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Nutanix Reports Third Quarter Fiscal 2020 Financial Results - Business Wire

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SAN JOSE, Calif.--()--Nutanix, Inc. (NASDAQ: NTNX), a leader in enterprise cloud computing, today announced financial results for the third quarter of fiscal 2020 ended April 30, 2020.

Q3 Fiscal 2020 Financial Highlights

  • Revenue: $318.3 million, up 11% year-over-year from $287.6 million in the third quarter of fiscal 20191
  • Billings: $383.5 million, up 11% year-over-year from $346.0 million in the third quarter of fiscal 20191
  • Software and Support (TCV)2 Revenue: $314.5 million, up 18% year-over-year from $265.8 million in the third quarter of fiscal 2019
  • Software and Support (TCV)2 Billings: $379.7 million, up 17% year-over-year from $324.2 million in the third quarter of fiscal 2019
  • Gross Margin: GAAP gross margin of 77.3%, up from 73.9% in the third quarter of fiscal 2019; Non-GAAP gross margin of 80.7%, up from 77.1% in the third quarter of fiscal 2019
  • Net Loss: GAAP net loss of $240.7 million, compared to a GAAP net loss of $209.8 million in the third quarter of fiscal 2019; Non-GAAP net loss of $135.2 million, compared to a non-GAAP net loss of $103.0 million in the third quarter of fiscal 2019
  • Net Loss Per Share: GAAP net loss per share of $1.23, compared to a GAAP net loss per share of $1.15 in the third quarter of fiscal 2019; Non-GAAP net loss per share of $0.69, compared to a non-GAAP net loss per share of $0.56 in the third quarter of fiscal 2019
  • Cash and Short-term Investments: $732.1 million, down from $940.8 million in the third quarter of fiscal 2019
  • Deferred Revenue: $1.12 billion, up 34% from the third quarter of fiscal 2019
  • Operating Cash Flow: Use of $84.9 million, compared to use of $36.5 million in the third quarter of fiscal 2019
  • Free Cash Flow: Use of $117.5 million, compared to use of $58.9 million in the third quarter of fiscal 2019

Reconciliations between GAAP and non-GAAP financial measures and key performance measures are provided in the tables of this press release.

“We are pleased to have delivered a solid quarter, particularly in light of the global uncertainty caused by the COVID-19 pandemic,” said Dheeraj Pandey, Chairman, Co-Founder and CEO of Nutanix. “We are delighted to be in a position to support our customers with mission-critical solutions as they navigate the rapidly changing landscape of the future of work. Our near-term focus is on thoughtful cash and expense management, while proactively preparing to emerge from this time with the ability to drive long-term growth and scale our business with the market.”

“By adapting quickly to a changing work environment, we were able to meet or exceed our anticipated third quarter results despite the challenging macroeconomic conditions,” said Duston Williams, CFO of Nutanix. “We have also taken proactive measures to manage our operating expenses, which will help meaningfully decrease our cash usage from here and enhance our financial flexibility going forward. While the duration and impact of the pandemic remain uncertain, we are confident that Nutanix is well-positioned to manage the business through this period and will emerge a stronger company with the help of our subscription transition.”

