What gives management confidence in the implied steep upsell for Q4 given supply chain constraints, and what leading indicators should investors watch?

Q4 is traditionally a very strong quarter due to fiscal year-end incentives. The guidance for Q3 and Q4 is based on current visibility into market supply. The 24% year-over-year RPO growth at the end of Q2 also provides confidence in remaining performance obligations. “Q4 is traditionally our -- a very strong quarter for us. It's the end of the fiscal year, of course. So our sellers are all incentivized to maximize what they can do in Q4.”

There appears to be a discrepancy between mid-teens TCV bookings growth and RPO bookings growth (calculated as Q2 revenue + QoQ RPO change) of 4% against a tough 34% comp. Is there an increase in off-balance sheet bookings?

The reported RPO growth was 24% year-over-year. The discrepancy arises because the reported RPO excludes cancelable backlog, which, though a small percentage of total RPO, can significantly impact year-over-year growth rates in the calculated bookings. Including this cancelable backlog aligns the growth rate with the mid-teens TCV bookings growth. “I believe what you're referring to, Jim, is the calculated bookings, which for everyone's reference is calculated as Q2 revenue plus quarter-over-quarter change in RPO. So similar to last quarter, Jim, the exclusion of cancelable backlog from our reported RPO has a meaningful impact on the RPO bookings calculation and year-over-year growth rate despite the fact that, that cancelable backlog remains a very small portion relative to our total RPO number.”

Why are Q3 operating margins guided lower than Q2/Q4, and why is full-year FCF guidance cut more significantly than revenue, especially with the AMD investment?

Q3 typically has lower operating margins due to seasonality, with Q2 and Q4 being higher. The FCF guidance cut is primarily due to longer server lead times delaying billing and cash collection; the cash impact is higher than the revenue impact because cash is typically collected upfront. The AMD equity investment does not impact operating cash flow. “Historically, our seasonality around operating margin is that it's higher in Q2 and Q4 and lower in Q1 and Q2 on a relative -- Q1 and Q3 on a relative basis.”

NTNX

Nutanix (NTNX) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jan 2026 (Q2 FY26)· Information Technology· Feb 25, 2026

Source: earnings call transcript

Executive summary

Nutanix Q2 FY26 — Strong Bookings and AMD Partnership Amidst Supply Chain Headwinds

Nutanix delivered strong Q2 FY26 results, exceeding revenue guidance and achieving robust bookings and new customer additions, bolstered by a strategic AI partnership with AMD. However, persistent supply chain constraints for server components are delaying revenue recognition and free cash flow conversion, leading to a revised near-term outlook. The company is actively mitigating these timing issues through customer choice and flexible licensing, maintaining confidence in its long-term growth trajectory.

Highlights

Quarterly revenue of $723 million, exceeding the guidance range of $705 million to $715 million.
ARR grew 16% year-over-year to $2.36 billion at the end of Q2 FY26.
Added over 1,000 new customers, marking the strongest quarterly new logo additions in 8 years.
Achieved solid free cash flow generation of $191 million, representing a 26% margin in Q2 FY26.
Formed a strategic multiyear partnership with AMD, including a $150 million equity investment and up to $100 million for R&D/GTM funding.

Concerns

Supply chain challenges (CPU, memory) are causing higher server prices and lengthening lead times, delaying near-term revenue and free cash flow recognition.
Q3 FY26 revenue guidance lowered to $680 million to $690 million.
Full-year FY26 revenue guidance lowered to $2.8 billion to $2.84 billion.
Full-year FY26 free cash flow guidance lowered to $745 million to $775 million.
Net dollar-based retention rate (NRR) decelerated to 107% at the end of Q2, partly due to timing delays in US Fed renewals.

