, okay? penetration

includes called, that offering, I vSphere cetera. the some comes VMware it to have operations et now Foundation, capabilities, when management lower-tier or Virtual vSphere right, a VVF, does believe, it's VMware Now and

you to the in my was there what of what some earlier -- mentioned that, amount response I -- question is Now in VMware.

big a legacy right, hypervisor of connected X-tier VMware, storage, only it's fact, that's chunk the areas. In to storage

Because Now hypervisor go the includes right, way our also replace our of after is the hypervisor, with complete right? to our which just storage. is the solution, simply not market hypervisor our part we

architecture customers hypervisor, architecture also HCI rest that's actually a So includes legacy modern shift that making our are our to storage hypervisor external but a stack. plus from a of a the

like-for-like, modernization conversion well. So there, but infrastructure of it's just it's the a not a as simple and

solution, handle we do. feel apps we all a on I Hat can Red run good have have We a that platform cloud we about customers have modern So hybrid pretty can Kubernetes partnerships applications OpenShift. workloads, can with the what We for

partners We Azure with partnerships have our like cloud AWS. and

there. we very So from a capability perspective, portfolio of are much a

question the Our line from Ader next come from of Jason Blair. will William

most ask question, the architectures in those with I today. kind from running And alternatives? architectures transition those now the could on disenfranchised out of never wanted looked the for little X-tier the acquisition last customers then Broadcom this that change Are and of like, at Does and it accelerate it's on follow-up just closely, conversations the to just that like as VMware X-tier maybe kind actually thread there happening? HCI, bit but looking we away get should. maybe we of are well, really a feel

much so, Very I would Jason. say,

that the we one There's has And a you're to of things lot with the lot call And is that Foundation, X that HCI. customers. the default by with fact, in Cloud tier. right? VMware itself what done, the So right, of of offering includes bigger VMware Broadcom way, that their a

now, just So it. X-tier which piece of bit here, puts little doing HCI but it on effectively not of a storage the putting it's us they're pressure also

that X-tier right, that right, we have potentially opportunity, we've are so on and long, -- help. migrating this might And in terms that doing been clearly of and all day since focused we to legacy HCI started over

don't because there out vSphere are lose substantial a easier so opportunities certain in we now that and Now there have keep of of base just is track HCI even the to plus other vSAN we should thing mind, there. it,

almost decision, And be like-for-like, they customers have so a already made and HCI right? might Those looking. that's the

things to If from capitalize of sitting right? like-for-like they're And migrate -- doing to much are have opportunity. pretty We bunch looking we're X we that doing things we VMware, that here, not say a doing. over solution migrate the a are to. I'd away idle we can on we're

customers. alternative to of that the viable is as for First simplest, Nutanix targeting some awareness been advertising more have we the dollars these easiest maximize

helping Number new incentives platform customers. partners two, our for customers also to in place get are for our we've put who

three, front. looking VMware customers migration. where we have help are end bring period yes, helping bring there's costs we that on a operating partners on, environment out them more they them dual they're new When we and have time give and incentives. with a also environment customers to try might they Number us, As our of to to

specific steps very taking go opportunity. also the we're after So some to

really Great. do material that contributor a Cisco the quick be the Rajiv, start happy comments early just on you When your business? And that with you're on then think, could to to one progress. follow-up

guide. do We the in that time Cisco. already making. that when focused takes it progress contribution full to talk when sellers. more we we to with solution, about happy FY a significant Yes. going cover I this clearly, in the But Jason, is we're this that year, up. training expect contribution be We FY And -- 'XX. we're get factored 'XX modest to we'll enabling that the build on And from

motivated. We through and cloud new customers now are getting they are the

think over So will build. time, I it

from the our line Mohan from Wamsi of of And question come will America. Bank next

strong operating was lower about any there? talk reverting Rukmini, you if quarter? in why things But there very things got fully I next follow-up. have something the mentioned And onetime didn't you around I catch. You've in think, Can is any quarter. onetime there a I in hiring. leverage were fiscal there? And that