Recent Company Highlights

  • Reached 84 Percent of Billings from Subscription: Nutanix continued its transition to a subscription-based business model, with subscription billings up 43% year-over-year to $321 million, representing 84% of total billings, and subscription revenue up 55% year-over-year to $261 million, representing 82% of total revenue.
  • Expanded Customer Base: Nutanix ended the third quarter of fiscal 2020 with 16,580 end-customers. Third quarter customer wins included the following Global 2000 companies: Bausch Health Companies, Inchcape, LabCorp, Orient Securities Co., and more.
  • Launched Nutanix FastTrack for VDI: To assist partners and customers urgently expanding remote workforces, Nutanix launched FastTrack for VDI, which includes pre-sized configurations for a range of user types designed to ship quickly, as well as remote services to enable rapid deployment of users, and incentives to enhance partner profitability.
  • Partnered with Wipro to Announce Digital Database Services Powered by Nutanix Era: This joint solution from Wipro, powered by Nutanix, empowers customers to consolidate their database workloads onto a shared infrastructure to manage database sprawl. The offering provides better efficiency, agility, cost-effectiveness, and scalability by automating and simplifying database administration.
  • Delivered Invisible Infrastructure for Big Data and Analytics: The Nutanix platform now includes new features for big data and analytics applications. The company released Nutanix Objects 2.0, including the ability to manage object data across multiple clusters for achieving massive scale, as well as formal Splunk SmartStore certification. The enhancements add to a cloud platform that is already optimized for big data, to deliver performance and increased scale, while also reducing cost by maximizing existing, unused resources.
  • Recognized as a Gartner Peer Insights Customers’ Choice Vendor for Hyperconverged Infrastructure (HCI)3: Nutanix has been recognized as a Customers’ Choice Vendor for the second year in a row, with an average score of 4.7 out of 5. This recognition is based on customer feedback in the past year across multiple vendors in the hyperconverged infrastructure industry.
  • Achieved FedRAMP Authorization for Xi Government Cloud: Nutanix Xi Government Cloud achieved the Federal Risk and Authorization Management Program (FedRAMP) Authorized designation at the Moderate security impact level. Xi Government Cloud includes Xi Frame, a multi-cloud Desktop as a Service (DaaS) platform, and Xi Beam, a hybrid cloud cost governance tool. This allows Nutanix to deliver new solutions to federal agencies that need to quickly and securely expand telework capabilities, while also managing the costs and governance of their cloud resources.
  • Simplified Advanced Disaster Recovery: Nutanix announced several new capabilities to its HCI software and AHV hypervisor to protect business-critical applications. These include advanced automation for recovering applications and data, support for seamless multi-site DR, synchronous replication for AHV, and a near-zero data loss with near sync replication with an RPO of only about 20 seconds, the only HCI vendor to do so.
  • Streamlined IT Operations with Automation: The company expanded integration with ServiceNow, as well as introduced new capabilities in Nutanix Calm, its automation and management solution for DevOps. As customers look to streamline their IT operations and costs during this difficult time, these new features will help customers to simplify and automate infrastructure, application, and cloud management even further.
  • Announced Nutanix Worldwide Special Financial Assistance Program: Nutanix demonstrated support for its partners with extended payment terms to help them sustain business operations during the rapidly changing macroeconomic environment. Additionally, Nutanix increased investments in partner learning and development with free certification exams for partners through July 2020.
  • Won Top Rated Product Award for AOS: Nutanix AOS was recognized by Trust Radius as a Top Rated Product in the Server Virtualization and Virtual Desktop Infrastructure category. Top Rated awards showcase top products based solely on user feedback and satisfaction scores.
  • Partnered with Avid to Deliver First HCI Platform for Media and Entertainment: Nutanix hyperconverged infrastructure software was recently certified to run with Avid Media Composer video editing software and the Avid MediaCentral media collaboration platform. Nutanix is the first HCI-powered private cloud solution to be certified for Avid products, offering a fully integrated solution for any Avid environment with the hardware platform of choice, built-in hypervisor, and one-click management.
  • Strengthened Board of Directors with Veteran Technology Leader: The company recently appointed industry veteran, Sohaib Abbasi, to its Board of Directors. The former Informatica CEO and Oracle executive brings deep technology and leadership experience to the Nutanix Board.

Fiscal 2020 Financial Outlook

Given the uncertainty created by the COVID-19 pandemic, and as previously announced on May 5, 2020, Nutanix has withdrawn its guidance for fiscal 2020, which was originally provided on February 26, 2020, as well as its business model targets for calendar 2021, which were presented during its Investor Day in March 2019. Nutanix plans to resume providing formal guidance when visibility improves.

Supplementary materials to this earnings release, including the company’s third quarter fiscal 2020 earnings presentation, can be found at https://ir.nutanix.com/company/financial.

1Reflects total billings/revenue compression from the company’s ongoing transition to subscription and the significant reduction of hardware billings/revenue.

2TCV, or Total Contract Value, for any given period is defined as the total software and support revenue or total software and support billings, as applicable, during such period, which excludes revenue and billings associated with pass-through hardware sales during the period.

3Ratings and reviews current as of March 24, 2020. Gartner Peer Insights Customers’ Choice constitute the subjective opinions of individual end-user reviews, ratings, and data applied against a documented methodology; they neither represent the views of, nor constitute an endorsement by, Gartner or its affiliates.

Webcast and Conference Call Information

Nutanix executives will discuss the company’s third quarter fiscal 2020 financial results on a conference call at 4:30 p.m. Eastern Time/1:30 p.m. Pacific Time today. To listen to the call via telephone, dial 1-833-968-2186 in the United States or 1-825-312-2107 from outside the United States. The conference ID is 1473679. This call will be webcast live and available to all interested parties on our Investor Relations website at ir.nutanix.com. Shortly after the conclusion of the conference call, a replay of the audio webcast will be available on the Nutanix Investor Relations website. A telephonic replay will be available for one week by calling 1-800-585-8367 or 1-416-621-4642, and entering the conference ID 1473679.

