Nutanix

Nutanix is a global leader in cloud software and a pioneer in hyperconverged 

infrastructure solutions, making computing invisible anywhere. Organizations 

around the world use Nutanix software to leverage a single platform to manage

any app at any location for their private, hybrid and multicloud environments.

Chief Executive Officer and Chairman, Nutanix, Inc.

San Jose, CA 95110

BOARD OF DIRECTORS

NUTANIX CORPORATE HEADQUARTERS

Dheeraj Pandey

1740 Technology Drive, Suite 150

Former Chairman, Chief Executive Officer and President, 

www.nutanix.com

Sohaib Abbasi

(408) 890-4833

(408) 216-8360

Informatica Corporation

Susan L. Bostrom

Tonya Chin

INVESTOR RELATIONS

Former Executive Vice President, Chief Marketing Officer, 

SVP, Corporate Marketing, IR and Chief Communications Officer

Worldwide Government Affairs, Cisco Systems, Inc.  

(408) 560-2675 

Email: tonya@nutanix.com

Former Chief Executive Officer, PeopleSoft, Inc.

You may also reach us by visiting the investor relations 

portion of our website at: ir.nutanix.com

Managing Partner, Azimuth Partners LLC

Our Class A common stock trades on The Nasdaq

Global Select Market under the ticker symbol NTNX.

Craig Conway

Virginia Gambale

Steven J. Gomo

Former Chief Financial Officer, NetApp, Inc.

REGISTRAR AND TRANSFER AGENT

Max de Groen

of address, please contact our transfer agent:

For questions regarding stockholder accounts or changes 

Managing Director, Bain Capital Private Equity

Managing Director, Bain Capital Private Equity

Louisville, KY 40202

David Humphrey

462 South 4th Street, Suite 1600

Computershare Trust Company, N.A.

Managing Director, Lightspeed Ventures

www.computershare.com

T (U.S. and Canada): (877) 373-6374

Ravi Mhatre

T (Outside U.S. and Canada): (781) 575-3100

General Partner, Riverwood Capital

Jeffrey T. Parks

Former Chief Technology Officer, Google Cloud

Brian Stevens

NUTANIX EXECUTIVE OFFICERS

Dheeraj Pandey

Chief Executive Officer and Chairman

Duston Williams

Chief Financial Officer

David Sangster

Chief Operating Officer

Tyler Wall

Chief Legal Officer

Tarkan Maner

Chief Commercial Officer

© 2020 Nutanix, Inc. All rights reserved. Nutanix, the Nutanix logo, and all Nutanix product and service names mentioned

herein are registered trademarks or trademarks of Nutanix, Inc. in the United States and other countries. All other brand names

mentioned herein are for identification purposes only and may be the trademarks of their respective holder(s).

DEAR STOCKHOLDERS, 

Fiscal 2020 has been a year of successful business growth and transformation despite a back-
drop of global change and uncertainty. Yet it is this very uncertainty that has underscored the 
importance of our business model transition and the clear differentiation of our product strategy. 
The existing market opportunity for our leading hyperconverged infrastructure is vast, and our 
strategy is to further enhance our total addressable market (TAM) as we increasingly participate 
in the new HCI, or hybrid cloud infrastructure.

As I reflect on fiscal 2020, we have seen three distinct themes of our transformation. First, the 
global pandemic affirmed the trend that the lift-and-shift of applications and data to the cloud
— both private (on premises) and public — will be an important driver of our future growth, fueled 
by customer renewals and upsell over time. Second, our subscription transition at scale is helping 
us grow meaningfully, as evidenced by our run-rate ACV (Annual Contract Value), which grew 
29% year-over-year to $1.2 billion ending fiscal 2020. A critical factor of this transition is an 
extremely loyal customer base, making our industry-leading Net Promoter Score (NPS) a key 
enabler for renewals. And finally, with the combination of concerted operating expense discipline 
and the recent investment from Bain Capital Private Equity, we are confident about our ability
to innovate and scale our business for the long term.

Our Subscription Business Model Transition: Ahead of Schedule
When we set out on the journey toward a subscription model at the beginning of fiscal 2019, we 
believed in its ability not only to help future-proof our business, but also to provide the flexibility 
our customers need in a hybrid and multicloud world. With strong execution on this transition 
this fiscal year, we are now ahead of schedule in the transition process, with 88% of our billings 
coming from subscription in our last quarter, up from 71% one year ago, and well ahead of our 
target of at least 75% by the end of the fiscal year. Having gone through the “pain” of shorter 
contract durations and its related impact on billings, we will start to see the “gain” of the transi-
tion over the next couple of years. This gain happens as customers reap the benefits of portable, 
pay-as-you-go subscription licensing across clouds, while we benefit from the renewals and 
predictable business that come with this model.

Evolving our Products as the Market Matures: Hybrid Cloud Infrastructure is the New HCI
The cloud is not a destination — it is a means to an end. Hyperconverging clouds will define 
our market over the next decade. Our product strategy reflects this trend and we have seen 
significant momentum during the fiscal year. The recent availability of Nutanix Clusters on 
AWS and our partnership announcement with Microsoft Azure were critical milestones toward 
realizing our vision of making computing invisible anywhere by delivering a singular experience 
across multiple clouds, public or private. This vision is also made possible with our investments 
in products beyond the digital HCI core (datacenter, DevOps, and desktop services), which 
continue to demonstrate strong momentum and growth. Our Era (database), Files (storage) 
and Frame (Desktop-as-a-Service) solutions saw record momentum during the fiscal year. 
In fact, 33% of our deals in Q4 involved at least one product beyond the core, up from 26% 
a year ago, and these products accounted for 15% of new ACV, up from 12% a year ago.

Changing How We Measure Growth and Incentivize Sellers: Moving to ACV
Our successful shift to subscription requires a new way to measure our growth. As we transitio-
ned to a software business and then to a subscription business model, total billings and revenue 
growth became less significant as we reduced term durations, which has the effect of decreasing 
the amount of billings and revenue we book upfront. Moving forward, annual contract value 
(ACV) billings will be one of the more appropriate metrics with which to evaluate our growth, 
as it is normalized for shorter contract durations. To ensure our sellers are incentivized to maxi-
mize ACV, minimize discounting, and accelerate go-to-market performance, we recently changed 
our compensation programs so that they are directly aligned with these goals. From an increasing 
focus in our quarterly reporting, to incentivizing our sales teams, ACV growth is critical to our 
success in the future.

Customer Delight Remains Our Top Priority: A Key Differentiator for Brand and Renewals
Our core platform continues to gain positive, third-party recognition, with Forrester once again 
announcing Nutanix as a leader in its Hyperconverged Infrastructure Wave, notably ahead of 
other players in the leaders segment. In addition, Gartner recognized us as a leader for the third 
year in a row in the Gartner Magic Quadrant for hyperconverged infrastructure, and Nutanix 
received the highest score for the ability to execute. These accomplishments highlight our true 
north star, which is customer delight. Our NPS, which measures customer satisfaction and 
loyalty, continues at an average of 90 over six years. We also received another Summit Award 
in recognition of winning the Omega Northface Scoreboard award for five consecutive years, 
further highlighting our perennial leadership in customer service and support.

Executing on our Vision: Bolstering our Balance Sheet
We announced a key milestone with the $750 million investment by Bain Capital Private Equity 
to further fuel our growth initiatives, including providing liquidity through our transition to
a subscription-based business model. This investment gives us the capital we need to invest
in key strategic areas, including further development of our hybrid cloud infrastructure (HCI) 
solutions. The Bain investment is a clear validation of our subscription business model and
of the underlying health of our business. With their expertise and capital, Bain will be an 
invaluable partner to help unlock additional value for Nutanix shareholders.

A New Era Begins at Nutanix: Becoming Invisible
Just as we have always worked hard to make computing invisible anywhere, after 11 years since co-
founding Nutanix, it is now time for me to become invisible. I’m proud to have led the team from 
$0 to $1.5B+ in annual billings in 10 years, and I am very confident that we will continue to build 
on this success with a new leader. With an enviable customer loyalty scorecard, a delightful plat-
form that will make hybrid clouds elegant, and a strong balance sheet to fund our transition and 
navigate this upcoming economic recovery, Nutanix is the company to watch for the next decade. 

As a stakeholder, I am, and forever will be, a Nutant!

Dheeraj Pandey
Co-Founder, Chairman and CEO

1740 Technology Drive, Suite 150
San Jose, California 95110

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On December 11, 2020 at 9:00 a.m., Pacific Time

To the Stockholders of Nutanix, Inc.:

On behalf of our board of directors, it is our pleasure to invite you to attend the 2020 annual meeting of stockholders
(including any adjournment or postponement thereof, the ‘‘Annual Meeting’’) of Nutanix, Inc., a Delaware
corporation.
at
be
www.virtualshareholdermeeting.com/NTNX2020, originating from San Jose, California, on Friday, December 11,
2020 at 9:00 a.m., Pacific Time, and, for the following purposes, as more fully described in the accompanying proxy
statement:

webcast

virtually,

Meeting

Annual

held

The

live

will

via

1. To elect three Class I directors, Susan L. Bostrom, Steven J. Gomo, and Max de Groen, to serve until the
annual meeting of stockholders to take place after the end of the fiscal year ending July 31, 2023.

2. To ratify the selection of Deloitte & Touche LLP as our independent registered public accounting firm for

the fiscal year ending July 31, 2021.

3. To approve, on a non-binding advisory basis, the compensation of our Named Executive Officers.

4. To conduct any other business properly brought before the meeting.

These items of business are more fully described in the proxy materials accompanying this notice.

The record date for the Annual Meeting (the ‘‘Record Date’’) is October 13, 2020. Only stockholders of record of our
Class A common stock and Class B common stock at the close of business on the Record Date may vote at the
Annual Meeting.

On or about October 26, 2020, we expect to mail to our stockholders a Notice of Internet Availability of Proxy
Materials (the ‘‘Notice’’), containing instructions on how to access our proxy statement and annual report. The
Notice provides instructions on how to vote via the Internet or by telephone and includes instructions on how to
receive a paper copy of our proxy materials by mail.The accompanying proxy statement and our annual report can
be accessed directly at the following Internet address: www.proxyvote.com. You will be asked to enter the
sixteen-digit control number located on your Notice or proxy card.

By Order of the Board of Directors

Dheeraj Pandey
Chief Executive Officer & Chairman

San Jose, California
October 26, 2020

You are cordially invited to attend the virtual Annual Meeting.YOUR VOTE IS IMPORTANT. Whether or not
you expect to attend the Annual Meeting, you are urged to vote and submit your proxy by following the
voting procedures described in the proxy card. Even if you have voted by proxy, you may still vote during
the Annual Meeting. Please note, however, that if your shares are held of record by a broker, bank or other
agent and you wish to vote during the Annual Meeting, you must follow the instructions from your broker,
bank or other agent.

TABLE OF CONTENTS

QUESTIONS AND ANSWERS ABOUT PROXY MATERIALS AND VOTING
CORPORATE GOVERNANCE AT NUTANIX

Board of Directors and Its Committees
Nominations Process and Director Qualifications
Proposal No. 1 Election of Directors
Director Compensation
Certain Relationships and Related Party Transactions

AUDIT COMMITTEE MATTERS

Proposal No. 2 Ratification of Selection of Independent Registered Public Accounting Firm
Report of the Audit Committee

OUR EXECUTIVE OFFICERS
EXECUTIVE COMPENSATION

Proposal No. 3 Non-Binding Advisory Vote on the Compensation of Our Named Executive

Officers

Compensation Discussion and Analysis
Report of the Compensation Committee
Executive Compensation Tables
Employment Arrangements
Equity Compensation Plan Information

STOCK OWNERSHIP INFORMATION

Security Ownership of Certain Beneficial Owners and Management
Section 16(a) Beneficial Ownership Reporting Compliance

OTHER MATTERS

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PROXY STATEMENT

For the 2020 Annual Meeting of Stockholders
To Be Held On Friday, December 11, 2020 at 9:00 a.m., Pacific Time

Our board of directors is soliciting your proxy to vote at the 2020 annual meeting of stockholders (including any
adjournment or postponement thereof, the ‘‘Annual Meeting’’) of Nutanix, Inc., a Delaware corporation, to be held
via live webcast at www.virtualshareholdermeeting.com/NTNX2020, originating from San Jose, California, on
Friday, December 11, 2020 at 9:00 a.m., Pacific Time.

For the Annual Meeting, we have elected to furnish our proxy materials, including this proxy statement and our
Annual Report on Form 10-K for our fiscal year ended July 31, 2020 (the ‘‘Annual Report’’), to our stockholders
primarily via the Internet. On or about October 26, 2020, we expect to mail to our stockholders a Notice of Internet
Availability of Proxy Materials (the ‘‘Notice’’) that contains the notice of the Annual Meeting and instructions on how
to access our proxy materials on the Internet, how to vote at the Annual Meeting, and how to request printed copies
of the proxy materials. Stockholders may request to receive all future materials in printed form by mail or
electronically by e-mail by following the instructions contained in the Notice. We encourage stockholders to take
advantage of the availability of the proxy materials on the Internet to help reduce the environmental impact and
cost of our annual meetings.

Only stockholders of record of our Class A common stock and Class B common stock at the close of business on
October 13, 2020 (the ‘‘Record Date’’) will be entitled to vote at the Annual Meeting. On the Record Date, there
were 194,558,126 shares of Class A common stock and 11,508,862 shares of Class B common stock outstanding
and entitled to vote. A list of stockholders entitled to vote at the Annual Meeting will be available for examination
during normal business hours for ten days before the Annual Meeting at our principal place of business at the
address below. The stockholder list will also be available online during the Annual Meeting to those that attend the
meeting.

In this proxy statement, we refer to Nutanix, Inc. as ‘‘Nutanix,’’‘‘we,’’‘‘us’’ or the ‘‘Company’’ and the board of directors
of Nutanix as ‘‘our board of directors.’’ Our Annual Report, which contains consolidated financial statements as of
and for our fiscal year ended July 31, 2020 (‘‘fiscal 2020’’), accompanies this proxy statement.You also may obtain,
without charge, a copy of this proxy statement and the Annual Report, which was filed with the U.S. Securities and
Exchange Commission (the ‘‘SEC’’), by writing to our Secretary at 1740 Technology Dr., Suite 150, San Jose,
CA 95110 or by following the directions set forth in the Notice.

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QUESTIONS AND ANSWERS
ABOUT PROXY MATERIALS AND VOTING

The information provided in the ‘‘questions and answers’’ format below is for your convenience only and is merely
a summary of the information contained in this proxy statement. You should carefully read this proxy statement in
its entirety. Information contained on, or that can be accessed through, our website is not intended to be, and is not,
incorporated by reference into this proxy statement and references to our website addresses in this proxy
statement are inactive textual references only.

Why did I receive a notice regarding the availability of proxy materials on the Internet?

We have elected to provide access to our proxy materials over the Internet. Accordingly, we have sent you a Notice
because our board of directors is soliciting your proxy to vote at the Annual Meeting. All stockholders will have the
ability to access the proxy materials on the website referred to in the Notice or to request a printed set of the proxy
materials. Instructions on how to access the proxy materials over the Internet or to request a printed copy may be
found in the Notice.

We expect to mail the Notice on or about October 26, 2020 to all stockholders of record entitled to vote at the
Annual Meeting.

How do I attend and participate in the Annual Meeting online?

We will be hosting the Annual Meeting via live webcast only. Any stockholder can attend the Annual Meeting, live
online at www.virtualshareholdermeeting.com/NTNX2020. The webcast will start at 9:00 a.m., Pacific Time.
Stockholders may vote and submit questions while attending the meeting online.The webcast will open 15 minutes
before the start of the meeting. In order to enter the meeting, you will need the control number. The control number
will be included in the Notice or on your proxy card if you are a stockholder of record of shares of common stock,
or included with your voting instructions received from your broker, bank or other agent if you hold your shares of
common stock in a ‘‘street name.’’ Instructions on how to attend and participate online are available at
www.virtualshareholdermeeting.com/NTNX2020.

Who can vote at the Annual Meeting?

Only stockholders of record at the close of business on October 13, 2020, the Record Date for the Annual Meeting,
will be entitled to vote at the Annual Meeting. As of the close of business on the Record Date, there were
194,558,126 shares of Class A common stock and 11,508,862 shares of Class B common stock outstanding and
entitled to vote, together referred to as our common stock.

Stockholder of Record: Shares Registered in Your Name

If, as of the close of business on the Record Date, your shares of common stock were registered directly in your
name with our transfer agent, Computershare Trust Company, N.A. (the ‘‘Transfer Agent’’), then you are a
stockholder of record. As a stockholder of record, you may vote online during the meeting or vote by proxy.Whether
or not you plan to attend the Annual Meeting, we urge you to vote by proxy to ensure your vote is counted.

Beneficial Owner: Shares Registered in the Name of a Broker or Bank

If, as of the close of business on the Record Date, your shares of common stock were held, not in your name, but
rather in an account at a brokerage firm, bank, dealer or other similar organization, then you are the beneficial
owner of shares held in ‘‘street name’’ and the Notice will be forwarded to you by that organization.The organization
holding your account is considered to be the stockholder of record for purposes of voting at the Annual Meeting.
As a beneficial owner, you have the right to direct your broker or other agent regarding how to vote the shares in
your account.You are also invited to attend the virtual Annual Meeting. Since you are not the stockholder of record,
you may vote your shares online during the Annual Meeting only by following the instructions from your broker,
bank or other agent.

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What matters am I voting on?

There are three matters scheduled for a vote:

•

•

•

Election of three Class I directors to hold office until the annual meeting of stockholders to take place after
the end of fiscal year ending July 31, 2023;

Ratification of the selection of Deloitte & Touche LLP as our independent registered public accounting
firm for the fiscal year ending July 31, 2021; and

The approval, on a non-binding advisory basis, of the compensation of our Named Executive Officers.

How do I vote?

The procedures for voting are as follows:

Stockholder of Record: Shares Registered in Your Name

If you are a stockholder of record, you may vote online during the Annual Meeting, vote by proxy through the
Internet, vote by proxy over the telephone, or vote by proxy using a proxy card that you may request. Whether or
not you plan to attend the Annual Meeting, we urge you to vote by proxy to ensure your vote is counted. Even if you
have submitted a proxy before the Annual Meeting, you may still attend online and vote during the meeting. In such
case, your previously submitted proxy will be disregarded.

•

•

•

•

To vote online during the Annual Meeting, follow the provided instructions to join the meeting at
www.virtualshareholdermeeting.com/NTNX2020, starting at 9:00 a.m., Pacific Time, on December 11,
2020.

To vote online before the Annual Meeting, go to www.proxyvote.com.

To vote by toll-free telephone, call 1-800-690-6903 if you are a stockholder of record or 1-800-454-8683
if you are a ‘‘beneficial’’ stockholder (be sure to have your Notice or proxy card in hand when you call).

To vote by mail, simply complete, sign and date the proxy card or voting instruction card, and return it
promptly in the envelope provided.

If we receive your vote by Internet or phone or your signed proxy card up until 11:59 p.m., Eastern Time, the day
before the Annual Meeting, we will vote your shares as you direct.

To vote, you will need the control number. The control number will be included in the Notice, or on your proxy card
if you are a stockholder of record of shares of common stock, or included with your voting instructions received from
your broker, bank or other agent if you hold your shares of common stock in a ‘‘street name’’.

Beneficial Owner: Shares Registered in the Name of Broker or Bank

If you are a beneficial owner of shares registered in the name of your broker, bank or other agent, you should have
received a notice containing voting instructions from that organization rather than from us. Simply follow the voting
instructions in such notice to ensure that your vote is counted. To vote online during the meeting, you must follow
the instructions from your broker, bank or other agent.

Internet proxy voting is provided to allow you to vote your shares online, with procedures designed to
ensure the authenticity and correctness of your proxy vote instructions. Please be aware that you must
bear any costs associated with your Internet access.

Can I change my vote?

Yes. Subject to the voting deadlines above, if you are a stockholder of record, you may revoke your proxy at any
time before the close of voting using one of the following methods:

•

•

•

You may submit another properly completed proxy card with a later date.

You may grant a subsequent proxy by telephone or through the Internet.

You may send a written notice that you are revoking your proxy to our Secretary at 1740 Technology Dr.,
Suite 150, San Jose, California 95110.

3

•

You may attend and vote online during the Annual Meeting. Simply attending the Annual Meeting will not,
by itself, revoke your proxy.

If your shares are held by your broker or bank as a nominee or agent, you should follow the instructions provided
by such party.

What happens if I do not vote?

Stockholder of Record: Shares Registered in Your Name

If you are a stockholder of record and do not vote during the Annual Meeting, or through the Internet, by telephone
or by completing your proxy card before the Annual Meeting, your shares will not be voted.

Beneficial Owner: Shares Registered in the Name of a Broker or Bank

Broker non-votes occur when (1) a broker or other nominee holds shares for a beneficial owner, (2) the beneficial
owner has not given the respective broker specific voting instructions, (3) the matter is non-routine in nature, and
(4) there is at least one routine proposal presented at the applicable meeting of stockholders (such as Proposal 2
at this Annual Meeting). Under applicable rules, a broker or other nominee has discretionary voting power only with
respect to proposals that are considered ‘‘routine,’’ but not with respect to ‘‘non-routine’’ proposals. Broker
non-votes are considered present for purposes of determining the presence of a quorum so long as the shares
represented by a broker or other nominee who holds shares for a beneficial owner, where the beneficial owner has
not given the respective broker or other nominee specific voting instructions, can be voted for, against or in
abstention for at least one proposal presented at the Annual Meeting. Since there is one routine proposal
presented at the Annual Meeting (Proposal 2) on which brokers and other nominees have such discretionary
voting power, broker non-votes will be counted for quorum purposes at the Annual Meeting. Broker non-votes will
not be counted for purposes of determining the number of votes cast on a proposal. Therefore, a broker non-vote
will make a quorum more readily attainable but will not otherwise affect the outcome of the vote on any of the
proposals.

Abstentions represent a stockholder’s affirmative choice to decline to vote on a proposal, and occur when shares
present at the meeting are marked ‘‘abstain.’’ Abstentions are counted for purposes of determining whether a
quorum is present and are also counted as votes against a proposal in cases where approval of the proposal
requires the votes from the holders of a majority in voting power of the shares present at the Annual Meeting or
represented by proxy thereat and entitled to vote on the proposal (Proposals 2 and 3).

Proposals 1 and 3 are non-routine matters, so your broker or nominee may not vote your shares on Proposals 1
or 3 without your instructions. Proposal 2, the ratification of Deloitte & Touche LLP as our independent registered
public accounting firm for the fiscal year ending July 31, 2021, is a routine matter so your broker or nominee may
vote your shares on Proposal 2 even in the absence of your instruction. Please instruct your bank, broker or
other agent to ensure that your vote will be counted.

What if I return a proxy card or otherwise vote but do not make specific choices?

If you return a signed and dated proxy card or otherwise vote but do not make specific choices, your shares will be
voted FOR the election of all three nominees for Class I director, FOR the ratification of the selection of Deloitte &
Touche LLP as our independent registered public accounting firm for the fiscal year ending July 31, 2021, and FOR
the approval of the compensation of our Named Executive Officers. If any other matter is properly presented at the
Annual Meeting, your proxyholder (one of the individuals named on your proxy card) will vote your shares using his
best judgment.

How many votes do I have?

Each holder of Class A common stock will have the right to one vote per share of Class A common stock and each
holder of Class B common stock will have the right to ten votes per share of Class B common stock. Our Class A
common stock and Class B common stock will vote as a single class on all matters described in this proxy
statement for which your vote is being solicited. Stockholders are not permitted to cumulate votes with respect to
the election of directors.

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How do I find out whether I have Class A common stock or Class B common stock?

If you are unsure whether you hold shares of Class A common stock or Class B common stock, contact our stock
administrator at stocks@nutanix.com.

How many votes are needed to approve each proposal and how are the votes
counted?
•

Proposal 1: Directors are elected by a plurality vote. Therefore, the three director nominees for Class I
receiving the highest number of FOR votes will be elected.You may vote FOR or WITHHOLD on each of
the nominees for election as director. WITHHOLD votes and broker non-votes have no legal effect on the
election of directors.

•

•

Proposal 2: The ratification of the selection of our independent registered public accounting firm for the
fiscal year ending July 31, 2021 must receive FOR votes from the holders of a majority in voting power of
the shares present at the Annual Meeting or represented by proxy thereat and entitled to vote on the
proposal. You may vote FOR, AGAINST, or ABSTAIN with respect to this proposal. Abstentions are
considered votes present and entitled to vote on this proposal, and thus will have the same effect as a
vote AGAINST the proposal. Broker non-votes will have no effect as a vote on the outcome of this
proposal.

Proposal 3: The approval, on an advisory basis, of the compensation of our Named Executive Officers
must receive FOR votes from the holders of a majority of the voting power of the shares present at the
Annual Meeting or represented by proxy thereat and entitled to vote on the proposal.You may vote FOR,
AGAINST, or ABSTAIN with respect to this proposal. Abstentions are considered votes present and
entitled to vote on this proposal, and thus will have the same effect as votes AGAINST this proposal.
Broker non-votes will have no effect on the outcome of this proposal. Although the advisory vote is
non-binding, our board of directors values stockholders’ opinions. The compensation committee will
review the results of the vote and, consistent with our record of stockholder responsiveness, consider
stockholders’ concerns and take into account the outcome of the vote when considering future decisions
concerning our executive compensation program.

Who counts the votes?

We have engaged Broadridge Financial Solutions (‘‘Broadridge’’) as our independent agent to tabulate stockholder
votes. If you are a stockholder of record, and you choose to vote over the Internet (either prior to or during the
Annual Meeting) or by telephone, Broadridge will access and tabulate your vote electronically, and if you choose
to sign and mail your proxy card, your executed proxy card is returned directly to Broadridge for tabulation. As noted
above, if you hold your shares through a broker, your broker (or its agent for tabulating votes of shares held in street
name, as applicable) returns one proxy card to Broadridge on behalf of all its clients.

Who is paying for this proxy solicitation?

We will pay for the cost of soliciting proxies. In addition to these proxy materials, our directors and employees may
also solicit proxies in person, by telephone, or by other means of communication. Directors and employees will not
be paid additional compensation for soliciting proxies. We may reimburse brokers, banks and other agents for the
cost of forwarding proxy materials to beneficial owners.

When are stockholder proposals due for next year’s annual meeting?

Requirements for stockholder proposals to be brought before an annual meeting.

Our amended and restated bylaws provide that, for stockholder director nominations or other proposals to be
considered at an annual meeting, the stockholder must give timely notice thereof in writing to our Secretary at
Nutanix, Inc., 1740 Technology Drive, Suite 150, San Jose, CA 95110. No stockholders provided timely notice of
a director nomination or other proposal for this 2020 Annual Meeting, thus no other matters will be presented for
consideration at the Annual Meeting other than the proposals set forth in this proxy statement. To be timely for the

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2021 annual meeting of stockholders, a stockholder’s notice must be delivered to or mailed and received by our
Secretary at our principal executive offices not later than September 11, 2021 nor earlier than August 12, 2021. A
stockholder’s notice to the Secretary must also set forth the information required by our amended and restated
bylaws.

Requirements for stockholder proposals to be considered for inclusion in our proxy materials.

Stockholder proposals submitted pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended
(the ‘‘Exchange Act’’), and intended to be presented at the 2021 annual meeting of stockholders must be received
by us no later than June 28, 2021 in order to be considered for inclusion in our proxy materials for that meeting.

What is the quorum requirement?

A quorum of stockholders is necessary to hold a valid meeting. A quorum will be present if stockholders holding at
least a majority of the aggregate voting power of the shares of common stock issued, outstanding and entitled to
vote are present in person at the meeting or represented by proxy.

Your shares will be counted towards the quorum only if you submit a valid proxy (or one is submitted on your behalf
by your broker, bank or other nominee) or if you vote during the Annual Meeting. Abstentions and broker non-votes
will be counted towards the quorum requirement. If there is no quorum, either the chairperson of the Annual
Meeting or the stockholders entitled to vote at the Annual Meeting that are present in person or represented by
proxy may adjourn the meeting to another date.

How can I find out the results of the voting at the Annual Meeting?

We expect that preliminary voting results will be announced during or shortly following the Annual Meeting. In
addition, final voting results will be published in a current report on Form 8-K that we expect to file within four
business days after the Annual Meeting.

What does it mean if I receive more than one Notice?

If you receive more than one Notice, your shares may be registered in more than one name or in different accounts.
Please follow the instructions on the Notices to ensure that all your shares are voted.

What does it mean if multiple members of my household are stockholders but we only
received one Notice or full set of proxy materials in the mail?

The SEC has adopted rules that permit companies and intermediaries, such as brokers, to satisfy the delivery
requirements for notices and proxy materials with respect to two or more stockholders sharing the same address
by delivering a single Notice or set of proxy materials addressed to those stockholders. In accordance with a prior
notice sent to certain brokers, banks, dealers or other agents, we are sending only one Notice or full set of proxy
materials to those addresses with multiple stockholders unless we received contrary instructions from any
stockholder at that address. This practice, known as ‘‘householding,’’ allows us to satisfy the requirements for
delivering Notices or proxy materials with respect to two or more stockholders sharing the same address by
delivering a single copy of these documents. Householding helps to reduce our printing and postage costs,
reduces the amount of mail you receive and helps to preserve the environment. If you currently receive multiple
copies of the Notice or proxy materials at your address and would like to request ‘‘householding’’ of your
communications, please contact your broker. Once you have elected ‘‘householding’’ of your communications,
‘‘householding’’ will continue until you are notified otherwise or until you revoke your consent.

To receive a separate copy, or, if a stockholder is receiving multiple copies, to request that we only send a single
copy of the Notice and, if applicable, our proxy materials, such stockholder may contact us at the following address:

Nutanix, Inc.
Attention: Investor Relations
1740 Technology Drive, Suite 150
San Jose, California 95110

6

CORPORATE GOVERNANCE AT NUTANIX

Nutanix is strongly committed to good corporate governance practices. These practices provide an important
framework within which our board of directors and management can pursue our strategic objectives for the benefit
of our stockholders. Our board of directors has adopted corporate governance guidelines that set forth the role of
our board of directors, director independence standards, board structure and functions, director selection
considerations, and other governance policies. In addition, our board of directors has adopted written charters for
its standing committees (audit, compensation, and nominating and corporate governance), as well as a code of
business conduct and ethics that applies to all of our employees, officers and directors, including those officers
responsible for financial reporting. Our nominating and corporate governance committee reviews the corporate
governance guidelines annually, and recommends changes to our board of directors as warranted. The corporate
governance guidelines, the committee charters, and the code of business conduct and ethics, and any waivers or
amendments to the code of business conduct and ethics, are all available on our investor relations website
(http://ir.nutanix.com) in the ‘‘Governance’’ section.

BOARD OF DIRECTORS AND ITS COMMITTEES

Current Composition of the Board of Directors and its Committees

Name

Age

Position/Office
Held With
Nutanix

Audit
Committee

Compensation
Committee

Nominating and
Corporate
Governance
Committee

Independent Tenure

Class I directors whose terms expire at this Annual Meeting

Susan L. Bostrom

Steven J. Gomo

Max de Groen

Jeffrey T. Parks

60

68

35

39

Director

Director

Director

Director

Member*

Chair

Member

Chair*

3

3

3

3

Class II directors whose terms expire at the annual meeting of stockholders after the end of fiscal 2021

Craig Conway

Virginia Gambale

Brian Stevens

66

61

57

Director

Director

Director

Member

Member

Chair

3

3

3

Class III directors whose terms expire at the annual meeting of stockholders after the end of fiscal 2022

Member

Sohaib Abbasi

David Humphrey

Ravi Mhatre

Dheeraj Pandey

64

43

53

45

Lead
Independent
Director

Director

Director

CEO and
Chairman

Member

3

3

3

3 years

5 years

< 1 year

7 years

3 years

< 1 year

1 year

< 1 year

< 1 year

10 years

11 years

*

Mr. Parks has elected not to stand for re-election as a Class I director. If re-elected, Ms. Bostrom is expected to
succeed him as the Chair of the Compensation Committee when Mr. Parks’ term expires at the Annual Meeting.

Director Independence

Our Class A common stock is listed on the Nasdaq Global Select Market (‘‘Nasdaq’’). Under the listing
requirements and rules of Nasdaq, a majority of our board of directors must be comprised of independent
directors. In addition, the rules of Nasdaq require that, subject to specified exceptions, each member of a listed
company’s audit, compensation and nominating and corporate governance committees be independent. Under
the rules of Nasdaq, a director will only qualify as an ‘‘independent director’’ if, in the opinion of that company’s
board of directors, that person does not have a relationship that would interfere with the exercise of independent

7

judgment in carrying out the responsibilities of a director. Compensation committee members must not have a
relationship with us that is material to the director’s ability to be independent from management in connection with
the duties of a compensation committee member. Additionally, audit committee members must also satisfy the
independence criteria set forth in Rule 10A-3 under the Securities and Exchange Act of 1934, as amended (the
‘‘Exchange Act’’). In order to be considered independent for purposes of Rule 10A-3, a member of an audit
committee of a listed company may not, other than in his or her capacity as a member of the audit committee, the
board of directors or any other board committee, accept, directly or indirectly, any consulting, advisory or other
compensatory fee from the listed company or any of its subsidiaries or be an affiliated person of the listed company
or any of its subsidiaries.

Our board of directors has undertaken a review of the independence of each director and considered whether each
director has a material relationship with us that could compromise his or her ability to exercise independent
judgment in carrying out his or her responsibilities. As a result of this review, our board of directors determined that
each of Mses. Bostrom and Gambale and Messrs. Abbasi, Conway, de Groen, Gomo, Humphrey, Mhatre, Parks,
and Stevens, representing ten of our eleven current directors, do not have a relationship that would interfere with
the exercise of independent judgment in carrying out the responsibilities of a director and were ‘‘independent
directors’’ as defined under the applicable rules and regulations of the SEC and the listing requirements and rules
of Nasdaq.

Board Leadership

Our nominating and corporate governance committee periodically considers the leadership structure of our board
of directors and makes such recommendations to our board of directors as our nominating and corporate
governance committee deems appropriate. Our corporate governance guidelines also provide that, when the
positions of chairperson and chief executive officer are held by the same person, the independent directors may
designate a ‘‘lead independent director.’’

Currently, our board of directors believes that it is in the best interests of our company and our stockholders for our
Chief Executive Officer (‘‘CEO’’), Mr. Pandey, to serve as both CEO and Chairman given his knowledge of our
company and industry and his strategic vision. Because Mr. Pandey has served and continues to serve in both
these roles, our board of directors has appointed a lead independent director. Mr. Mhatre served as our lead
independent from the time of our IPO until October 2020, and in October 2020, our board of directors appointed
Mr. Abbasi as lead independent director. As lead independent director, Mr. Abbasi will preside at all meetings of the
board of directors at which the Chairman is not present, preside over executive sessions of our independent
directors, serve as a liaison between our Chairman and our independent directors and perform such additional
duties as our board of directors may otherwise determine and delegate. Our board of directors believes that its
independence and oversight of management is maintained effectively through this leadership structure, the
composition of our board of directors and sound corporate governance policies and practices.

The Company has announced that Mr. Pandey intends to resign as CEO once his successor has been identified
and duly appointed. The board is actively engaged in the CEO search process and we expect to appoint a new
CEO in a timely manner. Mr. Pandey’s term as CEO is not expected to extend past January 31, 2021.

Executive Sessions of Non-Employee Directors

In order to encourage and enhance communication among non-employee directors, and as required under
applicable Nasdaq rules, our corporate governance guidelines provide that the non-employee directors will meet
in executive sessions without management directors or company management on a periodic basis, no less than
twice a year. Our lead independent director is the presiding director at these meetings.

Communications with our Board of Directors

Stockholders or interested parties who wish to communicate with our board of directors or with an individual
director may do so by mail to our board of directors or the individual director, care of our Chief Legal Officer at 1740
Technology Dr., Suite 150, San Jose, CA 95110. The communication should indicate that it contains a stockholder
or
In accordance with our corporate governance guidelines, all such
communication will be reviewed by the Chief Legal Officer, in consultation with appropriate directors as necessary,
and, if appropriate, will be forwarded to the director or directors to whom the communications are addressed or, if
none are specified, to the Chairman of our board of directors.

interested party communication.

8

Committees of the Board of Directors

Our board of directors has established an audit committee, a compensation committee and a nominating and
corporate governance committee, which have the composition and responsibilities described below. Our board of
directors may establish other committees to facilitate the management of our business. Copies of the charters of
the audit, compensation, and nominating and corporate governance committees are available in the ‘‘Governance’’
section of our investor relations website (http://ir.nutanix.com). Members serve on these committees until their
resignation or until otherwise determined by our board of directors.

Audit Committee

Our audit committee is comprised of Ms. Gambale and Messrs. Gomo and Abbasi, each of whom is a
non-employee member of our board of directors. Mr. Gomo is the Chair of our audit committee. Our board of
directors has determined that each of the members of our audit committee satisfies the requirements for
independence and financial literacy under the rules and regulations of Nasdaq and the SEC. Our board of directors
has also determined that Mr. Gomo qualifies as an ‘‘audit committee financial expert,’’ as defined in the SEC rules,
and satisfies the financial sophistication requirements of Nasdaq. The audit committee is responsible for, among
other things:

•

•

•

•

•

•

•

•

•

selecting and hiring our independent registered public accounting firm;

evaluating the performance and independence of our registered public accounting firm;

pre-approving the audit and any non-audit services to be performed by our independent registered public
accounting firm;

reviewing the adequacy and effectiveness of our internal control policies and procedures and our
disclosure controls and procedures;

overseeing procedures for the treatment of complaints on accounting, internal accounting controls or
audit matters;

reviewing and discussing with management and the independent registered public accounting firm, our
audited and quarterly unaudited financial statements, the results of our annual audit, and our publicly filed
reports;

reviewing and discussing with management and the independent registered public accounting firm, our
major financial risk exposures and steps managements has taken to monitor and control those
exposures;

reviewing and overseeing any related-person transactions; and

preparing the audit committee report in our annual proxy statement.

Compensation Committee

Our compensation committee is comprised of Ms. Bostrom and Messrs. Mhatre and Parks, each of whom is a
non-employee member of our board of directors. Mr. Parks is the Chair of our compensation committee. Mr. Parks
has elected not to stand for re-election as a Class I director, and therefore his current term of office will expire at
the Annual Meeting. Upon and effective as of the expiration of Mr. Parks’ term of office as a member of our board
of directors at the Annual Meeting, Ms. Bostrom will succeed Mr. Parks as the Chair of our compensation
committee, if re-elected.

Our board of directors has determined that each member of our compensation committee meets the requirements
for independence under the rules of Nasdaq and the SEC, and is a ‘‘non-employee director’’ within the meaning of
Rule 16b-3 under the Exchange Act. The compensation committee is responsible for, among other things:

•

•

reviewing and approving our CEO’s and other executive officers’ annual base salaries, incentive
compensation plans, including the specific goals and amounts, equity compensation, employment
agreements, severance arrangements and change of control agreements, and any other benefits,
compensation or arrangements;

administering our equity compensation plans;

9

•

•

overseeing our overall compensation philosophy, compensation plans and benefits programs; and

reviewing the compensation disclosures in our annual proxy statement.

Compensation Committee Interlocks and Insider Participation

None of the members of our compensation committee have been an officer or employee of our company. None of
our executive officers currently serve, or during fiscal 2020 have served, as a member of the compensation
committee or director (or other board committee performing equivalent functions or, in the absence of any such
committee, the entire board of directors) of any entity that has one or more executive officers serving on our
compensation committee or our board of directors.

Nominating and Corporate Governance Committee

Our nominating and corporate governance committee is comprised of Ms. Gambale and Messrs. Conway and
Gomo, each of whom is a non-employee member of our board of directors. Ms. Gambale serves as the Chair of the
committee. Our board of directors has determined that each member of our nominating and corporate governance
committee meets the requirements for independence under the rules of Nasdaq. The nominating and corporate
governance committee is responsible for, among other things:

•

•

•

•

•

determining the qualifications required to be a member of the board of directors and recommending to the
board of directors the criteria to be considered in selecting director nominees;

evaluating and making recommendations regarding the composition, organization and governance of our
board of directors and its committees;

evaluating and making recommendations regarding the creation of additional committees or the change
in mandate or dissolution of committees;

developing and monitoring a set of corporate governance guidelines; and

reviewing and approving conflicts of interest of our directors and officers, other than related-person
transactions reviewed by the audit committee.

Other Committees

Pursuant to our amended and restated bylaws, the board of directors may designate other standing or ad hoc
committees to serve at the discretion of the board of directors from time to time. For example, the board of directors
has delegated certain authority to a mergers and acquisitions committee (comprised of Messrs. Conway,
Gomo and Mhatre), an equity award committee (comprised of Mr. Pandey), and a technology and product
committee (comprised of Messrs. Abbasi, Pandey and Stevens).

Board and Committee Meetings and Attendance

Our board of directors is responsible for the oversight of company management and strategy and for establishing
corporate policies. Our board of directors and its committees meet throughout the year on a regular basis and also
hold special meetings and act by written consent from time to time. Our board of directors met twelve times
(including regularly scheduled and special meetings) during our last fiscal year. The audit committee met
nine times during our last fiscal year. The compensation committee met eight times during our last fiscal year. The
nominating and corporate governance committee met five times during our last fiscal year. During our last fiscal
year, each director attended 75% or more of the aggregate of the meetings of our board of directors and of the
committees on which he or she served at the time.

We encourage our directors and nominees for director to attend our annual meeting of stockholders but do not
require that they attend. Seven of our nine then-incumbent directors attended our 2019 annual meeting of
stockholders.

Risk Oversight

Our board of directors oversees an enterprise-wide approach to risk management, designed to support the
achievement of organizational objectives, including strategic objectives, to improve long-term organizational
performance and to enhance stockholder value. Our board of directors, as a whole, is responsible for determining
the appropriate level of risk for Nutanix, assessing the specific risks that we face and reviewing management’s

10

strategies for adequately mitigating and managing the identified risks. Although our board of directors is
responsible for administering this risk management oversight function, the committees of our board of directors
support our board of directors in discharging its oversight duties and addressing risks inherent in their respective
areas.

Our audit committee has the responsibility to consider and discuss our major financial risk exposures and the steps
our management has taken to monitor and control these exposures, including guidelines and policies to govern the
process by which risk assessment and management is undertaken. Our audit committee also monitors compliance
with legal and regulatory requirements, in addition to oversight of the performance of our internal audit function.
Our nominating and corporate governance committee monitors the effectiveness of our corporate governance
guidelines. Our compensation committee assesses and monitors whether our compensation philosophy and
practices have the potential to encourage excessive risk-taking and evaluates compensation policies and
practices that could mitigate such risks.

At periodic meetings of our board of directors and its committees, management reports to and seeks guidance
from our board of directors and its committees with respect to the most significant risks that could affect our
business, such as legal, financial, tax and audit related risks. In addition, among other matters, management
provides our audit committee with periodic reports on our compliance programs and investment policy and
practices.

NOMINATIONS PROCESS AND DIRECTOR QUALIFICATIONS

Nomination to the Board of Directors

Candidates for nomination to our board of directors are selected by our board of directors based on the
recommendation of the nominating and corporate governance committee in accordance with the committee’s
charter, our policies, our amended and restated certificate of incorporation and amended and restated bylaws, our
corporate governance guidelines, the criteria adopted by our board of directors regarding director candidate
qualifications, and the requirements of applicable law. In recommending candidates for nomination, the nominating
and corporate governance committee considers candidates recommended by directors, officers, and employees,
as well as candidates that are properly submitted by stockholders in accordance with our policies and amended
and restated bylaws, using the same criteria to evaluate all such candidates. A stockholder that wishes to
recommend a candidate for election to the board of directors may send a letter directed to our Chief Legal Officer
at 1740 Technology Drive, Suite 150, San Jose, CA 95110. The letter must include, among other things, the
candidate’s name, home and business contact information, detailed biographical data, relevant qualifications, a
signed letter from the candidate confirming willingness to serve, and information regarding any relationships
between the candidate and Nutanix. Additional
information regarding the process for properly submitting
stockholder nominations for candidates for membership on our board of directors is set forth above under
‘‘Questions and Answers About Proxy Materials and Voting’’ and in our amended and restated bylaws.

Evaluations of candidates generally involve a review of background materials, internal discussions and interviews
with selected candidates as appropriate and, in addition, the nominating and corporate governance committee
may engage consultants or third-party search firms to assist in identifying and evaluating potential nominees.

Bain Board Nomination Rights

In August 2020, we entered into an investment agreement (as amended in September 2020, the ‘‘Investment
Agreement’’) with BCPE Nucleon (DE) SPV, LP (collectively with its affiliates, ‘‘Bain’’) relating to the issuance and
sale to Bain of $750 million in an initial aggregate principal amount of our 2.50% convertible senior notes due 2026
(the ‘‘Notes’’). Pursuant to the Investment Agreement, in September 2020, we appointed two Bain nominees,
David Humphrey and Max de Groen, to our board of directors. In addition, in general, Bain will have the right to
nominate a nominee at each annual meeting or action by written consent at which the Bain designee’s term as a
director expires, provided, however, that if, at any time, Bain beneficially owns less than 50% of the common stock
underlying the Notes (on an as-converted basis, and assuming full physical settlement), Bain will be entitled to
have only one nominee designated to the Board, and if, at any time, Bain beneficially owns less than 25% of the
common stock underlying the Notes (on an as-converted basis, and assuming full physical settlement), Bain will
not be entitled to have any nominee designated to the Board. Further, Bain will not have a right to nominate (i) a
second member to our Board, if Bain beneficially owns less than 9.09% of all of our common stock then
outstanding (on an as-converted basis, and assuming full physical settlement), even if Bain otherwise beneficially

11

owns at least 50% of the common stock underlying the Notes (on an as-converted basis, and assuming full
physical settlement), or (ii) any member to our Board, if Bain collectively beneficially owns less than 4.0% of all of
our common stock then outstanding (on an as-converted basis, and assuming full physical settlement), even if Bain
otherwise beneficially owns at least 25% of the common stock underlying the Notes (on an as-converted basis, and
assuming full physical settlement).

Director Qualifications

With the goal of developing a diverse, experienced and highly qualified board of directors, the nominating and
corporate governance committee is responsible for developing and recommending to our board of directors the
desired qualifications, expertise and characteristics of members of our board of directors, including qualifications
that the committee believes must be met by a committee-recommended nominee for membership on our board of
directors and specific qualities or skills that the committee believes are necessary for one or more of the members
of our board of directors to possess.

In addition to the qualifications, qualities, and skills that are necessary to meet U.S. state and federal legal,
regulatory and Nasdaq listing requirements and the provisions of our amended and restated certificate of
incorporation, amended and restated bylaws, corporate governance guidelines, and charters of the board
committees, the nominating and corporate governance committee requires the following minimum qualifications to
be satisfied by any nominee for a position on the board of directors: (i) the highest personal and professional ethics
and integrity, (ii) proven achievement and competence in the nominee’s field and the ability to exercise sound
business judgment, (iii) skills that are complementary to those of the existing board of directors, (iv) the ability to
assist and support management and make significant contributions to our success, and (v) an understanding of
the fiduciary responsibilities that are required of a member of the board of directors and the commitment of time
and energy necessary to diligently carry out those responsibilities. When considering nominees, our nominating
and corporate governance committee may take into consideration many other factors including, among other
things, the candidates’ character, integrity, judgment, independence, area of expertise, corporate experience,
length of service, and potential conflicts of interest, the candidates’ other commitments, and the size and
composition of the board of directors and the needs of the board of directors and its committees. Our board of
directors and nominating and corporate governance committee believe that a diverse, experienced and highly
qualified board of directors fosters a robust, comprehensive and balanced decision-making process for the
continued effective functioning of our board of directors and success of the Company. Accordingly, through the
nomination process, the nominating and corporate governance committee seeks to promote board membership
that reflects diversity, factoring in gender, race, ethnicity, differences in professional background, education, skill,
and experience, and other individual qualities and attributes that contribute to the total mix of viewpoints and
experience. The nominating and corporate governance committee evaluates the foregoing factors, among others,
and does not assign any particular weighting or priority to any of the factors.

In evaluating potential candidates for the Board in fiscal 2020, the nominating and corporate governance
committee considered the factors listed above, and utilized a search firm to identify, interview, evaluate and
recommend potential candidates. Following an extensive search in which numerous highly-qualified candidates
from a variety of backgrounds were considered,
the nominating and corporate governance committee
recommended Sohaib Abbasi and Virginia Gambale to be appointed to the Board.

The brief biographical description of each director set forth below in Proposal 1 below includes the primary
individual experience, qualifications, attributes and skills of each of our directors that led to the conclusion that
each director should serve as a member of our board of directors at this time.

12

PROPOSAL NO. 1: ELECTION OF DIRECTORS

Our board of directors currently consists of eleven (11) members. At each annual meeting of stockholders, the
successors to directors whose terms then expire will be elected to serve from the time of election until the
third annual meeting following the election. Pursuant to the Investment Agreement, we agreed to expand the size
of the Board from nine (9) to eleven (11) and appoint two Bain nominees, David Humphrey and Max de Groen, to
our Board. Our directors are divided into the three classes as follows:

•

•

•

Class I directors: Susan L. Bostrom, Steven J. Gomo, Max de Groen, and Jeffrey T. Parks, whose terms
will expire at the upcoming Annual Meeting unless re-elected;

Class II directors: Craig Conway, Virginia Gambale, and Brian Stevens, whose terms will expire at the
annual meeting of stockholders to be held after the end of the fiscal year ending July 31, 2021; and

Class III directors: Sohaib Abbasi, David Humphrey, Ravi Mhatre, and Dheeraj Pandey, whose terms will
expire at the annual meeting of stockholders to be held after the end of the fiscal year ending July 31,
2022.

Any additional directorships resulting from an increase in the number of directors will be distributed among the
three classes so that, as nearly as possible, each class will consist of one-third of the directors. The division of our
board of directors into three classes with staggered three-year terms may delay or prevent a change of our
management or a change of control of Nutanix.

Ms. Bostrom and Messrs. Gomo, de Groen, and Parks are currently Class I directors of Nutanix. Ms. Bostrom and
Messrs. Gomo, and de Groen have each been nominated to continue to serve as Class I directors, and each of
these nominees has agreed to stand for re-election at the Annual Meeting. Our management has no reason to
believe that any of Ms. Bostrom and Messrs. Gomo, and de Groen will be unable to serve. If elected at the Annual
Meeting, each of Ms. Bostrom and Messrs. Gomo, and de Groen would serve until the annual meeting of
stockholders to be held after the end of fiscal 2023 and until his or her successor has been duly elected, or if
sooner, until the director’s death, resignation or removal. Due to personal reasons, Mr. Parks has elected not to
stand for re-election as a Class I director, and will therefore step down from our board of directors effective as of
the end of his current term of office, which will expire at the Annual Meeting. Mr. Parks’ decision to not stand for
re-election at the Annual Meeting is solely for personal reasons and not due to any disagreements with the
Company on any matter, including relating to the Company’s operations, policies or practices. In light of Mr. Parks’
expected departure, our board of directors has resolved to reduce the size of the board from eleven (11) to ten (10)
members, effective as of the expiration of Mr. Parks’ term of office at the Annual Meeting.

Vote Required

Directors are elected by a plurality of the voting power of the shares present at the meeting or represented by proxy
and entitled to vote on the election of directors. WITHHOLD votes and broker non-votes have no legal effect on the
outcome. Accordingly, the three nominees receiving the highest number of affirmative votes will be elected. Shares
represented by executed proxies will be voted, if authority to do so is not withheld, for the election of the
three nominees named above. If any nominee becomes unavailable for election as a result of an unexpected
occurrence, shares that would have been voted for that nominee will instead be voted for the election of a substitute
nominee proposed by us.

Nominees

Our nominating and corporate governance committee seeks to assemble a board of directors that, as a group, can
best perpetuate the success of the business and represent stockholder interests through the exercise of sound
judgment using its diversity of background and experience in various areas. To that end, the committee has
identified and evaluated nominees in the broader context of our board’s overall composition, with the goal of
recruiting members who complement and strengthen the skills of other members and who also exhibit integrity,
collegiality, sound business judgment and other qualities deemed critical to effective functioning of our board of
directors. Each of the nominees listed below is currently a director. Mr. Gomo was appointed to our board of
directors prior to our IPO, while Ms. Bostrom and Mr. de Groen were appointed to the board of directors in October
2017 and September 2020, respectively.

13

Set forth below is biographical information for the nominees and each person whose term of office as a director will
continue after the Annual Meeting. This includes information regarding each director’s experience, qualifications,
attributes or skills that led our board of directors to recommend them for board service.

Nominees for Re-Election at this Annual Meeting of Stockholders

Susan L. Bostrom has served as a member of our board of directors since October 2017. Ms. Bostrom previously
served as Executive Vice President, Chief Marketing Officer, Worldwide Government Affairs of Cisco Systems, Inc.
(‘‘Cisco’’), a networking equipment provider, from January 2006 to January 2011. Prior to that, from 1997 to
January 2006, Ms. Bostrom served in various positions at Cisco, including Senior Vice President, Global
Government Affairs and the Internet Business Solutions Group and Vice President of Applications and Services
Marketing. Ms. Bostrom currently serves on the boards of directors of Anaplan, Inc., a software company, Cadence
Design Systems, Inc., an electronic design software company, and ServiceNow, Inc., a company providing
cloud-based solutions, as well as on the boards of directors of several private companies and non-profit
organizations. Ms. Bostrom previously served as a member of the board of directors of Varian Medical Systems,
Inc., a manufacturer of medical devices and software, from February 2005 until February 2019, Rocket Fuel Inc.,
an artificial
its acquisition by Sizmek, Inc. in
September 2017, and Marketo, Inc., a provider of software as a service marketing automation solutions, from
May 2012 until its acquisition by Vista Equity Partners in August 2016. Ms. Bostrom holds a B.S. in Business from
the University of Illinois and an M.B.A. from the Stanford Graduate School of Business. We believe that
Ms. Bostrom is qualified to serve as a member of our board of directors due to her extensive experience and
leadership roles in the technology industry, and her experience serving on the board of directors of several public
companies.

intelligence media buying company, from February 2013 until

Steven J. Gomo has served as a member of our board of directors since June 2015. Mr. Gomo served as
Executive Vice President, Finance and Chief Financial Officer of NetApp, Inc., a storage and data management
company from October 2004 until his retirement in December 2011, as well as Senior Vice President, Finance and
Chief Financial Officer from August 2002 to September 2004. He currently serves as a member of the board of
directors and chairman of the audit committee of each of Enphase Energy, Inc., a solar energy management
device maker, and Micron Technology, Inc., a developer and manufacturer of semiconductor memory products, as
well as a member of the board of directors of Solaria, a provider of advanced solar energy products, since
October 2019. Mr. Gomo also previously served on the board of directors of NetSuite Inc., a business management
software company, from March 2012 until it was acquired by Oracle Corporation in November 2016. Mr. Gomo also
served on the board of directors of SanDisk Corporation, a flash memory storage solutions and software company,
from December 2005 until the company was acquired by Western Digital Corporation in May 2016. Mr. Gomo holds
a B.S. in Business Administration from Oregon State University and an M.B.A. from Santa Clara University. We
believe Mr. Gomo is qualified to serve as a member of our board of directors because of his substantial corporate
governance, operational and financial expertise gained from holding various executive positions at publicly-traded
technology companies and from serving on the board of directors of several public companies.

Max de Groen has served as a member of our board of directors since September 2020. Mr. de Groen joined Bain
Capital Private Equity in 2010 and is currently a managing director in the Technology, Media & Telecommunications
Vertical of Bain. Prior to joining Bain Capital Private Equity, Mr. de Groen was at The Boston Consulting Group,
where he consulted in the technology, financial services, and healthcare practice areas. Mr. de Groen currently
serves on the board of directors of several private companies. Mr. de Groen holds a B.S. in Finance from the
University of Minnesota and an M.B.A. from Harvard Business School.We believe Mr. de Groen is qualified to serve
as a member of our board of directors because of his significant corporate finance and business expertise gained
from his experience in the venture capital and IT industries, including his time spent serving on the boards of
directors of technology companies.

Directors Continuing in Office Until the Annual Meeting of Stockholders After the End of the Fiscal Year
Ending July 31, 2021

Craig Conway has served as a member of our board of directors since October 2017. Mr. Conway previously
served as President and Chief Executive Officer of PeopleSoft, Inc., an enterprise application software company,
from 1999 to 2004. Mr. Conway currently serves on the board of directors of Salesforce.com, a cloud-based
customer relationship management company. Mr. Conway previously served as a director of Advanced Micro
Devices, Inc., a semiconductor company, from September 2009 until May 2013, and Guidewire Software, Inc.,

14

a provider of software products to insurance companies, from December 2010 until January 2019. Mr. Conway
holds a B.S. in Computer Science and Mathematics from the State University of New York at Brockport. We believe
that Mr. Conway is qualified to serve as a member of our board of directors based on his extensive and broad
management experience, gained from his background as the president and chief executive officer of multiple
technology companies and from serving on the board of directors of several public companies.

Virginia Gambale has served as a member of our board of directors since June 2020. Ms. Gambale is Managing
Partner of Azimuth Partners LLC, a technology advisory firm facilitating the growth and adoption of emerging
technologies for financial services, consumer and technology companies. Prior to founding Azimuth Partners in
2003, Ms. Gambale held senior management positions at Merrill Lynch, Bankers Trust, Deutsche Bank and Marsh
& McLennan. She was also the Head of Deutsche Bank Strategic Ventures, and subsequently a General Partner
at Deutsche Bank Capital and ABS Ventures until founding Azimuth Partners. Ms. Gambale has also served on the
boards of directors of: JetBlue Airways Corp., a commercial airline, since May 2006; First Derivatives plc, a provider
of software and consulting services, since March 2015; Regis Corporation, an owner and operator of hairstyling
and hair care salons, since February 2018; Virtu Financial, Inc., a financial services company, since January 2020;
and Core BTS, an IT solutions consulting and managed services provider, since July 2020. She also previously
served on numerous international public and private boards including Piper Jaffray, Workbrain, Synchronoss
Technologies and IQ Financial. Ms. Gambale holds a B.S. Degree in Mathematics and Computer Science from the
New York Institute of Technology. We believe Ms. Gambale is qualified to serve as a member of our board of
directors because of her extensive prior experience in senior leadership positions in finance and technology, as
well as her time spent serving on the boards of numerous public and private companies.

Brian M. Stevens has served as a member of our board of directors since June 2019. Mr. Stevens has served as
Executive Chairman of Neural Magic, a private machine learning company, since July 2019, and as a member of
the board of directors of Genpact Limited since May 2020. He previously served as Chief Technology Officer from
April 2017 to May 2019 and as Vice President of Product from September 2014 to May 2019 of Google Cloud,
where he was responsible for leading the technology vision for Google’s public cloud offering. Prior to Google, from
November 2001 until September 2014, Mr. Stevens served in various positions at Red Hat, Inc., an open source
solutions company, including as Chief Technology Officer and Executive Vice President of Worldwide Engineering
from September 2013 until September 2014. Mr. Stevens has also served on various boards in the past including
the American Red Cross, IEEE, Pentaho, Data Gravity, and the Open Stack Foundation. He holds a B.S. in
Computer Science from the University of New Hampshire and an M.S. in Computer Systems from Rensselaer
Polytechnic Institute. We believe Mr. Stevens is qualified to serve as a member of our board of directors because
of his extensive business experience and expertise in our industry, gained from his substantial leadership roles as
well as his time spent serving on the boards of other technology companies.

Directors Continuing in Office Until the Annual Meeting of Stockholders After the End of the Fiscal Year
Ending July 31, 2022

Sohaib Abbasi has served as a member of our board of directors since March 2020. Mr. Abbasi has also served
as a Senior Advisor at TPG Capital and Balderton Capital since July 2017 and January 2018, respectively.
From 2004 to August 2015, Mr. Abbasi served as the Chief Executive Officer of Informatica Corporation, a data
integration company, where he also served as Chair and a member of the board of directors from 2004 to
December 2015. From 1982 to 2003, Mr. Abbasi served in various roles at Oracle Corporation, most recently as a
member of Oracle’s executive committee and as senior vice president of two major divisions, Oracle Tools and
Oracle Education. Mr. Abbasi has also served on the boards of McAfee, a security software company, since
November 2018, and StreamSets, an enterprise data operations platform company, since August 2017, and as
chairman of the board of directors of Peakon, a provider of employee success platform, since June 2020.
Mr. Abbasi holds both a B.S. and M.S. in Computer Science from the University of Illinois at Urbana-Champaign.
We believe Mr. Abbasi is qualified to serve as a member of our board of directors because of his extensive business
experience and expertise in our industry, gained from his executive leadership roles in our industry as well as his
time spent serving on the boards of other technology companies.

David Humphrey has served as a member of our board of directors since September 2020. Mr. Humphrey joined
Bain Capital Private Equity Since 2001 and is currently a managing director in the Technology, Media &
Telecommunications Vertical and Co-Head of Bain’s North America Private Equity business. Prior to joining Bain
Capital Private Equity, Mr. Humphrey was an investment banker at Lehman Brothers’ mergers & acquisitions
group, where he advised companies on mergers and acquisitions across a range of industries. Mr. Humphrey has

15

served on the board of NortonLifeLock Inc. (fka Symantec Corp) since August 2016. He also served on the board
of Genpact Ltd. from October 2012 to November 2019 and on the board of Bright Horizons Family Solutions, Inc.
from May 2008 to June 2017. Mr. Humphrey currently also serves on the board of directors of several private
companies. Mr. Humphrey holds a B.A. in Economics from Harvard College and an M.B.A. from Harvard Business
School. We believe Mr. Humphrey is qualified to serve as a member of our board of directors because of his
significant corporate finance and business expertise gained from his experience in the venture capital and IT
industries, including his time spent serving on the boards of directors of various technology companies.

Ravi Mhatre has served as our lead independent director since August 2015, and as a member of our board of
directors since July 2010. Mr. Mhatre co-founded Lightspeed Venture Partners, a global technology venture capital
firm, and has served as Managing Director of Lightspeed Venture Partners since August 1999. He currently serves
on the board of directors of several private companies. Mr. Mhatre holds a B.S. in Electrical Engineering and a B.A.
in Economics from Stanford University and an M.B.A. from Stanford University’s Graduate School of Business. We
believe Mr. Mhatre is qualified to serve as a member of our board of directors because of his significant corporate
finance and business expertise gained from his experience in the venture capital and IT industries, including his
time spent serving on the boards of directors of various technology companies. We also value his perspective as
a representative of one of our largest stockholders.

Dheeraj Pandey co-founded our company and has served as our Chief Executive Officer and as the Chairman of
our board of directors since our inception in September 2009, as well as our President from September 2009 until
February 2016. Prior to co-founding our company, Mr. Pandey served as Vice President, Engineering at Aster Data
Systems (now Teradata Corporation), a data management and analysis software company, from February 2009 to
September 2009 and as its Director of Engineering from September 2007 to February 2009. Mr. Pandey has also
served as a director of the board and an audit committee member of Adobe Inc., a multinational computer software
company, since January 2019. Mr. Pandey holds a B. Tech. in Computer Science from the Indian Institute of
Technology, Kanpur, a M.S. in Computer Science from the University of Texas at Austin and was a Graduate Fellow
of Computer Science in the Ph.D. program at the University of Texas at Austin. We believe that the perspective and
experience that Mr. Pandey brings as our Chief Executive Officer and Chairman uniquely qualify him to serve on
our board of directors.

Non-Continuing Director

Jeffrey T. Parks has served as a member of our board of directors since December 2013. Mr. Parks co-founded
and has been a general partner of Riverwood Capital, a private equity firm, since January 2008. Mr. Parks currently
serves on the board of directors of several privately-held companies. Prior to co-founding Riverwood Capital,
Mr. Parks served as an investment executive with KKR & Co. L.L.P., a private equity firm, as an investment
professional in the Principal Opportunities Fund at Oaktree Capital Management, an asset management firm, and
as an investment banker at UBS, a global financial services company. Mr. Parks holds dual B.A. degrees in
Economics and Mathematics from Pomona College, where he currently serves on the Board of Trustees. We
believe Mr. Parks is qualified to serve as a member of our board of directors because of his extensive corporate
governance and management experience with technology companies, including as a director and private equity
investor.

Our board of directors recommends a vote FOR each Class I director nominee above.

16

DIRECTOR COMPENSATION

Fiscal 2020 Director Compensation Table

The following table provides information for all compensation awarded to, earned by or paid to each person who
served as a non-employee director in the fiscal year ended July 31, 2020. Messrs. de Groen and Humphrey were
appointed to our board of directors on September 24, 2020, and did not serve on our board for any portion of our
fiscal 2020 or receive any compensation from us during our fiscal 2020. Mr. Pandey, our CEO and Chairman, did
not receive additional compensation for his service as a director. The compensation received by Mr. Pandey as an
employee is shown in ‘‘Executive Compensation - Executive Compensation Tables - Fiscal 2020 Summary
Compensation Table.’’

Fees
Earned
or Paid
in Cash
($)

Stock
Awards(1)
($)

Option
Awards
($)

Non-Equity
Incentive Plan
Compensation
($)

Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
($)

All Other
Compensation
($)

Total
($)

— 144,776

— 270,581

— 265,472

— 202,037

— 390,195

—

—

— 377,804

— 370,141

— 362,477

— 336,932

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

— 144,776

— 270,581

— 265,472

— 202,037

— 390,195

—

—

— 377,804

— 370,141

— 362,477

— 336,932

Name

Sohaib Abbasi(2)
Susan L. Bostrom(3)
Craig Conway(3)
Virginia Gambale(4)

Steven J. Gomo
John McAdam(5)

Ravi Mhatre

Jeffrey T. Parks
Michael P. Scarpelli(6)

Brian M. Stevens

(1) The amounts reported in this column represent the aggregate grant date fair value of the restricted stock units
(‘‘RSUs’’), granted, as computed in accordance with Financial Accounting Standards Board (‘‘FASB’’), Accounting
Standards Codification Topic 718, Compensation—Stock Compensation (‘‘ASC Topic 718’’). The assumptions used
in the valuation of these awards are set forth in the notes to our consolidated financial statements, which are included
in our Annual Report on Form 10-K for our fiscal year ended July 31, 2020, filed with the SEC on September 23, 2020.
These amounts do not necessarily correspond to the actual value that may be recognized by the director upon the
vesting of such awards.

(2) Mr. Abbasi joined our board of directors on March 19, 2020 and received a prorated annual grant under our current

amended and restated outside director compensation policy.

(3) As described below in the section titled ‘‘Corporate Governance at Nutanix - Director Compensation - Non-Employee
Director Compensation Policy,’’ under our current amended and restated outside director compensation policy, each
non-employee director who holds an initial grant with a multi-year vesting schedule, any portion of which is unvested
as of the date of an annual meeting of stockholders, will be granted an award of RSUs with a total dollar annual award
value equal to $255,000 for his or her service as a member of our board of directors. Ms. Bostrom and Mr. Conway
each received their initial grants in October 2017 when they joined our board of directors, and a portion thereof
remained unvested as of December 13, 2019, the date of our 2019 annual meeting. Therefore, Ms. Bostrom and
Mr. Conway each received an annual award with a total dollar value equal to $255,000.

(4) Ms. Gambale joined our board of directors on June 3, 2020 and received a prorated annual grant under our current
amended and restated outside director compensation policy. The amounts reported do not
include the
Ms. Gambale’s interest in the transactions under a previously-terminated consulting agreement (the ‘‘Consulting
Agreement’’) between the Company and Azimuth Partners, LLC (‘‘Azimuth’’). Ms. Gambale serves as the Managing
Partner of Azimuth.The Consulting Agreement was terminated on June 3, 2020, prior to Ms. Gambale’s appointment
to the Board (the ‘‘Termination Time’’). Prior to the Termination Time and under the terms of the Consulting
Agreement, Azimuth received certain cash retainer fees and, on June 9, 2017, Ms. Gambale was personally granted
certain RSUs representing the right to receive the same number of shares of the Company’s Class A common stock
upon vesting. Since the beginning of the Company’s last fiscal year, which began on August 1, 2019, Ms. Gambale’s
interest in the transactions under the Consulting Agreement amounted to, in the aggregate, approximately
$63,110, consisting of: (1) aggregate cash retainer fees of approximately $50,000 paid to Azimuth, whose interest in

17

the transaction is being wholly attributed to Ms. Gambale as its Managing Director; and (2) $13,110, representing the
aggregate grant date fair market value of 750 RSUs that vested from August 1, 2019 until the Termination Time. All
remaining unvested RSUs previously granted to Ms. Gambale under the Consulting Agreement were terminated and
cancelled as of the Termination Time.

(5) Mr. McAdam retired from our board of directors at our 2019 annual meeting on December 13, 2019.
(6) Mr. Scarpelli resigned from our board of directors effective as of June 3, 2020.

Our non-employee directors held the following outstanding option and RSU awards as of July 31, 2020. The table
excludes Messrs. de Groen and Humphrey, who were appointed to our board of directors on September 24, 2020
and did not serve on our board for any portion of our fiscal 2020. Neither Mr. de Groen nor Humphrey held any
outstanding option or RSU awards as of July 31, 2020. The table also excludes Mr. Pandey, whose outstanding
awards are reflected in the section titled ‘‘Executive Compensation - Executive Compensation Tables - Outstanding
Equity Awards at Fiscal 2020 Year-End Table.’’

