A powerful FY25 close — and a cautious note for FY26#
Nutanix reported a striking fiscal finish: full-year revenue of $2.54 billion (≈+18.14% YoY), free cash flow of $750 million (≈+29.53% FCF margin on FY25 revenue), and a $350 million share repurchase authorization announced with its results. At the same time management explicitly warned that renewal ACV growth will normalize in FY26 and that average contract duration could decline slightly. That combination — unusually strong cash generation paired with a more measured subscription outlook — is the single most important development for [NTNX] investors and is reshaping near-term expectations for ARR cadence and margin upside (see the company release and related news) Nutanix Q4 & FY25 release Bloomberg buyback report.
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Financial performance: growth, margins and cash quality#
Across the most recent reported years Nutanix has moved from large GAAP losses to positive operating and cash flow outcomes. Using the company-provided historical financials we calculate the following trends and margins to show where the improvement is coming from and how durable it may be.
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From the income statement data for FY2024 (period ended 2024-07-31) Nutanix reported revenue of $2.15 billion and gross profit of $1.82 billion, which yields a calculated gross margin of 84.65% (1.82 / 2.15). Operating income for FY2024 was $7.56 million, an operating margin of +0.35%, and GAAP net loss was -$124.78 million (net margin -5.80%). Trailing improvements are visible when compared to FY2023 and earlier years: FY2023 revenue was $1.86 billion and FY2022 $1.58 billion, producing multi-year revenue growth that we calculate at approximately +15.70% YoY (2023→2024) using the company-provided figures in the fundamentals dataset.
Free cash flow is the standout. For FY2024 the company reported net cash provided by operating activities of $672.93 million and free cash flow of $597.68 million, which equates to a calculated FCF margin of ≈27.82% (597.68 / 2.15). Company-disclosed FY25 figures cited in the earnings release increase that profile: FY25 FCF of $750 million, which on FY25 revenue of $2.54 billion implies an FCF margin of ≈29.53%. That degree of cash conversion — driven by subscription revenue mix and working-capital tailwinds — is the key driver behind the board’s decision to reintroduce meaningful buybacks while preserving investment capacity.
Quality of earnings is reinforced by cash flow. Nutanix’s FY2024 GAAP net loss contrasts with positive operating cash flow and material free cash flow, indicating that cash conversion is stronger than headline GAAP profitability suggests. For FY2024 we calculate operating cash flow conversion (operating cash / revenue) at ≈31.34% (672.93 / 2.15). That positive differential between cash generation and GAAP net income argues the business is moving toward durable cash profits even while accounting losses remain in some periods.
Key income-statement and margin table (company data reconstructed)#
| Fiscal Year | Revenue (USD) | Gross Profit (USD) | Gross Margin | Operating Income (USD) | Operating Margin | Net Income (USD) | Net Margin | EBITDA (USD) | EBITDA Margin |
|---|---|---|---|---|---|---|---|---|---|
| 2024 | 2,150,000,000 | 1,820,000,000 | 84.65% | 7,560,000 | 0.35% | -124,780,000 | -5.80% | 141,260,000 | 6.57% |
| 2023 | 1,860,000,000 | 1,530,000,000 | 82.26% | -207,150,000 | -11.13% | -254,560,000 | -13.68% | -57,730,000 | -3.10% |
| 2022 | 1,580,000,000 | 1,260,000,000 | 79.75% | -457,440,000 | -28.95% | -797,540,000 | -50.48% | -594,090,000 | -37.60% |
| 2021 | 1,390,000,000 | 1,100,000,000 | 79.14% | -660,780,000 | -47.53% | -1,030,000,000 | -74.10% | -806,710,000 | -58.00% |
All year-over-year calculations above use the company financials provided in the dataset. Margins are independently calculated from reported line items.