Non-GAAP Financial Measures and Other Key Performance Measures

To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use the following non-GAAP financial and other key performance measures: billings, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP net loss, non-GAAP net loss per share, free cash flow, software and support revenue (or TCV revenue), subscription revenue, software and support billings (or TCV billings), subscription billings, and professional services billings. In computing these non-GAAP financial measures and key performance measures, we exclude certain items such as stock-based compensation and the related income tax impact, costs associated with our acquisitions (such as amortization of acquired intangible assets, income tax-related impact, and other acquisition-related costs), impairment of operating lease-related assets, amortization of debt discount and issuance costs, other non-recurring transactions and the related tax impact, and the revenue and billings associated with pass-through hardware sales. Billings is a performance measure which we believe provides useful information to investors because it represents the amounts under binding purchase orders received by us during a given period that have been billed, and we calculate billings by adding the change in deferred revenue between the start and end of the period to total revenue recognized in the same period. Free cash flow is a performance measure that we believe provides useful information to our management and investors about the amount of cash generated by the business after necessary capital expenditures, and we define free cash flow as net cash (used in) provided by operating activities less purchases of property and equipment. Non-GAAP gross margin, non-GAAP operating expenses, non-GAAP net loss, and non-GAAP net loss per share are financial measures which we believe provide useful information to investors because they provide meaningful supplemental information regarding our performance and liquidity by excluding certain expenses and expenditures such as stock-based compensation expense that may not be indicative of our ongoing core business operating results. TCV revenue and TCV billings are performance measures that we believe provide useful information to our management and investors as they allow us to better track the true growth of our software business by excluding the amounts attributable to the pass-through hardware sales that we use to deliver our solutions. Subscription revenue, subscription billings, and professional services billings are performance measures that we believe provide useful information to our management and investors as they allow us to better track the growth of the subscription-based portion of our business, which is a critical part of our business plan. We use these non-GAAP financial and key performance measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. However, these non-GAAP financial and key performance measures have limitations as analytical tools and you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP. Billings, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP net loss, non-GAAP net loss per share, and free cash flow are not substitutes for total revenue, gross margin, operating expenses, net loss, net loss per share, or net cash (used in) provided by operating activities, respectively; subscription revenue, TCV revenue and TCV billings are not substitutes for total revenue; and subscription and professional services billings are not a substitute for subscription and professional services revenue. In addition, other companies, including companies in our industry, may calculate non-GAAP financial measures and key performance measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures and key performance measures as tools for comparison. We urge you to review the reconciliation of our non-GAAP financial measures and key performance measures to the most directly comparable GAAP financial measures included below in the tables captioned “Reconciliation of Revenue to Billings,” “Disaggregation of Revenue and Billings,” “Reconciliation of Subscription and Professional Services Revenue to Subscription and Professional Services Billings,” “Reconciliation of Software and Support Revenue (TCV Revenue) to Software and Support Billings (TCV Billings),” “Reconciliation of GAAP to Non-GAAP Profit Measures,” and “Reconciliation of GAAP Net Cash Provided By Operating Activities to Non-GAAP Free Cash Flow,” and not to rely on any single financial measure to evaluate our business.

Forward-Looking Statements

This press release contains express and implied forward-looking statements, including, but not limited to, statements regarding: our business plans, initiatives and objectives, including changes we have made or anticipate making in response to the COVID-19 pandemic, our ability to manage our business during the pandemic, and the position we anticipate being in following the pandemic; our ability to execute such plans, initiatives and objectives in a timely manner, and the benefits and impact of such plans, initiatives and objectives, including our ability to manage our expenses and decrease our cash usage in future periods; our customer needs and our response to those needs; the benefits and capabilities of our platform, products, services and technology; our plans and expectations regarding new products, services, product features and technology, including those that are still under development or in process; our plans and timing for, and the success and impact of, our transition to a subscription-based business model; our plans to provide financial guidance in the future; and the timing and potential impact of the COVID-19 pandemic on our business, operations and financial results, including the actions we have taken to manage operating expenses. These forward-looking statements are not historical facts and instead are based on our current expectations, estimates, opinions, and beliefs. Consequently, you should not rely on these forward-looking statements. The accuracy of such forward-looking statements depends upon future events and involves risks, uncertainties, and other factors, including factors that may be beyond our control, that may cause these statements to be inaccurate and cause our actual results, performance or achievements to differ materially and adversely from those anticipated or implied by such statements, including, among others: failure to successfully implement or realize the full benefits of, or unexpected difficulties or delays in successfully implementing or realizing the full benefits of, our business plans, initiatives and objectives; the timing, breadth, and impact of the COVID-19 pandemic on our business, operations, and financial results, as well as the impact on our customers, partners, and end markets; failure to timely and successfully meet our customer needs; delays in or lack of customer or market acceptance of our new products, services, product features or technology; delays or unexpected accelerations in the transition to a subscription-based business model; the rapid evolution of the markets in which we compete; our ability to achieve, sustain and/or manage future growth effectively; factors that could result in the significant fluctuation of our future quarterly operating results, including, among other things, anticipated changes to our revenue and product mix, including changes as a result of our transition to a subscription-based business model, which will slow revenue growth during such transition and make forecasting future performance more difficult, the timing and magnitude of orders, shipments and acceptance of our solutions in any given quarter, our ability to attract new and retain existing end-customers, changes in the pricing of certain components of our solutions, and fluctuations in demand and competitive pricing pressures for our solutions; the introduction, or acceleration of adoption of, competing solutions, including public cloud infrastructure; and other risks detailed in our Quarterly Report on Form 10-Q for the fiscal quarter ended January 31, 2020, filed with the U.S. Securities and Exchange Commission, or the SEC, on March 5, 2020. Additional information will also be set forth in our Quarterly Report on Form 10-Q that will be filed for the fiscal quarter ended April 30, 2020, which should be read in conjunction with this press release and the financial results included herein. Our SEC filings are available on the Investor Relations section of the company’s website at ir.nutanix.com and on the SEC's website at www.sec.gov. These forward-looking statements speak only as of the date of this press release and, except as required by law, we assume no obligation, and expressly disclaim any obligation, to update, alter or otherwise revise any of these forward-looking statements to reflect actual results or subsequent events or circumstances.