Name

# of Outstanding
Options
(in shares)

# of Outstanding
RSUs
(in shares)

Sohaib Abbasi(1)

Susan L. Bostrom

Craig Conway
Virginia Gambale(2)

Steven J. Gomo
John McAdam(3)

Ravi Mhatre

Jeffrey T. Parks
Michael P. Scarpelli(4)

Brian M. Stevens

—

—

—

—

—

—

—

—

75,000

—

10,297

14,242

14,086

8,359

10,834

—

11,536

11,302

—

10,288

(1) Mr. Abbasi joined our board of directors on March 19, 2020.
(2) Ms. Gambale joined our board of directors on June 3, 2020.
(3) Mr. McAdam retired from our board of directors at our 2019 annual meeting on December 13, 2019.
(4) Mr. Scarpelli resigned from our board of directors effective as of June 3, 2020.

Non-Employee Director Compensation Policy

Under our non-employee director compensation policy, which was last approved by the Board in October 2018, our
non-employee directors are compensated entirely through equity awards, which the board of directors believes
best aligns the interests of our directors with the long-term interests of our stockholders. Non-employee directors
receive no other form of remuneration, perquisites or benefits, but are reimbursed for their reasonable travel
expenses incurred in attending board and committee meetings.

The compensation committee of our board of directors reviews the total compensation of our non-employee
directors and each element of our non-employee director compensation policy annually. At the direction of the
compensation committee, Compensia, Inc. (‘‘Compensia’’), a nationally recognized compensation consulting firm,
annually analyzes the competitive position of our non-employee director compensation policy against the peer
group used for executive compensation purposes. For a more detailed description of the role of Compensia, our
independent compensation consultant, please refer to the section titled ‘‘Executive Compensation - Compensation
Discussion and Analysis - Discussion of Our Fiscal 2020 Executive Compensation Program - Compensation-
Setting Process - Role of Compensation Consultant.’’ In August 2019, Compensia reviewed the competitive
position of the compensation for non-employee directors and did not recommend making any changes given our
competitive positioning relative to our peers. As a result, our director compensation program remained unchanged
for fiscal year 2020.

Pursuant to the policy, our non-employee directors will receive the RSU awards described below. In the event of a
change of control, each RSU award granted pursuant to the policy may be subject to accelerated vesting in
accordance with the terms of the 2016 Equity Incentive Plan.

18

Annual Grant

On the date of each annual meeting of our stockholders, each non-employee director will be granted an award of
RSUs with a total dollar value (the ‘‘Annual Award Value’’), based on board and committee service as follows:

Board Member
Lead Independent Director

$330,000
$20,000

Committee Awards

Audit
Compensation
Nominating and Corporate Governance

Chair

Member

$25,000 $12,500
$20,000 $10,000
$10,000 $ 5,000

Notwithstanding the above, on the date of each annual meeting of our stockholders, each non-employee director
who holds an initial grant with a multi-year vesting schedule (each, an ‘‘Initial Grant’’), any portion of which is
unvested as of the date of such annual meeting (each, a ‘‘Currently Vesting Director’’), will be granted an award of
RSUs with the portion of the Annual Award Value for service as a Board member equal to $255,000.

Each such annual RSU grant will vest in full on the earlier of (i) the day prior to the next annual meeting held after
the date of grant or (ii) the one-year anniversary of the date of grant, in each case subject to the non-employee
director continuing to provide service as a director through the applicable vesting date.

Prorated Grants

For Currently Vesting Directors. Upon the completion of the vesting of an Initial Grant, a Currently Vesting Director
will receive a RSU award with a total dollar value equal to a prorated portion of $75,000, based on the number of
days between the first day of the week in which the grant is made and the day prior to the next annual meeting of
our stockholders.

For New Directors. New directors will receive a RSU award with a total dollar value equal to a prorated portion of
the Annual Award Value, based on the number of days between the first day of the week in which the grant is made
and the day prior to the next annual meeting of our stockholders.

Each such prorated RSU grant will vest in full on the day prior to the next annual meeting held after the date of
grant, in each case subject to the non-employee director continuing to provide service as a director through the
applicable vesting date.

Stock Ownership Guidelines

Our stock ownership guidelines provide that each non-employee director is expected to attain a minimum share
ownership position with an aggregate value equal to the value of his or her annual equity award for service on the
board of directors (not including any equity awards for serving as lead independent director or a member or chair
of any committees) as follows: (i) for existing directors other than Ms. Gambale and Messrs. Abbasi, de Groen,
Humphrey, and Stevens, by this Annual Meeting, (ii) for Mr. Stevens, who joined our board of directors in
June 2019, by the annual stockholders meeting to occur after our fiscal year ending July 31, 2022, (iii) for each of
Ms. Gambale and Messrs. Abbasi, de Groen and Humphrey, who joined our board of directors in June 2020,
March 2020, September 2020, and September 2020, respectively, by the annual stockholders meeting to occur
after our fiscal year ending July 31, 2024, and (iv) for any new directors, by the fourth annual stockholders meeting
after the date such director joined the board of directors.

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

In addition to the executive officer and director compensation arrangements discussed in the sections titled
‘‘Corporate Governance at Nutanix - Director Compensation’’ and ‘‘Executive Compensation,’’ the following is a
description of each transaction since August 1, 2019 and each currently proposed transaction in which:

•

•

we have been or are to be a participant;

the amounts involved exceeded or will exceed $120,000; and

19

•

any of our directors, nominees for election as directors, executive officers or beneficial holders of more
than 5% of any class of our capital stock, or entities affiliated with them, or any immediate family members
of or person sharing the household with any of these individuals, had or will have a direct or indirect
material interest.

Transactions with Directors and Officers

In August 2020, we entered into the Investment Agreement with Bain relating to the issuance and sale to Bain of
$750 million in an initial aggregate principal amount of the Notes. The Notes were issued on September 24, 2020.
In accordance with the Investment Agreement, Mr. Humphrey, a managing director of Bain, and Mr. de Groen, a
managing director of Bain, were appointed to our board of directors.

In July 2019, we entered into an agreement with Snowflake Inc. (‘‘Snowflake’’), a company that provides
cloud-based solutions, for which one of our former non-employee directors, Michael P. Scarpelli, serves as the
Chief Financial Officer. Pursuant to the agreement, we purchased Snowflake products and services over an initial
12-month term starting in August 2019 for a total value of approximately $375,000. Since August 1, 2019, we
purchased approximately $273,000 of products and services from Snowflake under this agreement. Mr. Scarpelli
joined Snowflake in August 2019 after we had entered into the agreement with Snowflake, and had no involvement
in the negotiation of the agreement. Mr. Scarpelli resigned from our board of directors effective as of June 3, 2020.

Equity Awards to Executive Officers and Directors

We have granted equity awards to our Named Executive Officers. For a description of these stock awards, see the
section titled ‘‘Executive Compensation - Executive Compensation Tables - Outstanding Equity Awards at
Fiscal 2020 Year-End Table.’’

Policies and Procedures for Related Party Transactions

We have a formal written policy providing that our executive officers, directors, nominees for election as directors,
beneficial owners of more than 5% of any class of our common stock and any member of the immediate family of
any of the foregoing persons, is not permitted to enter into a related party transaction with us without the consent
of our audit committee, subject to the exceptions described below.

In approving or rejecting any such proposal, our audit committee is to consider the relevant
facts and
circumstances available and deemed relevant to our audit committee, including, whether the transaction is on
terms no less favorable than terms generally available to an unaffiliated third party under the same or similar
circumstances, and the extent of the related party’s interest in the transaction. Our audit committee has
determined that certain transactions will not require audit committee approval, including certain employment
arrangements of executive officers, director compensation, transactions with another company at which a related
party’s only relationship is as a non-executive employee, director or beneficial owner of less than 10% of that
company’s shares and the aggregate amount involved does not exceed the greater of $200,000 or 2% of the
recipient’s consolidated gross revenues in any fiscal year, transactions where a related party’s interest arises
solely from the ownership of our common stock and all holders of our common stock received the same benefit on
a pro rata basis, and transactions available to all employees generally.

We believe that we have executed all of the transactions set forth above on terms no less favorable to us than we
could have obtained from unaffiliated third parties. It is our intention to ensure that all future transactions between
us and our officers, directors and principal stockholders and their affiliates are approved by the audit committee of
our board of directors and are on terms no less favorable to us than those that we could obtain from unaffiliated
third parties.

20

AUDIT COMMITTEE MATTERS

PROPOSAL NO. 2: RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM

Our audit committee has re-appointed Deloitte & Touche LLP as our independent registered public accounting firm
for the fiscal year ending July 31, 2021 and has further directed that management submit this selection for
ratification by the stockholders at the Annual Meeting. Although ratification by stockholders is not required by law,
we have determined that it is good practice to request ratification of this selection by the stockholders. In the event
that Deloitte & Touche LLP is not ratified by our stockholders, the audit committee will review its future selection of
Deloitte & Touche LLP as our independent registered public accounting firm.

Deloitte & Touche LLP audited our financial statements for the fiscal years ended July 31, 2018, 2019 and 2020.
Representatives of Deloitte & Touche LLP are expected to be present during the Annual Meeting, where they will
be available to respond to appropriate questions and, if they desire, to make a statement.

Our board of directors is submitting this selection as a matter of good corporate governance and because we value
our stockholders’ views on our independent registered public accounting firm. Neither our amended and restated
bylaws nor other governing documents or law require stockholder ratification of the selection of our independent
registered public accounting firm. If the stockholders fail to ratify this selection, our board of directors will reconsider
whether or not to retain that firm. Even if the selection is ratified, our board of directors may direct the appointment
of different independent auditors at any time during the year if they determine that such a change would be in the
best interests of Nutanix and its stockholders.

Vote Required

An affirmative vote from holders of a majority in voting power of the shares present at the meeting or represented
by proxy and entitled to vote on the proposal will be required to ratify the selection of Deloitte & Touche LLP.
Abstentions will have the effect of a vote AGAINST the proposal and broker non-votes will have no effect.

Principal Accountant Fees and Services

The following table provides the aggregate fees for services provided by Deloitte & Touche LLP for the fiscal years
ended July 31, 2019 and 2020.

Audit fees(1)
Audit-related fees(2)
Tax fees(3)
Total fees

Fiscal Year Ended July 31,

2019

2020

$3,470,000
185,000
737,892

$4,392,892

$3,371,895
188,000
775,579

$4,335,474

(1) Consists of fees billed for professional services rendered in connection with the audit of our consolidated financial
statements, including audited financial statements presented in our Annual Report on Form 10-K, review of the
interim consolidated financial statements included in our quarterly reports and services normally provided in
connection with regulatory filings.

(2) Consists of fees billed for assurance and related services that are reasonably related to the performance of the audit

or review of the Company’s consolidated financial statements and are not reported under ‘‘Audit Fees.’’

(3) Consists of fees billed for professional services for tax compliance, tax advice and tax planning. These services

include assistance regarding federal, state and international tax compliance.

21

Pre-Approval Policies and Procedures

Consistent with the requirements of the SEC and the Public Company Accounting Oversight Board (‘‘PCAOB’’),
regarding auditor independence, the audit committee has responsibility for appointing, setting compensation,
retaining and overseeing the work of our independent registered public accounting firm. In recognition of this
responsibility, the audit committee has adopted a policy and procedures for the pre-approval of audit and non-audit
services rendered by our independent registered public accounting firm, Deloitte & Touche LLP. The policy
generally pre-approves specified services in the defined categories of audit services, audit-related services and
tax services up to specified amounts. Pre-approval may also be given as part of the audit committee’s approval of
the scope of the engagement of the independent auditor or on an individual, explicit, case-by-case basis before the
independent auditor is engaged to provide each service.

All of the services provided by Deloitte & Touche LLP for our fiscal years ended July 31, 2019 and 2020 described
above were pre-approved by the audit committee or our board of directors. Our audit committee has determined
that the rendering of services other than audit services by Deloitte & Touche LLP is compatible with maintaining the
principal accountant’s independence.

Our board of directors recommends a vote FOR the ratification of Deloitte & Touche LLP as
our independent registered public accounting firm for the fiscal year ending July 31, 2021.

22

REPORT OF THE AUDIT COMMITTEE

The audit committee has reviewed and discussed the audited financial statements for the fiscal year ended July 31,
2020 with the management of Nutanix. The audit committee has discussed with its independent registered public
accounting firm, Deloitte & Touche LLP, the matters required to be discussed by Auditing Standard No. 1301,
Communications with Audit Committees, as amended, as adopted by the PCAOB. The audit committee has also
received the written disclosures and the letter from its independent registered public accounting firm required by
applicable requirements of the PCAOB regarding the independent accountants’ communications with the audit
committee concerning independence, and has discussed with the independent registered public accounting firm
the accounting firm’s independence. Based on the foregoing, the audit committee has recommended to our board
of directors that the audited financial statements be included in Nutanix’s Annual Report on Form 10-K for the fiscal
year ended July 31, 2020.

The Audit Committee

Steven J. Gomo (Chair)
Sohaib Abbasi
Virginia Gambale

The material in this report is not ‘‘soliciting material,’’ is not deemed ‘‘filed’’ with the SEC and is not to be incorporated
by reference in any filing of Nutanix under the Securities Act or the Exchange Act, whether made before or after the
date hereof and irrespective of any general incorporation language in any such filing.

23

OUR EXECUTIVE OFFICERS
The following is biographical information for our current executive officers not discussed above, as of the date of
this proxy statement:

Name

Dheeraj Pandey
Duston M. Williams
David Sangster
Tyler Wall
Tarkan Maner

Age

45
62
56
54
51

Position/Office Held With Nutanix

Chief Executive Officer and Chairman
Chief Financial Officer
Chief Operating Officer
Chief Legal Officer
Chief Commercial Officer

Our board of directors chooses our executive officers, who then serve at the board’s discretion.There are no family
relationships among any of our directors or executive officers.

For biographical information regarding Mr. Pandey, please refer to the section above titled ‘‘Proposal No. 1: Election
of Directors.’’ The Company has announced that Mr. Pandey intends to resign as CEO once his successor has
been identified and duly appointed.

Duston M. Williams has served as our Chief Financial Officer since June 2014. Prior to joining us, Mr. Williams
served as Chief Financial Officer for Gigamon Inc., a network security company, from March 2012 until June 2014.
From March 2011 to January 2012, he served as Chief Financial Officer for SandForce, Inc., a data storage
company acquired by LSI Corporation. From July 2010 to February 2011, Mr. Williams served as the Chief
Financial Officer of Soraa, Inc., a solid state lighting company. From June 2006 to June 2010, Mr. Williams served
as Vice President and Chief Financial Officer of Infinera Corporation, an optical networking systems provider.
Mr. Williams holds a B.S. in Accounting from Bentley College and an M.B.A. from the University of Southern
California.

David Sangster has served as our Chief Operating Officer since March 2019 and was our Executive Vice
President, Engineering & Operations from February 2018 to March 2019, our Executive Vice President, Support
& Operations from February 2016 to February 2018, our Senior Vice President, Operations from April 2014 to
February 2016, and Vice President, Operations from December 2011 to April 2014. Prior to joining us, Mr. Sangster
served as Vice President, Manufacturing Technology at EMC Corporation, an IT storage hardware solutions
company, from July 2009 to December 2011. Mr. Sangster holds a B.S. in Mechanical Engineering from
Massachusetts Institute of Technology, an M.S. in Manufacturing Systems Engineering from Stanford University
and an M.B.A. in Operations and Marketing from Santa Clara University.

Tyler Wall has served as our Chief Legal Officer since November 2017. Prior to joining us, Mr. Wall was the Senior
Vice President, General Counsel, at Red Book Connect, LLC, a restaurant industry SaaS and technology solutions
company, from April 2014 to September 2017. Prior to that, Mr. Wall was the Vice President, General Counsel,
Chief Compliance Officer and Corporate Secretary at Brocade, a supplier of networking hardware, software, and
services, from 2005 to April 2014. Mr. Wall holds a B.S. in Economics from University of Utah, a J.D. from Santa
Clara University - School of Law, and an M.B.A. from Santa Clara University - School of Business.

Tarkan Maner has served as our Chief Commercial Officer since November 2019. Prior to joining us, Mr. Maner
served as Chairman and CEO at Nexenta Systems, Inc. from August 2013 until September 2019. Prior to Nexenta,
Mr. Maner served in various leadership positions at Wyse, Dell, CA Technologies, IBM, and Sterling Software.
Mr. Maner has served on the board of directors of Wheels Labs since 2018 and previously served on the boards
of directors of Teradici and CloudCheckr, as well as several non-profit organizations. Mr. Maner holds a B.S. in
Engineering Management
from Istanbul Technical University, a Master’s in Business Administration from
Midwestern State University Texas, and an AMP in Business Administration from Harvard Business School.

24

EXECUTIVE COMPENSATION

PROPOSAL NO. 3: NON-BINDING ADVISORY VOTE ON THE COMPENSATION OF OUR
NAMED EXECUTIVE OFFICERS

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the ‘‘Dodd-Frank Act’’) enables
stockholders to approve, on an advisory or non-binding basis, the compensation of our Named Executive Officers
as disclosed pursuant to Section 14A of the Exchange Act. This proposal, commonly known as a ‘‘Say-on-Pay’’
proposal, gives our stockholders the opportunity to express their views on our Named Executive Officers’
compensation as a whole. This vote is not intended to address any specific item of compensation or any specific
Named Executive Officer, but rather the overall compensation of all of our Named Executive Officers and the
philosophy, policies and practices described in this proxy statement.

The say-on-pay vote is advisory, and therefore not binding on us. The say-on-pay vote will, however, provide
information to us regarding investor sentiment about our executive compensation philosophy, policies and
practices, which the compensation committee will be able to consider when determining executive compensation
for the remainder of the current fiscal year and beyond. Our board of directors and our compensation committee
value the opinions of our stockholders and to the extent there is any significant vote against the Named Executive
Officer compensation as disclosed in this proxy statement, we will communicate directly with stockholders to better
understand the concerns that influenced the vote, consider our stockholders’ concerns, and the compensation
committee will evaluate whether any actions are necessary to address those concerns.

We believe that the information provided in the ‘‘Executive Compensation’’ section of this proxy statement, and in
particular the information discussed in ‘‘Executive Compensation - Compensation Discussion and Analysis,’’
demonstrates that our executive compensation program was designed appropriately and is working to ensure
management’s interests are aligned with our stockholders’
long-term value creation.
Accordingly, we ask our stockholders to vote FOR the following resolution at the Annual Meeting:

interests to support

‘‘RESOLVED, that the stockholders approve, on a non-binding advisory basis, the compensation paid to the
Company’s Named Executive Officers, as disclosed in the proxy statement for the Annual Meeting pursuant
to the compensation disclosure rules of the Securities Exchange Commission, including in the Compensation
Discussion and Analysis, the compensation tables and the narrative discussions that accompany the
compensation tables.’’

Vote Required

The non-binding advisory vote on executive compensation requires the affirmative vote of a majority of the voting
power of the shares present at the meeting or represented by proxy and entitled to vote on the proposal.
Abstentions will have the effect of a vote AGAINST the proposal and broker non-votes will have no effect.

Our board of directors recommends a vote FOR the approval, on a non-binding advisory basis, of the
compensation of our Named Executive Officers, as disclosed in this proxy statement.

25

COMPENSATION DISCUSSION AND ANALYSIS

The compensation provided to our Named Executive Officers for fiscal 2020 is set forth in detail in the ‘‘Fiscal 2020
Summary Compensation Table’’ and the other tables that follow in this Compensation Discussion and Analysis.The
following discussion provides an overview of our executive compensation philosophy, the overall objectives of our
executive compensation program, and each component of compensation that we provide to our Named Executive
Officers. In addition, we explain how and why the compensation committee of our board of directors arrived at the
specific compensation policies and decisions for our Named Executive Officers. The following are the individuals
who served as our Named Executive Officers during fiscal 2020, or a portion thereof:

•

•

•

•

•

Dheeraj Pandey, Chief Executive Officer and Chairman;

Duston M. Williams, Chief Financial Officer;

David M. Sangster, Chief Operating Officer;

Tyler Wall, Chief Legal Officer; and

Tarkan Maner, Chief Commercial Officer.

Our board of directors has delegated to the compensation committee the authority and responsibility for
establishing and overseeing salaries, administering the incentive compensation programs, and establishing and
overseeing other forms of compensation for our executive officers, general remuneration policies for the balance
of our employee population and for overseeing and administering our equity incentive and benefit plans.

EXECUTIVE SUMMARY

Our goal is to create an executive compensation program that attracts and motivates the top executives who are
essential for building Nutanix into the enterprise cloud platform company that we aspire to be. Achieving this goal
depends on our continued discipline as we execute on our growth strategy, transition our business to a
subscription-based business model, and continue to significantly invest in our business in order to build scale and
increase our leadership in our industry. Since our IPO in 2016, not only has our business has grown significantly,
but we have undergone multiple business transformations - a transition away from selling hardware, followed
shortly by a transition to subscription-based business model, all the way executing on a product evolution towards
a true hybrid cloud platform. Maintaining this growth requires the intense focus and dedication of our executives.
The velocity of our growth has also required that we recruit and retain seasoned leaders who are experienced in
navigating the complexities of significant growth and who can continue to grow a company at scale. Furthermore,
while we believe that these transformations, particularly the shift to a subscription-based business model, are in
the best interest of our stockholders in the long run, they have created volatility, and executing on these
transformations not only requires our executives to be agile in the near-term but also focused on the long-term
goals of the Company. Accordingly, we continue to design and update our executive compensation programs to
match the maturity, size, scale, growth, business model and continuing aspirations of our business to create value
for our stockholders.We operate in a highly competitive and rapidly evolving market, and our ability to compete and
succeed in this dynamic environment is directly correlated to our ability to recruit, incentivize and retain talented
and seasoned top-caliber technology leaders. The market for skilled management and personnel that we seek to
hire and retain is fiercely competitive, therefore our executive compensation programs are critical in supporting the
growth of our business.

This executive summary provides an overview of:
• Our fiscal 2020 business highlights;
• Our executive compensation practices; and
• Our Say-on-Pay vote for executive compensation and Say-on-Pay frequency vote.

26

Fiscal 2020 Business Highlights

In fiscal 2020, despite the ongoing COVID-19 pandemic, we made significant progress on our ongoing transition
toward a subscription-based business model. Our subscription billings increased to approximately 81% of total
billings in fiscal 2020, representing a year-over-year increase of 21%, and our subscription revenue reached
$1.0 billion (approximately 79% of total revenue in fiscal 2020), representing a year-over-year increase of 59%.
This transition toward a subscription-based business model has had, and may continue to have, adverse
near-term impacts on our business, financial performance and stock price, and has resulted in shifts to our targets
with respect to certain top-line metrics (such as total revenue and total billings). However, we believe we have a
unique opportunity many other companies may not have, and will continue to focus on capturing this large and
growing market opportunity, which requires that we continue to heavily invest in our business. In particular, our
ongoing subscription transition aims to capitalize on the hybrid cloud paradigm shift in our industry and provide our
customers the freedom to choose the way they consume our enterprise cloud platform based on their specific
business needs. As we continue with this subscription transition, our life-of-device licensing models will be
increasingly replaced by term-based licenses, thereby providing our customers with a subscription consumption
option that more closely matches the way they consume third-party public cloud services and, ultimately, true
license portability across hybrid cloud deployments. As a result, despite the near-term impacts, we believe that our
business model transitions will help us capture a larger portion of the market and ultimately contribute to our
long-term growth.

We designed the annual incentive component of our fiscal 2020 executive compensation program to align with key
performance measures that we believe to be more appropriate indicators of our success through these business
model transitions and more reflective of a subscription-based business model, such as the annual contract value
of bookings and customer churn rate.

The COVID-19 pandemic created global economic uncertainty and was an unexpected factor in our fiscal 2020
performance. In response to the uncertainty, we undertook a number of cost savings measures, and each of our
Named Executive Officers voluntarily took a temporary 10% reduction in base salary as a show of support for the
Company. While the economic impact of the COVID-19 pandemic had mixed impact on our financial results, the
shift to remote work amidst a global lockdown drove demand for our end-user computing offerings and further
validated our vision for a hybrid cloud.

Our key financial and business results for fiscal 2020 provide context for stockholders reviewing our executive
compensation disclosures, and for additional information regarding our key results for fiscal 2020, as well as a
detailed discussion of the impact of our transition to a subscription-based business model on our business,
financial performance, and stock price, please refer to our Annual Report on Form 10-K for our fiscal year ended
July 31, 2020, as filed with the SEC on September 23, 2020, in particular, Part II, Item 7, Management’s Discussion
and Analysis of Financial Condition and Results of Operations – Key Financial and Performance Metrics and –
Factors Affecting our Performance, and Part I, Item 1A, Risk Factors.

We believe our Named Executive Officers’ compensation for fiscal 2020 appropriately incentivized them to
contribute to our performance and execute our business model transitions and longer-term ambitions. As we
surpass $1.3 billion in total annual revenue, we have attracted and retained an executive management team of
seasoned and accomplished leaders capable of driving growth at a larger scale, focusing on executing on our
market opportunities, and leading us through our next phase of growth.

27

Executive Compensation Practices

We endeavor to maintain sound governance standards consistent with our executive compensation policies and
practices. The compensation committee evaluates our executive compensation program on a regular basis to
ensure consistency with our short-term and long-term goals, given the dynamic nature of our business and the
market in which we compete for executive talent. The following policies and practices were in effect during fiscal
2020:

* Performance-based cash and equity incentives

* No retirement or pension-type plans other than the

What We Do

What We Don’t Do

* 100% independent compensation committee

* Independent compensation consultant engaged by the

compensation committee

standard 401(k) offered to all employees

* No perquisites or personal benefits, other than
standard benefits typically received by other
employees

* Annual review of executive compensation strategy and

* No tax gross-ups for change of control payments and

risks, as well compensation practices of our peer
group

benefits

* Equity-based executive and director compensation to

align with the interests of our stockholders

* No short sales, hedging, or pledging of stock

ownership positions and transactions involving
derivatives of our common stock

* Multi-year vesting requirements for all time-based RSU

* No strict benchmarking of compensation to a specific

awards granted to our executive officers

percentile of our peer group

* Multi-year vesting requirements for any performance-

based RSU (‘‘PRSU’’), awards granted to our
executive officers

* Our executives participate in broad-based company
health and welfare benefits programs alongside all
other full-time salaried employees

* Our directors are compensated 100% with equity to

align our directors with the long-term interests of our
stockholders.

* Director stock ownership guidelines.

Say-on-Pay Vote on Executive Compensation and Say-on-Pay Frequency Vote and Effect of Most Recent
Say-on-Pay Vote

At the Annual Meeting, we will be conducting a non-binding, advisory vote on the compensation of our Named
Executive Officers (the ‘‘Say-on-Pay vote’’), as described in Proposal No. 3 of this proxy statement. As previously
disclosed, in our annual meeting of stockholders held on December 17, 2018, our stockholders approved, on a
non-binding advisory basis, to hold future stockholder advisory votes on the compensation of our Named
Executive Officers every one year.

Our compensation committee considers the results of the Say-on-Pay Vote on the compensation of our Named
Executive Officers and stockholder feedback on our executive compensation program as part of its annual
executive compensation review. At our 2019 annual meeting of stockholders, over 92% of the votes cast approved
the compensation program for our Named Executive Officers as described in our 2019 proxy statement. Based on
this strong stockholder support, our compensation committee determined not to make any significant changes to
our existing executive compensation program and policies. Our compensation committee currently intends to
continue to consider the results of the annual advisory vote on executive compensation and stockholder feedback
as data points in making executive compensation decisions.

28

DISCUSSION OF OUR FISCAL 2020 EXECUTIVE COMPENSATION PROGRAM

Our executive compensation program is designed to attract, motivate and retain the key executives who drive our
success and to align our executives with the long-term interests of our shareholders. This section provides an
overview of our executive compensation philosophy, the overall objectives of our executive compensation program
and each component of our executive compensation program. In addition, we explain how and why the
compensation committee arrived at the specific compensation policies and decisions involving our executive
compensation program.

Executive Compensation Philosophy

Our desire is to create a premier enterprise cloud platform software company, and our compensation philosophy
is singularly focused on the achievement of that goal. We operate in a highly competitive business environment
characterized by a rapidly changing market and frequent technological advances, and we expect competition
among companies in our market to continue to increase. In the past several years, we have experienced a high
level of growth and have focused our current business strategy on maintaining that growth at scale while also
transitioning to a subscription-based business model. To successfully execute on this strategy in this dynamic
environment, we need to recruit, incentivize and retain talented and seasoned leaders who are able to execute at
the highest level and deliver stockholder value. We have structured our executive compensation program to align
with this strategy by adopting a mix of short-term and long-term incentives, which we believe will motivate our
executive officers to execute to our short-term and long-term growth strategy.

We actively compete with many other companies in seeking to attract and retain a skilled executive management
team that has successfully and rapidly scaled and managed multi-billion dollar software businesses. This is
especially challenging in the San Francisco Bay Area and Silicon Valley markets in which we have our
headquarters, where there are a large number of rapidly expanding technology companies, especially in the
software space,
intensely competing for highly qualified candidates. We have responded to this intense
competition for talent by implementing compensation practices designed to attract and motivate our executive
officers to pursue our corporate objectives, while retaining them and incentivizing them to create long-term value
for our stockholders, such that these executives can help lead us to become the premier cloud platform company
we aspire to be.

Our executive compensation program combines short-term and long-term components, including salary, cash
bonuses and equity awards. In particular, we have a strong belief that our employees should share in the ownership
of Nutanix. Therefore, equity compensation is a significant part of our compensation packages, which we believe
best aligns the interests of our employees with those of our stockholders.

Our compensation committee regularly reviews and adjusts our executive compensation program to align with the
maturity, size, scale, growth and aspirations of our business. Due to the dynamic nature of our industry and our
business, we expect to continue to adjust our approach to executive compensation to respond to our needs and
market conditions as they evolve.

Executive Compensation Objectives

The current objectives of our executive compensation program are to:

•

•

•

•

Attract, motivate and retain highly qualified executive officers who have successfully and rapidly scaled
other technology companies, and who possess the skills and leadership to execute on our growth
strategy and business model transition, and lead us to become the company we aspire to be to deliver
long-term stockholder value;

Reflect our growth-centric strategy, which includes significant investments for our future growth;

Reward our executive officers for achieving or exceeding our strategic and financial performance goals;
and

Align the long-term goals of our executive officers and employees with those of our stockholders through
a focus on ownership.

29

Compensation-Setting Process

Role of the Compensation Committee

Pursuant to its charter, the compensation committee is primarily responsible for establishing, approving and
adjusting compensation arrangements for our Named Executive Officers, including our CEO, reviewing and
approving corporate goals and objectives relevant to these compensation arrangements, evaluating executive
performance against the backdrop of our corporate goals and objectives, and determining the long-term incentive
component of our executive compensation arrangements in light of factors related to our performance, including
accomplishment of our long-term business and financial goals. For additional information about the compensation
committee, see ‘‘Corporate Governance at Nutanix - Board of Directors and Its Committees - Compensation
Committee’’ in this proxy statement.

Compensation decisions for our executive officers are made by the compensation committee, with the input of its
independent compensation consultant and our CEO and management team (except with respect to their own
compensation). The compensation committee periodically reviews and, as necessary, adjusts the cash and equity
compensation of our executive officers with the goal of ensuring that our executive officers are properly
incentivized.

The compensation committee considers compensation data from our peer group as one of several factors that
inform its judgment of appropriate parameters for target compensation levels. The compensation committee,
however, does not strictly benchmark compensation to a specific percentile of our peer group, nor does it apply a
formula or assign relative weights to specific compensation elements. In addition, while compensation peer group
data is a factor, the compensation committee is forward-looking in aligning our executive compensation program
with the unique growth opportunity we believe we have, and the risks associated with pursuing the opportunity,
which are not captured by reviewing peer data.

The compensation committee makes compensation decisions after the consideration of many factors, including:

•

•

The performance and experience of each executive officer;

The scope and strategic impact of the executive officer’s responsibilities and the criticality of the executive
officer’s role to the performance of the Company and achievement of our growth strategy and transition
to a subscription-based model;

• Our past business performance and future expectations;
• Our long-term goals and strategies;
•

The performance of our executive team as a whole;

•

•

•

•

•

For each executive officer, other than our CEO, the recommendation of our CEO based on an evaluation
of his or her performance;

The difficulty and cost of replacing high-performing leaders with in-demand skills;

The tenure and past compensation levels, including existing unvested equity, of each individual;

The relative compensation among our executive officers; and

The competitiveness of compensation relative to our peer group.

The compensation committee operates under a written charter adopted by our board of directors. A copy of the
charter is posted on the investor relations section of our website located at http://ir.nutanix.com.

Role of Management

The compensation committee works with members of our management team, including our CEO and our human
resources, finance and legal professionals (except with respect to their own compensation). Typically, our CEO
makes recommendations to our compensation committee, regularly attends compensation committee meetings
and is involved in the determination of compensation for our executive officers, except that our CEO does not make
recommendations as to his own compensation. Because of his direct role overseeing our executive officers, our
CEO makes recommendations to our compensation committee regarding short- and long-term compensation for
all executive officers (other than himself) based on our results and aspirations, an individual executive officer’s

30

actual contribution toward, and ability to contribute to the achievement of, these results and aspirations, and
performance toward individual goal achievement. Our compensation committee then reviews the
recommendations and other data and makes decisions as to total compensation for each executive officer, as well
as each individual compensation component.

Role of Compensation Consultant

The compensation committee is authorized, in its sole discretion, to retain the services of one or more
compensation consultants, outside legal counsel and such other advisors as necessary to assist with the
execution of its duties and responsibilities. For fiscal 2020, the compensation committee engaged Compensia to
conduct market research and analysis on our various executive positions, to assist the committee in developing
appropriate incentive plans for our executives on an annual basis, to provide the committee with advice and
ongoing recommendations regarding material executive compensation decisions, and to review compensation
proposals of management. Compensia evaluated the following components to assist the committee in establishing
executive compensation for fiscal 2020:

•

•

•

•

•

Base salary;

Target and actual annual incentive compensation;

Target and actual total cash compensation (base salary and annual incentive compensation);

Long-term incentive compensation (equity awards); and

Beneficial ownership of our common stock.

As described above in the section titled ‘‘Corporate Governance at Nutanix - Director Compensation - Non-
Employee Director Compensation Policy,’’ Compensia also annually provides, at the direction of the compensation
committee, an analysis of the competitive position of the Company’s non-employee director compensation policy
against the peer group used for executive compensation purposes.

Based on consideration of the factors specified in the SEC rules and Nasdaq listing standards, the compensation
committee does not believe that its relationship with Compensia and the work of Compensia on behalf of the
compensation committee and our management team has raised any conflicts of interest. The compensation
committee reviews these factors on an annual basis. As part of the compensation committee’s determination of
Compensia’s independence for fiscal 2020, it received written confirmation from Compensia addressing these
factors and stating its belief that it remains an independent compensation consultant to the compensation
committee.

Peer Group

The compensation committee reviews market data of companies that we believe are comparable to us. With
Compensia’s assistance, the compensation committee developed a peer group for use when making its fiscal
2020 compensation decisions, which consisted of companies that are located in the same geographical area and
that had revenues, growth rates, market capitalization and/or a number of employees within a range similar to that
of Nutanix. While the compensation committee takes into account compensation practices of the peer companies,
the compensation committee uses this information as one of many factors in its deliberations on compensation
matters, as described above, and does not set compensation levels to meet specific percentiles.

The compensation committee referred to compensation data from this peer group when making fiscal 2020 base
salary, cash bonus and equity award decisions for our executive officers. The following is a list of the public
companies that comprised our fiscal 2020 peer group:

Arista Networks
Guidewire Software
Pivotal Software
ServiceNow
Twilio

Dropbox
New Relic
Proofpoint
Shopify
Veeva Systems

F5 Networks
Okta
Pure Storage
Splunk
VMware

Fortinet
Palo Alto Networks
Red Hat
Tableau Software
Workday

In June 2020, the compensation committee reviewed the compensation peer group that would be used for
compensation decision making for the year ending July 31, 2021 (‘‘fiscal 2021’’). In light of our comparable market

31

capitalization at the time, comparable growth rate and annual revenue, our continued transition toward a
subscription-based business model, and, in certain cases, the acquisition of the applicable company, the
compensation committee determined that Cloudera, Datadog, HubSpot, MongoDB, PTC and Zendesk should be
added to the peer group and that Fortinet, Pivotal Software, Red Hat, ServiceNow, Shopify, Tableau Software,
Veeva Systems, and Workday should be removed. The committee believes that this updated peer group provides
even more comprehensive insight into market executive compensation practices as we continue our transition to
a subscription-based business model, and will help further align our executive compensation with our business
plans in the near and long term.

The following is a list of the public companies that comprise our fiscal 2021 peer group:

Arista Networks
F5 Networks
New Relic
PTC
VMware

Cloudera
Guidewire Software
Okta
Pure Storage
Zendesk

Datadog
HubSpot
Palo Alto Networks
Splunk

Dropbox
MongoDB
Proofpoint
Twilio

COMPONENTS OF COMPENSATION PROGRAM AND FISCAL 2020 COMPENSATION

Our executive compensation program consists of the following primary components:

•

•

•

•

•

base salary;

target and actual annual incentive compensation;

long-term equity compensation;

beneficial ownership of our common stock; and

severance and change of control-related payments and benefits.

We also provide our executive officers with comprehensive employee benefit programs such as medical, dental
and vision insurance, a 401(k) plan, life and disability insurance, flexible spending accounts, an employee stock
purchase plan and other plans and programs generally made available to all of our eligible employees.

We believe these elements provide a compensation package that attracts and retains qualified individuals, links
individual performance to Company performance, focuses the efforts of our Named Executive Officers and other
executives on the achievement of both our short-term and long-term objectives and aligns the interests of our
executive officers with those of our stockholders. In particular, our corporate culture encourages a long-term focus
by our Named Executive Officers, as well as all our other employees, by placing a heavy emphasis on granting
equity awards, the value of which depends on our stock performance and other performance measures, to achieve
strong long-term performance. On average, our fiscal 2020 target compensation packages for our Named
Executive Officers who were in office for the full fiscal year were comprised of 7% in base salary, 5% in annual
incentives, and 88% in long-term incentives.

Base Salaries

We pay base salaries to our Named Executive Officers to compensate them for services rendered during the year
and provide predictable income. Generally, we establish the initial base salaries of our executive officers at the time
we hire the individual executive officer, taking into account the executive officer’s experience, skills, knowledge,
and scope of responsibilities, as well as benchmarking against our peer group. In addition, the competition in the
market from which we recruit plays a role in setting salary levels due to the difficulty in recruiting candidates with
the level of talent and experience we believe are necessary for us to execute on our business and growth plans.We
do not apply specific formulas to determine changes in salaries. Instead, the salaries of our Named Executive
Officers are reviewed on an annual basis by our CEO (other than his own salary, which is reviewed and determined
by the compensation committee) and the compensation committee, based on their experience setting salary levels
and in determining compensation for senior executives.

32

Fiscal 2020 Base Salaries

In August 2019, in connection with its review of our executive compensation program, our compensation
committee approved adjustments to the base salaries of our Named Executive Officers (other than Mr. Maner, who
did not join the Company until November 2019), which were effective retroactively to August 1, 2019. Based on an
analysis prepared by Compensia, the then-current base salary levels for several of our Named Executive Officers
were lower than the percentile that the compensation committee considered to be appropriate for the specific
Named Executive Officer, as applicable, for a comparable executive in our compensation peer group, based on
each Named Executive Officer’s performance and contribution to the Company’s performance. Based on this
review, and to account for cost-of-living increases in Silicon Valley, where all of our Named Executive Officers are
or were based, our compensation committee approved base salary increases for each Named Executive Officer,
as set forth below.

Mr. Sangster was promoted to Chief Operating Officer. The Committee took into account Mr. Sangster’s promotion
and the related expansion of responsibilities relative to those of his prior role in providing him with a base salary
increase that was higher than that provided to the other Named Executive Officers, as part of the compensation
committee’s review of our executive compensation program in August 2019. Mr. Maner’s base salary was approved
by the compensation committee at the time of his hire in November 2019 based on a review of compensation for
comparable executives in our compensation peer group, giving consideration to the expanded responsibilities of
Mr. Maner relative to such comparable executives as well as Mr. Maner’s extensive experience and leadership
roles.

Named Executive Officer

Base Salary(1)

Percentage Increase from
Fiscal 2019 Base Salary

Dheeraj Pandey

Duston M. Williams

David M. Sangster

Tyler Wall
Tarkan Maner(2)

$500,000

$475,000

$475,000

$425,000

$450,000

0%

6%

19%

6%

—

(1) As of July 31, 2020.
(2) Mr. Maner joined the Company in November 2019.

Target and Actual Annual Incentive Compensation

Our board of directors has adopted our Executive Incentive Compensation Plan (the ‘‘Executive Bonus Plan’’). Our
Executive Bonus Plan allows our compensation committee to provide incentive awards to employees selected by
our compensation committee, including our Named Executive Officers.

Under our Executive Bonus Plan, our compensation committee determines the performance goals (if any)
applicable to any award or portion of an award and may choose the performance goals from a wide range of
possible metrics as set forth in the Executive Bonus Plan. The performance goals may differ from participant to
participant and from award to award.

Our compensation committee administers our Executive Bonus Plan and may, in its sole discretion and at any time,
increase, reduce or eliminate a participant’s actual award, and/or increase, reduce or eliminate the amount
allocated to the bonus pool for a particular performance period. The actual award may be below, at or above a
participant’s target award, at the discretion of the compensation committee. The compensation committee may
determine the amount of any reduction on the basis of such factors as it deems relevant, and it is not required to
establish any allocation or weighting with respect to the factors it considers.

Actual awards are paid in cash in a single lump sum only after they are earned, which usually requires continued
employment through the last day of the performance period. If a participant terminates employment because of
death or disability before the actual award is paid, the award may be paid to the participant’s estate or to the
participant, as applicable, subject to the compensation committee’s discretion to reduce or eliminate the award.
Payment of awards occurs as soon as administratively practicable after they are earned, but no later than the dates
set forth in our Executive Bonus Plan.

33

Our board of directors and our compensation committee have the authority to amend, alter, suspend or terminate
our Executive Bonus Plan, provided such action does not impair the existing rights of any participant with respect
to any earned awards.

Each year, our compensation committee determines the terms and conditions for the Executive Bonus Plan for the
year. In fiscal 2020, our compensation committee adopted and approved target annual incentive compensation
amounts for each of the Named Executive Officers, as well as the terms and conditions for (1) the first half of fiscal
2020 (the ‘‘H1 FY2020 Executive Bonus Plan’’) and (2) the second half of fiscal 2020 (the ‘‘H2 FY2020 Executive
Bonus Plan’’). The H1 FY2020 Executive Bonus Plan and H2 FY2020 Executive Bonus Plan are together herein
referred to as ‘‘Fiscal 2020 Executive Bonus Plan.’’

Fiscal 2020 Annual Bonus Targets

In December 2019, following review of an analysis prepared by Compensia, the compensation committee
increased the dollar amount of the target annual incentive compensation opportunities for each of our Named
Executive Officers (except for Mr. Maner) as part of the compensation committee’s annual analysis of the total cash
compensation package provided to our executive officers. Mr. Maner was not considered for adjustments to his
annual bonus target as he had been with the Company for less than a year at the time the increases were
approved. The target annual incentive compensation opportunities established under the Fiscal 2020 Executive
Bonus Plan for our Named Executive Officers were as follows:

Named Executive Officer

Annual Bonus Target

Annual Bonus Target as a %
of Base Salary

Change from Fiscal 2019
Bonus Target(1)

Dheeraj Pandey

Duston M. Williams

David M. Sangster

Tyler Wall

Tarkan Maner

$600,000

$300,000

$300,000

$175,000

$450,000

Fiscal 2020 Executive Bonus Plan

120%

63%

63%

41%

100%

20%

0%

9%

17%

—

Each of the H1 FY2020 Executive Bonus Plan and H2 FY2020 Executive Bonus Plan provided for potential
performance-based incentive payouts to our Named Executive Officers based on two general performance
components. First, 80% of each Named Executive Officer’s potential payout was based on our actual achievement
of pre-established corporate objectives for the applicable six-month performance period, aligned with our annual
operating plan. The performance targets for the corporate objectives for each six-month performance period were
set at levels determined to be challenging and requiring substantial skill and effort on the part of senior
management, and were weighted based on relative importance to the overall performance for the Company.
Second, the remaining 20% of each Named Executive Officer’s potential payout was based on personal
performance objectives for each Named Executive Officer that were aligned to our principal business goals in fiscal
2020. Potential payouts under the Fiscal 2020 Executive Bonus Plan ranged between 0% to 200%, depending on
achievement of the performance measures. Actual bonuses are paid in a lump sum following each six-month
performance period. Actual bonus amounts for each six-month performance period under the Fiscal 2020
Executive Bonus Plan were calculated as the sum of the weighted payout percentage for all performance targets
for the period multiplied by 50% of the annual bonus target for each applicable Named Executive Officer. In both
the H1 FY2020 Executive Bonus Plan and the H2 FY2020 Executive Bonus Plan, no payout could be made under
the plan unless one of the corporate objectives was achieved at a level that warranted a payout under the
performance targets for that performance period.

The Named Executive Officers’ performance measures for payment under the H1 FY2020 Executive Bonus Plan
were: (1) New ACV plus Renewals and (2) personal performance.

We define New ACV plus Renewals for any given period is defined as the sum of the New ACV and Renewal ACV
for all contracts booked during the period. New ACV with respect to any given contract is defined as (i) if the
contract is (A) with a new customer, the aggregate value of such contract excluding professional services, or
(B) with an existing customer, the aggregate value of any upsell / expansion under such contract excluding
professional services (the ‘‘Incremental Value’’), in each case divided by (ii) the number of years in the term of such

34

contract, using an assumed term of five years for life-of-device licenses. Renewal ACV only applies to contracts
with existing customers, and is defined as (i) the aggregate value of such contract, excluding any Incremental Value
and professional services, divided by (ii) the number of years in the term of such contract.

The Named Executive Officers’ performance measures for payment under the H2 FY2020 Executive Bonus Plan
were: (1) New ACV plus Renewals, (2) free cash flow, (3) customer churn rate, and (4) personal performance.

We calculate customer churn rate by dividing the number of customers lost during the period by the sum of
customers at the beginning of the period and the number of customers acquired during the period. A customer is
considered active if it has an asset with an active support contract.

The compensation committee approved the use of these metrics for the Fiscal 2020 Executive Bonus Plan for the
following reasons:

Metric

Importance of the Metric

New ACV plus Renewals

Free Cash Flow

An indicator of the topline growth of our business during our transition to a
subscription-based business model because it takes into account variability in
term lengths.

An indicator of our ability to balance our growth against the level of free cash
flow generated by our business.

Customer Churn Rate

A measurement of our ability to retain and renew customers as their term-based
licenses expire in a subscription-based business model.

Personal Performance
Objectives

A recognition of the unique contribution that each Named Executive Officer
makes to our overall business goals and incentivize each Named Executive
Officer to achieve his personal objectives for the fiscal year.

The compensation committee believed that these performance measures were objective measures of the success
of our growth and business strategy, especially in light of our ongoing transition to a subscription-based business
model, and were based on internal key performance metrics.

The following table describes the relative weighting of each performance measure and the payout percentages
that were used to calculate the actual payout based on achievement of the targets at and between the low end of
the target range and the high end of the target range. Any achievement of the plan targets between the low and high
end of the target range would correlate to a lower or higher payout percentage between 0% and 200%. For the
Fiscal 2020 Executive Bonus Plan, if we did not achieve a payout under the New ACV plus Renewals performance
measure for any given six-month performance period, then no payout would be made under the Executive Bonus
Plan to any Named Executive Officer for that period, regardless of the level of achievement under any other
performance measure (including personal performance).

H1 FY2020 Executive Bonus Plan

Performance Metric

Weighting

Plan Targets

Less than 90% of Target

Payout %

0%

New ACV plus Renewals

80%

100% of Target

100%

Between 90% and 100% of Target

Between 0% and 100%

Personal Performance

20%

Between 100% and 105% of Target

Between 100% and 200%

105% or more of Target

200%

Based on individual strategic
objectives for each executive that
were aligned to our principal business
goals in fiscal 2020

Between 0% and 200%

35

H2 FY2020 Executive Bonus Plan

Performance Metric

Weighting

Plan Targets

Less than 90% of Target

Payout %

0%

New ACV plus Renewals

40%

100% of Target

100%

Between 90% and 100% of Target

Between 0% and 100%

Between 100% and 105% of Target

Between 100% and 200%

105% or more of Target

Less than 90% of Target

200%

0%

Between 90% and 100% of Target

Between 0% and 100%

Free Cash Flow

20%

100% of Target

100%

Between 100% and 118% of Target

Between 100% and 200%

118% or more of Target

Greater than 157% of Target

200%

0%

Between 100% and 157% of Target

Between 0% and 100%

Customer Churn Rate

20%

100% of Target

100%

Personal Performance

20%

Between 43% and 100% of Target

Between 100% and 200%

Less than 43% of Target

200%

Based on individual strategic
objectives for each executive that
were aligned to our principal business
goals in fiscal 2020

Between 0% and 200%

Fiscal 2020 Executive Bonus Plan Payouts

The achievement of the various performance metrics for the Named Executive Officers under each of the H1
FY2020 Executive Bonus Plan and H2 FY2020 Executive Bonus Plan were as follows:

H1 FY2020 Executive Bonus Plan

Performance Metric

New ACV plus Renewals

Personal Performance

Percent
Achievement of
Plan Target

91.8%

100%

Payout %

17.65%

100%

Weighting

Weighted Total

80%

20%

Total:

14.1%

20.0%

34.1%

the Company partially met

Although, as indicated above,
its target under the New ACV plus Renewals
performance measure under the H1 FY2020 Executive Bonus Plan, in light of the uncertainty surrounding the
ongoing COVID-19 pandemic and the measures the Company has implemented to reduce its expenses, the
compensation committee resolved not to make any bonus payments for the first half of fiscal 2020 under the H1
FY2020 Executive Bonus Plan.

36

H2 FY2020 Executive Bonus Plan

Performance Metric

New ACV plus Renewals

Free Cash Flow

Customer Churn Rate

Personal Performance

Percent
Achievement of
Plan Target

81%

93%

77%

N/A

Payout %

Weighting

Weighted Total

0%

0%

0%

0%

40%

20%

20%

20%

Total:

0%

0%

0%

0%

0%

As indicated above, the Company did not meet its target under the New ACV plus Renewals performance measure
to warrant a payout under the H2 FY2020 Executive Bonus Plan and, as a result, the compensation committee did
not calculate each Named Executive Officer’s achievement under his personal performance measure and none of
our Named Executive Officers received a payout under the H2 FY2020 Executive Bonus Plan.

Long-Term Equity Compensation

Our corporate culture encourages a long-term focus by our Named Executive Officers, as well as all our other
employees. In keeping with this culture, our executive compensation program places a heavy emphasis on
granting equity awards, the value of which depends on our stock performance and other performance measures,
to achieve strong long-term performance.

These equity awards are typically time-based RSUs but, where appropriate, we also grant PRSUs to our Named
Executive Officers that are tied to the long-term objectives of the Company.

We believe that RSUs offer predictable value delivery to our executive officers while promoting alignment of their
interests with the long-term interests of our stockholders in a manner consistent with competitive market practices.
We also believe that PRSUs directly link a significant portion of an executive officer’s target total direct
compensation to our performance based on the achievement of one or more pre-established financial or stock
price performance metrics. In fiscal 2020, we granted a PRSU to our CEO, and certain of our Named Executive
Officers, including our CEO, hold PRSUs from prior fiscal years. Together, RSUs and PRSUs are important tools
to motivate and retain our highly sought-after executive officers since the value of the awards is delivered to our
executive officers over multi-year periods, subject to their continued service. Going forward, we may introduce
other forms of equity awards to our executive officers, including our Named Executive Officers, to continue to
maintain a strong alignment of their interests with the interests of our stockholders.

The compensation committee, in consultation with our CEO (other than with respect to himself) and its
independent compensation consultant, determines the size, mix, material terms and, in the case of PRSUs,
performance metrics of the equity awards granted to our executive officers, taking into account a number of factors
as described in the section ‘‘Executive Compensation - Compensation Discussion and Analysis - Compensation-
Setting Process.’’

Fiscal 2020 Equity Awards

In fiscal 2020, each of our Named Executive Officers received RSUs or PRSUs, as applicable, as described in the
‘‘Grant of Plan-Based Awards’’ table in section ‘‘Executive Compensation - Compensation Discussion and Analysis
- Executive Compensation Tables.’’ Each of Messrs. Pandey, Williams, Sangster, and Wall received their RSUs or
PRSUs, as applicable, in connection with the annual executive officer compensation review. Mr. Maner received his
RSU award in connection with the start of his employment with the Company. Mr. Maner was not considered for
additional equity grants in fiscal 2020 as he had received a multi-year new hire grant when he joined the Company.

Severance and Change of Control-Related Benefits

Our Named Executive Officers each participate in our Change of Control and Severance Policy (the ‘‘Change of
Control Severance Policy’’), which provides each of them with protections in the event of their involuntary
termination of employment following a change of control of the Company. In addition, certain of the executive
officers may have such provisions in their employment agreements.

37

In addition, in October 2020, our compensation committee approved an Executive Severance Policy, which
provides eligible employees with protections in the event of the involuntary termination of their employment under
circumstances not related to a change of control of the Company. Each of our Named Executive Officers, other
than Mr. Pandey, whose employment agreement provides for separate benefits, is eligible to participate in the
Executive Severance Policy.

We believe that these protections assist us in retaining these individuals. We also believe that these protections
serve our executive retention objectives by helping our Named Executive Officers maintain continued focus and
dedication to their responsibilities to maximize stockholder value, including in the event that there is a potential
transaction that could involve a change of control. The terms of these agreements, the Change of Control
Severance Policy, and the Executive Severance Policy were determined after our board of directors and
compensation committee reviewed our retention goals for our Named Executive Officers, an analysis of relevant
market data, and with consideration for potential retention needs given the impending leadership change from
Mr. Pandey’s announced departure.

For a summary of the material terms and conditions of these post-employment compensation arrangements, see
section titled ‘‘Executive Compensation - Employment Arrangements.’’

EMPLOYMENT ARRANGEMENTS

We have entered into employment agreements with our Named Executive Officers. Each of these arrangements
provides for ‘‘at-will’’ employment and sets forth the initial terms and conditions of employment of each Named
Executive Officer, including base salary, target annual bonus opportunity, standard employee benefit plan
participation, a recommendation for an initial grant of an option to purchase shares of our common stock or other
equity awards, opportunities for post-employment compensation and vesting acceleration terms. These
agreements also set forth the rights and responsibilities of each party and may protect both parties’ interests in the
event of a termination of employment by providing for certain payments and benefits under specified
circumstances, including following a change of control of the Company. These offers of employment were each
subject to the execution of a standard proprietary information and invention assignment agreement and proof of
identity and work eligibility in the United States.

Each of these agreements was approved on our behalf by the compensation committee or our board of directors
at the recommendation of the compensation committee. We believe that these arrangements were necessary to
induce these individuals to forgo other employment opportunities or leave their then-current employer for the
uncertainty of a demanding position in a new and unfamiliar organization.

In filling our executive positions, the compensation committee was aware that, in some situations, it would be
necessary to recruit candidates with the requisite experience and skills to manage a growing business.
Accordingly, it recognized that it would need to develop highly competitive compensation packages to attract
qualified candidates in a competitive labor market. At the same time, the compensation committee was sensitive
to the need to integrate new executive officers into the executive compensation structure that it was seeking to
develop, balancing both competitive and internal equity considerations.

For a summary of the material terms and conditions of our employment agreements with the Named Executive
Officers, see section below titled ‘‘Executive Compensation - Employment Arrangements.’’

OTHER COMPENSATION POLICIES

Employee Benefits

We provide employee benefits to all eligible employees in the United States, including our Named Executive
Officers, which the compensation committee believes are reasonable and consistent with its overall compensation
objective to better enable us to attract and retain employees. These benefits include medical, dental and vision
insurance, health savings accounts, a 401(k) plan, life and disability insurance, flexible spending accounts, an
employee stock purchase plan and other plans and programs.

Stock Trading Practices; Hedging and Pledging Policy

We maintain an Insider Trading Policy that, among other things, prohibits our officers, including our Named
Executive Officers, directors and employees from trading during quarterly and special blackout periods. We also
prohibit short sales, hedging and similar transactions designed to decrease the risks associated with holding our

38

securities, as well as pledging our securities as collateral for loans and transactions involving derivative securities
relating to our common stock. Our Insider Trading Policy requires that all directors, executive officers, and certain
other key employees, including our Named Executive Officers, pre-clear with our legal department any proposed
open market transactions.

Impact of Accounting and Tax Requirements on Compensation

Deductibility of Executive Compensation

Generally, Section 162(m) of the Internal Revenue Code of 1986, as amended, disallows a tax deduction to any
publicly-held corporation for any remuneration in excess of $1 million paid in any taxable year to its chief executive
officer and certain other highly compensated officers.The compensation committee may, in its judgment, authorize
compensation payments that are not fully tax deductible when it believes that such payments are appropriate to
attract and retain executive talent or meet other business objectives. The compensation committee intends to
continue to compensate our Named Executive Officers in a manner consistent with the best long-term interests of
the Company and our stockholders.

Taxation of ‘‘Parachute’’ Payments and Deferred Compensation

We do not provide our Named Executive Officers with a ‘‘gross-up’’ or other reimbursement payment for any tax
liability that he or she might owe as a result of the application of Sections 280G, 4999, or 409A of the Code.
Sections 280G and 4999 of the Code provide that certain officers and directors, and service providers who hold
significant equity interests, and certain highly compensated service providers may be subject to an excise tax if
they receive payments or benefits in connection with a change of control that exceeds certain prescribed limits,
and that the Company, or a successor, may forfeit a deduction on the amounts subject to this additional tax.
However, under our Change of Control Severance Policy, if any payment or benefits to a policy participant,
including the payments and benefits under the policy, would constitute a ‘‘parachute payment’’ within the meaning
of Section 280G of the Code and would therefore be subject to an excise tax under Section 4999 of the Code, then
such payments and benefits will be either (1) reduced to the largest portion of the payments and benefits that would
result in no portion of the payments and benefits being subject to the excise tax, or (2) not reduced, whichever, after
taking into account all applicable federal, state and local employment and income taxes and the excise tax, results
in the participant’s receipt, on an after-tax basis, of the greater payments and benefits.

Section 409A also imposes additional significant taxes on the individual in the event that an executive officer,
director or other service provider receives ‘‘deferred compensation’’ that does not meet certain requirements of
Section 409A of the Code.

Accounting for Stock-Based Compensation

We follow ASC Topic 718 for our stock-based awards. ASC Topic 718 requires companies to measure the
compensation expense for all share-based payment awards made to employees and directors, including stock
options, restricted stock unit awards and performance units, based on the grant date ‘‘fair value’’ of these awards.
This calculation is performed for accounting purposes and reported in the compensation tables below. ASC Topic
718 also requires companies to recognize the compensation cost of their stock-based compensation awards in
their income statements over the period that a Named Executive Officer is required to render service in exchange
for the option or other award.

For performance units, stock-based compensation expense recognized may be adjusted over the performance
period based on interim estimates of performance against pre-set objectives.

Compensation Risk Assessment

Our compensation committee reviews and discusses with management the risks arising from our compensation
philosophy and practices applicable to all employees to determine whether they encourage excessive risk-taking
and to evaluate compensation policies and practices that could mitigate such risks. In addition, our compensation
committee has engaged Compensia to independently review our executive compensation program. Based on
these reviews, our compensation committee structures our executive compensation program to encourage our
named executive officers to focus on both short-term and long-term success. We do not believe that our executive
compensation program creates risks that are reasonably likely to have a material adverse effect on us.

39

REPORT OF THE COMPENSATION COMMITTEE

Our compensation committee has reviewed and discussed the Compensation Discussion and Analysis with
management. Based on such review and discussions, our compensation committee has recommended to our
board of directors that the Compensation Discussion and Analysis be included in this proxy statement.

Respectfully submitted by the members of the compensation committee of our board of directors:

The Compensation Committee
Jeffrey T. Parks (Chair)
Susan L. Bostrom
Ravi Mhatre

40

EXECUTIVE COMPENSATION TABLES

FISCAL 2020 SUMMARY COMPENSATION TABLE

The following table presents all of the compensation awarded to, or earned by, our Named Executive Officers
during the fiscal year ended July 31, 2020.

Name and Principal
Position

Fiscal
Year

Salary(1)
($)

Bonus
($)

Option
Awards
($)

Stock
Awards(2)
($)

Non-Equity
Incentive Plan
Compensation(3)
($)

All Other
Compensation
($)

Total
($)

Dheeraj Pandey

Chief Executive

Officer and Chairman

2020

474,811

2019

2018

483,333

350,000

Duston M. Williams

2020

451,070

Chief Financial Officer

2019

2018

441,667

350,000

David M. Sangster

2020

451,070

Chief Operating

Officer

Tyler Wall

Chief Legal Officer

2019

2018

394,167

326,667

2020

403,589

2019

2018

391,667

238,636

—

—

—

—

—

—

—

—

—

—

—

—

—

—

4,160,000(4)

6,460,000(5)

—

—

— 10,413,000(6)

439,225

—

—

—

—

—

—

—

—

2,868,000

3,944,000

4,165,200

4,780,000

3,944,000

2,950,350

1,434,000

—

—

—

285,496

—

—

259,044

—

—

— 10,389,000

111,895

Tarkan Maner

2020

299,489

150,000

— 15,955,000

Chief Commercial
Officer (7)

2019

2018

—

—

—

—

—

—

—

—

—

—

—

—

—

4,634,811

6,943,333

— 11,202,225

—

—

—

—

—

—

—

—

3,319,070

4,385,667

4,800,696

5,231,070

4,338,167

3,536,061

1,837,589

391,667

— 10,739,531

— 16,404,489

—

—

—

—

(1) Due to the global economic uncertainty resulting from the COVID-19 pandemic and given the cost savings measures
taken by the Company in response, each of the Named Executive Officers voluntarily took a temporary 10%
reduction in base salary in April 2020. The base salaries reinstated to the levels previously approved by the
compensation committee effective as of August 2020.

(2) The amounts in this column represent the aggregate grant date fair value calculated in accordance with ASC Topic
718 for RSU awards. The grant date fair value was determined using the closing share price of our Class A common
stock on the date of grant.

(3) The amounts reported represent the amounts paid under our executive bonus plan.
(4) Mr. Pandey was granted PRSUs in fiscal 2020 with a total grant date fair value of $4,160,000, which are subject to
certain performance conditions.The amount reported assumes that all performance-based vesting conditions will be
achieved.

(5) Mr. Pandey was granted RSUs in fiscal 2019 with a total grant date fair value of $6,460,000, of which $2,516,000 is
subject to certain performance conditions. The amount reported assumes that all service-based and performance-
based vesting conditions will be achieved.

(6) Mr. Pandey was granted RSUs in fiscal 2018 with a total grant date fair value of $10,413,000, of which $3,471,000 is
subject to certain performance conditions. The amount reported assumes that all service-based and performance-
based vesting conditions will be achieved.

(7) Mr. Maner joined the Company in November 2019. In connection with his hire, Mr. Maner was granted 500,000 RSUs
under our 2016 Plan which vest over four years with a one-year vesting cliff. Mr. Maner’s initial hire grant was
determined based on a review of compensation for comparable executives in our compensation peer group, giving
consideration to the expanded responsibilities of Mr. Maner relative to such comparable executives as well as
Mr. Maner’s extensive experience and leadership roles, and aims to provide long-term incentives for Mr. Maner that
are aligned with our long-term goals.

41

GRANT OF PLAN-BASED AWARDS

The following table presents, for each of our Named Executive Officers, information concerning plan-based awards
granted during the fiscal year ended July 31, 2020. This information supplements the information about these
awards set forth in the ‘‘Fiscal 2020 Summary Compensation Table’’ above.

Estimated Future Payouts Under
Non-Equity Incentive Plan
Awards(1)

Estimated Future Payouts Under
Equity Incentive Plan Awards

Grant
Date

Approval
Date

Threshold
($)

Target
($)

Maximum
($)

Threshold
($)

Target
($)

Maximum
($)

—

—

— 600,000

1,200,000

—

—

—

12/11/19

12/11/19

—

—

—

— 200,000

200,000(4)

—

—

— 300,000

600,000

8/27/19

8/27/19

—

—

—

—

—

— 300,000

600,000

8/27/19

8/27/19

—

—

—

—

—

— 175,000

350,000

8/27/19

8/27/19

—

—

—

—

—

— 450,000

900,000

12/11/19

12/11/19

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

All Other
Stock
Awards:
Number
of
Shares
of Stock
or
Units(2)
(#)

—

—

—

—

— 150,000(6)

—

—

— 250,000(6)

—

—

—

—

75,000(6)

—

— 500,000(7)

All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)

Exercise
or Base
Price of
Option
Awards
($/sh)

Grant
Date Fair
Value of
Stock and
Option
Awards(3)
($)

—

—

—

—

—

—

—

—

—

—

—

— 4,160,000(5)

—

—

— 2,868,000

—

—

—

4,780,000

—

— 1,434,000

—

—

— 15,955,000

Named
Executive
Officer

Dheeraj

Pandey

Duston M.

Williams

David M.

Sangster

Tyler Wall

Tarkan

Maner

(1) Represents cash incentive compensation opportunities under the Fiscal 2020 Executive Bonus Plan and assumes
achievement at target levels for our corporate objectives. For achievement in excess of target, overperformance
could be rewarded with a payout of up to an additional 100% of each Named Executive Officer’s target (for a
maximum payment of 200% of each Named Executive Officer’s target). As set forth in the ‘‘Fiscal 2020 Summary
Compensation Table’’ above, our Named Executive Officers did not actually receive any payouts under the Fiscal
2020 Executive Bonus Plan. The components of, and the calculation of the payouts under, the Fiscal 2020 Executive
Plan are discussed more fully in the section titled ‘‘Executive Compensation - Compensation Discussion and Analysis
- Components of Compensation Program and Fiscal 2020 Compensation - Fiscal 2020 Executive Bonus Plan.’’

(2) Represents the number of shares of common stock subject to RSUs.

(3) The amount reported represents the grant date fair value of the equity awards, as computed in accordance with ASC
Topic 718, based on the closing price of our Class A common stock on the date of grant.These amounts do not reflect
the actual economic value that may ultimately be realized by the Named Executive Officers.

(4) The PRSUs may vest based on the achievement of an average stock price of $65 over an approximately 4.5-year
performance period (the ‘‘Performance Period’’), and subject to Mr. Pandey’s continuous service to the Company on
each vesting date. The average stock price will be calculated based on the average closing price of one share of our
Class A common stock as reported on the Nasdaq Stock Market during the 180-day period ending on the last trading
day prior to each measurement date (as applicable, the ‘‘Average Stock Price’’). The Average Stock Price will be
measured once per quarter during the Performance Period, and (i) if the Average Stock Price on any given quarterly
measurement date does not equal or exceed $65, then none of the PRSUs will vest that quarter, and any unvested
PRSUs will carry over to the next quarter (the ‘‘Carryover RSUs’’), (ii) if the Average Stock Price on any given
quarterly measurement date equals or exceeds $65, then 1/18th of the PRSUs plus the applicable Carryover RSUs,
if any, would vest, and/or (iii) if the Average Stock Price never equals or exceeds $65 during the Performance Period,
the PRSUs would terminate at the end of the Performance Period. See the section below entitled ‘‘Executive
Compensation - Employment Arrangements’’ for more details.

(5) The amount reported is computed in accordance with ASC Topic 718, which excludes the impact of estimated
forfeitures related to service-based and performance-based vesting conditions, reflects the accounting cost for the
equity awards, and does not correspond to the actual economic value that may ultimately be realized by Mr. Pandey
from the equity award. The amount reported assume that all service-based and performance-based vesting
conditions will be achieved.

(6) The RSUs vest in 16 equal quarterly installments, with the first of such quarterly installments to vest on December 15,
2019, subject to the Named Executive Officer’s continuous service. For additional information, see ‘‘Executive
Compensation - Compensation Discussion and Analysis - Components of Compensation Program and Fiscal 2020
Compensation - Long-Term Equity Compensation.’’

42

(7)

In connection with the start of his employment with the Company, Mr. Maner was granted 500,000 RSUs under our
2016 Plan. The RSUs vest as to 1/4th of the underlying shares on December 15, 2020, with the 1/16th of the
remaining shares to vest quarterly thereafter, subject to Mr. Maner’s continuous service to the Company through the
applicable vesting date.

OUTSTANDING EQUITY AWARDS AT FISCAL 2020 YEAR-END TABLE

The following table presents, for each of our Named Executive Officers, information concerning each outstanding
equity award held by such Named Executive Officer as of July 31, 2020. This information supplements the
information about these awards set forth in the ‘‘Fiscal 2020 Summary Compensation Table’’ above.

