Nutanix (NTNX) Q3 FY26 earnings call: guidance and Q&A

Are customers better equipped to manage supply chain issues, and does this lead to smoother deal conversion for Nutanix?

Customers are more aware and adapting, and Nutanix helps by offering choices like server vendors, external storage, and public cloud solutions (NC2). Hardware prices remain elevated, while lead times vary by vendor. This flexibility helps customers navigate the environment.

“customers are much more aware of the situation and are better navigating the situation. And we are also helping them with that.”

asked by Matthew Martino · answered by Rajiv Ramaswami

What factors are included in the Q4 guidance? Is there conservatism, and what would drive the high end of the range?

The Q4 guidance factors in dynamic supply chain impacts on revenue timing and challenges in the Middle East region, which is a mid-single-digit percentage of revenue. Reaching the high end would depend on a better supply environment or improved conditions in the Middle East.

“Middle East region has been a good growth driver for us in the past and represents a mid-single-digit percent of our revenue. And we saw good performance from that region in Q3. But as we all know, given the situation there, conducting new business in the region is more challenging.”

asked by Matthew Martino · answered by Rukmini Sivaraman

How much incremental ARR is coming from external storage sales, how is Nutanix priced compared to VMware, and what is the expected traction?

It's early days for external storage, but significant deals are already being seen (e.g., EverPure, Dell PowerFlex). The goal is to price the solution as close to the full stack as possible to make it attractive for customers to reuse hardware, with an eventual aim to convert them to HCI. Expects continued growth in this area.

“our goal is to try and price the solution as close to our food stack as possible.”

asked by Paramveer Singh · answered by Rajiv Ramaswami

What is the size of NC2 within the portfolio, and how much is increased server cost driving the shift towards public cloud deployments?

NC2 is seeing an uptick in customers and consumption, though it's still a minority but growing portion of the business. Server constraints and higher enterprise server costs are definitely causing customers to look more at public cloud with NC2, with examples of customers using it for migration or as a temporary solution.

“there's no doubt that server constraints or enterprise server constraints are causing customers to look more at the public cloud with NC2.”

asked by James Fish · answered by Rajiv Ramaswami

Can Nutanix quantify the revenue and free cash flow being deferred due to supply chain constraints? How should we think about the sustainability of margin upside?

Nutanix has not quantified the specific amount of deferred revenue. Bookings were strong in Q3, with over 20% TCV growth. Margin upside is due to increased revenue and timing of hiring. The company's intent is to continue growing operating margins over time while investing for growth.

“we haven't quantified specifically how much revenue is being deferred because of this”

asked by Wamsi Mohan · answered by Rukmini Sivaraman

What trends are observed in customer behavior approaching the VCF 9 deadline, and what is Nutanix doing to accelerate migrations?

Most customers who purchased VCF have not fully adopted it. VCF 9 will force choices, potentially requiring substantial hardware refresh. Nutanix offers options like preserving existing hardware with external storage, public cloud deployments, automated migration tools, and commercial incentives to facilitate migration from legacy platforms.

“VCF 9 is going to be quite a significant upgrade for you all in terms of the effort that you're going to have to put in.”

asked by Radi Sultan · answered by Rajiv Ramaswami