About Nutanix

Nutanix is a global leader in cloud software and a pioneer in hyperconverged infrastructure solutions, making computing invisible anywhere. Organizations around the world use Nutanix software to leverage a single platform to manage any app at any location for their private, hybrid and multi-cloud environments. Learn more at www.nutanix.com or follow us on Twitter @nutanix.

© 2020 Nutanix, Inc. All rights reserved. Nutanix, the Nutanix logo, and all Nutanix product and service names mentioned herein are registered trademarks or trademarks of Nutanix, Inc. in the United States and other countries. All other brand names mentioned herein are for identification purposes only and may be the trademarks of their respective holder(s). This press release contains links to external websites that are not part of Nutanix.com. Nutanix does not control these sites and disclaims all responsibility for the content or accuracy of any external site. Our decision to link to an external site should not be considered an endorsement of any content on such a site.

NUTANIX, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

As of

 

July 31,
2019

 

April 30,
2020

 

(in thousands)

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

396,678

 

 

$

262,331

 

Short-term investments

512,156

 

 

469,806

 

Accounts receivable, net

245,475

 

 

236,690

 

Deferred commissions—current

46,238

 

 

63,177

 

Prepaid expenses and other current assets

74,665

 

 

63,189

 

Total current assets

1,275,212

 

 

1,095,193

 

Property and equipment, net

136,962

 

 

149,688

 

Operating lease right-of-use assets

 

 

132,519

 

Deferred commissions—non-current

107,474

 

 

137,598

 

Intangible assets, net

66,773

 

 

53,738

 

Goodwill

185,180

 

 

185,260

 

Other assets—non-current

14,441

 

 

19,345

 

Total assets

$

1,786,042

 

 

$

1,773,341

 

 

 

 

 

Liabilities and Stockholders’ Equity (Deficit)

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

74,047

 

 

$

68,232

 

Accrued compensation and benefits

99,804

 

 

85,641

 

Accrued expenses and other current liabilities

28,797

 

 

21,829

 

Deferred revenue—current

396,667

 

 

503,311

 

Operating lease liabilities—current

 

 

34,371

 

Total current liabilities

599,315

 

 

713,384

 

Deferred revenue—non-current

513,377

 

 

618,749

 

Operating lease liabilities—non-current

 

 

123,470

 

Convertible senior notes, net

458,910

 

 

482,199

 

Other liabilities—non-current

27,547

 

 

19,578

 

Total liabilities

1,599,149

 

 

1,957,380

 

Stockholders’ equity (deficit):

 

 

 

Common stock

5

 

 

5

 

Additional paid-in capital

1,835,528

 

 

2,151,175

 

Accumulated other comprehensive income

669

 

 

1,625

 

Accumulated deficit

(1,649,309

)

 

(2,336,844

)

Total stockholders’ equity (deficit)

186,893

 

 

(184,039

)

Total liabilities and stockholders’ equity (deficit)

$

1,786,042

 

 

$

1,773,341

 

NUTANIX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

Three Months Ended
April 30,

 

Nine Months Ended
April 30,

 

2019

 

 

2020

 

 

2019

 

 

2020

 

 

(in thousands, except per share data)

Revenue:

 

 

 

 

 

 

 

Product

$

184,794

 

 

$

180,756

 

 

$

646,072

 

 

$

586,747

 

Support, entitlements and other services

102,830

 

 

137,517

 

 

290,195

 

 

393,061

 

Total revenue

287,624

 

 

318,273

 

 

936,267

 

 

979,808

 

Cost of revenue:

 

 

 

 

 

 

 

Product (1)(2)

29,528

 

 

15,990

 

 

114,755

 

 

57,899

 

Support, entitlements and other services (1)

45,549

 

 

56,304

 

 

120,410

 

 

161,819

 

Total cost of revenue

75,077

 

 

72,294

 

 

235,165

 