Option Awards

Stock Awards

Number
of Securities
Underlying
Unexercised
Options
Exercisable
(#)

Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)

Option
Exercise
Price
($)

Option
Expiration
Date

Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)

Market
Value of
Shares or
Units of
Stock That
Have Not
Vested(1)
($)

886,000(2)

705,000(2)

500,000(3)

—

—

—

0.49

3/27/2022

0.49

6/12/2022

12.00

9/15/2026

—

500,000(4)

12.00

9/15/2026

205,000(2)

418,750(2)

—

—

3.20

6/18/2024

3.20

6/18/2024

7,918(2)

—

3.20

5/19/2024

75,000(5) 1,664,250

62,500(6) 1,386,875

50,000(9) 1,109,500

45,000(10)

998,550

62,500(6) 1,386,875

121,875(11) 2,704,406

31,875(12)

707,306

62,500(6) 1,386,875

203,125(13) 4,507,344

112,500(14) 2,496,375

60,938(15) 1,352,214

500,000(16)11,095,000

Named
Executive
Officer

Dheeraj

Pandey

Grant Date

3/28/2012

6/13/2012

9/16/2016

9/16/2016

12/12/2017

10/23/2018

12/12/2017

10/23/2018

12/11/2019

Duston M.

6/19/2014

Williams

David M.

Sangster

6/19/2014

9/16/2016

12/12/2017

10/23/2018

8/27/2019

5/20/2014

12/12/2017

10/23/2018

8/27/2019

9/16/2016

Tyler Wall

11/27/2017

8/27/2019

12/11/2019

Tarkan

Maner

Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights
That Have
Not Yet
Vested
(#)

Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other Rights
That Have
Not Vested(1)
($)

100,000(4)

2,219,000

100,000(7)

2,219,000

200,000(8)

4,438,000

100,000(4)

2,219,000

(1) Based on the closing price of Nutanix Class A common stock on July 31, 2020, which was $22.19.
(2) The shares subject to the options are fully vested and exercisable immediately.
(3) The options allow early exercise and are immediately exercisable. The shares subject to the options vest as to

10,416 shares monthly, subject to continuous service through the applicable vesting date.

(4) One-third of the shares subject to the awards will vest on the later of January 1, 2019 or upon the compensation
committee’s certification that the Company has achieved the performance goal, subject to continuous service

43

through the vesting date. One-third of the shares subject to the awards will vest on the later of January 1, 2020 or
upon the compensation committee’s certification that the Company has achieved the performance goal, subject to
continuous service through the vesting date. One-third of the shares subject to the awards will vest on the later of
the Company has achieved the
January 1, 2021 or upon the compensation committee’s certification that
performance goal, subject to continuous service through the vesting date.

(5) The RSUs vest as to 12,500 shares quarterly, subject to continuous service through the applicable vesting date.
(6) The RSUs vest as to 6,250 shares quarterly, subject to continuous service through the applicable vesting date.
(7) The PRSUs may vest based on the achievement of an average stock price of $80 over an approximately 4.5-year
performance period, and subject to Mr. Pandey’s continuous service to the Company on each vesting date. The
average stock price will be calculated based on the Average Stock Price. The Average Stock Price will be measured
once per quarter during the Performance Period, and (i) if the Average Stock Price on any given quarterly
measurement date does not equal or exceed $80, then none of the PRSUs will vest that quarter, and any Carryover
PRSUs, (ii) if the Average Stock Price on any given quarterly measurement date equals or exceeds $80, then 1/18th
of the PRSUs plus the applicable Carryover PRSUs, if any, would vest, and/or (iii) if the Average Stock Price never
equals or exceeds $80 during the Performance Period, the PRSUs would terminate at the end of the Performance
Period.

(8) The RSUs vest based on the achievement of an average stock price of $65 over an approximately 4.5-year
performance period, and subject to Mr. Pandey’s continuous service through the applicable vesting date. For
additional information, please see footnote 4 set forth in the ‘‘Grant of Plan Based Awards’’ table above.

(9) The RSUs vest as to 25,000 shares quarterly, subject to continuous service through the applicable vesting date.
(10) The RSUs vest as to 7,500 shares quarterly, subject to continuous service through the applicable vesting date.
(11) The RSUs vest as to 9,375 shares quarterly, subject to continuous service through the applicable vesting date.
(12) The RSUs vest as to 5,312 or 5,313 shares, as applicable, quarterly, subject to continuous service through the

applicable vesting date.

(13) The RSUs vest as to 15,625 shares quarterly, subject to continuous service through the applicable vesting date.
(14) The RSUs vest as to 18,750 shares quarterly, subject to continuous service through the applicable vesting date.
(15) The RSUs vest as to 4,687 or 4,688 shares, as applicable, quarterly, subject to continuous service through the

applicable vesting date.

(16) The RSUs vest as to 1/4th of the underlying shares on December 15, 2020, with the 1/16th of the remaining shares
to vest quarterly thereafter, subject to Mr. Maner’s continuous service to the Company through the applicable vesting
date.

2020 OPTION EXERCISES AND STOCK VESTED VALUE

The following table presents, for each of the Named Executive Officers, the shares of our common stock that were
acquired upon the exercise of stock options and vesting of RSU and PRSU awards and the related value realized
during fiscal 2020.

Named Executive Officer

Dheeraj Pandey
Duston M. Williams
David M. Sangster
Tyler Wall
Tarkan Maner

Option Awards

Stock Awards

Number of Shares
Acquired on
Exercise
(#)

Value Realized on
Exercise(1)
($)

Number of Shares
Acquired on
Vesting
(#)

Value Realized on
Vesting(2)
($)

—
—
—
—
—

—
—
—
—
—

75,000
183,125
93,125
89,062
—

1,829,625
4,442,538
2,230,463
2,160,261
—

(1) The value realized upon the exercise of stock options is calculated by (i) subtracting the option exercise price from the
closing price of our Class A common stock on the date of exercise, multiplied by (ii) the number of shares underlying
the stock option exercised.

(2) The value realized upon vesting of RSUs and PRSUs is calculated by multiplying the number of shares vested by the
closing price of our Class A common stock on the vest date (or, in the event the vest date occurs on a holiday or
weekend, the closing price of our Class A common stock on the immediately preceding trading day).

44

EMPLOYMENT ARRANGEMENTS

EMPLOYMENT ARRANGEMENTS WITH NAMED EXECUTIVE OFFICERS

We have entered into employment agreements with each of the Named Executive Officers in connection with his
commencement of employment with us. Each of these arrangements was negotiated on our behalf by the
compensation committee or our CEO.

Typically, these arrangements provide for at-will employment and set forth the initial terms and conditions of
employment of each Named Executive Officer, including base salary, target annual bonus opportunity, standard
employee benefit plan participation, a recommendation for initial equity awards and in certain cases the
circumstances, if applicable, under which post-employment compensation or vesting acceleration terms might
apply. These offers of employment were each subject to execution of a standard proprietary information and
invention agreement and proof of identity and work eligibility in the United States.

Dheeraj Pandey

We entered into an employment letter with Dheeraj Pandey, our Chief Executive Officer and Chairman on
February 26, 2015. The employment letter has an indefinite term and Mr. Pandey’s employment is at-will.
Mr. Pandey’s current annual base salary is $500,000, and he is currently eligible to earn annual
incentive
compensation with a target equal to $600,000, based upon achievement of individual and corporate targets
determined by our board of directors or compensation committee for each fiscal year.

In connection with entering into the employment letter, we granted Mr. Pandey four RSU grants under our 2010
Stock Plan (the ‘‘2010 Plan’’) and RSU agreements, covering an aggregate of 1,900,000 shares. In March 2016,
Mr. Pandey voluntarily forfeited his rights with respect to a number of the RSUs. For additional details regarding
Mr. Pandey’s equity awards, see ‘‘Executive Compensation - Executive Compensation Tables’’ above.

Mr. Pandey is a participant in the Change of Control Severance Policy, which is described below. In addition,
Mr. Pandey’s employment letter provides Mr. Pandey with certain severance benefits outside of the Change of
Control Severance Policy.

Duston M. Williams

We entered into an employment letter with Duston Williams, our Chief Financial Officer, on April 26, 2014. The
employment letter has an indefinite term and Mr. Williams’ employment is at-will. Mr. Williams’ current annual base
salary is $475,000, and he is currently eligible to earn annual incentive compensation with a target equal to
$300,000, based upon achievement of individual and corporate targets determined by our board of directors or
compensation committee for each fiscal year.

In connection with his hire, Mr. Williams was granted two option grants and one RSU grant covering an aggregate
of 1,460,000 shares under our 2010 Plan all of which have vested in full. For additional details regarding
Mr. Williams’ outstanding equity awards, see ‘‘Executive Compensation - Executive Compensation Tables’’ above.

Mr.Williams is a participant in the Change of Control Severance Policy and is eligible to participate in the Executive
Severance Policy, both of which are described below.

David M. Sangster

We entered into an employment letter with David Sangster, our Chief Operating Officer, on October 17, 2011. The
employment letter has an indefinite term and Mr. Sangster’s employment is at-will. Mr. Sangster’s current annual
base salary is $475,000, and he is currently eligible to earn annual incentive compensation with a target equal to
$300,000, based upon achievement of individual and corporate targets determined by our board of directors or
compensation committee for each fiscal year.

In connection with his hire, Mr. Sangster was granted a stock option under our 2010 Plan and option agreement to
purchase 350,000 shares of our Class A common stock. That option has vested in full and has been exercised by
Mr. Sangster. For additional details regarding Mr. Sangster’s equity awards, see ‘‘Executive Compensation -
Executive Compensation Tables’’ above.

Mr. Sangster is a participant in the Change of Control Severance Policy and is eligible to participate in the
Executive Severance Policy, both of which are described below.

45

Tyler Wall

We entered into an employment letter with Tyler Wall, our Chief Legal Officer, on November 20, 2017. The
employment letter has an indefinite term and Mr. Wall’s employment is at-will. Mr. Wall’s current annual base salary
is $425,000, and he is currently eligible to earn annual incentive compensation with a target equal to $175,000
based upon achievement of individual and corporate targets determined by our board of directors or compensation
committee for each fiscal year.

In connection with his hire, Mr. Wall was granted 300,000 RSUs under our 2016 Equity Incentive Plan (the ‘‘2016
Plan’’), which vest over four years with a one-year vesting cliff. For additional details regarding Mr. Wall’s equity
awards, see ‘‘Executive Compensation - Executive Compensation Tables’’ above.

Mr. Wall is a participant in the Change of Control Severance Policy and is eligible to participate in the Executive
Severance Policy, both of which are described below.

Tarkan Maner

We entered into an employment letter with Tarkan Maner, our Chief Commercial Officer, on October 29, 2019. The
employment letter has an indefinite term and Mr. Maner’s employment is at-will. Mr. Maner’s current annual base
salary is $450,000, and he is currently eligible to earn annual incentive compensation with a target equal to
$450,000, based upon achievement of individual and corporate targets determined by our board of directors or
compensation committee for each fiscal year.

In connection with his hire, Mr. Maner was granted 500,000 RSUs under our 2016 Plan which vest over four years
with a one-year vesting cliff. For additional details regarding Mr. Maner’s equity awards, see ‘‘Executive
Compensation - Executive Compensation Tables’’ above.

Mr. Maner is a participant in the Change of Control Severance Policy and is eligible to participate in the Executive
Severance Policy, both of which are described below.

SEVERANCE AND CHANGE OF CONTROL-RELATED BENEFITS

Change of Control Severance Policy

In August 2016, we adopted a Change of Control and Severance Policy , pursuant to which a designated employee
is eligible to receive severance benefits in lieu of any other severance payments and benefits, subject to the
employee signing a participation agreement, in connection with a change of control of the Company or in
connection with the involuntary termination of their employment under the circumstances described in the Change
of Control Severance Policy. Each of our Named Executive Officers is a participant in the Change of Control
Severance Policy. Generally, if a participant’s employment is terminated within three months prior to or 12 months
following the consummation of a change of control, which such period is referred to as the change of control period,
either by us or a subsidiary of ours other than for cause, death or disability or by the participant for good reason,
then the Change of Control Severance Policy provides for:

(1)

the applicable percentage of the then-unvested shares subject to each of the participant’s then-
outstanding time-based equity awards, except for performance-based equity awards that were converted
by their terms into time-based equity awards upon a change of control transaction, will immediately vest
and become exercisable, with such percentage being 100% for each of the Named Executive Officers,

(2) a lump sum payment equal to the participant’s annual base salary, as in effect immediately prior to the
participant’s termination or, if the termination is due to a resignation for good reason based on a material
reduction in base salary, immediately prior to such reduction, or immediately prior to the change of
control, whichever is greater, multiplied by 100% for our CEO and 75% for each of our other Named
Executive Officers,

(3) a lump sum payment equal to the participant’s target annual bonus as in effect for the fiscal year in which
his or her termination of employment occurs, multiplied by 100% for our CEO and 75% for each of our
other Named Executive Officers, and

(4) payment or reimbursement of the cost of continued health benefits for a period of up to 12 months for our

CEO and nine months for each of our other Named Executive Officers.

46

In order to receive severance benefits under the Change of Control Severance Policy, a participant must timely
execute and not revoke a release of claims in favor of us. In addition, the Change of Control Severance Policy
provides that, if any payment or benefits to a participant, including the payments and benefits under the Change
of Control Severance Policy, would constitute a parachute payment within the meaning of Section 280G of the
Code and would therefore be subject to an excise tax under Section 4999 of the Code, then such payments and
benefits will be either (1) reduced to the largest portion of the payments and benefits that would result in no portion
of the payments and benefits being subject to the excise tax, or (2) not reduced, whichever, after taking into
account all applicable federal, state and local employment and income taxes and the excise tax, results in the
participant’s receipt, on an after-tax basis, of the greater payments and benefits.

For purposes of each of the Change of Control Severance Policy and the Executive Severance Policy (as defined
below), cause (‘‘Cause’’) means any of the following reasons (with any references to us interpreted to include any
subsidiary, parent, affiliate or successor of ours):

•

•

•

•

the participant’s willful failure to perform his or her duties and responsibilities to us or the participant’s
violation of any written policy of ours;

the participant’s commission of any act of
misconduct that has caused or is reasonably expected to result in injury to us;

fraud, embezzlement, dishonesty or any other willful

the participant’s unauthorized use or disclosure of any proprietary information or trade secrets of ours or
any other party to whom the participant owes an obligation of nondisclosure as a result of his or her
relationship with us; or

the participant’s material breach of any of his or her obligations under any written agreement or covenant
with us.

For purposes of the Change of Control Severance Policy, good reason means the participant’s termination of his
or her employment in accordance with the next sentence after the occurrence of one or more of the following
events without the participant’s express written consent:

•

•

•

•

a material reduction of the participant’s duties, authorities or responsibilities relative to the participant’s
duties, authorities or responsibilities in effect immediately prior to such reduction;

a material reduction by us in the participant’s rate of annual base salary; provided, however, that, a
reduction of annual base salary that also applies to substantially all other similarly situated employees of
ours will not constitute good reason;

a material change in the geographic location of the participant’s primary work facility or location; provided,
that a relocation of less than 35 miles from the participant’s then present location will not be considered
a material change in geographic location; or

our failure to obtain from any successor or transferee of ours an express written and unconditional
assumption of our obligations to the participant under the Change of Control Severance Policy.

In order for the participant’s termination of his or her employment to be for good reason, the participant must not
terminate employment with us without first providing us with written notice of the acts or omissions constituting the
grounds for good reason within 90 days of the initial existence of the grounds for good reason and a cure period
of 30 days following the date of written notice, such grounds must not have been cured during such time, and the
participant must terminate his or her employment within 30 days following the expiration of our 30-day cure period.

47

Potential Payments upon Termination or Change of Control

The following table sets forth the estimated payments that would be received by the Named Executive Officers if,
pursuant to the terms of the Change of Control Severance Policy, a hypothetical termination of employment without
cause or following a resignation for good reason in connection with a change of control of the Company had
occurred on July 31, 2020. The table below reflects amounts that would have been payable to each Named
Executive Officer assuming that, if applicable, his employment was terminated on July 31, 2020 and, if applicable,
a change of control of the Company also occurred on that date. The table below does not reflect any estimated
payments under the Executive Severance Policy because the policy, which was adopted in October 2020, is in
early stages of implementation and the participation election process has not begun for any eligible participant,
including any of our eligible Named Executive Officers. Therefore, we have not included any estimated payments
and benefits that would be provided in each covered circumstance under the Executive Severance Policy to any of
our eligible Named Executive Officers.

Named Executive Officer
Dheeraj Pandey
Duston M. Williams
David M. Sangster
Tyler Wall
Tarkan Maner(6)

Upon Termination without Cause or
Resignation for Good Reason During Change of Control Period

Salary
Severance(1)
$500,000
$356,250
$356,250
$318,750
$337,500

Bonus
Severance(2)
$600,000
$225,000
$225,000
$131,250
$337,500

Value of
Accelerated
Vesting(3)
$ 5,701,401(5)
$ 6,199,331
$ 7,341,192
$ 3,848,589
$11,095,000

Continuation
of Medical
Benefits(4)

$27,265
$20,449
$20,449
$20,449
$20,449

Total
$ 6,828,666
$ 6,801,030
$ 7,942,891
$ 4,319,038
$11,790,449

(1) Reflects payment of 75% of annual base salary as of July 31, 2020 for each Named Executive Officer, except for

Mr. Pandey, who would receive a payment of 100% of his base salary.

(2) Reflects payment of 75% of each Named Executive Officer’s annual bonus target as of July 31, 2020, except for

Mr. Pandey, who would receive a payment of 100% of his annual bonus target.

(3) Reflects the accelerated stock option and RSU payment values based upon the closing price of our Class A common

stock of $22.19 on July 31, 2020, less any applicable exercise price in the case of stock options.

(4) Reflects COBRA premiums based on elected level of healthcare coverage (medical, dental and vision) for nine
months, except for Mr. Pandey, who would receive COBRA premiums based on elected level of healthcare coverage
(medical, dental and vision) for 12 months.

(5) The amount reported excludes (i) 100,000 PRSUs held by Mr. Pandey, the vesting of which upon a change of control
transaction is conditioned upon the gross per-share price payable to holders of our Class A common stock in
connection with the applicable change of control transaction exceeding $80, and (ii) 200,000 PRSUs held by
Mr. Pandey, the vesting of which upon a change of control transaction is conditioned upon the gross per-share price
payable to holders of our Class A common stock in connection with the applicable change of control transaction
exceeding $65. The closing price of our Class A common stock on July 31, 2020 was $22.19.

(6) Mr. Maner joined the Company in November 2019. In connection with his hire, Mr. Maner was granted 500,000 RSUs
under our 2016 Plan which vest over four years with a one-year vesting cliff. Because of this one-year vesting cliff, all
500,000 RSUs so granted to Mr. Maner upon his hire remained unvested as of July 31, 2020. Therefore, if Mr. Maner
had been terminated on July 31, 2020 and if a change of control of the Company had also occurred on that date, all
of Mr. Maner’s unvested 500,000 RSUs would have been accelerated.

48

Executive Severance Policy

In October 2020, we adopted an Executive Severance Policy (the ‘‘Executive Severance Policy’’), pursuant to which
a designated employee is eligible to receive severance benefits in lieu of any other severance payments and
benefits, subject to the employee signing a participation agreement, in connection with the involuntary termination
of their employment under the circumstances described in the Executive Severance Policy. Generally, upon a
termination of the eligible employee either (i) by us, other than for Cause, death, or disability, or (ii) by the applicable
eligible employee on account of a Constructive Termination (such termination, ‘‘Qualified Termination’’), then the
Executive Severance Policy provides for:

(1) a lump sum payment equal to the participant’s annual base salary, as in effect immediately prior to the
the termination is due to a resignation for Constructive
participant’s Qualified Termination or,
Termination based on a material reduction in annual base salary, immediately prior to such reduction,
multiplied by 75% for each of Tier 1 eligible employees and 50% for each of Tier 2 eligible employees, and

if

(2) payment or reimbursement, at our sole discretion, of the cost of continued health benefits for a period of

up to nine months.

In order to receive severance benefits under the Executive Severance Policy, a participant must timely execute and
not revoke a release of claims in favor of us.

For purposes of the Executive Severance Policy, constructive termination (‘‘Constructive Termination’’) means the
eligible employee’s termination of his or her employment after the occurrence of one or more of the following events
without the applicable eligible employee’s express written consent:

(1) a reduction in substantially all of the applicable eligible employee’s responsibilities relative to his or her
responsibilities in effect immediately prior to such reduction (provided, however, that, a change in title or
reporting structure, without more, shall not constitute a Constructive Termination), and

(2) a reduction by the Company in the applicable eligible employee’s rate of annual base salary by more than
25% within a single calendar year (provided, however, that, a reduction of annual base salary that also
applies to substantially all other similarly situated employees of the Company shall not constitute a
Constructive Termination).

In order for the applicable eligible employee’s termination of his or her employment to be a Constructive
Termination, the eligible employee must not terminate employment with the Company without first providing the
Company with written notice of the acts or omissions constituting the grounds for ‘‘Constructive Termination’’ within
90 days of the initial existence of the grounds for ‘‘Constructive Termination’’ and a cure period of 30 days following
the Company’s receipt of written notice, such grounds must not have been cured during such time, and the eligible
employee must terminate his or her employment within 30 days following such cure period.

Each of our Named Executive Officers, other than Mr. Pandey, whose employment agreement provides for
separate benefits, is eligible to participate in the Executive Severance Policy. The Executive Severance Policy,
which was adopted in October 2020, is in early stages of implementation and the participation election process has
not begun for any eligible participant, including any of our eligible Named Executive Officers. Therefore, we have
not described and quantified estimated payments and benefits that would be provided in each covered
circumstance under the Executive Severance Policy to any of our eligible Named Executive Officers.

CEO PAY RATIO

Ratio

In accordance with Item 402(u) of Regulation S-K, promulgated under the Dodd Frank Act, we determined the ratio
of: (1) the annual total compensation of our CEO, to (2) the median of the annual total compensation of all of our
employees, except for our CEO, both calculated in accordance with the requirements of Item 402(c)(2)(x) of
Regulation S-K. We believe this ratio is a reasonable estimate calculated in a manner consistent with Item 402(u)
of Regulation S-K under the Exchange Act.

For the fiscal year ended July 31, 2020:

•

the annual total compensation of our CEO was $4,634,811;

49

•

•

the median of the annual total compensation of all employees of our company (other than our CEO) was
$190,997; and

the ratio of the annual total compensation of our CEO to the median of the annual total compensation of
all other employees was 24.3:1.

Identification of Median Employee

We selected July 31, 2020 as the date on which to determine our employee population and the median employee.
In determining this population, we included all worldwide full-time and part-time employees other than our CEO.
We did not include any contractors in our employee population. As permitted by SEC rules, in order to identify our
median employee, we elected to use total target cash compensation plus the grant date fair market value of equity
awards, if any, as our consistently applied compensation measure, which we refer to herein as total target
compensation and calculated as (i) base salary and target bonus as of July 31, 2020, and (ii) the grant date fair
market value of equity awards issued during the previous twelve months. For employees paid in a currency other
than U.S. dollars, we converted their compensation to U.S. dollars using the exchange rates used by us for various
financial and accounting purposes in effect on July 31, 2020. To identify our median compensated employee, we
then calculated the total target direct compensation for our global employee population and excluded employees
at the median who had anomalous compensation characteristics.

The SEC rules for identifying the median compensated employee and calculating the pay ratio based on that
employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain
exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices.
Consequently, the pay ratio reported by other companies may not be comparable to the pay ratio reported above,
as other companies may have different employment and compensation practices and may utilize different
methodologies, exclusions, estimates, and assumptions in calculating their own pay ratios. Additionally, due to our
emphasis on pay-for-performance and the structure of our performance-based compensation for our CEO, his
total direct compensation can be highly variable from one fiscal year to the next.

EQUITY COMPENSATION PLAN INFORMATION

The following table summarizes our equity compensation plan information as of July 31, 2020. Information is
included for equity compensation plans approved by our stockholders. We do not have any equity compensation
plans not approved by our stockholders.

(a) Number of
Securities to be Issued
Upon Exercise of
Outstanding Options,
Warrants and Rights(1)

(b) Weighted
Average Exercise Price
of Outstanding
Options, Warrants and
Rights(2)

(c) Number of
Securities Remaining
Available for Future
Issuance Under Equity
Compensation Plans
(Excluding Securities
Reflected in Column (a))(3)

Plan Category

Equity plans approved by stockholders

Equity plans not approved by stockholders

30,177,999

—

$5.10

—

21,892,756

—

Includes 7,546,442 outstanding stock options and 22,631,557 outstanding RSUs.

(1)
(2) The weighted average exercise price is calculated based solely on outstanding stock options, and does not take into

(3)

account stock underlying restricted stock units, which generally have no exercise price.
Includes 12,723,678 shares reserved for future equity grants under our 2016 Plan and 9,169,078 shares reserved for
future stock purchase plan awards under our ESPP. Our 2016 Plan provides that the total number of shares reserved
for issuance under the 2016 Plan will be automatically increased on the first day of each fiscal year beginning in fiscal
2018, by an amount equal to the least of (i) 18,000,000 shares, (ii) 5% of the outstanding shares of all classes of
common stock as of the last day of our immediately preceding fiscal year, or (iii) such other amount as our board of
directors may determine. Accordingly, on August 1, 2020, the number of shares of Class A common stock available
for issuance under our 2016 Plan increased by 10,097,453 shares, pursuant to this provision. This increase is not
reflected in the table above. On December 13, 2019, our stockholders approved certain amendments to our ESPP,
pursuant to which the number of shares reserved for sale and issuance under our ESPP was increased by 9,200,000.

50

STOCK OWNERSHIP INFORMATION

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of the close of business on September 24, 2020, certain information with respect
to the beneficial ownership of our common stock: (a) by each person known by us to be the beneficial owner of
more than five percent of the outstanding shares of Class A common stock or Class B common stock; (b) by each
of our directors; (c) by each of our Named Executive Officers; and (d) by all of our current executive officers and
directors as a group.

The percentage of shares beneficially owned shown in the table is based on 194,195,207 shares of Class A
common stock and 12,193,980 shares of our Class B common stock outstanding as of the close of business on
September 24, 2020. In computing the number of shares of capital stock beneficially owned by a person and the
percentage ownership of such person, we deemed to be outstanding all shares of our capital stock with respect to
which the individual has the right to acquire beneficial ownership within 60 days of September 24, 2020 through the
exercise of any stock option or other right. However, we did not deem such shares of our capital stock outstanding
for the purpose of computing the percentage ownership of any other person.

Beneficial ownership is determined in accordance with the rules of the SEC and generally includes any shares over
which a person exercises sole or shared voting or investment power. Unless otherwise indicated, the persons or
entities identified in this table have sole voting and investment power with respect to all shares shown beneficially
owned by them, subject to applicable community property laws. The information contained in the following table is
not necessarily indicative of beneficial ownership for any other purpose, and the inclusion of any shares in the table
does not constitute an admission of beneficial ownership of those shares. Except as otherwise noted below, the
address for persons listed in the table is c/o Nutanix, Inc., 1740 Technology Drive, Suite 150, San Jose, CA 95110.
The information provided in the table below is based on our records, information filed with the SEC and information
provided to us, except where otherwise noted.

Name of Beneficial Owner

Shares

%

Shares

%

Shares Beneficially Owned

Class A

Class B

% of Total
Voting
Power(1)

5% Stockholders:

Entities affiliated with Fidelity(2)
Ajeet Singh(3)
Entities affiliated with the Vanguard Group(4)
Entities affiliated with Generation Investment

Management LLP(5)

Clearbridge Investments, LLC(6)

Named Executive Officers and Directors:

Dheeraj Pandey(7)
Duston M. Williams(8)
David Sangster(9)
Tyler Wall(10)
Tarkan Maner(11)
Sohaib Abbasi(12)
Susan L. Bostrom(13)
Craig Conway(14)
Virginia Gambale(15)
Steven J. Gomo(16)
Max de Groen(17)
David Humphrey(18)
Ravi Mhatre(19)
Jeffrey T. Parks(20)
Brian Stevens(21)
Former Directors:
John McAdam(22)
Michael P. Scarpelli(23)

27,653,429
—
16,379,873

15,433,452
11,514,427

52,208
219,535
76,810
74,367
—
—
5,980
31,624
8,250
88,946
—
—
927,716
50,027
5,073

32,813
16,512

All directors and executive officers as a group
(17 persons)(24)

1,589,861

*

Denotes less than 1%

51

14.2
—
8.4

7.9
5.9

—
—

—
—

*
*
*
*

*
*
*
*

*
*
*

*
*

*

112,835
2,387,696
—

—
—

11,496,757
655,000
7,918
—
—
—
—
—
—
—
—
—
—
—
—

—
—

*
19.6
—

—
—

94.3
5.4
*

—
—
—
—
—
—
—
—
—
—
—
—

—
—

9.1
7.6
5.2

4.9
3.6

36.4
2.1
*
*

—
—

—
—

*
*
*
*

*
*
*

*
*

12,159,675

99.7 %

39.0 %

(1) Percentage of total voting power represents voting power with respect to all shares of our Class A and Class B
common stock, as a single class. The holders of our Class B common stock are entitled to 10 votes per share, and
holders of our Class A common stock are entitled to one vote per share.

(2) Consists of: (i) 112,835 shares of Class B common stock held of record by investment companies advised by FMR
Co., Inc. and Fidelity Management & Research (Hong Kong) Limited, both indirect wholly-owned subsidiaries of FMR
LLC; and (ii) 27,653,429 shares of Class A common stock held of record by FMR LLC and its affiliates. Abigail
P. Johnson is a Director, the Chairman and the Chief Executive Officer of FMR LLC. Members of the Johnson family,
including Abigail P. Johnson, are the predominant owners, directly or through trusts, of Series B voting common
shares of FMR LLC, representing 49% of the voting power of FMR LLC. The Johnson family group and all other
Series B shareholders have entered into a shareholders’ voting agreement under which all Series B voting common
shares will be voted in accordance with the majority vote of Series B voting common shares. Accordingly, through
their ownership of voting common shares and the execution of the shareholders’ voting agreement, members of the
Johnson family may be deemed, under the Investment Company Act of 1940, to form a controlling group with respect
to FMR LLC. Neither FMR LLC nor Abigail P. Johnson has the sole power to vote or direct the voting of the shares
owned directly by the various investment companies registered under the Investment Company Act advised by
Fidelity Management & Research Company (‘‘FMR Co’’), a wholly owned subsidiary of FMR LLC, which power
resides with the Fidelity Funds’ Boards of Trustees. FMR Co carries out the voting of the shares under written
guidelines established by the Fidelity Funds’ Boards of Trustees. The address for FMR LLC is 245 Summer Street,
Boston, Massachusetts 02210. Based on a Schedule 13G/A filed on February 7, 2020, a Form 13F-HR filed on
August 13, 2020 by FMR LLC and, with respect to holdings of Class B common stock, information supplied by the
Transfer Agent.

(3) Consists of (i) 320,000 shares of Class B common stock held of record by the Singh/Sarahan 2014 Irrevocable
Descendants Trust and (ii) 2,067,696 shares of Class B common stock held of record by Singh/Sarahan Revocable
Trust. Ajeet Singh and Renu Saharan are co-trustees of both of these trusts. Based on a Schedule 13G/A filed by
Ajeet Singh on February 13, 2018 and information supplied by the Transfer Agent.

(4) Consists of 16,379,873 shares of Class A common stock beneficially owned by Vanguard Group 23-1945930 LLP
and its affiliates. Based on a Schedule 13G filed on February 12, 2020 and a Form 13F-HR filed on August 14, 2020
by Vanguard Group 23-1945930 and its affiliates. The address for Vanguard Group 23-1945930 is 100 Vanguard
Blvd, Malvern, PA 19355.

(5) Consists of 15,433,452 shares of Class A common stock beneficially owned by Generation Investment Management
LLP. Based on a Schedule 13G/A filed on February 14, 2020 and a Form 13F-HR filed on August 14, 2020 by
Generation Investment Management LLP. The address for Generation Investment Management LLP is 20 Air Street,
7th floor, London, United Kingdom W1B 5AN.

(6) Consists of 11,514,427 shares of Class A common stock beneficially owned by Clearbridge Investments, LLC. Based
on a Form 13F-HR filed by Clearbridge Investments, LLC on August 14, 2020. The address for Clearbridge
Investments, LLC is 620 8th Avenue, New York, NY 10018.

(7) Consists of: (i) 5,262,103 shares of Class B common stock held of record by The Pandey Revocable Trust for which
Mr. Pandey and Mr. Pandey’s spouse serve as co-trustees; (ii) 68,000 shares of Class B common stock held of record
by Pandey Irrevocable Descendants’ Trust for which Mr. Pandey’s spouse serves as trustee; (iii) 2,932,000 shares of
Class B common stock held of record by The Pandey 2017 Irrevocable Descendants’ Trust for which Mr. Pandey and
his spouse serve as co-trustees; (iv) 381,218 shares of Class B common stock held of record by the Pandey 2016
Annuity Trust FBO one of Mr. Pandey’s minor children, for which Mr. Pandey and his spouse serve as co-trustees;
(v) 381,218 shares of Class B common stock held of record by the Pandey 2016 Annuity Trust FBO one of
Mr. Pandey’s minor children, for which Mr. Pandey and his spouse serve as co-trustees; (vi) 381,218 shares of
Class B common stock held of record by the Pandey 2016 Annuity Trust FBO one of Mr. Pandey’s minor children, for
which Mr. Pandey and his spouse serve as co-trustees; (vii) 52,208 shares of Class A common stock held by
Mr. Pandey, and (viii) 2,091,000 shares of Class B common stock subject to options exercisable within 60 days of
September 24, 2020. Excludes 500,000 shares of Class B common stock and 518,750 shares of Class A common
stock subject to time-based or performance-based vesting that shall not vest and settle within 60 days of
September 24, 2020.

(8) Consists of (i) 219,535 shares of Class A common stock held of record by Mr. Williams, (ii) 31,250 shares of Class B
common stock held of record by Mr. Williams, and (iii) 623,750 shares of Class B common stock subject to options
exercisable within 60 days of September 24, 2020. Excludes 231,250 RSUs subject to time-based vesting that shall
not vest and settle within 60 days of September 24, 2020.

(9) Consists of (i) 76,810 shares of Class A common stock held of record by Mr. Sangster and (ii) 7,918 shares of Class B
common stock subject to options exercisable within 60 days of September 24, 2020. Excludes 370,313 RSUs subject
to time-based or performance-based vesting that shall not vest and settle within 60 days of September 24, 2020.

(10) Consists of 74,367 shares of Class A common stock held of record by Mr. Wall. Excludes 150,000 RSUs subject to

time-based vesting that shall not vest and settle within 60 days of September 24, 2020.

(11) Mr. Maner joined the Company in November 2019. Excludes 500,000 RSUs subject to time-based vesting that shall

not vest and settle within 60 days of September 24, 2020.

(12) Excludes 10,297 RSUs subject to time-based vesting that shall not vest and settle within 60 days of September 24,

2020.

52

(13) Excludes 8,262 RSUs subject to time-based vesting that shall not vest and settle within 60 days of September 24,

2020.

(14) Excludes 8,106 RSUs subject to time-based vesting that shall not vest and settle within 60 days of September 24,

2020.

(15) Consists of (i) 2,750 shares of Class A common stock held of record by Ms. Gambale and (ii) 5,500 shares of Class A
common stock held of record by Virginia Gambale TTEE Virginia Gambale REV Trust DTD 5/22/2003 for which
Ms. Gambale serves as trustee. Excludes 8,359 RSUs subject to time-based vesting that shall not vest and settle
within 60 days of September 24, 2020.

(16) Excludes 10,834 RSUs subject to time-based vesting that shall not vest and settle within 60 days of September 24,

2020.

(17) Mr. de Groen joined our board of directors on September 24, 2020. Excludes 3,126 RSUs subject to time-based

vesting that shall not vest and settle within 60 days of September 24, 2020.

(18) Mr. Humphrey joined our board of directors on September 24, 2020. Excludes 3,126 RSUs subject to time-based

vesting that shall not vest and settle within 60 days of September 24, 2020

(19) Consists of (i) 513,364 shares of Class A common stock held of record by Mhatre Investments LP - Fund I and
(ii) 414,352 shares of Class A common stock held by Mr. Mhatre. Mr. Mhatre serves as the trustee of the general
partner of Mhatre Investments LP - Fund I and, accordingly, exercises sole voting and dispositive power over shares
held of record by Mhatre Investments LP - Fund I. Excludes 11,536 RSUs subject to time-based vesting that shall not
vest and settle within 60 days of September 24, 2020. The address for Mhatre Investments LP - Fund I is c/o
Lightspeed Venture Partners, 2200 Sand Hill Road, Menlo Park, California 94025. Based on a Form 4 filed on
September 8, 2020 by Ravi Mhatre.

(20) Consists of (i) 8,523 shares of Class A common stock held of record by Mr. Parks, (ii) 37,217 shares of Class A
common stock held of record by The Parks Trust, a trust beneficially owned by Mr. Parks, and (iii) 4,287 shares of
Class A common stock held of record by Riverwood Capital, LP, which is holding such shares for the benefit of The
Parks Trust, subject to Mr. Parks’ continued service. Excludes 11,302 RSUs subject to time-based vesting that shall
not vest and settle within 60 days of September 24, 2020. Mr. Parks has elected not to stand for re-election as a
Class I director, and will therefore step down from our board of directors effective as of the end of his current term of
office, which will expire at the Annual Meeting.

(21) Excludes 10,288 RSUs subject to time-based vesting that shall not vest and settle within 60 days of September 24,

2020.

(22) Mr. McAdam retired from our board of directors effective as of December 13, 2019.
(23) Consists of 16,512 shares of Class A common stock held of record by Mr. Scarpelli. Mr. Scarpelli resigned from our

board of directors effective as of June 3, 2020.

(24) Consists of (i) 1,577,901 shares of Class A common stock beneficially owned by our executive officers and directors
as a group, (ii) 12,159,675 shares of Class B common stock beneficially owned by our executive officers and directors
as a group, and (iii) 11,960 shares of Class A common stock received from RSUs that shall vest and settle within
60 days of September 24, 2020. Excludes 1,855,549 RSUs and 500,000 shares of Class B common stock subject to
time-based or performance-based vesting that shall not vest and settle within 60 days of September 24, 2020.

53

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who own more than
ten percent of a registered class of Nutanix’s equity securities, to file with the SEC initial reports of ownership and
reports of changes in ownership of common stock and other equity securities of Nutanix.

To our knowledge, based solely on a review of
the copies of such reports furnished to us and written
representations that no other reports were required, during the fiscal year ended July 31, 2020, all Section 16(a)
filing requirements applicable to our officers, directors and greater than 10% beneficial owners were complied with,
except for one Form 4 filed late by Virginia Gambale to report a grant of restricted stock units on June 3, 2020 that
was reported on Form 4 on June 10, 2020.

OTHER MATTERS

Our board of directors knows of no other matters that will be presented for consideration at the virtual Annual
Meeting. If any other matters are properly brought before the meeting, it is the intention of the persons named in
the associated proxy to vote on such matters in accordance with their best judgment.

We have filed our Annual Report on Form 10-K for the fiscal year ended July 31, 2020 with the SEC. It is available
free of charge at the SEC’s web site at www.sec.gov. Stockholders can also access this proxy statement and our
Annual Report on Form 10-K for the fiscal year ended July 31, 2020 at http://ir.nutanix.com, or a copy of our Annual
Report on Form 10-K for the fiscal year ended July 31, 2020 is available without charge upon written request to our
Secretary at 1740 Technology Dr., Suite 150, San Jose, California 95110.

54

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K 

(Mark One)
☒

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
EXCHANGE ACT OF 1934

For the fiscal year ended July 31, 2020 

☐

OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File Number: 001-37883 

NUTANIX, INC. 
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization)

27-0989767
(I.R.S. Employer
Identification No.)

1740 Technology Drive, Suite 150

San Jose, CA 95110

(Address of principal executive offices, including zip code)

(408) 216-8360

(Registrant's telephone number, including area code)

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Class A common stock, $0.000025 par value 
per share

NTNX

NASDAQ Global Select Market

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the 

Securities Act.  Yes  ☒    No  ☐

Indicate by check mark whether the registrant is not required to file reports pursuant to Section 13 or 15(d) of the 

Securities Exchange Act of 1934.  Yes  ☐    No  ☒ 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of 
the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was 
required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

 
 
  
 
 
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if 
any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the 
preceding 12 months (or for such shorter period that the registrant was required to submit and post such 
files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated 

filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," 
"accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. 
(Check one):

Large Accelerated Filer

 ☒

Accelerated Filer

Non-accelerated Filer

☐  (Do not check if a smaller reporting 
company)

Emerging Growth Company

☐

Smaller Reporting Company

If an emerging growth company, 
indicate by check mark if the registrant 
has elected not to use the extended 
transition period for complying with any 
new or revised financial accounting 
standards provided pursuant to Section 
13(a) of the Exchange Act.

 ☐

 ☐

☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment 

of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 
U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.  ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities 

Exchange Act).    Yes  ☐    No  ☒

The aggregate market value of the registrant's common stock held by non-affiliates of the registrant as of January 

31, 2020 (the last business day of the registrant's most recently completed second fiscal quarter) was approximately $5.9 
billion, based upon the closing sale price of such stock on the NASDAQ Stock Market. The registrant has no non-voting 
common equity.

As of August 31, 2020, the registrant had 186,885,682 shares of Class A common stock, $0.000025 par value per 

share, and 15,102,453 shares of Class B common stock, $0.000025 par value per share, outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

As noted herein, the information called for by Parts II and III is incorporated by reference to specified portions of the 
registrant’s definitive proxy statement to be filed in conjunction with the registrant’s 2020 annual meeting of stockholders, 
which is expected to be filed not later than 120 days after the registrant's fiscal year ended July 31, 2020.

 
TABLE OF CONTENTS

Special Note Regarding Forward-Looking Statements 

PART I

Item 1. Business

Item 1A. Risk Factors

Item 1B. Unresolved Staff Comments

Item 2. Properties

Item 3. Legal Proceedings

Item 4. Mine Safety Disclosures

PART II

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of 
Equity Securities

Item 6. Selected Consolidated Financial and Other Data

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 7A. Quantitative and Qualitative Disclosures About Market Risk 

Item 8. Financial Statements and Supplementary Data

Item 9. Change in and Disagreements with Accountants on Accounting Financial Disclosure

Item 9A. Controls and Procedures

Item 9B. Other Information

PART III

Item 10. Directors, Executive Officers and Corporate Governance

Item 11. Executive Compensation

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder 
Matters

Item 13. Certain Relationships and Related Transactions and Director Independence

Item 14. Principal Accountant Fees and Services

PART IV

Item 15. Exhibits and Financial Statement Schedules

Item 16. Form 10-K Summary

Exhibit Index

Signatures

Page

ii

1

1

8

49

49

49

49

50

50

52

54

76

77

124

124

124

125

125

125

125

125

125

126

126

126

127

130

i

 
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of 

the Securities Act of 1933, as amended ("Securities Act"), and Section 21E of the Securities Exchange Act of 1934, 
as amended ("Exchange Act"), which statements involve substantial risks and uncertainties. Other than statements 
of historical fact, all statements contained in this Annual Report on Form 10-K including statements regarding our 
future results of operations and financial position, our business strategy and plans and our objectives for future 
operations, are forward-looking statements. The words "believe," "may," "will," "potentially," "estimate," "continue," 
"anticipate," "plan," "intend," "could," "would," "expect," or words or expressions of similar substance or the negative 
thereof, that convey uncertainty of future events or outcomes are intended to identify forward-looking statements. 
Forward-looking statements included in this Annual Report on Form 10-K include, but are not limited to, statements 
regarding:

•

•

•

•

•

•

•

•

•

•

•

our future billings, revenue, cost of revenue and operating expenses, as well as changes in the cost of 
product revenue, component costs, product gross margins and support, entitlements and other services 
revenue and changes in research and development, sales and marketing and general and administrative 
expenses;

our business plans, initiatives and objectives, our ability to execute such plans, initiatives and objectives in 
a timely manner, and the impact of such plans, initiatives and objectives on our business, operations, and 
financial results;

our plans for, and the timing of, changes to our business model, including our ongoing transition to a 
subscription-based business model, our ability to manage, complete or realize the benefits of such 
transitions successfully and in a timely manner, and the short-term and long-term impacts of such 
transitions on our business, operations and financial results;

the timing and potential impact of the COVID-19 pandemic and the actions taken in response, including 
our own, on our business, operations and financial results;

the benefits and capabilities of our platform, products, services and technology;

our growth strategy, our ability to effectively achieve and manage our growth, and the amount, timing and 
impact of any investments to grow our business, including plans to increase demand generation and 
marketing spending, and invest in our global engineering, research and development and sales and 
marketing teams;

the impact of any adjustments to our go-to-market cost structure, in particular our sales compensation 
structure; 

the impact of our decision to use new or different metrics, or to make adjustments to the metrics we use, to 
supplement our financial reporting;

the timing, success and impact of the succession plan for our Chief Executive Officer;

anticipated trends, growth rates and challenges in our business and in the markets in which we operate, 
including the segmentation and productivity of our sales team; 

our ability to develop new solutions, product features and technology and bring them to market in a timely 
manner, as well as the impact of including additional solutions in our product portfolio;

• market acceptance of new technology and recently introduced solutions;

•

•

•

•

•

the interoperability and availability of our solutions with and on third-party hardware platforms;

our ability to increase sales of our solutions, particularly to large enterprise customers;

our ability to attract new end customers and retain and grow sales from our existing end customers;

our ability to maintain and strengthen our relationships with our channel partners and OEMs, and the 
impact of any changes to such relationships on our business, operations and financial results; 

the effects of seasonal trends on our results of operations;

ii

•

•

•

•

•

•

•

•

our expectations concerning relationships with third parties, including our ability to compress and stabilize 
sales cycles;

our ability to maintain, protect and enhance our intellectual property;

our exposure to and ability to guard against cyber attacks and other actual or perceived security breaches;

our ability to continue to expand internationally;

the effects of increased competition in our market and our ability to compete effectively;

anticipated capital expenditures;

future acquisitions or investments in complementary companies, products, services or technologies and 
the ability to successfully integrate completed acquisitions;

our ability to stay in compliance with laws and regulations that currently apply or become applicable to our 
business both in the United States and internationally, including recent changes in global tax laws;

• macroeconomic and industry trends, projected growth or trend analysis;

•

•

•

the impact of events that may be outside of our control, such as political and social unrest, terrorist attacks, 
hostilities, malicious human acts, climate change, natural disasters (including extreme weather), 
pandemics or other major public health concerns, and other similar events;

our ability to attract and retain qualified employees and key personnel; and

the sufficiency of cash balances to meet cash needs for at least the next 12 months.

 We have based these forward-looking statements largely on our current expectations and projections about 

future events and trends that we believe may affect our financial condition, results of operations, business strategy, 
short-term and long-term business operations and objectives and financial needs in light of the information currently 
available to us. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, 
including those described in Part I, Item 1A. "Risk Factors" in this Annual Report on Form 10-K. Moreover, we 
operate in a very competitive and rapidly changing environment and new risks emerge from time to time. It is not 
possible for us to predict all risks, nor can we assess the impact of all factors on our business or the extent to which 
any factor, or combination of factors, may cause actual results to differ materially from those contained or implied in 
any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-
looking events and trends discussed in this Annual Report on Form 10-K may not occur and actual results could 
differ materially and adversely from those anticipated or implied in the forward-looking statements.

You should not rely upon forward-looking statements as predictions of future events. Although we believe that 

the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future 
results, performance, or events and circumstances reflected in the forward-looking statements will be achieved or 
will occur. The forward-looking statements in this Annual Report on Form 10-K relate only to events as of the date 
on which the statements are made. We undertake no obligation, and expressly disclaim any obligation, to update, 
alter or otherwise revise or publicly release the results of any revision to these forward-looking statements to reflect 
new information or the occurrence of unanticipated or subsequent events, except as required by law. We may not 
actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should 
not place undue reliance on our forward-looking statements.

iii

[This page intentionally left blank] 

ITEM 1. Business

Overview

PART I

Nutanix, Inc. ("we," "us," "our" or "Nutanix") provides a leading enterprise cloud platform, which we call the 
Nutanix Cloud Platform, that consists of software solutions and cloud services that power our customers’ hybrid 
cloud and multicloud strategies. Our solutions run across private-, hybrid- and multicloud environments, and allow 
organizations to seamlessly "lift and shift" their workloads, including enterprise applications, high-performance 
databases, end-user computing and virtual desktop infrastructure ("VDI") services, cloud native workloads, and 
analytics applications, between different cloud environments. 

Founded in 2009, we pioneered the hyperconverged infrastructure ("HCI") category, initially combining the 
disparate IT silos of compute, storage and networking into a single on-premises product. As the market realized the 
power, scalability and customer choice that HCI provides, we continued to innovate, and Acropolis Hypervisor 
("AHV") - our native, no-cost hypervisor designed to run all virtualized applications - was born. To give our 
customers even more choice, we engineered our software solutions to run on a variety of server platforms, 
decoupling our software from our Nutanix-branded hardware appliances and powering a variety of on-premises 
private cloud deployments; a significant step in our transition from a hardware to a software company. That 
transition has continued with the adoption of "cloud" as a mainstream IT paradigm, which has motivated IT 
professionals to move toward hybrid cloud architectures that allow businesses to simultaneously utilize a private 
cloud powered by Nutanix software, along with third-party public cloud infrastructures for maximum flexibility. We 
continue to transform our software solutions into a comprehensive enterprise cloud platform, based on web-scale 
engineering principles and a focus on operational simplicity, which allows our customers to power nearly any scale 
IT deployment. Although today our customers primarily use our enterprise cloud platform to power their on-premises 
private cloud deployments, our solutions also simplify the complexities of multicloud environments with a single 
management console for automation, cost governance and compliance. The end result will be an enterprise cloud 
platform that empowers our customers to unify various clouds - on-premises private, public and distributed - into 
one seamless cloud, allowing IT to choose the right cloud for each application.

In addition to our transition to a software-centric business model, and to provide our customers with the 
freedom to choose the best consumption model based on their specific business needs, we have also continued to 
reshape our licensing by moving toward a subscription-based business model. A subscription-based business 
model means one in which our products, including associated support and entitlement arrangements, are sold with 
a defined term. For more information, see the section titled "Components of Our Results of Operations" included in 
Part II, Item 7, as well as Note 3 of Notes to Consolidated Financial Statements included in Part II, Item 8, of this 
Annual Report on Form 10-K. Furthermore, as part of our transition to a subscription-based business model, we 
have commenced our transition to a sales compensation structure that is based on Annual Contract Value ("ACV"). 
These transitions have caused, and will continue to cause, our traditional life-of-device licensing models to become 
increasingly replaced by term-based licenses, providing our customers with a subscription consumption option 
which are portable across hybrid- and multicloud deployments. We believe that these transitions - from hardware to 
software solutions, and from life-of-device to subscription models - will contribute to our long-term growth, although 
they may have an adverse impact on our business and financial performance in the near term. In fiscal 2020, our 
subscription billings increased to 80.8% of total billings, up 20 percentage points from fiscal 2019, and our 
subscription revenue reached $1.0 billion, representing a year-over-year increase of 58.9%. In fiscal 2020, our ACV 
billings was $505.2 million, representing a year-over-year increase of 17.9%.

The Nutanix Cloud Platform

Leveraging the foundation of our core HCI technology, the Nutanix Cloud Platform delivers a rich set of digital 

HCI services, datacenter services, DevOps services, and desktop services.

Digital HCI Services

Our HCI products – composed of Acropolis ("AOS"), a software-defined platform that converges compute, 
storage, and networking services, Prism, our consumer-grade control plane providing management and analytics for 
the entire enterprise cloud platform, and Acropolis Hypervisor ("AHV"), a native, enterprise-grade hypervisor 
designed to run all virtualized applications – form the foundation of the Nutanix Cloud Platform.

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Acropolis (AOS). AOS converges virtualization, storage, and networking services into a turnkey solution. AOS 

is comprised of three foundational components: 

• Virtualization. AOS supports major hypervisors, including our native, no-cost AHV.

• Storage Capabilities. Building on a distributed data fabric, AOS enables robust enterprise storage services 

across multiple storage protocols. Storage capabilities include snapshots and cloning, performance 
acceleration capabilities, such as caching, data tiering and data locality and storage optimization, such as 
deduplication, compression and erasure coding, along with data protection and disaster recovery features.

• Networking Services. AOS provides services to visualize the network, automate common network 

operations, secure the network and integrate with various third-party networking and security products. 

Prism. Nutanix Prism is our consumer-grade control plane providing management and analytics across the 

enterprise cloud platform. It delivers integrated management, robust operational analytics, self-service capabilities 
and one-click administration. Prism allows routine IT operations that are typically manual and cumbersome to be 
fully automated or completed with just one click, including capacity planning, provisioning of new resources and 
troubleshooting. Prism enables efficient centralized administration to manage multiple clusters within a single 
datacenter, or across multiple sites. Prism also offers Application Programming Interfaces ("APIs") for integration 
with third-party products and advanced management and orchestration of Nutanix environments.

Acropolis Hypervisor. AHV is a native, enterprise-grade virtualization solution that is included with our 

enterprise cloud platform with no additional software components to license, install or manage. AHV is built upon a 
widely-used open source hypervisor technology, known as KVM and extends its base functionality to include 
additional features such as virtual machine ("VM") high availability and live migration. AHV also includes such 
features as flexible migrations, automated workload placement, security hardening, network virtualization, data 
protection and disaster recovery and rich analytics, while allowing for integrated management via Nutanix Prism to 
streamline the provisioning, placing and managing of VMs, thereby providing our customers with a high-
performance virtualization solution while eliminating third-party virtualization costs. 

Datacenter Services Solutions

The Nutanix Cloud Platform also provides the IT resources that data center professionals need to design, build 

and operate a cloud datacenter. This includes scale-out storage services that consolidate management of 
structured and unstructured data. Nutanix customers can simplify storage operations, while delivering enterprise-
grade NFS and SMB files services (Nutanix Files), as well as S3-compatible object services (Nutanix Objects), at 
nearly any scale.

Security is designed into the Nutanix Cloud Platform, including application-centric firewall services based on 

advanced microsegmentation technology (Nutanix Flow) that protects applications against internal and external 
threats, as well as data encryption. Nutanix solutions also provide strong user authentication, authorization and 
access services, activity monitoring and comprehensive logging. With multiple industry security certifications, 
Nutanix solutions help customers across industries meet stringent security and compliance mandates.

Beyond protecting applications and data against security threats, the Nutanix Cloud Platform provides 

essential capabilities to maintain business continuity in the event of an IT failure, and to quickly recover from 
unplanned downtime. Capabilities include built-in multi-site data replication and synchronization services, 
orchestration runbooks, and validated integration with popular data back-up solutions. We also provide a managed, 
cloud-based disaster recovery service (Nutanix Xi Leap) to maintain IT operations in the event of a datacenter 
outage.

2

DevOps Services Solutions

As part of our integrated offering, we deliver services for application developers and DevOps teams to 
accelerate the development, testing, provisioning and scaling of applications across different cloud environments. 
These services include automated database management to simplify database administration and to efficiently 
manage database copies that proliferate in most IT environments (Nutanix Era). Also included are automation 
services that streamline application lifecycle management, provide self-service provisioning via an application 
marketplace, and deliver powerful hybrid cloud orchestration (Nutanix Calm). Our DevOps Services solutions also 
allow for automated deployment and management of Kubernetes clusters to simplify the provisioning, operations 
and lifecycle management of cloud-native environments, containerized applications and microservices (Nutanix 
Karbon). 

Desktop Services Solutions

The Nutanix Cloud Platform provides a rich set of end-user computing ("EUC") services that can reduce the 

cost of delivering virtualized desktops and applications, while improving performance and scalability. Services 
include virtualization, file storage, security and networking for traditional VDI environments. We also provide 
desktop-as-a-service (Nutanix Xi Frame) to deliver virtual apps or desktops to users from multiple public cloud 
environments and/or an enterprises private cloud datacenter, which can be easily accessed from any browser.

Delivery of Our Solutions

The Nutanix Cloud Platform can be deployed on-premises running on a variety of qualified hardware platforms, 
in popular public cloud environments such as Amazon Web Services through Nutanix Clusters, or, in the case of our 
cloud-based software and software-as-a-service ("SaaS") offerings, via hosted service. Non-portable software 
licenses for our platform are delivered or sold alongside configured-to-order appliances, with a license term equal to 
the life of the associated appliance. Our subscription term-based licenses are sold separately, or can also be sold 
alongside configured-to-order appliances. Our subscription term-based licenses typically have a term of one to five 
years. Our cloud-based SaaS subscriptions have terms extending up to five years. As we continue our transition 
toward a subscription-based business model, we expect a greater portion of our products to be delivered through 
subscription term-based licenses or cloud-based SaaS subscriptions.

Configured-to-order appliances, including our Nutanix-branded NX hardware line, can be purchased from one 

of our channel partners, original equipment manufacturers ("OEMs"), or directly from Nutanix. Super Micro 
Computer, Inc. ("Super Micro") and Flextronics Systems Limited ("Flextronics") pre-install our software on our 
Nutanix-branded NX series appliances. Dell Technologies ("Dell"), Lenovo Group Ltd. ("Lenovo"), International 
Business Machines Corporation ("IBM"), Fujitsu Technology Solutions GmbH ("Fujitsu"), Hewlett Packard 
Enterprise ("HPE") and Inspur Group ("Inspur") pre-install our software on their hardware to create the Dell XC 
Series, Lenovo Converged HX Series, IBM CS Series, Fujitsu XF Series, HPE DX Series and Inspur inMerge 1000 
Series appliances, respectively. Some of our OEM partners also sell associated support offerings.

Our enterprise cloud platform is typically purchased with one or more years of support and entitlements, which 
includes the right to software upgrades and enhancements as well as technical support. Purchases of non-portable 
software are typically accompanied by the purchase of a separate support and entitlement agreement. Purchases of 
term-based licenses and SaaS subscriptions have support and entitlements built into the license.

Our Support Programs

Product Support. We offer varying levels of product support to our customers based on their needs. We also 

offer premium support programs through our technical account managers and designated support engineers.

Professional Services. We provide consulting and implementation services to customers through our 

professional services team for assessment, design, deployment and optimizing of their Nutanix environments. We 
typically provide these services at the time of initial installation to help the customer with configuration and 
implementation.

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Our End Customers

Our solutions serve a broad range of workloads, including enterprise applications, databases, virtual desktop 
infrastructure, and big data analytics, and we support both virtualized and container-based applications. We have 
end customers across a broad range of industries, such as automotive, consumer goods, education, energy, 
financial services, healthcare, manufacturing, media, public sector, retail, technology and telecommunications. We 
also sell to service providers, who utilize our enterprise cloud platform to provide a variety of cloud-based services 
to their customers. We had a broad and diverse base of approximately 17,360 end customers as of July 31, 2020, 
including approximately 915 Global 2000 enterprises. We define the number of end customers as the number of 
end customers for which we have received an order by the last day of the period, excluding partners to which we 
have sold products for their own demonstration purposes. A single organization or customer may represent multiple 
end customers for separate divisions, segments or subsidiaries. The number of end customers grew from 
approximately 14,180 as of July 31, 2019 to approximately 17,360 as of July 31, 2020.

Our enterprise cloud platform is primarily sold through channel partners, including distributors, resellers and 

OEMs, and delivered directly to our end customers. Arrow Electronics, Inc., a distributor to our end customers, 
represented 18%, 24% and 29% of our total revenue for fiscal 2018, 2019 and 2020, respectively. Tech Data 
Corporation, another distributor to our end customers, represented 13%, 13% and 14% of our total revenue for 
fiscal 2018, 2019 and 2020, respectively.

Growth Strategy

Key elements of our growth strategy include:

• Continually innovate and maintain technology leadership. Since inception, we have rapidly innovated 

from supporting limited applications and a single hypervisor to a full enterprise cloud platform that is 
designed to support a wide variety of workloads across private, public and multicloud deployments. We 
intend to continue to invest heavily in developing our enterprise cloud platform with new features, services 
and products to expand our market opportunity.

•

Invest to acquire new end customers.  Since the completion of our first end customer sale in October 
2011, we have grown to approximately 17,360 end customers. We intend to grow our base of end 
customers by continuing to invest in sales and marketing, leveraging our network of channel partners and 
OEMs, furthering our international expansion and extending our enterprise cloud platform to address new 
customer segments. One area of continued focus is increasing our sales to new, and expanding our sales 
to existing, large enterprise customers.

• Continue to drive follow-on sales to existing end customers. Our end customers typically deploy our 

technology initially for a specific project or application deployment. Our sales teams and channel partners 
then seek to systematically target follow-on sales opportunities to drive additional purchases throughout our 
broader product portfolio. This land and expand strategy enables us to quickly expand our footprint within 
our existing end customer base from follow-on orders that in the aggregate are often multiples of the initial 
order.

• Enhanced focus on renewals. In addition to our land and expand strategy described above, as part of our 
transition to a subscription-based model, we have enhanced our focus on renewals, which are typically 
associated with lower sales costs. We have also commenced our transition to an ACV-based sales 
compensation structure starting in August 2020, which we expect will shorten the lengths of our contract 
terms, allowing us in turn to benefit from such efficiency gains associated with renewals. 

• Deepen engagement with current channel and OEM partners and establish additional routes to 

market to enhance sales leverage. We have established meaningful channel partnerships globally and 
have driven strong engagement and commercial success with several major resellers and distributors. We 
believe that our OEM relationships can augment our routes to market to accelerate our growth and that 
there is a significant opportunity to grow our sales with our channel partners and OEMs. We intend to attract 
and engage new channel and OEM partners around the globe while also selling our standalone software for 
deployment on qualified hardware or a hosted service to maximize the availability of our solutions for our 
customers.

4

•

Invest in rapid growth while remaining focused on our overall financial health. We intend to continue 
investing in our rapid growth, while balancing such growth against our operating expenses. By maintaining 
this balance, we believe we can drive toward our high growth potential without sacrificing our overall 
financial health.

Sales and Marketing

Sales. We primarily engage our end customers through our global sales force who directly interact with key IT 

decision makers while also providing sales development, opportunity qualification and support to our channel 
partners. We have established relationships with our channel partners, who represent many of the key resellers and 
distributors of datacenter infrastructure software and systems in each of the geographic regions where we operate. 
We also engage our end customers through our OEM partners, which license our software and package it with their 
hardware, and sell through their direct sales forces and channel partners.

Technology Alliances. We have developed relationships with a number of leading technology companies that 

help us deliver world-class solutions to our customers. Through our Technology Alliance Partner Program, our 
developer, application, hardware and infrastructure partners get access to resources that allow them to validate and 
integrate their products with Nutanix solutions and engage in joint sales training and enablement. In addition, we 
work closely with our technology partners through co-marketing and lead-generation activities in an effort to 
broaden our marketing reach and help us win new customers and retain existing ones.

Marketing. We supplement our sales efforts with marketing programs that include online advertising, 

corporate and third-party events, demand generation activities, social media promotions, media and analyst 
relations and community programs. More recently, in response to the global COVID-19 pandemic, we have 
transformed nearly all of our in-person marketing programs into digital experiences. For example, in September 
2020 we hosted our sixth annual .NEXT Conference in a completely digital format, where approximately 41,000 
digital attendees registered to learn about our current and future products and solutions. We also establish deep 
integration with our ecosystem of third-party technology partners and engage in joint marketing activities with them. 
Our channel partners have joined our integrated partner program, the Nutanix Elevate Partner Program, which 
provides market development funds, preferred pricing through deal registration, sales enablement and product 
training, innovative marketing campaigns and dedicated account support. We also coordinate with our OEM 
partners on joint marketing activities.

Research and Development

Our research and development efforts are focused primarily on improving current technology, developing new 
technologies in current and adjacent markets and supporting existing end customer deployments. Our research and 
development teams primarily consist of distributed systems software and user interface engineers. A large portion of 
our research and development team is based in San Jose, California. We also maintain research and development 
centers in India, North Carolina, Washington, Serbia and Germany. We plan to dedicate significant resources to our 
continued research and development efforts, and intend to continue to grow our global research and development 
and engineering teams to enhance our solutions, improve integration with new and existing ecosystem partners and 
broaden the range of IT infrastructure technologies that we converge into our enterprise cloud platform. We believe 
that these investments will contribute to our long-term growth, although they may adversely affect our profitability in 
the near term.

Research and development expense was $313.8 million, $500.7 million and $554.0 million for fiscal 2018, 

2019 and 2020, respectively. 

Manufacturing

We do not manufacture any hardware. The Nutanix-branded NX series appliances, including those that are 

delivered by us, are manufactured for us based on our specifications by two manufacturers, Super Micro and 
Flextronics. Super Micro and Flextronics assemble and test the Nutanix-branded NX series appliances and they 
generally procure the components used in the NX series appliances directly from third-party suppliers. Our 
agreement with Super Micro was renewed in May 2020 for one year and will automatically renew for successive 
one-year periods thereafter, with the option to terminate upon each annual renewal. Our agreement with Flextronics 
expires in November 2020 and automatically renews for successive one-year periods thereafter, with the option to 
terminate upon each annual renewal. Distributors handle fulfillment and shipment for certain end customers, but do 
not hold inventory.

5

Backlog

We typically accept and deliver orders within a short time frame. In general, customers may cancel or 
reschedule orders without penalty prior to delivery, and delivery schedules requested by customers in their 
purchase orders vary based upon each customer’s particular needs. As a result, we do not believe that our backlog 
at any particular time is a reliable indicator of future revenue.

Competition

We operate in the intensely competitive IT infrastructure market and compete primarily with companies that 
sell software to build and operate private clouds, integrated systems and standalone storage and servers, as well as 
providers of public cloud infrastructure solutions. These markets are characterized by constant change and rapid 
innovation. Our main competitors fall into the following categories:

•

•

•

software providers, such as VMware, Inc. ("VMware"), that offer a broad range of virtualization, 
infrastructure and management products to build and operate enterprise and hybrid clouds;

traditional IT systems vendors, such as Cisco Systems, Inc. ("Cisco"), Dell, HPE, Hitachi Data Systems 
("Hitachi"), IBM and Lenovo, that offer integrated systems that include bundles of servers, storage and 
networking solutions, as well as a broad range of standalone server and storage products; 

traditional storage array vendors, such as Dell, Hitachi and NetApp, Inc. ("NetApp"), which typically sell 
centralized storage products; and

• providers of public cloud infrastructure and SaaS-based offerings, such as Amazon.com, Inc. ("Amazon"), 

Google Inc. and Microsoft Corporation.

In addition, we compete against vendors of hyperconverged infrastructure products, such as Cisco, HPE, Dell, 

VMware and many smaller emerging companies. As our market grows, we expect it will continue to attract new 
companies as well as existing larger vendors. Some of our competitors may also expand their product offerings, 
acquire competing businesses, sell at lower prices, bundle with other products, provide closed technology platforms, 
partner with other companies to develop joint solutions, or otherwise attempt to gain a competitive advantage. 
Furthermore, as we expand our product offerings, we may expand into new markets and we may encounter 
additional competitors in such markets. Additionally, as companies increasingly offer competing solutions, they may 
be less willing to cooperate with us as an OEM or otherwise. For example, IBM recently acquired Red Hat, Inc. 
("Red Hat") and they may begin to prioritize selling Red Hat products instead of our products in its global consulting 
business. In addition, Dell owns a majority of the outstanding voting power of VMware, and a joint Dell and VMware 
offering would also compete directly with our core solutions. 

We believe the principal competitive factors in our market include:

• product features and capabilities;

•

system scalability, performance and resiliency;

• management and operations, including provisioning, troubleshooting, analytics, automation and upgrades;

•

total cost of ownership over the lifetime of the technology;

• product interoperability with third-party applications, infrastructure software, infrastructure systems and 

platforms and public clouds;

• application mobility across disparate silos of enterprise computing, including public and private cloud 

infrastructure; and

•

complete customer experience, including usability, support and professional services.

We believe we are positioned favorably against our competitors based on these factors. However, many of our 

competitors have substantially greater financial, technical and other resources, greater brand recognition, larger 
sales forces and marketing budgets, a larger existing customer base, broader distribution and larger and more 
mature intellectual property portfolios.

6

Intellectual Property

Our success depends in part upon our ability to protect and use our core technology and intellectual property. 

We rely on patents, trademarks, copyrights and trade secret laws, confidentiality procedures and employee 
nondisclosure and invention assignment agreements to protect our intellectual property rights. As of July 31, 2020, 
we had 195 United States patents that have been issued and 263 non-provisional patent applications pending in the 
United States. Our issued U.S. patents expire between 2031 and 2039. We also leverage open source software in 
most of our products.

See Item 1A, "Risk Factors," for further discussion of risks related to protecting our intellectual property.

Facilities

Our corporate headquarters are located in San Jose, California where, under lease agreements that expire 

through May 2024, we currently lease approximately 436,000 square feet of space. We also maintain offices in 
North America, Europe, Asia Pacific, the Middle East, Latin America and Africa. We lease all of our facilities and do 
not own any real property. We expect to add facilities as we grow our employee base and expand geographically. 
We believe that our facilities are adequate to meet our needs for the immediate future and that, should it be needed, 
suitable additional space will be available to accommodate the expansion of our operations.