Wamsi, the question. thanks Yes. for

will made in at our we overall expected. management. And one the expect were hiring And than just go So of was was performance half. of expenses good was QX, bit we strong than I and do reference that margin and second in expenses came of a which up higher terms in timing revenue operating higher because lower our in expectation the expense -- XX%

Seasonally, half, QX up Wamsi, in over implied in does half the than compared the is is operating in it revenue the guide QX that at course, of QX. look half, you second if and lower So expenses in go to QX.

growth this opportunity of factoring that outlook. be overall, the thoughtfully of and on So continued to the But I'd that's are have we focused say on us. some into those are investing things investing ahead

take top bottom outlook we've And we've our up so on the approach and full And been line. overall, year to that's pleased taken. both

you Rajiv, And lot of potentially you Nutanix about quarters, because already. talk talk around build this sort how wins be of given you made over of if helpful? disruption? mean, of the a way points M&A then, I terms few growth or we the see pipeline to that many But sense. perhaps makes and That that maybe could it quantitatively how coming can share and quarter-over-quarter rate pace of qualitative this you are even of last some think would or can your shift thinking over comments in about that points many just Or maybe should be about Okay. you

it's to give this our of part right? be this Yes. very TAM Day, some and TAM of we to we've as at that going me right, that and you I $XX quantitative what we about I look into hard talked The first and what up, what But creates Wamsi, grow for that, continuing SAM And all, been say share you billion is SAM for always is billion, point. sure, mean, last opportunity to if the Investor speed to think eat right? expect at our specific event SAM. going and -- numbers is, an $XX really and market I'd

and So TAM haven't it's same, the changed. but after it able quicker. more the still It's SAM to same of really -- the get we're now

to little I say a time we've come small with to the they in and is of hard takes expand. and have how -- they something it there, and then who how much bring not customers ELAs. convert -- to us something they've depreciate this in it's some I challenge and portion -- right? it's customers yes, that going to it got early predict, and right? the is these it's X, -- bought, So got we've to this quantifying got hardware us got X-year what for to a for a is mean like do There's quickly want Now but very that, -- the example, different, we've rush. said, for They're that

all timing capture these terms can things So of we of unpredictability quickly create some it. how in and

pipeline? want capture us move as know, trying do provide to of that market to an we you for can. that on the more us opportunity to certainly Rukmini, I color any I we quickly quicker, But think and provides this as are don't

of may is can is that And tell think a around acquisition I as which other thing by VMware's say, one I Yes. that, question Broadcom. to Rajiv, always before. cases, some well, opportunity door Wamsi, your result add competed what right? we they specifically nuance of the now here about I think, I'd what to in seeing this may so against it us tell, clear wasn't be is from we've competitor. is it's VMware, And quite our And because open to this

one some we invest last this us existing by cases, more other an to maybe in in example there's it's cases, influenced ours are factor. where with of go the are and partly about idea important of, of choosing us single clear customers other or in on earnings a an it's But cases, call right? talked factor, So in this, more factor, but source

specifically that competitive is pipeline And particular this situations so and and things dollars in harder in market. for us -- disruption those attribute, to that to the like

as are is precise factors terms feel So multiyear -- get that but has a Rajiv all or makes magnitude timing. good of and opportunity, in to those combined difficult what us mentioned, this

line Our will from come Bora next of from JPMorgan. Pinjalim question the

for VCE Nutanix one and was game to VCE how think on the guess, buzz the formative quarter. secondly, to kind time. around that years noted it changer learnings the and Cisco that this I do you compared at a are the you for partners of the Nutanix? pivotal Congrats VCE Cisco from relationship of and partnership be can rise your apply, the of you the And think Rajiv, VMware there any Do relationship? could of fall

Yes. clearly at the time partnership I VCE there at with very was that and actually cyclical initially. Cisco

sellers accounts. But and Now in I'll I'll big has sort to their leverage back of accounts in converged infrastructure you and right, puts to all market position, takes, give hard presence I So -- huge market tell Cisco the of right? this. these their you me it's clearly, -- and compare the their VCE terms then for and with access

the particular that to -- Now not several comes small player small market when -- is market, it if they're some look competitors. space servers in position to their their this share of compared relatively a other you at