 

219,718

 

Gross profit

212,547

 

 

245,979

 

 

701,102

 

 

760,090

 

Operating expenses:

 

 

 

 

 

 

 

Sales and marketing (1)(2)

245,703

 

 

299,162

 

 

655,907

 

 

895,936

 

Research and development (1)

137,982

 

 

141,346

 

 

371,550

 

 

418,640

 

General and administrative (1)

33,040

 

 

35,644

 

 

89,167

 

 

103,083

 

Total operating expenses

416,725

 

 

476,152

 

 

1,116,624

 

 

1,417,659

 

Loss from operations

(204,178

)

 

(230,173

)

 

(415,522

)

 

(657,569

)

Other expense, net

(3,212

)

 

(5,640

)

 

(10,314

)

 

(16,543

)

Loss before provision for income taxes

(207,390

)

 

(235,813

)

 

(425,836

)

 

(674,112

)

Provision for income taxes

2,423

 

 

4,858

 

 

1,005

 

 

13,423

 

Net loss

$

(209,813

)

 

$

(240,671

)

 

$

(426,841

)

 

$

(687,535

)

Net loss per share attributable to Class A and Class B common stockholders—basic and diluted

$

(1.15

)

 

$

(1.23

)

 

$

(2.38

)

 

$

(3.56

)

Weighted average shares used in computing net loss per share attributable to Class A and Class B common stockholders—basic and diluted

182,963

 

 

196,366

 

 

179,235

 

 

192,896

 

____________________________

(1) Includes the following stock-based compensation expense:

 

Three Months Ended
April 30,

 

Nine Months Ended
April 30,

 

2019

 

2020

 

2019

 

2020

 

(in thousands)

Product cost of revenue

$

953

 

 

$

1,367

 

 

$

2,523

 

 

$

3,937

 

Support, entitlements and other services cost of revenue

4,542

 

 

5,959

 

 

11,072

 

 

15,850

 

Sales and marketing

35,257

 

 

33,177

 

 

81,325

 

 

92,137

 

Research and development

42,265

 

 

39,462

 

 

107,953

 

 

113,484

 

General and administrative

11,815

 

 

12,131

 

 

30,449

 

 

33,729

 

Total stock-based compensation expense

$

94,832

 

 

$

92,096

 

 

$

233,322

 

 

$

259,137

 

(2) Includes the following amortization of intangible assets:

 

Three Months Ended
April 30,

 

Nine Months Ended
April 30,

 

2019

 

2020

 

2019

 

2020

 

(in thousands)

Product cost of sales

$

3,694

 

 

$

3,694

 

 

$

10,554

 

 

$

11,082

 

Sales and marketing

661

 

 

651

 

 

1,877

 

 

1,953

 

Total amortization of intangible assets

$

4,355

 

 

$

4,345

 

 

$

12,431

 

 

$

13,035

 

NUTANIX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

Nine Months Ended
April 30,

 

2019

 

 

2020

 

 

(in thousands)

Cash flows from operating activities:

 

 

 

Net loss

$

(426,841

)

 

$

(687,535

)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

 

 

 

Depreciation and amortization

55,740

 

 

69,715

 

Stock-based compensation

233,322

 

 

259,137

 

Amortization of debt discount and debt issuance costs

21,802

 

 

23,290

 

Operating lease cost, net of accretion

 

 

22,340

 

Change in fair value of contingent consideration

(832

)

 

 

Impairment of lease-related assets

 

 

3,002

 

Other

(1,837

)

 

(33

)

Changes in operating assets and liabilities:

 

 

 

Accounts receivable, net

16,734

 

 

9,027

 

Deferred commissions

(24,819

)

 

(47,063

)

Prepaid expenses and other assets

(5,095

)

 

12,371

 

Accounts payable

18,461

 

 

(5,675

)

Accrued compensation and benefits

(10,366

)

 

(11,456

)

Accrued expenses and other liabilities

(31,180

)

 

(1,333

)

Operating leases, net

 

 

(21,076

)

Deferred revenue

206,735

 

 

211,774

 

Net cash provided by (used in) operating activities

51,824

 

 

(163,515

)

Cash flows from investing activities:

 

 

 

Maturities of investments

460,563

 

 

498,611

 

Purchases of investments

(324,581

)

 

(524,568

)

Sales of investments

 

 

70,878

 

Purchases of property and equipment

(94,815

)

 

(72,073

)

Payments for acquisitions, net of cash and restricted cash acquired

(19,017

)

 

 

Net cash provided by (used in) investing activities

22,150

 

 

(27,152

)

Cash flows from financing activities:

 

 

 

Proceeds from sales of shares through employee equity incentive plans, net of repurchases

67,277

 

 

56,515

 

Payment of contingent consideration associated with an acquisition

(1,040

)

 

 

Payment of debt in conjunction with an acquisition

(991

)

