NTNX - Q2 IDC Market Share

The latest IDC data came out on Tuesday. NTNX slightly ovetook VMware in HCI software sales.

https://www.idc.com/getdoc.jsp?containerId=prUS44330918

In Q1 the market share was VMware 37.2% ($456m) to NTNX 32.5% ($397m). In Q2 it shifted to VMware 37.2% ($495.8m) to NTNX 34.2% ($497.7m).

Note there is some seasonality I’m sure, and NTNX had more marketshare in Q2 2017. However, this certainly doesn’t look like a business losing share (per the nonsense analyst downgrade). And if anything lends credence to the notion that VMware may not be capturing “new” non-Dell / upgraded customers as fast.

Of equal or more interest to me, “Revenue from hyperconverged systems sales grew 78.1% year over year during the second quarter of 2018, generating $1.5 billion worth of sales. This amounted to 41.2% of the total converged systems market.” This is up from 76% and 38% in Q1, so things look to be accelerating (which is incredible).

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In Q2 it shifted to


VMware 37.2% ($495.8 million) 
NTNX   34.2% ($497.7 million)

Hi Stephen,
I’m not sure how you read that. Here’s what I copied off the chart you linked to:

**Top Companies, Worldwide Hyperconverged Systems Based on Owner of HCI Software, Q2 2018 (Revenues are in US$ millions)**

**Second Quarter 2018 Revenue:**

**Nutanix   $497.7 million    34.2% market share**
**VMWare    $495.8 million    34.1% market share**

Thus you got the dollar amounts right but you mis-copied the percentages. Actually Nutanix slightly beat out VMWare this quarter, and is certainly gaining share, not losing it.

Saul

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I believe this study underestimates Nutanix. I cannot say if it does or not, but I believe it does not count Nutanix revenues from Cisco or HP. Since Dell’s top selling server product ships w Nutanix one might imagine Nutanix does quite well w Cisco and HP boxes as well, Jr these companies would not report these sales as credit to Nutanix. Maybe I am wrong on this, but in my mind nudge th Nutanix number up a bit.

Tinker

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Correct! It was a typo. Should read 34.1%. Apologies in advance, sometimes I type on my phone.

On a side note, found a few interesting tidbits in the 10k. Disclosure, I mostly skimmed, and some of this is in the investor presentations, but nonetheless interesting.

  • “The number of end customers grew from over 7,000 as of July 31, 2017 to over 10,600 as of July 31, 2018.” That is 51% growth. In Q4 they added 1,000 new customers alone.

  • “Additionally, end customers who have been with us for 18 months or longer have total lifetime orders, including the initial order, to date in an amount that is more than 4.1x greater, on average, than their initial order.”

  • “Our product revenue during fiscal 2018 was also impacted by the reduction of hardware revenue from transactions where the hardware was not sold by us. We estimate that if we had sold the hardware in these transactions, our product revenue for the fiscal year ended July 31, 2018 would have been approximately $168.9 million higher.” Meaning total revenue would have been $1,324, or 56.5% YOY growth (another way of looking at it, although probably best to use software billings or deferred revenue as a better measure).

  • Likewise, “the number of our full-time employees increased from approximately 2,800 as of July 31, 2017 to approximately 4,000 as of July 31, 2018.”

  • “We have significantly increased our sales and marketing personnel, which grew by approximately 42% from July 31, 2017 to July 31, 2018. We estimate, based on past experience, that sales team members typically become fully ramped up around the start of their fourth quarter of employment with us, and as our newer employees ramp up, we expect their increased productivity to contribute to our revenue growth. As of July 31, 2018 , we considered approximately 59% of our global sales team members to be fully ramped, while the remaining approximately 41% of our global sales team members are in the process of ramping up.”

All in all, more data points that NTNX is growing, and growing fast. There are not many companies at this scale that are growing this quickly…and all this doesn’t really speak to future growth of their new offerings.

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Yeh - it may undercount NTNX as Cisco or Dell revenues, but my biggest criticism is it doesn’t count billings but revenues recognised. If VMWare is growing billings as fast as Nutanix I would be amazed.
A

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