-- not of this they're so market. segment it's So the as in strong

have big certainly they cloud. overall a mean, I market However,

So see now think, into really, here significant I that's would do really market potential to X what I where over the us together the of go and do time.

time a also focused Again, motion. build complex that They And up. the we has to them. specialists. Cisco have selling are And have they data it and they take together specialists on working to generalists, now, have with has more center right

I it's this to your to predict a So big answer question, mean, little early days how for for be us. us could

this fact, would I we -- and going cooperation in of I think our And is in there's continuing am build to happening optimistic, a field. over say sellers time. sellers Cisco and lot I to the and And -- between opportunity also up certainly,

in this but early. omens good all at very time, point still So

I the One Understood. want The similar billings ask -- sequential elongation the It guidance the a in bit to comment drawdown. cycle that QX was question you are you, you higher little kind that I as higher calls you seems you QX sequential? elongation made, for a that well? stay of And guess elongation maybe for for that tuned. guide we'll in assuming sales ACV QX was Rukmini. QX. like sequential versus saw, fiscal

that you question. Pinjalim, thank for

and first seasonality -- QX. I your was on So between on question part QX think the of

QX time, this for able of what guided look -- was actually And that so for in we initial to last sort terms year similar of Pinjalim, versus the quite QX. beat gave you guidance our it that front, QX. to on back But were we QX we if

I than is And you're so we guided what think referring to. to with smaller actually, what

levels, and or well. And bit time what is historical seasonality average what was for as when But to the expect the to referring on then there, with cycle look in the expected Pinjalim. But seeing decrease, I I sales around say, at quarter-to-quarter, it remains year what this modest we elevated. we it back that a somewhat we're line more would elongation and less moves to point we'd last your is

referring to. I what was that's so And

Our question Barclays. from Wang of next line from the comes George

Congrats quarter on two the quick the I ones. guidance. and have

see on the touched to just And and partnership, older elaborate customers? for on the of promote are approach to incentives HyperFlex Maybe the the discounts to drive kind Cisco color can some further adoption VMware can customers. I briefly Firstly, you providing on customers? the potential the the you just kind you want promotions HyperFlex from you give guys of if the

Yes.

We window say a Cisco, limited have right? I of longer product, clearly, that's a like all, I time they a they're ended selling With it. have -- are HyperFlex, -- there's the and -- and would Cisco, we there's they've first no where so for think -- up limited support

of set that. them So that for good through we by a we, Cisco itself, Cisco, customers those they -- migration And are programs of creates by supporting has the whole and migrate. it HyperFlex do for has as types migration to initiatives, way, an course, incentive of a and they're at driving

So the router market. being through this Cisco largely and through is Cisco done

you TCO visible the just it's prepared seeing about Or inflection quickly, private point a remarks. Rajiv, I'm to of the the cloud? the talked more are curious, Also, of you prior you of terms kind continued to versus can kind repatriation other still besides private in in about repatriation to repatriation lower Just the talk cloud, expensive cloud? factors public a of contribute continuation trend? may

I'll Yes. two-part to that, give George. answer a you

here, are don't but me I examples. Yet. in a say enterprise I it But I that I some certainly, still we a They're to the still thing bulk whole data that more about. talked right? sitting like are It's of the trend also, those the seeing point inflection. examples repatriating, that cloud. can are if not hard for should people workloads of But there's know But we in keep other call So certainly are the example think is of in centers. public mind repatriating,

been what new have about because to workloads net applications. talking gone largely public I'm cloud enterprise has the

sitting So to enterprise the workloads they careful that the cloud. are a for of public environment, in take I are CIOs still being that do more think much these how lot about

more I lot where on-prem, happening there's -- the at. applied yes, to there's should and cloud a what back repatriation cloud into public also scrutiny from forward going So I'm the public but from take some forethought being there's

will come Cikos next question Michael Our Needham. from line from of the

And I as to echo as others in well wanted the results as my the the here. addition to far quarter comments and great

we I quarter there's the here. coming think two to help that But financials for a pulled the the the forward co-terming of and And you think specifically guess, beat what degree think a -- about was year Rukmini, to the of guidance? the raise benefit later the land first, to us anything to back if I this bit know can occurred? I that when was from expected about part magnitude