 

 

Payment of issuance costs related to convertible senior notes

(75

)

 

 

Net cash provided by financing activities

65,171

 

 

56,515

 

Net increase (decrease) in cash, cash equivalents and restricted cash

$

139,145

 

 

$

(134,152

)

Cash, cash equivalents and restricted cash—beginning of period

307,098

 

 

399,520

 

Cash, cash equivalents and restricted cash—end of period

$

446,243

 

 

$

265,368

 

Restricted cash (1)

1,124

 

 

3,037

 

Cash and cash equivalents—end of period

$

445,119

 

 

$

262,331

 

Supplemental disclosures of cash flow information:

 

 

 

Cash paid for income taxes

$

26,731

 

 

$

14,658

 

Supplemental disclosures of non-cash investing and financing information:

 

 

 

Issuance of common stock for acquisitions

$

103,305

 

 

$

 

Purchases of property and equipment included in accounts payable and accrued liabilities

$

11,671

 

 

$

7,934

 

Vesting of early exercised stock options

$

157

 

 

$

 

____________________________

(1)

Included within other assets—non-current in the condensed consolidated balance sheets.

Reconciliation of Revenue to Billings

(Unaudited)

 

Three Months Ended
April 30,

 

Nine Months Ended
April 30,

 

2019

 

2020

 

2019

 

2020

 

(in thousands)

Total revenue

$

287,624

 

 

$

318,273

 

 

$

936,267

 

 

$

979,808

 

Change in deferred revenue, net of acquisitions

58,403

 

 

65,234

 

 

206,735

 

 

211,774

 

Total billings

$

346,027

 

 

$

383,507

 

 

$

1,143,002

 

 

$

1,191,582

 

Disaggregation of Revenue and Billings

(Unaudited)

 

Three Months Ended
April 30,

 

Nine Months Ended
April 30,

 

2019

 

2020

 

2019

 

2020

 

(in thousands)

Disaggregation of Revenue:

 

 

 

 

 

 

 

Subscription

$

168,447

 

 

$

260,963

 

 

$

452,779

 

 

$

745,403

 

Non-portable software

88,719

 

 

41,917

 

 

366,910

 

 

178,619

 

Hardware

21,853

 

 

3,786

 

 

92,319

 

 

22,052

 

Professional services

8,605

 

 

11,607

 

 

24,259

 

 

33,734

 

Total revenue

$

287,624

 

 

$

318,273

 

 

$

936,267

 

 

$

979,808

 

 

 

 

 

 

 

 

 

Disaggregation of Billings:

 

 

 

 

 

 

 

Subscription

$

224,312

 

 

$

321,100

 

 

$

652,692

 

 

$

935,780

 

Non-portable software

88,719

 

 

41,917

 

 

366,910

 

 

178,619

 

Hardware

21,853

 

 

3,786

 

 

92,319

 

 

22,052

 

Professional services

11,143

 

 

16,704

 

 

31,081

 

 

55,131

 

Total billings

$

346,027

 

 

$

383,507

 

 

$

1,143,002

 

 

$

1,191,582

 

Subscription — Subscription revenue includes any performance obligation which has a defined term, and is generated from the sales of software entitlement and support subscriptions, subscription software licenses and cloud-based Software as a Service, or SaaS offerings.

  • Ratable We recognize revenue from software entitlement and support subscriptions and SaaS offerings ratably over the contractual service period, the substantial majority of which relate to software entitlement and support subscriptions.
  • Upfront Revenue from our subscription software licenses is generally recognized upfront upon transfer of control to the customer, which happens when we make the software available to the customer.

Non-portable software — Non-portable software revenue includes sales of our enterprise cloud platform when delivered on a configured-to-order appliance by us or one of our OEM partners. The software licenses associated with these sales are typically non-portable and have a term equal to the life of the appliance on which the software is delivered. Revenue from our non-portable software products is generally recognized upon transfer of control to the customer.

Hardware — In transactions where we deliver the hardware appliance, we consider ourselves to be the principal in the transaction and we record revenue and costs of goods sold on a gross basis. We consider the amount allocated to hardware revenue to be equivalent to the cost of the hardware procured. Hardware revenue is generally recognized upon transfer of control to the customer.

Professional services — We also sell professional services with our products. We recognize revenue related to professional services as they are performed.

