Nutanix CEO Dheeraj Pandey sees the COVID-19 pandemic as a time of renewal for the cloud infrastructure firm.
For its fiscal third quarter, which ended April 30, Nutanix reported revenue of $318.3 million, up 11% year-over-year, while its non-GAAP net loss grew year-over year to 69 cents per share. Shares of Nutanix (NTNX) - Get Nutanix, Inc. Class A Report fluctuated after hours on Wednesday but were down 5% overall.
"Every 8-10 years there is a massive disruption, a recession that happens, and some companies go and retool themselves," Pandey told TheStreet.
Nutanix has been undergoing a shift from hardware sales to services and subscription revenues, and said that 82% of total revenue was from subscriptions last quarter. Its total billings were $383.5 million, up 11% year-over-year, and its non-GAAP gross margin grew to 80.7%.
Pandey called it a solid quarter, despite the impact of COVID-19.
He said the pandemic had a mixed impact on demand last quarter, with dislocations from customers in hard-hit sectors, such as travel and hospitality, counterbalanced by tailwinds from the work-from-home environment.
"At the same time, we did see a bit of a slowdown in new customers," he said, while also adding that Nutanix's sales team has adapted by focusing on smaller subscription deals that could be expanded over time.
Heading into earnings, shares of Nutanix were down about 20% year to date amid uncertainty around its ability to balance the negative impacts of COVID-19 in its overall business.
Writing in April, analysts at Goldman Sachs noted Nutanix's "solid" technology offering, but cast doubt on "its ability to return to revenue growth while reducing operating expenses/sales to maintain adequate cash on the balance sheet.”
In early May, Nutanix furloughed 1,500 employees, equivalent to roughly 25% of its global workforce.
Pandey added that Nutanix is embracing a startup mentality, cutting spending and leaning into its subscription business as a way to gradually earn customers' trust over time instead of focusing on large contract commitments.
"There's a lot of good things about being a startup again," he said. "We’ve laid the foundation in this business model transition, and it's going to be a great competitive advantage in the coming months."
Pandey noted that this is Nutanix's first recessionary cycle. The company was founded in late 2009, and went public in 2016.
"People want to buy small things [in the current environment, and subscriptions are yet another way to make Nutanix smaller," he added.