outperformance Sure. renewals I the the I get yes, at -- there that sort renewals economics. to were One for renewal, time which by and team Mike, better factors to that -- I highlighted as mean, able our talked is And in was X that, QX, of of good. is outperformance. just so better about reason pricing

which renewal did is Secondly, quarter to, a and which I the And on was we -- referring better said piece, as that on-time I third talked Mike, strong early performance, do we is think, better then co-term you're renewal. around about in what the well. little

been of and as are be Co-terms same of they customers due. due conversation lot those and it than us a renewals before, are go co-term in brings prefer for quarter said because will have times transact different advance often, aligned at similarly. -- may licenses beneficial they the then they than to we've date. the that both be to that's when all a for And early those, an their out start being purchased And and as customer earlier to are And that well end we earlier what our in to when we well. able renewal

for those so long for they generally at coming customers. And us. are economics as we good good as give cash They welcome us the It's upfront.

And so all that those we are welcome. things generally

Mike, Now in variation, dynamic I your that and to sort forward, which was quarters, the question, aspect expect terms would between right, going of say another the continue pull of I'd forward. think is normal there we of of

where compared for that's not 'XX. going, talked up I'm renewal cohort partly year this 'XX I dynamic next than co-terms, still would fiscal see a were compared think is also leading But if that accelerated and year. to we 'XX also renewals in I which but available in you ATR was had at that saw we we The accelerating is do is 'XX, that that And just renew that 'XX. between fiscal year year say, growth point, 'XX renewal about to this for to coming Mike. early And to what bigger fiscal sure because in was

outperformance pretty quarter So And overall, from again, a is to all these generally, by would are things renewals we I see. the done say a strong that like perspective.

basis of characterize business predictable forward. than So I us more better sort as but nothing that certainly on a sort of going manage the would expected certainly, allows to

Got it. Got response on it. predictability. it's And Mike, that you're ending funny

things on that of earnings their one those going deals and my on I've companies think greater in the I through certain seeing pipeline deals larger been season close. is variability have side, when this cited based

can magnitude but you when a get citing deals? sense to you're these wanted possible, help if the think about I us larger So

Like coming the you're of in second get versus confidence increase the just how then deals, obviously to historically closed. that you And with what less is, certainty better x a of windows tied the an because help perspective just more size are again, a percent from driving in to are dollar sense And do strategic? us they There's piece seeing? like that. around they those timing get

I how our I'll see side. problem are have on wanted this guys front. want on Just to anything thinking with to you that gain there just sure and that, respond to as about make that It's you as but that high-quality how you'd start do far confidence a I

more there. you're a although, predictable, these larger my and think good new of deals is Mike, some I right, more which definitely more there is why point unpredictable, are right, inherently it's previous But portion. generally think was than question, we your predictable, renewals course, Yes, right, expansion the and on question, variability

when the looking know I you won't some or you and that, of meaning say at like versus size in larger from think may certain coming like have number, a were if how what size of deal I data you so higher size larger And deals from seen we're that you deal mix that. for opportunities, is our a we seeing pipeline of And buckets specific size. of we What at percentage than Mike. sizes, would I is previously, give buckets those proportion coming a we've the a much look right? look is is something or larger

changing So towards be more larger that growing. weighted to mix deals. the just is to pipeline the saying -- and that's of addition in also We're it

part your first the of answer question. to sort the of that's So

of probability things at the of We at do comfortable? look we terms how we in right, things in and period We're -- convert, the how of on a rates in think it's of pipeline. looking lot related a then a And other of like many those we and conversion Now can that pipeline. just get time. terms during what's we to put that we

we that? little how that's this, we're guidance you is the so the to sort Rajiv, anything did color more of approaching add want that And provided, all into of and factored that a methodology to into right? But

Yes, things. just a of couple

First of seeing portfolio deployments. for think -- because ready think reasons for large-scale while, course, that working portfolio of all, I we're the deals product we've is we, a on enterprise large we which these is of one a been

with have And of so force where customers, terms segmentation. a before course, on us further VMware, engaged large our are the many this with now bit who engaging of then in with of we focus us. are sales necessarily disruption industry And top up got we've our market not own that, segmented

the reason for our deals that's in we're So seeing pipeline. why these of more large