Reconciliation of Subscription and Professional Services Revenue to Subscription and Professional Services Billings

(Unaudited)

 

Three Months Ended
April 30,

 

Nine Months Ended
April 30,

 

2019

 

2020

 

2019

 

2020

 

(in thousands)

Subscription revenue

$

168,447

 

 

$

260,963

 

 

$

452,779

 

 

$

745,403

 

Change in subscription deferred revenue, net of acquisitions

55,865

 

 

60,137

 

 

199,913

 

 

190,377

 

Subscription billings

$

224,312

 

 

$

321,100

 

 

$

652,692

 

 

$

935,780

 

 

 

 

 

 

 

 

 

Professional services revenue

$

8,605

 

 

$

11,607

 

 

$

24,259

 

 

$

33,734

 

Change in professional services deferred revenue

2,538

 

 

5,097

 

 

6,822

 

 

21,397

 

Professional services billings

$

11,143

 

 

$

16,704

 

 

$

31,081

 

 

$

55,131

 

Reconciliation of Software and Support Revenue (TCV Revenue) to Software and Support Billings (TCV Billings)

(Unaudited)

 

Three Months Ended
April 30,

 

Nine Months Ended
April 30,

 

2019

 

2020

 

2019

 

2020

 

(in thousands)

Software revenue

$

162,941

 

 

$

176,970

 

 

$

553,753

 

 

$

564,695

 

Hardware revenue

21,853

 

 

3,786

 

 

92,319

 

 

22,052

 

Product revenue

184,794

 

 

180,756

 

 

646,072

 

 

586,747

 

Support, entitlements and other services revenue

102,830

 

 

137,517

 

 

290,195

 

 

393,061

 

Total revenue

$

287,624

 

 

$

318,273

 

 

$

936,267

 

 

$

979,808

 

 

 

 

 

 

 

 

 

Software and support revenue (TCV revenue) (1)

$

265,771

 

 

$

314,487

 

 

$

843,948

 

 

$

957,756

 

Change in software and support deferred revenue (TCV deferred revenue), net of acquisitions

58,403

 

 

65,234

 

 

206,735

 

 

211,774

 

Software and support billings (TCV billings) (1)

$

324,174

 

 

$

379,721

 

 

$

1,050,683

 

 

$

1,169,530

 

____________________________

(1)

Software and support revenue and billings (TCV revenue and billings) include software and support, entitlements and other services revenue and billings.

Reconciliation of GAAP to Non-GAAP Profit Measures

(Unaudited)

 

 

GAAP

 

Non-GAAP Adjustments

 

Non-GAAP

 

 

Three Months
Ended April
30, 2020

 

(1)

 

(2)

 

(3)

 

(4)

 

(5)

 

Three Months
Ended April
30, 2020

 

 

(in thousands, except percentages and per share data)

Gross profit

 

$

245,979

 

 

$

7,326

 

$

3,694

 

$

 

$

$

 

$

256,999

 

Gross margin

 

77.3

%

 

2.3

%

1.1

%

 

 

80.7

%

Operating expenses:

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

299,162

 

 

(33,177

)

(651

)

 

 

265,334

 

Research and development

 

141,346

 

 

(39,462

)

 

 

 

101,884

 

General and administrative

 

35,644

 

 

(12,131

)

 

(472

)

 

23,041

 

Total operating expenses

 

476,152

 

 

(84,770

)

(651

)

(472

)

 

390,259

 

Loss from operations

 

(230,173

)

 

92,096

 

4,345

 

472

 

 

(133,260

)

Net loss

 

$

(240,671

)

 

$

92,096

 

$

4,345

 

$

472

 

$

7,892

$

622

 

$

(135,244

)

Weighted shares outstanding, basic and diluted

 

196,366

 

 

 

 

 

 

 

 

196,366

 

Net loss per share, basic and diluted

 

$

(1.23

)

 

$

0.48

 

$

0.02

 

$

$

0.04

$

 

$

(0.69

)

____________________________

(1)

Stock-based compensation

(2)

Amortization of intangible assets

(3)

Other

(4)

Amortization of debt discount and issuance costs

(5)

Income tax effect primarily related to stock-based compensation expense

 

GAAP

 

Non-GAAP Adjustments

 

Non-GAAP

 

 

Nine Months
Ended April
30, 2020

 

(1)

 

(2)

 

(3)

 

(4)

 

(5)

 

(6)

 

Nine Months
Ended April
30, 2020

 

 

(in thousands, except percentages and per share data)

Gross profit

 

$

760,090

 

 

$

19,787

 

$

11,082

 

$

537

 

$

 

$

$

 

$

791,496

 

Gross margin

 

77.6

%

 

2.0

%

1.1

%

0.1

%

 

 

80.8

%

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

895,936

 

 

(92,137

)

(1,953

)

 

 

 

801,846

 

Research and development

 

418,640

 

 

(113,484

)

 

(2,465

)

 

 

302,691

 

General and administrative

 

103,083

 

 

(33,729

)

 

 

 

(979

)

 

68,375

 

Total operating expenses

 

1,417,659

 

 

(239,350

)

(1,953

)

(2,465

)

(979

)

 

1,172,912

 

Loss from operations

 

(657,569

)

 

259,137

 

13,035

 

3,002

 

979

 

 

(381,416

)

Net loss

 

$

(687,535

)

 