Employees

We had approximately 6,170 employees worldwide as of July 31, 2020. None of our employees in the United 
States are represented by a labor organization or is a party to any collective bargaining arrangement. In certain of 
the European countries in which we operate, we are subject to, and comply with, local labor law requirements in 
relation to the establishment of works councils. We are often required to consult and seek the consent or advice of 
these works councils. We have never had a work stoppage and we consider our relationship with our employees to 
be good.

Information about Segment and Geographic Areas

The segment and geographic information required herein is contained in Note 13 of Notes to Consolidated 

Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.

Corporate Information

We were incorporated in Delaware in September 2009 as Nutanix, Inc. Our principal executive offices are 

located at 1740 Technology Drive, Suite 150, San Jose, California 95110, and our telephone number is (408) 
216-8360. We have operations throughout North America, Europe, Asia Pacific, the Middle East, Latin America and 
Africa. Our website address is www.nutanix.com. Information contained on or accessible through our website is 
neither a part of this Annual Report on Form 10-K nor incorporated by reference herein, and any references to our 
website and the inclusion of our website address in this Annual Report on Form 10-K are intended to be inactive 
textual references only.

7

Available Information

Our website is located at www.nutanix.com and our investors relations website is located at ir.nutanix.com. We 

file reports with the Securities and Exchange Commission ("SEC"), which maintains an internet site (http://
www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers, 
including us, that file electronically with the SEC. This Annual Report on Form 10-K, our Quarterly Reports on 
Form 10-Q, our Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to 
Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, are made available free of charge on 
the investor relations portion of our website as soon as reasonably practicable after we electronically file such 
material with, or furnish it to, the SEC. We also provide a link to the section of the SEC’s website at www.sec.gov 
that has, or will have, all of our public filings, including this Annual Report on Form 10-K and our Quarterly Reports 
on Form 10-Q, Current Reports on Form 8-K, all amendments to those reports, our Proxy Statements and other 
ownership-related filings. We use our investor relations website as well as social media as channels of distribution 
for important company information. For example, webcasts of our earnings calls and certain events we participate in 
or host with members of the investment community are on our investor relations website. Additionally, we announce 
investor information, including news and commentary about our business and financial performance, SEC filings, 
notices of investor events and our press and earnings releases, on our investor relations website. It is possible that 
the information we post on social media could be deemed to be material information. Therefore, we encourage 
investors, the media and others interested in our company to review the information we post on social media 
channels listed on our investor relations website. Investors and others can receive notifications of new information 
posted on our investor relations website in real time by signing up for email alerts and RSS feeds. Further corporate 
governance information, including our corporate governance guidelines, board committee charters and code of 
business conduct and ethics, is also available on our investor relations website under the heading "Governance." 
Information contained on or accessible through our websites are neither a part of nor incorporated by reference into 
this Annual Report on Form 10-K or any other report or document we file with or furnish to the SEC, and any 
references to our websites and the inclusion of our website addresses in this Annual Report on Form 10-K are 
intended to be inactive textual references only.

Item 1A. Risk Factors

You should carefully consider the risks and uncertainties described below, together with all of the other 

information contained in this Annual Report on Form 10-K, including our consolidated financial statements and 
related notes, before making a decision to invest in our Class A common stock. The risks and uncertainties 
described below are not the only ones we face; additional risks and uncertainties that we are unaware of, or that 
we currently believe are not material, may also become important factors that affect our business. If any of the 
following risks occur, our business, financial condition, operating results and prospects could be materially 
harmed. In that event, the price of our Class A common stock could decline, and you could lose part or all of your 
investment. In addition, the impact of the COVID-19 pandemic and any worsening of the economic environment 
may exacerbate the risks described below, any of which could have a material impact on us. The situation is 
changing rapidly, and additional impacts may arise that we are not currently aware of.

8

Risks Related to Our Business and Industry

The effects of the COVID-19 pandemic and the actions taken in response, including our own, have materially 
affected, and will continue to materially affect, how we and our customers and partners are operating our 
businesses, and the extent to which the effects of the pandemic and such actions will impact our business, 
financial performance, results of operations and stock price remain highly uncertain and difficult to predict.

The ongoing and rapidly evolving COVID-19 pandemic has caused, and continues to cause, significant 
disruptions to the flow of the economy and is putting unprecedented strains on governments, health care systems, 
educational institutions, businesses and individuals around the world, including in nearly all of the regions in which 
we operate, and has resulted in significant volatility and uncertainty in the global economy. In response to the 
pandemic, authorities, businesses, and individuals have implemented, and are continuing to implement, numerous 
unprecedented measures, including travel bans and restrictions, quarantines, shelter-in-place, stay-at-home, remote 
work and social distancing orders, and shutdowns. Such measures have impacted and will continue to impact our 
workforce and operations, as well as those of our customers, vendors, suppliers, and partners, and may result in a 
prolonged recession or depression that could further materially and adversely affect the global economy and our 
business even beyond the duration of the pandemic. Furthermore, different jurisdictions are in varying stages of 
restrictions and have achieved varying degrees of success at controlling the spread of the pandemic, with many 
jurisdictions seeing a resurgence in COVID-19 cases and subsequently having to halt or reverse their reopening 
plans. As such, we cannot predict, with any degree of certainty, the ultimate duration and severity of the adverse 
effects of the COVID-19 pandemic and the measures taken in response to the pandemic on the global economy 
and our business, or the likelihood or frequency of future resurgence of the COVID-19 pandemic or other similar 
major public health concerns.

In response to the COVID-19 pandemic, we have taken steps to protect and assist our employees, customers, 

vendors, suppliers, and partners, including by: temporarily closing all of our offices (including our California 
headquarters) around the world; encouraging our employees to work remotely; implementing travel restrictions that 
prohibit all non-essential business travel; postponing, cancelling, withdrawing from, or converting to virtual-only 
experiences (where possible and appropriate) our in-person customer, industry, analyst, investor, and employee 
events, including our 2020 .NEXT customer and partner events, our 2020 Investor Day, and our fiscal 2021 sales 
kick off; and offering extended payment terms of up to 60 days to certain partners through July 2020. Such 
measures may have a significant negative impact on a number of areas of our business, including but not limited to: 
the productivity of our workforce, and in particular our sales and services teams; our ability to ramp newer sales 
teams in a fast and effective manner; our ability to obtain new and retain existing customers and partners; our win 
and renewal rates; our ability to collect payments from our partners in a timely manner; the efficiency of our demand 
generation activities; and/or our ability to maintain or increase our pipeline of potential opportunities. For example, 
our ability to close transactions with customers and partners, particularly new customers and partners who do not 
have prior experience with our solutions, may be negatively impacted, potentially significantly, as a result of such 
measures. Furthermore, we have taken, and expect to continue to take, additional actions to manage our operating 
expenses in response to the COVID-19 pandemic, including, but not limited to: implementing a 10% reduction in 
executive salaries, effective April 2020; pausing all merit salary increases and bonus payments; and implementing 
two, non-consecutive, mandatory one-week furloughs for our employees in the U.S., along with two, non-
consecutive, voluntary one-week unpaid leave periods for our employees outside the U.S., in a period spanning 
May to October 2020. We remain unable to predict whether such measures will be sufficient or effective at reducing 
our operating expenses in any given period, or whether additional actions will be required. In addition, such 
measures may have a material adverse impact on our business, financial performance, results of operations and 
the price of our Class A common stock. For instance, as a result of the current hiring pause, it may be hard for us to 
return to or accelerate growth in the future. Additionally, even if we decide to end the current hiring pause, it may be 
more difficult to effectively hire, ramp and retain a sufficient number of key employees, especially if formal or 
informal travel and other restrictions remain in place even after the COVID-19 pandemic has ended. 

The COVID-19 pandemic and the measures taken in response to the pandemic, including our own, have 
already caused, and may continue to cause, various adverse effects on the global economy and our business. 
Those effects include, but are not limited to:

•

Decisions by our customers and potential customers, particularly in industries most impacted by the 
COVID-19 pandemic, including transportation, hospitality, retail, energy, education, and healthcare, to 
reduce IT spending or delay or abandon their planned or future purchases, which may reduce the 
demand for our solutions and/or result in extended sales cycles;

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•

Decisions by our customers to purchase our software solutions on shorter subscription terms than they 
have historically, and/or request to only pay for the initial year of a multi-year subscription term upfront, 
which could negatively impact our financial performance, and our cash flow in particular, when 
compared to historical periods;

• Our customers and partners experiencing liquidity issues or entering bankruptcy or similar proceedings, 

which would impact our ability to collect payments in a timely manner, if at all;

•

•

•

•

•

•

•

•

•

•

•

Potential shifts in industry trends, for example, towards large public cloud providers, which may reduce 
the demand for our solutions;

An inability to meet in person or otherwise effectively communicate with our current or potential 
customers, vendors, suppliers, and partners, which may negatively affect our current and future 
relationships with such customers, vendors, suppliers, and partners and our ability to generate demand 
for our solutions;

Additional delays, cancellations, or changes to user and industry conferences and other marketing 
events relating to our solutions, including our own customer and partner events, which may negatively 
impact our ability to obtain new and retain existing customers, and effectively market our solutions;

Delays or disruptions in our or our partners’ supply chains and data center operations, including delays 
or disruptions in procuring and shipping, or an inability to procure or ship, the hardware appliances on 
which our software solutions run, including our Nutanix-branded NX hardware line, which may 
negatively affect our ability to close transactions with our customers and partners and/or to recognize 
the revenue from those transactions;

Delays or disruptions in procuring the hardware platforms on which our Xi Cloud Services solutions run, 
which may negatively affect our ability to provide our current and/or planned Xi Cloud Services;

An inability to provide 24x7 worldwide support and/or replacement parts to our end customers;

Delays or disruptions to our product roadmap, and our ability to deliver new products, features, or 
enhancements in a timely manner or at all;

Increased cyberattacks and security challenges as our employees and those of our partners, customers 
and service providers work remotely from non-corporate managed networks during the ongoing 
COVID-19 pandemic and potentially beyond;

Adoption of new laws or regulations, or changes to existing laws or regulations, including any 
restrictions or health and safety requirements that may be imposed if and when we start re-opening our 
global offices and any new or additional restrictions against immigration and travel (such as 
cancellations or restrictions on the availability of visas, delays in the issuance of visas or suspensions of 
entry), which may create additional regulatory uncertainty and cause us to incur additional expenses in 
order to comply with, or due to delays or changes caused or mandated by, such laws or regulations 
and/or materially impair our ability to hire and retain skilled professionals;

Difficulties or delays in ramping, training, and retaining new sales teams in an effective manner due in 
part to the inability to provide in-person trainings;

Negative physical and mental health impacts on, and resulting unavailability or reduced productivity of, 
our key executives or other employees as a result of such employees or their family members 
contracting the virus, being placed in quarantine or self-isolation, being in jurisdictions where travel or 
other activities remain restricted, or due to prolonged social isolation or distancing measures;

10

•

•

•

•

A significant and/or prolonged decline in, or increase in volatility relating to, the global financial and 
other capital markets, including significant and prolonged volatilities in stock prices, interest rates and 
exchange rates, and/or or a potential global recession or depression, which would adversely affect, 
potentially materially, our business and stock price, as well as our ability to access capital markets on 
terms favorable or acceptable to us, if at all;

Changes in our internal controls, policies and procedures due to remote work arrangements, which may 
result in significant deficiencies or material weaknesses in our internal controls in the preparation of our 
financial reports, and the resulting increased costs of controls and compliance oversight activities;

An inability to execute our business continuity plans and/or maintain our critical business processes; 
and

Increased quarterly fluctuations in, and an inability to forecast or difficulties or delays in forecasting, our 
financial performance or results of operations, as well as related impacts to any financial guidance we 
may issue from time to time, including any modification or withdrawal thereof.

The duration, scope and ultimate impact of the COVID-19 pandemic and the actions taken in response on the 
global economy and our business remain highly fluid, cannot be predicted with any degree of certainty, and will be 
highly dependent upon numerous factors, many of which are beyond our control, including the actions of 
governments, businesses and other enterprises in response to the pandemic and the extent and effectiveness of 
those actions. While governments and central banks in several parts of the world have enacted fiscal and monetary 
stimulus measures to counteract the negative macroeconomic impacts of COVID-19 pandemic, the effectiveness 
and adequacy of such stimulus measures, as well as their future availability, remain uncertain. The discontinuation 
or reduction in scope of such stimulus measures may cause a further decline in the global macroeconomic 
conditions and financial hardships for our customers and partners, thereby exacerbating the adverse effects of the 
pandemic on our business, including those described above. If we are not able to effectively respond to and 
manage the impact of the COVID-19 pandemic, our business, financial performance, results of operations, and the 
price of our Class A common stock will be negatively affected, potentially materially.

We have a history of losses and we may not be able to achieve or maintain profitability in the future. 

We have incurred net losses in all periods since our inception, and we expect that we will continue to incur net 
losses for the foreseeable future. We experienced net losses of $297.2 million, $621.2 million and $872.9 million for 
fiscal 2018, 2019 and 2020, respectively. As of July 31, 2020, we had an accumulated deficit of $2.5 billion. In 
addition to the investments we expect to continue to make to grow our business, we also incur and expect to 
continue incurring significant additional legal, accounting and other expenses as a public company. If we fail to 
increase our revenue and manage our expenses, we may not achieve or sustain profitability in the future. 

Our transition to a subscription-based business model has resulted in, and may continue to result in, a 
compression to our topline results, and if we fail to successfully manage the transition, our business, 
operating results and free cash flow may be adversely affected.

We are currently transitioning to a subscription-based business model and may undergo additional business 
model changes in the future in order to adapt to changing market demands. Our transition to a subscription-based 
business model entails significant known and unknown risks and uncertainties, and we cannot assure you that we 
will be able to complete the transition to a subscription-based business model, or manage the transition successfully 
and in a timely manner. If we do not complete the transition, or if we fail to manage the transition successfully and in 
a timely manner, our revenues, business and operating results may be adversely affected. Moreover, we may not 
realize all of the anticipated benefits of the subscription transition, even if we successfully complete the transition. 
The transition to a subscription-based business model also means that our historical results, especially those 
achieved before we began the transition, may not be indicative of our future results.

11

Regardless of how we manage the transition, our total billings and revenue have been and will continue to be 
adversely impacted by the transition, particularly when compared to historical periods, due primarily to two factors. 
First, and most important, subscription-based sales, including sales of term-based licenses where revenue is 
currently recognized upfront, may in some instances have a lower total dollar value than sales of licenses for the life 
of the device because they may be of a shorter term than the actual or assumed life of the device. If we are unable 
to increase the volume of our subscription-based sales in any given period to make up for the lower total dollar 
value of certain subscription-based sales, our total billings and revenue for such period will be negatively impacted. 
Second, and of lesser significance, the revenue associated with certain SaaS subscription purchases, such as 
Nutanix Xi Cloud Services, will be recognized ratably over the term of the subscription, resulting in less upfront 
revenue as compared to our term-based licenses and historical life-of-device licenses. These factors may also 
make it difficult to increase our revenue in a given period through additional sales in the same period. 

In addition, due to the generally shorter terms of subscription-based licenses as compared to our historical life-

of-device licenses, maintaining our historically high customer renewal rates and minimizing customer churn will 
become increasingly important. Our subscription customers have no obligation to renew their subscriptions for our 
solutions after the expiration of the subscription term, and may decide not to renew their subscriptions, or to renew 
only for a portion of our solutions or on pricing terms that are less favorable to us. Our customers’ renewal rates 
may decline or fluctuate as a result of a number of factors, including their level of satisfaction with our solutions, 
their ability to continue their operations and spending levels, the pricing of our solutions and the availability of 
competing solutions at the time of renewal or hardware refresh. We anticipate that our subscription-based model will 
require us to dedicate additional resources toward educating our existing and potential customers as to the benefits 
of the subscription model and our solutions generally, and to re-train our seasoned sales employees, who have 
historically focused on appliance sales and selling software licenses for the life of the device, on selling 
subscription-based licenses in order to maintain and increase their productivity. As a result, our sales and marketing 
costs may increase. 

In addition, we have adjusted, and may in the future need to further adjust, our go-to-market cost structure, 

particularly as it relates to how we structure, effect, and compensate our sales teams, including for renewal 
transactions, to become more efficient as we transition to the subscription-based business model. In particular, to 
align with the new subscription-based business model, starting in fiscal 2021, we adjusted our sales compensation 
structure, which was previously based primarily on total contract value, to one that is based primarily on annual 
contract value ("ACV"), which will likely cause our average contract term lengths to decline and could negatively 
impact our operating and free cash flows, potentially significantly. Those adjustments may negatively affect the 
productivity of our sales teams, cause our sales teams to prioritize shorter-term transactions, cause a change in the 
mix of solutions sold and the mix of revenue among solutions sold, and cause our renewal rates to fluctuate or 
decline, and there is no assurance that we will be able to successfully implement the adjustments in a timely or 
cost-effective manner, or that we will be able to realize all or any of the expected benefits from such adjustments. If 
our customers do not renew their subscriptions for our solutions, demand pricing or other concessions prior to 
renewal, or if our renewal rates fluctuate or decline, our total billings and revenue will fluctuate or decline, and our 
business and financial results will be negatively affected.

Additional risks associated with our transition to a subscription-based business model include, but are not 

limited to: 

•

•

•

•

if current or prospective end customers prefer our historical life-of-device licenses, adoption of our 
subscription-based model may not meet our expectations, or may take longer to achieve than 
anticipated;

potential confusion of or creation of concerns among current or prospective end customers and channel 
partners, including concerns regarding changes to our pricing models;

we may be unsuccessful in implementing or maintaining subscription-based pricing models, or we may 
select a pricing model that is not optimal and could negatively affect adoption, renewal rates and our 
business results;

our end customers may shift purchases to our lower priced subscription offerings, which could 
negatively affect our overall financial results;

12

•

•

•

•

•

•

•

when purchasing multi-year term-based subscription licenses, or as a result of our recently announced 
sales compensation model change to one that is based primarily on ACV, we may see an increase in 
the number of customers who choose to pay for only the first year of the applicable term upfront, 
instead of the full term as we have seen historically, which would negatively impact our operating and 
free cash flows, potentially significantly, and as a result we may need to raise additional capital which 
we may not be able to do on terms favorable or acceptable to us, or at all;

our relationships with existing channel partners that are accustomed to selling life-of-device licenses 
may be damaged, and we may be required to dedicate additional time and resources to educate our 
channel partners about our transition, each of which may negatively affect our business and financial 
results;

we may see increased discounting behavior from our sales employees and, if we are unable to monitor, 
prevent and manage such discounting behavior successfully and in a timely manner, our business and 
financial results will be negatively affected;

if we are unsuccessful in adjusting our go-to-market cost structure, or in doing so in a timely or cost-
effective manner, we may incur sales compensation costs at a higher than expected sales 
compensation costs, particularly if the pace of our subscription transition is faster than anticipated;

we may face additional and/or different financial reporting obligations, which could increase the costs 
associated with our financial reporting and investor relations activities; 

similarly to our decision to start reporting ACV billings and run-rate ACV, we may choose to supplement 
our financial reporting with new or different metrics, which could increase the costs associated with our 
financial reporting and may be difficult for investors to understand; and

investors, industry and financial analysts may have difficulty understanding the shift in our business 
model, resulting in changes in analysts' financial estimates or failure to meet investor expectations.

Finally, our transition to a subscription-based business model as an IT infrastructure and platform company 
has few, if any, precedents, and there are many risks or uncertainties that may remain unknown to us until we have 
gathered more information as part of the transition. If we fail to anticipate these unknowns, whether due to a lack of 
information, precedent, or otherwise, or if we fail to properly manage expected risks and/or execute on our transition 
to a subscription-based business model, our business and operating results, and our ability to accurately forecast 
our future operating results, may be adversely affected.

The markets in which we compete are rapidly evolving, which make it difficult to forecast end customer 
adoption rates and demand for our solutions. 

The markets in which we compete are rapidly evolving. Accordingly, our future financial performance will 
depend in large part on the allocation of spending in traditional IT markets and on our ability to adapt to new market 
demands. Currently, sales of our solutions are dependent in large part upon replacement of spending in traditional 
markets, including x86 servers, storage systems and virtualization software. In addition, as we continue to develop 
new solutions designed to address new market demands, such as Nutanix Xi Cloud Services, sales of our solutions 
will in part depend on capturing new spending in these markets, including hybrid cloud services. If these markets 
experience a shift in customer demand, or if customers in these markets focus their new spending on, or shift their 
existing spending to, public cloud solutions or other solutions that do not interoperate with our solutions more 
quickly or more extensively than expected, our solutions may not compete as effectively, if at all. It is also difficult to 
predict end customer demand or adoption rates for our solutions or the future growth of our market. 

If end customers do not adopt our solutions, our ability to grow our business and operating results may be 
adversely affected. 

Traditional IT infrastructure architecture is entrenched in the datacenters of many of our end customers 
because of their historical financial investment in existing IT infrastructure architecture and the existing knowledge 
base and skillsets of their IT administrators. As a result, our sales and marketing efforts often involve extensive 
efforts to educate our end customers as to the benefits and capabilities of our solutions, particularly as we introduce 
new products and continue to pursue large organizations as end customers. If we fail to achieve market acceptance 
of our solutions, our ability to grow our business and our operating results will be adversely affected. 

13

Our historical financial performance, including revenue growth, may not be indicative of our future 
performance. 

Our historical financial performance, including revenue growth, may not be indicative of our future 

performance. For example, while we have historically experienced significant revenue growth, our total revenue 
growth slowed in recent periods, due in large part to our transitions from hardware to software-only sales, and from 
life-of-device to a subscription license model, and these transitions make it difficult to compare historical results. 
Similarly, while we saw improvements in our pipeline generation in recent periods as a result of our investments in 
sales and marketing activities, including the hiring of additional sales people, those improvements may not continue, 
and the returns on these initiatives may not be as high or may take longer to realize than expected, and may impact 
our revenue growth and profitability in the near future.

In addition, as a result of our transition toward a subscription-based model, our revenue may continue to be 
impacted in the short term. The revenue associated with certain subscription purchases, such as with Nutanix Xi 
Cloud Services, will be recognized ratably over the term of the subscription, resulting in less upfront revenue as 
compared to our historical life-of-device and term-based software-only transactions. Also, the revenue we recognize 
from subscription sales, even if recognized upfront, may in some instances have a lower total dollar value than 
those associated with licenses for the life of the device because they may be of a shorter term than the life of the 
device. Furthermore, such downward impact on average term lengths may be exacerbated by our recently 
announced transition to an ACV-based sales compensation structure. This may also make it difficult to rapidly 
increase our revenue in any period through additional sales. 

Following our transition to software-only sales and due to the ongoing transition toward a subscription-based 

model, our success will also depend heavily on the ability of our sales team to adjust their strategy to focus on 
software-only and subscription-based sales effectively and in a timely manner. Furthermore, our customers may not 
understand these changes to our product sales, and investors, industry and financial analysts may have difficulty 
understanding the changes to our business model, resulting in changes in financial estimates or failure to meet 
investor expectations. As our business changes, the transitions may make it more difficult to accurately project our 
operating results or plan for future growth. Accordingly, you should not rely on our revenue growth for any prior 
periods as an indication of our future revenue or revenue growth.

We have experienced rapid growth in prior periods and we may not be able to sustain or manage any future 
growth effectively. 

We have expanded our overall business and operations significantly in prior periods. Our employee headcount 

increased significantly since our inception, and we may have significant headcount increases in the future. We 
anticipate that our operating expenses will increase in the long term as we scale our business, including in 
developing and improving our new and existing solutions, expanding our sales and marketing capabilities and 
global coverage, and in providing general and administrative resources to support our growth. However, as 
discussed above in the section titled "Impact of the COVID-19 Pandemic," in response to the COVID-19 pandemic 
we have proactively taken steps to reduce our expenses and, as a result, our operating expenses may fluctuate 
from quarter to quarter in the near-term. In addition, as we continue to grow our business in the long-term, we must 
effectively train, integrate, develop, motivate and retain a large number of new employees, as well as existing 
employees who are promoted or moved into new roles, while maintaining the effectiveness of our business 
execution. The failure to manage these changes could significantly delay the achievement of our strategic 
objectives. In particular, our success depends heavily on our ability to ramp new sales teams in a fast and effective 
manner and retain those sales teams. We must also continue to improve and expand our IT and financial 
infrastructure, management systems and product management and sales processes. We expect that our future 
growth will continue to place a significant strain on our management, operational and financial resources, and we 
may not be able to sustain or manage any future growth effectively. We may incur costs associated with future 
growth prior to or without realizing the anticipated benefits, and the return on these investments may be lower, if 
any, or may develop more slowly than we expect. For example, in February 2019 we announced initiatives to 
increase pipeline growth through additional investments in sales and marketing activities, including increased 
demand generation spending, and the hiring of additional sales people. While we saw improvements in these areas 
in recent quarters, those improvements may not continue, including as a result of the actions we have taken to 
reduce expenses as a result of the COVID-19 pandemic, and the returns on these initiatives may not be as high or 
may take longer to realize than expected, and may impact our revenue growth and profitability in the near future.

14

If we are unable to sustain or manage our growth effectively, we may not be able to take advantage of market 

opportunities. We also may fail to satisfy end customers’ requirements, maintain product quality, execute on our 
business plan or respond to competitive pressures, any of which could adversely affect our business, operating 
results, financial condition and prospects. 

We believe our long-term value as a company will be greater if we focus on growth, which may negatively 
impact our profitability in the near term. 

Part of our business strategy is to primarily focus on our long-term growth. As a result, our profitability may be 
lower in the near term than it would be if our strategy was to maximize short-term profitability. Expenditures related 
to expanding our research and development efforts, sales and marketing efforts, our transition to a subscription-
based business model, infrastructure and other such investments may not ultimately grow our business or cause 
long-term profitability. If we are ultimately unable to achieve profitability at the level anticipated by analysts and our 
stockholders, the price of our Class A common stock may decline, potentially significantly. 

The enterprise IT market is rapidly changing and expanding, and we expect competition to continue to 
intensify in the future from both established competitors and new market entrants. 

We operate in the intensely competitive enterprise infrastructure market and compete primarily with companies 

that sell software to build and operate enterprise clouds, integrated systems and standalone storage and servers, 
as well as providers of public cloud infrastructure solutions. These markets are characterized by constant change 
and rapid innovation. Our main competitors fall into the following categories: 

•

•

•

•

software providers, such as VMware, that offer a broad range of virtualization, infrastructure and 
management products to build and operate enterprise and hybrid clouds;

traditional IT systems vendors, such as Cisco, Dell, HPE, Hitachi, IBM and Lenovo, that offer integrated 
systems that include bundles of servers, storage and networking solutions, as well as a broad range of 
standalone server and storage products;

traditional storage array vendors, such as Dell, Hitachi and NetApp, which typically sell centralized 
storage products; and

providers of public cloud infrastructure and SaaS-based offerings, such as Amazon, Google Inc. and 
Microsoft Corporation.

In addition, we compete against vendors of hyperconverged infrastructure and software-defined storage 

products, such as Cisco, HPE, Dell, VMware and many smaller emerging companies. As our market grows, we 
expect it will continue to attract new companies as well as existing larger vendors. Some of our competitors may 
also expand their product offerings, acquire competing businesses, sell at lower prices, bundle with other products, 
provide closed technology platforms, partner with other companies to develop joint solutions, or otherwise attempt 
to gain a competitive advantage. Furthermore, as we expand our product offerings, we may expand into new 
markets and we may encounter additional competitors in such markets. Additionally, as companies increasingly 
offer competing solutions, they may be less willing to cooperate with us as an original equipment manufacturer 
("OEM" and, collectively, "OEMs") or otherwise. For example, IBM recently acquired Red Hat and they may begin to 
prioritize selling Red Hat products instead of our products in its global consulting business. In addition, Dell owns a 
majority of the outstanding voting power of VMware, and a joint Dell and VMware offering has competed and will 
likely continue to compete directly with our solutions. As a result, Dell is and will continue to be incentivized to sell 
its own solutions over our products.

15

Many of our existing competitors have, and some of our potential competitors may have, competitive 

advantages over us, such as longer operating histories, significantly greater financial, technical, marketing or other 
resources, stronger brand awareness and name recognition, larger intellectual property portfolios and broader 
global presence and distribution networks. Moreover, our current or potential competitors may be acquired by third 
parties with greater available resources and the ability to initiate or withstand substantial price competition. 
Furthermore, some of our competitors have access to larger customer bases and supply a wide variety of products 
to, and have well-established relationships with, our current and prospective end customers. Some of these 
competitors have in the past and may in the future take advantage of their existing relationships with end 
customers, distributors or resellers to provide incentives to such current or prospective end customers that make 
their products more economically attractive or to interfere with our ability to offer our solutions to our end customers. 
Our competitors may also be able to offer products or functionality similar to ours at a more attractive price, such as 
by integrating or bundling their solutions with their other product offerings or those of technology partners or 
establishing cooperative relationships with other competitors, technology partners or other third parties. Potential 
end customers may prefer to purchase from their existing suppliers rather than a new supplier, especially given the 
significant investments that they have historically made in their legacy infrastructures. Some of our competitors may 
also have stronger or broader relationships with technology partners than we do, which could make their products 
more attractive than ours. As a result, we cannot assure you that our solutions will compete favorably, and any 
failure to do so could adversely affect our business, operating results and prospects. 

Developments or improvements in enterprise IT infrastructure technologies may materially and adversely 
affect the demand for our solutions. 

Significant developments in enterprise IT infrastructure technologies, such as advances in storage, 

virtualization, containers, networking, disaster recovery, edge computing, management software and public cloud 
and hybrid cloud infrastructure solutions, may materially and adversely affect our business, operating results and 
prospects in ways we do not currently anticipate. For example, improvements in hybrid cloud technologies, such as 
improvements in orchestration and automation tools or new or improved interoperability between historically on-
premises enterprise cloud technologies with public cloud platforms, could emerge as a preferred alternative to our 
solutions, especially if they are introduced to the market before ours are. Any failure by us to develop new or 
enhanced technologies or processes, to react to changes or advances in existing technologies or to correctly 
anticipate these changes or advances as we create and invest in our product roadmap, could materially delay our 
development and introduction of new solutions, which could result in the loss of competitiveness of our solutions, 
decreased revenue and a loss of market share to competitors. In addition, public cloud infrastructure offers 
alternatives to the on-premises infrastructure deployments that our platform currently primarily supports. Various 
factors could cause the rate of adoption of public cloud infrastructure to increase, including the on-going COVID-19 
pandemic, continued or accelerated decreases in the price of public cloud offerings, increased interoperability with 
on-premises infrastructure solutions that compete with our solutions, and improvements in the ability of public cloud 
providers to deliver reliable performance, enhanced security, better application compatibility and more precise 
infrastructure control. Any of these factors could make our platform less competitive as compared to the public 
cloud, and could materially and adversely affect the demand for our solutions. 

16

If other IT vendors do not cooperate with us to ensure that our solutions interoperate with their products, 
including by providing us with early access to their new products or information about their new products, 
our product development efforts may be delayed or impaired, which could adversely affect our business, 
operating results and prospects. 

Our solutions provide a platform on which software applications and hypervisors from different software 
providers run. As a result, our solutions must interoperate with our end customers’ existing hardware and software 
infrastructure, specifically their networks, servers, software and operating systems, as well as the applications that 
they run on this infrastructure, which may be manufactured and provided by a wide variety of vendors and OEMs. In 
addition to ensuring that our solutions interoperate with these hardware and software products initially, we must 
occasionally update our software to ensure that our solutions continue to interoperate with new or updated versions 
of these hardware and software products. Current or future providers of hardware, software applications, 
hypervisors or data management tools could make changes that would diminish the ability of our solutions to 
interoperate with them, and significant additional time and effort may be necessary to ensure the continued 
compatibility of our solutions, which might not be possible at all. Even if our solutions are compatible with those of 
other providers, if they do not certify or support our solutions for their systems or cooperate with us to coordinate 
troubleshooting and hand off of support cases, end customers may be reluctant to buy our solutions, which could 
decrease demand for our solutions and harm our ability to achieve a return on the investments and resources that 
we have dedicated to ensuring compatibility. Developing solutions that interoperate properly requires substantial 
partnering, capital investment and employee resources, as well as the cooperation of the vendors or developers of 
the software applications and hypervisors both with respect to product development and product support. Vendors 
may not provide us with early or any access to their technology and products, assist us in these development 
efforts, certify our solutions, share with or sell to us any APIs, formats, or protocols we may need, or cooperate with 
us to support end customers. If they do not provide us with the necessary access, assistance or proprietary 
technology on a timely basis or at all, we may experience product development delays or be unable to ensure the 
compatibility of our solutions with such new technology or products. To the extent that vendors develop products 
that compete with ours, they have in the past, and may again in the future, withhold their cooperation, decline to 
share access, certify our solutions or sell or make available to us their proprietary APIs, protocols or formats or 
engage in practices to actively limit the functionality, or compatibility, and certification of our products. If any of the 
foregoing occurs, our product development efforts may be delayed or impaired, our solutions could become less 
attractive to end customers resulting in a decline in sales, and our business, operating results and prospects may 
be adversely affected. 

If we fail to successfully execute on our plan to sell more cloud services, which would be sold on a ratable 
subscription-basis, our results of operations could be adversely affected.

We have sold and anticipate selling more of our products and services as cloud-based offerings - which 
include offerings hosted on public cloud infrastructure as well as part of our own Nutanix Xi Cloud Services - on a 
ratable subscription basis. While cloud-based offerings currently make up a small portion of our business, this shift 
has required and will continue to require a considerable investment of resources and will continue to divert 
resources and increase costs, especially in cost of license and other revenues, in any given period. We have also 
made, and intend to continue to make, investments in the supporting infrastructure for such cloud-based offerings 
that we host, and may not recoup the costs of such investments. Such investments of resources may also not 
improve our long-term growth and results of operations. Further, the increase in some costs associated with our 
cloud-based services may be difficult to predict over time, especially in light of our lack of historical experience with 
the costs of delivering cloud-based versions of our solutions. 

We believe our plan has certain advantages; however, it also presents a number of risks to us including, but 

not limited to, the following:

•

•

arrangements entered into on a ratable subscription basis may delay when we can recognize revenue, 
even when compared to similar term-based subscription sales, which we currently recognize upfront, 
and can require up-front costs, which may be significant;

since revenue is recognized ratably over the term of the customer agreement, any decrease in 
customer purchases of our ratable subscription-based products and services will not be fully reflected in 
our operating results until future periods. This will also make it difficult for us to increase our revenue 
through additional ratable subscription sales in any given period;

17

•

•

cloud-based ratable subscription arrangements are generally under short-term agreements. 
Accordingly, our customers generally have no long-term obligation to us and may cancel their 
subscription at any time, even if our customers are satisfied with our cloud-based subscription products; 
and

there is no assurance that the cloud-based solutions we offer on a ratable subscription basis, including 
new products that we may introduce, will receive broad marketplace acceptance.

If we fail to properly execute on our plan to sell more of our products and services as cloud-based offerings on 

a ratable subscription basis, our business and operating results would be adversely affected, and the price of our 
Class A common stock could decline.

If we fail to develop or introduce new or enhanced solutions on a timely or cost-effective basis, our ability to 
attract and retain end customers could be impaired and our brand, reputation and competitive position 
could be harmed. 

We operate in a dynamic environment characterized by rapidly changing technologies and industry standards 
and technological obsolescence. We will need to continue to create valuable software solutions and integrate these 
solutions across hardware platforms. To compete successfully, we must design, develop, market and sell new or 
enhanced solutions that provide increasingly higher levels of performance, capacity, scalability, security, 
interoperability, application mobility and reliability and meet the cost expectations of our end customers. The 
introduction of new products by our competitors, the market acceptance of products based on new or alternative 
technologies, or the emergence of new industry standards could render our existing or future solutions obsolete or 
less attractive to end customers. Any failure to anticipate or develop new or enhanced solutions or technologies in a 
timely or cost-effective manner in response to technological shifts, could result in decreased revenue and harm to 
our business and prospects. Any new feature or application that we develop or acquire may not be introduced in a 
timely or cost-effective manner and may not achieve broad market acceptance and investments in research and 
development or efforts to optimize our engineering cost structure may not be successful. In particular, if we fail to 
timely release new products, technology or services that we previously announced, our brand and reputation could 
be harmed. If we fail to introduce new or enhanced solutions that meet the needs of our end customers or penetrate 
new markets in a timely fashion, we will lose market share and our business, operating results and prospects will be 
adversely affected.

If we are not successful in executing our strategy to increase sales of our solutions to new and existing large 
organizations, service providers and government entities, our operating results may suffer. 

Our growth strategy is dependent in large part upon increasing sales of our solutions to new and existing large 

enterprises, service providers and government entities, particularly when such sales result in large orders for our 
solutions. Sales to these end customers involve risks that may not be present, or that are present to a lesser extent, 
with sales to smaller end customers, which can act as a disincentive to our sales team to pursue these larger end 
customers. These risks include: 

•

•

competition from companies that traditionally target larger enterprises, service providers and 
government entities and that may have pre-existing relationships or purchase commitments from such 
end customers;

increased purchasing power and leverage held by large end customers in negotiating contractual 
arrangements with us;

• more stringent requirements in our support service contracts, including demand for quicker support 

response times and penalties for any failure to meet support requirements; and

•

longer sales cycles and the associated risk that substantial time and resources may be spent on a 
potential end customer that elects not to purchase our solutions.

18

Large organizations often undertake a significant evaluation process that results in a lengthy sales cycle. 
Although we have a channel sales model, our sales representatives typically engage in direct interaction with our 
prospective end customers as well as our distributors and resellers. We typically provide evaluation products to 
these end customers and may spend substantial time, effort and money in our sales efforts to these prospective 
end customers. In addition, product purchases by large organizations are frequently subject to budget constraints, 
multiple approvals and unanticipated administrative, processing and other delays. Finally, large organizations 
typically have longer implementation cycles, require greater product functionality and scalability, require a broader 
range of services, demand that vendors take on a larger share of risks, require acceptance provisions that can lead 
to a delay in revenue recognition and expect greater payment flexibility. Given these variables, it can be difficult for 
us to estimate when an expected sale from a large organization, service provider or government entity may occur, 
and our ability to accurately forecast our future operating results may be adversely affected. If we fail to realize an 
expected sale from a large end customer in a particular quarter or at all, our business and operating results could 
be adversely affected. All of these factors can add further risk to business conducted with these end customers. 

Our growth depends on our existing end customers making additional purchases of software licenses and 
software upgrades and renewing and upgrading their subscriptions and support and entitlement 
agreements, and the failure of our end customers to do so could harm our business and operating results. 

Our future success depends in part on purchases by our existing end customers of additional software licenses 

and appliances as well as renewals and upgrades to their subscription and support and entitlement agreements. If 
our end customers do not purchase additional software licenses or appliances or software upgrades, or renew or 
upgrade their subscription and support and entitlement agreements, our revenue may decline and our operating 
results may be harmed. In order for us to maintain or improve our operating results, we depend on our existing end 
customers renewing their subscription agreements as well as their support and entitlement agreements, or 
purchasing additional solutions. End customers may choose not to renew their subscription agreements or support 
and entitlement agreements, or purchase additional solutions, because of several factors, including dissatisfaction 
with our prices or features relative to competitive offerings, reductions in our end customers’ spending levels or 
other causes outside of our control. If our existing end customers do not purchase new solutions, or renew or 
upgrade their subscription agreements or support and entitlement agreements, our revenue may grow more slowly 
than expected or may decline, and our business and operating results may be adversely affected. 

We rely on our key personnel, and our Chief Executive Officer in particular, to grow our business, and the 
loss of one or more such key employees or the inability to attract and retain qualified personnel could harm 
our business. 

Our success and future growth depends to a significant degree on the skills and continued services of our 
executive officers and key personnel. In particular, we have been highly dependent on the services of Dheeraj 
Pandey, our Chief Executive Officer and Chairman, who plans to retire as Chief Executive Officer ("CEO"), of the 
Company upon the selection and appointment of the Company’s next CEO. As one of our co-founders, Mr. Pandey 
has been critical to the development of our technology, future vision and strategic direction, and his retirement could 
disrupt our business and negatively impact our operating results, prospects and future growth and cause a 
significant decline in the price of our Class A common stock. Furthermore, while the Company has a CEO 
succession plan in place, failure to successfully manage such succession plan and in particular to recruit in a timely 
manner, integrate and retain the successor CEO may have a material adverse impact on our operational and 
financial performance and future growth. In addition, we do not have life insurance policies that cover any of our 
executive officers or other key employees. The loss of the services of Mr. Pandey, the successor Chief Executive 
Officer, or any of our key employees or executive officers could disrupt our business and negatively impact our 
operating results, prospects and future growth. 

In addition, our future success also depends on our ability to continue to attract, integrate and retain highly 
skilled personnel, especially skilled sales and engineering employees. Competition for highly skilled personnel is 
frequently intense, especially in the San Francisco Bay Area, where we are headquartered. Volatility or lack of 
performance in the price of our Class A common stock may also affect our ability to attract and retain our key 
employees. We cannot assure you that we will be able to successfully attract or retain qualified personnel. Our 
inability to attract and retain the necessary personnel could adversely affect our business, operating results and 
financial condition. 

19

If we do not effectively expand, train, motivate and retain our sales force, we may be unable to add new 
end customers or increase sales to our existing end customers and our business will be adversely affected. 

Although we have a channel sales model, our sales representatives typically engage in direct interaction with 
our prospective end customers. Therefore, we continue to be substantially dependent on our sales force to obtain 
new end customers and sell additional solutions to our existing end customers. There is significant competition for 
sales personnel with the skills and technical knowledge that we require. Our ability to achieve revenue growth will 
depend, in large part, on our success in recruiting, training and retaining sufficient numbers of sales personnel to 
support our growth. New hires require significant training and may take significant time before they achieve full 
productivity; we estimate based on past experience that our average sales team members typically do not fully ramp 
and are not fully productive until around the time of the start of their fourth quarter of employment with us. Our 
recent hires and planned hires may not become productive as quickly as we expect, and we may be unable to hire 
or retain sufficient numbers of qualified individuals, particularly individuals who are focused on sales of our solutions 
to new and existing large enterprises, service providers and government entities, in the markets where we do 
business or plan to do business. Hiring sales personnel in new countries also requires additional set up, upfront and 
ongoing costs that we may not recover if the sales personnel fail to achieve full productivity. In addition, as a result 
of our rapid growth, a large percentage of our sales force is new to our company and our solutions and therefore 
less effective than our more seasoned employees. Moreover, as we complete our transition to focus on software-
only transactions and continue our transition to a subscription-based business model, we are also re-training our 
seasoned sales employees, who have historically focused on appliance sales and selling software licenses for the 
life of the device, in order to maintain or increase their productivity. We have adjusted and also anticipate needing to 
further adjust our go-to-market cost structure, particularly as it relates to how we compensate our sales teams for 
life-of-device and renewal transactions.

If our new sales employees, particularly those focused on sales of our solutions to new and existing large 
enterprises, service providers and government entities, do not become fully productive on the timelines that we 
have projected, or if we are unable to successfully re-train our more seasoned sales employees as we focus on 
software-only and subscription-based sales or adjust our go-to-market cost structure, our revenue will not increase 
at anticipated levels and our ability to achieve long-term projections may be negatively impacted. If we are unable to 
hire, train and maintain sufficient numbers of effective sales personnel, or our new or existing sales personnel are 
not successful in obtaining new end customers, convincing existing customers to renew their subscription-based 
purchases, or increasing sales to our existing customer base generally, our business, operating results and 
prospects will be adversely affected.

If we do not effectively compose, structure and compensate our sales force to focus on the end customers 
and activities that will primarily drive our growth strategy, our business will be adversely affected.

As indicated above, our growth is dependent in large part on the success of our sales force and in particular 

our ability to structure our sales force and sales compensation structure in a way that aligns with our growth 
strategy. As part of our efforts to appropriately structure and compensate our sales force such that their incentives 
are properly aligned with our growth strategy, we have made changes to our sales processes, sales segmentation, 
and leadership structures for our global sales teams and may need to make additional changes in the future. Such 
changes may take longer than anticipated to successfully implement, and we may not be able to realize the full 
benefits thereof, which may have a material adverse impact on our sales productivity as well as our business and 
operational results generally. In particular, as indicated above, our growth continues to be substantially dependent 
on our ability to increase our sales to large enterprises, particularly when those sales result in large orders for our 
solutions. Competition for sales employees who have the knowledge and experience necessary to effectively 
penetrate major enterprise accounts is fierce, and we may not be successful in hiring such employees, or hiring 
them on the timelines we anticipate, which will negatively impact our ability to target and penetrate major enterprise 
accounts. In addition, we anticipate that the sales cycles associated with major accounts will be longer than our 
traditional sales cycles, which will increase the time it will take our new global account managers to become fully 
productive. In addition, as our organization continues to focus on major accounts and large deals, the productivity of 
our traditional sales teams may be impacted. In fiscal 2019 we also started to further segment our sales force to 
separate commercial sales teams, particularly in the United States, from our enterprise sales teams, with the goal of 
building a focused U.S. commercial sales team to serve as a counterbalance to our enterprise sales teams. This 
process, which we anticipate will continue for the foreseeable future, will involve hiring new, and training existing, 
sales teams to focus exclusively on commercial transactions, which are typically smaller and more frequent than 
enterprise transactions. 

20

Additionally, we have transitioned our business to focus primarily on software-only transactions, and are in the 

process of transitioning to a subscription-based business model. As we continue with this transition to a 
subscription-based business model, we have adjusted and anticipate needing to further adjust the compensation 
structure of our sales force, particularly as it relates to how we compensate our sales teams for life-of-device and 
renewal transactions. In particular, to align with the new subscription-based business model, starting in fiscal 2021 
we have adjusted our sales compensation structure, which was previously based on total contract value, to one that 
is based primarily on ACV, which will likely cause our average contract term lengths to decline and could negatively 
impact our operating and free cash flows, potentially significantly. These segmentation projects, business model 
transitions and compensation structure changes may lead to fluctuations in sales productivity that will make it more 
difficult to accurately project our operating results or plan for future growth. If we are unable to effectively manage 
these changes or implement new sales structures in a timely manner, or if our decision to segment our sales force 
is not successful in obtaining large sales of our solutions, our growth and ability to achieve long-term projections 
may be negatively impacted, and our business and operating results will be adversely affected.

We rely primarily on indirect sales channels for the distribution of our solutions, and disruption within these 
channels could adversely affect our business, operating results and cash flows. 

We primarily sell our solutions through indirect sales channels, including channel partners, such as distributors, 

our OEMs, value added resellers and system integrators. Our OEMs may in turn distribute our solutions through 
their own networks of channel partners with whom we have no direct relationships. 

We rely, to a significant degree, on our channel partners to select, screen and maintain relationships with their 

distribution networks and to distribute our solutions in a manner that is consistent with applicable law, regulatory 
requirements and our quality standards. If our channel partners or a partner in their distribution network violates 
applicable law or regulatory requirements or misrepresents the functionality of our solutions, our reputation and 
brand could be damaged and we could be subject to potential liability. Additionally, if we are unable to establish 
relationships with strong channel partners in key growth regions, our ability to sell our solutions in these regions 
may be adversely affected. Our agreements with our channel partners are non-exclusive, meaning our channel 
partners may offer end customers the products of several different companies, including products that compete with 
ours. If our channel partners do not effectively market and sell our solutions, choose to use greater efforts to market 
and sell their own products or those of our competitors, or fail to meet the needs of our end customers, our 
business, operating results and prospects may be adversely affected. Our channel partners may cease marketing 
our solutions with limited or no notice and with little or no penalty. The loss of a substantial number of our channel 
partners, together with our inability to replace them, or the failure to recruit additional channel partners or establish 
an alternative distribution network could materially and adversely affect our business and operating results. For 
example, sales through Arrow Electronics, Inc. and Tech Data Corporation to our end customers represented 29% 
and 14%, respectively, of our total revenue for fiscal 2020. In addition, if a channel partner offers its own products or 
services that are competitive to our solutions, is acquired by a competitor or reorganizes or divests its reseller 
business units, our revenue derived from that partner may be adversely impacted or eliminated altogether. 

Recruiting and retaining qualified channel partners and training them in the use of our technologies requires 

significant time and resources. If we fail to devote sufficient resources to support and expand our network of 
channel partners, our business may be adversely affected. Maintaining strong indirect sales channels for our 
products and effectively leveraging our channel partners and OEMs is important to our growth strategy, and the 
failure to effectively manage these relationships may lead to higher costs and reduced revenue. Also, in certain 
international markets, we are in the process of transitioning our distribution model from contracting directly with 
hundreds of individual resellers to contracting with a smaller number of larger global distributors. Although we 
believe that this transition will make our sales channels more efficient and broader reaching in the long term in 
these markets, there is no guarantee that this new distribution model will increase our sales in the short term or 
allow us to sustain our gross margins. Any potential delays or confusion during the transition process to our new 
partners may negatively affect our relationship with our existing end customers and channel partners and may 
cause us to lose prospective end customers or additional business from existing end customers or cause a decline 
in renewal rates with existing end customers. Upon completion of the transition to the new sales model, we will be 
more reliant on fewer channel partners, which may reduce our contact with our end customers making it more 
difficult for us to establish brand awareness, ensure proper delivery and installation of our software, support ongoing 
end customer requirements, estimate end customer demand, respond to evolving end customer needs and obtain 
subscription renewals from end customers. 

21

All of our sales to government entities have been made indirectly through our channel partners. Government 

entities may have statutory, contractual or other legal rights to terminate contracts with our channel partners for 
convenience or due to a default, and, in the future, if the portion of government contracts that are subject to 
renegotiation or termination at the election of the government are material, any such termination or renegotiation 
may adversely impact our future operating results. Additionally, we sometimes rely on our channel partners to 
satisfy certain regulatory obligations that we would otherwise have to satisfy if we sold directly to the government 
entities, and our channel partners may be unable or unwilling to satisfy these obligations in the future. In the event 
of such termination or change, it may be difficult for us to arrange for another channel partner to sell our solutions to 
these government entities in a timely manner, and we could lose sales opportunities during the transition. 
Governments routinely investigate and audit government contractors’ (including subcontractors') administrative 
processes, and any unfavorable audit could result in the government refusing to continue buying our solutions, our 
channel partners changing their business models or refusing to continue to sell our solutions under current models, 
a reduction of revenue or fines, or civil or criminal liability if the audit uncovers improper or illegal activities.

If our indirect distribution channel is disrupted, particularly if we are reliant on a fewer number of channel 
partners, or if we are required to directly satisfy certain regulatory obligations imposed by government entities as a 
result of our efforts to expand our sales to government entities, we may be required to devote more time and 
resources to distribute our solutions directly and support our end customers, which may not be as effective and 
could lead to higher costs, reduced revenue and growth that is slower than expected. 

Our operating results may fluctuate significantly, which could make our future results difficult to predict and 
could cause our operating results to fall below expectations. 

Our operating results may fluctuate due to a variety of factors, many of which are outside of our control. As a 

result, comparing our operating results on a period-to-period basis may not be meaningful. If our revenue or 
operating results in any particular period fall below investor expectations, the price of our Class A common stock 
would likely decline. Factors that are difficult to predict and that could cause our operating results to fluctuate 
include, but are not limited to: 

•

•

•

•

•

•

•

•

•

•

•

•

the timing and magnitude of orders, shipments and acceptance of our solutions in any quarter;

our ability to attract new and retain existing end customers;

disruptions in our sales channels or shifts in our relationships with important channel partners and 
OEMs;

the timing of revenue recognition for our sales, the impact of which is heightened by our focus on 
software-only sales and ongoing transition to a subscription-based model;

reductions in end customers’ budgets for information technology purchases;

delays in end customers’ purchasing cycles or deferments of end customers’ purchases in anticipation 
of new products or updates from us or our competitors;

fluctuations in demand and competitive pricing pressures for our solutions;

the lengths of our contract terms;

the mix of solutions sold, including the mix between appliance and software-only sales and the mix 
between subscription-based and non-subscription-based transactions, and the mix of revenue between 
products and support, entitlements and other services, which will depend in part on whether we are 
successful in executing our strategy to transition our business to a subscription-based model;

our ability to develop, introduce and ship in a timely manner new solutions and product enhancements 
that meet customer requirements, and market acceptance of such new solutions and product 
enhancements;

the timing of product releases or upgrades or announcements by us or our competitors;

any change in the competitive dynamics of our markets, including consolidation or partnerships among 
our competitors or partners, new entrants or discounting of prices;

22

•

•

•

•

•

the amount and timing of expenses to grow our business and the extent to which we are able to take 
advantage of economies of scale or to leverage our relationships with OEM or channel partners;

the costs associated with acquiring new businesses and technologies and the follow-on costs of 
integrating and consolidating the results of acquired businesses;

the amount and timing of stock-based compensation expenses;

our ability to control the costs of our solutions and their key components, or to pass along any cost 
increases to our end customers;

general economic, industry and market conditions and other events that may be outside of our control, 
such as political and social unrest, terrorist attacks, hostilities, malicious human acts, climate change, 
natural disasters (including extreme weather), pandemics or other major public health concerns, and 
other similar events; and

•

future accounting pronouncements and changes in accounting policies.

The occurrence of any one of these risks could negatively affect our operating results in any particular quarter, 

which could cause the price of our Class A common stock to decline. 

Our gross margins are impacted by a variety of factors and may be subject to variation from period to 
period. 

Our gross margins may be affected by a variety of factors, including shifts in the mix of whether our solutions 

are sold as an appliance or as software-only, fluctuations in the pricing of our products, including as a result of 
competitive pricing pressures or increases in component pricing, and the degree to which we are successful in 
selling the value of incremental feature improvements and upgrades, changes in the cost of components of our 
hardware appliances, changes in the mix between direct versus indirect sales, changes in the mix of products sold 
and the timing and amount of recognized and deferred revenue, particularly as a result of our continued transition to 
a subscription-based business model. If we are unable to manage these factors effectively, our gross margins may 
decline, and fluctuations in gross margin may make it difficult to manage our business and to achieve or maintain 
profitability, which could adversely affect our business and operating results.

Our sales cycles can be long and unpredictable and our sales efforts require considerable time and expense. 
As a result, it can be difficult for us to predict when, if ever, a particular customer will choose to purchase 
our solutions, which may cause our operating results to fluctuate significantly. 

Our sales efforts involve educating our end customers about the uses and benefits of our solutions, including 

their technical capabilities and cost saving potential. End customers often undertake an evaluation and testing 
process that can result in a lengthy sales cycle. Increasing competition and the emergence of new hyperconverged 
infrastructure product offerings and consumption models often result in customers evaluating multiple vendors at 
the same time, which can further lengthen the sales cycle. We spend substantial time and resources on our sales 
efforts without any assurance that our efforts will produce any sales. Platform purchases are frequently subject to 
budget constraints, multiple approvals and unanticipated administrative, processing and other delays. The broad 
nature of the technology shift that our solutions represent and the legacy relationships our end customers have with 
existing IT vendors sometimes lead to unpredictable sales cycles, which make it difficult for us to predict when end 
customers may purchase solutions from us. The unpredictable nature of our sales cycles may be increased in future 
periods as we continue to focus our sales efforts more heavily on major accounts and large deals, and as we 
educate our customers about our ongoing transition to a subscription-based business model. Our business and 
operating results will be significantly affected by the degree to which and speed with which organizations adopt our 
solutions. 

23

Because we depend on manufacturers of hardware, including our OEM partners, to timely and cost-
effectively produce and ship the hardware on which our software runs, we are susceptible to delays and 
pricing fluctuations, which would cause our business to be adversely affected. 

We rely on manufacturers, including our OEM partners, to produce the hardware appliances on which our 
software runs, including both our Nutanix-branded NX series appliances and the various third-party appliances that 
are included on our hardware compatibility list, which exposes us to direct and indirect risks beyond our control, 
including reduced control over quality assurance, product costs, product supply and timing, and potential 
reputational harm and brand damage. We may not be able to discover, manage, and/or remediate such risks 
successfully and in a timely manner. For example, customers may delay their purchase of our software if they 
expect that the delivery of the servers on which they intend to operate the software will be delayed for many 
months. Furthermore, our orders for NX series appliances represent a relatively small percentage of the overall 
orders received by such hardware manufacturers from their customers. Therefore, fulfilling our orders may not be a 
priority in guiding their business decisions and operational commitments. If we fail to manage our relationships with 
these manufacturers effectively, or if any of them experience delays, disruptions or increased manufacturing lead 
times, component lead-time disruptions, capacity constraints or quality control problems in their operations or are 
unable to meet our or our end customers’ requirements for timely delivery, our ability to sell our solutions to our end 
customers could be severely impaired due to the lack of availability of certified hardware appliances, and our 
customers' ability, or willingness, to consume our software will be materially delayed, which will adversely affect our 
business and operating results, competitive position, brand and reputation, as well as our relationships with affected 
customers. 

In particular, we rely substantially on Super Micro Computer, Inc. ("Super Micro") and Flextronics Systems 
Limited ("Flextronics") to assemble and test the Nutanix-branded NX series appliances, including those that are 
delivered by us. Our agreement with Super Micro was renewed in May 2020 for one year and will automatically 
renew for successive one-year periods following the expiration of such renewal term, with the option to terminate 
upon each annual renewal, and does not contain any minimum long-term commitment to manufacture NX-branded 
appliances. Our agreement with Flextronics expires in November 2020 and automatically renews for successive 
one-year periods thereafter, with the option to terminate upon each annual renewal. The agreement does not 
contain any minimum long-term commitment to manufacture NX-branded appliances and any orders are fulfilled 
only after a purchase order has been delivered and accepted. If we are required to change the manufacturer of our 
NX-branded appliances, we may lose revenue, incur increased costs and damage our channel partner and end 
customer relationships. We may also decide to switch or bring on additional contract manufacturers in order to 
better meet our needs. Switching to or bringing on a new OEM partner or contract manufacturer and commencing 
production is expensive and time-consuming and may cause delays in order fulfillment at our existing OEM partners 
and contract manufacturers or cause other disruptions.

Our agreements with Super Micro and Flextronics do not contain any price assurances, and any increases in 

component costs, without a corresponding increase in the price of our NX series solutions, could harm our gross 
margins. Furthermore, we may need to increase our component purchases, manufacturing capacity and internal 
test and quality functions if we experience increased demand. The inability of Super Micro, Flextronics or other 
manufacturers to produce adequate supplies of hardware appliances could cause a delay in customers’ ability to 
consume our software and our order fulfillment, and our business, operating results and prospects would be 
adversely affected. As of July 31, 2020, we had approximately $81.2 million in the form of guarantees to our OEM 
partners related to certain components.

24

There are a limited number of suppliers, and in some cases single-source suppliers, for several key 
components in the NX-branded appliances, and any delay or disruption in the availability or quality of these 
components could delay shipments of the NX-branded appliances and damage our channel partner or end 
customer relationships. 

We rely on a limited number of suppliers, and in some cases single-source suppliers, for several key hardware 

components of the Nutanix-branded NX series appliances. These components are generally purchased on a 
purchase order basis through Super Micro or Flextronics and we do not have long-term supply contracts with our 
suppliers. Our reliance on key suppliers exposes us to risks, including reduced control over product quality, 
production and component costs, timely delivery and capacity. It also exposes us to the potential inability to obtain 
an adequate supply of required components because we do not have long-term supply commitments, and replacing 
some of these components would require a lengthy product qualification process. Furthermore, we extensively test 
and qualify the components that are used in NX-branded appliances to ensure that they meet certain quality and 
performance specifications. If our supply of certain components is disrupted or delayed, or if we need to replace 
existing suppliers, there can be no assurance that additional supplies or components can serve as adequate 
replacements for the existing components, will be available when required or that supplies will be available on terms 
that are favorable to us, and we may be required to modify our solutions to interoperate with the replacement 
components. Any of these developments could extend our lead times, increase the costs of our components or 
costs of product development, cause us to miss market windows for product launch and adversely affect our 
business, operating results and financial condition. 

We generally maintain minimal inventory for repairs and a number of evaluation and demonstration units, and 

generally acquire components only as needed. We do not enter into long-term supply contracts for these 
components. As a result, our ability to respond to channel partner or end customer orders efficiently may be 
constrained by the then-current availability, terms and pricing of these components. The technology industry has 
experienced component shortages and delivery delays in the past, and we may experience shortages or delays of 
critical components in the future as a result of strong demand in the industry, component availability constraints, or 
other factors. If we or our suppliers inaccurately forecast demand for our solutions or we ineffectively manage our 
enterprise resource planning processes, our suppliers may have inadequate inventory, which could increase the 
prices we must pay for substitute components or result in our inability to meet demand for our solutions, as well as 
damage our channel partner or end customer relationships. 

If the suppliers of the components of our hardware appliances increase prices of components, experience 
delays, disruptions, capacity constraints, quality control problems in their manufacturing operations or adverse 
changes to their financial condition, our ability to ship appliances to our channel partners or end customers in a 
timely manner and at competitive prices could be impaired and our competitive position, brand, reputation, and 
operating results could be adversely affected. Qualifying a new component is expensive and time-consuming. If we 
are required to change key suppliers or assume internal manufacturing operations, we may lose revenue and 
damage our channel partner or end customer relationships which could adversely impact our revenue and operating 
results. 

We enter into arrangements with certain of our OEM partners that could require us to purchase certain 
minimum levels of inventory, which could result in us incurring losses with respect to such inventory, and 
may negatively impact our business and operating results.

We enter into arrangements with certain of our OEM partners whereby the supplier will purchase certain 

quantities of components and allocate them exclusively for our use in our products. If we are unable to use the 
inventory within a specified period, we may be required to purchase the inventory, or to pay the OEM partner the 
difference between the price at which the OEM partner purchased the inventory and the price at which the OEM 
partner is ultimately able to sell the inventory to a third party. As a result, if we inaccurately or mistakenly forecast 
our need for any such components, or if the market price of any such components decreases after the components 
are purchased by an OEM partner, we may suffer losses with respect to such inventory, and our business and 
operating results could be adversely affected.

25

We rely upon third parties for the warehousing and delivery of appliances and replacement parts for support, 
and we therefore have less control over these functions than we otherwise would. 

We outsource the warehousing and delivery of appliances to a third-party logistics provider for worldwide 
fulfillment. In addition, some of our support offerings commit us to replace defective parts in our appliances as 
quickly as four hours after the initial customer support call is received, which we satisfy by storing replacement parts 
inventory in various third-party supply depots in strategic worldwide locations. As a result of relying on third parties, 
we have reduced control over shipping and logistics transactions and costs, quality control, security and the supply 
of replacement parts for support. Consequently, we may be subject to shipping disruptions and unanticipated costs 
as well as failures to provide adequate support for reasons that are outside of our direct control. If we are unable to 
have appliances or replacement products shipped in a timely manner, end customers may cancel their contracts 
with us, we may suffer reputational harm and our business, operating results and prospects may be adversely 
affected. 

Our ability to sell our solutions is dependent in part on ease of use and the quality of our technical support, 
and any failure to offer high-quality technical support would harm our business, operating results and 
financial condition. 

Once our solutions are deployed, our end customers depend on our support organization to resolve any 
technical issues relating to our solutions. Furthermore, because of the emerging nature of our solutions, our support 
organization often provides support for and troubleshoots issues for products of other vendors running on our 
solutions, even if the issue is unrelated to our solutions. There is no assurance that we can solve issues unrelated 
to our solutions, or that vendors whose products run on our solutions will not challenge our provision of technical 
assistance to their products. Our ability to provide effective support is largely dependent on our ability to attract, 
train and retain personnel who are not only qualified to support our solutions, but also well versed in some of the 
primary applications and hypervisors that our end customers run on our solutions. Furthermore, as we expand our 
operations internationally, our support organization will face additional challenges, including those associated with 
delivering support, training and documentation in languages other than English. In addition, as we continue to 
expand our product portfolio to include additional solutions our ability to provide high-quality support will become 
more difficult and will involve more complexity. Any failure to maintain high-quality installation and technical support, 
or a market perception that we do not maintain high-quality support, could harm our reputation and brand, adversely 
affect our ability to sell our solutions to existing and prospective end customers, and could harm our business, 
operating results and financial condition. 

Our solutions are highly technical and may contain undetected defects, which could cause data 
unavailability, unauthorized access to, loss, or corruption that might, in turn, result in liability to our end 
customers and harm to our reputation, brand and business. 

Our solutions are highly technical and complex and are often used to store information critical to our end 
customers’ business operations. Our solutions may contain undetected errors, defects or security vulnerabilities that 
could result in data unavailability, unauthorized access to, loss, corruption or other harm to our end customers’ data, 
including personal or identifying information regarding their employees, customers, and suppliers, as well as their 
finance and payroll data, and other sensitive business information. In addition, as we expand our platform and 
introduce new cloud-based products that may hold more of our customer's data, such as Xi Leap and our other Xi 
Cloud Services, any undetected or unresolved errors, defects or security vulnerabilities may result in data 
unavailability, unauthorized access to, loss, corruption or other harm to our end-customers' data. Some errors or 
defects in our solutions may only be discovered after they have been installed and used by end customers. We 
previously conducted an in-field replacement of equipment manufactured by our previous outsourced manufacturer, 
and may be required to do so again in the future. In addition, we may make certain commitments to our OEMs 
regarding the time frames within which we will correct any security vulnerabilities in our software. If any hardware or 
software errors, defects or security vulnerabilities are discovered in our solutions after commercial release, a 
number of negative effects in our business could result, including but not limited to: 

•

•

•

lost revenue or lost OEM or other channel partners or end customers;

increased costs, including warranty expense and costs associated with end customer support as well 
as development costs to remedy the errors or defects;

delays, cancellations, reductions or rescheduling of orders or shipments;

26

•

•

product returns or discounts; and

damage to our reputation and brand.

In addition, we could face legal claims for breach of contract, product liability, tort or breach of warranty. While 
many of our contracts with end customers contain provisions relating to warranty disclaimers and liability limitations, 
these provisions might not be upheld or might not provide adequate protection if we face such legal claims. 
Defending a lawsuit, regardless of its merit, could be costly and may divert management’s attention and adversely 
affect the market’s perception of us and our solutions. In addition, our business liability insurance coverage could 
prove inadequate with respect to a claim and future coverage may be unavailable on terms favorable or acceptable 
to us or at all. These product-related issues could result in claims against us and our business could be adversely 
impacted. 

Our business depends, in part, on sales to government organizations, and significant changes in the 
contracting or fiscal policies of such government organizations could have an adverse effect on our 
business and operating results. 

We derive a portion of our revenue from contracts with federal, state, local and foreign governments, and we 

believe that the success and growth of our business will continue to depend on our successful procurement of 
government contracts. However, demand is often unpredictable from government organizations, and there can be 
no assurance that we will be able to maintain or grow our revenue from the public sector. Government agencies are 
subject to budgetary processes and expenditure constraints that could lead to delays or decreased capital 
expenditures in IT spending, particularly in light of continued uncertainties about government spending levels, such 
as recent changes to, or failure to appoint new, government leaders. The budget and approval process for 
government agencies also experiences a longer sales cycle relative to our other end customers, and it may be 
difficult for us to accurately forecast the impact of these contracts on our future operating results. If government 
organizations reduce or shift their capital spending patterns, our business, operating results and prospects may be 
harmed. Factors that could impede our ability to maintain or increase the amount of revenue derived from 
government contracts, include, but are not limited to:

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•

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•

•

•

•

public sector budgetary cycles and funding authorizations;

changes in fiscal or contracting policies;

decreases in available government funding;

changes in government programs or applicable requirements;

the adoption of new laws or regulations or changes to existing laws or regulations;

potential delays or changes in the government appropriations or other funding authorization processes; 
and 

higher expenses associated with, or delays caused by, diligence and qualifying or maintaining 
qualification as a government vendor.

The occurrence of any of the foregoing could cause governments and governmental agencies to delay or 
refrain from purchasing our solutions in the future or otherwise have an adverse effect on our business, operating 
results and prospects. 

27

Third-party claims that we are infringing intellectual property, whether successful or not, could subject us to 
costly and time-consuming litigation or expensive licenses, and our business could be harmed. 

A number of companies, both within and outside of the enterprise and cloud computing infrastructure industry, 
hold a large number of patents covering aspects of storage, servers, networking, desktop, security and virtualization 
products. In addition to these patents, participants in this industry typically also protect their technology through 
copyrights and trade secrets. As a result, there is frequent litigation based on allegations of infringement, 
misappropriation or other violations of intellectual property rights. We have received, and in the future may receive, 
inquiries from other intellectual property holders and may become subject to claims that we infringed or are 
infringing their intellectual property rights, particularly as we expand our presence in the market and face increasing 
competition. There can be no assurance that we will be successful in defending against these allegations or 
reaching a business resolution that is satisfactory to us. In addition, parties may claim that the names and branding 
of our solutions infringe their trademark rights in certain countries or territories. If such a claim were to prevail, we 
may have to change the names and branding of our solutions in the affected territories and we could incur other 
costs.

We currently have a number of agreements in effect pursuant to which we have agreed to defend, indemnify 

and hold harmless our end customers, suppliers and channel and other partners from damages and costs which 
may arise from the infringement by our solutions of third-party patents or other intellectual property rights. The 
scope of these indemnity obligations varies, but may, in some instances, include indemnification for damages and 
expenses, including attorneys’ fees. A claim that our solutions infringe a third party’s intellectual property rights, 
even if untrue, could harm our relationships with our end customers and/or channel partners, may deter future end 
customers from purchasing our solutions and could expose us to costly litigation and settlement expenses. Even if 
we are not a party to any litigation between a customer and a third party relating to infringement by our solutions, an 
adverse outcome in any such litigation could make it more difficult for us to defend our solutions against intellectual 
property infringement claims in any subsequent litigation in which we are a named party. Any of these results could 
harm our brand and operating results.