I towards going we this. keep to these would XXX approach better respect these with after we after whole getting at going think deals. deals, I have I say mean Now a prosecuting

on We have deals. the big where accounts executive we have large responses

these a of timing, be go going to over bit full things still a it's pursue be We to these said deals. vary and to team so the to unpredictable tend it's assembled that, time. size have also And having going now

it unpredictability, completely companies. have series both -- a these replace the does doesn't but it's it of So of you deals engagement, between types when right,

audits, customers things this resources, of as are certifications, investing of through a are through whole of testing, resources because lot security bunch process. there's lot get that negotiations, well going a We contract a investing

opportunities. would better going a after as we, are at of company, I say getting and so these And better types

will question Morgan Marshall from Meta line from Stanley. the next Our of come

A couple -- noted of Maybe you for on just me. clearly questions some still. macro headwinds

of types you wanted any certain smaller deals, it color past any of if projects, on verticals, to Just Are quarters, it there still times? of the are sense from is deals, Or a of change just the lead that kind are larger get things of of certain seeing just elongating shape that? in any? couple

disruption. of second are would And guys maybe number your getting kind then you right I of question, the inbox now, resumes in imagine the a given on just

Just any of OpEx notable of of hires your kind add adds? you're talent of pool finding or some to in the how terms

Rukmini, take one, Yes. don't number why you two number question. I'll take the

Yes. Sure, Rajiv.

macro, on which remained first was less or few the last Meta, relative more your I question, So to quarters. seen we've think it's in stable what

as continue that's few I'd see. that somewhat we'd okay, sort And stable. -- consistent, to uncertain, fairly characterize last with what quarters. So we what seen in but And the of we've

about, we So significant modest show from change elongation again, in to continued our cycles talked that, up no levels. compared sales of as the did historical which,

be also larger -- driven sizes of could deal that this in of pipeline. by some higher Now our larger mix

of of not point. that up fact we've It's So gone the But up again, showing that necessarily is that's now. just sort factor a also macro a market.

call weakness macro, or nothing on specific seeing this terms in verticals I point. else at we're that strength would out So noticing of

stable but it. uncertain, characterize how is we'd Somewhat

X we the was right? terms market tough Yes. talent tend this software the a in Everybody doubt of was market and is on hiring there's of And as was Meta, top for difficult -- ago, it hire developers. the pyramid question, talent, no years it a to

significantly Now the market, for has think hyperscalers, best quite talent are might In to just us, example. but from other every able of, this for VMware right? from not we or place, changed attract today, you that places also

see environment. we tenant a so And good

that, about in R&D hiring in door. We been happy come I'm happening have of level so we the but up and have the that's levels are the the using company, carefully, overall, And talent talent also at we and it's the very sales. well, we And in been both management good contributor seeing that that. helping the board. course individual but have at really across as -- And selectively levels,

the line of will Suppiger Erik question come from next Our from JMP.

All right.

on touch to Sorry cycles. and wanted larger elongated of just about that. subject sales the I deals

Is a that and have consolidation was trends getting that As more previously are lot cycle? an the similar single sales onto that few one opposed discussions noted, it customers there. there consolidating as of contributing could on seen vendors have some or of things economic to there around to focused the more that is vendors out a issue? tools elongated of been a uncertainty other be Or

really I've much an it's in whether In to playing And not case, there's I I'm Erik, strategy that like, certainly, sure people on as vendor much, are vendors. very and rethink vendor. my right, alternative incumbent play. that's a okay, our consolidating lot bring because need got of very for for example, us, much

feel happy with they were don't happy. they prior, now and vendor So the

alternative infrastructure got clearly they've and alternative. to a very we factor have solid So look one that's an playing. at That's

that all applications to where gotten little have is I a we point The that a that pretty the a have can second factor, running. customers the we much as earlier, portfolio address company mentioned as enterprise, are a across

all all platform player a anymore. as applications one scale, applications. very it not They're for So us to about scale vendor as them and vendor customers' for just use they're can their that from that -- small thinking It's thinking that case a large makes run our that minds, about right? in bigger it

for playing larger -- out a to -- also takes right? typically that, engagement now. our strategic that's think, what's customer, so in So which And I -- playing us with us the a more leads for is longer,

