San Jose-based Nutanix  (Nasdaq: NTNX) was set up to deliver invisible infrastructure for enterprise computing. Its proprietary software-driven Xtreme Computing Platform converges compute, virtualization, and storage into a single solution to provide a simpler solution to the datacenter. The company was a pioneer in the development of a compute and storage infrastructure that could implement enterprise-class virtualization without involving the investments in expensive network storage. After a disappointing IPO, the Billion Dollar Unicorn hyper-converged storage leader appears to be on a path of recovery.

Nutanix’s Financials

For the recently reported second quarter, revenues grew 44% to $286.7 million, compared with the market expectations of $283 million. Loss per share came in at $0.14, better than the market’s forecast of a loss of $0.21 per share.

By segment, product revenues grew 41% over the year to $223.3 million, and support and other services revenues grew 55% to $63.6 million. Recently, Nutanix changed its revenue accounting policy. It no longer recognizes pass-through hardware revenues as part of its revenues.

During the quarter, Nutanix’s billings grew 57% to $355.9 million. Software accounted for 42% billings and Support services brought in 35% of the billings. The remaining 23% billings came from the hardware segment. Overall, Software and support billings grew 60% over the year. It added 1,057 customers, ending the quarter with 8,870 customers.

Nutanix expects revenues to grow 35% over the year to $275-$280 million with a non-GAAP net loss of $0.19-$0.21 for the quarter. The market was looking for revenues of $268.4 million with a loss of $0.23 per share.

Nutanix’s Expansion

Nutanix recently released the version 5.5 of its core product. This was the biggest software release in its history. Some of the enhancements to the platform include single node clusters, software-based encryption, real-time replication, self-service portal in Calm for DevOps, antivirus support in software-defined file services, and cross-hypervisor migration.

The other big news for Nutanix was the recent announcement of plans to acquire Minjar, the India-based developer of Botmetric. Botmetric is an AWS-based service that helps customers with unified cost control and provides them with enhanced operational insights into workloads running in public clouds. Botmetric will enable customers to adapt multi-cloud architectures and will give cloud operators the ability to choose the best environment for their business applications in data. Terms of the acquisition were not disclosed. Nutanix plans to leverage the Minjar acquisition to strengthen its automation and lifecycle management offering Calm and Xi Cloud.

Questions for Nutanix’s Board

Nutanix is leveraging the unprecedented opportunity in SaaS today by transitioning to a software-dominant model to drive revenue growth acceleration and profitability. The recent acquisition of Minjar is also in line with my opinion that companies should be searching for the unpolished gems in countries like India to expand. But despite these moves, Nutanix’s rising competition is worrying.

According to a recent report, Nutanix’s market share grew from 33% in 2016 to 34% in 2017. During the same period, rival Dell saw market share grow from 39% to 49%. Dell competes in the market through Dell EMC and VMWare. Besides direct competition, Nutanix is also dependent on Dell for nearly 10% of its top-line. Dell could very easily control that to further hurt Nutanix. I would like to know what is Nutanix doing specifically to address this growing threat?

Its stock is currently trading at 52-week high levels of $51.48 with a market capitalization of $8.26 billion. It has soared from the 52-week low of $14.38 in April last year. The stock’s current price is also a dramatic improvement from the $16 it had listed at, in 2016.