Nutanix doesn't expect a rush of VMware refugees – maybe for years

Beats guidance as renewals grow and waits for Broadcom and Cisco to bring more bucks

Nutanix doesn't expect a rush of VMware users to adopt its platform, because many signed up for long-term deals before Broadcom acquired the virtualization giant.

"Many customers signed multi-year enterprise agreements with VMware prior to the deal closing," Nutanix CEO Rajiv Ramaswami told investors today on a Q2 earnings call. "It buys them some time to make decisions." Some of those customers – usually the larger outfits – had already seen Broadcom in action and knew the acquisitor's playbook, he suggested. Smaller VMware customers are now considering alternatives having seen Broadcom in action.

Nutanix therefore expects "the opportunity to build gradually." One group Ramaswami expects may act more urgently is VMware users operating in three-tiered environments that include dedicated storage arrays, which might reach end-of-life before their servers are due for replacement. Such customers, the CEO feels, are ripe for a discussion about converged and hybrid cloud storage.

AWS makes Citrix VDI play
One of Nutanix's traditional strongholds is desktop virtualization, often for Citrix users.

AWS on Thursday complicated that market a little by opening a preview of Citrix desktop-as-a-service on its managed WorkSpaces Core service.

WorkSpaces Core sees AWS manage virtual desktop rigs wherever they run.

Muneer Mirza, AWS general manager for end user experiences, told The Register the cloudy concern expects to entice Citrix users as they contemplate cloud migrations. WorkSpaces already runs VMware's end user computing wares.

Ramaswami explained that Nutanix often uses a "land and expand" strategy when converting VMware users. Starting with storage could be one way to make that happen.

While growth from VMware users bothered by Broadcom's new bundles may not excite Nutanix's balance sheet in the short term, Ramaswami was able to announce strong growth from other sources that saw the biz exceed previous guidance.

Annual contract value billings – Nutanix's preferred top line measure of success – rose 23 percent year on year to $329.5 million. Revenue of $565 million for the quarter was up 16 percent year on year. GAAP Operating Income produced a profit of $37 million – a turnaround from a $56.5 million loss for last year's Q2.

Full year revenue was forecast between $2.12 and $2.15 billion – a jump from the $2.095 to $2.125 billion prediction offered last quarter.

That result, and prediction, came from what Ramaswami described to The Register as "execution with discipline" and strong cost control.

Customer renewals also exceeded expectations.

There's more good news to come, the CEO predicted, as Nutanix's Cisco alliance has only just started. He predicted positive financial impact in FY 2025 – starting in around five months. ®