Nutanix Investor Day & Position Update

Hi all,

In light of Investor Day, I wanted to write a few quick thoughts and an update on my positioning re: NTNX. Apologies as I didn’t have time to edit.

Investor Day

  • If you are a shareholder, I highly recommend listening to a few of the audio recordings of the presentations. Specifically, Dustin (CFO) and Chris Kaddaras (new Sales lead) did very well.

  • If you don’t have time, check out some of the presentations. Again, Dustin’s (CFO) helped clear up a few outstanding financial questions about their path forward and gave the audience a lot of hope:…

  • I didn’t listen to everything, but I read a few of the presentations and listened to a few talks. There were times that I felt really excited about their opportunity, and other times that I felt frustrated that they kept dodging the same questions about “lead gen”. It’s funny, the same honesty and philosophical ramblings that were very endearing about Dheeraj for the last couple of years, have become very frustrating now. He’s clearly a genius, but I hope someone coaches him on how to better answer questions directly.

  • That being said, Chris Kaddaras is a real star, and he seemed like the only one that was shooting straight with the analysts. He said multiple times that there were just “execution” problems, plain and simple. And to me, that is the only thing that makes sense. In the Q&A the analysts kept asking over and over for more clarity, suggesting that maybe they had introduced too many products or why they didn’t spend enough lead-gen money. Without saying that the previous head of Sales dropped the ball (which I’m fairly certain is what happened), he very simply said (paraphrasing): listen, in the EMEA there were no execution issues and we’ve been consistently outperforming the entire company. This is simply a matter of execution as a sale org.

  • They mentioned that they have a couple of good data points to believe that they have addressed the lead-gen issue already. Although it may take a couple of quarters to fully show up.

  • Most importantly, they reaffirmed the $3b number, although pushing it out 2 quarters. Again, if they hit this number, this will only be a speed bump in the price appreciation. However, that “if” has become a significant “if” in light of recent missteps.

Update on Positioning

  • As I mentioned in my last post, I took a decent-sized short-term trading position after earnings, and in advance of Investor Day, as the stock had capitulated and was significantly oversold. Not to mention that it is worth much more than $33. I closed most of that position today ($41-42). Those options paid off handsomely, and helped close the gap on my losses. I still do have a minor short-term position and will monitor it closely over the next few days, hoping for a few upgrades. I will avoid TA on this board, but suffice it to say, there was a clear trading range from $36-46 previously, and I don’t expect this to go above $46 for awhile (although I’d be happily proven wrong).

  • Long-term, I have begun trimming the position slightly, to bring it more in line with a Tier 2 position in my portfolio. I still do believe in it long-term, especially with the valuations of other companies I hold, but I don’t have the blind confidence I once had, as management made a few significant missteps. That said, their engineering vision and opportunity if executed, is as good as almost any company in our universe. But as they say, ideas are worth nothing unless executed properly.



One additional note, there are some great comparitive financial slides in the linked presentation from Dustin (CFO) on other SaaS companies. Many are companies covered on this board. So even if you don’t own NTNX, it’s a good read.

Lastly, I’m not sure I’ve ever heard NTNX mention this stat, but in FY 2018 they had a NRR of 141%! That is 2nd to only TWLO.



in the EMEA there were no execution issues and we’ve been consistently outperforming the entire company. This is simply a matter of execution as a sale org.

A skeptic would probably point out that the EMEA didn’t have as significant a base to grow from.

I don’t care how they spin it. I don’t even care if it’s true! A company that neglects to acquire new customers is just as uninvestable as a company that is unable to.


PS I’m glad those who bought at the bottom made a little on their trade. But I don’t feel like I missed out by not buying at $33 and selling at $40. That’s not good investing in my book — that’s gambling on market sentiment. It will work until it doesn’t. You could have done the same with TLND. But with other companies in other quarters the share price just keeps trending down over the next few months, while you miss out on other opportunities.


Lastly, I’m not sure I’ve ever heard NTNX mention this stat, but in FY 2018 they had a NRR of 141%! That is 2nd to only TWLO.

Pivotal’s was 156%


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Pivotal’s was 156%

Pivotal was 149% last quarter.
150% the 2 quarters before and 156% four quarters ago.


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A skeptic would probably point out that the EMEA didn’t have as significant a base to grow from.

They said EMEA was 28% of the base, so small but a decent size.

I was looking for them to say

We focused on too many new products and lost track of our core business a bit. We are going to put some of the new products on hold and focus on the core.

They did’nt say that. There were no analyst questions on the complexity of selling new products, whether it requires a different sales force etc.

Plus they were upfront that they have only 2 weeks of positive data which augurs well for Q4.

Because of these reasons I will watch from the sidelines. I did sell all around 39ish.

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Hi Texmex,

Listen to the last question of the Q&A, an analyst asked that question directly and finally Chris jumped in and answered it. It was the only answer from the execs that made any sense (they didn’t execute well).

Hi Bear,

Re: the expansion rates, “2nd to TWLO” was from their deck, in comparison to the SaaS companies they compare themselves to. Amd again, there are some great slides / metrics to compare a lot of our companies in Dustin’s presentation.

Re: investing in bottoms, it is certainly not the Saul philosophy. And it is hard to argue with his returns (up there with historically great investors). But there are many successful investing styles, and as I have written about before, its the most common piece of advice I give to young investors: you have to find the style that best fits your personality.

As for bottoms not being reliable, nothing is “reliable” in investing. But with trading, it is about probabilities and asymetrical risk/reward. Personally, many of my best trades/investments have been at bottoms, as human psychology tends to fluctuate from euphoria to panic (for anyone interested in this subject Soros has written / spoken extensively on the topic).

Anyways, per board rules, I won’t dive into TA. But suffice it to say, it is an extremely profitable technique if done properly and understood (as I can attest to from the last 5 years of investing returns). It makes no sense to me why fundamental investors don’t incorporate basic indicators it into their decision making (eg RSI or even basic trading ranges and patterns). However, to trade using TA, it takes years to master and most likely involves a lot of losses along the way. Therefore, I don’t recommend trading from TA to 99.9% of investors. End of TA commentary.

Back to local bottoms on beaten down stocks, I understand where Saul is coming from. You ride the fastest car as far and long as it is the fastest car available. But again, not everyone has that philosphy, stomach, or time to trade as often as he does. Also, as mentioned, sometimes a “broken” stock is undervalued and the bounces / return to appropriate valuation can be incredible. In the past two years, see FOSL, KMI, KORS, CMG, TWLO, and on and on. This is actually a fairly “reliable” trade, after a great company has a capitulation event (and yes, I still consider NTNX a great company, maybe not top 10 anymore, but it is an great company with a great future), you start buying the fear for a short-term or medium-term trade. That is only when you are confident in the value of the company though (be it cash flow, earnings, or EV/S).

I do invest primarily in high-growth tech stocks for long-term (most similarly to Saul’s style). And he has taught us all so much (thank you as always). But to just blindly follow his philosophy and trades does not do anyone a service. I’m sure Saul would agree. We all have to find our own way in this forest…