Nutanix (NTNX) delivered a solid finish to fiscal 2025, exceeding all guidance metrics while demonstrating an ability to capture market share from VMware amid industry disruption.
The cloud infrastructure platform provider posted strong revenue growth, improved profitability, and robust free cash flow generation. However, shares are trading down 11% as investors digest mixed signals about future growth acceleration.
Nutanix reported fiscal Q4 revenue of $653 million, up 19% year-over-year and above the guided range of $635-$645 million.
For the full fiscal year, Nutanix achieved revenue of $2.54 billion, representing 18% growth, while annual recurring revenue (ARR) reached $2.22 billion with 17% year-over-year growth.
“We are pleased with our performance in fiscal year ’25, exceeding the high end of the guidance across all guided metrics” — Rukmini Sivaraman, CFO.
Here are three key factors that could drive Nutanix’s performance amid the VMware migration opportunity.
1. VMware Displacement Momentum Building Early
Nutanix is capitalizing on widespread customer uncertainty following Broadcom’s acquisition of VMware. The company added over 2,700 new customers in fiscal 2025, its highest count in four years, including more than 50 Global 2000 accounts.
CEO Rajiv Ramaswami emphasized that the VMware replacement opportunity remains vast. “If you were to characterize this as a multi-inning baseball game, I’d probably say we’re in the second inning at this point,” he said, noting that VMware has approximately 200,000 customers.
A standout win came from Finanz Informatik, the digitalization partner for Germany’s Savings Bank Finance Group, serving 50 million customers. The company plans to migrate its Windows and Linux workloads to Nutanix over the next two years, citing security, cost-effectiveness, and partnership trust as key decision-making factors.
Nutanix also landed two Global 2000 customers using its new cloud platform, which supports Dell PowerFlex, demonstrating early success in preserving customers’ existing external storage investments while modernizing their infrastructure.
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2. Profitability Metrics Accelerating Beyond Expectations
Nutanix demonstrated strong operational discipline while maintaining growth momentum. It achieved a Rule of 40 score of 48 for the second consecutive year, combining 18% revenue growth with 30% free cash flow margins.
Free cash flow surged to $750 million, up 26% year-over-year, while non-GAAP operating margins reached 21.1% for the full year. This represents a 500-basis-point improvement from the prior year, showcasing the scalability of Nutanix’s subscription model.
The company’s gross margins remain industry-leading at 88.1%, providing substantial room for investment in growth initiatives while maintaining profitability. Management raised fiscal 2026 operating margin guidance to 21-22%, signaling continued margin expansion ahead.
3. Strategic Platform Expansion
Nutanix is diversifying beyond traditional hyperconverged infrastructure through strategic partnerships and AI capabilities. It enhanced its generative AI offerings with GPT-in-a-Box 2.0 and deepened integration with NVIDIA AI Enterprise.
The partnership with Dell PowerFlex targets large enterprise customers seeking to modernize their IT infrastructure while preserving existing external storage investments.
A similar partnership with Pure Storage entered early access and remains on track for general availability by year-end.
Management also highlighted the expansion of cloud capabilities, with Google Cloud support now in public preview, complementing existing AWS and Azure integrations. This multi-cloud approach positions Nutanix to capture workloads across different cloud strategies.
Nutanix provided fiscal 2026 revenue guidance of $2.9-$2.94 billion, representing 15% growth at the midpoint. It expects to continue adding customers at a rate of mid-to-high hundreds of new logos per quarter.
The TIKR Takeaway
Nutanix’s fiscal 2025 results highlight an ability to execute during a period of significant industry disruption. Strong customer additions, expanding margins, and early wins with strategic partnerships demonstrate momentum in the VMware displacement cycle.
The hedge fund activity shown in the shareholder data reveals mixed sentiment among institutional investors. While Renaissance Technologies increased its position by 10.42%, Jericho Capital reduced its stake by 40.50%.
This divergence suggests institutional investors are still evaluating Nutanix’s long-term competitive positioning.
With the VMware opportunity still in early innings and new partnership revenue streams beginning to contribute, Nutanix stock appears well-positioned to benefit from enterprise infrastructure modernization trends over the coming years.
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