Guidance & targets

Category	Target	Timeline	Confidence
Q3 FY26 Revenue	$680M-$690M high materiality	Q3 · FY26	High
Q3 FY26 Non-GAAP operating margin	16%-17% medium materiality	Q3 · FY26	High
Q3 FY26 Fully diluted weighted average shares outstanding	~288M shares low materiality	Q3 · FY26	High
FY26 Revenue	$2.8B-$2.84B high materiality	FY26	High
FY26 Non-GAAP operating margin	21%-22% high materiality	FY26	High
FY26 Free cash flow	$745M-$775M high materiality	FY26	High
FY26 Free cash flow margin	27% medium materiality	FY26	High
FY26 TCV bookings growth	exceed revenue growth high materiality	FY26	High
First jointly developed platform with AMD	delivered by late 2026 medium materiality	CY26	High
Revenue from AMD partnership	small amounts next calendar year or H2 FY27 low materiality	CY27 / H2 FY27	Medium

NTNX operating KPIs by quarter

NTNX operating KPIs stated on its earnings calls, by fiscal quarter
KPI	This call Jan 2026 Q2 FY26	Apr 2026 Q3 FY26	Jul 2026 Q4 FY26	Change vs prior quarter
Annual recurring revenue (ARR)	—	$2.435B ARR at the end of Q3 was $2.435 billion, representing year-over-year growth of 15%. Source: earnings call transcript	$2.549B ARR at the end of Q4 was $2.549 billion. Source: earnings call transcript	+4.7%
Net revenue retention rate	107% NRR, or net dollar-based retention rate at the end of Q2 was 107%. Source: earnings call transcript	106% NRR, our net dollar-based retention rate at the end of Q3 was 106%. Source: earnings call transcript	106% NRR or net dollar-based retention rate at the end of Q4 was 106%, flat quarter-over-quarter. Source: earnings call transcript	0 pt
Average contract duration	3.1 years In Q2, average contract duration was 3.1 years, largely consistent with our expectations. Source: earnings call transcript	3.4 years In Q3, average contract duration was 3.4 years, slightly higher than our expectations. Source: earnings call transcript	3.3 years In Q4, average billings contract duration was 3.3 years, slightly lower than our expectations. Source: earnings call transcript	-2.9%

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Orderbook & backlog

Ending ARR $2.356B end of Q2 FY26

16% YoY growth

Product announcements

Product	Type	Timeline	Details
Nutanix Cloud Platform enhancements	update	Q2 FY26
Solutions supporting EverPure (Pure Storage)	launch	Q2 FY26

Deals & partnerships

AMD Multiyear collaboration for development and marketing of a Nutanix-powered agentic AI platform for enterprises and service providers, built on AMD accelerated compute infrastructure. AMD strategic investment of $150M in Nutanix common stock; AMD to fund up to $100M for R&D and go-to-market. Multiyear

The partnership aligns AMD's interests with Nutanix's success, expanding Nutanix's AI ecosystem to include AMD alongside NVIDIA, and offering customers broader choice in accelerated compute platforms. Targets enterprise use cases for agentic AI applications, especially in regulated industries or at the edge.

Risks & headwinds

Supply chain challenges (CPU and memory shortages) Expected to continue through the rest of FY26 and beyond, not a short-term issue.

Driving higher prices and lengthening lead times for servers.

Mitigation:Offering customer choice of server platforms, public clouds (NC2), external storage support, and software swaps on existing hardware; providing tools and promotions for flexible licensing start dates and separate software purchases.

Timing of revenue and free cash flow conversion Near-term, impacting Q3 and full-year FY26 guidance.

Some revenue and free cash flow shifted out from FY26; FCF impact is higher than revenue impact.

Mitigation:Management views this solely as a timing issue, with the overall revenue and cash flow expected to be recognized over time remaining unchanged.

NRR deceleration Q2 FY26.

Net dollar-based retention rate (NRR) at 107% at the end of Q2 FY26.

Mitigation:Impacted by timing delays in US Fed renewals (expected to be received in Q3); also noted that as ARR grows, the ACV dollars required to offset a point of churn increases.

What to watch in Q3 FY26

Impact of supply chain on revenue and FCF

next quarter

Current Q3 FY26 revenue guidance $680M-$690M; FY26 FCF guidance $745M-$775M.

Target Stabilization or improvement in server lead times and pricing.

