Cloud Stocks: Nutanix Plans To Take On VMWare


According to a report by Market Research Future published last year, the Hybrid Cloud market is estimated to grow at 23% CAGR to reach $173.33 billion by 2025. Enterprise cloud computing player Nutanix (Nasdaq: NTNX) is helping organizations migrate to these multi-cloud environments by improving its product and partner capabilities.

Nutanix’s Financials

For the second quarter of the year, Notanix’s revenues grew 19% to $413.1 million, ahead of the market’s forecast of $407.9 million. ACV billings grew 37% over the year to $217.9 million. Net loss per share came in at $0.03, compared with the Street’s forecast of a loss of $0.21 per share.

By segment, Nutanix’s Product revenues grew 19.7% to $209.2 million while revenues from support, entitlements, and other services grew 18.9% to $203.9 million.

For the third quarter, Nutanix forecast revenues of $395-$400 million, compared with the market’s estimates of $403.84 million.

Nutanix’s Cloud Expansion

Recently, Nutanix announced its partnership with Red Hat that creates a powerful solution for building, scaling, and managing cloud-native applications on-premise and in hybrid clouds. It combines both their technologies to enable the installation, interoperability and management of Red Hat OpenShift and Red Had Enterprise Linux with Nutanix Cloud Platform, including Nutanix AOS and AHV. The partnership will allow customers that are looking to run Red Hat Enterprise Linux and Red Hat OpenShift on hyper-converged infrastructure (HCI) to use Nutanix’s platform that includes Nutanix AOS and AHV.

It also announced its collaboration with Citrix that provides secure, on-demand, and elastic access to apps, desktops, and data from any device or location and at any scale through Nutanix HCI and hybrid multi-cloud deployments of Citrix desktop-as-a-service (DaaS) and Virtual Apps and Desktops services. Nutanix and Citrix will provide fully comprehensive DaaS options for customers to procure, deploy, and manage Citrix environments that are running on the Nutanix Cloud Platform, delivered with original equipment manufacturer (OEM), global system integrator (GSI), service provider (SP), and public cloud providers in an efficient, cost-effective way to accelerate the adoption of hybrid multi-cloud solutions.

Earlier this year, Nutanix also announced the global availability of its simplified product portfolio, making it easier for customers to execute their hybrid multi-cloud strategies. The new solution has simplified packaging, metering, and pricing to enable customers to plan for changing needs more easily. It has integrated its earlier portfolio of 15 offerings into five, making it easier even for its sales teams and its partners to close deals faster.

The new portfolio now includes Nutanix Cloud Infrastructure (NCI) a complete software solution including virtual compute, storage, and networking for virtual machines and containers, Nutanix Cloud Manager (NCM) that helps simplify building and managing cloud deployments by driving consistent governance across private and public clouds, Nutanix Unified Storage (NUS) that delivers distributed and software-defined storage for multiple protocols to support a variety of workloads deployed anywhere, Nutanix Database Service (NDB) that simplifies database management across hybrid multi-cloud environments, and Nutanix End User Computing Solutions to deliver virtual apps and desktops to users worldwide from the public, private, and hybrid cloud infrastructure.

The migration also involved a change in pricing to a per-core pricing. Earlier Nutanix used to charge a premium for all-flash configurations. But with the new model, its pricing is no longer dependent on storage type, making it more attractive to customers who were already migrating to, or were on, flash configurations.

Nutanix believes that its new product offering and the integrations with companies like Red Hat will make it a tougher playing field for its competitors like VMWare (VMW). The company is already seeing strong traction in the market for its simplified offering. According to the management, customers are taking advantage of this new packaging to quickly purchase more complete solutions that better meet their needs.

According to an IDC report, the hyper-converged infrastructure market was $2.46 billion in Q4 2020. VMware accounted for 38.7% of this market followed by Nutanix with a 23.4% share. As the market continues to shift toward cloud-focused offerings, services such as those offered by Red Hat OpenShift will attract attention. By tying up with Red Hat, Nutanix is getting ready to take on VMware in the hybrid cloud market segment.

Its stock is currently trading at $24.02 with a market capitalization of $5.21 billion. It hit a 52-week high of $44.50 in August last year and a 52-week low of $22.59 earlier this month.

Disclosure: All investors should make their own assessments based on their own research, informed interpretations and risk appetite. This article expresses my own opinions based on my own ...

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