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NTNX - Nutanix

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Haven't seen a thread on Nutanix, would love to hear any thoughts from the community on the name.


As a quick overview, Nutanix sells hyperconverged infrastructure (HCI) software to enterprises. The company is currently transitioning to a subscription software-only business model (away from a hardware-centric business model) and just raised $750mn from Bain Capital Private Equity. The company's founder/CEO also announced that he is leaving upon finding a replacement (not really a red flag, more like an orange flag).


The company is trading at ~3x revenues and is not yet profitable. The business also faces significant competition from VMware, which holds leading market share (or maybe not according to Nutanix, depending on how you differentiate between hardware and software revenues). However, consensus appears to be that Nutanix offers a more flexible, software-only solution that is simpler to use and scale. The transition to software subscription revenues also appears to be going quite well (FQ4 2020 subscription revenue was 87% of total, growing 46% year-over-year. Gross margin expanded to 81% in FY2020, up from 78% in 2019 and 68% in 2018).


What draws me to the company is that 1) HCI appears to be the future, 2) Nutanix appears to be the best pure-play solution, and holding its own while fighting a real goliath, 3) Nutanix's subscription business appears to be undervalued, as the company reported strong customer retention metrics (96% customer retention, 125% ACV net expansion, 90 NPS).


Curious to hear any other perspectives.

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MF wrote about this stock a few times. Their operating numbers are quite horrible - their SG&A cost ($1.16B) exceeds their Gross profit ($1.02B). This includes SBC but still.


They needed to get a $750M cash injection from Bain Capital o find the SAAS transition. I don’t think their revenues/share have increased at all since the IPO, due dilution and muted revenue growth. It’s cheap, if you believe they can increase their revenue faster while reducing the costs at the same time.




I would love to hear about their technology. VM Ware is highly profitable, but not a fast grower either.

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