ChatGPT-in-a-Box. the on just then And good. Very Okay.

particular a curious is Who if these seen are adopting days? you base of groups segments that in that? AI private have or doing cloud Just customer your

Yes.

for say us, First traction that. I'd Erik, across early of on services, it's we financial kinds verticals, all days are seeing defense, all, of But federal.

medical first the agency. or our of wins was devices. with Manufacturing, one fact, pharma federal In

same to search verticals. tend right, but be or customer a -- co-piloting, use the just are cases fraud different there's of verticals, service, some of cases, similar. many Document detection, across somewhat analytics, these range but use So same summarization, the enhanced

Bollin line question will next Company. Cleveland of Research from Ben Our from come the

comment have on And and few you're the customers? the investing year you been activity there's evolved are amount hiring about managing see a at growth seeing of you. look I questions And how your I'm Rukmini, you particular, in from curious made of in of what plans partners out follow-up. then you about start a a how you hiring. inbound for when there? had carefully And the the since front that

Ben. So take that, I'll maybe

think I couple is One hiring. to points. a related there's of So

activity from other inbound cetera. partners, is et customers, The

there. a different So question slightly

if -- reasons. for I very OpEx the on years think So for the look on we've hiring, we've you been right history past the -- tight our very, at here, few

As our company and more we into the some consolidated got execution focus got portfolio, going. our

where And are year the now we this is investing.

growth continuing leverage our judiciously, talked about. R&D bottom but both -- can out And investing. but Our going We're OpEx demand perspective. go-to-market effective based to investing we've is in drive certainly what of our are getting handling an on our starting portfolio terms so be of more to We're we're we that we see. that investing investing we're the and -- to in on terms building of in line, terms

partners, it a ago. here the said -- years, I be And when very the last, X and one right, from whether priorities I customer be all we've X addressing seen the focused terms we more to of which we engagements, now in of that those, over early started on terms providers. partners it was your set focused managed efforts X service are years And year customers, we of or of incoming say, whether have of would larger in point, more

managed that provider on to partners, enabling extending to partner focus more making them, partners, our time. we them where channel, the service them and giving our more incentives, over add autonomous of them to So continue network more recruiting

And scrutiny great. question cloud center about some and about are you of curious if customers is, investment earlier how in data public commented perspective investments. change the from any that's as with thinking That's you it seeing it an to me. because Broadcom other CIO Okay. notably what's happened their I'm you're for investments one relates Rajiv, and longer-term VMware? for infrastructure planning

certainly, mean, I Ben. Well,

line, the footprint great a right a absolutely lot that's to bottom I of vendor long-term And have strategy technology VMware at large I think, a with rethink was again, mean, with customers now the whether So is, and innovation right? customers. them. and it they for

And easy public alternative just of the which alternative providers, cloud, to cloud, for public could I it so more workloads thing either to which we at say, an that are to says, okay, they well, not existing okay, we've everything is not look do. got move or and when as go take could the a to easy easy that's to

and fact aspects of forth. then cost, regulatory they -- factor it into And the so

that which a going are out find I'm right, my it's infrastructure there -- the but of in see AI, public happening the applications in training with terms lot in sets, modernization I like invest to think cloud new AI, -- same to keep I fine-tune on moving customers I'm but And want which down a okay, of to also not it's run vendor, we starting for the digitization, running for is of the public just like in my also now, cycles own happening some cloud, on-prem. to that route, terms -- continue spot towards, of clearly, modern carefully. certainly I'm going going are to we'll us example, in as these training data So is proprietary

have are to solutions going to different to my inferencing for to closer running at locations. edge going potentially I'm which slightly be look And

what call the that's several So very I years. next I are for of driving many the are here think things much, these think, world multi-cloud. we our hybrid customers And that

of line next Dan Our Capital question the comes Markets. RBC from Bergstrom from

that answer a involved VMware? in tools from place a I XXX typical specifically does VMware deals, approach for go are around take? you To into Dan migration facilitate to the then processes over Matt long Bergstrom and how build off in some of could migration recent what It's Hedberg. guess, mechanics a mentioned migrations? And

