Nutanix Announces $20M Deal with DOD

Investment Analysis Clubs Saul’s Investing Discussions
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The largest in the company’s history…

Nutanix (NTNX), Inc. (NASDAQ:NTNX), a leader in enterprise cloud computing, today announced it closed the largest deal in company history in Q4 of fiscal 2018, worth more than $20m with an agency in the U.S. Department of Defense. The customer will use Nutanix software to operate 15 remote sites running two different networks.

…

“Government agencies face enormous pressure to control costs, streamline IT infrastructure, and maintain application performance from basic IT functions to critical national security tasks,” said Chris Howard, Vice President, Public Sector Sales, Nutanix. “The simplicity, ease of use and overall great value of our software is why U.S. federal organizations have been such early and sustained adopters of our platform. We’re excited to continue to supporting their missions.”

Read more at https://seekingalpha.com/pr/17265536-nutanix-announces-20m-d…

Matt
Long NTNX
Intuit (INTU), MasterCard (MA), PayPal (PYPL), and Square (SQ) Ticker Guide
See all my holdings at http://my.fool.com/profile/TMFCochrane/info.aspx

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Sorry Matt didn’t see your post before posting the same info.

Good news for us Nutanix investors.

WM33

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Matt, that deal was already announced at thenearnings call and a portion of the money recognized in Q4s revenues.

Are you saying this is something brand new and different? Does not seem likely, but will listen for your response.

Thanks.

Tinker

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Is this a second deal with a DoD agency? I thought a $20M deal was already announced in the earnings call?

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Seems likely that their revenue estimates for next quarter are a bit low.

I’m a bit sceptical about their new cloud software, but the inertia of these sorts of deals must be enormous. You don’t switch out your datacenter OS on a quarterly basis.

cheers
Greg

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You are all correct, it was already mentioned in the conference call.

“Our top deal of the quarter and the largest in the company’s history worth more than $20 million was with a DoD agency looking for a simple and resilient solution to power its combat edge clouds across the world. This customer will use our Enterprise Cloud platform to power 15 remote sites running 2 different networks. Another one of these deals with a different entity within the DoD, continue to expand its use of our platform with a repeat buy in the quarter which included the purchase of licenses for our Calm application life cycle management offering.”

It’s just interesting to note that the market is reacting a bit to the light being shone on this. A quick 3.71% bump ahs as I write.

WM33

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Ah, I assumed it was a new deal, although the details sounded identical. Why would you send out a PR about a deal you announced weeks ago?

Not sure I understand the machinations of corporate-speak.

cheers
Greg

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Why would you send out a PR about a deal you announced weeks ago?

My guess is that all of the t’s weren’t crossed and i’s weren’t dotted until now (in legalese, it is only now a “fully executed” agreement), so they didn’t feel they should put out the press release formally announcing it until this afternoon.

But it was probably close enough to being a done deal that they were comfortable speaking to it on the call.

-mekong

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I’m fairly confident it is the same deal mentioned on the call (and rumored a month before the conf call). I’m sure they needed to get approvals before doing a formal press release though (which may explain the delay).

Also, there is an investor conference on Wednesday (Duetsche Bank Technology Conference), so the price may rise into that conference (and/or hopefully rise after).

Lastly, digging in a bit more to the details, see link: https://www.nutanix.com/company/customers/all-customers/us-d…

I’m not positive if this is the same deal, but really interesting to read more about the DAAS (desktop as a service) program with DoD. The did a pilot with 500 desktops (power users). It went well. Seems like it was expanded to 4,000, with the potential to get to 20,000 desktops:

“The DoD feels confident about building this new virtual desktop service on Nutanix. For the initial Pentagon client, the agency will provide 2,000 virtual desktops across two different networks, for a total of 4,000 desktops. As more tenants are added to the system, it could expand to over 20,000 virtual desktops. “It’s a great solution that meets our needs. Nutanix is easy to implement and scales linearly, so it makes expansion a lot more predictable, which are all good things for us,” said Shiroma.”

In current market (with many other stretched valuations), still my highest conviction stock for next 6-18 months.

Stephen

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How does a $20 m deal move the needle on a $1 b rev co?

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How does a $20 m deal move the needle on a $1 b rev co?

Well, $20m is 2% of $1b. But, in the land of land and expand, where customers eventually spend several multiples more than the initial purchase over the years that follow, the future revenue from this customer should be quite significant. Then a deal with one Federal government agency could lead to deals with other agencies.