Our defense of intellectual property rights claims brought against us or our end customers, suppliers and 
channel partners, with or without merit, could be time-consuming, expensive to litigate or settle, divert management 
resources and attention and force us to acquire intellectual property rights and licenses, which may involve 
substantial royalty or other payments. Further, a party making such a claim, if successful, could secure a judgment 
that requires us to pay substantial damages. An adverse determination also could prevent us from offering our 
solutions to our end customers and may require that we procure or develop substitute solutions that do not infringe, 
which could require significant effort and expense. We may have to seek a license for the technology, which may 
not be available on terms favorable or acceptable to us or at all, and as a result may significantly increase our 
operating expenses or require us to restrict our business activities in one or more respects. Any of these events 
could adversely affect our business, operating results, financial condition and prospects. 

The success of our business depends in part on our ability to protect and enforce our intellectual property 
rights. 

We rely on a combination of patent, copyright, service mark, trademark and trade secret laws, as well as 
confidentiality procedures and contractual restrictions and covenants, to establish and protect our proprietary rights, 
all of which provide only limited protection. We cannot assure you that any patents will be issued with respect to our 
currently pending patent applications in a manner that gives us adequate defensive protection or competitive 
advantages, if at all, or that any patents issued to us will not be challenged, invalidated or circumvented. We have 
filed for patents in the United States and in certain international jurisdictions, but such protections may not be 
available in all countries in which we operate or in which we seek to enforce our intellectual property rights, or may 
be difficult to enforce in practice. Our currently issued patents and any patents that may be issued in the future with 
respect to pending or future patent applications may not provide sufficiently broad protection or they may not prove 
to be enforceable in actions against alleged infringers. We cannot be certain that the steps we have taken will 
prevent unauthorized use of our technology or the reverse engineering of our technology. Moreover, others may 
independently develop technologies that are competitive to ours or infringe our intellectual property. 

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Protecting against the unauthorized use of our intellectual property, solutions and other proprietary rights is 
expensive and difficult, particularly internationally. Litigation may be necessary in the future to enforce or defend our 
intellectual property rights or to determine the validity and scope of the proprietary rights of others. Any such 
litigation could result in substantial costs and diversion of management resources, either of which could harm our 
business, operating results and financial condition. Further, many of our current and potential competitors have the 
ability to dedicate substantially greater resources to defending intellectual property infringement claims and to 
enforcing their intellectual property rights than we have. Attempts to enforce our rights against third parties could 
also provoke these third parties to assert their own intellectual property or other rights against us, or result in a 
holding that invalidates or narrows the scope of our rights, in whole or in part. Effective patent, trademark, service 
mark, copyright and trade secret protection may not be available in every country in which our solutions are 
available. An inability to adequately protect and enforce our intellectual property and other proprietary rights could 
seriously harm our business, operating results, financial condition and prospects.

If we fail to maintain an effective system of internal controls, our ability to produce timely and accurate 
financial statements or comply with applicable regulations could be impaired. 

As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley 
Act of 2002 ("Sarbanes-Oxley Act") and the rules and regulations of the Nasdaq Stock Market. We expect that the 
requirements of these rules and regulations will continue to increase our legal, accounting and financial compliance 
costs, make some activities more difficult, time-consuming and costly, and place significant strain on our personnel, 
systems and resources. 

The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and 
procedures and internal control over financial reporting. We are continuing to develop and refine our disclosure 
controls, internal control over financial reporting and other procedures that are designed to ensure that information 
required to be disclosed by us in the reports that we will file with the SEC, is recorded, processed, summarized and 
reported within the time periods specified in SEC rules and forms, and that information required to be disclosed in 
reports under the Exchange Act is accumulated and communicated to our principal executive and financial officers. 

Our current controls and any new controls that we develop may become inadequate because of changes in 
conditions in our business. Further, weaknesses in our internal controls may be discovered in the future. Any failure 
to develop or maintain effective controls, or any difficulties encountered in their implementation or improvement, 
could harm our operating results or cause us to fail to meet our reporting obligations and may result in a 
restatement of our financial statements for prior periods. Any failure to implement and maintain effective internal 
controls also could adversely affect the results of periodic management evaluations and annual independent 
registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial 
reporting that we are required to include in our periodic reports we will file with the SEC under Section 404 of the 
Sarbanes-Oxley Act. Ineffective disclosure controls and procedures and internal control over financial reporting 
could also cause investors to lose confidence in our reported financial and other information, which would likely 
have a negative effect on the market price of our Class A common stock. 

In order to maintain and improve the effectiveness of our disclosure controls and procedures and internal 
control over financial reporting to comply with the SEC rules that implement Sections 302 and 404 of the Sarbanes-
Oxley Act, we have expended and anticipate that we will continue to expend significant resources and undertake 
various actions, including incurring accounting-related costs and implementing new internal controls and 
procedures, and providing significant management oversight. In addition, our independent registered public 
accounting firm is also required to formally attest to the effectiveness of our internal control over financial reporting 
and may issue a report that is adverse in the event it is not satisfied with the level at which our controls are 
documented, designed or operating. Any failure to maintain the adequacy of our internal controls, or consequent 
inability to produce accurate financial statements on a timely basis, or an adverse report from our independent 
auditors, could increase our operating costs and could materially impair our ability to operate our business and 
could have a material and adverse effect on our operating results and could cause a decline in the price of our 
Class A common stock. In addition, if we are unable to continue to meet these requirements, we may not be able to 
remain listed on the Nasdaq Stock Market. 

29

Failure to comply with laws and regulations applicable to our business could subject us to fines and 
penalties and could also cause us to lose end customers in the public sector or negatively impact our ability 
to contract with the public sector. 

Our business is subject to regulation by various federal, state, local and foreign governmental agencies, 
including agencies responsible for monitoring and enforcing employment and labor laws, antitrust laws, workplace 
safety, product safety, environmental laws, consumer protection laws, anti-bribery laws, import/export controls, 
federal securities laws and tax laws and regulations. In certain jurisdictions, these regulatory requirements may be 
more stringent than in the United States. Noncompliance with applicable regulations or requirements could subject 
us to investigations, sanctions, mandatory product recalls, enforcement actions, disgorgement of profits, fines, 
damages and civil and criminal penalties or injunctions. If any governmental sanctions are imposed, or if we do not 
prevail in any possible civil or criminal litigation, our business, reputation, operating results and financial condition 
could be adversely affected. In addition, responding to any action will likely result in a significant diversion of 
management’s attention and resources and an increase in third-party professional fees. Enforcement actions and 
sanctions could harm our business, operating results and financial condition. 

In addition, we must comply with laws and regulations relating to the formation, administration and 

performance of contracts with the public sector, including U.S. federal, state and local governmental organizations, 
which affect how we and our channel partners do business with governmental agencies. Selling our solutions to the 
U.S. government, whether directly or through channel partners, also subjects us to certain regulatory and 
contractual requirements. Failure to comply with these requirements by either us or our channel partners could 
subject us to investigations, fines and other penalties, which could have an adverse effect on our business, 
operating results, financial condition and prospects. As an example, the U.S. Department of Justice ("DOJ") and the 
General Services Administration ("GSA") have in the past pursued claims against and financial settlements with IT 
vendors under the False Claims Act and other statutes related to pricing and discount practices and compliance 
with certain provisions of GSA contracts for sales to the federal government. The DOJ and GSA continue to actively 
pursue such claims. Violations of certain regulatory and contractual requirements could also result in us being 
suspended or debarred from future government contracting. Any of these outcomes could have an adverse effect 
on our revenue, operating results, financial condition and prospects. 

These laws and regulations impose added costs on our business, and failure to comply with these or other 
applicable regulations and requirements, including noncompliance in the past, could lead to claims for damages 
from our channel partners, penalties, termination of contracts, loss of exclusive rights in our intellectual property and 
temporary suspension or permanent debarment from government contracting. Any such damages, penalties, 
disruptions or limitations in our ability to do business with the public sector could have an adverse effect on our 
business and operating results. 

We are subject to governmental regulation and other legal obligations, particularly related to privacy, data 
protection and information security, and our actual or perceived failure to comply with such obligations 
could adversely affect our business and operating results. Compliance with such laws could also impair our 
efforts to maintain and expand our customer base, and thereby decrease our revenue. 

Personal privacy, data protection and information security are significant issues in the United States and the 

other jurisdictions where we offer our solutions. The regulatory framework for privacy and security issues worldwide 
is rapidly evolving and is likely to remain uncertain for the foreseeable future. Our handling of data is subject to a 
variety of laws and regulations, including regulation by various government agencies, including the U.S. Federal 
Trade Commission ("FTC") and various state, local and foreign bodies and agencies. 

30

The U.S. federal and various state and foreign governments have adopted or proposed limitations on the 

collection, distribution, use and storage of personal information of individuals, including end customers and 
employees. In the United States, the FTC and many state attorneys general are applying federal and state 
consumer protection laws to the online collection, use and dissemination of data. Additionally, many foreign 
countries and governmental bodies, including in Australia, Brazil, the European Union ("EU"), India, Japan and 
numerous other jurisdictions in which we operate or conduct our business, have laws and regulations concerning 
the collection and use of personal information obtained from their residents or by businesses operating within their 
jurisdiction. These laws and regulations often are more restrictive than those in the United States. Such laws and 
regulations may require companies to implement new privacy and security policies, permit individuals to access, 
correct and delete personal information stored or maintained by such companies, inform individuals of security 
breaches that affect their personal information, and, in some cases, obtain individuals’ consent to use personal 
information for certain purposes. In addition, a foreign government could require that any personally identifiable 
information collected in a country not be disseminated outside of that country, and we are not currently equipped to 
comply with such a requirement. 

We also expect that there will continue to be new proposed laws, regulations and industry standards 
concerning privacy, data protection and information security in the United States, the European Union and other 
jurisdictions, and we cannot yet determine the impact such future laws, regulations and standards may have on our 
business. For example, California has enacted the California Consumer Privacy Act ("CCPA"), which went into 
effect on January 1, 2020 and, among other things, requires covered companies to provide new disclosures to 
California consumers and afford such consumers new abilities to opt-out of certain sales of personal information. In 
addition, the California Privacy Rights Act ("CPRA"), which would significantly amend the CCPA and generally 
expand consumers’ privacy rights and protections with respect to their personal information, is on the California 
November 2020 ballot. We cannot yet predict the full impact of the CCPA (or potentially the CPRA if enacted) on 
our business or operations, but it has and may continue to require us to modify our data processing practices and 
policies and to incur substantial costs and expenses in an effort to comply. Additionally, the General Data Protection 
Regulation ("GDPR"), which became effective in May 2018, superseded prior EU data protection legislation, 
imposes more stringent EU data protection requirements, provides an enforcement authority which substantially 
increases compliance costs, and imposes large penalties for noncompliance. Certain other jurisdictions, including 
Brazil, have adopted or are considering legislation with obligations that are similar to the GDPR. 

Moreover, as a result of current and proposed data protection and privacy laws aimed at using personal data 
for marketing purposes, including the ePrivacy Regulation to replace the ePrivacy Directive in the European Union, 
we face an increased difficulty in marketing to current and potential customers, which impacts our ability to spread 
awareness of our products and services and, in turn, grow a customer base in some regions. There also remains 
significant uncertainty surrounding the regulatory framework for the future of personal data transfers from the EU or 
the European Economic Area ("EEA"), as applicable, to the United States. For example, in July 2020, the Court of 
Justice of the European Union ("CJEU") invalidated the EU-U.S. Privacy Shield framework ("Privacy Shield"), one of 
the mechanisms we use to legitimize the transfer of personal data from the EEA to the U.S. The CJEU decision also 
drew into question the long-term viability of an alternative means of data transfer upon which we rely, the standard 
contractual clauses, for transfers of personal data from the EU or the EEA to the U.S. This CJEU decision may lead 
to increased scrutiny on data transfers from the EU or the EEA to the U.S. generally and increase our liability and 
costs of compliance with data privacy legislation. Furthermore, we may experience a reluctance from current or 
prospective European customers to use our products and may find it necessary to make changes to our handling of 
personal data of our EEA customers. 

31

Additionally, following a referendum in June 2016 in which voters in the United Kingdom approved an exit from 

the EU, the United Kingdom government has initiated a process to leave the EU, known as Brexit. Brexit has 
created uncertainty with regard to the regulation of data protection in the United Kingdom. In particular, while the 
Data Protection Act of 2018, which implements and complements the GDPR achieved Royal Assent on May 23, 
2018 and is now effective in the United Kingdom, it is still unclear whether transfer of data from the EEA to the 
United Kingdom will remain lawful under the GDPR. During the period of “transition” (i.e., until December 31, 2020), 
EU law will continue to apply in the United Kingdom, including the GDPR, after which the Data Protection Act will 
substantially convert the requirements of the GDPR into United Kingdom law. However, we cannot fully predict how 
the Data Protection Act and other United Kingdom data protection laws or regulations may develop in the medium 
to longer term, affecting how data transfers to and from the United Kingdom will be regulated. We continue to 
monitor and review the impact of any resulting changes to EU or United Kingdom law that could affect our 
operations. Beginning in 2021, the United Kingdom will be a “third country” under the GDPR. We may incur 
liabilities, expenses, costs, and other operational losses under the GDPR and privacy laws of applicable EU 
member states and the United Kingdom in connection with any measures we take to comply with them. 

As we begin to offer more cloud-based services, we will increasingly be positioned as a data processor, which 

imposes additional obligations under the foregoing and other laws and regulations relating to privacy and data 
protection, and may increase our liability exposure by operation of law, contract, or penalties for noncompliance. 
Additionally, we expect that existing laws, regulations and standards may be interpreted in new manners in the 
future. Current or future laws, regulations, standards and other obligations, as well as changes in the interpretation 
of existing laws, regulations, standards and other obligations could impair our or our customers’ ability to collect, 
use or disclose information relating to individuals, which could decrease demand for our solutions, require us to 
restrict our business operations, increase our costs and impair our ability to maintain and grow our customer base 
and increase our revenue.

Although we are working to comply with those federal, state and foreign laws and regulations, industry 
standards, contractual obligations and other legal obligations that apply to us, those laws, regulations, standards 
and obligations are evolving and may be modified, interpreted and applied in an inconsistent manner from one 
jurisdiction to another, and may conflict with one another, other requirements or legal obligations, our practices or 
the features of our solutions. As such, we cannot assure ongoing compliance with all such laws or regulations, 
industry standards, contractual obligations and other legal obligations. Any failure or perceived failure by us to 
comply with federal, state or foreign laws or regulations, industry standards, contractual obligations or other legal 
obligations, or any actual or suspected security incident, whether or not resulting in unauthorized access to, or 
acquisition, release or transfer of personal information or other data, may result in governmental enforcement 
actions and prosecutions, private litigation, fines and penalties or adverse publicity and could cause our customers 
to lose trust in us, which could have an adverse effect on our reputation, brand and business. Any inability to 
adequately address privacy and security concerns, even if unfounded, or comply with applicable laws, regulations, 
policies, industry standards, contractual obligations or other legal obligations could result in additional cost and 
liability to us, damage our reputation and brand, inhibit sales and adversely affect our business and operating 
results. 

32

Failure to comply with anticorruption and anti-money laundering laws, including the U.S. Foreign Corrupt 
Practices Act of 1977, as amended ("FCPA"), and similar laws associated with our activities outside of the 
United States could subject us to penalties and other adverse consequences. 

We are subject to the FCPA, the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the U.S. Travel 

Act, the USA PATRIOT Act, the United Kingdom Bribery Act of 2010 ("U.K. Bribery Act") and possibly other anti-
bribery and anti-money laundering laws in countries in which we conduct activities. We face significant risks if we 
fail to comply with the FCPA and other anticorruption laws that prohibit companies and their employees and third-
party intermediaries from authorizing, offering or providing, directly or indirectly, improper payments or benefits to 
foreign government officials, political parties and private-sector recipients for the purpose of obtaining or retaining 
business, directing business to any person or securing any advantage. In many foreign countries, particularly in 
countries with developing economies, it may be a local custom that businesses engage in practices that are 
prohibited by the FCPA or other applicable laws and regulations. In addition, we use various third parties to sell our 
solutions and conduct our business abroad. We or our third-party intermediaries may have direct or indirect 
interactions with officials and employees of government agencies or state-owned or affiliated entities and we can be 
held liable for the corrupt or other illegal activities of these third-party intermediaries, our employees, 
representatives, contractors, partners and agents, even if we do not explicitly authorize such activities. We continue 
to update and implement our FCPA/anti-corruption compliance program and no assurance can be given that all of 
our employees and agents, as well as those companies to which we outsource certain of our business operations, 
will not take actions in violation of our policies and applicable law, for which we may be ultimately held responsible. 

Any violation of the FCPA, other applicable anticorruption laws and anti-money laundering laws could result in 
whistleblower complaints, adverse media coverage, investigations, loss of export privileges, severe criminal or civil 
sanctions and, in the case of the FCPA, suspension or debarment from U.S. government contracts, which could 
have a material and adverse effect on our reputation, brand, business, operating results and prospects. In addition, 
responding to any enforcement action may result in a materially significant diversion of management’s attention and 
resources and significant defense costs and other third-party professional fees. 

We are subject to governmental export and import controls that could impair our ability to compete in 
international markets or subject us to liability if we violate the controls. 

Our solutions are subject to U.S. export controls, including the Export Administration Regulations and 

economic sanctions administered by the Office of Foreign Assets Control, and we incorporate encryption 
technology into certain of our solutions. These encryption products and the underlying technology may be exported 
outside of the United States only with the required export authorizations, including by license, a license exception or 
other appropriate government authorizations, including the filing of an encryption registration. 

Furthermore, our activities are subject to the U.S. economic sanctions laws and regulations that prohibit the 

shipment of certain products and services without the required export authorizations, including to countries, 
governments and persons targeted by U.S. embargoes or sanctions. Additionally, the U.S. government has recently 
been critical of existing trade agreements and may impose more stringent export and import controls. Obtaining the 
necessary export license or other authorization for a particular sale may be time-consuming and may result in the 
delay or loss of sales opportunities even if the export license ultimately may be granted. While we take precautions 
to prevent our solutions from being exported in violation of these laws, including obtaining authorizations for our 
encryption products, implementing IP address blocking and screenings against U.S. government and international 
lists of restricted and prohibited persons, we cannot guarantee that the precautions we take will prevent violations of 
export control and sanctions laws. Violations of U.S. sanctions or export control laws can result in significant fines or 
penalties and possible incarceration for responsible employees and managers could be imposed for criminal 
violations of these laws. 

We also note that if our channel partners fail to obtain appropriate import, export or re-export licenses or 

permits, we may also be adversely affected, through reputational harm as well as other negative consequences 
including government investigations and penalties. We presently incorporate export control compliance 
requirements into our channel partner agreements; however, no assurance can be given that our channel partners 
will be able to comply with such requirements. 

33

Also, various countries, in addition to the United States, regulate the import and export of certain encryption 
and other technology, including import and export licensing requirements, and have enacted laws that could limit 
our ability to distribute our solutions or could limit our end customers’ ability to implement our solutions in those 
countries. Changes in our solutions or future changes in export and import regulations may create delays in the 
introduction of our solutions in international markets, prevent our end customers with international operations from 
deploying our solutions globally or, in some cases, prevent the export or import of our solutions to certain countries, 
governments, or persons altogether. From time to time, various governmental agencies have proposed additional 
regulation of encryption technology, including the escrow and government recovery of private encryption keys. Any 
change in export or import regulations, economic sanctions or related legislation, increased export and import 
controls stemming from U.S. government policies, or change in the countries, governments, persons or 
technologies targeted by such regulations, could result in decreased use of our solutions by, or in our decreased 
ability to export or sell our solutions to, existing or potential end customers with international operations. Any 
decreased use of our solutions or limitation on our ability to export or sell our solutions would adversely affect our 
business, operating results and prospects. 

Our international operations expose us to additional risks, and failure to manage those risks could adversely 
affect our business, operating results and cash flows. 

We derive a significant portion of our revenue from end customers and channel partners outside the United 

States. We derived approximately 44%, 45% and 46% of our total revenue from our international customers based 
on bill-to-location for fiscal 2018, 2019 and 2020, respectively. We are continuing to adapt to and develop strategies 
to address international markets but there is no guarantee that such efforts will have the desired effect. As of 
July 31, 2020, approximately 52% of our full-time employees were located outside of the United States. We expect 
that our international activities will continue to grow over the foreseeable future as we continue to pursue 
opportunities in existing and new international markets, which will require significant management attention and 
financial resources. We are subject to risks associated with having significant worldwide operations, including, but 
not limited to: 

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business practices may differ from those in the United States and may require us in the future to include 
terms other than our standard terms in customer, channel partner, employee, consultant and other 
contracts; 

political, economic and social instability or uncertainty around the world, including the results and 
impact of the United Kingdom's separation from the European Union, commonly known as "Brexit";

potential changes in trade relations arising from policy initiatives implemented by, or statements made 
by, the U.S. government, which has been critical of existing and proposed trade agreements;

the potential impact of tariffs or other trade restrictions imposed by, or threatened to be imposed by, the 
U.S. government, such as the tariffs imposed on Chinese imports to the U.S.;

greater difficulty in enforcing contracts, judgments and arbitration awards in international courts, and in 
collecting accounts receivable and longer payment and collection periods; 

greater risk of unexpected changes in regulatory practices, tariffs and tax laws and treaties; 

risks associated with trade restrictions and foreign legal requirements, including the importation, 
certification and localization of our solutions required in foreign countries; 

greater risk of a failure of foreign employees, partners, distributors and resellers to comply with both 
U.S. and foreign laws, including antitrust regulations, the FCPA, the U.K. Bribery Act, U.S. or foreign 
sanctions regimes and export or import control laws and any trade regulations ensuring fair trade 
practices; 

heightened risk of unfair or corrupt business practices in certain geographies and of improper or 
fraudulent sales arrangements that may impact financial results and result in restatements of, or 
irregularities in, financial statements; 

requirements to comply with foreign privacy, data protection and information security laws and 
regulations and the risks and costs of noncompliance; 

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•

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reduced or uncertain protection for intellectual property rights in some countries; 

impediments to the flow of foreign exchange capital payments and receipts due to exchange controls 
instituted by certain foreign governments; 

increased expenses incurred in establishing and maintaining corporate entities, office space and 
equipment for our international operations; 

difficulties in managing and staffing international offices and increased travel, infrastructure and legal 
and regulatory compliance costs associated with multiple international locations, including costs related 
to additional regulatory reviews or audits, financial accounting and reporting obligations and 
international cybersecurity requirements; 

greater difficulty in identifying, attracting and retaining local experienced personnel, and the costs and 
expenses associated with such activities; 

the challenge of managing a development team in geographically disparate locations; 

• management communication and integration problems resulting from cultural and geographic 

dispersion; 

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differing employment practices and labor relations issues; 

fluctuations in exchange rates between the U.S. dollar and foreign currencies in markets where we do 
business; and 

treatment of revenue from international sources for tax purposes and changes in tax laws, regulations 
or official interpretations, including being subject to foreign tax laws and being liable for paying 
withholding, income or other taxes in foreign jurisdictions.

As we expand our business globally, our success will depend, in large part, on our ability to anticipate and 
effectively manage these risks. These factors and other factors could harm our ability to gain future international 
revenue and, consequently, materially impact our business, operating results and financial condition. The expansion 
of our existing international operations and entry into additional international markets will require significant 
management attention and financial resources. Our failure to successfully manage our international operations and 
the associated risks effectively could limit the future growth of our business.

A number of our solutions incorporate software provided under open source licenses which may restrict or 
impose certain obligations on how we use or distribute our solutions or subject us to various risks and 
challenges, which could result in increased development expenses, delays or disruptions to the release or 
distribution of those solutions, inability to protect our intellectual property rights and increased competition. 

Certain significant components of our solutions incorporate or are based upon open source software, and we 

may incorporate open source software into other solutions in the future. Such open source software is generally 
licensed under open source licenses, including, for example, the GNU General Public License, the GNU Lesser 
General Public License, "Apache-style" licenses, "BSD-style" licenses and other open source licenses. The use of 
open source software subjects us to a number of risks and challenges, including, but not limited to: 

•

If open source software programmers, most of whom we do not employ, do not continue to develop and 
enhance open source technologies, our development expenses could increase and our product release 
and upgrade schedules could be delayed. 

• Open source software is open to further development or modification by anyone. As a result, others 
may develop such software to be competitive with our platform and may make such competitive 
software available as open source. It is also possible for competitors to develop their own solutions 
using open source software, potentially reducing the demand for, and putting price pressure on, our 
solutions. 

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•

•

The licenses under which we license certain types of open source software may require that, if we 
modify the open source software we receive, we are required to make such modified software and other 
related proprietary software of ours publicly available without cost and on the same terms. In addition, 
some open source licenses appear to be permissive in that internal use of the open source software is 
allowed, but prohibit commercial uses, or treat provision of cloud services as triggering the requirement 
to make proprietary software publicly available. Accordingly, we monitor our use of open source 
software in an effort to avoid subjecting our proprietary software to such conditions and others we do 
not intend. Although we believe that we have complied with our obligations under the various applicable 
licenses for open source software that we use, our processes used to monitor how open source 
software is used could be subject to error. In addition, there is little or no legal precedent governing the 
interpretation of terms in most of these licenses and licensors sometimes change their license terms. 
Therefore, any improper usage of open source, including a failure to identify changes in license terms, 
could result in unanticipated obligations regarding our solutions and technologies, which could have an 
adverse impact on our intellectual property rights and our ability to derive revenue from solutions 
incorporating the open source software. 

If an author or other third party that distributes such open source software were to allege that we had 
not complied with the conditions of one or more of these licenses, we could be required to incur legal 
expenses defending against such allegations, or engineering expenses in developing a substitute 
solution.

If we are unable to successfully address the challenges of integrating offerings based upon open source 
technology into our business, our business and operating results may be adversely affected and our development 
costs may increase. 

Adverse or uncertain macroeconomic or geopolitical conditions or reduced IT spending may adversely 
impact our business, revenues and profitability.

Our business, operations and performance are dependent in part on worldwide economic conditions and 
events that may be outside of our control, such as political and social unrest, terrorist attacks, hostilities, malicious 
human acts, climate change, natural disasters (including extreme weather), pandemics or other major public health 
concerns and other similar events, and the impact these conditions and events have on the overall demand for 
enterprise computing infrastructure solutions and on the economic health and general willingness of our current and 
prospective end customers to purchase our solutions and to continue spending on IT in general. The global 
macroeconomic environment has been, and may continue to be, inconsistent, challenging and unpredictable due to 
the ongoing COVID-19 pandemic, international trade disputes or tensions, tariffs, including those imposed by the 
U.S. government on Chinese imports to the U.S., restrictions on sales and technology transfers, uncertainties 
related to changes in public policies such as domestic and international regulations and fiscal and monetary 
stimulus measures, taxes, or international trade agreements, actual or potential government shutdowns, elections 
and any related political instability, including potential additional U.S. government shutdowns and developments 
resulting from the 2020 U.S. presidential election, geopolitical turmoil and civil unrests, instability in the global credit 
markets, uncertainties regarding the effects of the United Kingdom’s separation from the European Union, 
commonly known as "Brexit," and other disruptions to global and regional economies and markets.

These macroeconomic challenges and uncertainties, including the COVID-19 pandemic, have, and may 
continue to, put pressure on global economic conditions and overall IT spending and may cause our end customers 
to modify spending priorities or delay or abandon purchasing decisions, thereby lengthening sales cycles and 
potentially lowering prices for our solutions, and may make it difficult for us to forecast our sales and operating 
results and to make decisions about future investments, any of which could materially harm our business, operating 
results and financial condition.

36

We are exposed to fluctuations in currency exchange rates, which could negatively affect our operating 
results. 

Our sales contracts are denominated in U.S. dollars, and therefore, substantially all of our revenue is not 
subject to foreign currency risk. However, a relative strengthening of the U.S. dollar could increase the real cost of 
our solutions to our end customers outside of the United States, which could adversely affect our financial condition 
and operating results. In addition, an increasing portion of our operating expenses is incurred outside the United 
States, is denominated in foreign currencies such as the Euro, the Pound Sterling, the Indian Rupee, the Canadian 
Dollar and the Australian Dollar, and is subject to fluctuations due to changes in foreign currency exchange rates. In 
particular, the ongoing COVID-19 pandemic has caused, and may continue to cause, significant volatility in the 
currency exchange rates, and such volatility may continue for the duration of and possibly beyond the COVID-19 
pandemic. If we become more exposed to currency fluctuations and are not able to successfully hedge against the 
risks associated with currency fluctuations, our operating results could be adversely affected. Furthermore, such 
currency fluctuations may also adversely impact our ability to accurately predict our future financial results. To date, 
we have not entered into any hedging arrangements with respect to foreign currency risk or other derivative 
instruments.

Taxing authorities may successfully assert that we should have collected or in the future should collect sales 
and use, value added or similar taxes, and we could be subject to liability with respect to past or future sales, 
which could adversely affect our operating results. 

We do not collect sales and use, value added or similar taxes in all jurisdictions in which we have sales, and 

we have been advised that such taxes are not applicable to our products and services in certain jurisdictions. Sales 
and use, value added and similar tax laws and rates vary greatly by jurisdiction. Certain jurisdictions in which we do 
not collect such taxes may assert that such taxes are applicable. The U.S. Supreme Court’s decision in South 
Dakota v. Wayfair, Inc. increases states’ ability to assert taxing jurisdiction on out-of-state retailers could result in 
additional jurisdictions asserting that sales and use or other taxes apply to our products and services. The assertion 
that such taxes are applicable by a jurisdiction in which we do not collect such taxes could result in tax 
assessments, penalties and interest, to us or our end customers for the past amounts, and we may be required to 
collect such taxes in the future. If we are unsuccessful in collecting such taxes from our end customers, we could be 
held liable for such costs, which may adversely affect our operating results. 

Our international operations may subject us to potential adverse tax consequences. 

We have expanded and, in the long-term, anticipate continuing to expand our international operations and staff 

to better support our growth into the international markets. Our corporate structure and associated transfer pricing 
policies contemplate the business flows and future growth into the international markets, and consider the functions, 
risks and assets of the various entities involved in the intercompany transactions. The amount of taxes we pay in 
different jurisdictions may depend on the application of the tax laws of the various jurisdictions, including the United 
States, to our international business activities, changes in tax rates, new or revised tax laws or interpretations of 
existing tax laws and policies and our ability to operate our business in a manner consistent with our corporate 
structure and intercompany arrangements. The taxing authorities of the jurisdictions in which we operate may 
challenge our methodologies for pricing intercompany transactions pursuant to the intercompany arrangements or 
disagree with our determinations as to the income and expenses attributable to specific jurisdictions. If such a 
challenge or disagreement were to occur, and our position was not sustained, we could be required to pay 
additional taxes, interest and penalties, which could result in one-time tax charges, higher effective tax rates, 
reduced cash flows and lower overall profitability of our operations. Our financial statements could fail to reflect 
adequate reserves to cover such a contingency. 

37

Changes in global tax laws could increase our worldwide tax rate and could have a material adverse effect 
on our business, cash flow, results of operations or financial conditions. 

In December 2017, the U.S. Congress passed and the President signed legislation commonly referred to as 
the Tax Cuts and Jobs Act ("TCJA"), which includes a broad range of tax reform proposals affecting businesses, 
including a federal corporate rate reduction from 35% to 21%; limitations on the deductibility of interest expense and 
executive compensation; creation of new minimum taxes such as the base erosion anti-abuse tax, Global Intangible 
Low Taxed Income; and a new minimum tax on certain foreign earnings. 

In June 2019, the U.S. Court of Appeals for the Ninth Circuit overturned the 2015 U.S. tax court decision in 
Altera Corp. v. Commissioner ("Altera"). The Ninth Circuit’s opinion upholds Treasury Regulations requiring the 
inclusion of stock-based compensation costs under cost sharing agreements. On July 22, 2019, the taxpayer 
requested an en banc rehearing before the full Ninth Circuit Court of Appeals and the request was denied on 
November 12, 2019. On February 10, 2020, the taxpayer filed a petition for writ of certiorari to the U.S. Supreme 
Court. In June 2020, the U.S. Supreme Court denied certiorari in the case of Altera. We have concluded that the 
law remains unsettled and continue to record unrecognized tax benefit as we exclude stock-based compensation 
costs from our cost sharing arrangements. Any potential impact of a final adverse decision would result in 
adjustments to deferred tax assets and corresponding adjustments to the valuation allowance. We will continue to 
monitor developments and the potential effect on its consolidated financial statements and tax filings.

In addition, international organizations such as the Organization for Economic Cooperation and Development, 

have published Base Erosion and Profit Shifting action plans that, if adopted by countries where we do business, 
could increase our tax obligations in these countries. We will continue to assess the ongoing impact of these current 
and pending changes to global tax legislation and the impact on the Company's future financial statements upon the 
finalization of laws, regulations and additional guidance. In addition, we have continued to evaluate our corporate 
structure. Any changes to the taxation of undistributed foreign earnings could change our plans regarding 
reinvestment of such earnings. Due to the large scale of our U.S. and international business activities, many of 
these enacted and proposed changes to the taxation of our activities could increase our worldwide effective tax rate 
and have an adverse effect on our operating results, cash flow or financial condition.

Certain EU and other jurisdictions have introduced anti-hybrid provisions, which came into force in EU member 

states on January 1, 2020 (subject to relevant derogations). The scope of these rules is wide-reaching and can 
apply to disallow certain deductions for corporate tax purposes where hybrid entities exist within a company 
structure. These provisions may place additional burden on our management to assess the impact of the rules and 
potentially create additional tax costs. EU countries and other jurisdictions will continue to interpret or issue 
additional guidance on how provisions of the anti-hybrid will be applied, which, if applicable, may materially impact 
our financial statements and cash flow. Separately, as a result of the complexity of, and lack of clear precedent or 
authority with respect to, the application of various income tax laws to our corporate structure, tax authorities may 
challenge how we report our transactions, which may increase our costs and impact our operations.

The determination of our worldwide provision for income taxes and other tax liabilities requires significant 

judgment by management and involves dealing with uncertainties in the application of complex global tax 
regulations. Although we believe that our estimates are reasonable, the ultimate tax outcome may differ from the 
amounts recorded in our consolidated financial statements and may materially affect our financial results in the 
period or periods for which such determination is made.

38

Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.

In general, under Section 382 of the United States Internal Revenue Code of 1986, as amended (the "Code"), 
a corporation that undergoes an ownership change is subject to limitations on its ability to utilize its pre-change net 
operating losses ("NOLs"), and other tax attributes to offset future taxable income. An ownership change occurs 
when a company’s "five-percent shareholders" (as defined in Section 382 of the Code) collectively increase their 
ownership in the company by more than 50 percentage points (by value) over a rolling three-year period. Similar 
limitations may apply for state tax purposes. If our existing NOLs are subject to limitations arising from previous 
ownership changes, our ability to utilize NOLs could be limited by Section 382 of the Code. In addition, we may 
experience ownership changes in the future as a result of subsequent shifts in our stock ownership. Moreover, the 
TCJA eliminates the carryback and permits the indefinite carryforward of NOLs arising in tax years beginning after 
December 31, 2017 (whereas NOLs arising in tax years beginning on or prior to that date continue to have a two-
year carryback and 20 year carryforward), and limits the deductibility of NOLs arising in tax years beginning after 
December 31, 2017 to 80% of current year taxable income. As a result, if we earn net taxable income, our ability to 
use our NOLs and other tax attributes to offset U.S. federal taxable income may be subject to limitations, which 
could potentially result in increased future tax liability to us.

The Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") enacted on March 27, 2020 lifts 
certain deduction limitations originally imposed by the TCJA. Under the CARES Act, we will be able to carryback 
federal NOLs to offset prior year taxable income generated in tax years beginning after December 31, 2017 and 
before January 1, 2021. This provision does not impact us, as we have NOLs in the applicable tax years.

Our business is subject to the risks of natural disasters (including extreme weather), man-made problems, 
pandemics and other major public health concerns and other similar events that may be outside of our 
control. 

Significant natural disasters (such as earthquakes, fires, floods, and extreme weather), man-made problems 

(such as significant power outages, security breaches, acts of terrorism or war, civil unrests, or geopolitical turmoil), 
pandemics or other major public health concerns (such as the ongoing COVID-19 pandemic) and other similar 
events that may be outside of our control could have an adverse impact on our business and operating results. For 
example, despite the implementation of network security measures, our networks also may be vulnerable to 
computer viruses, break-ins and similar disruptions from unauthorized tampering with our solutions. Further, both 
our corporate headquarters and our main contract manufacturers are located in the San Francisco Bay Area, a 
region known for seismic activity. In addition, natural disasters (including extreme weather), man-made problems 
and pandemics or other major public health concerns could cause disruptions in our or our end customers’ or 
channel partners’ businesses, our suppliers’ and manufacturers’ operations or the global economy as a whole. We 
also rely on IT systems to communicate among our workforce and with third parties. Any disruption to our 
communications, whether caused by a natural disaster or by man-made problems, such as power disruptions, could 
adversely affect our business. We do not have a formal disaster recovery plan or policy in place and do not 
currently require that our manufacturing partners have such plans or policies in place. To the extent that any such 
disruptions result in delays or cancellations of orders or impede our suppliers’ or our manufacturers’ ability to timely 
deliver our solutions and product components, or the deployment of our solutions, our business, operating results 
and financial condition would be adversely affected. We do maintain what we believe are commercially reasonable 
levels of business interruption insurance. However, such insurance may not adequately cover our losses in the 
event of a significant disruption in our business. 

39

If we are the victim of a cyber attack or other cyber security incident and our networks, computer systems or 
software solutions are breached or unauthorized access to sensitive or proprietary information, including 
employee or customer data, otherwise occurs, our business operations may be interrupted, our reputation 
and brand may be damaged, and we may incur significant liabilities. 

Cyber attacks designed to gain access to sensitive or proprietary information by breaching mission critical 
systems of large organizations are constantly evolving, and high-profile electronic security breaches leading to the 
unauthorized release of sensitive or proprietary information, including employee and customer information, have 
occurred at a number of large companies in recent years. Companies in our industry have reported that they have 
been subject to cyber attacks, including attacks potentially from nation-state actors, and we could be subject to 
similar attacks. Computer malware, viruses, social engineering (predominantly spear phishing attacks) and general 
hacking have become more prevalent in our industry, particularly against cloud services, and companies like us can 
suffer security breaches from a variety of causes, whether due to third-party action, software bugs or vulnerabilities 
or coding errors, physical break-ins, employee error, malfeasance or otherwise. As we transition to offering more 
cloud-based solutions, such as Nutanix Xi Cloud Services, as well as those based on our partnerships with third 
party public cloud providers, we may increasingly be the target of cyber threats. Because the techniques used and 
vulnerabilities exploited to obtain unauthorized access or to sabotage systems change frequently, and generally are 
not identified until they are launched against a target, we may be unable to anticipate these techniques or 
vulnerabilities or implement adequate preventative measures. We may also experience security breaches that may 
remain undetected for an extended period. If any unauthorized access to or security breach of our solutions occurs, 
or is believed to have occurred, such an event or perceived event could result in the loss of data, loss of intellectual 
property or trade secrets, loss of business, severe reputational or brand damage adversely affecting end customer 
or investor confidence, regulatory investigations and orders, litigation, indemnity obligations, damages for contract 
breach and penalties for violation of privacy, data protection and other applicable laws, regulations or contractual 
obligations. We may also be subject to significant costs for remediation that may include liability for stolen assets or 
information and repair of system damage that may have been caused or incentives offered to end customers or 
other business partners in an effort to maintain business relationships after a breach and other liabilities. 
Additionally, any such event or perceived event could impact our reputation and brand, harm customer confidence, 
hurt our sales and expansion into existing and new markets or cause us to lose potential or existing end customers. 
Furthermore, a high-profile security breach suffered, or perceived to have been suffered, by an industry peer may 
entail a general loss of trust in our industry and thereby have a similar adverse impact on our business and financial 
performance as a direct breach suffered by us. We could be required to expend significant capital and other 
resources to alleviate problems caused by such actual or perceived breaches and to remediate our systems, we 
could be exposed to a risk of loss, litigation or regulatory action and possible liability, and our ability to operate our 
business may be impaired. Additionally, actual, potential or anticipated attacks may cause us to incur increasing 
costs, including costs to deploy additional personnel and protection technologies, train employees and engage third-
party experts and consultants. 

In addition, if the security measures of our end customers, partners, vendors, or suppliers are compromised, 

even without any actual compromise of our own systems or of our solutions used by such end customers, partners, 
vendors, or suppliers, we may face negative publicity, reputational harm or brand damage if our end customers, 
partners, vendors, or suppliers or anyone else incorrectly attributes the blame for such security breaches to us or 
our solutions. If end customers believe that our solutions do not provide adequate security for the storage of 
personal or other sensitive or proprietary information or the transmission of such information over the internet, our 
business will be harmed. End customers’ concerns about security or privacy may deter them from using our 
solutions for activities that involve personal or other sensitive information, which may significantly affect our 
business and operating results. Moreover, we have acquired a number of companies, products, services and 
technologies over the years. Although we devote significant resources to address any security issues with respect 
to such acquisitions, we may still inherit additional risks as we integrate these companies, products, services and 
technologies into our business and solutions.

40

We have expanded and may further expand through acquisitions of, or investments in, other companies, 
each of which may divert our management’s attention, resulting in additional dilution to our stockholders 
and consumption of resources that are necessary to sustain and grow our business. 

Our business strategy may, from time to time, include acquiring other complementary products, technologies 
or businesses. For example, in August 2018 we acquired Mainframe2, Inc., in March 2018 we acquired Minjar, Inc. 
and Netsil Inc., in August 2016, we acquired Calm.io Pte. Ltd. and in September 2016, we acquired PernixData, Inc. 
We also may enter into relationships with other businesses in order to expand our solutions, which could involve 
preferred or exclusive licenses, additional channels of distribution or discount pricing or investments in other 
companies. Negotiating these transactions can be time-consuming, difficult and expensive, and our ability to close 
these transactions may be subject to third-party approvals, such as government regulatory approvals, which are 
beyond our control. Consequently, we can make no assurance that these transactions once undertaken and 
announced, will close. 

These kinds of acquisitions or investments may result in unforeseen expenditures and operating and 

integration difficulties, especially if the acquisitions or investments are more complex in structure and scope, 
including due to the geographic location of the acquired company. In particular, we may encounter difficulties 
assimilating or integrating the businesses, technologies, products, personnel or operations of companies that we 
may acquire, particularly if the key personnel of the acquired business choose not to work for us. We may have 
difficulty retaining the customers of any acquired business or the acquired technologies or research and 
development expectations may prove unsuccessful. Acquisitions may also disrupt our ongoing business, divert our 
resources, require significant management attention that would otherwise be available for development of our 
business and may be viewed negatively by our end customers, investors or securities analysts. We may not 
successfully evaluate or utilize the acquired technology or personnel, or accurately forecast the financial impact of 
an acquisition transaction, including accounting charges. Any acquisition or investment could expose us to unknown 
liabilities and risks, and we may incur additional costs and expenses necessary to address an acquired company’s 
failure to comply with laws and governmental rules and regulations. Moreover, we cannot assure you that the 
anticipated benefits of any acquisition or investment would be realized in a timely manner, if at all, or that we would 
not be exposed to unknown liabilities. In connection with these types of transactions, we may issue additional equity 
securities that would dilute our stockholders, use cash that we may need in the future to operate our business, incur 
debt on terms unfavorable to us or that we are unable to repay, incur large charges or substantial liabilities, 
encounter difficulties integrating diverse business cultures and become subject to adverse tax consequences, 
substantial depreciation or deferred compensation charges. These challenges related to acquisitions or investments 
could adversely affect our business, operating results, financial condition and prospects. 

Regulations related to conflict minerals may cause us to incur additional expenses and could limit the 
supply and increase the costs of certain metals used in the manufacturing of our solutions. 

We are subject to the requirements under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 

2010 ("Dodd-Frank Act") that have and will continue to require us to perform due diligence and disclose and report 
whether our solutions contain conflict minerals. Although the SEC has provided guidance with respect to a portion 
of the conflict mineral filing requirements that has and may continue to somewhat reduce our reporting practices, we 
have incurred and expect to incur additional costs to comply with these disclosure requirements, and the 
requirements could adversely affect the sourcing, availability and pricing of the materials used in the manufacture of 
components used in our products. 

Risks Related to Our Long-Term Debt

In January 2018, we issued $575.0 million in aggregate principal amount of 0% Convertible Senior Notes due 
2023 (the "2023 Notes"), in private placements to qualified institutional buyers. We expect to issue $750.0 million in 
aggregate principal amount of 2.5% Convertible Senior Notes due 2026 (the "2026 Notes," together with the 2023 
Notes, the "Notes") in September 2020. The 2026 Notes will bear interest at a rate of 2.50% per annum, with such 
interest to be paid in kind on the Notes held by Bain Capital through an increase in the principal amount of the 
Notes and in cash on the Notes transferred to entities not affiliated with Bain Capital. Interest on the 2026 Notes will 
accrue from the date of issuance and be added to the principal amount of such Notes on a semi-annual basis 
thereafter.

41

We may not have the ability to raise the funds necessary to settle conversions of the Notes in cash or to 
repurchase the Notes upon a fundamental change, and our future debt may contain limitations on our ability 
to pay cash upon conversion or repurchase of the Notes.

Holders of the Notes will have the right to require us to repurchase all or a portion of their Notes upon the 
occurrence of a fundamental change before the maturity date at a repurchase price equal to 100% of the principal 
amount of the Notes to be repurchased, plus accrued and unpaid special interest, if any. In addition, upon 
conversion of the Notes, unless we elect to deliver solely shares of our Class A common stock to settle such 
conversion (other than paying cash in lieu of delivering any fractional share), we will be required to make cash 
payments in respect of the Notes being converted. Moreover, we will be required to repay the Notes in cash at their 
maturity unless earlier converted or repurchased. However, we may not have enough available cash or be able to 
obtain financing at the time we are required to make repurchases of Notes surrendered therefor or pay cash with 
respect to Notes being converted or at their maturity.

In addition, our ability to repurchase Notes or to pay cash upon conversions of Notes or at their maturity may 
be limited by law, regulatory authority or agreements governing our future indebtedness. Our failure to repurchase 
Notes at a time when the repurchase is required by the indenture or to pay cash upon conversions of Notes or at 
their maturity as required by the indenture would constitute a default under the indenture. A default under the 
indenture or the fundamental change itself could also lead to a default under agreements governing our future 
indebtedness. Moreover, the occurrence of a fundamental change under the indenture could constitute an event of 
default under any such agreement. If the payment of the related indebtedness were to be accelerated after any 
applicable notice or grace periods, we may not have sufficient funds to repay the indebtedness or to pay cash 
amounts due upon conversion, upon required repurchase or at maturity of the Notes.

The conditional conversion feature of the Notes, if triggered, may adversely affect our financial condition 
and operating results.

In the event the conditional conversion feature of the Notes is triggered, holders of the Notes will be entitled to 
convert their Notes at any time during specified periods at their option. If one or more holders elect to convert their 
Notes, unless we elect to satisfy our conversion obligation by delivering solely shares of our Class A common stock 
(other than paying cash in lieu of delivering any fractional share), we would be required to settle a portion or all of 
our conversion obligation in cash, which could adversely affect our liquidity. In addition, even if holders of Notes do 
not elect to convert their Notes, we could be required under applicable accounting rules to reclassify all or a portion 
of the outstanding principal of the Notes as a current rather than long-term liability, which would result in a material 
reduction of our net working capital.

The accounting method for convertible debt securities that may be settled in cash, such as the Notes, could 
have a material effect on our reported financial results.

Under Accounting Standards Codification 470-20, Debt with Conversion and Other Options ("ASC 470-20"), an 

entity must separately account for the liability and equity components of the convertible debt instruments, such as 
the Notes, that may be settled entirely or partially in cash upon conversion in a manner that reflects the issuer’s 
economic interest cost. The effect of ASC 470-20 on the accounting for the Notes is that the equity component is 
required to be included in the additional paid-in capital section of stockholders’ equity on our consolidated balance 
sheet at the issuance date and the value of the equity component would be treated as debt discount for the purpose 
of accounting for the debt component of the Notes. As a result, we are required to record non-cash interest expense 
as a result of the amortization of the discounted carrying value of the Notes to their face amount over the term of the 
Notes. We will report larger net losses (or lower net income) in our financial results because ASC 470-20 will require 
interest to include the amortization of the debt discount, which could adversely affect our reported or future financial 
results or the trading price of our Class A common stock.

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In addition, under certain circumstances, convertible debt instruments (such as the Notes) that may be settled 

entirely or partly in cash may be accounted for utilizing the treasury stock method, the effect of which is that the 
shares issuable upon conversion of such Notes are not included in the calculation of diluted earnings per share 
except to the extent that the conversion value of such Notes exceeds their principal amount. Under the treasury 
stock method, for diluted earnings per share purposes, the transaction is accounted for as if the number of shares 
of Class A common stock that would be necessary to settle such excess, if we elected to settle such excess in 
shares, are issued. We cannot be sure that the accounting standards in the future will continue to permit the use of 
the treasury stock method. If we are unable or otherwise elect not to use the treasury stock method in accounting 
for the shares issuable upon conversion of the Notes, then our diluted earnings per share could be adversely 
affected.

The convertible note hedge and warrant transactions may affect the value of the Notes and our Class A 
common stock.

In connection with the pricing of the 2023 Notes, we entered into convertible note hedge transactions with one 
or more of the initial purchasers of the 2023 Notes and/or their respective affiliates or other financial institutions, or 
the option counterparties. We also entered into warrant transactions with the option counterparties pursuant to 
which we will sell warrants for the purchase of our Class A common stock. The convertible note hedge transactions 
are expected generally to reduce the potential dilution upon any conversion of 2023 Notes and/or offset any cash 
payments we are required to make in excess of the principal amount upon conversion of any 2023 Notes. The 
warrant transactions could separately have a dilutive effect to the extent that the market price per share of our Class 
A common stock exceeds the strike price of the warrants. 

The option counterparties and/or their respective affiliates may modify their hedge positions by entering into or 

unwinding various derivatives with respect to our Class A common stock and/or purchasing or selling our Class A 
common stock in secondary market transactions prior to the maturity of the 2023 Notes (and are likely to do so 
during any observation period related to a conversion of 2023 Notes or following any repurchase of 2023 Notes by 
us on any fundamental change repurchase date or otherwise). This activity could also cause or avoid an increase or 
a decrease in the market price of our Class A common stock. In addition, if any such convertible note hedge and 
warrant transactions fail to become effective, the option counterparties may unwind their hedge positions with 
respect to our Class A common stock, which could adversely affect the value of our Class A common stock.

The potential effect, if any, of these transactions and activities on the market price of our Class A common 

stock will depend in part on market conditions and cannot be ascertained at this time. Any of these activities could 
adversely affect the value of our Class A common stock.

We are subject to counterparty risk with respect to the convertible note hedge transactions.

The option counterparties will be financial institutions or affiliates of financial institutions, and we will be subject 

to the risk that one or more of such option counterparties may default under the convertible note hedge 
transactions. Our exposure to the credit risk of the option counterparties will not be secured by any collateral. If any 
option counterparty becomes subject to bankruptcy or other insolvency proceedings, we will become an unsecured 
creditor in those proceedings with a claim equal to our exposure at that time under our transactions with that option 
counterparty. Our exposure will depend on many factors but, generally, an increase in our exposure will be 
correlated to an increase in our Class A common stock market price and in the volatility of the market price of our 
Class A common stock. In addition, upon a default by an option counterparty, we may suffer adverse tax 
consequences and dilution with respect to our Class A common stock. We can provide no assurance as to the 
financial stability or viability of any option counterparty.

Risks Related to Ownership of Our Class A Common Stock 

The market price of our Class A common stock may be volatile and may decline. 

The market price of our Class A common stock has fluctuated and may continue to fluctuate substantially. The 
market price of our Class A common stock depends on a number of factors, including those described in this "Risk 
Factors" section, many of which are beyond our control and may not be related to our operating performance. 
These fluctuations could cause you to lose all or part of your investment in our Class A common stock. Factors that 
could cause fluctuations in the market price of our Class A common stock include the following:

•

price and volume fluctuations in the overall stock market from time to time; 

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volatility in the market prices and trading volumes of high technology stocks; 

changes in operating performance and stock market valuations of other technology companies 
generally, or those in our industry in particular; 

changes in financial estimates by any analysts who follow our company, including as a result of our 
plan to transition our business toward a subscription-based model, or our failure to meet these 
estimates or the expectations of investors; 

the financial projections we may provide to the public, any changes in these projections or our failure to 
meet these projections; 

announcements by us or our competitors of new products or new or terminated significant contracts, 
commercial relationships or capital commitments; 

public analyst or investor reaction to our press releases, other public announcements and filings with 
the SEC; 

rumors and market speculation involving us or other companies in our industry; 

actual or anticipated changes or fluctuations in our operating results; 

actual or anticipated developments in our business or our competitors’ businesses or the competitive 
landscape generally; 

actual or threatened litigation involving us, our industry or both, or investigations by regulators into our 
operations or those of our competitors; 

developments or disputes concerning our intellectual property or our solutions, or third-party proprietary 
rights; 

rumored, announced or completed acquisitions of businesses or technologies of or by us or our 
competitors; 

new laws or regulations or new interpretations of existing laws or regulations applicable to our business; 

changes in accounting standards, policies, guidelines, interpretations or principles; 

any major changes in our management or our Board of Directors; 

general economic conditions and slow or negative growth of our markets; and 

other events or factors which may be outside of our control, such as political and social unrest, terrorist 
attacks, hostilities, malicious human acts, climate change, natural disasters (including extreme 
weather), pandemics or other major public health concerns (such as the ongoing COVID-19 pandemic), 
and other similar events, or responses to these events.

In addition, the stock market in general, and the market for technology companies in particular, has 
experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the 
operating performance of those companies. Broad market and industry factors may seriously affect the market price 
of our Class A common stock, regardless of our actual operating performance. In addition, in the past, following 
periods of volatility in the overall market and the market prices of a particular company’s securities, securities class 
action litigation has often been instituted against that company. For example, following our earnings release in 
February 2019, the price of our Class A common stock fell significantly and, as a result, multiple class action 
securities lawsuits have been filed against us, as well as multiple shareholder derivative claims. These securities 
litigation matters, as well as any additional securities litigation matters that may be instituted against us, could result 
in substantial costs, divert our management’s attention and resources from our business, and adversely impact our 
reputation and brand. This could have an adverse effect on our business, operating results and financial condition. 

44

Sales of substantial amounts of our Class A common stock in the public markets, or the perception that they 
might occur, could reduce the price that our Class A common stock might otherwise attain and may dilute 
your voting power and your ownership interest in us. 

Sales of a substantial number of shares of our Class A common stock in the public markets, particularly sales 

by our directors, executive officers and significant stockholders, or the perception that these sales could occur, 
could adversely affect the market price of our Class A common stock.

We have reserved a substantial number of shares of our Class A common stock for issuance upon vesting or 
exercise of our equity compensation plans, upon conversion of the Notes and in relation to warrant transactions we 
entered into in connection with the pricing of the 2023 Notes.

In addition, certain holders of our Class B common stock are entitled to rights with respect to registration of 
these shares under the Securities Act, pursuant to our Amended and Restated Investors’ Rights Agreement. If such 
holders exercise their registration rights and sell a large number of shares, they could adversely affect the market 
price for our Class A common stock. We have also registered the offer and sale of all shares of Class A and Class B 
common stock that we may issue under our equity compensation plans.

We may also issue our shares of Class A common stock or additional securities convertible into shares of our 
Class A common stock from time to time in connection with a financing, acquisition, investments or otherwise. Any 
such issuance could result in substantial dilution to our existing stockholders and cause the market price of our 
Class A common stock to decline. 

Conversion of our Notes may dilute the ownership interest of existing stockholders, or may otherwise 
depress the price of our Class A common stock.

The conversion of some or all of our Notes, to the extent we deliver shares upon conversion thereof will dilute 

the ownership interests of existing stockholders, reduce our earnings per share and potentially have an adverse 
effect on the price of our Class A common stock. Any sales in the public market of our Class A common stock 
issuable upon such conversion could adversely affect prevailing market prices of our Class A common stock. In 
addition, the existence of the Notes may encourage short selling by market participants because the conversion of 
the Notes could be used to satisfy short positions, or anticipated conversion of the Notes into shares of our Class A 
common stock could depress the price of our Class A common stock.

The dual class structure of our common stock as contained in our charter documents has the effect of 
concentrating voting control with a limited number of stockholders that held our stock prior to our IPO, 
including our directors, executive officers, and employees, and their affiliates, and significant stockholders, 
which will limit your ability to influence corporate matters. 

Our Class B common stock has 10 votes per share, and our Class A common stock has one vote per share. 

As of July 31, 2020, stockholders who hold shares of Class B common stock, including our investors and our 
directors, executive officers and employees, and their affiliates, together hold a majority of the voting power of our 
outstanding capital stock. As a result, for the foreseeable future, such stockholders will have significant influence 
over the management and affairs of our company and over the outcome of all matters submitted to our stockholders 
for approval, including the election of directors and significant corporate transactions, such as a merger, 
consolidation or sale of substantially all of our assets. 

In addition, the holders of Class B common stock collectively will continue to control all matters submitted to 

our stockholders for approval even if their stock holdings represent less than 50% of the outstanding shares of our 
common stock. Because of the ten-to-one voting ratio between our Class B and Class A common stock, the holders 
of our Class B common stock collectively will continue to control a majority of the combined voting power of our 
common stock so long as the shares of Class B common stock represent at least 9.1% of all outstanding shares of 
our Class A and Class B common stock. This concentrated control will limit your ability to influence corporate 
matters for the foreseeable future, and, as a result, the market price of our Class A common stock could be 
adversely affected. These holders of our Class B common stock may also have interests that differ from yours and 
may vote in a way with which you disagree and which may be adverse to your interests, and, unless earlier 
converted at the election of the holders of 67% of our outstanding Class B common stock, our amended and 
restated certificate of incorporation provides for a dual class stock structure for 17 years following the completion of 
our IPO. 

45

Future transfers, whether or not for value, by holders of Class B common stock will generally result in those 
shares converting to Class A common stock, subject to limited exceptions, such as certain transfers affected for 
estate planning purposes. The conversion of shares of our Class B common stock into shares of our Class A 
common stock will have the effect, over time, of increasing the relative voting power of those holders of Class B 
common stock who retain their shares in the long term. If one or more significant holders of our Class B common 
stock decides to convert or sell their shares, it could result in a different group of Class B common stock holders 
having the power to exert significant influence over our company, which may or may not align with the strategy and 
direction set by our management. Any such changes could adversely affect the market price of our Class A 
common stock.

The requirements of being a public company may strain our resources, divert management’s attention and 
affect our ability to attract and retain qualified Board members. 

We are subject to the reporting and corporate governance requirements of the Exchange Act, the listing 
requirements of the Nasdaq Stock Market and other applicable securities rules and regulations, including the 
Sarbanes-Oxley Act and the Dodd-Frank Act. Compliance with these rules and regulations will increase our legal 
and financial compliance costs, make some activities more difficult, time-consuming or costly and increase demand 
on our systems and resources, particularly now that we are no longer an "emerging growth company," as defined in 
the Jumpstart Our Business Startups Act. Among other things, the Exchange Act requires that we file annual, 
quarterly and current reports with respect to our business and results of operations and maintain effective 
disclosure controls and procedures and internal control over financial reporting. In order to improve our disclosure 
controls and procedures and internal control over financial reporting to meet this standard, significant resources and 
management oversight may be required. As a result, management’s attention may be diverted from other business 
concerns, which could harm our business, financial condition, results of operations and prospects. Although we 
have already hired additional employees to help comply with these requirements, we may need to further expand 
our legal and finance departments in the future, which will increase our costs and expenses. 

In addition, changing laws, regulations and standards relating to corporate governance and public disclosure 

are creating uncertainty for public companies, increasing legal and financial compliance costs and making some 
activities more time-consuming. These laws, regulations and standards are subject to varying interpretations, in 
many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as 
new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding 
compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We 
intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result 
in increased general and administrative expense and a diversion of management’s time and attention from revenue-
generating activities to compliance activities. If our efforts to comply with new laws, regulations and standards differ 
from the activities intended by regulatory or governing bodies, regulatory authorities may initiate legal proceedings 
against us and our business and prospects may be harmed. As a result of our required public disclosures of 
information, our business and financial condition are more visible, which may result in threatened or actual litigation, 
including by competitors and other third parties. If such claims are successful, our business, financial condition, 
results of operations and prospects could be harmed, and even if the claims do not result in litigation or are resolved 
in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our 
management and harm our business, financial condition, results of operations and prospects. 

In addition, as a result of our disclosure obligations as a public company, we will have reduced strategic 
flexibility and will be under pressure to focus on short-term results, which may adversely affect our ability to achieve 
long-term profitability. 

46

If financial or industry analysts do not publish research or reports about our business, if they have a 
difficulty understanding the changes to our business model, or if they issue inaccurate or unfavorable 
research regarding our Class A common stock, our stock price and trading volume could decline. 

The trading market for our Class A common stock will be influenced by the research and reports that industry 
or financial analysts publish about us or our business. We do not control these analysts or the content and opinions 
included in their reports. In addition, we are in a period of transition to a subscription-based business model in the 
long term, which analysts may not have historically reflected, or may not accurately in the future reflect, in their 
research. The foregoing factors could affect analysts' ability to accurately forecast our results and make it more 
likely that we fail to meet their estimates. In the event we obtain industry or financial analyst coverage, if any of the 
analysts who cover us issue an inaccurate or unfavorable opinion regarding our Class A common stock, the price of 
our Class A common stock would likely decline. In addition, the stock prices of many companies in the high 
technology industry have declined significantly after those companies have failed to meet, or often times 
significantly exceeded, the financial guidance publicly announced by the companies or the expectations of analysts. 
If our financial results fail to meet (or significantly exceed) our announced guidance or the expectations of analysts 
or public investors, analysts could downgrade our Class A common stock or publish unfavorable research about us. 
If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, we could 
lose visibility in the financial markets, which in turn could cause the price of our Class A common stock or trading 
volume to decline, potentially significantly.

Certain provisions in our charter documents and under Delaware law could make an acquisition of our 
company more difficult, limit attempts by our stockholders to replace or remove members of our Board of 
Directors or current management and may adversely affect the market price of our Class A common stock. 

Our amended and restated certificate of incorporation and amended and restated bylaws contain provisions 

that could delay or prevent a change in control of our company. These provisions could also make it difficult for 
stockholders to elect directors that are not nominated by the current members of our Board of Directors or take 
other corporate actions, including effecting changes in our management. These provisions include: 

•

•

•

•

•

•

•

our amended and restated certificate of incorporation provides for a dual class common stock structure 
for 17 years following the completion of our IPO; 

a classified Board of Directors with three-year staggered terms, which could delay the ability of 
stockholders to change the membership of a majority of our Board of Directors; 

the ability of our Board of Directors to issue shares of preferred stock and to determine the price and 
other terms of those shares, including preferences and voting rights, without stockholder approval, 
which could be used to significantly dilute the ownership of a hostile acquirer; 

upon the conversion of our Class A common stock and Class B common stock into a single class of 
common stock, the exclusive right of our Board of Directors to elect a director to fill a vacancy created 
by the expansion of our Board of Directors or the resignation, death or removal of a director, which 
prevents stockholders from being able to fill vacancies on our Board of Directors; 

upon the conversion of our Class A common stock and Class B common stock into a single class of 
common stock, a prohibition on stockholder action by written consent, which forces stockholder action 
to be taken at an annual or special meeting of our stockholders; 

the requirement that a special meeting of stockholders may be called only by the chairman of our Board 
of Directors, our lead independent director, our president, our secretary or a majority vote of our Board 
of Directors, which could delay the ability of our stockholders to force consideration of a proposal or to 
take action, including the removal of directors; 

the requirement for the affirmative vote of holders of at least 66 2⁄3% of the voting power of all of the 
then outstanding shares of the voting stock, voting together as a single class, to amend the provisions 
of our amended and restated certificate of incorporation relating to the issuance of preferred stock and 
management of our business or our amended and restated bylaws, which may inhibit the ability of an 
acquirer to effect such amendments to facilitate an unsolicited takeover attempt; 

47

•

•

the ability of our Board of Directors, by majority vote, to amend our amended and restated bylaws, 
which may allow our Board of Directors to take additional actions to prevent an unsolicited takeover and 
inhibit the ability of an acquirer to amend our amended and restated bylaws to facilitate an unsolicited 
takeover attempt; and 

advance notice procedures with which stockholders must comply to nominate candidates to our Board 
of Directors or to propose matters to be acted upon at a stockholders’ meeting, which may discourage 
or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of 
directors or otherwise attempting to obtain control of us.

In addition, as a Delaware corporation, we are subject to Section 203 of the Delaware General Corporation 

Law. These provisions may prohibit large stockholders, in particular those owning 15% or more of our outstanding 
voting stock, from merging or combining with us for a certain period of time. 

We do not intend to pay dividends in the foreseeable future. As a result, your ability to achieve a return on 
your investment will depend on appreciation in the price of our Class A common stock. 

We have never declared or paid any cash dividends on our Class A common stock. We currently intend to 
retain all available funds and any future earnings for use in the operation and expansion of our business and do not 
anticipate paying any dividends on our Class A common stock in the foreseeable future. Any determination to pay 
dividends in the future will be at the discretion of our Board of Directors. Accordingly, investors must rely on sales of 
their Class A common stock after price appreciation, which may never occur, as the only way to realize any future 
gains on their investments. 

48

Item 1B. Unresolved Staff Comments

Not Applicable.

Item 2. Properties

Our corporate headquarters are located in San Jose, California where, under lease agreements that expire 

through May 2024, we currently lease approximately 436,000 square feet of space. We also maintain offices in 
North America, Europe, Asia Pacific, the Middle East, Latin America and Africa. We lease all of our facilities and do 
not own any real property. We expect to add facilities as we grow our employee base and expand geographically. 
We believe that our facilities are adequate to meet our needs for the immediate future and that, should it be needed, 
suitable additional space will be available to accommodate the expansion of our operations. 

Item 3. Legal Proceedings

The information set forth under the "Legal Proceedings" subheading in Note 8 of Notes to Consolidated 
Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K is incorporated herein by 
reference.

Item 4. Mine Safety Disclosures

Not Applicable.

49

PART II

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of 
Equity Securities

Market Information for Common Stock

Our Class A common stock began trading publicly on the NASDAQ Stock Market under the ticker symbol 
"NTNX" on September 30, 2016. Prior to that time, there was no public market for our Class A common stock. The 
following table sets forth, for the periods indicated, the high and low sale prices of our Class A common stock as 
reported on the NASDAQ Global Select Market.

Fiscal Quarter:

First quarter

Second quarter

Third quarter

Fourth quarter

Fiscal 2019

Fiscal 2020

High

Low

High

Low

$ 

$ 

$ 

$ 

61.13  $ 

35.95  $ 

29.51  $ 

52.23  $ 

36.13  $ 

37.35  $ 

54.14  $ 

33.51  $ 

37.42  $ 

42.98  $ 

22.70  $ 

25.35  $ 

18.20 

26.62 

12.49 

17.64 

Our Class B common stock is not listed nor traded on any stock exchange.

Holders of Record

As of July 31, 2020, there were 122 holders of record of our Class A common stock. This figure does not 
include a substantially greater number of "street name" holders or beneficial holders of our common stock whose 
shares are held of record by banks, brokers and other financial institutions. As of July 31, 2020, there were 
approximately 45 stockholders of record of our Class B common stock.

Dividend Policy

We have never declared or paid cash dividends on our common stock. We currently intend to retain all 
available funds and any future earnings for use in the operation of our business and do not anticipate paying any 
dividends in the foreseeable future. Any future determination to declare dividends will be made at the discretion of 
our Board of Directors, subject to applicable laws and will depend on our financial condition, operating results, 
capital requirements, general business conditions and other factors that our Board of Directors may deem relevant.

Unregistered Sales of Equity Securities and Use of Proceeds

None.

Purchases of Equity Securities by the Issuer

None.

50

Stock Performance Graph

The following graph shows a comparison from September 30, 2016 (the date our Class A common stock 
commenced trading on the NASDAQ Stock Market) through July 31, 2020 of the cumulative total return for our 
Class A common stock based on the closing price on the last day of each respective period. The graph assumes an 
initial investment of $100 on September 30, 2016 in the common stock of Nutanix, Inc., the NASDAQ Composite 
Index and NASDAQ Computer Index and assumes reinvestment of any dividends. The stock price performance on 
the following graph is not necessarily indicative of future stock price performance.

Nutanix, Inc.

Nasdaq Composite Index

Nasdaq Computer Index

Fiscal Year

9/30/16

7/31/17

7/31/18

7/31/19

7/31/20

$ 

$ 

$ 

100  $ 

57.42  $  132.14  $ 

61.35  $ 

59.97 

100  $  120.60  $  147.29  $  158.70  $  210.72 

100  $  126.39  $  161.66  $  180.60  $  267.85 

The information on the above graph shall not be deemed to be "filed" for purposes of Section 18 of the 
Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section or Sections 11 
and 12(a)(2) of the Securities Act, and shall not be incorporated by reference into any registration statement or 
other document filed by us with the SEC, whether made before or after the date of this Annual Report on Form 10-
K, regardless of any general incorporation language in such filing, except as shall be expressly set forth by specific 
reference in such filing.