Why it matters

Supply chain issues are the primary driver of revised guidance and impact on cash flow timing.

Thus far, longer lead times largely driven by lack of CPU availability have been a significantly bigger challenge for us than pricing. ... We have factored this anticipated impact into our updated outlook.

Find out whether NTNX delivers this. Inve re-checks your case every morning.

Q&A highlights

How has the magnitude of the VMware replacement opportunity changed given Broadcom's recent actions and changes to hyperscaler agreements?

The VMware replacement opportunity remains unchanged and is a multi-year journey. Nutanix continues to add over 1,000 new customers, with AHV adoption at an all-time high. Partnerships with AWS have been extended, and support for external storage and Google Cloud is expanding, all facilitating migrations from VMware.

“I don't think anything has really changed from an opportunity perspective. You can see that we are still continuing to add new customers at a healthy clip. We added 1,000-plus customers this last quarter. Our AHV percentage, which is our hypervisor adoption has hit an all-time high.”

asked by Radi Sultan · answered by Rajiv Ramaswami

3 min read 6 chapters

Detailed narrative

Strategic AMD Partnership for Agentic AI

Nutanix announced a multiyear strategic partnership with AMD to develop and market a Nutanix-powered agentic AI platform for enterprises and service providers. This collaboration will leverage AMD's accelerated compute infrastructure, with AMD making a $150 million strategic investment in Nutanix common stock and funding up to $100 million for R&D and go-to-market efforts.

The first jointly developed platform is expected to be delivered to customers by late calendar year 2026, targeting regulated industries and sovereign cloud deployments where data locality and security are paramount.

Supply Chain Headwinds and Mitigation Strategies

The company is facing significant supply chain challenges, particularly with shortages of CPUs and memory, which are driving higher server prices and lengthening lead times. These issues are delaying customers' ability to procure necessary hardware, consequently impacting the timing of Nutanix's revenue recognition and free cash flow conversion.

To mitigate this, Nutanix is offering customers multiple options, including choice of server platforms from various providers, running solutions in public clouds with Nutanix Cloud Clusters (NC2), supporting selected external storage platforms, and enabling software swaps on existing hyperconverged hardware.

Strong Bookings and Customer Acquisition Momentum

Despite the dynamic operating environment, Nutanix reported strong bookings performance in Q2 FY26, with TCV bookings growth in the mid-teens percent. The company also added over 1,000 new customers, marking its strongest quarterly new logo additions in eight years. This robust demand is attributed to businesses seeking to modernize their IT footprints, adopt hybrid cloud operating models, and deploy cloud-native applications, including AI.

Full-year bookings expectations have been raised, indicating continued strong underlying demand for Nutanix solutions.

Flexible Licensing to Preserve Bookings

To navigate the revenue recognition delays caused by supply chain constraints, Nutanix is implementing strategies to maintain bookings momentum. This includes providing customers with increased flexibility around licensing start dates and offering options to purchase software separately from server hardware.

Management anticipates a higher percentage of bookings in the second half of the fiscal year will have future start dates, ensuring that demand is captured even if hardware availability delays immediate revenue conversion.

Q2 Financial Outperformance and Margin Management

Nutanix exceeded the high end of its guidance range for all guided metrics in Q2 FY26, reporting $723 million in revenue and a non-GAAP operating margin of 26.2%. This outperformance was driven by higher-than-expected TCV bookings and lower operating expenses due to the timing of hiring.

Despite lowering full-year revenue guidance due to supply chain impacts, the company maintained its non-GAAP operating margin guidance of 21% to 22%, reflecting a continued focus on investment discipline and operational efficiencies.

Long-Term AI Opportunity and Ecosystem Expansion

Nutanix views AI as a significant long-term growth driver, particularly for enterprise inferencing and agentic applications. The company positions its platform as ideal for running these workloads efficiently and securely across diverse environments. The AMD partnership expands Nutanix's AI ecosystem beyond its existing collaboration with NVIDIA, offering customers broader choice in accelerated compute platforms and strengthening its position across the major players in the AI market.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.