Chris

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They had already announced a “larger” deal with the AirForce a few months ago:

https://www.marketwatch.com/story/nutanix-has-scored-largest…

I guess since that one was a partnership deal, it didn’t count as the still largest deal :slight_smile:

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“In current market (with many other stretched valuations), still my highest conviction stock for next 6-18 months.”

I have been thinking the same and was planning to add more. But I held back because the stock started dropping after a good EC. Why is this stock at such a low valuation, half the P/S of NEWR even though it is growing at least at the same rate?

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I believe that Mauser has a good point. In this market why question. Thin the herd. This your losers, add to your winners as things seem appropriate.

Not all ships are rising. The regular areas of the stock market are pretty staid. Many technology names are staid as well like Cloudera, and Nutanix, although it has had a good year, has fallen behind.

True, if one looks at Nutanix’s chart it may simply be waiting a few more weeks for it to rise again. I mean its chart is like an EKG with a repeated rhythm pattern over and over and over again.

My issue with Nutanix has always been, that unlike practically every other similar like company in the market that we follow, it is the one company that fails to make any positive progress in any material fashion towards sustained rational cash printing.

It is a software company with little in terms of capital expenses. It is growing at more than 50% a year. It’s deals are getting bigger and bigger (thus sales should be more and more efficient), and its repeat buys (which come with little marginal cost) are far larger than initial purchases (which should crate a large amount of economic leverage). And yet, I cannot recall Nutanix doing anything but adopting this Rule of 40 that I find rather arbitrary to begin with and more a cover to do uneconomical things.

Certainly, and I wholly agree, grow and grow into your opportunity, but one would expect as you grow, and your efficiency improves, and your recurring revenue with little if any incremental costs each year to earn grow, that even if not trying the business would have to show some economic leverage! Nutanix does not appear to really do so however.

That is usually a transitory concern however, stock goes down, no earnings leverage, stock goes up it is all about expanding growth opportunities.

That has always been my greatest issue with Nutanix.

Tinker

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Are you saying this is something brand new and different?

I did think it was new at first. My bad ladies/gents.

Matt
Long NTNX
Intuit (INTU), MasterCard (MA), PayPal (PYPL), and Square (SQ) Ticker Guide
See all my holdings at http://my.fool.com/profile/TMFCochrane/info.aspx

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You know, to me, this is representative of one (of many) of the investment thesis for Nutanix.

That the market doesn’t understand them or doesn’t know them sufficiently at this point in time. This AH reaction for what most of us is old news fits that narrative.

Darth

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My issue with Nutanix has always been, that unlike practically every other similar like company in the market that we follow, it is the one company that fails to make any positive progress in any material fashion towards sustained rational cash printing.

That is a great point, Tinker. Also, it prompted my brain to recall a few thoughts about Cohesity and Mohit Aron having left Nutanix to start it (Aron was a co-founder of Nutanix, fwiw).

Here’s a few links to where I mentioned the Aron angle over on the NPI board a few months back (starting as of July 4th).

http://discussion.fool.com/black-and-orange-33112110.aspx?sort=w…

http://discussion.fool.com/ntnx-33138111.aspx?sort=whole#3313813…

-volfan84
still long NTNX

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Yes, NTNX has been developing so many new products. But its cash flow and rate of share dilution are negatives. I don’t recall any analyst asking about that.

Looks like many of the top long term guys have left - Sudheesh Nair, Ajeet Singh. Also, checking on volfan’s comment I came across this about Mohit Aron. Is Pandey’s leadership driving people off? He does have a 97% approval and 2 of these guys left a long time back. So there is that.

https://www.businessinsider.com/why-cohesity-founder-left-nu…

"At Nutanix, Aron says customers were asking the company to build a product that did for their backup storage what Nutanix did for their main storage — make it easier and cheaper to grow and manage.

He couldn’t get the rest of the leadership team to agree to develop the product the way he wanted to, he says, so he quit to do it himself. While he has a good relationship with his former cofounder, Dheeraj Pandey (Nutanix CEO), he says, this was not a sanctioned split blessed with seed money.

It was a clean break.

“I have a civil relationship with everyone at Nutanix,” he says, but “I did not take money from any of the people associated [with Nutanix]. I did not become adviser. I was scared of IP issues.”

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Plus, it would be a great reference account. “Perhaps you didn’t know, but we have the DOD as a client…”