What’s driving large orders?
Nutanix (NTNX) looks to strike large deals driven by its popularity in hyper-converged infrastructure (or HCI). As per Gartner, Nutanix holds the leadership position in Gartner’s Magic Quadrant.
In September, Nutanix inked a deal of over $20 million with the US Department of Defense—the largest deal in the company’s history. The company continues to expand its strong product portfolio with new launches, which include Frame, Beam, Era, and Sherlock. Such new products could further allow the company to sustain its strong billings growth. Moreover, the company’s partnerships with large IT players Dell (DVMT), Lenovo, Cisco (CSCO), and IBM (IBM) have also allowed it to drive its international contracts.
The company’s strong repeat purchase momentum is also supporting its large contract size. In the fiscal fourth quarter, ~70% of its bookings were from existing clients compared to 69% in the previous year’s quarter. The total lifetime purchase reached 25.0 times the initial purchase among its top 25 customers, and the repeat purchase multiple for the average customer who has been with Nutanix for 18 months was 4.1 times.
In the graph above, we can see the billings growth for Nutanix over the last five quarters. During the period, the overall billings for the company increased at a CAGR (compound annual growth rate) of 10.7%. Moreover, the company has maintained a book-to-bill ratio of above 1, which is a good sign for its future growth prospects. Such tailwinds could help the company achieve its long-term billings target of $3 billion.
Nutanix exited the fiscal fourth quarter with total billings of $395 million, up 50% YoY (year-over-year). In the reported quarter, the Software and Entitlements & Support segments witnessed YoY billings growth of 56.4% and 81.1%, respectively.