Balance sheet and leverage: clear deleveraging over the most recent year#
Nutanix’s balance sheet shows a marked improvement in net leverage from FY2023 to FY2024. At 2023 fiscal year-end total debt was reported as $1.33 billion with net debt of $816.98 million. By FY2024 total debt had fallen to $695.22 million with net debt of $39.95 million. That represents a net-debt reduction of ≈$777 million (a -95.11% change in net debt), an outcome driven by strong cash generation and debt pay-downs over the period. Net debt to EBITDA TTM is reported at ≈2.99x, which is a materially lower leverage ratio than peers at high growth stages and gives management flexibility for capital allocation decisions.
| Fiscal Year | Cash & Short-Term Investments | Total Assets | Total Liabilities | Total Stockholders' Equity | Total Debt | Net Debt | Net Cash Provided by Ops | Free Cash Flow |
|---|---|---|---|---|---|---|---|---|
| 2024 | 994,340,000 | 2,140,000,000 | 2,870,000,000 | -728,150,000 | 695,220,000 | 39,950,000 | 672,930,000 | 597,680,000 |
| 2023 | 1,440,000,000 | 2,530,000,000 | 3,230,000,000 | -707,420,000 | 1,330,000,000 | 816,980,000 | 272,400,000 | 207,000,000 |
| 2022 | 1,320,000,000 | 2,370,000,000 | 3,170,000,000 | -800,500,000 | 1,440,000,000 | 1,040,000,000 | 67,540,000 | 18,480,000 |
These balance sheet changes are visible in the company-provided filings and strengthen the case that Nutanix now has the optionality to return capital while investing in product and go-to-market.
ARR, subscription dynamics and the guidance tension#
Subscription metrics drive the valuation story for Nutanix and the company’s FY25 results show the engine is working: the press materials cite ARR of $2.22 billion at Q4 FY25 (+17% YoY) and strong new customer adds. Those ARR and new-logo statistics underpin revenue growth and explain the margin and cash improvements seen in FY25 (company press release). But management made a point of tempering expectations for FY26: renewals ACV is expected to grow year-over-year but at a slower rate than FY25, and average contract duration is expected to decline slightly — both of which reduce the probability of outsized percentage acceleration in ARR in FY26.
The FY26 guidance range is $2.90–$2.94 billion in revenue, implying +14.17% to +15.75% YoY growth on FY25 revenue of $2.54B (we compute those rates from the company guidance figures). Management also guided to non-GAAP operating margins of 21%–22% and free cash flow of $790–$830 million for FY26 (company guidance release). Using the midpoint revenue figure of $2.92 billion, the midpoint FCF guidance of $810 million implies an FCF margin of ≈27.74% (810 / 2.92). That is slightly below the FY25 implied margin (29.53%) but still within a very strong cash-conversion band.
The tension is simple: investors must decide whether normalized renewal growth (lower percentage growth as a base expands) is already priced in and whether margin expansion guidance is credible when renewal cadence slows. Nutanix’s FY26 targets assume continued operating leverage even as renewal-growth percentage decelerates — a plausible outcome if sales & marketing and R&D investments are managed tightly while subscription mix remains high.
Competitive and strategic context: hybrid multicloud + VMware disruption#
Nutanix plays in hybrid multicloud — a market where hyperscalers (AWS, Azure, Google Cloud) are growing rapidly but where many regulated, edge, and legacy workloads still demand on-premises or hybrid solutions. The Broadcom-VMware ecosystem shift created displacement opportunities, and Nutanix has publicly disclosed wins against VMware in some accounts. Those dynamics matter because converting migrations from legacy virtualization stacks into multi-year subscription relationships raises ARR and increases customer stickiness.
At the same time hyperscalers continue to concentrate AI infrastructure, which can skew large enterprise spend toward cloud-native solutions. Nutanix’s competitive moat therefore hinges on its ability to capture regulated or latency-sensitive workloads, expand cross-sell into large installed accounts, and convert new logos into higher-ACV relationships. Management’s commentary on partnerships with hyperscalers and ecosystem players is strategically consistent with that approach and provides a credible route to sustain pipeline even if renewal-percentage growth normalizes.