and -- query the but mean answer that -- process, Dan. through the Yes. I'll go I to

applications an is That's all So part of we by those are that on running workloads and one that what that case which, are good these can performance, our and infrastructure. workloads run there's large, that are assessment days. sure it the with making clearly the of

what deployed? deployed, second becomes. more more of of the the And they The is migration elements or have they the elements the the stack stickier that have complex

to away for example, a that automated only hypervisor, our hypervisor the it's deployed hypervisor. largely just So move a customer a for from

tools. have We automated

done a In all day VM fact, lot called We've these our of long. migrations tools Move.

can automated. a And so be relatively simple that done that's migration

have of of on of invested at some security the work, automation top work end other will custom lot be spectrum, Now to then of stack, the they've custom those if a the over converted engagement, is of services which a of those that requires some open our of offering more over to convert part professional onto onto also help or platforms. our and platform types

Terraform For example, people as automation example. are looking at an

at came planned they engaged migration, when those examples years. this There for very cases, the it's we've it's the actually cases, they you that quick. that been name a within days. happens study in this give a health X the case So of to with actually, The the system migration. time, around what they were migration of past pediatrics, is the few doing that a care migration so. public take was some point. migration will years a I'll is In for complex But lot published though. of some we recently XX a or of execution actual done And more plan

typical a that's example. So

and of would once ready. call lower the then the they're And but them complexity, to days, not and They're side. the cycle of medium XX then I a the migrate selling not getting at were they everything high able engagement environment. There's end and simplest and in necessarily ready, complexity a everything as it's --

line comes James. Raymond next Simon Leopold of And our from from question the

This Chiu is Victor for Simon Leopold.

are us outlook VMware from here? the understand into baked a guidance specifically? can expecting at quickly, you gains Just this what's accelerates Does you really your rate? similar help reflects Or full year from current

the for question. Victor, Thank you,

assumes end by the And year we does acceleration said year. the point, some a at the there. year the beginning also not expect partnership this of in any benefit, VMware the right? assumes It from Cisco Broadcom, of has from benefit assumes small full the no, talked some benefit about as being well. So the It towards at we've as guide as it it acquired before, just

said, from as right, small sort talked year over certainly et baked this about pipeline, again, into on including in to benefit cycles, a Rajiv and elongation, in but there's that, call, time that grow unpredictability regard as that deals addition we expect the of in fiscal But to sales cetera. average large dynamics with other 'XX, well modest all we've the to

relative how the That's through Nutanix for Great. us question. market macro to on just been and performs cautious. thinking you're follow overall We've you And that I sentiment what year slightly channel that? lastly, up HCI the Okay. has helpful. wanted hearing understand more on turned the this growth the help to HCI overall Can

I'll I around seen Maybe -- Yes. HCI haven't take that. don't we caution or a adoption. think slowdown

enterprise than have the it's infrastructure same performance even so continuously that in the capabilities can dynamic out many architecture. we've legacy HCI cases, legacy do time in better gotten and on the all today over HCI where past, of I platform is think pretty a been kind better There The there. with can much seen run right? workloads

So TCO or operate. better much to better simpler performance,

right? for set -- a a doing So things got And what inertia, we've -- of have We've been had have to architecture. that's is shift the for a way but time. right? to that software-defined overcome overcome And do, And been we've modern -- existence but company. I that. always we all we a think is long of entire customers more the And the that have doing been to here that doing with what to shift

change how seen. So are a thinking in there's so year in certainly I last our wouldn't been it, about see that or of that not the bunch I've customers

relative? how for And how of is -- growth growing thinking kind great. growth and Nutanix the you're what That's

Yes.

and beyond Day we I in -- of we we much and through to 'XX both growth provided last is what in covered opportunities FY growth what could -- add we we where outlook XX% drive just terms terms September, Investor TAM don't said there. at our think the ARR I what of have SAM

today's participation conference. And question-and-answer your conclude Thank program. the this our with session that, conclude in will today. does This you for

may day. You have now great Everyone, a disconnect.