Securities Authorized for Issuance Under Equity Compensation Plans 

The information required by this item is incorporated herein by reference to our definitive proxy statement for 
our 2020 annual meeting of stockholders, which will be filed no later than 120 days after the end of our fiscal year 
ended July 31, 2020.

51

Item 6. Selected Consolidated Financial and Other Data

The selected consolidated statement of operations data for fiscal 2018, 2019 and 2020 and the consolidated 

balance sheet data as of July 31, 2019 and 2020 are derived from our audited consolidated financial statements 
included elsewhere in this Annual Report on Form 10-K. The selected consolidated statement of operations data for 
fiscal 2016 and fiscal 2017 and the consolidated balance sheet data as of July 31, 2016, 2017 and 2018 were 
derived from audited financial statements not included in this Annual Report on Form 10-K. Our historical results are 
not necessarily indicative of the results that may be expected in the future. The selected consolidated financial data 
below should be read in conjunction with the section entitled "Management’s Discussion and Analysis of Financial 
Condition and Results of Operations" included in Part II, Item 7 of this Annual Report on Form 10-K and our 
consolidated financial statements and related notes included in Part II, Item 8 of this Annual Report on Form 10-K.

We adopted Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers (Topic 

606) ("ASC 606"), effective August 1, 2017. For the fiscal years ended July 31, 2016 and 2017, we have recast 
certain of our financial data, as disclosed in our Annual Report on Form 10-K for the fiscal year ended July 31, 
2018.

Fiscal Year Ended July 31,

2016

2017

2018

2019

2020

(in thousands, except per share data)

Consolidated Statement of 
Operations Data:

Revenue:

Product

Support, entitlements and other 

services

Total revenue

Cost of revenue:
Product (1)(2)
Support, entitlements and other 

services (1)

Total cost of revenue

Gross profit

Operating expenses:

Sales and marketing (1)(2)
Research and development (1)
General and administrative (1)

Total operating expenses

Loss from operations

Other expense, net

Loss before provision for income 

taxes

$ 

413,910  $ 

673,297  $ 

887,989  $ 

832,419  $ 

765,822 

89,500 

503,410 

172,606 

267,468 

403,724 

541,860 

845,903 

1,155,457 

1,236,143 

1,307,682 

133,541 

249,393 

276,127 

143,078 

71,312 

37,246 

170,787 

332,623 

286,584 

116,400 

34,265 

437,249 

77,938 

327,331 

518,572 

501,021 

288,619 

77,341 

109,903 

386,030 

769,427 

649,657 

313,777 

86,401 

161,050 

304,128 

215,377 

286,689 

932,015 

1,020,993 

909,750 

1,160,389 

500,719 

119,587 

553,978 

135,547 

866,981 

1,049,835 

1,530,056 

1,849,914 

(104,626)   

(348,409)   

(280,408)   

(598,041)   

(828,921) 

(1,290)   

(26,377)   

(9,306)   

(15,019)   

(26,300) 

(105,916)   

(374,786)   

(289,714)   

(613,060)   

(855,221) 

Provision for income taxes

2,317 

4,852 

7,447 

8,119 

17,662 

Net loss

$ 

(108,233)  $ 

(379,638)  $ 

(297,161)  $ 

(621,179)  $ 

(872,883) 

Net loss per share attributable to 
Class A and Class B common 
stockholders—basic and diluted

Weighted average shares used in 
computing net loss per share 
attributable to Class A and Class B 
common stockholders—basic and 
diluted

$ 

(2.46)  $ 

(2.96)  $ 

(1.81)  $ 

(3.43)  $ 

(4.48) 

43,970 

128,296 

164,091 

181,031 

194,719 

52

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)

Includes stock-based compensation expense as follows:

2016

2017

2018

2019

2020

Fiscal Year Ended July 31,

(in thousands)

Cost of revenue:

Product

Support, entitlements and other 

services

Total cost of revenue

Sales and marketing

Research and development

General and administrative

Total stock-based compensation 

expense

$ 

391  $ 

3,066  $ 

2,580  $ 

3,535  $ 

5,334 

968 

1,359 

8,006 

6,259 

4,432 

10,411 

13,477 

78,117 

109,044 

30,853 

8,945 

11,525 

65,060 

74,389 

26,894 

15,326 

18,861 

107,751 

140,519 

39,598 

22,014 

27,348 

126,015 

153,252 

45,383 

$ 

20,056  $ 

231,491  $ 

177,868  $ 

306,729  $ 

351,998 

During the three months ended October 31, 2016, we recorded approximately $83.0 million of stock-based compensation 

expense related to performance stock awards, as we determined that the performance conditions (certain liquidity events, 
including our IPO, and the achievement of specified performance targets) were probable of achievement.

(2)

Includes amortization of intangible assets as follows:

Product cost of revenue

Sales and marketing

Total amortization of intangible 

assets

Consolidated Balance Sheet Data:

Cash, cash equivalents and short-

term investments

Total assets

Deferred revenue (current and non-

current portion)

Long-term debt

Preferred stock warrant liability

Convertible preferred stock

Total stockholders’ (deficit) equity

Fiscal Year Ended July 31,

2016

2017

2018

2019

2020

(in thousands)

—  $ 

1,314  $ 

5,641  $ 

14,248  $ 

— 

915 

914 

2,528 

14,777 

2,603 

—  $ 

2,229  $ 

6,555  $ 

16,776  $ 

17,380 

2016

2017

2018

2019

2020

As of July 31,

(in thousands)

185,200  $ 

349,053  $ 

934,303  $ 

908,834  $ 

719,778 

411,715  $ 

738,212  $  1,599,880  $  1,786,042  $  1,768,547 

218,481  $ 

369,056  $ 

631,207  $ 

910,044  $  1,183,441 

73,260  $ 

9,679  $ 

310,379  $ 

—  $ 

429,598  $ 

458,910  $ 

490,222 

—  $ 

—  $ 

—  $ 

—  $ 

—  $ 

—  $ 

— 

— 

(285,827)  $ 

217,063  $ 

326,779  $ 

186,893  $ 

(274,977) 

$ 

$ 

$ 

$ 

$ 

$ 

$ 

$ 

$ 

53

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NUTANIX, INC.

Management's Discussion and Analysis of 
Financial Condition and Results of Operations

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition, results of operations and cash flows should 

be read in conjunction with the consolidated financial statements and the related notes thereto included elsewhere 
in this Annual Report on Form 10-K. The last day of our fiscal year is July 31. Our fiscal quarters end on 
October 31, January 31, April 30 and July 31. This discussion contains forward-looking statements based upon 
current expectations that involve risks and uncertainties. Our actual results may differ materially from those 
anticipated in these forward-looking statements as a result of various factors, including those set forth under "Risk 
Factors" or in other parts of this Annual Report on Form 10-K. See also "Special Note Regarding Forward-Looking 
Statements" above.

Overview

Nutanix, Inc. ("we," "us," "our" or "Nutanix") provides a leading enterprise cloud platform, which we call the 
Nutanix Cloud Platform, that consists of software solutions and cloud services that power our customers’ hybrid 
cloud and multicloud strategies. We seek to provide an enterprise cloud platform that empowers our customers to 
unify various clouds - private, public, distributed - into one seamless cloud, allowing enterprises to choose the right 
cloud for each application. Our enterprise cloud platform allows enterprises to simplify the complexities of a 
multicloud environment with automation, cost governance and compliance.

Our enterprise cloud platform can be deployed on a variety of qualified hardware platforms or, in the case of 

our cloud-based software and software as a service ("SaaS") offerings, via hosted service or delivered pre-installed 
on an appliance that is configured to order. Non-portable software is delivered or sold alongside configured-to-order 
appliances with a license term equal to the life of the associated appliance. Our subscription term-based licenses 
are sold separately, or can be sold alongside configured-to-order appliances. Configured-to-order appliances, 
including our Nutanix-branded NX hardware line, can be purchased from one of our channel partners, original 
equipment manufacturers ("OEMs") or directly from Nutanix. Our enterprise cloud platform is typically purchased 
with one or more years of support and entitlements, which includes the right to software upgrades and 
enhancements as well as technical support.

Product revenue is generated primarily from the licensing of our solutions. Support, entitlements and other 

services revenue is primarily derived from the related support and maintenance contracts. Prior to fiscal 2019, we 
delivered most of our solutions on an appliance, thus our revenue included the revenue associated with the 
appliance and the included non-portable software, which lasts for the life of the associated appliance. However, 
starting in fiscal 2018, as a result of our business model transition toward software-only sales, more of our 
customers began buying appliances directly from our OEMs while separately buying licenses for our software 
solutions from us or one of our channel partners. In addition, starting in fiscal 2019, as a result of our transition 
towards a subscription-based business model, more of our customers began purchasing separately sold 
subscription term-based licenses that could be deployed on a variety of hardware platforms. As we continue our 
transition to a subscription-based business model, we expect a greater portion of our products to be delivered 
through subscription term-based licenses or cloud-based SaaS subscriptions.

We had a broad and diverse base of approximately 17,360 end customers as of July 31, 2020, including 

approximately 915 Global 2000 enterprises. We define the number of end customers as the number of end 
customers for which we have received an order by the last day of the period, excluding partners to which we have 
sold products for their own demonstration purposes. A single organization or customer may represent multiple end 
customers for separate divisions, segments or subsidiaries. Since shipping our first product in fiscal 2012, our end 
customer base has grown rapidly. The number of end customers grew from approximately 14,180 as of July 31, 
2019 to approximately 17,360 as of July 31, 2020. 

Our solutions are primarily sold through channel partners, including distributors, resellers and OEMs, and 

delivered directly to our end customers. Our solutions serve a broad range of workloads, including enterprise 
applications, databases, virtual desktop infrastructure, unified communications and big data analytics, and we 
support both virtualized and container-based applications. We have end customers across a broad range of 
industries, such as automotive, consumer goods, education, energy, financial services, healthcare, manufacturing, 
media, public sector, retail, technology and telecommunications. We also sell to service providers, who utilize our 
enterprise cloud platform to provide a variety of cloud-based services to their customers. 

54

NUTANIX, INC.

Management's Discussion and Analysis of 
Financial Condition and Results of Operations (Continued)

We continue to invest in the growth of our business, including the development of our solutions, hiring for 
critical roles in our global teams, projects to increase the demand for our solutions and other sales and marketing 
initiatives. The number of our full-time employees increased from approximately 5,340 as of July 31, 2019 to 
approximately 6,170 as of July 31, 2020. We have an engineering team focused on distributed systems and IT 
infrastructure technologies at our San Jose, California headquarters and at our research and development centers 
in India, North Carolina, Washington, Serbia and Germany. We have in the past also expanded our international 
sales and marketing presence by continuing to build out our global teams and continuing to invest in sales and 
marketing initiatives, such as additional demand generation spending to increase pipeline growth. We plan to, in the 
long term, invest in our global engineering team to enhance the functionality of our enterprise cloud platform, 
including our newer subscription-based products, introduce new products and features to build upon our technology 
leadership, as well as expand our global sales and marketing teams in the long term. However, as discussed further 
in the "Impact of the COVID-19 Pandemic" and "Factors Affecting Our Performance" sections below, in response to 
the ongoing and rapidly evolving COVID-19 pandemic, we have proactively taken steps to manage our expenses. 
As a result, our overall spending on such efforts will fluctuate, and may decline, from quarter to quarter in the near-
term.

Impact of the COVID-19 Pandemic

The ongoing and rapidly evolving COVID-19 pandemic has significantly curtailed the movement of people, 
goods and services worldwide, imposed unprecedented strains on governments, health care systems, educational 
institutions, businesses and individuals around the world, including in nearly all of the regions in which we operate, 
and has resulted in significant volatility and uncertainty in the global economy. In response to the pandemic, 
authorities, businesses, and individuals have implemented numerous unprecedented measures, including travel 
bans and restrictions, quarantines, shelter-in-place, stay-at-home, remote work and social distancing orders, and 
shutdowns, which have impacted and will continue to impact our workforce and operations, as well as those of our 
customers, vendors, suppliers, and partners.

In response to the COVID-19 pandemic, we have also been required – or have deemed it necessary – to take 
a number of actions to protect and assist our employees, customers, and partners, including: temporarily closing all 
of our offices (including our California headquarters) around the world; requiring our employees to work remotely; 
implementing travel restrictions that allow only the most essential business travel; and postponing, cancelling, 
withdrawing from, or converting to virtual-only experiences (where possible and appropriate) our in-person 
customer, industry, analyst, investor, and employee events, including our 2020 .NEXT customer and partner events, 
our 2020 Investor Day, and our fiscal 2021 sales kick off; and offering extended payment terms of up to 60 days to 
certain partners through July 2020. As a result of such actions, as well as the general effects of the COVID-19 
pandemic, our business and operations have experienced and may continue to experience numerous negative 
impacts, including: curtailed demand for certain of our solutions; reduced IT spending; delays in or abandonment of 
planned or future purchases; lengthened payment terms; lengthened sales cycles, particularly with new customers 
and partners who do not have prior experience with our solutions; supply chain disruptions; and voluntary and 
involuntary delays in the ability to ship, and the ability of our end customers to accept delivery of, the hardware 
platforms on which our software solutions run. We also expect the reduced manufacturing capacity caused by the 
pandemic to result in increases in the prices of certain components used to manufacture such hardware platforms, 
which may increase the price of those hardware platforms for our end customers. The travel bans, shutdowns, 
social distancing restrictions and remote work policies have also made it difficult or impossible to deliver on-site 
services to our partners and end customers, and to meet with our current and potential end customers in person. 
We have also seen positive impacts, including increased demand for our virtual desktop, desktop-as-a-service, and 
end-user computing solutions as a result of our end customers enabling their employees to work remotely.

55

NUTANIX, INC.

Management's Discussion and Analysis of 
Financial Condition and Results of Operations (Continued)

We have also quickly adapted to the new work environment, leveraging digital, video, and other collaborative 

tools to enable our teams to stay connected with each other, and our sales, marketing and support teams to 
continue to engage with and remain responsive to our partners and end customers. Furthermore, we have taken, 
and expect to continue to take, a number of proactive actions to manage our operating expenses in light of the 
uncertainty caused by the COVID-19 pandemic, including: effecting a global hiring pause outside of a small number 
of critical roles; implementing a 10% reduction in executive salaries, effective April 2020; pausing all merit salary 
increases and bonus payments; and implementing two, non-consecutive, mandatory one-week furloughs for our 
employees in the U.S., along with two, non-consecutive, voluntary one-week unpaid leave periods for our 
employees outside the U.S. Although the full impact of these actions is uncertain, they have resulted in a reduction 
in our operating expenses, including sales and marketing expenses. See the section titled "Risk Factors" in Part II, 
Item 1A of this Form 10-Q for further discussion of the possible impact of these actions on our business and 
financial performance.

The duration, scope and ultimate impact of the COVID-19 pandemic on the global economy and our business 

remain highly fluid and cannot be predicted with certainty, and the full effect of the pandemic and the actions we 
have taken in response may not be fully reflected in our results of operations and financial performance until future 
periods. Our management team is focused on guiding our company through the emerging challenges presented by 
COVID-19 and remains committed to driving positive business outcomes. Although we do not currently expect the 
pandemic to affect our financial reporting systems, internal control over financial reporting or disclosure controls and 
procedures, the continued impact of the pandemic on our business and financial performance will be highly 
dependent upon numerous factors, many of which are beyond our control. See the section titled "Risk Factors" in 
Part II, Item 1A of this Form 10-Q for further discussion of the possible impact of the COVID-19 pandemic, as well 
as the actions we have taken in response, on our business and financial performance.

Key Financial and Performance Metrics

We monitor the following key financial and performance metrics:

Total revenue

Year-over-year percentage increase

Subscription revenue

As of and for the Fiscal Year Ended July 31,

2018

2019

2020

(in thousands, except percentages)

$  1,155,457 

$  1,236,143 

$  1,307,682 

 36.6 %

 7.0 %

 5.8 %

$  330,645 

$  648,415 

$  1,030,180 

Software and support revenue (TCV revenue)

$  898,143 

$  1,130,822 

$  1,284,227 

Total billings

Subscription billings

$  1,417,484 

$  1,514,660 

$  1,580,092 

$  581,923 

$  916,000 

$  1,276,413 

Software and support billings (TCV billings)

$  1,160,170 

$  1,409,339 

$  1,556,637 

ACV billings

Run-rate ACV

Gross profit

Adjusted gross profit

Gross margin

Adjusted gross margin

Total deferred revenue

Net cash provided by (used in) operating activities

Free cash flow

Non-GAAP operating expenses

Total end customers

$  328,811 

$  428,564 

$  505,179 

$  650,166 

$  944,444 

$  1,219,965 

$  769,427 

$  932,015 

$  1,020,993 

$  786,593 

$  965,287 

$  1,063,655 

 66.6 %

 68.1 %

 75.4 %

 78.1 %

 78.1 %

 81.3 %

$  631,207 

$  910,044 

$  1,183,441 

$ 

$ 

92,540 

30,168 

$ 

$ 

42,168 

$  (159,885) 

(76,284) 

$  (249,373) 

$  883,244 

$  1,239,567 

$  1,518,697 

10,610 

14,180 

17,360 

56

 
 
 
NUTANIX, INC.

Management's Discussion and Analysis of 
Financial Condition and Results of Operations (Continued)

Disaggregation of Revenue and Billings

The following table depicts the disaggregation of revenue and billings by type, consistent with how we evaluate 

our financial performance:

Disaggregation of revenue:

Subscription revenue

Non-portable software revenue

Hardware revenue

Professional services revenue

Total revenue

Disaggregation of billings:

Subscription billings

Non-portable software billings

Hardware billings

Professional services billings

Total billings

Fiscal Year Ended July 31,

2018

2019

2020

(in thousands)

$ 

330,645  $ 

648,415  $  1,030,180 

543,952 

257,314 

23,546 

449,131 

105,321 

33,276 

208,158 

23,455 

45,889 

$  1,155,457  $  1,236,143  $  1,307,682 

$ 

581,923  $ 

916,000  $  1,276,413 

543,952 

257,314 

34,295 

449,131 

105,321 

44,208 

208,158 

23,455 

72,066 

$  1,417,484  $  1,514,660  $  1,580,092 

Subscription revenue — Subscription revenue includes any performance obligation which has a defined term 

and is generated from the sales of software entitlement and support subscriptions, subscription software licenses 
and cloud-based software as a service ("SaaS") offerings. 

•

•

Ratable — We recognize revenue from software entitlement and support subscriptions and SaaS offerings 
ratably over the contractual service period, the substantial majority of which relate to software entitlement 
and support subscriptions. These offerings represented approximately $243.9 million, $376.4 million and 
$508.8 million of our subscription revenue for fiscal 2018, 2019 and 2020, respectively. 

Upfront — Revenue from our subscription software licenses is generally recognized upfront upon transfer of 
control to the customer, which happens when we make the software available to the customer. These 
subscription software licenses represented approximately $86.7 million, $272.0 million and $521.3 million of 
our subscription revenue for fiscal 2018, 2019 and 2020, respectively.

Non-portable software revenue — Non-portable software revenue includes sales of our enterprise cloud 

platform when delivered on a configured-to-order appliance by us or one of our OEM partners. The software 
licenses associated with these sales are typically non-portable and have a term equal to the life of the appliance on 
which the software is delivered. Revenue from our non-portable software products is generally recognized upon 
transfer of control to the customer. 

Hardware revenue — In transactions where we deliver the hardware appliance, we consider ourselves to be 
the principal in the transaction and we record revenue and costs of goods sold on a gross basis. We consider the 
amount allocated to hardware revenue to be equivalent to the cost of the hardware procured. Hardware revenue is 
generally recognized upon transfer of control to the customer. 

Professional services revenue — We also sell professional services with our products. We recognize revenue 

related to professional services as they are performed. 

57

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NUTANIX, INC.

Management's Discussion and Analysis of 
Financial Condition and Results of Operations (Continued)

Non-GAAP Financial Measures and Key Performance Measures

We regularly monitor total billings, subscription billings, professional services billings, software and support 

billings (TCV billings), ACV billings, run-rate ACV, adjusted gross profit, adjusted gross margin, free cash flow and 
non-GAAP operating expenses, which are non-GAAP financial measures and key performance measures, to help 
us evaluate our growth and operational efficiencies, measure our performance, identify trends in our sales activity 
and establish our budgets. We evaluate these measures because they: 

• are used by management and the Board of Directors to understand and evaluate our performance and 
trends, as well as to provide a useful measure for period-to-period comparisons of our core business;

• are widely used as a measure of financial performance to understand and evaluate companies in our 

industry; and

• are used by management to prepare and approve our annual budget and to develop short-term and long-
term operational and compensation plans, as well as to assess our actual performance against our goals.

Total billings is a performance measure which we believe provides useful information to investors, as it 
represents the dollar value under binding purchase orders received and billed during a given period. Subscription 
billings and professional services billings are performance measures that we believe provide useful information to 
our management and investors as they allow us to better track the growth of the subscription-based portion of our 
business, which is a critical part of our business plan. TCV billings is a performance measure that we believe 
provides useful information to our management and investors as it allows us to better track the true growth of our 
software business by excluding the amounts attributable to the pass-through hardware sales that we use to deliver 
our solutions. ACV billings and run-rate ACV are performance measures that we believe provide useful information 
to our management and investors, in particular as we progress further on our subscription-based business model 
transition, as they allow us to better track the top-line growth of our business during our transition to a subscription-
based business model because they take into account variability in term lengths. Free cash flow is a performance 
measure that we believe provides useful information to management and investors about the amount of cash used 
in or generated by the business after necessary capital expenditures. Adjusted gross profit, adjusted gross margin 
and non-GAAP operating expenses are performance measures which we believe provide useful information to 
investors, as they provide meaningful supplemental information regarding our performance and liquidity by 
excluding certain expenses and expenditures, such as stock-based compensation expense, that may not be 
indicative of our ongoing core business operating results. We use these non-GAAP financial and key performance 
measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons.

Total billings, subscription billings, professional services billings, software and support billings (TCV billings), 
ACV billings, run-rate ACV, adjusted gross profit, adjusted gross margin, free cash flow and non-GAAP operating 
expenses have limitations as analytical tools and they should not be considered in isolation or as substitutes for 
analysis of our results as reported under generally accepted accounting principles in the United States. Total 
billings, subscription billings, professional services billings, software and support billings (TCV billings), adjusted 
gross profit, adjusted gross margin, free cash flow and non-GAAP operating expenses are not substitutes for total 
revenue, subscription revenue, professional services revenue, software and support revenue (TCV revenue), gross 
profit, gross margin, cash provided by (used in) operating activities, or GAAP operating expenses, respectively. 
There is no GAAP measure that is comparable to either ACV billings or run-rate ACV, so we have not reconciled 
either ACV billings or run-rate ACV numbers included in this Annual Report on Form 10-K to any GAAP measure. In 
addition, other companies, including companies in our industry, may calculate non-GAAP financial measures and 
key performance measures differently or may use other measures to evaluate their performance, all of which could 
reduce the usefulness of our non-GAAP financial measures and key performance measures as tools for 
comparison. We urge you to review the reconciliation of our non-GAAP financial measures and key performance 
measures to the most directly comparable GAAP financial measures included below and not to rely on any single 
financial measure to evaluate our business.

We calculate our non-GAAP financial and key performance measures as follows:

Total billings — We calculate total billings by adding the change in deferred revenue, net of acquisitions, 

between the start and end of the period to total revenue recognized in the same period.

58

NUTANIX, INC.

Management's Discussion and Analysis of 
Financial Condition and Results of Operations (Continued)

Subscription billings — We calculate subscription billings by adding the change in subscription deferred 
revenue, net of acquisitions, between the start and end of the period to subscription revenue recognized in the 
same period. 

Professional services billings — We calculate professional services billings by adding the change in 

professional services deferred revenue, net of acquisitions, between the start and end of the period to professional 
services revenue recognized in the same period. 

Software and support billings (TCV billings) — We calculate software and support billings, also referred to 

as TCV billings, by adding the change in software and support deferred revenue (TCV deferred revenue), net of 
acquisitions, between the start and end of the period to software and support revenue (TCV revenue), recognized in 
the same period. Software and support revenue and billings (TCV revenue and billings) include software and 
support, entitlements and other services revenue and billings.

ACV billings — We calculate ACV billings as the sum of the ACV for all contracts billed during the period. ACV 

is defined as the total annualized value of a contract, excluding amounts related to professional services and 
hardware. We calculate the total annualized value for a contract by dividing the total value of the contract by the 
number of years in the term of the contract, using, where applicable, an assumed term of five years for contracts 
that do not have a specified term. As there is no GAAP measure that is comparable to ACV billings, we have not 
reconciled ACV billings numbers to any GAAP measure.

Run-rate ACV — We calculate run-rate ACV as the sum of ACV for all contracts that are in effect as of the end 
of the period. For the purposes of this calculation, we assume that the contract term begins on the date a contract is 
booked, irrespective of the periods in which we would recognize revenue for such contract. As there is no GAAP 
measure that is comparable to run-rate ACV, we have not reconciled run-rate ACV numbers to any GAAP measure.

Adjusted gross profit and adjusted gross margin — We calculate adjusted gross margin as adjusted gross 

profit divided by total revenue. We define adjusted gross profit as gross profit adjusted to exclude stock-based 
compensation expense, the amortization of acquired intangible assets and costs associated with other non-
recurring transactions. Our presentation of adjusted gross profit should not be construed as implying that our future 
results will not be affected by any recurring expenses or any unusual or non-recurring items that we exclude from 
our calculation of this non-GAAP financial measure.

Free cash flow — We calculate free cash flow as net cash provided by (used in) operating activities less 
purchases of property and equipment, which measures our ability to generate cash from our business operations 
after our capital expenditures.

Non-GAAP operating expenses — We define non-GAAP operating expenses as total operating expenses 
adjusted to exclude stock-based compensation expense, costs associated with business combinations, such as 
amortization of acquired intangible assets, revaluation of contingent consideration and other acquisition-related 
costs and costs associated with other non-recurring transactions. Our presentation of non-GAAP operating 
expenses should not be construed as implying that our future results will not be affected by any recurring expenses 
or any unusual or non-recurring items that we exclude from our calculation of this non-GAAP financial measure.

59

NUTANIX, INC.

Management's Discussion and Analysis of 
Financial Condition and Results of Operations (Continued)

The following table presents a reconciliation of total billings, adjusted gross profit, adjusted gross margin, free 
cash flow and non-GAAP operating expenses to the most directly comparable GAAP financial measures, for each 
of the periods indicated:

Fiscal Year Ended July 31,

2018

2019

2020

(in thousands, except percentages)

Total revenue

$  1,155,457 

$  1,236,143 

$  1,307,682 

Change in deferred revenue, net of acquisitions

262,027 

278,517 

272,410 

Total billings (non-GAAP)

$  1,417,484 

$  1,514,660 

$  1,580,092 

Gross profit

Stock-based compensation

Amortization of intangible assets

Impairment of lease-related assets

Other

$  769,427 

$  932,015 

$  1,020,993 

11,525 

5,641 

— 

— 

18,861 

14,248 

— 

163 

27,348 

14,777 

537 

— 

Adjusted gross profit (non-GAAP)

$  786,593 

$  965,287 

$  1,063,655 

Gross margin

Stock-based compensation

Amortization of intangible assets

Adjusted gross margin (non-GAAP)

Operating expenses

Stock-based compensation

Change in fair value of contingent consideration

Amortization of intangible assets

Acquisition-related costs

Impairment of lease-related assets

Other

 66.6 %

 1.0 %

 0.5 %

 68.1 %

 75.4 %

 1.5 %

 1.2 %

 78.1 %

 78.1 %

 2.1 %

 1.1 %

 81.3 %

$  1,049,835 

$  1,530,056 

$  1,849,914 

(166,343) 

(287,868) 

(324,650) 

2,423 

(914) 

(1,757) 

— 

— 

832 

(2,528) 

(721) 

— 

(204) 

— 

(2,603) 

— 

(2,465) 

(1,499) 

Operating expenses (non-GAAP)

$  883,244 

$  1,239,567 

$  1,518,697 

Net cash provided by (used in) operating activities

$ 

92,540 

$ 

42,168 

$  (159,885) 

Purchases of property and equipment

Free cash flow (non-GAAP)

(62,372) 

(118,452) 

(89,488) 

$ 

30,168 

$ 

(76,284) 

$  (249,373) 

60

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NUTANIX, INC.

Management's Discussion and Analysis of 
Financial Condition and Results of Operations (Continued)

The following table presents a reconciliation of subscription billings, professional services billings and software 
and support billings (TCV billings) to the most directly comparable GAAP financial measures, for each of the periods 
indicated:

Fiscal Year Ended July 31,

2018

2019

2020

(in thousands)

Subscription revenue

$ 

330,645  $ 

648,415  $  1,030,180 

Change in subscription deferred revenue, net of acquisitions

251,278 

267,585 

246,233 

Subscription billings

Professional services revenue

Change in professional services deferred revenue

Professional services billings

Software revenue

Hardware revenue

Product revenue

Support, entitlements and other services revenue

$ 

$ 

$ 

$ 

581,923  $ 

916,000  $  1,276,413 

23,546  $ 

33,276  $ 

10,749 

10,932 

34,295  $ 

44,208  $ 

45,889 

26,177 

72,066 

630,675  $ 

727,098  $ 

742,367 

257,314 

887,989 

267,468 

105,321 

832,419 

403,724 

23,455 

765,822 

541,860 

Total revenue

$  1,155,457  $  1,236,143  $  1,307,682 

Software and support revenue (TCV revenue) (1)

$ 

898,143  $  1,130,822  $  1,284,227 

Change in software and support deferred revenue (TCV 
deferred revenue), net of acquisitions

262,027 

278,517 

272,410 

Software and support billings (TCV billings) (1)

$  1,160,170  $  1,409,339  $  1,556,637 

(1) Software and support revenue and billings (TCV revenue and billings) include software and support, entitlements and 

other services revenue and billings.

Factors Affecting Our Performance

We believe that our future success will depend on many factors, including those described below. While these 

areas present significant opportunity, they also present risks that we must manage to achieve successful results. 
See the section titled "Risk Factors" for details. If we are unable to address these challenges, our business and 
operating results could be materially and adversely affected.

61

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NUTANIX, INC.

Management's Discussion and Analysis of 
Financial Condition and Results of Operations (Continued)

Investment in Growth

We plan to, in the long term, invest in sales and marketing so that we can capitalize on our market opportunity, 

including growing our sales and marketing teams, continuing our focus on opportunities with major accounts and 
large deals, which we define as transactions over $500,000, expanding our focus on opportunities in commercial 
accounts, as well as other sales and marketing initiatives, such as demand generation spending to increase our 
pipeline growth. Historically, we have significantly increased our sales and marketing personnel, which grew by 
approximately 17% from July 31, 2019 to July 31, 2020. However, as discussed above in the section titled "Impact 
of the COVID-19 Pandemic," in response to the COVID-19 pandemic we have proactively taken steps to reduce our 
expenses and, as a result, our overall investments in growth and the size of our sales and marketing teams will 
fluctuate, and may decline, in the near term. We estimate, based on past experience, that our average sales team 
members typically become fully ramped up around the start of their fourth quarter of employment with us, and as 
our newer employees ramp up, we expect their increased productivity to contribute to our revenue growth. As of 
July 31, 2020, we considered approximately 69% of our global sales team members to be fully ramped, while the 
remaining approximately 31% of our global sales team members are in the process of ramping up. As we continue 
to focus some of our newer and existing sales team members on major accounts and large deals, and as we 
continue our transition toward a subscription-based business model, it may take longer, potentially significantly, for 
these sales team members to become fully productive, and there may also be an impact to the overall productivity 
of our sales team. Furthermore, the effects of the COVID-19 pandemic and the measures we have implemented in 
response, including postponing, cancelling or making virtual-only certain in-person corporate events at which our 
sales team members have historically received in-person sales enablement and related trainings, may further 
increase, potentially significantly, the time it takes for our sales team members to become fully productive. We are 
focused on actively managing these realignments and potential effects.

We also intend, in the long term, to grow our global research and development and engineering teams to 
enhance our solutions, including our newer subscription-based products, improve integration with new and existing 
ecosystem partners and broaden the range of technologies and features available through our platform. However, 
as discussed above in the section titled "Impact of the COVID-19 Pandemic," in response to the COVID-19 
pandemic we have effected a global hiring pause outside of a small number of critical roles and, as a result, the 
overall growth in our global research and development and engineering teams will fluctuate, and may decline, from 
quarter to quarter in the near-term.

We believe that these investments will contribute to our long-term growth, although they may adversely affect 

our profitability in the near term.

62

NUTANIX, INC.

Management's Discussion and Analysis of 
Financial Condition and Results of Operations (Continued)

Transition to Subscription

Starting in fiscal 2019, as a result of our transition towards a subscription-based business model, more of our 
customers began purchasing separately sold subscription term-based licenses that could be deployed on a variety 
of hardware platforms. As we continue our transition to a subscription-based business model, we expect a greater 
portion of our products to be delivered through subscription term-based licenses or cloud-based SaaS 
subscriptions. Shifts in the mix of whether our solutions are sold on a subscription basis have and could continue to 
result in fluctuations in our billings and revenue. Subscription sales consist of subscription term-based licenses and 
offerings with ongoing performance obligations, including software entitlement and support subscriptions and cloud-
based SaaS offerings. Since revenue is recognized as performance obligations are delivered, sales with ongoing 
performance obligations may reflect lower revenue in a given period. In addition, other factors relating to our shift to 
selling more subscription term-based licenses may impact our billings, revenue and cash flow. For example, our 
term-based licenses generally have an average term of less than four years and thus result in lower billings and 
revenue in a given period when compared to our historical life of device license sales, which have a duration equal 
to the life of the associated appliance, which we estimate to be approximately five years. In addition, starting in 
fiscal 2021, we are beginning to compensate our sales force based on ACV instead of total contract value, and 
while we expect that the shift to an ACV-based sales compensation plan will incentivize sales representatives to 
maximize ACV and minimize discounts, it could also further compress the average term of our subscription term-
based licenses. Furthermore, our customers may, including in response to the uncertainty caused by the COVID-19 
pandemic, decide to purchase our software solutions on shorter subscription terms than they have historically, and/
or request to only pay for the initial year of a multi-year subscription term upfront, which could negatively impact our 
billings, revenue and cash flow in a given period when compared to historical life-of-device or multiple-year term-
based license sales.

Revenue for our solutions, whether or not sold as a subscription term-based license, is generally recognized 
upon transfer of control to the customer. For additional information on revenue recognition, see Note 3 of Notes to 
Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K and "Critical 
Accounting Estimates" later in this "Management’s Discussion and Analysis of Financial Condition and Results of 
Operations" section.

Market Adoption of Our Products

The public cloud and, more recently, hybrid cloud paradigms, have changed IT buyer expectations about the 
simplicity, agility, scalability, portability and pay-as-you-grow economics of IT resources, which represent a major 
architectural shift and business model evolution. A key focus of our sales and marketing efforts is creating market 
awareness about the benefits of our enterprise cloud platform. This includes our newer products outside of our core 
hyperconverged infrastructure ("HCI") offering, both as compared to traditional datacenter architectures as well as 
the public cloud, particularly as we continue to pursue large enterprises and mission critical workloads and transition 
toward a subscription-based business model. The broad nature of the technology shift that our enterprise cloud 
platform represents, the relationships our end customers have with existing IT vendors, and our transition toward a 
subscription-based business model sometimes lead to unpredictable sales cycles. We hope to compress and 
stabilize these sales cycles as market adoption increases, as we gain leverage with our channel partners, as we 
continue to educate the market about our subscription-based business model, and as our sales and marketing 
efforts evolve. Our business and operating results will be significantly affected by the degree to and speed with 
which organizations adopt our enterprise cloud platform.

Leveraging Channel Partners and OEMs

We plan to continue to strengthen and expand our network of channel partners and OEMs to increase sales to 

both new and existing end customers. We believe that increasing channel leverage, particularly as we expand our 
focus on opportunities in commercial accounts, by investing in sales enablement and co-marketing with our partners 
and OEMs in the long term will extend and improve our engagement with a broad set of end customers. Our 
business and results of operations will be significantly affected by our success in leveraging and expanding our 
network of channel partners and OEMs.

63

NUTANIX, INC.

Management's Discussion and Analysis of 
Financial Condition and Results of Operations (Continued)

Customer Retention and Expansion

Our end customers typically deploy our technology for a specific workload initially. After a new end customer's 
initial order, which includes the product and associated software entitlement and support subscription and services, 
we focus on expanding our footprint by serving more workloads. We also generate recurring revenue from our 
software entitlement and support subscription renewals, and given our transition to a subscription-focused business 
model, software and support renewals will have an increasing significance for our future revenue streams as 
existing subscriptions come up for renewal. We view continued purchases and upgrades as critical drivers of our 
success, as the sales cycles are typically shorter as compared to new end customer deployments, and selling 
efforts are typically less. As of July 31, 2020, approximately 67% of our end customers who have been with us for 
18 months or longer have made a repeat purchase, which is defined as any purchase activity, including renewals of 
term-based licenses or software entitlement and support subscription renewals, after the initial purchase. 
Additionally, end customers who have been with us for 18 months or longer have total lifetime orders, including the 
initial order, in an amount that is more than 4.2x greater, or 4.6x greater excluding the value of hardware purchases, 
on average, than their initial order. This number increases to approximately 12.4x, or 13.9x excluding hardware, on 
average, for Global 2000 end customers who have been with us for 18 months or longer as of July 31, 2020. These 
multiples exclude the effect of one end customer who had a very large and irregular purchase pattern that we 
believe is not representative of the purchase patterns of all of our other end customers. 

Our business and operating results will depend on our ability to retain and sell additional products to our 
existing and future base of end customers. Our ability to obtain new and retain existing customers will in turn 
depend in part on a number of factors. These factors include our ability to effectively maintain existing and future 
customer relationships, continue to innovate by adding new functionality and improving usability of our solutions in a 
manner that addresses our end customers’ needs and requirements, and optimally price our solutions in light of 
marketplace conditions, competition, our costs and customer demand. Furthermore, our ongoing transition to a 
subscription-based business model may cause concerns among our customer base, including concerns regarding 
changes to pricing over time, and may also result in confusion among new and existing end customers, for 
example, regarding our pricing models. Such concerns and/or confusion can slow adoption and renewal rates 
among our current and future customer base. Therefore, as we continue our transition, we may need to enhance 
our efforts to educate our end customers and as a result incur higher sales and marketing costs.

Components of Our Results of Operations

Revenue

We generate revenue primarily from the sale of our enterprise cloud platform, which can be deployed on a 
variety of qualified hardware platforms or, in the case of our cloud-based SaaS offerings, via hosted service or 
delivered pre-installed on an appliance that is configured to order. Non-portable software is delivered or sold 
alongside configured-to-order appliances with a license term equal to the life of the associated appliance.

Our subscription term-based licenses are sold separately, or can be sold alongside configured-to-order 
appliances. Our subscription term-based licenses typically have a term of one to five years. Our cloud-based SaaS 
subscriptions have terms extending up to five years.

Configured-to-order appliances, including our Nutanix-branded NX hardware line, can be purchased from one 

of our channel partners, OEMs or directly from Nutanix. Our enterprise cloud platform is typically purchased with 
one or more years of support and entitlements, which includes the right to software upgrades and enhancements as 
well as technical support. Our platform is primarily sold through channel partners, including distributors, resellers 
and OEMs.

64

NUTANIX, INC.

Management's Discussion and Analysis of 
Financial Condition and Results of Operations (Continued)

Product revenue — Product revenue consists of software and hardware revenue. A majority of our product 
revenue is generated from the sale of our enterprise cloud operating system. We also sell renewals of previously 
purchased software licenses and SaaS offerings. Revenue from our software products is generally recognized upon 
transfer of control to the customer, which is typically upon shipment for sales including a hardware appliance, upon 
making the software available to the customer when not sold with an appliance or as services are performed with 
SaaS offerings. In transactions where we deliver the hardware appliance, we consider ourselves to be the principal 
in the transaction and we record revenue and costs of goods sold on a gross basis. We consider the amount 
allocated to hardware revenue to be equivalent to the cost of the hardware procured. Hardware revenue is generally 
recognized upon transfer of control to the customer.

Support, entitlements and other services revenue — We generate our support, entitlements and other 
services revenue primarily from software entitlement and support subscriptions, which include the right to software 
upgrades and enhancements as well as technical support. The majority of our product sales are sold in conjunction 
with software entitlement and support subscriptions, with terms ranging from one to five years. Occasionally, we 
also sell professional services with our products. We recognize revenue from software entitlement and support 
contracts ratably over the contractual service period. The service period typically commences upon transfer of 
control of the corresponding products to the customer. We recognize revenue related to professional services as 
they are performed. 

Cost of Revenue

Cost of product revenue — Cost of product revenue consists of costs paid to third-party OEM partners, 
hardware costs, personnel costs associated with our operations function, consisting of salaries, benefits, bonuses 
and stock-based compensation, cloud-based costs associated with our SaaS offerings, and allocated costs, 
consisting of certain facilities, depreciation and amortization, recruiting and information technology costs allocated 
based on headcount. 

Cost of support, entitlements and other services revenue — Cost of support, entitlements and other 
services revenue includes personnel and operating costs associated with our global customer support organization, 
as well as allocated costs. We expect our cost of support, entitlements and other services revenue to increase in 
absolute dollars as our support, entitlements and other services revenue increases.

Operating Expenses

Our operating expenses consist of sales and marketing, research and development and general and 
administrative expenses. The largest component of our operating expenses is personnel costs. Personnel costs 
consist of wages, benefits, bonuses and, with respect to sales and marketing expenses, sales commissions.

Sales and marketing — Sales and marketing expense consists primarily of personnel costs. Sales and 

marketing expense also includes sales commissions, costs for promotional activities and other marketing costs, 
travel costs and costs associated with demonstration units, including depreciation and allocated costs. 
Commissions are deferred and recognized as we recognize the associated revenue. We expect sales and 
marketing expense to continue, in the long term, to increase in absolute dollars as part of our long-term plans to 
increase the size of our global sales and marketing organizations. However, as discussed above in the section titled 
"Impact of the COVID-19 Pandemic," in response to the COVID-19 pandemic we have proactively taken steps to 
reduce our expenses, including (i) effecting a global hiring pause outside of a small number of critical roles; (ii) 
implementing travel restrictions prohibiting all non-essential business travel; and (iii) postponing, cancelling, 
withdrawing from, or converting to virtual-only experiences (where possible and appropriate) our in-person sales 
and marketing events, including our 2020 .NEXT customer and partner events and our fiscal 2021 sales kick off. As 
a result, our sales and marketing expense will fluctuate, and may decline, in the near-term. Additionally, as we 
continue our transition to a subscription-based business model, we anticipate needing to adjust the compensation 
structure of our sales force, which may lead to fluctuations in our commissions expense and overall sales and 
marketing expense as a percentage of revenue and on an absolute basis. 

65

NUTANIX, INC.

Management's Discussion and Analysis of 
Financial Condition and Results of Operations (Continued)

Research and development — Research and development ("R&D") expense consists primarily of personnel 

costs, as well as other direct and allocated costs. We have devoted our product development efforts primarily to 
enhancing the functionality and expanding the capabilities of our solutions. R&D costs are expensed as incurred. 
We expect R&D expense, in the long term, to increase in absolute dollars as part of our long-term plans to invest in 
our future products and services, including our newer subscription-based products, although R&D expense may 
fluctuate as a percentage of total revenue and, on an absolute basis, from quarter to quarter. In addition, as 
discussed above in the section titled "Impact of the COVID-19 Pandemic," in response to the COVID-19 pandemic 
we have effected a global hiring pause outside of a small number of critical roles and, as a result, our R&D expense 
will fluctuate, and may decline, from quarter to quarter in the near-term.

General and administrative — General and administrative ("G&A") expense consists primarily of personnel 
costs, which include our executive, finance, human resources and legal organizations. G&A expense also includes 
outside professional services, which consists primarily of legal, accounting and other consulting costs, as well as 
insurance and other costs associated with being a public company and allocated costs. We expect G&A expense, in 
the long term, to increase in absolute dollars, particularly due to additional legal, accounting, insurance and other 
costs associated with our growth, although G&A expense may fluctuate as a percentage of total revenue and, on an 
absolute basis, from quarter to quarter. In addition, as discussed above in the section titled "Impact of the 
COVID-19 Pandemic," in response to the COVID-19 pandemic we have effected a global hiring pause outside of a 
small number of critical roles and, as a result, our G&A expense will fluctuate, and may decline, from quarter to 
quarter in the near-term.

Other Income (Expense), Net

Other income (expense), net consists primarily of interest income and expense, which includes the 

amortization of the debt discount and issuance costs associated with our 0% Convertible Senior Notes, due in 2023 
(the "2023 Notes"), interest income related to our short-term investments and foreign currency exchange gains or 
losses. During fiscal 2019 and fiscal 2020, we recognized $29.3 million and $31.3 million, respectively, of interest 
expense related to the amortization of the debt discount and issuance costs associated with the 2023 Notes.

Provision for Income Taxes

Provision for income taxes consists primarily of income taxes for certain foreign jurisdictions in which we 
conduct business and state income taxes in the United States. We have recorded a full valuation allowance related 
to our federal and state net operating losses and other net deferred tax assets and a partial valuation allowance 
related to our foreign net deferred tax assets due to the uncertainty of the ultimate realization of the future benefits 
of those assets.

Results of Operations

The following tables set forth our consolidated results of operations in dollars and as a percentage of total 

revenue for the fiscal years presented. The period-to-period comparison of results is not necessarily indicative of 
results for future periods. 

66

NUTANIX, INC.

Management's Discussion and Analysis of 
Financial Condition and Results of Operations (Continued)

Revenue:

Product

Support, entitlements and other services

Total revenue

Cost of revenue:
Product (1)(2)
Support, entitlements and other services (1)

Total cost of revenue

Gross profit

Operating expenses:

Sales and marketing (1)(2)
Research and development (1)
General and administrative (1)

Total operating expenses

Loss from operations

Other expense, net

Loss before provision for income taxes

Provision for income taxes

Net loss

(1)

Includes stock-based compensation expense as follows:

Cost of revenue:

Product

Support, entitlements and other services

Total cost of revenue

Sales and marketing

Research and development

General and administrative

Fiscal Year Ended July 31,

2018

2019

2020

(in thousands)

$ 

887,989  $ 

832,419  $ 

765,822 

267,468 

403,724 

541,860 

1,155,457 

1,236,143 

1,307,682 

276,127 

109,903 

386,030 

769,427 

649,657 

313,777 

86,401 

143,078 

161,050 

304,128 

71,312 

215,377 

286,689 

932,015 

1,020,993 

909,750 

1,160,389 

500,719 

119,587 

553,978 

135,547 

1,049,835 

1,530,056 

1,849,914 

(280,408)   

(598,041)   

(828,921) 

(9,306)   

(15,019)   

(26,300) 

(289,714)   

(613,060)   

(855,221) 

7,447 

8,119 

17,662 

$ 

(297,161)  $ 

(621,179)  $ 

(872,883) 

Fiscal Year Ended July 31,

2018

2019

2020

(in thousands)

$ 

2,580  $ 

3,535  $ 

8,945 

11,525 

65,060 

74,389 

26,894 

15,326 

18,861 

107,751 

140,519 

39,598 

5,334 

22,014 

27,348 

126,015 

153,252 

45,383 

Total stock-based compensation expense

$ 

177,868  $ 

306,729  $ 

351,998 

(2)

Includes amortization of intangible assets as follows:

Product cost of revenue

Sales and marketing

Total amortization of intangible assets

67

Fiscal Year Ended July 31,

2018

2019

2020

(in thousands)

$ 

$ 

5,641  $ 

14,248  $ 

914 

2,528 

6,555  $ 

16,776  $ 

14,777 

2,603 

17,380 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NUTANIX, INC.

Management's Discussion and Analysis of 
Financial Condition and Results of Operations (Continued)

Revenue:

Product

Support, entitlements and other services

Total revenue

Cost of revenue:

Product

Support, entitlements and other services

Total cost of revenue

Gross profit

Operating expenses:

Sales and marketing

Research and development

General and administrative

Total operating expenses

Loss from operations

Other expense, net

Loss before provision for income taxes

Provision for income taxes

Net loss

Revenue

Fiscal Year Ended July 31,

2018

2019

2020

(as a percentage of total revenue)

 76.9 %

 23.1 %

 67.3 %

 32.7 %

 58.6 %

 41.4 %

 100.0 %

 100.0 %

 100.0 %

 23.9 %

 9.5 %

 33.4 %

 66.6 %

 56.2 %

 27.2 %

 7.5 %

 90.9 %

 (24.3) %

 (0.8) %

 (25.1) %

 0.6 %

 (25.7) %

 11.6 %

 13.0 %

 24.6 %

 75.4 %

 73.6 %

 40.5 %

 9.7 %

 123.8 %

 (48.4) %

 (1.2) %

 (49.6) %

 0.7 %

 (50.3) %

 5.4 %

 16.5 %

 21.9 %

 78.1 %

 88.7 %

 42.4 %

 10.4 %

 141.5 %

 (63.4) %

 (2.0) %

 (65.4) %

 1.4 %

 (66.8) %

Fiscal Year 
Ended July 31,

Change

Fiscal Year 
Ended July 31,

Change

2018

2019

$

%

2019

2020

$

%

(in thousands, except percentages)

Product

$  887,989  $  832,419  $  (55,570) 

 (6) % $  832,419  $  765,822  $  (66,597) 

 (8) %

Support, entitlements and 

other services

Total revenue

  267,468 

  403,724 

  136,256 

 51 %   403,724 

  541,860 

  138,136 

$ 1,155,457  $ 1,236,143  $  80,686 

 7 % $ 1,236,143  $ 1,307,682  $  71,539 

 34 %

 6 %

Total revenue by bill-to-location was as follows:

Fiscal Year 
Ended July 31,

Change

Fiscal Year 
Ended July 31,

Change

2018

2019

$

%

2019

2020

$

%

$  648,805  $  682,340  $  33,535 

 5 % $  682,340  $  706,110  $  23,770 

  240,247 

  271,712 

31,465 

 13 %   271,712 

  265,092 

(6,620) 

(in thousands, except percentages)

U.S.

Asia Pacific

Europe, the Middle East 

and Africa

Other Americas

42,013 

43,735 

1,722 

 4 %  

43,735 

58,991 

  224,392 

  238,356 

13,964 

 6 %   238,356 

  277,489 

Total revenue

$ 1,155,457  $ 1,236,143  $  80,686 

 7 % $ 1,236,143  $ 1,307,682  $  71,539 

68

 3 %

 (2) %

 16 %

 35 %

 6 %

39,133 

15,256 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NUTANIX, INC.

Management's Discussion and Analysis of 
Financial Condition and Results of Operations (Continued)

Product revenue decreased year-over-year for fiscal 2019 and fiscal 2020 due primarily to the decrease in 
hardware revenue, as more and more customers are purchasing hardware directly from our OEMs. In addition, our 
product revenue has been impacted by our continued transition to selling subscription term-based licenses, as 
these licenses generally have had an average term of approximately four years, while those with a duration equal to 
the life of the associated appliance have an estimated life of approximately five years. The total average contract 
term was approximately 4.3 years, 4.1 years and 3.8 years for fiscal 2018, 2019 and 2020, respectively. Total 
average contract term represents the dollar-weighted term across all subscription and life-of-device contracts billed 
during the period, using an assumed term of five years for licenses without a specified term, such as life-of-device 
licenses.

Support, entitlements and other services revenue increased year-over-year for both fiscal 2019 and fiscal 2020 

in conjunction with the growth of our end customer base and the related software entitlement and support 
subscription contracts. Our total end customer count increased from approximately 10,610 as of July 31, 2018 to 
approximately 14,180 as of July 31, 2019 and to approximately 17,360 as of July 31, 2020.

Cost of Revenue and Gross Margin

Fiscal Year 
Ended July 31,

Change

Fiscal Year 
Ended July 31,

Change

2018

2019

$

%

2019

2020

$

%

(in thousands, except percentages)

Cost of product revenue

$ 276,127 

$ 143,078 

$ (133,049) 

 (48) % $ 143,078 

$ 71,312 

$  (71,766) 

 (50) %

Product gross margin

 68.9 %

 82.8 %

 82.8 %

 90.7 %

Cost of support, 

entitlements and other 
services revenue

Support, entitlements and 
other services gross 
margin

Total gross margin

$ 109,903 

$ 161,050 

$  51,147 

 47 % $ 161,050 

$ 215,377 

$  54,327 

 34 %

 58.9 %

 66.6 %

 60.1 %

 75.4 %

 60.1 %

 75.4 %

 60.3 %

 78.1 %

Cost of product revenue

The year-over-year fluctuations in cost of product revenue are in line with the corresponding fluctuations in 
hardware revenue. For fiscal 2019 and fiscal 2020, as compared to the respective prior year periods, the decreases 
in cost of product revenue were due primarily to the decreases in hardware revenue, as more and more customers 
are purchasing hardware directly from our OEMs.

Product gross margin increased by 13.9 percentage points, from 68.9% in fiscal 2018 to 82.8% in fiscal 2019, 

and by 7.9 percentage points, to 90.7% in fiscal 2020, due primarily to the higher mix of software revenue, as we 
continued to focus on more software-only transactions.

Cost of support, entitlements and other services revenue

Cost of support, entitlements and other services revenue increased year-over-year for both fiscal 2019 and 

fiscal 2020 due primarily to higher personnel-related costs, relating to growth in our global customer support 
organization, and other costs associated with supporting our growing end customer base. The increases in 
personnel-related costs were driven primarily by increases in our customer support, entitlements and other services 
headcount of 40% from July 31, 2018 to July 31, 2019 and 19% from July 31, 2019 to July 31, 2020. 

Support, entitlements and other services gross margin increased by 1.2 percentage points, from 58.9% in 

fiscal 2018 to 60.1% in fiscal 2019, and by 0.2 percentage points to 60.3% in fiscal 2020, due primarily to 
personnel-related costs growing at a slower rate than support, entitlements and other services revenue.

69

 
 
 
NUTANIX, INC.

Management's Discussion and Analysis of 
Financial Condition and Results of Operations (Continued)

Operating Expenses

Sales and marketing

Fiscal Year 
Ended July 31,

Change

Fiscal Year 
Ended July 31,

Change

2018

2019

$

%

2019

2020

$

%

(in thousands, except percentages)

Sales and marketing

$ 649,657 

$ 909,750 

$  260,093 

 40 % $ 909,750 

$ 1,160,389  $  250,639 

 28 %

Percent of total revenue

 56.2 %

 73.6 %

 73.6 %

 88.7 %

Sales and marketing expense increased year-over-year both for fiscal 2019 and fiscal 2020 due primarily to 

higher personnel-related costs and sales commissions, as our sales and marketing headcount increased year-over-
year by 36% in fiscal 2019 and 17% in fiscal 2020, as well as increased sales and marketing activities related to 
demand generation, brand awareness, promotions, trade shows and partner programs as part of our efforts to 
penetrate and expand in global markets.

Research and development

Fiscal Year 
Ended July 31,

Change

Fiscal Year 
Ended July 31,

Change

2018

2019

$

%

2019

2020

$

%

(in thousands, except percentages)

Research and 
development

$ 313,777 

$ 500,719 

$  186,942 

 60 % $ 500,719 

$ 553,978 

$  53,259 

 11 %

Percent of total revenue

 27.2 %

 40.5 %

 40.5 %

 42.4 %

Research and development expense increased year-over-year both for fiscal 2019 and fiscal 2020 due 
primarily to higher personnel-related costs, including stock-based compensation expense, as our R&D headcount 
increased year-over-year by 27% in fiscal 2019 and 13% in fiscal 2020 in an effort to continue the expansion of our 
product development activities, including new products. For fiscal 2019, this increase includes additional headcount 
and stock-based compensation expense related to employees who joined the Company through acquisitions.

General and administrative

Fiscal Year 
Ended July 31,

Change

Fiscal Year 
Ended July 31,

Change

2018

2019

$

%

2019

2020

$

%

(in thousands, except percentages)

General and administrative $ 86,401 

$ 119,587 

$  33,186 

 38 % $ 119,587 

$ 135,547 

$  15,960 

 13 %

Percent of total revenue

 7.5 %

 9.7 %

 9.7 %

 10.4 %

General and administrative expense increased year-over-year both for fiscal 2019 and fiscal 2020 due 
primarily to higher personnel-related costs, including stock-based compensation expense, as our G&A headcount 
increased year-over-year by 30% in fiscal 2019 and 10% in fiscal 2020 in order to support our growing business. 
The increase in G&A expense was also impacted by higher depreciation and legal and outside services costs, in 
line with the general growth of the business.

Other Expense, Net

Fiscal Year 
Ended July 31,

Change

Fiscal Year 
Ended July 31,

Change

2018

2019

$

%

2019

2020

$

%

(in thousands, except percentages)

Other expense, net

$ 

(9,306)  $  (15,019)  $  5,713 

 61 % $  (15,019)  $  (26,300)  $  11,281 

 75 %

The increase in other expense, net for fiscal 2019 was due primarily to interest expense associated with the 

amortization of the debt discount and issuance costs for the 2023 Notes, as the 2023 Notes were issued during the 
second quarter of fiscal 2018, partially offset by interest earned on short-term investments. 

70

 
 
 
 
 
 
 
 
 
 
 
 
NUTANIX, INC.

Management's Discussion and Analysis of 
Financial Condition and Results of Operations (Continued)

The increase in other expense, net for fiscal 2020 was due primarily to higher foreign currency losses, primarily 
related to operating expenses denominated in foreign currencies and our increasing foreign business. The increase 
in other expense, net was also impacted by lower interest income due primarily to sales of investments during fiscal 
2020.

Provision for Income Taxes

Fiscal Year 
Ended July 31,

Change

Fiscal Year 
Ended July 31,

Change

2018

2019

$

%

2019

2020

$

%

(in thousands, except percentages)

Provision for income taxes $ 

7,447  $ 

8,119  $ 

672 

 9 % $ 

8,119  $  17,662  $ 

9,543 

 118 %

The year-over-year increase in the provision for income taxes in fiscal 2019 and fiscal 2020 was due primarily 

to higher foreign taxes as a result of higher taxable earnings in foreign jurisdictions, as we continued our global 
expansion. The provision for income taxes in fiscal 2019 was partially offset by a one-time U.S. valuation allowance 
release related to a business combination and a one-time tax benefit related to the change in tax law. We continue 
to maintain a full valuation allowance on our U.S. federal and state deferred tax assets and a partial valuation 
allowance related to our foreign net deferred tax assets.

Liquidity and Capital Resources

As of July 31, 2020, we had $318.7 million of cash and cash equivalents, $3.3 million of restricted cash and 

$401.0 million of short-term investments, which were held for general corporate purposes. Our cash, cash 
equivalents and short-term investments primarily consist of bank deposits, money market accounts and highly rated 
debt instruments of the U.S. government and its agencies and debt instruments of highly rated corporations.

In January 2018, we issued Convertible Senior Notes with a 0% interest rate for an aggregate principal amount 

of $575.0 million. There are no required principal payments prior to the maturity of the 2023 Notes. For additional 
information, see Note 6 of Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual 
Report on Form 10-K.

Due to investments in our business as well as the potential cash flow impacts resulting from our continued 
transition to a subscription-based business model, we expect our operating and free cash flow to continue to be 
negative during the next 12 months. Notwithstanding that fact, we believe that our cash and cash equivalents and 
short-term investments will be sufficient to meet our anticipated cash needs for working capital and capital 
expenditures for at least the next 12 months. Our future capital requirements will depend on many factors, including 
our growth rate, the timing and extent of spending to support development efforts, the expansion of sales and 
marketing activities, the introduction of new and enhanced product and service offerings, the continuing market 
acceptance of our products, the impact of COVID-19 pandemic on our business, our end customers and partners, 
and the economy, and the timing of and extent to which our customers transition to shorter-term contracts or 
request to only pay for the initial term of multi-year contracts as a result of our transition to a subscription-based 
business model.

On August 26, 2020, we entered into an investment agreement (the "Investment Agreement") with BCPE 
Nucleon (DE) SPV, LP ("Bain") relating to the issuance and sale to Bain of $750 million in an initial aggregate 
principal amount of 2.5% Convertible Senior Notes due 2026. The transactions contemplated by the Investment 
Agreement are expected to close on or prior to September 24, 2020, subject to satisfaction of the customary closing 
conditions set forth in the Investment Agreement. For additional details, refer to Note 15 of Notes to Consolidated 
Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.

71

 
 
 
NUTANIX, INC.

Management's Discussion and Analysis of 
Financial Condition and Results of Operations (Continued)

Cash Flows

The following table summarizes our cash flows for the periods presented:

Fiscal Year Ended July 31,

2018

2019

2020

(in thousands)

Net cash provided by (used in) operating activities

$ 

92,540  $ 

42,168  $ 

(159,885) 

Net cash (used in) provided by investing activities

Net cash provided by financing activities

(503,555)   

(16,850)   

578,616 

67,104 

24,559 

57,797 

Net increase (decrease) in cash, cash equivalents and restricted 

cash

$ 

167,601  $ 

92,422  $ 

(77,529) 

We retrospectively adopted Accounting Standards Update ("ASU") 2016-18, Statement of Cash Flows (Topic 

230): Restricted Cash, which requires that a statement of cash flows explain the change during the period in the 
total of cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents, 
effective August 1, 2018. Our statement of cash flows for the fiscal year ended July 31, 2018 has been adjusted to 
conform to the new standard.

Cash Flows from Operating Activities

Net cash generated from operating activities was $92.5 million and $42.2 million and net cash used in 
operating activities was $159.9 million for fiscal 2018, 2019 and 2020, respectively, representing an increase of 
$77.8 million and decreases of $50.4 million and $202.1 million, respectively, as compared to the respective prior 
year periods. The generation of cash during fiscal 2018 and 2019 was due primarily to increasing billings and 
collections, partially offset by higher operating expenses as we continue to invest in the long-term growth of our 
business. The use of cash during fiscal 2020 was due primarily to our higher net loss from operations.

Cash Flows from Investing Activities

Net cash used in investing activities of $503.6 million for fiscal 2018 primarily consisted of $716.4 million of 

short-term investment purchases, using a significant portion of the proceeds from the 2023 Notes, $62.4 million of 
purchases of property and equipment and $22.2 million of net payments for business combinations, partially offset 
by $297.5 million of maturities of short-term investments.

Net cash used in investing activities of $16.9 million for fiscal 2019 primarily consisted of $468.1 million of 

short-term investment purchases, $118.5 million of purchases of property and equipment and $19.0 million of net 
payments for business combinations, partially offset by $588.8 million of maturities of short-term investments.

Net cash provided by investing activities of $24.6 million for fiscal 2020 primarily consisted of $645.8 million of 
maturities of short-term investments and $75.4 million of sales of short-term investments, partially offset by $607.2 
million of short-term investment purchases and $89.5 million of purchases of property and equipment.

Cash Flows from Financing Activities

Net cash provided by financing activities of $578.6 million for fiscal 2018 primarily consisted of $563.6 million 

of net proceeds from the 2023 Notes, after deducting the initial purchasers' discount and debt issuance costs, $88.0 
million of proceeds from the sale of the warrants in connection with the 2023 Notes and $72.0 million of net 
proceeds from the sale of shares through employee equity incentive plans, partially offset by $143.2 million of cash 
used to purchase bond hedges in connection with the 2023 Notes and a $1.7 million debt payment in conjunction 
with a business combination.

Net cash provided by financing activities of $67.1 million for fiscal 2019 primarily consisted of $69.2 million of 

net proceeds from the sale of shares through employee equity incentive plans, partially offset by a $1.0 million 
acquisition-related contingent consideration payment and a $1.0 million debt payment in conjunction with a 
business combination.

72

 
 
 
 
 
 
 
NUTANIX, INC.

Management's Discussion and Analysis of 
Financial Condition and Results of Operations (Continued)

Net cash provided by financing activities of $57.8 million for fiscal 2020 consisted of proceeds from the sale of 

shares through employee equity incentive plans.

Contractual Obligations

The following table summarizes our contractual obligations as of July 31, 2020:

Payments Due by Period

Total

Less than
1 Year

1 Year to
3 Years

3 to 5 Years

More than 5 
Years

(in thousands)

Principal amount payable on convertible 

senior notes (1)

Operating leases (undiscounted basis) (2)
Other commitments (3)

Guarantees with OEMs

Total

$  575,000  $ 

—  $  575,000  $ 

—  $ 

182,585 

62,453 

81,215 

46,007 

59,722 

51,215 

94,272 

2,131 

30,000 

38,113 

600 

— 

— 

4,193 

— 

— 

$  901,253  $  156,944  $  701,403  $ 

38,713  $ 

4,193 

(1) For additional information regarding our convertible senior notes, refer to Note 6 of Notes to Consolidated Financial 

Statements included in Part II, Item 8 of this Annual Report on Form 10-K.

(2) For additional information regarding our operating leases, refer to Note 7 of Notes to Consolidated Financial Statements 

included in Part II, Item 8 of this Annual Report on Form 10-K.

(3) Purchase obligations and other commitments pertaining to our daily business operations.

From time to time, in the normal course of business, we make commitments with our OEMs to ensure them a 

minimum level of financial consideration for their investment in our joint solutions. These commitments are based on 
revenue targets or on-hand inventory and non-cancelable purchase orders for non-standard components. We 
record a charge related to these items when we determine that it is probable a loss will be incurred and we are able 
to estimate the amount of the loss. Our historical charges have not been material.

As of July 31, 2020, we had accrued liabilities related to uncertain tax positions, which are reflected on our 
consolidated balance sheet. These accrued liabilities are not reflected in the contractual obligations disclosed in the 
table above, as it is uncertain if or when such amounts will ultimately be settled. Uncertain tax positions are further 
discussed in Note 12 of Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report 
on Form 10-K.

Off-Balance Sheet Arrangements

As of July 31, 2020, we did not have any relationships with unconsolidated organizations or financial 
partnerships, such as structured finance or special purpose entities that would have been established for the 
purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Critical Accounting Policies and Estimates

Our consolidated financial statements are prepared in accordance with U.S. GAAP. The preparation of these 

consolidated financial statements requires management to make estimates, assumptions and judgments that affect 
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the 
financial statements and the reported amounts of revenue and expenses during the applicable periods. We evaluate 
our estimates, assumptions and judgments on an ongoing basis. Our estimates, assumptions and judgments are 
based on historical experience and various other factors that we believe to be reasonable under the circumstances. 
Different assumptions and judgments would change the estimates used in the preparation of our consolidated 
financial statements, which, in turn, could change the results from those reported.

The critical accounting estimates, assumptions and judgments that we believe have the most significant impact 

on our consolidated financial statements are described below.

73

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NUTANIX, INC.

Management's Discussion and Analysis of 
Financial Condition and Results of Operations (Continued)

Revenue Recognition

Some of our contracts with customers contain multiple performance obligations. Determining whether products 

and services are considered distinct performance obligations that should be accounted for separately versus 
together may require significant judgment. For these contracts, we account for individual performance obligations 
separately if they are distinct. The transaction price is allocated to the separate performance obligations on a 
relative standalone selling price ("SSP") basis. For deliverables that we routinely sell separately, such as software 
entitlement and support subscriptions on our core offerings, we determine SSP by evaluating the standalone sales 
over the trailing 12 months. For those that are not sold routinely, we determine SSP based on our overall pricing 
trends and objectives, taking into consideration market conditions and other factors, including the value of our 
contracts, the products sold and geographic locations. 

If the contract contains a single performance obligation, the entire transaction price is allocated to the single 

performance obligation. Contracts that contain multiple performance obligations require an allocation of the 
transaction price to each performance obligation based on a relative SSP. We determine SSP based on the price at 
which the performance obligation is sold separately. If the SSP is not observable through past transactions, we 
estimate the SSP, taking into account available information such as market conditions and internally approved 
pricing guidelines related to the performance obligations. Refer to Note 1 and Note 3 of Notes to Consolidated 
Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional information on 
revenue recognition. 

Income Taxes

The objectives of accounting for income taxes are to recognize the amount of taxes payable or refundable for 

the current year and deferred tax liabilities and assets for the future tax consequences of events that have been 
recognized in an entity’s financial statements or tax returns. We recognize the tax benefit from an uncertain tax 
position only if it is more likely than not that the tax position will be sustained on examination by the taxing 
authorities, based on the technical merits of the position. We recognize uncertain tax positions only if it is more likely 
than not to be sustained based solely on its technical merits as of the reporting date. We consider many factors 
when evaluating and estimating our tax positions and tax benefits, which may require periodic adjustments and 
which may not accurately anticipate actual outcomes. Judgment is required in assessing the future tax 
consequences of events that have been recognized in our consolidated financial statements or tax returns. 
Variations in the actual outcome of these future tax consequences could materially impact our consolidated financial 
statements. 

