Here’s how I think about it, and remember that I could be completely wrong. I’m not computer and tech savvy, and I am approaching this from a common sense point of view instead of a tech point of view.
How dissatisfied are customers in Nutanix WITHOUT the Xi program. Well Nutanix has had a net promoter score which averaged 90 for the past five years. NOBODY gets a net promoter score of 90 even once. It’s crazy high! It’s an extreme outlier! It probably puts them in the top 1/1000th of customer satisfaction. It means that their customers absolutely love their products. LOVE them! And this is without the Xi product being introduced yet.
Their January results included revenue up 44%, billings up 57%, software billings up 60%, deferred revenue up 57%, cash flow from operations up 135%, free cash flow up over 300%, million dollar deals up 104%! A dollar based net retention rate over 120%. These are awesome results !!! And this was without the Xi program!
The revenue was up 44% even with them not counting a lot of previously counted hardware sales. Revenue grew by about 52% on an apples to apples basis. Gross margins ticked up to 63.5% from 61.9%. Bookings were up 13% sequentially and 57% from the year before. The book to bill ratio was 1.24. Customers spend 410% of initial purchase in repeat orders over the first 18 months. And this is without the Xi product being introduced yet.
Gartner rated them the top leader in their space for Completeness of Vision and Ability to Execute. And again, this was without the Xi program being introduced yet.
I might trim a tiny bit of my Nutanix because it’s my largest position, and bring it down from a 15% position to a 14% position or something like that, but I think that anyone thinking of substantially reducing his position in Nutanix because of a program delay is way over-reacting.
I think the market agreed. A 5% drop on a down market day was nothing. Nutanix was up about 48% for the year before the drop Friday. Some stocks drop 20% on a good market day just because their earnings were great but their guidance was cautious. I think Nutanix isn’t giving a new date for release because they don’t want to predict an early date when they actually think it will be ready, because they don’t want to take a chance of disappointing again with another delay. I think that’s wise.
It think this is just an absolutely awesome company! The Xi release will come, but they’ll do fine as far as results until it arrives.
But that’s just the way I see it. If you don’t agree, go back and read the numbers I posted above.
PS - If you are not familiar with Net Promoter Scores they rate how likely a customer company would be to recommend Nutanix to another company. Possible scores go from -100 to +100 in a bell shaped curve, and a score of 15 or 20 is considered a ‘good’ score. Plenty of companies get negative scores. A score of 90 puts Nutanix way out in the tail. As I said, maybe in the top 1/1000th of companies.