Piggybacking on the NTNX discussion under the SHOP thread, I took a look at the change in gross profit by quarter.
A way to look at the growth without the pass through hardware sales.
Gross Profit percent change for NTNX
2017 84.0 62.5 52.3 50.6
2018 40.5 45.6 58.2
Growth is accelerating, but with easier comps.
Jim
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If you like the sales growth check out billings and deferred revs growth.
A
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percent change in billings by quarter
2017 87 59 47 40
2018 32 57 50
percent change in deferred revenue by quarter
2017 161 128 102 77
2018 48 57 62
Similar trends to gross profit change. Picking up the last 2 quarters.
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Thanks, Jimbo!
One note about the “hidden” growth aspect, software and support made up 83% (and rising) of billings in Q3 - compared to only 17% for hardware.
The software and support billings grew 67%. That is where the future (and margins) are for NTNX. If that number can keep growing at 50-60% for the next 12-24 months, look out.
Stephen
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Focus:
Exactly correct…and that transition away from hardware is why comparing total revenue and Billings from year to year is inaccurate (at least the past couple years) since their hardware revenue had been a large portion of total revenue previously and was essentially a pass through expense.
Their market is essentially a duopoly with VMware (DELL)…with DELL having the advantage of converting on-prem business and cross selling with DELL, PVTL.
NTNX reports a week before VMW.
Would be interesting to go back and see how VMW’s growth in hyperconvergence compared to NTNX…are they both growing with the general market or one greater than the other.
From the last VMW earnings call:
Matt Hedberg
Hey, guys. Thanks for taking my question and congrats again on the results. It was good to hear about the continued success of vSAN and I guess I wanted to dig a little deeper into your hyper-converged offering VxRail. Pat, you talked a little bit about in your prepared remarks, but I am wondering if you could give us a little bit more into what’s driving the success there and perhaps how it’s contributing to some of your Dell revenue synergy targets?
Pat Gelsinger
Yes. And overall, another very solid quarter 70% year-over-year growth that and we saw that both vSAN and VxRail customer accounts now over 14,000 as we ended Q1 and just a very solid trajectory. We do see that this is an area of particular strength for our Dell synergies and Dell VxRail is the going extremely well and they also are effectively being a partner for us on vSAN and vSAN-ready nodes.
So while the total revenue growth for VMW is only 14% YoY…the sector that competes with NTNX was up pretty substantially as compared to NTNX.
I need to go back and confirm growth rates.
The question is not without some importance IMO…who if anyone is winning the hyperconvergence war in this duopoly…and why.
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Market share of VMWare vs. Nutanix? All you needed to do was ask 
On the basis of HCI software, systems running VMware’s hyperconverged software represented $405.1 million in fourth quarter vendor revenue, or 32.4% of the total market segment. Systems running Nutanix’s hyperconverged software represented $368.4 million in fourth quarter vendor revenue, or 29.5% of the total market segment. Both values represent all software and hardware, regardless of how it was ultimately branded.
Dell/EMC is #1 on the hardware side, VMWare on the software side, as VMWare numbers are not included in the Dell/EMC numbers.
This is through Q4 2017, so relatively recent (and probably the most recent publically available numbers without an expensive subscription.
VMWare 32.4%, Nutanix 29.5%. Pretty close.
Tinker
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Interesting. Yar over year Nutanix lost a very material amount of marketshare. Nutanix had a 5 point lead over VMWare in Q4 2016, but is down 3 points in Q4 2017. That is an 8 percent gain/loss for VMWare and Nutanix respectively, while at the same time the combinatin of VMWare and Nutanix gained 4 points of marketshare against the rest of the market.
By these numbers VMWare is clearly winning, relatively speaking. What is means from a practical perspective I leave to you fine people to determine.
Tinker
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Hey Tinker:
The operative word may be Both values represent all software and hardware, regardless of how it was ultimately branded.
From NTNX guidance last earnings for this quarter:
Now for the guidance for the fourth quarter. Again on a non-GAAP basis, we expect revenue between $295 million and $300 million, assuming the elimination of approximately $95 million in pass-through hardware revenue. Gross margin between 73% and 74%.
That $300 million is nearly all software.
Maybe we should take this over to the NPI since folks here didn’t like our details on MDB when we posted here before?
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NPI is always a great place to hash details like this out. It does give one confidence in the sales teams that Dell/EMC/VMWare and now Pivotal put together. Back in 2016 EMC stated they intended to b #1 in this market within 12 months, and they succeeded. VMware made a similar statement as well, and it looks like they succeeded perhaps. I linked to another article where the guy who lead the VMWare crusade to be #1 in HCI is now coming over to Pivotal to do the same for PKS vs. mostly Red Hat.
Tinker
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The operative word may be Both values represent all software and hardware, regardless of how it was ultimately branded.
From NTNX guidance last earnings for this quarter: Again on a non-GAAP basis, we expect revenue between $295 million and $300 million, assuming the elimination of approximately $95 million in pass-through hardware revenue. Gross margin between 73% and 74%.
That $300 million is nearly all software.
Maybe we should take this over to the NPI since folks here didn’t like our details on MDB when we posted here before?
Hi Duma, that kind of discussion is exactly what this board is for and about. It’s very welcome here. I can’t imagine why you would have thought otherwise.
Best,
Saul
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Tinker and Duma, If VMWare has gained so much market share by using the advantages of being one of the four combined Dell companies, that sounds like it foretells a very strong future for Pivotal as well.
Saul
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