uploads///NTNX_Bill to Revenue Ratio

Nutanix May Gain from a Rising Bill-To-Revenue Ratio

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May. 4 2018, Updated 8:01 a.m. ET

Factors driving bill-to-revenue growth

As shown in the graph below, Nutanix (NTNX) has maintained strong bill-to-revenue growth in the last five quarters, driven by new client additions, particularly high-value customers spending more than $1 million. The company’s bill-to-revenue ratio has stayed over 1.0 in the last five quarters, indicating that the company’s top line may continue to see large deals in future quarters.

In fiscal 2Q18, the company’s bill-to-revenue ratio was 1.2, compared with 1.1 in fiscal 2Q17. The company exited fiscal 2Q18 with a Global 2000 client base of 642, and during the quarter, the company struck its largest deal ever, a $10 million deal with a beverage company.

The company’s overall billings, which are driven by its software segment, rose 57% YoY (year-over-year) to $356 million in 2Q18. In the last five quarters, its billings have grown at a compound annual rate of 12%.

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Information technology giants contributing to growth

In fiscal 2Q18, Nutanix benefited from large IT (information technology) players such as Dell (DVMT) and Lenovo. Dell’s bookings in the reported quarter comprised ~10% of the company’s overall bookings and included two large contracts of $2.5 million. Quarter-over-quarter, Lenovo posted 80% order growth in fiscal 2Q18 and signed four contracts for over $1 million.

Nutanix also sealed two deals from IBM (IBM) in fiscal 2Q18, and Cisco’s (CSCO) Unified Computing System bookings expanded more than 40% quarter-over-quarter. Two Cisco deals were worth $2.5 million and $1.5 million.

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