Nutanix hails channel as valuation soars

Sales dipped but earnings-per-share losses narrowed

Nutanix has hailed the channel as key to its better-than-expected Q1 results.

The vendor's valuation rocketed by nearly 10 per cent after the publication of its earnings, with revenue beating Wall Street expectations.

Sales for the three-month period ending 31 October 2020 dipped 0.6 per cent to $312.8m, but losses per share narrowed from $0.71 a year ago to $0.57.

Speaking on an earnings call, transcribed by Seeking Alpha, outgoing Nutanix CEO Dheeraj Pandey praised the channel for accelerating the vendor's shift to a new sales model.

Nutanix now prefers to highlight its "annual contract value" revenue to investors, rather than pure sales.

These figures show revenue derived from its "land and expand" approach, which sees customers brought in on a recurring revenue basis and then upsold other products and services.

Billings of this nature climbed 10 per cent in Q1 to $137.8m, with the annual run rate rocketing 29 per cent to $1.29bn.

"The channel continues to play an extremely important role in how we help evolve our customer journey," Pandey said.

"To that end, we announced a simplified channel programme to deliver even more profitability and an accelerated road map to help partners embrace the cloud business model.

"Additionally, we made meaningful improvements to Nutanix University, our education arm. The program now provides more certifications across new skill levels in technology tracks to increase the stickiness of Nutanix software and overall consumption of our technology."

Pandey added that the number of partner employees in this programme has quadrupled over the last year to over 38,000.

He also praised vendor alliances with the likes of Hewlett Packard Enterprise, Dell and Lenovo as "an important part of our strategy for offering freedom of choice to our customers".

Pandey also offered an update on the vendor's search for his successor.

He said the firm has been looking at candidates in the enterprise software and infrastructure spaces.

"You have to be strategy focused [and] be able to be able to look around the corner because computing is an industry that's changing so fast [that] you can't take your eyes off the strategy ball," he said.

"I think we've got some great candidates in the pipeline.

I think, all in all, somebody who has a three-to-five-year view and a vision would be very, very important, especially for our sales engineers, our developers and our system reliability engineers. There's a lot of engineering in the company in various different departments that also need to look up to somebody for a strategy and the public cloud landscape that's out in front of us."