Stock-Based Compensation

We measure and recognize compensation expense for all stock-based awards, including stock options and 

purchase rights issued to employees under our 2016 Employee Stock Purchase Plan ("2016 ESPP"), based on the 
estimated fair value of the awards on the grant date. We use the Black-Scholes-Merton ("Black-Scholes") option 
pricing model to estimate the fair value of stock options and 2016 ESPP purchase rights. The fair value of restricted 
stock units ("RSUs"), is measured using the fair value of our common stock on the date of the grant. The fair value 
of stock options and RSUs is recognized as expense on a straight-line basis over the requisite service period, which 
is generally four years. For stock-based awards granted to employees with a performance condition, we recognize 
stock-based compensation expense using the accelerated attribution method over the requisite service period when 
management determines it is probable that the performance condition will be satisfied. The fair value of the 2016 
ESPP purchase rights is recognized as expense on a straight-line basis over the offering period. We account for 
forfeitures of all share-based awards when they occur.

Our use of the Black-Scholes option pricing model requires the input of highly subjective assumptions, 

including the fair value of the underlying common stock, expected term of the option, expected volatility of the price 
of our common stock, risk-free interest rates and the expected dividend yield of our common stock. The 
assumptions used in our option pricing model represent management’s best estimates. These estimates involve 
inherent uncertainties and the application of management’s judgment. If factors change and different assumptions 
are used, our stock-based compensation expense could be materially different in the future.

74

NUTANIX, INC.

Management's Discussion and Analysis of 
Financial Condition and Results of Operations (Continued)

Business Combinations

We account for our acquisitions using the acquisition method. Goodwill is measured at the acquisition date as 

the excess of the purchase price over the fair value of the assets acquired and liabilities assumed. Significant 
estimates and assumptions are made by management to value such assets and liabilities. Although we believe that 
those estimates and assumptions are reasonable and appropriate, they are inherently uncertain and subject to 
refinement. Additional information related to the acquisition date fair value of acquired assets and assumed 
liabilities obtained during the measurement period, not to exceed one year, may result in changes to the recorded 
values of such assets and liabilities, resulting in an offsetting adjustment to the goodwill associated with the 
business acquired. 

Uncertain tax positions and tax-related valuation allowances are initially established in connection with a 
business combination as of the acquisition date. We continue to collect information and reevaluate these estimates 
and assumptions quarterly. We will record any adjustments to our preliminary estimates to goodwill, provided that 
we are within the one-year measurement period.

Any contingent consideration payable is recognized at fair value at the acquisition date. Liability-classified 
contingent consideration is remeasured each reporting period, with changes in fair value recognized in earnings 
until the contingent consideration is settled. 

Goodwill, Intangible Assets and Impairment Assessment

Goodwill represents the excess of the purchase price over the fair value of the assets acquired and liabilities 

assumed, if any, in a business combination, and is allocated to our single reporting unit. We review our goodwill and 
other intangible assets determined to have an indefinite useful life for impairment at least annually, during the fourth 
quarter, or more frequently whenever events or changes in circumstances indicate that the carrying value of an 
asset may not be recoverable. Goodwill is tested for impairment by comparing the reporting unit's carrying value, 
including goodwill, to the fair value of the reporting unit. We operate under one reporting unit and for our annual 
goodwill impairment test, we determine the fair value of our reporting unit based on our enterprise value. We may 
elect to utilize a qualitative assessment to determine whether it is more likely than not that the fair value of our 
reporting unit is less than its carrying value. If, after assessing the qualitative factors, we determine that it is more 
likely than not that the fair value of our reporting unit is less than its carrying value, an impairment analysis will be 
performed. We will compare the fair value of our reporting unit with its carrying amount and if the carrying value of 
the reporting unit exceeds its fair value, an impairment loss will be recognized. 

Assessing whether impairment indicators exist or if events or changes in circumstances have occurred, 
including market conditions, operating fundamentals, competition and general economic conditions, requires 
significant judgment. Additionally, changes in the technology industry occur frequently and quickly. Therefore, there 
can be no assurance that a charge to operating expenses will not occur as a result of future goodwill, intangible 
assets and other long-lived assets impairment tests. To date, we have not recorded any impairment charges related 
to our goodwill and intangible assets. 

Legal and Other Contingencies 

The  outcomes  of  legal  proceedings  and  claims  brought  against  us  are  subject  to  significant  uncertainty.  An 
estimated loss from a loss contingency such as a legal proceeding or claim is accrued by a charge to income if it is 
probable  that  an  asset  has  been  impaired  or  a  liability  has  been  incurred  and  the  amount  of  the  loss  can  be 
reasonably  estimated.  In  determining  whether  a  loss  should  be  accrued,  we  evaluate,  among  other  factors,  the 
degree  of  probability  of  an  unfavorable  outcome  and  the  ability  to  make  a  reasonable  estimate  of  the  amount  of 
loss. Changes in these factors could materially impact our consolidated financial statements.

Recent Accounting Pronouncements

Refer to "Recent Accounting Pronouncements" in Note 1 of Notes to Consolidated Financial Statements 

included in Part II, Item 8 of this Annual Report on Form 10-K.

75

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

We have operations both within the United States and internationally and we are exposed to market risk in the 

ordinary course of business. Market risk represents the risk of loss that may impact our financial position due to 
adverse changes in financial market prices and rates. Our market risk exposure is primarily a result of fluctuations in 
foreign currency exchange rates and interest rates.

Foreign Currency Risk

Our consolidated results of operations and cash flows are subject to fluctuations due to changes in foreign 
currency exchange rates. Historically, our revenue contracts have been denominated in U.S. dollars. Our expenses 
are generally denominated in the currencies in which our operations are located. To date, we have not entered into 
any hedging arrangements with respect to foreign currency risk or other derivative instruments. In the event our 
foreign sales and expenses increase, our operating results may be more significantly affected by foreign currency 
exchange rate fluctuations, which can affect our operating income or loss. The effect of a hypothetical 10% change 
in foreign currency exchange rates on our non-U.S. dollar monetary assets and liabilities would not have had a 
material impact on our historical consolidated financial statements. Foreign currency transaction gains and losses 
and exchange rate fluctuations have not been material to our consolidated financial statements. 

A hypothetical 10% decrease in the U.S. dollar against other currencies would result in an increase in our 

operating loss of approximately $31.2 million, $38.4 million and $46.1 million for fiscal 2018, 2019 and 2020, 
respectively. The increase in this hypothetical change is due to an increase in our expenses denominated in foreign 
currencies due to of our continued global expansion. This analysis disregards the possibilities that rates can move 
in opposite directions and that losses from one geographic area may be offset by gains from another geographic 
area.

Interest Rate Risk

Our investment objective is to conserve capital and maintain liquidity to support our operations; therefore, we 
generally invest in highly liquid securities, consisting primarily of bank deposits, money market funds, commercial 
paper, U.S. government securities and corporate bonds. Such fixed and floating interest-earning instruments carry a 
degree of interest rate risk. The fair market value of fixed income securities may be adversely impacted by a rise in 
interest rates, while floating rate securities may produce less income than predicted if interest rates fall. Due to the 
short-term nature of our investment portfolio, we do not believe an immediate 10% increase or decrease in interest 
rates would have a material effect on the fair market value of our portfolio. Therefore, we do not expect our 
operating results or cash flows to be materially affected by a sudden change in interest rates.

76

Item 8. Financial Statements and Supplementary Data

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statements of Comprehensive Loss

Consolidated Statements of Stockholders’ Equity (Deficit)

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

Note 1: Overview and Summary of Significant Accounting Policies

Note 2: Business Combinations

Note 3: Revenue, Deferred Revenue and Deferred Commissions

Note 4: Fair Value Measurements

Note 5: Balance Sheet Components

Note 6: Convertible Senior Notes

Note 7: Leases

Note 8: Commitments and Contingencies

Note 9: Stockholders' Equity

Note 10: Equity Award Plans

Note 11: Net Loss Per Share

Note 12: Income Taxes

Note 13: Segment Information

Note 14: Selected Quarterly Financial Data (Unaudited)

Note 15: Subsequent Events

78

81

83

84

85

86

88

88

96

97

99

101

104

107

109

110

111

115

116

120

121

122

77

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of Nutanix, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Nutanix, Inc. and subsidiaries (the "Company") 
as of July 31, 2020 and 2019, the related consolidated statements of operations, comprehensive loss, shareholders' 
equity (deficit), and cash flows, for each of the three years in the period ended July 31, 2020, and the related notes 
(collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all 
material respects, the financial position of the Company as of July 31, 2020 and 2019, and the results of its 
operations and its cash flows for each of the three years in the period ended July 31, 2020, in conformity with 
accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board 
(United States) (PCAOB), the Company's internal control over financial reporting as of July 31, 2020, based on 
criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring 
Organizations of the Treadway Commission and our report dated September 23, 2020 expressed an unqualified 
opinion on the Company's internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an 
opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with 
the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal 
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the 
PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan 
and perform the audit to obtain reasonable assurance about whether the financial statements are free of material 
misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of 
material misstatement of the financial statements, whether due to error or fraud, and performing procedures that 
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and 
disclosures in the financial statements. Our audits also included evaluating the accounting principles used and 
significant estimates made by management, as well as evaluating the overall presentation of the financial 
statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial 
statements that was communicated or required to be communicated to the audit committee and that (1) relates to 
accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, 
subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion 
on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, 
providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. 

Revenue Recognition — Refer to Notes 1 and 3 to the financial statements

Critical Audit Matter Description

The Company recognizes revenue upon transfer of control of promised products or services to customers in an 
amount that reflects the consideration the Company expects to receive in exchange for those products or services. 
The Company offers customers an enterprise cloud platform, which can be pre-installed on hardware or delivered 
separately, as well as related support subscriptions and professional services. Product revenue was $765.8 million 
and support, entitlements, and other services was $541.9 million for the year ended July 31, 2020.

Significant judgment is exercised by the Company in determining revenue recognition for the Company’s customer 
contracts, and includes the following:

• Determination of whether promised goods or services, such as hardware and software licenses, are capable of 
being distinct and are distinct in the context of the Company’s customer contracts which leads to whether they 
should be accounted for as individual or combined performance obligations.

78

• Determination of standalone selling prices for each distinct performance obligation and for products and 

services that are not sold separately.

• Determination of the timing of when revenue is recognized for each distinct performance obligation either over 

time or at a point in time.

We identified revenue recognition as a critical audit matter because of these significant judgments required by 
management.  This required a high degree of auditor judgment and an increased extent of effort when performing 
audit procedures to evaluate whether revenue was recognized to depict the transfer of promised goods or services 
to customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for 
those goods or services.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the Company’s revenue recognition for the Company’s customer contracts included 
the following, among others:

• We tested the effectiveness of controls related to the identification of distinct performance obligations, 

determination of the standalone selling prices, and the determination of the timing of revenue recognition.

• We evaluated management’s significant accounting policies related to revenue recognition for reasonableness.

• We selected a sample of recorded revenue transactions and performed the following procedures:

– Obtaining and reading customer source documents and the contract for each selection, including 
master agreements and related amendments to evaluate if relevant contractual terms have been 
appropriately considered by management.

– Evaluating management’s application of their accounting policy and tested revenue recognition for 

specific performance obligations by comparing management’s conclusions to the underlying master 
agreement and any related amendments.

– Testing the mathematical accuracy of management’s calculations of revenue and the associated timing 

of revenue recognized in the financial statements.

• For a selection of arrangements with original equipment manufacturers (“OEMs”), we confirmed accounts 

receivable and total billings as of and for the year ended July 31, 2020, respectively, directly with the OEM. In 
addition, we confirmed a sample of individual revenue orders for the year ended July 31, 2020, to evaluate the 
accuracy of management’s records. 

• We evaluated the reasonableness of management’s estimate of standalone selling prices for products and 

services that are not sold separately by performing the following:

– Assessing the appropriateness of the Company’s methodology and mathematical accuracy of the 

determined standalone selling prices.

– Testing the completeness and accuracy of the source data utilized in management’s calculations.

/s/ DELOITTE & TOUCHE LLP

San Jose, California

September 23, 2020

We have served as the Company’s auditor since 2013.

79

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of Nutanix, Inc.

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of Nutanix, Inc. and subsidiaries (the “Company”) as of 
July 31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by the 
Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company 
maintained, in all material respects, effective internal control over financial reporting as of July 31, 2020, based on 
criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board 
(United States) (PCAOB), the consolidated financial statements as of and for the year ended July 31, 2020, of the 
Company and our report dated September 23, 2020, expressed an unqualified opinion on those financial 
statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for 
its assessment of the effectiveness of internal control over financial reporting, included in the accompanying 
Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on 
the Company’s internal control over financial reporting based on our audit. We are a public accounting firm 
registered with the PCAOB and are required to be independent with respect to the Company in accordance with the 
U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission 
and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and 
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting 
was maintained in all material respects. Our audit included obtaining an understanding of internal control over 
financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and 
operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we 
considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance 
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in 
accordance with generally accepted accounting principles. A company’s internal control over financial reporting 
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, 
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable 
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance 
with generally accepted accounting principles, and that receipts and expenditures of the company are being made 
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable 
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s 
assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. 
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may 
become inadequate because of changes in conditions, or that the degree of compliance with the policies or 
procedures may deteriorate.

/s/ DELOITTE & TOUCHE LLP

San Jose, California

September 23, 2020

80

NUTANIX, INC.
CONSOLIDATED BALANCE SHEETS

Assets

Current assets:

Cash and cash equivalents

Short-term investments

Accounts receivable, net of allowance of $379 and $804 as of July 31, 2019 and 

2020

Deferred commissions—current

Prepaid expenses and other current assets

Total current assets

Property and equipment, net
Operating lease right-of-use assets (1)

Deferred commissions—non-current

Intangible assets, net

Goodwill

Other assets—non-current

Total assets

Liabilities and Stockholders’ Equity (Deficit)

Current liabilities:

Accounts payable

Accrued compensation and benefits
Accrued expenses and other current liabilities (1)

Deferred revenue—current
Operating lease liabilities—current (1)

Total current liabilities

Deferred revenue—non-current
Operating lease liabilities—non-current (1)

Convertible senior notes, net
Other liabilities—non-current (1)

Total liabilities

Commitments and contingencies (Note 8)

As of July 31,

2019

2020

(in thousands, except per share 
data)

$ 

396,678  $ 

318,737 

512,156 

401,041 

245,475 

242,516 

46,238 

74,665 

68,694 

63,032 

1,275,212 

1,094,020 

136,962 

— 

107,474 

66,773 

185,180 

14,441 

143,172 

127,326 

146,834 

49,392 

185,260 

22,543 

$  1,786,042  $  1,768,547 

$ 

74,047  $ 

54,029 

99,804 

28,797 

396,667 

— 

599,315 

513,377 

— 

458,910 

27,547 

109,109 

25,924 

534,572 

36,569 

760,203 

648,869 

116,794 

490,222 

27,436 

1,599,149 

2,043,524 

81

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NUTANIX, INC.
CONSOLIDATED BALANCE SHEETS

Stockholders’ equity (deficit):

Preferred stock, par value of $0.000025 per share— 200,000 shares authorized 
as of July 31, 2019 and 2020; no shares issued and outstanding as of July 31, 
2019 and 2020

Common stock, par value of $0.000025 per share— 1,200,000 (1,000,000 Class 
A, 200,000 Class B) shares authorized as of July 31, 2019 and 2020; 188,595 
(168,155 Class A, 20,440 Class B) and 201,949 (186,846 Class A, 15,103 
Class B) shares issued and outstanding as of July 31, 2019 and 2020

Additional paid-in capital

Accumulated other comprehensive income

Accumulated deficit

Total stockholders’ equity (deficit)

— 

5 

— 

5 

1,835,528 

2,245,180 

669 

2,030 

(1,649,309)   

(2,522,192) 

186,893 

(274,977) 

Total liabilities and stockholders’ equity (deficit)

$  1,786,042  $  1,768,547 

(1) During the first quarter of fiscal 2020, we adopted Accounting Standards Update ("ASU") No. 2016-02 using the 

modified retrospective method and elected the transition option that allowed us not to restate the comparative periods in 
our condensed consolidated financial statements in the year of adoption. For additional details, refer to Note 1.

 See the accompanying notes to the consolidated financial statements.

82

 
 
 
 
 
 
 
 
 
 
 
NUTANIX, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

Revenue:

Product

Support, entitlements and other services

Total revenue

Cost of revenue:

Product

Support, entitlements and other services

Total cost of revenue

Gross profit

Operating expenses:

Sales and marketing

Research and development

General and administrative

Total operating expenses

Loss from operations

Other expense, net

Loss before provision for income taxes

Provision for income taxes

Net loss

Net loss per share attributable to Class A and Class B common 

stockholders—basic and diluted

Weighted average shares used in computing net loss per share 

attributable to Class A and Class B common stockholders—basic 
and diluted

Fiscal Year Ended July 31,

2018

2019

2020

(in thousands, except per share data)

$ 

887,989  $ 

832,419  $ 

765,822 

267,468 

403,724 

541,860 

1,155,457 

1,236,143 

1,307,682 

276,127 

109,903 

386,030 

769,427 

649,657 

313,777 

86,401 

143,078 

161,050 

304,128 

71,312 

215,377 

286,689 

932,015 

1,020,993 

909,750 

1,160,389 

500,719 

119,587 

553,978 

135,547 

1,049,835 

1,530,056 

1,849,914 

(280,408)   

(598,041)   

(828,921) 

(9,306)   

(15,019)   

(26,300) 

(289,714)   

(613,060)   

(855,221) 

7,447 

8,119 

17,662 

$ 

(297,161)  $ 

(621,179)  $ 

(872,883) 

$ 

(1.81)  $ 

(3.43)  $ 

(4.48) 

164,091 

181,031 

194,719 

See the accompanying notes to the consolidated financial statements.

83

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NUTANIX, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

Net loss

Other comprehensive (loss) income, net of tax:

Change in unrealized (loss) gain on available-for-sale securities, 

net of tax

Comprehensive loss

Fiscal Year Ended July 31,

2018

2019

2020

(in thousands)

$ 

(297,161)  $ 

(621,179)  $ 

(872,883) 

(896)

1,671

1,361 

$ 

(298,057)  $ 

(619,508)  $ 

(871,522) 

See the accompanying notes to the consolidated financial statements.

84

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N

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NUTANIX, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Cash flows from operating activities:

Net loss

Adjustments to reconcile net loss to net cash provided by (used in) 

operating activities:

Depreciation and amortization

Stock-based compensation

Amortization of debt discount and issuance cost

Change in fair value of contingent consideration

Operating lease cost, net of accretion

Impairment of lease-related assets

Other

Changes in operating assets and liabilities:

Accounts receivable, net

Deferred commissions
Prepaid expenses and other assets (1)

Accounts payable

Accrued compensation and benefits

Accrued expenses and other liabilities

Operating leases, net

Deferred revenue

Net cash provided by (used in) operating activities (1)

Cash flows from investing activities:

Purchases of investments

Maturities of investments

Sales of investments

Purchases of property and equipment

Payments for business combinations, net of cash and restricted cash 
acquired

Net cash (used in) provided by investing activities

Cash flows from financing activities:

Fiscal Year Ended July 31,

2018

2019

2020

(in thousands)

$ 

(297,161)  $ 

(621,179)  $ 

(872,883) 

50,302 

177,868 

14,685 

77,612 

306,729 

29,313 

(2,423)   

(832)   

— 

— 

— 

— 

(962)   

(2,786)   

(79,273)   

(40,852)   

(37,374)   

(16,469)   

27,877 

34,295 

— 

262,027 

92,540 

15,704 

(39,333)   

(12,037)   

13,508 

14,406 

(17,454)   

— 

278,517 

42,168 

93,773 

351,998 

31,313 

— 

30,374 

3,002 

324 

4,334 

(61,816) 

10,089 

(16,574) 

18,765 

3,400 

(28,394) 

272,410 

(159,885) 

(716,417)   

(468,144)   

(607,194) 

297,461 

588,763 

— 

— 

645,828 

75,413 

(62,372)   

(118,452)   

(89,488) 

(22,227)   

(503,555)   

(19,017)   

(16,850)   

— 

24,559 

Proceeds from sales of shares through employee equity incentive plans, 

net of repurchases

72,010 

69,210 

57,797 

Payment of contingent consideration associated with a business 

combination

Payment of debt in conjunction with business combinations

Proceeds from issuance of convertible senior notes, net

Payments for convertible note hedges

Proceeds from issuance of warrants

Payments of offering costs

— 

(1,040)   

(1,696)   

563,587 

(143,175)   

87,975 

(85)   

(991)   

(75)   

— 

— 

— 

— 

— 

— 

— 

— 

— 

Net cash provided by financing activities

578,616 

67,104 

57,797 

Net increase (decrease) in cash, cash equivalents and restricted cash (1)

$ 

167,601  $ 

92,422  $ 

(77,529) 

86

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NUTANIX, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Cash, cash equivalents and restricted cash—beginning of period (1)
Cash, cash equivalents and restricted cash—end of period (1)
Restricted cash (1)(2)

Cash and cash equivalents—end of period

Supplemental disclosures of cash flow information:

Cash paid for income taxes

Supplemental disclosures of non-cash investing and financing 
information:

Issuance of common stock for business combinations 

Purchases of property and equipment included in accounts payable and 

accrued liabilities

Vesting of early exercised stock options

Fiscal Year Ended July 31,

2018

2019

2020

(in thousands)

139,497 

307,098 

399,520 

307,098  $ 

399,520  $ 

321,991 

1,123 

2,842 

3,254 

305,975  $ 

396,678  $ 

318,737 

10,116  $ 

28,999  $ 

16,625 

63,780  $ 

103,305  $ 

— 

13,444  $ 

8,074  $ 

681  $ 

183  $ 

4,630 

— 

$ 

$ 

$ 

$ 

$ 

$ 

(1) During the first quarter of fiscal 2019, we adopted Accounting Standards Update ("ASU") No. 2016-18, which requires 

that the statement of cash flows explain the change during the period in the total of cash, cash equivalents and 
restricted cash. We adopted the standard retrospectively for the prior period presented. Our adoption of ASU 2016-18 
did not have any significant impact on our consolidated statements of cash flows.
Included within other assets—non-current in the consolidated balance sheets.

(2)

 See the accompanying notes to the consolidated financial statements.

87

 
 
 
 
 
 
 
 
NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. OVERVIEW AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization and Description of Business

Nutanix, Inc. was incorporated in the state of Delaware in September 2009. Nutanix, Inc. is headquartered in 

San Jose, California, and together with its wholly-owned subsidiaries (collectively, "we," "us," "our" or "Nutanix") has 
operations throughout North America, Europe, Asia Pacific, the Middle East, Latin America and Africa.

We provide a leading enterprise cloud platform, which we call the Nutanix Cloud Platform, that consists of 
software solutions and cloud services that power our customers’ hybrid cloud and multicloud strategies. We seek to 
provide an enterprise cloud platform that empowers our customers to unify various clouds - private, public, 
distributed - into one seamless cloud, allowing enterprises to choose the right cloud for each application. Our 
enterprise cloud platform allows enterprises to simplify the complexities of a multicloud environment with 
automation, cost governance and compliance. Our solutions are primarily sold through channel partners, including 
distributors, resellers and original equipment manufacturers ("OEMs") (collectively, "Partners"), and delivered 
directly to our end customers.

Principles of Consolidation

The accompanying consolidated financial statements, which include the accounts of Nutanix, Inc. and its 
wholly-owned subsidiaries, have been prepared in conformity with accounting principles generally accepted in the 
United States ("U.S. GAAP"). All intercompany accounts and transactions have been eliminated in consolidation. 
Certain reclassifications have been made to the prior year financial statements to conform to the current year 
presentation. These reclassifications had no impact on the previously reported net loss or accumulated deficit. 

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to 

make estimates and assumptions that affect the amounts reported in the consolidated financial statements and 
accompanying notes. Such management estimates and assumptions include, but are not limited to, the best 
estimate of selling prices for products and related support; useful lives and recoverability of intangible assets and 
property and equipment; allowance for doubtful accounts; determination of fair value of stock-based awards; 
accounting for income taxes, including the valuation allowance on deferred tax assets and uncertain tax positions; 
warranty liability; purchase commitment liabilities to our OEMs; sales commissions expense and the period of 
benefit for deferred commissions; whether an arrangement is or contains a lease; the incremental borrowing rate to 
measure the present value of operating right-of-use assets and lease liabilities; and contingencies and litigation. 
Management evaluates these estimates and assumptions on an ongoing basis using historical experience and 
other factors and makes adjustments when facts and circumstances dictate. As future events and their effects 
cannot be determined with precision, actual results could materially differ from those estimates and assumptions.

In response to the ongoing and rapidly evolving COVID-19 pandemic, we considered the impact of the 

estimated economic implications on our critical and significant accounting estimates, including assessment of 
collectibility of customer contracts, valuation of accounts receivable, provision for purchase commitments to our 
OEMs and impairment of long-lived assets, right-of-use assets, and deferred commissions.

Concentration Risk

Credit Risk—Financial instruments that potentially subject us to concentrations of credit risk consist of cash 
and cash equivalents and accounts receivable. We invest only in high-quality credit instruments and maintain our 
cash and cash equivalents and available-for-sale investments in fixed income securities. Management believes that 
the financial institutions that hold our investments are financially sound and, accordingly, are subject to minimal 
credit risk. Our deposits are with multiple institutions, however such deposits may exceed federally insured limits. 
We provide credit, in the normal course of business, to a number of companies and perform credit evaluations of 
our customers.

Concentration of Revenue and Accounts Receivable — We sell our products primarily through our Partners 

and occasionally directly to end customers. For the fiscal years ended July 31, 2018, 2019 and 2020, no end 
customer accounted for more than 10% of total revenue or accounts receivable.

88

NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For each significant Partner, revenue as a percentage of total revenue and accounts receivable as a 

percentage of total accounts receivable, net are as follows:

Partners

Partner A

Partner B

Partner C

Partner D

Revenue

Fiscal Year Ended July 31,

Accounts Receivable 
as of July 31,

2018

2019

2020

2019

2020

 18 %

 13 %

 10 %

 20 %

 24 %

 13 %

 10 %

 10 %

 29 %

 14 %

(1)

(1)

 27 %

 18 %

(1)

(1)

 33 %

 16 %

(1)

(1)

(1) Less than 10%

Summary of Significant Accounting Policies

Cash, Cash Equivalents and Short-Term Investments

We classify all highly liquid investments with original maturities of three months or less from the date of 
purchase as cash equivalents and all highly liquid investments with stated maturities of greater than three months 
as marketable securities.

We determine the appropriate classification of our marketable securities at the time of purchase and 

reevaluate such designation as of each balance sheet date. We classify and account for our marketable securities 
as available-for-sale securities. We classify our marketable securities with stated maturities greater than twelve 
months as short-term investments due to our intent and ability to use these securities to support our current 
operations.

Our marketable securities are recorded at their estimated fair value. Unrealized gains or losses on available-

for-sale securities are reported in other comprehensive income (loss). We periodically review whether our securities 
may be other-than-temporarily impaired, including whether or not (i) we have the intent to sell the security or (ii) it is 
more likely than not that we will be required to sell the security before its anticipated recovery. If one of these factors 
is met, we will record an impairment loss associated with our impaired investment. The impairment loss will be 
recorded as a write-down of investments in the consolidated balance sheets and a realized loss within other 
expense in the consolidated statements of operations.

Fair Value Measurement

We define fair value as the price that would be received from selling an asset or paid to transfer a liability in an 

orderly transaction between market participants at the measurement date. When determining the fair value 
measurements for assets and liabilities, which are required to be recorded at fair value, we consider the principal or 
most advantageous market in which to transact and the market-based risk. We apply fair value accounting for all 
assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a 
recurring basis. The carrying amounts reported in the consolidated financial statements for cash and cash 
equivalents, accounts receivable, accounts payable and accrued liabilities approximate their fair values due to their 
short-term nature. The fair value of the 0% Convertible Senior Notes, due in January 2023 (the "2023 Notes") is 
determined based on the closing trading price per $100 of the 2023 Notes as of the last day of trading for the 
period. 

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are recorded at the invoiced amount, net of an allowance for doubtful accounts. Credit is 

extended to customers based on an evaluation of their financial condition and other factors. We generally do not 
require collateral or other security to support accounts receivable. We perform ongoing credit evaluations of our 
customers and maintain an allowance for doubtful accounts.

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The allowance for doubtful accounts is based on the best estimate of the amount of probable credit losses in 
existing accounts receivable. We evaluate the collectability of our accounts receivable based on known collection 
risks and historical experience. In circumstances where we are aware of a specific customer’s inability to meet its 
financial obligations (e.g., bankruptcy filings or substantial downgrading of credit ratings), we record an allowance 
for doubtful accounts in order to reduce the net recognized receivable to the amount we reasonably believe will be 
collected. For all other customers, we record an allowance for doubtful accounts based on the length of time the 
receivable is past due and our historical experience of collections and write-offs.

The changes in the allowance for doubtful accounts are as follows:

Fiscal Year Ended July 31,

2018

2019

2020

(in thousands)

Allowance for doubtful accounts—beginning balance

$ 

132  $ 

815  $ 

Charged to allowance for doubtful accounts

Recoveries

Write-offs

Allowance for doubtful accounts—ending balance

$ 

Property and Equipment

815 

— 

(132)   

815  $ 

437 

(290)   

(583)   

379  $ 

379 

822 

(22) 

(375) 

804 

Property and equipment, including leasehold improvements, are stated at cost, less accumulated depreciation 

and amortization. We include the cost to acquire demonstration units and the related accumulated depreciation in 
property and equipment as such units are generally not available for sale. Depreciation and amortization is 
computed using the straight-line method over the estimated useful lives of the related assets.

Leases

We determine if an arrangement is or contains a lease at inception by evaluating various factors, including 
whether a vendor’s right to substitute an identified asset is substantive. Lease classification is determined at the 
lease commencement date when the leased assets are made available for our use. Operating leases are included 
in operating lease right-of-use assets, operating lease liabilities—current and operating lease liabilities—non-current 
in our consolidated balance sheet as of July 31, 2020. We did not have any material financing leases in the periods 
presented. 

Operating lease right-of-use assets ("ROU assets") represent our right to use an underlying asset for the lease 

term and lease liabilities represent our obligation to make payments arising from the lease. Operating lease ROU 
assets and liabilities are recognized at the lease commencement date based on the present value of lease 
payments over the lease term. Lease payments consist primarily of fixed payments under the arrangement, less any 
lease incentives, such as rent holidays. Variable lease payments not dependent on an index or a rate are expensed 
as incurred and are not included within the ROU asset and lease liability calculation. Variable lease payments 
primarily include reimbursements of costs incurred by lessors for common area maintenance, property taxes and 
utilities. We use an estimate of our incremental borrowing rate ("IBR") based on the information available at the 
lease commencement date in determining the present value of lease payments, unless the implicit rate is readily 
determinable. In determining the appropriate IBR, we consider information including, but not limited to, our credit 
rating, the lease term and the currency in which the arrangement is denominated. For leases which commenced 
prior to our adoption of Accounting Standards Update ("ASU") 2016-02, Leases ("ASC 842"), we used the IBR as of 
August 1, 2019. Our lease terms may include renewal options, which are not included in the lease terms for 
calculating our lease liability, as we are not reasonably certain that we will exercise these renewal options at the 
time of the lease commencement. Lease costs are recognized on a straight-line basis as operating expenses within 
our consolidated statements of operations. We present lease payments within cash flows from operations within the 
consolidated statements of cash flows.

For our operating leases, we elected to account for lease and non-lease components as a single lease 
component. Additionally, we do not record leases on the consolidated balance sheet that have a lease term of 12 
months or less at the lease commencement date.

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Business Combinations

We account for our acquisitions using the acquisition method. Goodwill is measured at the acquisition date as 

the excess of the purchase price over the fair value of the assets acquired and liabilities assumed. Significant 
estimates and assumptions are made by management to value such assets and liabilities. Although we believe that 
those estimates and assumptions are reasonable and appropriate, they are inherently uncertain and subject to 
refinement. Additional information related to the acquisition date fair value of acquired assets and assumed 
liabilities obtained during the measurement period, not to exceed one year, may result in changes to the recorded 
values of such assets and liabilities, resulting in an offsetting adjustment to the goodwill associated with the 
business acquired. 

Uncertain tax positions and tax-related valuation allowances are initially established in connection with a 
business combination as of the acquisition date. We continue to collect information and reevaluate these estimates 
and assumptions quarterly. We will record any adjustments to our preliminary estimates to goodwill, provided that it 
is within the one-year measurement period. Any contingent consideration payable is recognized at fair value at the 
acquisition date. Liability-classified contingent consideration is remeasured each reporting period, with changes in 
fair value recognized in earnings until the contingent consideration is settled. 

Acquisition related costs incurred in connection with a business combination, other than those associated with 

the issuance of debt or equity securities, are expensed as incurred.

Goodwill, Intangible Assets and Other Long-Lived Assets

Goodwill represents the future economic benefits arising from other assets acquired in a business combination 
or an acquisition that are not individually identified and separately recorded. The excess of the purchase price over 
the estimated fair value of net assets of businesses acquired in a business combination is recognized as goodwill. 

Intangible assets consist of identifiable intangible assets, including developed technology, customer 

relationships and trade names, resulting from business combinations. Finite-lived intangible assets are recorded at 
fair value, net of accumulated amortization. Finite-lived intangible assets are amortized on a straight-line basis over 
their estimated useful lives. Amortization expense is included as a component of cost of product revenue and sales 
and marketing expense in the accompanying consolidated statements of operations. Amounts included in sales and 
marketing expense relate to customer relationships. 

Goodwill and other intangible assets acquired in a business combination and determined to have an indefinite 

useful life are not amortized, but instead tested for impairment at least annually, as of May 1 of each year. Such 
goodwill and other intangible assets may also be tested for impairment between annual tests in the presence of 
impairment indicators such as, but not limited to: (i) a significant adverse change in legal factors or in the business 
climate; (ii) a substantial decline in our market capitalization; (iii) an adverse action or assessment by a regulator; 
(iv) unanticipated competition; (v) loss of key personnel; (vi) a more likely-than-not expectation of the sale or 
disposal of a reporting unit or a significant portion thereof; (vii) a realignment of our resources or restructuring of our 
existing businesses in response to changes to industry and market conditions; (viii) testing for recoverability of a 
significant asset group within a reporting unit; or (ix) a higher discount rate used in the impairment analysis as 
impacted by an increase in interest rates. 

Goodwill is tested for impairment by comparing the reporting unit's carrying value, including goodwill, to the fair 

value of the reporting unit. We operate under one reporting unit and for our annual goodwill impairment test, we 
determine the fair value of our reporting unit based on our enterprise value. We may elect to utilize a qualitative 
assessment to determine whether it is more likely than not that the fair value of our reporting unit is less than its 
carrying value. If, after assessing the qualitative factors, we determine that it is more likely than not that the fair 
value of our reporting unit is less than its carrying value, an impairment analysis will be performed. We compare the 
fair value of our reporting unit with its carrying amount and if the carrying value of the reporting unit exceeds its fair 
value, an impairment loss will be recognized. 

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Long-lived assets, such as property and equipment and finite-lived intangible assets subject to depreciation 
and amortization, are evaluated for impairment whenever events or changes in circumstances indicate that their 
carrying amount may not be recoverable. Among the factors and circumstances we consider in determining 
recoverability are: (i) a significant decrease in the market price of a long-lived asset; (ii) a significant adverse change 
in the extent or manner in which a long-lived asset is being used or in its physical condition; (iii) a significant 
adverse change in legal factors or in the business climate that could affect the value of a long-lived asset, including 
an adverse action or assessment by a regulator; (iv) an accumulation of costs significantly in excess of the amount 
originally expected for the acquisition; and (v) current-period operating or cash flow loss combined with a history of 
operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the 
use of a long-lived asset. Recoverability of assets to be held and used is measured by a comparison of the carrying 
amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the 
carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized in the 
amount by which the carrying amount of the asset exceeds the fair value of the asset. 

There have been no indicators of impairment of goodwill, intangible assets or other long-lived assets and we 

did not record any material impairment losses during fiscal 2018, 2019 or 2020. 

Revenue Recognition

The core principle of ASC 606 is to recognize revenue to depict the transfer of promised goods or services to 

customers in an amount that reflects the consideration the entity expects to be entitled to in exchange for those 
goods or services. This principle is achieved by applying the following five-step approach: 

•

•

•

•

•

Identification of the contract, or contracts, with a customer — A contract with a customer exists when (i) we 
enter into an enforceable contract with a customer that defines each party’s rights regarding the goods or 
services to be transferred and identifies the payment terms related to these goods or services, (ii) the 
contract has commercial substance and (iii) we determine that collection of substantially all consideration 
for goods or services that are transferred is probable based on the customer’s intent and ability to pay the 
promised consideration. We apply judgment in determining the customer’s ability and intention to pay, 
which is based on a variety of factors, including the customer’s historical payment experience or, in the 
case of a new customer, published credit and financial information pertaining to the customer.

Identification of the performance obligations in the contract — Performance obligations promised in a 
contract are identified based on the goods or services that will be transferred to the customer that are both 
capable of being distinct, whereby the customer can benefit from the goods or services either on their own 
or together with other resources that are readily available from third parties or from us, and are distinct in 
the context of the contract, whereby the transfer of the goods or services is separately identifiable from 
other promises in the contract. To the extent a contract includes multiple promised goods or services, we 
apply judgment to determine whether promised goods or services are capable of being distinct and distinct 
in the context of the contract. If these criteria are not met, the promised goods or services are accounted for 
as a combined performance obligation.

Determination of the transaction price — The transaction price is determined based on the consideration to 
which we will be entitled in exchange for transferring goods or services to the customer. 

Allocation of the transaction price to the performance obligations in the contract — If the contract contains 
a single performance obligation, the entire transaction price is allocated to the single performance 
obligation. Contracts that contain multiple performance obligations require an allocation of the transaction 
price to each performance obligation based on a relative standalone selling price ("SSP"). We determine 
SSP based on the price at which the performance obligation is sold separately. If the SSP is not observable 
through past transactions, we estimate the SSP, taking into account available information such as market 
conditions and internally approved pricing guidelines related to the performance obligations. 

Recognition of revenue when, or as, performance obligations are satisfied — We satisfy performance 
obligations either over time or at a point in time. Revenue is recognized at the time the related performance 
obligation is satisfied with the transfer of a promised good or service to a customer. For additional details on 
revenue recognition, refer to Note 3 of Notes to Consolidated Financial Statements.

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Contracts with multiple performance obligations — Some of our contracts with customers contain multiple 

performance obligations. For these contracts, we account for individual performance obligations separately if they 
are distinct. The transaction price is allocated to the separate performance obligations on a relative standalone 
selling price ("SSP") basis. For deliverables that we routinely sell separately, such as software entitlement and 
support subscriptions on our core offerings, we determine SSP by evaluating the standalone sales over the trailing 
12 months. For those that are not sold routinely, we determine SSP based on our overall pricing trends and 
objectives, taking into consideration market conditions and other factors, including the value of our contracts, the 
products sold and geographic locations. 

Contract balances — The timing of revenue recognition may differ from the timing of invoicing to customers. 

Accounts receivable are recorded at the invoiced amount, net of an allowance for doubtful accounts. A receivable is 
recognized in the period we deliver goods or provide services, or when our right to consideration is unconditional. In 
situations where revenue recognition occurs before invoicing, an unbilled receivable is created, which represents a 
contract asset. Unbilled accounts receivable, included in accounts receivable, net on the consolidated balance 
sheets, was not material for any of the periods presented.

Payment terms on invoiced amounts are typically 30-45 days. The balance of accounts receivable, net of 
allowance for doubtful accounts, as of July 31, 2019 and 2020 is presented in the accompanying consolidated 
balance sheets. 

Costs to obtain and fulfill a contract — We capitalize commissions paid to sales personnel and the related 

payroll taxes when customer contracts are signed. These costs are recorded as deferred commissions in the 
consolidated balance sheets, current and non-current. We determine whether costs should be deferred based on 
our sales compensation plans, if the commissions are incremental and would not have been incurred absent the 
execution of the customer contract. Commissions paid upon the initial acquisition of a contract are amortized over 
the estimated period of benefit, which may exceed the term of the initial contract if the commissions expected to be 
paid upon renewal are not commensurate with that of the original contract. Accordingly, the amortization of deferred 
costs is recognized on a systematic basis that is consistent with the pattern of revenue recognition allocated to each 
performance obligation and included in sales and marketing expense in the consolidated statements of operations. 
We determine the estimated period of benefit by evaluating the expected renewals of customer contracts, the 
duration of relationships with our customers, customer retention data, our technology development lifecycle and 
other factors. Deferred costs are periodically reviewed for impairment.

Taxes assessed by a government authority that are both imposed on and concurrent with specific revenue 

transactions between us and our customers are presented on a net basis in our consolidated statements of 
operations.

Deferred revenue — Deferred revenue primarily consists of amounts that have been invoiced but not yet 

recognized as revenue and primarily pertain to software entitlement and support subscriptions and professional 
services. The current portion of deferred revenue represents the amounts that are expected to be recognized as 
revenue within one year of the consolidated balance sheet date.

Cost of Revenue

Cost of revenue consists of cost of product revenue and cost of support, entitlements and other services 
revenue. Personnel costs associated with our operations and global customer support organizations consist of 
salaries, benefits and stock-based compensation. Allocated costs consist of certain facilities, depreciation and 
amortization, recruiting and information technology costs allocated based on headcount.

Warranties

We generally provide a one-year warranty on hardware sold by us and a 90-day warranty on software licenses. 

The hardware warranty provides for parts replacement for defective components and the software warranty 
provides for bug fixes. With respect to the hardware warranty obligation, we have a warranty agreement with our 
contract manufacturers under which the OEMs are generally required to replace defective hardware within three 
years of shipment. Furthermore, our post-contract customer support ("PCS") agreements provide for the same parts 
replacement that customers are entitled to under the warranty program, except that replacement parts are delivered 
according to targeted response times to minimize disruption to the customers’ critical business applications. 
Substantially all customers purchase PCS agreements.

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Given the warranty agreement with our OEMs and considering that substantially all products are sold together 
with PCS agreements, we generally have very limited exposure related to warranty costs and therefore no warranty 
reserve has been recognized.

Research and Development

Our research and development expense consists primarily of product development personnel costs, including 

salaries and benefits, stock-based compensation and allocated facilities costs. Research and development costs 
are expensed as incurred.

Stock-Based Compensation

Stock-based compensation expense is measured based on the grant date fair value of share-based awards. 
The fair value of the purchase rights under our 2016 Employee Stock Purchase Plan ("2016 ESPP") is estimated 
using the Black-Scholes-Merton ("Black-Scholes") option pricing model, which is impacted by the fair value of our 
common stock, as well as changes in assumptions regarding a number of subjective variables. These variables 
include the expected common stock price volatility over the term of the awards, the expected term of the awards, 
risk-free interest rates and expected dividend yield. The fair value of restricted stock units ("RSUs") is determined 
using the fair value of our common stock on the date of grant.

We grant stock awards with service conditions only and with both service and performance conditions. We 

recognize stock-based compensation expense for employee stock awards with a service condition only using the 
straight-line method over the requisite service period of the awards, which is generally the vesting period. We use 
the accelerated attribution method to recognize stock-based compensation expense related to employee stock 
awards that contain both service and performance conditions. The fair value of the 2016 ESPP purchase rights is 
recognized as expense on a straight-line basis over the offering period. We account for forfeitures of all share-
based awards when they occur.

Foreign Currency

The functional currency of our foreign subsidiaries is the U.S. dollar. Transactions denominated in currencies 

other than the functional currency are remeasured at the average exchange rate in effect during the reporting 
period. At the end of each reporting period all monetary assets and liabilities of our subsidiaries are remeasured at 
the current U.S. dollar exchange rate at the end of the reporting period. Remeasurement gains and losses are 
included within other expense, net in the accompanying consolidated statements of operations. During the fiscal 
years ended July 31, 2018, 2019 and 2020, we recognized foreign currency losses of $3.6 million, $2.5 million and 
$9.4 million, respectively. To date, we have not undertaken any hedging transactions related to foreign currency 
exposure.

Segments

Our chief operating decision maker is a group which is comprised of our Chief Executive Officer and Chief 
Financial Officer. This group allocates resources and assesses financial performance based upon discrete financial 
information at the consolidated level. Accordingly, we have determined that we operate as a single operating and 
reportable segment.

Income Taxes

We account for income taxes using the asset and liability method. Deferred income taxes are recognized by 

applying enacted statutory tax rates applicable to future years to differences between the financial statement 
carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit 
carryforwards. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in 
the period that includes the enactment date. The measurement of deferred tax assets is reduced, if necessary, by a 
valuation allowance on amounts that are more likely than not to be realized.

We record a liability for uncertain tax positions if it is not more likely than not to be sustained based solely on 

its technical merits as of the reporting date. We consider many factors when evaluating and estimating our tax 
positions and tax benefits, which may require periodic adjustments and may not accurately anticipate actual 
outcomes.

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Advertising Costs

Advertising costs are charged to sales and marketing expenses as incurred in the consolidated statements of 

operations. During the fiscal years ended July 31, 2018, 2019 and 2020, advertising expense was $14.6 million, 
$26.7 million and $38.7 million, respectively.

Recently Adopted Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (the "FASB") issued ASC 842, which requires the 

recognition of ROU assets and lease liabilities on the consolidated balance sheets and additional disclosures 
around key information about leasing arrangements. We adopted the standard effective August 1, 2019, using a 
modified retrospective transition method. As a result, our consolidated balance sheet as of July 31, 2019 was not 
restated and continued to be reported under the previous lease standard ("ASC 840"), and is therefore not 
comparative. We elected the package of practical expedients permitted under the transition guidance, which 
allowed us to not reassess whether existing arrangements contain leases, not reassess lease classification and not 
reassess initial direct costs. The standard had a material impact on our consolidated balance sheet, but did not 
have an impact on our consolidated statement of operations or cash flows. The most significant impact was the 
recognition of ROU assets and lease liabilities for operating leases. We recognized ROU assets and lease liabilities 
of $120.2 million and $142.1 million, respectively, on our consolidated balance sheet on August 1, 2019, which 
included reclassifying lease incentives, prepaid rent and deferred rent as components of the ROU asset. The 
difference between the total ROU assets and total lease liabilities recorded as of August 1, 2019 was due primarily 
to the derecognition of deferred rent liabilities that were included in accrued expenses and other current liabilities 
and other liabilities—non-current in our consolidated balance sheet as of July 31, 2019. The operating lease ROU 
asset also includes any lease payments made prior to commencement date and excludes lease incentives. Refer to 
Note 7 for additional details.

In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated 

Other Comprehensive Income, which provides companies with an option to reclassify stranded tax effects resulting 
from the enactment of the Tax Cuts and Jobs Act ("TCJA") from accumulated other comprehensive income to 
retained earnings. We adopted the new standard effective August 1, 2019 and the adoption had no impact on our 
consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for 

Income Taxes, which simplifies the accounting for income taxes by removing certain exceptions to the general 
principles in Topic 740 and clarify and amend existing guidance. The new standard is effective for fiscal years 
beginning after December 15, 2020, with early adoption permitted, including interim reporting periods within those 
fiscal years. We early adopted the new standard effective November 1, 2019 and the adoption had no impact in our 
consolidated financial statements.

Recently Issued and Not Yet Adopted Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement 

of Credit Losses on Financial Instruments, which requires the measurement and recognition of expected credit 
losses for financial assets held at amortized cost, including trade receivables. ASU 2016-13 replaces the existing 
incurred loss impairment model with an expected loss model that requires the use of forward-looking information to 
calculate credit loss estimates. It also eliminates the concept of other-than-temporary impairment and requires credit 
losses related to available-for-sale debt securities to be recorded through an allowance for credit losses rather than 
as a reduction in the amortized cost basis of the securities. The new standard is effective for fiscal years beginning 
after December 15, 2019, with early adoption permitted, including interim reporting periods within those fiscal years. 
ASU 2016-13 is effective for us in the first quarter of fiscal 2021. We do not expect the adoption of this new 
standard to have a material impact on our consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-
Changes to the Disclosure Requirements for Fair Value Measurement, which eliminates, adds and modifies certain 
disclosure requirements for fair value measurements as part of the FASB's disclosure framework project. The new 
standard is effective for fiscal years beginning after December 15, 2019, with early adoption permitted, including 
interim reporting periods within those fiscal years. ASU 2018-13 is effective for us in the first quarter of fiscal 2021. 
We do not expect the adoption of this new standard to have a material impact on our quarterly or annual 
disclosures.

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In August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an 

Entity’s Own Equity ("ASU 2020-06"). Under ASU 2020-06 the embedded conversion features are no longer 
separated from the host contract for convertible instruments with conversion features that are not required to be 
accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in substantial 
premiums accounted for as paid-in capital. Consequently, a convertible debt instrument will be accounted for as a 
single liability measured at its amortized cost and a convertible preferred stock will be accounted for as a single 
equity instrument measured at its historical cost, as long as no other features require bifurcation and recognition as 
derivatives. By removing those separation models, the interest rate of convertible debt instruments typically will be 
closer to the coupon interest rate. ASU 2020-06 also provides for certain disclosures with regard to convertible 
instruments and associated fair values. ASU 2020-06 is effective for us in the first quarter of fiscal 2023. Early 
adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods 
within those fiscal years. The FASB specified that an entity should adopt the guidance as of the beginning of its 
annual fiscal year. As such, we can early adopt this standard beginning in the first quarter of fiscal 2022. We are 
currently evaluating the potential impact of adoption of this guidance on our consolidated financial statements.

NOTE 2. BUSINESS COMBINATIONS

We completed one acquisition in fiscal 2019. We did not complete any acquisitions in fiscal 2020. The 
purchase price allocation for the fiscal 2019 acquisition, discussed in detail below, reflects various fair value 
estimates and analyses, including certain tangible assets acquired and liabilities assumed, the valuation of 
intangible assets acquired, income taxes and goodwill, which were subject to change within the measurement 
period as preliminary valuations were finalized. Measurement period adjustments are recorded in the reporting 
period in which the estimates are finalized and adjustment amounts are determined. We determined the fair values 
of the intangible assets with the assistance of a valuation firm. The estimation of the fair value of the intangible 
assets required the use of valuation techniques and entailed consideration of all the relevant factors that might 
affect the fair value, such as present value factors and estimates of future revenues and costs. 

Our consolidated financial statements for the fiscal years ended July 31, 2019 and 2020 include the operations 

of the acquired company from the date the deal closed. Pro forma results of operations have not been presented 
because they are not material to our consolidated financial statements. Goodwill represents the excess of the 
purchase price over the fair value of the net tangible and intangible assets acquired. The goodwill recognized in this 
acquisition is primarily attributable to the synergies expected from the expanded market opportunities with our 
offerings and the knowledgeable and experienced workforce that joined us as part of the acquisition. Goodwill will 
not be amortized, but will instead be tested for impairment annually, or more frequently if certain indicators of 
impairment are present.

Mainframe2, Inc.

On August 24, 2018, we completed the acquisition of Mainframe2, Inc. ("Frame"), a privately held Delaware 
corporation with its principal offices in San Mateo, California ("Frame Acquisition"). Frame provides a cloud-based 
Windows desktop and application delivery service. The aggregate purchase price of approximately $130.0 million 
consisted of approximately $26.7 million in cash and 1,813,321 shares of our Class A common stock, with an 
aggregate fair value of approximately $103.3 million. The fair value of the shares of common stock issued was 
determined to be $56.97 per share, the closing price of our stock on August 24, 2018. Certain portions of the 
consideration for the acquisition, both cash and shares of our Class A common stock, were placed in escrow to 
secure the indemnification obligations of certain Frame security holders.

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We also entered into employee holdback or deferred payment arrangements with certain employees of Frame 

who joined Nutanix after the acquisition, totaling approximately $43.3 million, of which $6.6 million will be paid in 
cash ("cash holdback") and $36.7 million will be satisfied by issuing shares of our Class A common stock ("share 
holdback"). As the earning of the share holdback and payment of the cash holdback are contingent upon the 
continuous service of the employees, they are being accounted for as post-combination compensation expense 
over the required service period of three years. The 643,746 shares of our Class A common stock related to the 
$36.7 million share holdback have a fair value of $56.97 per share, the closing price of our Class A common stock 
on August 24, 2018, and had been issued at closing and are currently being held in escrow. This holdback is being 
accounted for as stock-based compensation over the required three-year service period. On September 21, 2018, 
we filed a Form S-3 registration statement with the SEC for the 2,451,322 shares of our Class A common stock that 
were issued as partial consideration in the Frame Acquisition.

The purchase price allocation primarily included approximately $97.3 million of goodwill and $38.2 million of 

intangible assets, including $31.8 million related to developed technology and $2.2 million related to customer 
relationships, which are being amortized over an estimated economic life of five years, and $4.2 million related to 
trade name, which is being amortized over an estimated economic life of four years. Goodwill was not deductible for 
income tax purposes.

Acquisition-related costs were expensed as incurred as general and administrative expenses on our 
consolidated statement of operations. We recognized approximately $1.1 million of acquisition-related costs in 
connection with the Frame Acquisition. 

The following table presents the aggregate purchase price allocation related to the Frame acquisition:

Goodwill

Amortizable intangible assets

Tangible assets acquired

Liabilities assumed

Total consideration

As of July 31, 
2019

(in thousands)

$ 

97,328 

38,180 

10,811 

(16,293) 

$ 

130,026 

NOTE 3. REVENUE, DEFERRED REVENUE AND DEFERRED COMMISSIONS 

Disaggregation of Revenue and Revenue Recognition

We generate revenue primarily from the sale of our enterprise cloud platform, which can be delivered pre-

installed on an appliance that is configured to order or delivered separately to be utilized on a variety of certified 
hardware platforms. Software can be delivered separately or on a configured-to-order appliance. When the software 
is not portable to other appliances, it generally has a term equal to the life of the associated appliance, while 
subscription term-based licenses typically have a term of one to five years. Configured-to-order appliances, 
including our Nutanix-branded NX hardware line, are typically sold through Partners and can be purchased from 
one of our OEMs or in some cases directly from Nutanix. Our enterprise cloud platform is typically purchased with 
one or more years of support and entitlements, which includes the right to software upgrades and enhancements as 
well as technical support. A substantial portion of sales are made through channel partners and OEM relationships. 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table depicts the disaggregation of revenue by revenue type, consistent with how we evaluate 

our financial performance:

Subscription

Non-portable software 

Hardware

Professional services

Total revenue

Fiscal Year Ended July 31,

2018

2019

2020

(in thousands)

$ 

330,645  $ 

648,415  $  1,030,180 

543,952 

257,314 

23,546 

449,131 

105,321 

33,276 

208,158 

23,455 

45,889 

$  1,155,457  $  1,236,143  $  1,307,682 

Prior to the first quarter of fiscal 2019, we disaggregated revenue into the following categories: software 
revenue, hardware revenue and support, entitlements and other services revenue. Software revenue included non-
portable software and term-based software licenses. Under the new disaggregated revenue categories, included in 
the table above, term-based software licenses are included within subscription revenue and non-portable software 
is presented separately. Support, entitlements and other services revenue included software entitlement and 
support subscriptions and professional services. Under the new disaggregated revenue categories, software 
entitlement and support subscriptions are included within subscription revenue and professional services revenue is 
presented separately. There was no change to the presentation of hardware revenue.

Subscription revenue — Subscription revenue includes any performance obligation which has a defined term 

and is generated from the sales of software entitlement and support subscriptions, subscription software licenses 
and cloud-based software as a service ("SaaS") offerings. 

•

•

Ratable — We recognize revenue from software entitlement and support subscriptions and SaaS offerings 
ratably over the contractual service period, the substantial majority of which relate to software entitlement 
and support subscriptions. These offerings represented approximately $243.9 million, $376.4 million and 
$508.8 million of our subscription revenue for fiscal 2018, 2019 and 2020, respectively. 

Upfront — Revenue from our subscription software licenses is generally recognized upfront upon transfer of 
control to the customer, which happens when we make the software available to the customer. These 
subscription software licenses represented approximately $86.7 million, $272.0 million and $521.3 million of 
our subscription revenue for fiscal 2018, 2019 and 2020, respectively.

Non-portable software revenue — Non-portable software revenue includes sales of our enterprise cloud 

platform when delivered on a configured-to-order appliance by us or one of our OEM partners. The software 
licenses associated with these sales are typically non-portable and have a term equal to the life of the appliance on 
which the software is delivered. Revenue from our non-portable software products is generally recognized upon 
transfer of control to the customer. 

Hardware revenue — In transactions where we deliver the hardware appliance, we consider ourselves to be 
the principal in the transaction and we record revenue and costs of goods sold on a gross basis. We consider the 
amount allocated to hardware revenue to be equivalent to the cost of the hardware procured. Hardware revenue is 
generally recognized upon transfer of control to the customer. 

Professional services revenue — We also sell professional services with our products. We recognize revenue 

related to professional services as they are performed. 

98

 
 
 
 
 
 
 
 
 
NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Significant changes in the balance of deferred revenue (contract liability) and deferred commissions (contract 

asset) for the periods presented are as follows:

Balance as of July 31, 2018

Additions

Revenue/commissions recognized

Assumed in a business combination

Balance as of July 31, 2019

Additions

Revenue/commissions recognized

Balance as of July 31, 2020

Deferred 
Revenue

Deferred 
Commissions

(in thousands)

$ 

631,207  $ 

114,379 

682,241 

158,062 

(403,724)   

(118,729) 

320 

910,044 

815,257 

— 

153,712 

233,917 

(541,860)   

(172,101) 

$  1,183,441  $ 

215,528 

During the fiscal year ended July 31, 2019, we recognized revenue of approximately $275.0 million pertaining 

to amounts deferred as of July 31, 2018. During the fiscal year ended July 31, 2020, we recognized revenue of 
approximately $371.8 million pertaining to amounts deferred as of July 31, 2019. 

The majority of our contracted but not invoiced performance obligations are subject to cancellation terms. 
Revenue allocated to remaining performance obligations represents contracted revenue that has not yet been 
recognized ("contracted not recognized"), which includes deferred revenue and non-cancelable amounts that will be 
invoiced and recognized as revenue in future periods and excludes performance obligations that are subject to 
cancellation terms. Contracted not recognized revenue was approximately $1.2 billion as of July 31, 2020, of which 
we expect to recognize approximately 46% over the next 12 months, and the remainder thereafter. 

NOTE 4. FAIR VALUE MEASUREMENTS

The authoritative guidance on fair value measurements establishes a three-tier fair value hierarchy based on 

the observability of the inputs available in the market used to measure fair value as follows:

•

•

•

Level I — Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the 
measurement date;

Level II — Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, 
unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other 
inputs that are observable or can be corroborated by observable market data for substantially the full term 
of the related assets or liabilities; and

Level III — Unobservable inputs that are significant to the measurement of the fair value of the assets or 
liabilities that are supported by little or no market data.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Cash equivalents and short-term investments

Our money market funds are classified within Level I due to the highly liquid nature of these assets and have 

unadjusted inputs, quoted prices in active markets for these assets at the measurement date from the financial 
institution that carries these investment securities. Our investments in available-for-sale debt securities such as 
commercial paper, corporate bonds and U.S. government securities are classified within Level II. The fair value of 
these securities is priced by using inputs based on non-binding market consensus prices that are corroborated by 
observable market data, quoted market prices for similar instruments, or pricing models such as discounted cash 
flow techniques.

99

 
 
 
 
 
 
 
 
 
 
NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The fair value of our financial assets and liabilities measured on a recurring basis is as follows:

Financial Assets:

Cash equivalents:

Money market funds

Commercial paper

U.S. government securities

Corporate bonds

Short-term investments:

Corporate bonds

Commercial paper

U.S. government securities

Total measured at fair value

Cash

Total cash, cash equivalents and short-term 

investments

Financial Assets:

Cash equivalents:

Money market funds

Commercial paper

Short-term investments:

Corporate bonds

Commercial paper

U.S. government securities

Total measured at fair value

Cash

Total cash, cash equivalents and short-term 

investments

As of July 31, 2019

Level I

Level II

Level III

Total

(in thousands)

$ 

33,156  $ 

—  $ 

—  $ 

33,156 

— 

— 

— 

— 

— 

— 

103,029 

119,933 

9,996 

354,549 

92,851 

64,756 

— 

— 

— 

— 

— 

— 

103,029 

119,933 

9,996 

354,549 

92,851 

64,756 

$ 

33,156  $ 

745,114  $ 

—  $ 

778,270 

130,564 

$ 

908,834 

As of July 31, 2020

Level I

Level II

Level III

Total

(in thousands)

$ 

142,936  $ 

—  $ 

—  $ 

142,936 

— 

— 

— 

— 

8,999 

345,265 

29,702 

26,074 

— 

— 

— 

— 

8,999 

345,265 

29,702 

26,074 

$ 

142,936  $ 

410,040  $ 

—  $ 

552,976 

166,802 

$ 

719,778 

100

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Financial Instruments Not Recorded at Fair Value on a Recurring Basis

We report our financial instruments at fair value, with the exception of the 2023 Notes. Financial instruments 

that are not recorded at fair value on a recurring basis are measured at fair value on a quarterly basis for disclosure 
purposes. The carrying values and estimated fair values of financial instruments not recorded at fair value are as 
follows:

As of July 31, 2019

As of July 31, 2020

Carrying Value

Estimated Fair 
Value

Carrying Value

Estimated Fair 
Value

(in thousands)

Convertible senior notes, net

$ 

458,910  $ 

527,275  $ 

490,222  $ 

529,385 

The carrying value of the 2023 Notes as of July 31, 2019 and 2020 was net of the unamortized debt discount 

of $110.0 million and $80.3 million, respectively, and unamortized debt issuance costs of $6.1 million and $4.5 
million, respectively. 

The total estimated fair value of the 2023 Notes was determined based on the closing trading price per $100 of 

the 2023 Notes as of the last day of trading for the period. We consider the fair value of the 2023 Notes to be a 
Level 2 measurement due to the limited trading activity.

NOTE 5. BALANCE SHEET COMPONENTS

Short-Term Investments

The amortized cost of our short-term investments approximates their fair value. As of July 31, 2019 and 2020, 

unrealized gains and losses from our short-term investments were not material. As of July 31, 2019 and 2020, 
unrealized losses from securities that were in an unrealized loss position for more than 12 months were not 
material. Unrealized losses related to our short-term investments are due to interest rate fluctuations, as opposed to 
credit quality. As a result, at July 31, 2019 and 2020, we did not record any other-than-temporary impairments for 
these investments.

The following table summarizes the estimated fair value of our investments in marketable debt securities by 

their contractual maturity dates:

Due within one year

Due in one to two years

Total

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consists of the following:

Prepaid operating expenses

Tenant improvement allowance receivables

VAT receivables

Prepaid income taxes

Other current assets

Total prepaid expenses and other current assets

$ 

74,665  $ 

101

As of 
July 31, 2020

(in thousands)

$ 

$ 

298,074 

102,967 

401,041 

As of July 31,

2019

2020

(in thousands)

$ 

37,864  $ 

31,690 

— 

5,068 

19,690 

12,043 

8,557 

8,381 

— 

14,404 

63,032 

 
 
 
 
 
 
 
 
 
 
 
 
 
NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The decrease in prepaid expenses and other current assets from July 31, 2019 to July 31, 2020 was due 

primarily to the receipt of an $18.0 million corporate income tax refund in the first quarter of fiscal 2020, partially 
offset by the addition of $8.6 million of tenant improvement allowances, which are recorded within prepaid expenses 
and other current assets on the consolidated balance sheet as of July 31, 2020 as a result of our adoption of ASC 
842 during the first quarter of fiscal 2020.

Property and Equipment, Net

Property and equipment, net consists of the following:

Computer, production, engineering and other equipment

Demonstration units

Leasehold improvements

Furniture and fixtures

Total property and equipment, gross

Less: accumulated depreciation (2)

Total property and equipment, net

Estimated
Useful Life

(in months)

As of July 31,

2019

2020

(in thousands)

36

12
(1)

60

$ 

200,762  $ 

245,245 

59,981 

46,520 

12,868 

66,569 

65,557 

17,026 

320,131 

394,397 

(183,169)   

(251,225) 

$ 

136,962  $ 

143,172 

(1) Leasehold improvements are amortized over the shorter of the estimated useful lives of the improvements or the 

(2)

remaining lease term. 
Includes a $1.2 million write-off related to the impairment of certain leasehold improvements for the fiscal quarter ended 
January 31, 2020. For additional information on this lease-related impairment, refer to Note 7.

Depreciation expense related to our property and equipment was $43.7 million, $60.8 million and $76.4 million 

for the fiscal years ended July 31, 2018, 2019 and 2020, respectively.

Intangible Assets, Net

Intangible assets, net consists of the following:

Developed technology

Customer relationships

Trade name

Total intangible assets, gross

Less:

Accumulated amortization of developed technology

Accumulated amortization of customer relationships

Accumulated amortization of trade name

Total accumulated amortization

Total intangible assets, net

As of July 31,

2019

2020

(in thousands)

$ 

79,300  $ 

79,300 

8,860 

4,170 

92,330 

8,860 

4,170 

92,330 

(21,210)   

(35,987) 

(3,392)   

(955)   

(4,953) 

(1,998) 

(25,557)   

(42,938) 

$ 

66,773  $ 

49,392 

Amortization expense related to our intangible assets is being recognized in the consolidated statements of 

operations within product cost of revenue for developed technology and sales and marketing expense for customer 
relationships and trade name.

102

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The changes in the net book value of intangible assets, net are as follows:

Intangible assets, net—beginning balance

Acquired intangible assets
Amortization of intangible assets (1)

Intangible assets, net—ending balance

As of July 31,

2019

2020

(in thousands)

$ 

45,366  $ 

66,773 

38,180 

— 

(16,773)   

(17,381) 

$ 

66,773  $ 

49,392 

(1) Represents amortization expense related to intangible assets recognized during the year in the consolidated statements 

of operations, within product cost of revenue and sales and marketing expense.

The estimated future amortization expense of our intangible assets is as follows:

Fiscal Year Ending July 31:

2021

2022

2023

2024

2025

Total

Goodwill

The changes in the carrying amount of goodwill are as follows:

Balance at July 31, 2018

Acquired in Frame Acquisition

Other

Balance at July 31, 2019

Other

Balance at July 31, 2020

Amount

(in thousands)

$ 

17,380 

16,183 

10,856 

3,210 

1,763 

$ 

49,392 

Carrying 
Amount

(in thousands)

$ 

87,759 

97,328 

93 

185,180 

80 

$ 

185,260 

103

 
 
 
 
 
 
 
 
 
 
 
NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Accrued Compensation and Benefits

Accrued compensation and benefits consists of the following:

Accrued commissions

Accrued vacation

Contributions to ESPP withheld

Payroll taxes payable

Accrued benefits

Accrued bonus

Other

As of July 31,

2019

2020

(in thousands)

$ 

31,703  $ 

15,475 

20,778 

8,504 

6,819 

11,413 

5,112 

33,503 

24,006 

16,563 

10,742 

8,426 

5,568 

10,301 

Total accrued compensation and benefits

$ 

99,804  $ 

109,109 

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consists of the following:

Income taxes payable

Accrued professional services

Other

Total accrued expenses and other current liabilities

NOTE 6. CONVERTIBLE SENIOR NOTES

As of July 31,

2019

2020

(in thousands)

$ 

9,651  $ 

2,996 

16,150 

$ 

28,797  $ 

9,703 

3,006 

13,215 

25,924 

In January 2018, we issued Convertible Senior Notes with a 0% interest rate for an aggregate principal amount 

of $575.0 million, due in 2023, in a private placement to qualified institutional buyers pursuant to Rule144A under 
the Securities Act. This included $75.0 million in aggregate principal amount of the 2023 Notes that we issued 
resulting from initial purchasers fully exercising their option to purchase additional notes. There are no required 
principal payments prior to the maturity of the 2023 Notes. The total net proceeds from the 2023 Notes are as 
follows: 

Principal amount

Less: initial purchasers' discount

Less: cost of the bond hedges

Add: proceeds from the sale of warrants

Less: other issuance costs

Net proceeds 

Amount

(in thousands)

$ 

575,000 

(10,781) 

(143,175) 

87,975 

(707) 

$ 

508,312 

The 2023 Notes do not bear any interest and will mature on January 15, 2023, unless earlier converted or 

repurchased in accordance with their terms. The 2023 Notes are unsecured and do not contain any financial 
covenants or any restrictions on the payment of dividends, or the issuance or repurchase of securities by us. 

104

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Each $1,000 of principal of the 2023 Notes will initially be convertible into 20.4705 shares of our Class A 
common stock, which is equivalent to an initial conversion price of approximately $48.85 per share, subject to 
adjustment upon the occurrence of specified events. Holders of these Notes may convert their Notes at their option 
at any time prior to the close of the business day immediately preceding October 15, 2022, only under the following 
circumstances: 

1) during any fiscal quarter commencing after the fiscal quarter ending on April 30, 2018 (and only during 

such fiscal quarter), if the last reported sale price of our Class A common stock for at least 20 trading days 
(whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the 
last trading day of the immediately preceding fiscal quarter, is greater than or equal to 130% of the 
conversion price on each applicable trading day;

2) during the five business day period after any five consecutive trading day period (the "measurement 
period") in which the trading price per $1,000 principal amount of Notes for each trading day of the 
measurement period was less than 98% of the product of the last reported sale price of our Class A 
common stock and the conversion rate for the 2023 Notes on each such trading day; or 

3) upon the occurrence of certain specified corporate events.

