Nutanix, Inc. (NTNX) - Q1 2026 10-Q Summary
Business Context and Reporting Period
This summary covers Nutanix, Inc.'s unaudited financial results for the quarter ended October 31, 2025 (Fiscal Q1 2026). Nutanix is a hybrid multicloud computing leader providing a unified software platform for applications, AI, and data management. The company operates as a single reporting segment with a subscription-based business model.
Key Financial Metrics
| Metric | Q1 2026 (Oct 31, 2025) | Q1 2025 (Oct 31, 2024) |
|---|---|---|
| Total Revenue | $670.6 million | $591.0 million |
| Gross Profit | $583.1 million | $508.3 million |
| Gross Margin | 87.0% | 86.0% |
| Operating Income | $49.3 million | $27.3 million |
| Operating Margin | 7.4% | 4.6% |
| Net Income | $62.1 million | $29.9 million |
| Diluted EPS | $0.21 | $0.10 |
| Operating Cash Flow | $196.8 million | $161.8 million |
| Free Cash Flow | $174.5 million | $151.9 million |
| Cash & Short-Term Investments | $2.06 billion | $1.99 billion |
| Convertible Debt (Carrying Value) | $1.35 billion | $1.34 billion |
Material Changes vs. Prior Period
- Revenue Growth: Total revenue increased 13% year-over-year (YoY), driven by a 16% increase in Product revenue and an 11% increase in Support, maintenance, and other services revenue.
- Profitability Expansion: Operating income more than doubled to $49.3 million, with operating margin expanding to 7.4% from 4.6%. Net income grew 108% to $62.1 million.
- Expense Management: While operating expenses increased 11% to $533.8 million due to headcount growth in sales, marketing, and R&D, they decreased as a percentage of revenue (79.6% vs. 81.4%).
- Geographic Performance: Revenue grew in the U.S. (16%), EMEA (15%), and Other Americas (85%), while Asia Pacific revenue declined 6%.
- Customer Base: Total end customers grew to approximately 29,930, up from 27,160 in the prior year. Net Dollar-Based Retention Rate (NRR) was 109%.
Guidance, Outlook, and Risks
- Strategic Focus: Management continues to invest in sales and marketing to drive pipeline growth, particularly in major accounts and commercial segments, while aiming to improve operating cash flow through efficiencies.
- Capital Allocation: The company repurchased approximately 0.7 million shares for $50.0 million during the quarter. Approximately $411.5 million remains available under the current share repurchase authorization.
- Debt Structure: The company holds $500.0 million in 2027 Convertible Notes and $862.5 million in 2029 Convertible Notes. A $500.0 million revolving credit facility was entered into in February 2025, with no borrowings outstanding as of period end.
- Risks and Contingencies:
- Legal Proceedings: The DOJ is investigating historical conduct involving a former employee and a federal customer. Nutanix is cooperating with the investigation; no material adverse effect is currently expected, but outcomes are unpredictable.
- Market Risks: Exposure to foreign currency fluctuations and interest rate changes, though the company notes these have not been material historically.
- Operational Risks: Reliance on channel partners and OEMs for hardware supply and sales execution.
Investor Verification Checklist
- Verify the sustainability of the 13% revenue growth rate given the 6% decline in the Asia Pacific region.
- Monitor the impact of the DOJ investigation regarding the former employee and federal procurement on future government contracts.
- Assess the trajectory of sales and marketing expenses as a percentage of revenue to ensure the company meets its goal of reducing this metric over time.
- Review the conversion terms of the $1.35 billion in convertible debt and the potential dilution impact if stock price thresholds are met.
- Confirm the accuracy of the Non-GAAP reconciliations, specifically the treatment of stock-based compensation and litigation fees.