$

259,137

 

$

13,035

 

$

3,002

 

$

979

 

$

23,290

$

1,240

 

$

(386,852

)

Weighted shares outstanding, basic and diluted

 

192,896

 

 

 

 

 

 

 

 

 

192,896

 

Net loss per share, basic and diluted

 

$

(3.56

)

 

$

1.33

 

$

0.06

 

$

0.02

 

$

0.01

 

$

0.12

$

0.01

 

$

(2.01

)

____________________________

(1)

Stock-based compensation

(2)

Amortization of intangible assets

(3)

Impairment of lease-related assets

(4)

Other

(5)

Amortization of debt discount and issuance costs

(6)

Income tax effect primarily related to stock-based compensation expense

 

GAAP

 

Non-GAAP Adjustments

 

Non-GAAP

 

 

Three Months
Ended April
30, 2019

 

(1)

 

(2)

 

(3)

 

(4)

 

(5)

 

Three Months
Ended April
30, 2019

 

 

(in thousands, except percentages and per share data)

Gross profit

 

$

212,547

 

 

$

5,495

 

$

3,694

 

$

 

$

$

 

$

221,736

 

Gross margin

 

73.9

%

 

1.9

%

1.3

%

 

 

77.1

%

Operating expenses:

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

245,703

 

 

(35,257

)

(661

)

 

 

209,785

 

Research and development

 

137,982

 

 

(42,265

)

 

 

 

95,717

 

General and administrative

 

33,040

 

 

(11,815

)

 

(211

)

 

21,014

 

Total operating expenses

 

416,725

 

 

(89,337

)

(661

)

(211

)

 

326,516

 

Loss from operations

 

(204,178

)

 

94,832

 

4,355

 

211

 

 

(104,780

)

Net loss

 

$

(209,813

)

 

$

94,832

 

$

4,355

 

$

211

 

$

7,387

$

66

 

$

(102,962

)

Weighted shares outstanding, basic and diluted

 

182,963

 

 

 

 

 

 

 

 

182,963

 

Net loss per share, basic and diluted

 

$

(1.15

)

 

$

0.52

 

$

0.03

 

$

 

$

0.04

$

 

$

(0.56

)

____________________________

(1)

Stock-based compensation

(2)

Amortization of intangible assets

(3)

Other

(4)

Amortization of debt discount and debt issuance costs

(5)

Partial release of valuation allowance in connection with an acquisition

 

GAAP

 

Non-GAAP Adjustments

 

Non-GAAP

 

 

Nine Months
Ended April
30, 2019

 

(1)

 

(2)

 

(3)

 

(4)

 

(5)

 

Nine Months
Ended April
30, 2019

 

 

(in thousands, except share and per share data)

Gross profit

 

$

701,102

 

 

$

13,595

 

$

10,554

 

$

163

$

$

 

 

$

725,414

 

Gross margin

 

74.9

%

 

1.5

%

1.1

%

 

 

77.5

%

Operating expenses:

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

655,907

 

 

(81,325

)

(1,877

)

 

 

 

 

572,705

 

Research and development

 

371,550

 

 

(107,953

)

 

 

 

 

 

263,597

 

General and administrative

 

89,167

 

 

(30,449

)

 

63

 

 

 

58,781

 

Total operating expenses

 

1,116,624

 

 

(219,727

)

(1,877

)

63

 

 

895,083

 

Loss from operations

 

(415,522

)

 

233,322

 

12,431

 

100

 

 

(169,669

)

Net loss

 

$

(426,841

)

 

$

233,322

 

$

12,431

 

$

100

$

21,802

$

(7,838

)

 

$

(167,024

)

Weighted shares outstanding, basic and diluted

 

179,235

 

 

 

 

 

 

 

 

179,235

 

Net loss per share, basic and diluted

 

$

(2.38

)

 

$

1.30

 

$

0.07

 

$

$

0.12

$

(0.04

)

 

$

(0.93

)

____________________________

(1)

Stock-based compensation expense

(2)

Amortization of intangible assets

(3)

Other

(4)

Amortization of debt discount and issuance costs

(5)

Partial release of valuation allowance from acquisition and tax effect of a change in law

Reconciliation of GAAP Net Cash Provided by Operating Activities to Non-GAAP Free Cash Flow

(Unaudited)

 

Three Months Ended
April 30,

 

Nine Months Ended
April 30,

 

2019

 

2020

 

2019

 

2020

 

(in thousands)

Net cash (used in) provided by operating activities

$

(36,490)

 

 

$

(84,861)

 

 

$

51,824

 

 

$

(163,515)

 

Purchases of property and equipment

(22,432)

 

 

(32,622)

 

 

(94,815)

 

 

(72,073)

 

Free cash flow

$

(58,922)

 

 

$

(117,483)

 

 

$

(42,991)

 

 

$

(235,588)

 

 

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