Based on the closing price of our Class A common stock of $22.19 on July 31, 2020, the if-converted value of 
the 2023 Notes was lower than the principal amount. The price of our Class A common stock was not greater than 
or equal to 130% of the conversion price for 20 or more trading days during the 30 consecutive trading days ending 
on the last trading day of the quarter ended July 31, 2020. As such, the 2023 Notes are not convertible for the fiscal 
quarter commencing after July 31, 2020.

On or after October 15, 2022, holders may convert all or any portion of their Notes at any time prior to the 
close of business on the second scheduled trading day immediately preceding the maturity date, regardless of the 
foregoing conditions. 

Upon conversion of the 2023 Notes, we will pay or deliver, as the case may be, cash, shares of our Class A 
common stock or a combination of cash and shares of Class A common stock, at our election. We intend to settle 
the principal of the 2023 Notes in cash. 

The conversion rate will be subject to adjustment in some events, but will not be adjusted for any accrued or 

unpaid interest. A holder who converts their Notes in connection with certain corporate events that constitute a 
"make-whole fundamental change" per the indenture governing the 2023 Notes are, under certain circumstances, 
entitled to an increase in the conversion rate. In addition, if we undergo a fundamental change prior to the maturity 
date, holders may require us to repurchase for cash all or a portion of their Notes at a repurchase price equal to 
100% of the principal amount of the repurchased Notes, plus accrued and unpaid interest.

We may not redeem the 2023 Notes prior to the maturity date, and no sinking fund is provided for the 2023 

Notes.

In accounting for the issuance of the 2023 Notes, we separated the 2023 Notes into liability and equity 
components. The carrying amount of the liability component of approximately $423.4 million was calculated by 
measuring the fair value of a similar liability that does not have an associated convertible feature. The carrying 
amount of the equity component of approximately $151.6 million, representing the conversion option, was 
determined by deducting the fair value of the liability component from the par value of the 2023 Notes. The 
difference between the principal amount of the 2023 Notes and the liability component (the "debt discount") is 
amortized to interest expense using the effective interest method over the term of the 2023 Notes. The equity 
component of the 2023 Notes is included in additional paid-in capital in the consolidated balance sheets and is not 
remeasured as long as it continues to meet the conditions for equity classification.

105

NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

We incurred transaction costs related to the issuance of the 2023 Notes of approximately $11.5 million, 
consisting of an initial purchasers' discount of $10.8 million and other issuance costs of approximately $0.7 million. 
In accounting for the transaction costs, we allocated the total amount incurred to the liability and equity components 
using the same proportions as the proceeds from the 2023 Notes. Transaction costs attributable to the liability 
component were approximately $8.5 million, recorded as debt issuance costs (presented as contra debt in the 
consolidated balance sheets), and are being amortized to interest expense over the term of the 2023 Notes. The 
transaction costs attributable to the equity component were approximately $3.0 million and were net with the equity 
component within stockholders’ equity. 

The 2023 Notes consisted of the following:

Principal amounts:

Principal
Unamortized debt discount (1)
Unamortized debt issuance costs (1)

Net carrying amount

Carrying amount of equity component (2)

As of July 31,

2019

2020

(in thousands)

$ 

575,000  $ 

575,000 

(109,956)   

(80,298) 

(6,134)   

(4,480) 

$ 

$ 

458,910  $ 

490,222 

148,598  $ 

148,598 

(1)

(2)

Included in the consolidated balance sheets within "convertible senior notes, net" and amortized over the remaining life 
of the 2023 Notes using the effective interest rate method. The effective interest rate is 6.62%.
Included in the consolidated balance sheets within additional paid-in capital, net of $3.0 million in equity issuance costs.

As of July 31, 2020, the remaining life of the 2023 Notes was approximately 29 months.

The following table sets forth the total interest expense recognized related to the 2023 Notes:

Interest expense related to amortization of debt discount

Interest expense related to amortization of debt issuance costs

Total interest expense

Note Hedges and Warrants

Fiscal Year Ended July 31,

2018

2019

2020

(in thousands)

$ 

$ 

13,909  $ 

27,764  $ 

29,658 

776 

1,549 

1,654 

14,685  $ 

29,313  $ 

31,312 

Concurrently with the offering of the 2023 Notes in January 2018, we entered into convertible note hedge 

transactions with certain bank counterparties, whereby we have the initial option to purchase a total of 
approximately 11.8 million shares of our Class A common stock at a conversion price of approximately $48.85 per 
share, subject to adjustment for certain specified events. The total cost of the convertible note hedge transactions 
was approximately $143.2 million. In addition, we sold warrants to certain bank counterparties, whereby the holders 
of the warrants have the initial option to purchase a total of approximately 11.8 million shares of our Class A 
common stock at a price of $73.46 per share, subject to adjustment for certain specified events. We received 
approximately $88.0 million in cash proceeds from the sale of these warrants.

Taken together, the purchase of the convertible note hedges and the sale of warrants are intended to offset 
any actual dilution from the conversion of the 2023 Notes and to effectively increase the overall conversion price 
from $48.85 to $73.46 per share. As these transactions meet certain accounting criteria, the convertible note 
hedges and warrants are recorded within stockholders’ equity and are not accounted for as derivatives. The net 
cost incurred in connection with the convertible note hedge and warrant transactions of approximately $55.2 million 
was recorded as a reduction to additional paid-in capital in the consolidated balance sheets as of July 31, 2019 and 
2020. The fair value of the note hedges and warrants are not remeasured each reporting period. The amounts paid 
for the note hedges were tax deductible expenses, while the proceeds received from the warrants were not taxable.

106

 
 
 
 
 
NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Impact to Earnings per Share

The 2023 Notes will have no impact to diluted earnings per share ("EPS") until they meet the criteria for 
conversion, as discussed above, as we intend to settle the principal amount of the 2023 Notes in cash upon 
conversion. Under the treasury stock method, in periods when we report net income, we are required to include the 
effect of additional shares that may be issued under the 2023 Notes when the price of our Class A common stock 
exceeds the conversion price. Under this method, the cumulative dilutive effect of the 2023 Notes would be 
approximately 3.9 million shares if the average price of our Class A common stock was $73.46. However, upon 
conversion, there will be no economic dilution from the 2023 Notes, as exercise of the note hedges eliminate any 
dilution that would have otherwise occurred. The note hedges are required to be excluded from the calculation of 
diluted earnings per share, as they would be antidilutive under the treasury stock method. 

The warrants will have a dilutive effect when the average share price exceeds the warrant strike price of 
$73.46 per share. As the price of our Class A common stock continues to increase above the warrant strike price, 
additional dilution would occur at a declining rate so that a $10 increase from the warrant strike price would yield a 
cumulative dilution of approximately 4.9 million diluted shares for EPS purposes. However, upon conversion, the 
note hedges would neutralize the dilution from the 2023 Notes so that there would only be dilution from the 
warrants, which would result in an actual dilution of approximately 1.4 million shares at a common stock price of 
$83.46.

NOTE 7. LEASES

We have operating leases for offices, research and development facilities and datacenters. Our leases have 

remaining lease terms of one year to approximately nine years, some of which include options to renew or 
terminate. We do not include renewal options in the lease terms for calculating our lease liability, as we are not 
reasonably certain that we will exercise these renewal options at the time of the lease commencement. Our lease 
agreements do not contain any residual value guarantees or restrictive covenants.

Total operating lease cost was $39.1 million for the fiscal year ended July 31, 2020, excluding short-term lease 

costs, variable lease costs and sublease income, each of which were not material. Variable lease costs primarily 
include common area maintenance charges. Total lease expense recognized prior to our adoption of ASC 842 was 
$19.0 million and $37.0 million for the fiscal years ended July 31, 2018 and 2019, respectively.

During the second quarter of fiscal 2020, we ceased using certain office spaces in Bangalore, India. As the 

carrying value of the related right-of-use assets exceeded fair value, we recorded a $3.0 million impairment in our 
consolidated statements of operations for the fiscal year ended July 31, 2020. Of the $3.0 million impairment, 
approximately $1.8 million relates to the impairment of the operating lease right-of-use assets and approximately 
$1.2 million relates to the impairment of leasehold improvements. Additional charges related to asset impairments 
may be recorded in the future.

107

NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Supplemental balance sheet information related to leases is as follows:

Operating leases:

Operating lease right-of-use assets, gross

Accumulated amortization

Operating lease right-of-use assets, net

Operating lease liabilities—current

Operating lease liabilities—non-current

Total operating lease liabilities

Weighted average remaining lease term (in years):

Weighted average discount rate:

Supplemental cash flow and other information related to leases is as follows:

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases

Lease liabilities arising from obtaining right-of-use assets:

Operating leases

As of 
July 31, 2020

(in thousands)

$ 

159,292 

(31,966) 

$ 

127,326 

$ 

36,569 

116,794 

$ 

153,363 

3.7

 5.3 %

Fiscal Year 
Ended July 31, 
2020

(in thousands)

$ 

$ 

42,231 

45,278 

The undiscounted cash flows for our operating lease liabilities as of July 31, 2020 were as follows:

Fiscal Year Ending July 31:

2021

2022

2023

2024

2025

Thereafter

Total lease payments

Less: imputed interest

Total lease obligation

Less: current lease obligations

Long-term lease obligations

Amount

(in thousands)

$ 

43,874 

44,953 

43,313 

30,762 

5,158 

3,414 

171,474 

(18,111) 

153,363 

(36,569) 

$ 

116,794 

As of July 31, 2020, we have additional operating lease commitments of approximately $11.1 million on an 

undiscounted basis for certain office leases that have not yet commenced. These operating leases will commence 
during fiscal 2021 and fiscal 2022, with lease terms of two to six years.

108

 
 
 
 
 
 
 
 
 
 
 
NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As previously disclosed in our Annual Report on Form 10-K for the fiscal year ended July 31, 2019, the 

following table summarizes the future minimum payments due under our operating leases as of July 31, 2019, 
reported under ASC 840:

Fiscal Year Ending July 31:

2020

2021

2022

2023

2024

Thereafter

Total

Amount

(in thousands)

$ 

39,540 

41,909 

41,332 

40,695 

30,240 

3,511 

$ 

197,227 

NOTE 8. COMMITMENTS AND CONTINGENCIES

Purchase Commitments

In the normal course of business, we make commitments with our OEMs to ensure them a minimum level of 

financial consideration for their investment in our joint solutions. These commitments are based on revenue targets 
or on-hand inventory and non-cancelable purchase orders for non-standard components. We record a charge 
related to these items when we determine that it is probable a loss will be incurred and we are able to estimate the 
amount of the loss. Our historical charges have not been material. As of July 31, 2020, we had up to approximately 
$62.5 million of non-cancelable purchase obligations and other commitments pertaining to our daily business 
operations, and up to approximately $81.2 million in the form of guarantees to certain of our OEMs.

Guarantees and Indemnifications

We have entered into agreements with some of our Partners and customers that contain indemnification 
provisions in the event of claims alleging that our products infringe the intellectual property rights of a third party. 
The scope of such indemnification varies, and may include, in certain cases, the ability to cure the indemnification 
by modifying or replacing the product at our own expense, requiring the return and refund of the infringing product, 
procuring the right for the partner and/or customer to continue to use or distribute the product, as applicable, and/or 
defending the partner or customer against and paying any damages from third-party actions based upon claims of 
infringement. Other guarantees or indemnification arrangements include guarantees of product and service 
performance. 

We have also agreed to indemnify our directors, executive officers and certain other officers for costs 

associated with any fees, expenses, judgments, fines and settlement amounts incurred by any of these persons in 
any action or proceeding to which any of those persons is, or is threatened to be, made a party by reason of the 
person’s service as a director or officer, including any action by us, arising out of that person’s services as a director 
or officer of our company or that person’s services provided to any other company or enterprise at our request. We 
maintain director and officer insurance coverage that may enable us to recover a portion of any future amounts 
paid.

The fair value of liabilities related to indemnifications and guarantee provisions are not material and have not 

had any material impact on the consolidated financial statements to date.

109

 
 
 
 
 
NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Legal Proceedings

Beginning on March 29, 2019, several purported securities class actions were filed in the United States District 

Court for the Northern District of California against us and two of our officers. The initial complaints generally 
alleged that the defendants made false and misleading statements in violation of Sections 10(b) and 20(a) of the 
Exchange Act and SEC Rule 10b-5. In July 2019, the court consolidated the actions into a single action, and 
appointed a lead plaintiff, who then filed a consolidated amended complaint (the "Original Complaint"). The action 
was brought on behalf of those who purchased or otherwise acquired our stock between November 30, 2017 and 
May 30, 2019, inclusive. The defendants subsequently filed a motion to dismiss the Original Complaint, and the 
court granted that motion on March 9, 2020, while providing the lead plaintiff leave to amend. On April 17, 2020, the 
lead plaintiff filed a second amended complaint (the "Current Complaint"), again naming us and two of our officers 
as defendants. The Current Complaint alleges the same class period, includes many of the same factual allegations 
as the Original Complaint, and again alleges that the defendants violated Sections 10(b) and 20(a) of the Exchange 
Act, as well as SEC Rule 10b-5. The Current Complaint seeks monetary damages in an unspecified amount. On 
May 22, 2020, the Company and the individual defendants filed a motion to dismiss the Current Complaint, which 
was denied on September 11, 2020. The litigation is still in early stages, and we plan to continue to vigorously 
defend against the allegations and we are not able to determine what, if any, liabilities will attach to the Current 
Complaint.

Beginning on July 1, 2019, several shareholder derivative complaints were filed in each of the U.S. District 
Court for the Northern District of California, the Superior Court of California for the County of San Mateo and the 
Superior Court of California for the County of Santa Clara, naming (i) fourteen of Nutanix’s current and former 
officers and directors as defendants and (ii) the Company as a nominal defendant. The complaints generally alleged 
claims for breach of fiduciary duty, waste of corporate assets and unjust enrichment, all based on the same general 
underlying allegations that are contained in the securities class actions described above. The Superior Court 
complaints additionally alleged insider trading and violation of California Corporations Code Section 25402, and the 
Santa Clara County Superior Court complaints further included additional claims for "abuse of control" and "gross 
mismanagement." On January 7, 2020, the U.S. District Court for the North District of California consolidated the 
federal actions and, on March 6, 2020, the plaintiffs filed a stipulation designating a lead plaintiff and deeming the 
lead plaintiff’s original complaint as the designated complaint in the matter. On April 22, 2020, (i) the individual 
defendants filed a motion to dismiss the designated complaint on the grounds that it fails to state a claim, and (ii) we 
filed a motion to dismiss the designated complaint on the grounds that the plaintiffs failed to make a demand on our 
Board of Directors before filing the designated complaint. In response, the plaintiffs filed an amended complaint on 
June 17, 2020. The defendants filed motions to dismiss the amended complaint on July 17, 2020. A hearing on the 
motions to dismiss is scheduled for September 23, 2020. In August 2019, the Superior Court of California for the 
County of Santa Clara consolidated the Santa Clara derivative actions into a single action and, in January 2020, the 
court stayed the consolidated Santa Clara action in deference to the federal derivative actions described above. On 
September 17, 2019, the Superior Court of California for the County of San Mateo granted the plaintiff’s request for 
voluntary dismissal without prejudice. The remaining derivative cases are in the very early stages and we are not 
able to determine what, if any, liabilities will attach to those complaints.

We are not currently a party to any other legal proceedings that we believe to be material to our business or 

financial condition. From time to time, we may become party to various litigation matters and subject to claims that 
arise in the ordinary course of business.

NOTE 9. STOCKHOLDERS’ EQUITY 

We have two classes of authorized common stock, Class A common stock and Class B common stock. As 
of July 31, 2020, we had one billion shares of Class A common stock authorized, with a par value of $0.000025 per 
share, and 200 million shares of Class B common stock authorized, with a par value of $0.000025 per share. As 
of July 31, 2020, we had 186.8 million shares of Class A common stock issued and outstanding and 15.1 million 
shares of Class B common stock issued and outstanding.

110

NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Holders of Class A common stock are entitled to one vote for each share of Class A common stock held on all 

matters submitted to a vote of stockholders. Holders of Class B common stock are entitled to 10 votes for each 
share of Class B common stock held on all matters submitted to a vote of stockholders. Except with respect to 
voting, the rights of the holders of Class A and Class B common stock are identical. Shares of Class B common 
stock are voluntarily convertible into shares of Class A common stock at the option of the holder and are generally 
automatically converted into shares of our Class A common stock upon a sale or transfer. Shares issued in 
connection with exercises of stock options, vesting of restricted stock units, or shares purchased under the 
employee stock purchase plan are generally automatically converted into shares of our Class A common stock. 
Shares issued in connection with an exercise of common stock warrants are converted into shares of our Class B 
common stock. 

Common Stock Reserved for Issuance

As of July 31, 2020, we had reserved shares of common stock for future issuance as follows:

Shares reserved for future equity grants

Shares underlying outstanding stock options

Shares underlying outstanding restricted stock units

Shares reserved for future employee stock purchase plan awards

Total

NOTE 10. EQUITY INCENTIVE PLANS

Stock Plans

As of July 31, 
2020

(in thousands)

12,724 

7,546 

22,632 

9,169 

52,071 

We have three equity incentive plans, the 2010 Stock Plan ("2010 Plan"), 2011 Stock Plan ("2011 Plan") and 
2016 Equity Incentive Plan ("2016 Plan"). Our stockholders approved the 2016 Plan in March 2016 and it became 
effective in connection with our initial public offering ("IPO"). As a result, at the time of the IPO, we ceased granting 
additional stock awards under the 2010 Plan and 2011 Plan and both plans were terminated. Any outstanding stock 
awards under the 2010 Plan and 2011 Plan will remain outstanding, subject to the terms of the applicable plan and 
award agreements, until such shares are issued under those stock awards, by exercise of stock options or 
settlement of restricted stock units ("RSUs"), or until those stock awards become vested or expired by their terms. 

Under the 2016 Plan, we may grant incentive stock options, non-statutory stock options, restricted stock, RSUs 

and stock appreciation rights to employees, directors and consultants. We initially reserved 22.4 million shares of 
our Class A common stock for issuance under the 2016 Plan. The number of shares of Class A common stock 
available for issuance under the 2016 Plan will also include an annual increase on the first day of each fiscal year, 
beginning in fiscal 2018, equal to the lesser of: 18.0 million shares, 5% of the outstanding shares of all classes of 
common stock as of the last day of our immediately preceding fiscal year, or such other amount as may be 
determined by the Board. Accordingly, on August 1, 2018 and 2019, the number of shares of Class A common 
stock available for issuance under the 2016 Plan increased by 8.6 million and 9.4 million shares, respectively, 
pursuant to these provisions. As of July 31, 2020, we had reserved a total of 42.9 million shares for the issuance of 
equity awards under the Stock Plans, of which 12.7 million shares were still available for grant. On August 1, 2020, 
the number of shares of Class A common stock available for issuance under the 2016 Plan increased by 10.1 
million shares pursuant to the automatic increase provisions.

111

 
 
 
 
 
 
NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Restricted Stock Units 

Performance RSUs — We have granted RSUs that have both service and performance conditions to our 
executives and employees ("Performance RSUs"). Vesting of Performance RSUs is subject to continuous service 
and the satisfaction of certain performance targets. While we recognize cumulative stock-based compensation 
expense for the portion of the awards for which both the service condition has been satisfied and it is probable that 
the performance conditions will be met, the actual vesting and settlement of Performance RSUs are subject to the 
performance conditions actually being met. 

Market Stock Units — In October 2018, the Compensation Committee of our Board of Directors approved the 

grant of 100,000 RSUs subject to certain market conditions ("MSUs") to our Chief Executive Officer, with a weighted 
average grant date fair value per unit of $25.16. The MSUs will vest based upon the achievement of an average 
stock price of $80 over a performance period of approximately 4.5 years (the "Performance Period"), subject to his 
continuous service on each vesting date. The average stock price is calculated based on the average closing price 
of one share of our Class A common stock, as reported on the Nasdaq Stock Market during the 180-day period 
ending on the last trading day prior to each measurement date (as applicable, the "Average Stock Price"). The 
Average Stock Price is measured once per quarter during the Performance Period, and:

•

•

•

If the Average Stock Price on any given quarterly measurement date does not equal or exceed $80, then 
none of the MSUs will vest that quarter, and any unvested MSUs will carry over to the next quarter (the 
"Carryover MSUs");
If the Average Stock Price on any given quarterly measurement date equals or exceeds $80, then 1/18th of 
the MSUs plus the applicable Carryover MSUs, if any, would vest; and/or
If the Average Stock Price never equals or exceeds $80 during the Performance Period, the MSUs would 
terminate at the end of the Performance Period.

In December 2019, the Compensation Committee of our Board of Directors approved the grant of 200,000 
additional MSUs to our Chief Executive Officer, with a weighted average grant date fair value per unit of $20.80. 
The MSUs will vest based upon the achievement of an average stock price of $65 over a performance period of 
approximately 4.5 years (the "Second Performance Period"), subject to his continuous service on each vesting date.

In February 2020, the Compensation Committee of our Board of Directors approved the grant of 75,000 MSUs 

to our Executive Vice President of Worldwide Sales, with a weighted average grant date fair value per unit of 
$20.80. The MSUs will vest based upon the achievement of an average stock price of $65 over a performance 
period of approximately 3.9 years (the "Second Performance Period"), subject to his continuous service on each 
vesting date.

The average stock price is calculated based on the average closing price of one share of our Class A common 

stock, as reported on the Nasdaq Stock Market during the 180-day period ending on the last trading day prior to 
each measurement date (as applicable, the "Second Average Stock Price"). The Second Average Stock Price is 
measured once per quarter during the Second Performance Period, and:

•

•

•

If the Second Average Stock Price on any given quarterly measurement date does not equal or exceed $65, 
then none of the MSUs will vest that quarter, and any unvested MSUs will carry over to the next quarter (the 
"Carryover MSUs");
If the Second Average Stock Price on any given quarterly measurement date equals or exceeds $65, then 
1/18th of the MSUs plus the applicable Carryover MSUs, if any, would vest; and/or
If the Second Average Stock Price never equals or exceeds $65 during the Second Performance Period, 
the MSUs would terminate at the end of the Second Performance Period.

We used Monte Carlo simulations to calculate the fair value of these awards on the grant date. A Monte Carlo 
simulation requires the use of various assumptions, including the stock price volatility and risk-free interest rate as 
of the valuation date corresponding to the length of time remaining in the performance period and expected 
dividend yield. We recognize stock-based compensation expense related to these MSUs using the graded vesting 
attribution method over the Performance Period or Second Performance Period, as applicable. As of July 31, 2020, 
375,000 MSUs remained outstanding.

112

NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Below is a summary of RSU activity, including MSUs, under the Stock Plans: 

Fiscal Year Ended July 31,

2019

2020

Number of
Shares

(in thousands)

Grant Date 
Fair Value per 
Share

Grant Date 
Fair Value per 
Share

Number of
Shares

(in thousands)

23,597  $ 

11,204  $ 

(8,717)  $ 

(3,948)  $ 

22,136  $ 

31.20 

42.23 

30.15 

33.86 

36.72 

22,136  $ 

13,502  $ 

(8,807)  $ 

(4,199)  $ 

22,632  $ 

36.72 

27.31 

33.86 

34.82 

32.70 

Outstanding at beginning of period

Granted

Released

Forfeited

Outstanding at end of period

Stock Options

The Board determines the period over which stock options become exercisable and stock options generally 
vest over a four-year period. Stock options generally expire 10 years from the date of grant. The term of an ISO 
grant to a 10% stockholder will not exceed five years from the date of the grant. The exercise price of an ISO will 
not be less than 100% of the estimated fair value of the shares of common stock underlying the stock option (or 
110% of the estimated fair value in the case of an ISO granted to a 10% stockholder) on the date of grant. The 
exercise price of an NSO is determined by the Board at the time of grant and is generally not less than 100% of the 
estimated fair value of the shares of common stock underlying the stock option on the date of grant.

Below is a summary of stock option activity under the Stock Plans:

2019

Weighted 
Average
Exercise
Price

Weighted
Average
Remaining
Contractual
Life

Number of
Shares

Fiscal Year Ended July 31,

Aggregate
Intrinsic
Value

Number of
Shares

2020

Weighted 
Average
Exercise
Price

Weighted
Average
Remaining
Contractual
Life

Aggregate
Intrinsic
Value

(in thousands)

(in years)

(in thousands)

(in thousands)

(in years)

(in thousands)

11,333  $ 

5.12 

5.6

$  496,022 

8,740  $ 

5.20 

4.6

$  153,000 

Outstanding at beginning of 

period

Options granted

Options exercised

—  $ 

— 

(2,555)  $ 

4.77 

Options canceled/forfeited  

(38)  $  10.09 

—  $ 

— 

(1,192)  $ 

5.83 

(2)  $  26.21 

Outstanding at end of period

Exercisable at end of period

Vested and expected to vest 

at end of period

8,740  $ 

5.20 

8,721  $ 

5.18 

4.6

4.6

$  153,000 

7,546  $ 

5.10 

$  152,837 

7,545  $ 

5.09 

3.6

3.7

$  129,010 

$  129,004 

8,740  $ 

5.20 

4.6

$  153,000 

7,546  $ 

5.10 

3.6

$  129,010 

Stock options exercisable as of July 31, 2019 includes 8.0 million vested options and 0.7 million unvested 

options with an early exercise provision. Stock options exercisable as of July 31, 2020 includes 7.0 million vested 
options and 0.5 million unvested options with an early exercise provision. There were no options granted during 
fiscal 2019 or 2020. 

The aggregate intrinsic value of stock options exercised during the fiscal years ended July 31, 2018, 2019 and 

2020 was $289.4 million, $90.3 million and $23.4 million, respectively. Aggregate intrinsic value represents the 
difference between the exercise price of the options and the estimated fair value of our common stock. Cash 
received from option exercises was $33.1 million, $12.2 million and $6.9 million for the fiscal years ended July 31, 
2018, 2019 and 2020, respectively. The total grant date fair value of stock options vested was $11.5 million, $4.4 
million and $1.0 million for the fiscal years ended July 31, 2018, 2019 and 2020, respectively.

113

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Employee Stock Purchase Plan

In December 2015, the Board adopted the 2016 Employee Stock Purchase Plan, which was subsequently 

amended in January 2016 and September 2016 and approved by our stockholders in March 2016 ("Original 2016 
ESPP"). The Original 2016 ESPP became effective in connection with our IPO. On December 13, 2019, during our 
2019 Annual Meeting of Stockholders, our stockholders approved certain amendments to the Original 2016 ESPP. 
Under the amended and restated Original 2016 ESPP ("2016 ESPP"), the maximum number of shares of Class A 
common stock available for sale is 11.5 million shares, representing an increase of 9.2 million shares. 

The 2016 ESPP allows eligible employees to purchase shares of our Class A common stock at a discount 

through payroll deductions of up to 15% of eligible compensation, subject to caps of $25,000 in any calendar year 
and 1,000 shares on any purchase date. The 2016 ESPP provides for 12-month offering periods, generally 
beginning in March and September of each year, and each offering period consists of two six-month purchase 
periods.

On each purchase date, participating employees will purchase Class A common stock at a price per share 
equal to 85% of the lesser of the fair market value of our Class A common stock on (i) the first trading day of the 
applicable offering period or (ii) the last trading day of each purchase period in the applicable offering period. If the 
stock price of our Class A common stock on any purchase date in an offering period is lower than the stock price on 
the enrollment date of that offering period, the offering period will immediately reset after the purchase of shares on 
such purchase date and automatically roll into a new offering period.

During the fiscal year ended July 31, 2020, 3.3 million shares of common stock were purchased under the 
2016 ESPP for an aggregate amount of $50.6 million. As of July 31, 2020, 9.2 million shares were available for 
future issuance under the 2016 ESPP. 

We use the Black-Scholes option pricing model to determine the fair value of shares purchased under the 

2016 ESPP with the following weighted average assumptions on the date of grant:

Expected term (in years)

Risk-free interest rate

Volatility

Dividend yield

Stock-Based Compensation

Fiscal Year Ended July 31,

2018

2019

2020

0.75

 1.4 %

 49.8 %

 — %

0.84

 2.5 %

 69.0 %

 — %

0.92

 0.1 %

 73.4 %

 — %

Total stock-based compensation expense recognized in the consolidated statements of operations is as 

follows:

Cost of revenue:

Product

Support, entitlements and other services

Sales and marketing

Research and development

General and administrative

Fiscal Year Ended July 31,

2018

2019

2020

(in thousands)

$ 

2,580  $ 

3,535  $ 

8,945 

65,060 

74,389 

26,894 

15,326 

107,751 

140,519 

39,598 

5,334 

22,014 

126,015 

153,252 

45,383 

Total stock-based compensation expense

$ 

177,868  $ 

306,729  $ 

351,998 

As of July 31, 2020, unrecognized stock-based compensation expense related to outstanding stock awards 

was approximately $689.9 million and is expected to be recognized over a weighted average period of 
approximately 2.5 years.

114

 
 
 
 
 
 
 
 
 
 
 
 
 
 
NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 11. NET LOSS PER SHARE

Basic and diluted net loss per share attributable to common stockholders is presented in conformity with the 

two-class method required for participating securities. Our Convertible Preferred Stock is considered a participating 
security. Participating securities do not have a contractual obligation to share in our losses. As such, for the periods 
we incur net losses, there is no impact on the calculated net loss per share attributable to common stockholders in 
applying the two-class method.

Basic net income (loss) per share is computed using the weighted average number of common shares 

outstanding during the period. Diluted net income (loss) per share is computed by giving effect to potentially dilutive 
common stock equivalents outstanding during the period, as their effect would be dilutive. Potentially dilutive 
common shares include participating securities and shares issuable upon the exercise of stock options, the exercise 
of common stock warrants, the exercise of convertible preferred stock warrants, the vesting of RSUs and each 
purchase under the 2016 ESPP, under the treasury stock method. 

In loss periods, basic net loss per share and diluted net loss per share are the same, as the effect of potential 

common shares is antidilutive and therefore excluded.

The rights, including the liquidation and dividend rights, of the holders of our Class A and Class B common 

stock are identical, except with respect to voting. As the liquidation and dividend rights are identical, our 
undistributed earnings or losses are allocated on a proportionate basis among the holders of both Class A and 
Class B common stock. As a result, the net income (loss) per share attributed to common stockholders will, 
therefore, be the same for both Class A and Class B common stock on an individual or combined basis.

The computation of basic and diluted net loss per share attributable to Class A and Class B common 

stockholders is as follows:

Numerator:

Net loss

Denominator:

Fiscal Year Ended July 31,

2018

2019

2020

(in thousands, except per share data)

$ 

(297,161)  $ 

(621,179)  $ 

(872,883) 

Weighted average shares—basic and diluted

164,091 

181,031 

194,719 

Net loss per share attributable to common stockholders—basic 

and diluted

$ 

(1.81)  $ 

(3.43)  $ 

(4.48) 

The potential shares of common stock that were excluded from the computation of diluted net loss per share 

attributable to common stockholders for the fiscal years presented because including them would have been 
antidilutive are as follows:

Outstanding stock options and RSUs

Employee stock purchase plan

Contingently issuable shares pursuant to business combinations

Common stock subject to repurchase

Common stock warrants

Total

As of July 31,

2018

2019

2020

(in thousands)

34,930 

1,311 

277 

47 

34 

30,876 

1,659 

749 

— 

34 

30,178 

4,368 

506 

— 

— 

36,599 

33,318 

35,052 

Shares that will be issued in connection with our stock awards and shares that will be purchased under the 
employee stock purchase plan are generally automatically converted into shares of our Class A common stock. 
Shares issued in connection with an exercise of the common stock warrants are converted into shares of our Class 
B common stock and are voluntarily convertible into shares of Class A common stock at the option of the holder.

115

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 12. INCOME TAXES

Income Taxes

Loss before provision for income taxes by fiscal year consisted of the following:

Domestic

Foreign

Fiscal Year Ended July 31,

2018

2019

2020

(in thousands)

$ 

(201,666)  $ 

(658,938)  $ 

(905,840) 

(88,048)   

45,878 

50,619 

Loss before provision for income taxes

$ 

(289,714)  $ 

(613,060)  $ 

(855,221) 

 Provision for income taxes by fiscal year consisted of the following:

Current:

U.S. federal

State and local

Foreign

Total current taxes

Deferred:

U.S. federal

State and local

Foreign

Total deferred taxes

Provision for income taxes

Fiscal Year Ended July 31,

2018

2019

2020

(in thousands)

$ 

2,059  $ 

(1,998)  $ 

429 

8,541 

11,029 

312 

17,270 

15,584 

(3,387)   

(4,949)   

(718)   

523 

(3,582)   

(770)   

(1,746)   

(7,465)   

175 

79 

18,033 

18,287 

80 

— 

(705) 

(625) 

$ 

7,447  $ 

8,119  $ 

17,662 

The income tax provision differs from the amount of income tax determined by applying the applicable U.S. 
federal statutory income tax rate of 21% to pre-tax loss. The reconciliation of the statutory federal income tax and 
our effective income tax is as follows:

U.S. federal income tax at statutory rate

$ 

(75,779)  $ 

(128,680)  $ 

(179,514) 

Fiscal Year Ended July 31,

2018

2019

2020

(in thousands)

Change in valuation allowance

Stock-based compensation

Effect of foreign operations

Non-deductible expenses

Change in unrecognized tax benefit

State income taxes

Transfer pricing adjustments

U.S. tax reform impact

Intangible asset migration

Other

Total

25,274 

142,273 

145,244 

(73,631)   

(23,378)   

26,117 

2,115 

653 

14,305 

4,651 

727 

(290)   

(458)   

4,584 

93,352 

4,461 

591 

(3)   

— 

(2,027)   

30,913 

12,676 

5,393 

1,709 

79 

7 

— 

— 

709 

1,155 

$ 

7,447  $ 

8,119  $ 

17,662 

116

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

During the fiscal year ended July 31, 2018, our provision for income taxes was primarily attributable to the 
alternative minimum tax in the U.S. related to the migration of certain intangible assets and foreign tax provisions in 
certain foreign jurisdictions in which we conduct business, partially offset by a partial valuation allowance release in 
the U.S. due to acquisitions completed during fiscal 2018.

During the fiscal year ended July 31, 2019, our provision for income taxes was primarily attributable to foreign 

tax provisions in certain foreign jurisdictions in which we conduct business, partially offset by a partial valuation 
release in the U.S. due to an acquisition completed during fiscal 2019 and a tax benefit related to the change in tax 
law.

During the fiscal year ended July 31, 2020, our provision for income taxes was primarily attributable to foreign 

tax provisions in certain foreign jurisdictions in which we conduct business.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was enacted by 
the United States government. However, the CARES Act did not have a material impact on our provision for income 
taxes for the fiscal year ended July 31, 2020.

In June 2020, the U.S. Supreme Court denied certiorari in the case of Altera Corp. v. Commissioner ("Altera"). 
We have concluded that the law remains unsettled and continue to record unrecognized tax benefits as we exclude 
stock-based compensation costs from our cost sharing arrangements. Any potential impact of a final adverse 
decision would result in adjustments to deferred tax assets and corresponding adjustments to the valuation 
allowance. We will continue to monitor developments and the potential effect on our consolidated financial 
statements and tax filings.

117

NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The temporary differences that give rise to significant portions of deferred tax assets and liabilities are as 

follows:

Deferred tax assets:

Net operating loss carryforward

Tax credit carryforward

Deferred revenue

Leases

Intangible assets

Stock-based compensation expense

Accruals and reserves

Property and equipment

Other assets

Total deferred tax assets

Deferred tax liabilities:

Deferred commission expense

Leases

Acquisition-related

Property and equipment

Foreign branch taxes

Prepaid expenses

Other

Total deferred tax liabilities

Valuation allowance

Net deferred tax assets

As of July 31,

2019

2020

(in thousands)

$ 

294,577  $ 

412,110 

109,921 

71,859 

— 

35,764 

27,493 

14,825 

633 

24,258 

579,330 

(35,814)   

— 

(11,515)   

(9,174)   

(4,607)   

(2,303)   

(1,621)   

152,330 

122,236 

48,270 

31,119 

24,177 

13,401 

2,234 

29,022 

834,899 

(50,344) 

(44,502) 

(8,003) 

(5,629) 

(5,175) 

(2,140) 

(1,991) 

(65,034)   

(117,784) 

(509,764)   

(712,093) 

$ 

4,532  $ 

5,022 

Management believes that based on available evidence, both positive and negative, it is more likely than not 

that the U.S. deferred tax assets will not be utilized and as such, a full valuation allowance has been recorded.

The valuation allowance for deferred tax assets was $712.1 million as of July 31, 2020. The net increase in the 

total valuation allowance for the fiscal years ended July 31, 2019 and 2020 was $282.8 million and $202.3 million, 
respectively.

As of July 31, 2020, we had approximately $1.9 billion of federal net operating loss carryforwards and $1.1 
billion of state net operating loss carryforwards available to reduce future taxable income, which will begin to expire 
in fiscal 2029. In addition, we had approximately $97.2 million of federal research credit carryforwards, $65.5 million 
of state research credit carryforwards and $26.0 million of foreign tax credit carryforwards. The federal credits will 
begin to expire in fiscal 2030 and the state credits can be carried forward indefinitely. The foreign credits will begin 
to expire in fiscal 2027.

Utilization of the net operating loss and tax credit carryforwards may be subject to an annual limitation due to 

the ownership change limitations provided by the Internal Revenue Code of 1986, as amended, and similar state 
provisions. Any annual limitation may result in the expiration of net operating losses and credits before utilization. If 
an ownership change occurred, utilization of the net operating loss and tax credit carryforwards could be 
significantly reduced.

118

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of July 31, 2020, we held an aggregate of $173.7 million in cash and cash equivalents in our foreign 

subsidiaries, of which $114.7 million was denominated in U.S. dollars. We attribute net revenue, costs and 
expenses to domestic and foreign components based on the terms of our agreements with our subsidiaries. We do 
not provide for federal income taxes on the undistributed earnings of our foreign subsidiaries, as such earnings are 
to be reinvested offshore indefinitely. The income tax liability would be insignificant if these earnings were to be 
repatriated.

The income tax benefit and provision for the fiscal year ended July 31, 2020 are based on the assumption that 
foreign undistributed earnings are indefinitely reinvested. We will continue to evaluate whether or not to continue to 
assert indefinite reinvestment on part or all of our foreign undistributed earnings. In the event we determine not to 
continue to assert the permanent reinvestment of part or all of our foreign undistributed earnings, such a 
determination could result in the accrual and payment of additional foreign, state and local taxes.

We recognize uncertain tax positions in our financial statements if that position will more likely than not be 
sustained on audit, based on the technical merits of the position. A reconciliation of our unrecognized tax benefits, 
excluding accrued interest and penalties, is as follows:

Balance at the beginning of the year

Increases related to current year tax positions

Increases related to prior year tax positions

Decreases related to prior year tax positions

Settlements with tax authorities

Balance at the end of the year

Fiscal Year Ended July 31,

2019

2020

(in thousands)

$ 

91,716  $ 

81,250 

13,736 

301 

(23,782)   

(721)   

3,897 

491 

(381) 

— 

$ 

81,250  $ 

85,257 

During the fiscal year ended July 31, 2020, the net increase in unrecognized tax positions was primarily 

attributable to federal and state research and development credits and intercompany charges.

As of July 31, 2020, if uncertain tax positions are fully recognized in the future, it would result in a $14.5 million 

impact to our effective tax rate, and the remaining amount would result in adjustments to deferred tax assets and 
corresponding adjustments to the valuation allowance.

We recognize interest and/or penalties related to income tax matters as a component of income tax expense. 

As of July 31, 2020, we had recognized $3.1 million accrued interest and penalties related to uncertain tax 
positions.

We file income tax returns in the U.S. federal jurisdiction as well as various U.S. states and foreign 

jurisdictions. The tax years 2009 and forward remain open to examination by the major jurisdictions in which we are 
subject to tax. These fiscal years outside the normal statute of limitation remain open to audit by tax authorities due 
to tax attributes generated in those early years, which have been carried forward and may be audited in subsequent 
years when utilized. We are subject to the continuous examination of income tax returns by various tax authorities. 
We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the 
adequacy of the provision for income taxes. We believe that adequate amounts have been reserved for any 
adjustments that may ultimately result from these examinations. A final determination of Altera is possible within the 
next 12 months. If the Altera opinion stands, it would result in a $36.2 million reduction of our gross unrecognized 
tax benefits. There is no impact to our effective tax rate and this would result in adjustments to deferred tax assets 
and corresponding adjustments to the valuation allowance. Other than Altera, we do not anticipate a significant 
impact to the unrecognized tax benefits within the next 12 months.

119

 
 
 
 
 
 
 
 
NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 13. SEGMENT INFORMATION

Our chief operating decision maker is a group which is comprised of our Chief Executive Officer and Chief 

Financial Officer. This group reviews financial information presented on a consolidated basis for purposes of 
allocating resources and evaluating financial performance. Accordingly, we have a single reportable segment.

The following table sets forth revenue by geographic location based on bill-to location:

U.S.

Europe, the Middle East and Africa

Asia Pacific

Other Americas

Total revenue

Fiscal Year Ended July 31,

2018

2019

2020

(in thousands)

$ 

648,805  $ 

682,340 

224,392 

240,247 

42,013 

238,356 

271,712 

43,735 

706,110 

277,489 

265,092 

58,991 

$  1,155,457  $  1,236,143  $  1,307,682 

As of July 31, 2019 and 2020, $161.9 million and $136.7 million, respectively, of our long-lived assets, net 

were located in the United States.

120

 
 
 
 
 
 
 
 
 
 
 
 
NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 14. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

The following sets forth selected unaudited quarterly consolidated statements of operations data for each of 

the eight quarters in the period ended July 31, 2020. The information for each of these quarters has been prepared 
on a basis consistent with our audited annual consolidated financial statements included elsewhere in this report 
and, in the opinion of management, includes all adjustments of a normal, recurring nature that are necessary for the 
fair presentation of the results of operations for these periods in accordance with U.S. GAAP. This data should be 
read in conjunction with our audited consolidated financial statements and related notes included elsewhere in this 
report. These historical quarterly operating results are not necessarily indicative of the results that may be expected 
for a full fiscal year or any future period.

Three Months Ended

October 
31, 2018

January 
31, 2019

April 30, 
2019

July 31, 
2019

October 
31, 2019

January 
31, 2020

April 30, 
2020

July 31, 
2020

(unaudited, in thousands, except per share amounts)

Revenue:

Product

Support, entitlements and 

other services

$  224,346  $  236,932  $  184,794  $  186,347  $  192,444  $  213,547  $  180,756  $  179,075 

88,937 

98,428 

  102,830 

  113,529 

  122,324 

  133,220 

  137,517 

  148,799 

Total revenue

  313,283 

  335,360 

  287,624 

  299,876 

  314,768 

  346,767 

  318,273 

  327,874 

Cost of revenue:

Product (2)(3)

Support, entitlements and 

other services (2) 

Total cost of revenue

39,261 

45,966 

29,528 

28,323 

21,233 

20,676 

15,990 

13,413 

34,845 

74,106 

40,016 

85,982 

45,549 

75,077 

40,640 

68,963 

50,968 

72,201 

54,547 

75,223 

56,304 

72,294 

53,558 

66,971 

Gross profit

  239,177 

  249,378 

  212,547 

  230,913 

  242,567 

  271,544 

  245,979 

  260,903 

Operating expenses:

Sales and marketing (2)(3)

  196,497 

  213,707 

  245,703 

  253,843 

  291,838 

  304,936 

  299,162 

  264,453 

Research and development (2)

  110,531 

  123,037 

  137,982 

  129,169 

  138,206 

  139,088 

  141,346 

  135,338 

General and administrative (2)

27,339 

28,788 

33,040 

30,420 

32,860 

34,579 

35,644 

32,464 

Total operating expenses

  334,367 

  365,532 

  416,725 

  413,432 

  462,904 

  478,603 

  476,152 

  432,255 

Loss from operations

(95,190) 

(116,154) 

  (204,178) 

  (182,519) 

  (220,337) 

  (207,059) 

  (230,173) 

  (171,352) 

Other expense, net

(2,703) 

(4,399) 

(3,212) 

(4,705) 

(5,040) 

(5,863) 

(5,640) 

(9,757) 

Loss before (benefit from) 

provision for income taxes

(Benefit from) provision for 

income taxes

(97,893) 

(120,553) 

  (207,390) 

  (187,224) 

  (225,377) 

  (212,922) 

  (235,813) 

  (181,109) 

(3,628) 

2,210 

2,423 

7,114 

3,923 

4,642 

4,858 

4,239 

Net loss

$ 

(94,265)  $  (122,763)  $ (209,813)  $ (194,338)  $ (229,300)  $ (217,564)  $ (240,671)  $ (185,348) 

Net loss per share attributable to 
Class A and Class B common 
stockholders—basic and 
diluted (1) 

$ 

(0.54)  $ 

(0.68)  $ 

(1.15)  $ 

(1.04)  $ 

(1.21)  $ 

(1.13)  $ 

(1.23)  $ 

(0.93) 

(1) Basic and diluted earnings per share are computed independently for each of the quarters presented. Therefore, the 
sum of quarterly basic and diluted per share amounts may not equal annual basic and diluted per share amounts. 

121

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(2)

Includes stock-based compensation as follows:

October 31, 
2018

January 31, 
2019

April 30, 
2019

July 31, 
2019

October 31, 
2019

January 31, 
2020

April 30, 
2020

July 31, 
2020

Three Months Ended

(unaudited, in thousands)

Product cost of sales

$ 

698  $ 

872  $ 

953  $ 

1,012  $ 

1,112  $ 

1,458  $ 

1,367  $ 

1,397 

Support, entitlements and 
other services cost of 
sales

Sales and marketing

Research and development

General and administrative

3,157 

22,606 

31,009 

8,455 

3,373 

23,462 

34,679 

10,179 

4,542 

35,257 

42,265 

11,815 

4,254 

26,426 

32,566 

9,149 

4,751 

27,775 

37,563 

10,225 

5,140 

31,185 

36,459 

11,373 

5,959 

33,177 

39,462 

12,131 

6,164 

33,878 

39,768 

11,654 

Total

$ 

65,925  $ 

72,565  $  94,832  $  73,407  $ 

81,426  $ 

85,615  $  92,096  $  92,861 

(3)

Includes amortization of intangible assets as follows: 

October 31, 
2018

January 31, 
2019

April 30, 
2019

July 31, 
2019

October 31, 
2019

January 31, 
2020

April 30, 
2020

July 31, 
2020

Three Months Ended

(unaudited, in thousands)

Product cost of sales

Sales and marketing

Total

$ 

$ 

3,168  $ 

3,692  $ 

3,694  $ 

3,694  $ 

3,694  $ 

3,694  $ 

3,694  $ 

3,695 

550 

666 

661 

651 

651 

651 

651 

650 

3,718  $ 

4,358  $ 

4,355  $ 

4,345  $ 

4,345  $ 

4,345  $ 

4,345  $ 

4,345 

NOTE 15. SUBSEQUENT EVENTS

Issuance and Sale of Convertible Senior Notes

On August 26, 2020, we entered into an investment agreement (the "Investment Agreement") with BCPE 
Nucleon (DE) SPV, LP ("Bain") relating to the issuance and sale to Bain of $750 million in an initial aggregate 
principal amount of 2.50% Convertible Senior Notes due 2026 (the "2026 Notes"). The transactions contemplated 
by the Investment Agreement (the "Transaction") are expected to close on or prior to September 24, 2020, subject 
to satisfaction of the customary closing conditions set forth in the Investment Agreement (the date on which the 
closing occurs, the "Closing").

The 2026 Notes will be governed by an indenture (the "Indenture") between the us and U.S. Bank National 
Association, as trustee. The 2026 Notes will bear interest at a rate of 2.50% per annum, with such interest to be 
paid in kind on the 2026 Notes held by Bain through an increase in the principal amount of the 2026 Notes, and in 
cash on the 2026 Notes transferred to entities not affiliated with Bain. Interest on the 2026 Notes will accrue from 
the date of issuance and be added to the principal amount on a semi-annual basis thereafter. The 2026 Notes will 
mature on September 15, 2026, subject to earlier conversion, redemption or repurchase.

The 2026 Notes are convertible at the option of the holder at any time until the close of business on the 

scheduled trading day immediately preceding the maturity date, subject to all applicable conversion restrictions. The 
2026 Notes will be convertible into shares of our Class A Common Stock ("Common Stock") based on an initial 
conversion rate of 36.0360 shares of Common Stock per $1,000 principal amount of the 2026 Notes (which is equal 
to an initial conversion price of $27.75 per share), in each case subject to customary anti-dilution and other 
adjustments, including in connection with any make-whole adjustment (as described in the Indenture) as a result of 
certain extraordinary transactions. In addition, at the one-year anniversary of the date of the 2026 Notes, depending 
on the achievement of financial milestones, the conversion price may be subject to an additional, one-time 
adjustment, to an amount in the range of $25.25 to $27.75 per share.

122

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

On or after September 15, 2025, the 2026 Notes will be redeemable by us, at our option, for cash, shares of 

Common Stock, or a combination of both at the election of the holder of the 2026 Notes, for all or any portion of the 
2026 Notes in the event that the closing sale price per share of our Common Stock has been at least 150% of the 
conversion price then in effect for at least 20 trading days (whether or not consecutive), including at least one of the 
five trading days immediately preceding the date on which we provide the redemption notice in accordance with the 
Indenture, during any 30 consecutive trading day period (including the last trading day of such period) ending on, 
and including, the trading day immediately preceding the date on which we provide the redemption notice at a 
redemption price of 100% of the principal amount of such 2026 Notes, plus any accrued and unpaid interest to, but 
excluding, the redemption date.

With certain exceptions, upon a Fundamental Change (as defined in the Indenture), which includes, among 

other things, change of control of Nutanix or the failure of our Common Stock to be listed on a certain stock 
exchange, the holders of the 2026 Notes may require that we repurchase all or part of their 2026 Notes in principal 
amount of $1,000 or an integral multiple thereof at purchase price equal to 100% of the principal amount thereof, 
plus accrued and unpaid interest thereon to, but excluding, the Fundamental Change repurchase date.

The Indenture will include customary "events of default," which may result in the acceleration of the maturity of 

the 2026 Notes under the Indenture. The Indenture will also include customary covenants for convertible notes of 
this type.

Stock Repurchase Program

In August 2020, our Board of Directors authorized the repurchase of up to $125.0 million of our Class A 
common stock. Repurchases may be made from time to time through open market purchases or through privately 
negotiated transactions subject to market conditions, applicable legal requirements and other relevant factors. The 
repurchase program does not obligate us to acquire any particular amount of our common stock, and may be 
suspended at any time at our discretion.

CEO Succession Plan

On August 27, 2020, our Board of Directors announced that it has initiated a CEO succession plan to identify a 

candidate to succeed Dheeraj Pandey, given Mr. Pandey’s plans to retire as Chief Executive Officer. Mr. Pandey 
intends to continue as Chairman of the Board and Chief Executive Officer until his successor has been selected and 
appointed.

123

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 

None.

Item 9A. Controls and Procedures 

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, has 
evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) 
under the Securities and Exchange Act of 1934, as amended ("Exchange Act")) prior to the filing of this Annual 
Report on Form 10-K. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have 
concluded that, as of the end of the period covered by this Annual Report on Form 10-K, our disclosure controls and 
procedures were, in design and operation, effective at the reasonable assurance level.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial 
reporting, as defined in Rule 13a-15(f) and Rule 15d-15(f) of the Exchange Act. Internal control over financial 
reporting consists of policies and procedures that: (1) pertain to the maintenance of records that, in reasonable 
detail, accurately and fairly reflect the transactions and dispositions of our assets; (2) are designed and operated to 
provide reasonable assurance regarding the reliability of our financial reporting and our process for the preparation 
of financial statements for external purposes in accordance with generally accepted accounting principles and that 
our receipts and expenditures are being made only in accordance with authorizations of our management and 
directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized 
acquisition, use or disposition of our assets that could have a material effect on the financial statements. Our 
management evaluated the effectiveness of our internal control over financial reporting using the criteria set forth by 
the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control - Integrated 
Framework (2013). Based on the results of our evaluation, our management has concluded that our internal control 
over financial reporting was effective as of July 31, 2020.

The effectiveness of our internal control over financial reporting as of July 31, 2020 has been audited by 
Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report, which appears in 
Part II, Item 8 of this Annual Report on Form 10-K.

Limitations on the Effectiveness of Controls

Because of inherent limitations, internal control over financial reporting may not prevent or detect 
misstatements and projections of any evaluation of effectiveness to future periods are subject to the risk that 
controls may become inadequate because of changes in conditions, or that the degree of compliance with the 
policies or procedures may deteriorate.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting identified in connection with the evaluation 

required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the most recently completed 
fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over 
financial reporting.

Item 9B. Other Information 

None.

124

Item 10. Directors, Executive Officers and Corporate Governance

PART III

The information required by this item is incorporated herein by reference to our definitive proxy statement for 

our 2020 annual meeting of stockholders ("2020 Proxy Statement"), which will be filed not later than 120 days after 
the end of our fiscal year ended July 31, 2020.

Item 11. Executive Compensation 

The information required by this item is incorporated herein by reference to our 2020 Proxy Statement.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder 
Matters

The information required by this item is incorporated herein by reference to our 2020 Proxy Statement.

Item 13. Certain Relationships and Related Transactions and Director Independence

The information required by this item is incorporated herein by reference to our 2020 Proxy Statement.

Item 14. Principal Accountant Fees and Services

The information required by this item is incorporated herein by reference to our 2020 Proxy Statement.

125

Item 15. Exhibits and Financial Statement Schedules

(a)(1) Consolidated Financial Statements

PART IV

We have filed the consolidated financial statements listed in the Index to Consolidated Financial Statements 

included in Part II, Item 8, "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.

(a)(2) Financial Statement Schedules

All financial statement schedules have been omitted because they are not applicable, not material, or the 

required information is shown in the consolidated financial statements or the notes thereto. 

(a)(3) Exhibits

See the Exhibit Index below in this Annual Report on Form 10-K.

Item 16. Form 10-K Summary

None.

126

Number

Exhibit Title

Form

File No.

Exhibit

Filing
Date

Filed
Herewith

EXHIBIT INDEX

Incorporated by Reference

3.1

3.2

4.1

4.2

4.3

4.4

Amended and Restated Certificate of Incorporation............... 10-Q

001-37883

Amended and Restated Bylaws............................................. S-1/A

333-208711

3.1

3.4

12/8/2016

5/27/2016

Amended and Restated Investors’ Rights Agreement, dated 
as of August 26, 2014, as amended, by and among the 
Registrant and certain of its stockholders...............................

Specimen Class A Common Stock Certificate of the 
Registrant...............................................................................

Form of Warrant to Purchase Shares of Capital Stock by 
and between the Registrant and certain of its investors.........

Indenture, dated as of January 22, 2018, by and between 
the Registrant and U.S. Bank National Association and 
Form of 0% Convertible Senior Notes due 2023....................

S-1

333-208711

4.1

12/22/2015

S-1/A

333-208711

4.2

4/4/2016

S-1

333-208711

4.3

12/22/2015

8-K

001-37883

4.1

1/23/2018

4.5

Description of Class A Common Stock................................... 10-K

001-37883

4.5

9/24/2019

10.1†

10.2

10.3+

10.4+

10.5+

10.6+

10.7+

10.8+

10.9+

Memorandum of Understanding by and between the 
Registrant and Flextronics Telecom Systems Limited, 
executed on March 13, 2017..................................................

Form of Indemnification Agreement by and between the 
Registrant and each of its directors and executive officers....

2010 Stock Plan and forms of equity agreements 
thereunder..............................................................................

2011 Stock Plan and forms of equity agreements 
thereunder..............................................................................

2016 Equity Incentive Plan and forms of equity agreements 
thereunder..............................................................................

Amended and Restated 2016 Employee Stock Purchase 
Plan and forms of equity agreements thereunder..................

Employment Agreement, dated as of February 26, 2015, by 
and between the Registrant and Dheeraj Pandey..................

Offer Letter, dated as of April 26, 2014, by and between the 
Registrant and Duston Williams.............................................

Offer Letter, dated as of October 17, 2011, by and between 
the Registrant and David Sangster.........................................

10.10+

10.11+

Offer Letter, dated as of December 11, 2013, by and 
between the Registrant and Michael P. Scarpelli...................

Offer Letter, dated as of July 24, 2015, by and between the 
Registrant and John McAdam................................................

10-Q

001-37883

10.1

6/5/2019

S-1

333-208711

10.1

12/22/2015

S-1/A

333-208711

10.2

8/16/2016

S-1

333-208711

10.3

12/22/2015

S-1/A

333-208711

10.4

9/19/2016

10-Q

001-37883

10.1

3/5/2020

S-1

333-208711

10.6

12/22/2015

S-1

333-208711

10.7

12/22/2015

S-1

333-208711

10.11

12/22/2015

S-1

333-208711

10.12

12/22/2015

S-1

333-208711

10.13

12/22/2015

10.12+ Executive Incentive Compensation Plan................................ S-1

333-208711

10.14

12/22/2015

10.13

10.14

Office Lease, dated as of August 5, 2013, as amended to 
date, by and between the Registrant and CA-1740 
Technology Drive Limited Partnership....................................

Office Lease, dated as of April 23, 2014, as amended to 
date, by and between the Registrant and CA-Metro Plaza 
Limited Partnership.................................................................

10.15†

Original Equipment Manufacturer (OEM) Purchase 
Agreement, dated as of May 16, 2014, by and among the 
Registrant, Nutanix Netherlands B.V. and Super Micro 
Computer Inc., as amended by Amendment One to Original 
Equipment Manufacturer (OEM) Purchase Agreement, 
dated as of November 13, 2017 and Amendment Two to 
Original Equipment Manufacturer (OEM) Purchase 
Agreement dated as of October 31, 2018..............................

10.16†

Amendment Two to Original Equipment Manufacturer 
(OEM) Purchase Agreement, dated as of October 31, 2018, 
by and between the Registrant and Super Micro Computer, 
Inc...........................................................................................

S-1/A

333-208711

10.15

8/16/2016

S-1/A

333-208711

10.16

8/16/2016

10-Q

001-37883

10.2

6/5/2019

10-Q

001-37883

10.3

12/10/2018

127

10.17+ Change of Control and Severance Policy............................... S-1/A

333-208711

10.21

9/12/2016

10.18†

10.19+

10.20+

10.21†

10.22

10.23

10.24

10.25

10.26

10.27

10.28

Integration Services Agreement, dated as of May 19, 2016, 
by and among the Registrant, Nutanix Netherlands B.V., 
Avnet, Inc. and Avnet Europe Comm. VA..............................

Amended and Restated Outside Director Compensation 
Policy......................................................................................

Offer Letter, dated as of November 20, 2017, by and 
between the Registrant and Tyler Wall...................................

Manufacturing Services Agreement, by and among the 
Registrant, Nutanix Netherlands B.V. and Flextronics 
Telecom Systems Limited, entered into on November 1, 
2017, as amended by Amendment #1 to Manufacturing 
Services Agreement entered into on December 19, 2017......

Sixth Amendment to the Office Lease dated as of January 
29, 2018, by and between the Registrant and Hudson 1740 
Technology, LLC....................................................................

Seventh Amendment to the Office Lease dated as of April 4, 
2018, by and between the Registrant and Hudson 1740 
Technology, LLC....................................................................

Fourth Amendment to the Office Lease dated as of April 4, 
2018, by and between the Registrant and Hudson Metro 
Plaza, LLC..............................................................................

Fifth Amendment to the Office Lease dated as of October 1, 
2018, by and between the Registrant and Hudson Metro 
Plaza, LLC..............................................................................

Sixth Amendment to the Office Lease dated as of April 5, 
2019, by and between the Registrant and Hudson Metro 
Plaza, LLC..............................................................................

Seventh Amendment to the Office Lease dated as of April 
25, 2019, by and between the Registrant and Hudson Metro 
Plaza, LLC..............................................................................

Office Lease, dated as of April 4, 2018, by and between the 
Registrant and Hudson Concourse, LLC................................

10.29††

First Amendment to the Office Lease dated as of 
September 5, 2018, by and between the Registrant and the 
Hudson Concourse, LLC........................................................

10.30

Office Lease for 1741 Technology Dr., dated as of 
September 5, 2018, by and between the Registrant and 
Hudson Concourse, LLC........................................................

10.31

Purchase Agreement, dated January 17, 2018, by and 
among the Registrant and Morgan Stanley & Co. LLC, 
Merrill Lynch, Pierce, Fenner & Smith Incorporated and 
Goldman Sachs & Co. LLC, as representatives of the initial 
purchasers named therein, Form of Convertible Note Hedge 
Confirmation and Form of Warrant Confirmation....................

10.32††

Eighth Amendment to the Office Lease, dated as of 
September 17, 2019, by and between the Registrant and 
Hudson Metro Plaza, LLC......................................................

10.33

First Amendment to the Office Lease, dated as of October 
22, 2019, by and between the Registrant and Hudson 
Concourse, LLC......................................................................

10.34††

Confirmation Letter, dated as of November 12, 2019, 
relating to the Office Lease by and between the Registrant 
and Hudson Concourse, LLC.................................................

10.35††

Amendment Four to the Manufacturing Services Agreement, 
entered into as of September 4, 2019, by and between the 
Registrant, Nutanix Netherlands B.V. and Flextronics 
Telecom Systems Limited......................................................

10.36

Participation Agreement to the Original Equipment 
Manufacturer Purchase Agreement, entered into as of 
September 26, 2019, by and between the Registrant, 
Nutanix Netherlands B.V. and Super Micro Computer, Inc....

10.37+

Offer Letter, dated as of October 29, 2019, by and between 
the Registrant and Tarkan Maner...........................................

128

S-1/A

333-208711

10.18

5/27/2016

10-Q

001-37883

10.4

12/10/2018

10-Q

001-37883

10.1

3/15/2018

10-Q

001-37883

10.3

6/5/2019

10-Q

001-37883

10.1

6/12/2018

10-Q

001-37883

10.2

6/12/2018

10-Q

001-37883

10.3

6/12/2018

10-Q

001-37883

10.1

12/10/2018

10-K

001-37883

10.28

9/24/2019

10-K

001-37883

10.29

9/24/2019

10-Q

001-37883

10.4

6/12/2018

10-K

001-37883

10.31

9/24/2019

10-Q

001-37883

10.2

12/10/2018

8-K

001-37883

10.1

1/23/2018

10-Q

001-37883

10.1

12/5/2019

10-Q

001-37883

10.2

12/5/2019

10-Q

001-37883

10.3

12/5/2019

10-Q

001-37883

10.4

12/5/2019

10-Q

001-37883

10.5

12/5/2019

10-Q

001-37883

10.2

3/5/2020

10.38

Investment Agreement, dated as of August 26, 2020, by and 
among Nutanix, Inc. and BCPE Nucleon (DE) SPV, LP.........

8-K

001-37883

10.1

8/27/2020

21.1

List of subsidiaries of the Registrant.......................................

23.1

24.1

31.1

31.2

32.1

32.2

Consent of Deloitte & Touche LLP, Independent Registered 
Accounting Firm......................................................................

Power of Attorney (included on the Signatures page of this 
Annual Report on Form 10-K)................................................

Certification of Chief Executive Officer pursuant to 
Exchange Act Rules 13a-14a and 15d-14a, as adopted 
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002..

Certification of Chief Financial Officer pursuant to Exchange 
Act Rules 13a-14a and 15d-14a, as adopted pursuant to 
Section 302 of the Sarbanes-Oxley Act of 2002.....................

Certification of Chief Executive Officer pursuant to 18 
U.S.C. Section 1350, as adopted pursuant to Section 906 of 
the Sarbanes-Oxley Act of 2002.*..........................................

Certification of Chief Financial Officer pursuant to 18 U.S.C. 
Section 1350, as adopted pursuant to Section 906 of the 
Sarbanes-Oxley Act of 2002.*................................................

101.INS XBRL Instance Document......................................................

101.SCH XBRL Taxonomy Extension Schema Document....................

101.CAL

XBRL Taxonomy Extension Calculation Linkbase 
Document...............................................................................

101.

101.

XBRL Taxonomy Extension Definition....................................

XBRL Taxonomy Extension Label Linkbase..........................

101.PRE

XBRL Taxonomy Extension Presentation Linkbase 
Document...............................................................................

X

X

X

X

X

X

X

X

X

X

X

X

X

† Confidential treatment has been requested for portions of this exhibit. These portions have been omitted and have been filed separately with the Securities and 
Exchange Commission.

†† Certain confidential information contained in this Exhibit was omitted by means of marking such portions with brackets because the identified confidential 
information (i) is not material and (ii) would be competitively harmful if publicly disclosed.

* These exhibits are furnished with this Annual Report on Form 10-K and are not deemed filed with the Securities and Exchange Commission and are not 
incorporated by reference in any filing of Nutanix, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether 
made before or after the date hereof and irrespective of any general incorporation language contained in such filings.

+Indicates a management contract or compensatory plan or arrangement. 

129

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has 

duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized. 

SIGNATURES

Date: September 23, 2020

NUTANIX, INC.

By:

/s/ Dheeraj Pandey
Dheeraj Pandey
Chief Executive Officer and Chairman

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes 

and appoints Dheeraj Pandey and Duston M. Williams, jointly and severally, his attorneys-in-fact, each with the 
power of substitution, for him in any and all capacities, to sign any amendments to this report, and to file the same, 
with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, 
hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes, may do or 
cause to be done by virtue hereof. 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the 

following persons on behalf of the registrant and in the capacities and on the dates indicated. 

Signature

/s/ Dheeraj Pandey

Dheeraj Pandey

/s/ Duston M. Williams

Duston M. Williams

/s/ Aaron Boynton

Aaron Boynton

/s/ Sohaib Abbasi

Sohaib Abbasi

/s/ Susan L. Bostrom

Susan L. Bostrom

/s/ Craig Conway

Craig Conway

/s/ Virginia Gambale

Virginia Gambale

/s/ Steven J. Gomo

Steven J. Gomo

/s/ Ravi Mhatre

Ravi Mhatre

/s/ Jeffrey T. Parks

Jeffrey T. Parks

/s/ Brian M. Stevens

Brian M. Stevens

Title

Date

Chief Executive Officer and Chairman
(Principal Executive Officer)

September 23, 2020

Chief Financial Officer
(Principal Financial Officer)

Chief Accounting Officer
(Principal Accounting Officer)

Director

Director

Director

Director

Director

Director

Director

Director

130

September 23, 2020

September 23, 2020

September 23, 2020

September 23, 2020

September 23, 2020

September 23, 2020

September 23, 2020

September 23, 2020

September 23, 2020

September 23, 2020

 
 
 
 
 
 
 
 
 
 
 
 
 
 
NUTANIX CORPORATE HEADQUARTERS
1740 Technology Drive, Suite 150
San Jose, CA 95110
(408) 216-8360
(408) 890-4833
www.nutanix.com

INVESTOR RELATIONS
Tonya Chin
SVP, Corporate Marketing, IR and Chief Communications Officer
(408) 560-2675 
Email: tonya@nutanix.com

You may also reach us by visiting the investor relations 
portion of our website at: ir.nutanix.com

Our Class A common stock trades on The Nasdaq
Global Select Market under the ticker symbol NTNX.

REGISTRAR AND TRANSFER AGENT
For questions regarding stockholder accounts or changes 
of address, please contact our transfer agent:

Computershare Trust Company, N.A.
462 South 4th Street, Suite 1600
Louisville, KY 40202
T (U.S. and Canada): (877) 373-6374
T (Outside U.S. and Canada): (781) 575-3100
www.computershare.com

BOARD OF DIRECTORS
Dheeraj Pandey
Chief Executive Officer and Chairman, Nutanix, Inc.

Sohaib Abbasi
Former Chairman, Chief Executive Officer and President, 
Informatica Corporation

Susan L. Bostrom
Former Executive Vice President, Chief Marketing Officer, 
Worldwide Government Affairs, Cisco Systems, Inc.  

Craig Conway
Former Chief Executive Officer, PeopleSoft, Inc.

Virginia Gambale
Managing Partner, Azimuth Partners LLC

Steven J. Gomo
Former Chief Financial Officer, NetApp, Inc.

Max de Groen
Managing Director, Bain Capital Private Equity

David Humphrey
Managing Director, Bain Capital Private Equity

Ravi Mhatre
Managing Director, Lightspeed Ventures

Jeffrey T. Parks
General Partner, Riverwood Capital

Brian Stevens
Former Chief Technology Officer, Google Cloud

NUTANIX EXECUTIVE OFFICERS
Dheeraj Pandey
Chief Executive Officer and Chairman

Duston Williams
Chief Financial Officer

David Sangster
Chief Operating Officer

Tyler Wall
Chief Legal Officer

Tarkan Maner
Chief Commercial Officer

© 2020 Nutanix, Inc. All rights reserved. Nutanix, the Nutanix logo, and all Nutanix product and service names mentioned
herein are registered trademarks or trademarks of Nutanix, Inc. in the United States and other countries. All other brand names
mentioned herein are for identification purposes only and may be the trademarks of their respective holder(s).

Nutanix is a global leader in cloud software and a pioneer in hyperconverged 
infrastructure solutions, making computing invisible anywhere. Organizations 
around the world use Nutanix software to leverage a single platform to manage
any app at any location for their private, hybrid and multicloud environments.