Hyperconverged player Nutanix reported second fiscal 2018 quarter revenues of $286.7m, up 44 per cent on a year ago and 4 per cent on the prior quarter.
Profits seem as far away as ever, with a net loss of $61.5m, better than the prior quarter's $90.7m loss and the year-ago quarter's $76.4m, but not by much considering the revenue rise involved.
But competitors hoping it might run out of cash after 18 quarters of losses should think again. Cash and short-term investments totalled $918.3m, up 159 per cent on the year, mostly from the $509m in net proceeds from a 0 per cent, five-year Convertible Senior Note issued in the quarter.
CEO Dheeraj Pandey happily burbled about "our continued success with Global 2000 customers, the strength of our large deal execution and record number of new customers" and so on.
The customer count shot to 8,870, up by a startling 1,087, in the quarter.
Adoption of its own AHV hypervisor is up to 30 per cent; it was 28 per cent in the prior quarter and 24 per cent a year ago.
In the earnings call Pandey said: "This move towards the software-defined business model has helped us to accelerate our large deal momentum. In Q2 alone, we secured 57 deals worth more than $1m, up 104 per cent year-over-year. Also in Q2, we had 19 software and support deals worth more than $1m. In fact, five were worth more than $3m and three were worth more than $5m, and all three of these were deals Global 2000 customers."
Mainstream server supplier HCI failure
The general mainstream server supplier failure to capitalise on HCI is widespread. Apart from Dell, no mainstream vendor has any significant revenue presence – above 10 per cent share – in the HCI market, not Cisco, HPE, Hitachi, Huawei, IBM, nor Lenovo.
The fact that Nutanix can do this testifies to how late HPE is to the HCI market and how ineptly it has played its cards.
It entered years ago, having helped pioneer it with its LeftHand Networks virtual SAN. Even today, after buying SimpliVity, it still has a single-digit revenue market share.
This quarter's results solidify Nutanix's position at the head of the HCI market with Dell-VMware. Cisco, HPE, NetApp and everybody else have mountains to climb if they are to catch up – which they might never do.
Their best bet might simply be to partner with Nutanix, as Nutanix's software is running on their server kit, whether they like it or not.
CFO Duston Williams said: "Both Dell and Lenovo contributed nicely in Q2. Dell matched its best historical performance and Lenovo recorded its best performance, increasing almost 80 per cent sequentially.
"Dell bookings came in slightly less than 10 per cent of total bookings, and included deal sizes net to Nutanix of $3.5m and two deals at $2.6m each.
"Lenovo included four deals greater than $1m. IBM is still in its early stages of relationship and progressing within our expectations. We booked our first two initial IBM-related deals within the quarter. And lastly, our Cisco UCS related bookings increased over 40 per cent sequentially, included deals of $2.5m and $1.5m."
Analyst Katy Huberty asked that, as Nutanix is "deploying [its] software across the diverse number of servers, are you seeing that sort of awake the management teams of those other OEMs and realize that there is potentially an opportunity to work in a more aligned manner to participate in these deployments?"
Pandey was positive on this:
I think, it's happening, the grassroots is where the rebellion happens. The grassroots is the customers, the partners, they're the ones who've been basically saying, look, I love Nutanix and I would like for you to really run it in your servers.
And I think that's what we've been really trying to do for the last 12 to 18 months, which is how – one of the examples I gave about Cisco, and another one that Duston gave about HP, is all about the power of the customer. They're extremely powerful, especially the Global 2000 is very powerful in the way it actually dictates what server vendors actually go and work on it or not?
Whether the exec management of Cisco, HPE and Lenovo will actually respond as Pandey hopes is another matter entirely of course. When Cisco has spent $320m buying Springpath it's not going to pony up easily and say that was a mistake. Ditto HPE and SimpliVity.
Minjar is the company Nutanix is going to buy. It was started up in 2012 in India, with $900,000 seed funding, and has some 85 employees, most in Begaluru. There was a funding round in mid-2017;, the amount kept secret. The deal cost is not material to Nutanix's balance sheet.
The appeal is Minjar's Botmetric technology to provide costing information for workloads running in public clouds. This will strengthen Nutanix's hybrid on-premises/public clouds strategy, and the ability to cost-optimise workload placement. Minjar tech will be integrated into Nutanix's Enterprise Cloud OS.
Panday declared: "In the next few years, we intend to make a ... case for hyperconverging disparate cloud data centres using common software platform that we call the Enterprise Cloud OS ... hyperconvergence of these clouds will require a control plane that includes Calm, Minjar and many future different pieces that need to fit together."
Looking ahead to the next quarter Nutanix expects revenues between $275m and $280m. ®