Nutanix Q3 Earnings Call: Strong Growth Amid Challenges

Nutanix Inc ((NTNX)) has held its Q3 earnings call. Read on for the main highlights of the call.

Nutanix Inc. recently held its earnings call for the third quarter of 2025, delivering a strong performance that exceeded expectations. The company reported impressive revenue and cash flow figures, alongside robust annual recurring revenue (ARR) growth. Despite these achievements, Nutanix acknowledged challenges in the macro environment and flat net retention rates, which pose some concerns for future growth.

Exceeding Financial Guidance

Nutanix reported a remarkable financial performance, with revenue reaching $639 million, surpassing the expected range of $620 million to $630 million. This represents a year-over-year growth of 22%, highlighting the company’s ability to exceed its financial guidance and deliver strong results.

Annual Recurring Revenue Growth

The company’s ARR grew by 18% year-over-year, reaching $2.14 billion. This growth underscores the strong demand for Nutanix’s offerings and its successful expansion within existing customer segments, reflecting the company’s strategic focus on recurring revenue streams.

Strong New Logo Growth

Nutanix experienced significant new logo growth across all customer segments, securing notable wins with Fortune Global 500 companies and major asset managers. This growth in new customer acquisition is a testament to the company’s expanding market presence and appeal.

Free Cash Flow and Margin Improvements

In Q3, Nutanix achieved a free cash flow of $203 million, representing a 32% free cash flow margin. Additionally, the non-GAAP operating margin was 21.5%, exceeding the guided range of 17% to 18%. These figures indicate strong financial health and operational efficiency.

Partnerships and Innovation

Nutanix announced new partnerships and product innovations, including support for Dell PowerFlex and Pure Storage, as well as expansion to support Google Cloud. These strategic moves are expected to enhance the company’s product offerings and market reach.

Macro and Demand Environment Challenges

The company highlighted challenges in the macro environment, noting uncertainties that affect deal cycles, particularly in the federal business sector. These challenges could impact future growth and require careful navigation.

Flat Net Dollar Retention Rate

Nutanix’s net dollar-based retention rate remained flat at 110% quarter-over-quarter. While this indicates stable customer retention, it also suggests that expansion within existing customers is not accelerating, which could be a point of concern.

Federal Business Variability

Variability in the federal business was observed due to personnel changes and additional reviews, affecting deal cycles. This variability highlights the complexities of operating within the federal sector and the need for strategic adjustments.

Forward-Looking Guidance

Nutanix provided an optimistic outlook for the future, raising its guidance for the full fiscal year 2025. The company projects revenue between $2.52 billion and $2.53 billion, with a non-GAAP operating margin of approximately 20.5% and free cash flow of $700 million to $730 million. Nutanix plans to continue focusing on cloud platform expansion, partnerships, customer engagement, and innovation to sustain its growth trajectory.

In summary, Nutanix’s third-quarter earnings call reflected a strong performance with impressive financial results and strategic growth initiatives. While challenges in the macro environment and flat retention rates present some hurdles, the company’s forward-looking guidance and focus on innovation and partnerships position it well for continued success.