Photo Credit: Jared and Corin/Flickr.com 

After a rather slow IPO schedule for the technology sector during the year, things appear to be looking up. Last week, hyper converged storage provider Nutanix (NTNX), finally went public. It had filed to go public in December last year, but the market conditions led to a delayed listing. It has only been a week since it listed, but the Billion Dollar Unicorn club member appears to be doing well so far.

Nutanix’s Financials

Founded in 2009 by tech experts Dheeraj Pandey, Ajeet Singh, and Mohit Aron, San Jose-based Nutanix was set up to deliver invisible infrastructure for enterprise computing. It developed storage capabilities to simplify data center infrastructure by integrating server and storage resources into a turnkey appliance that can be deployed in as less as 30 minutes and can run any application at any scale. Nutanix’s impressive “Legos” like platform has helped it deliver strong growth since being founded.

According to the recent financials, Nutanix’s revenues grew 84% for the year ended July 2016 to $445 million. The continued investments in product development and marketing capabilities continue to hurt the margins. Nutanix ended the year with losses growing 34% over the year to $169 million.

By segment, product revenues grew 74% to $350.8 million and support and services revenues grew 131% to $94.1 million.

Nutanix’s Road to the IPO

In December 2015, Nutanix had filed to go public. But uncertain market conditions made it delay its listing for nine months. Prior to listing, Nutanix had raised $312.2 million from investors including Anshu Sharma, Battery Ventures, Blumberg Capital, Bob Pasker, EquityZen, Greenspring Associates, InstantScale Ventures, Khosla Ventures, Lightspeed Venture Partners, Morgan Stanley, Riverwood Capital, and Sapphire Ventures. In August 2014 it had raised $140 million at a valuation of over $2 billion. The delayed IPO coupled with continued losses made it raise another $75 million in loans from Goldman Sachs this year. And then, finally, last week, the company took the plunge.

It listed on the Nasdaq under the ticker NTNX at $16 a share, at a valuation of $2.18 billion. The valuation wasn’t much higher than what Nutanix had been valued at two years ago at its last funding round. But the market appears to have received the stock well so far. The stock rose to $46.78 after listing, taking its market capitalization to over $5 billion. It has fallen since and is trading at $36.10 – still a significant uptick from its list price.

Nutanix’s successful listing is a good omen for the tech industry. The data storage industry hasn’t had a very strong IPO track record of late. Other vendors like Pure Storage and Nimble Storage have seen their valuations fall by more than 40% since they listed. Nutanix’s IPO is likely to steer other tech companies into the listing.

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Nutanix’s Competition

But Nutanix’s path ahead is not all that rosy. The industry is seeing strong competition from bigger vendors. Dell’s acquisition of EMC earlier this year has brought Dell’s might into the industry as well. Besides being a competitor now, Dell has also been an OEM partner and a big customer for Nutanix. Dell accounted for a meaningful portion of Nutanix’s billings over the past few quarters and there is obvious concern that Dell may want to switch over to its own EMC-VMWare offering instead.

Then there are other legacy players like Cisco Systems and HP Enterprises (HPE ) who are also very bullish on the sector. Earlier this year, both Cisco and HPE launched their hyperconverged offerings. Cisco’s HyperFlex was released in March and post the release, Nutanix was no longer part of the Cisco partner program. In fact, even though Nutanix announced that its software could run on Cisco’s UCS C-Series server/storage systems, Cisco said that it does not support the solution.