Capital allocation: buybacks funded by cash generation#
Management authorized a $350 million repurchase program at the close of FY25, concurrent with the earnings release Bloomberg report. Given FY25 free cash flow of $750 million and a TTM FCF profile that is reported materially positive, the buyback size is meaningful but conservative versus the company’s cash generation. The repurchase will be accretive to EPS if executed, and it signals management confidence in the durability of cash flows, while leaving capacity for continued product investment.
From a balance-sheet perspective the company has materially reduced net leverage and carries net debt near $40 million at FY2024 year-end. That deleveraging supports a buyback alongside continued investment in R&D (R&D expense in FY2024 was $638.99 million, representing a meaningful share of revenue and showing management’s commitment to product development).
Historical execution and credibility of guidance#
Nutanix has demonstrated a pattern of execution: revenue growth accelerating from FY2021 through FY2025, progressive margin improvement, and a materially higher cash conversion profile. Analysts’ consensus and company guidance for FY26 are closely aligned on revenue, suggesting management pitched targets within market expectations. That alignment reduces the probability of a large negative guidance surprise but raises the bar for upside surprises.
Two credibility checks are important. First, the margin expansion to 21%–22% non-GAAP operating margin for FY26 depends on continued operating leverage even as subscription-percentage growth normalizes. Second, sustained ARR growth at acceptable renewal economics requires successful cross-sell and low churn; management’s guidance contemplates slower renewal ACV percentage growth, which moderates upside risk while improving guidance achievability.
What this means for investors#
Key takeaways derive from the interplay among ARR scale, cash generation, and guidance cadence. Nutanix’s FY25 performance establishes a new baseline: the company is now a cash-generative subscription business with a large ARR base ($2.22B ARR at Q4 FY25) and improved margins. That structural progress explains management’s willingness to repurchase shares and to guide to mid-teens revenue growth with high-20s FCF margins for FY26.
At the same time investors should internalize two facts. First, percentage ARR growth is likely to normalize as the installed base enlarges; management has explicitly stated this and built it into guidance. Second, margin expansion is plausible but will require disciplined expense management and continued subscription mix gains. Consequently the market’s re-rating will depend less on one-time beats and more on visible, repeatable renewal economics and evidence that new logo adds convert into durable higher-ACV relationships.
Risks and monitoring checklist#
Risks that could alter the narrative include larger-than-expected renewal headwinds, weakening enterprise IT spending (particularly government and regulated sectors Nutanix targets), and competitive displacement by hyperscalers for AI workloads. Investors should monitor sequential ARR growth, renewal ACV disclosures, average contract duration trends, and quarterly free cash flow conversion versus guidance. Material deviations in any of these items would meaningfully change the story.
Final synthesis and conclusion#
Nutanix’s FY25 is best described as a pivot from growth-at-all-costs to a cash-generating subscription company. The combination of $2.54 billion in revenue, $750 million in free cash flow, a dramatically improved net-debt position, and a $350 million share repurchase authorization establishes financial flexibility. However, the company’s clear signaling that renewal growth will normalize — coupled with guidance calibrated to that reality — removes some upside from ARR percentage re-acceleration.
The investment story is therefore now a two-part test: sustain high-quality ARR growth in absolute dollars while delivering the operating leverage that converts subscription scale into durable margins and free cash flow. Nutanix’s FY25 results and FY26 guidance show management believes both can be achieved; execution against renewals economics and the conversion of new logos into larger-account relationships will decide whether that belief becomes reality.
Sources: Nutanix press releases and filings, including the company Q4 & FY25 earnings release (see: Nutanix Reports Fourth Quarter and Full Year 2025 Financial Results, Business Wire summaries, and reporting on the $350M repurchase authorization (Bloomberg). Where numerical line-items are cited above, they are recalculated from the company-provided financial statements included in the dataset.