Nutanix Inc. reported fiscal first-quarter revenue and earnings that topped Wall Street estimates and sent the stock up more than 4% after hours.

The company swung from a loss of $15.85 million, or seven cents a share, a year ago to a profit of $29.9 million, or 10 cents a share. Adjusted earnings of 42 cents a share beat Wall Street’s consensus estimate of 32 cents. Revenue rose 16%, to $591 million, well ahead of analysts’ estimate of $572 million.

Annual recurring revenue, a measure of consistency, increased 18%, to $1.97 billion year over year. The net dollar-based retention rate — or the growth or shrinkage of revenue from existing customers — stood at 110%.

Nutanix raised its second-quarter revenue guidance to between $635 million and $645 million and reaffirmed its earlier fiscal 2025 revenue guidance of between $2.44 billion and $2.47 billion.

Despite the strong results, Nutanix said its federal business slowed in the quarter and the visibility into that business in the second fiscal quarter is unclear as the administration in Washington changes.

“Our U.S. Federal business performance was lower year-over-year relative to the strong comparison from Q1 a year ago,” said Chief Financial Officer Rukmini Sivarama. “We expect [it] to return to more normal levels in the second quarter.”

Sales cycles lengthen

Nutanix also experienced what Sivarama said were “modestly elongated average sales cycles compared to historical levels, which we believe is influenced by the macroeconomic environment and continued increased scrutiny on spending.”

Chief Executive Rajiv Ramaswami (pictured) said strong renewals and growth in new accounts more than compensated for enterprise and government-level slowdowns. “Land was very strong;  expand was relatively weak,” he said of the company’s “land and expand” approach to generating and growing new business. “Land logos were up maybe 50%,” although they comprise a smaller component of the business than growth from existing customers.

The first-quarter operating margin of 20% was up sharply from 15.6% a year ago and well ahead of the company’s guidance of 15.5%. This was “largely due to higher revenue and, to a smaller extent lower expenses as a result of certain nonrecurring payments and credits,” Sivarama said. Free cash flow rose 15%, to $151.9 million.

Broadcom tailwind

In a briefing with journalists following Nutanix’s earnings call, Ramaswami said Nutanix continues to benefit from price and policy changes instituted by Broadcom Inc. in the wake of its acquisition of VMware Inc. a year ago. In particular, the end of a partnership that helped customers migrate VMware environments to Amazon Web Services Inc., has “created an opportunity for us for sure,” he said.

“This is one impetus for the expanded partnership that we have with AWS where we are working together with them to provide migration for customers from [VMware Cloud to Nutanix Cloud Clusters] on AWS.” Nutanix expanded its partnership with AWS during the most recent quarter and extended its artificial intelligence infrastructure platform to the AWS cloud.

Ramaswami said Nutanix has also been steadily picking up channel partners that were cut loose by Broadcom in a consolidation move earlier this year. “We have a lot more channel partners than we had a year ago, and all our business goes through the channel,” he said.

He also expressed optimism about the growth potential of Nutanix’s expanded partnership with Dell Technologies Inc. that will have the two companies offering an integrated hardware software package based on Dell’s PowerEdge servers and PowerFlex storage.

“The contribution of the Dell partnership this year will be small because we just got started; we only have the Dell XE appliance in the market with our software,” he said. “The contribution will be greater in 2026. We’re optimistic.”

Ramaswami said the biggest benefits will kick in when Nutanix and Dell can deliver a bundled storage offering. “Storage refreshes are a logical opportunity to insert [hyper conversion infrastructure],” he said. “You get a 40% to 50% total cost of ownership savings. It’s our chance to go in and tell customers not to buy more storage because they can buy a full HCI stack and get better performance .”

Photo: Nutanix