Item 2. Management report and analysis of the financial situation and operating results

The following discussion and analysis of our financial condition, results of
operations and cash flows should be read in conjunction with (1) the unaudited
condensed consolidated financial statements and the related notes thereto
included elsewhere in this Quarterly Report on Form 10-Q and (2) the audited
consolidated financial statements and notes thereto and "Management's Discussion
and Analysis of Financial Condition and Results of Operations" included in our
Annual Report on Form 10-K for the fiscal year ended July 31, 2021 filed on
September 21, 2021. 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 the heading "Risk Factors" in Part I, Item 1A of
our Annual Report on Form 10-K for the fiscal year ended July 31, 2021 and in
Part II, Item 1A of this Quarterly Report on Form 10-Q. See also "Special Note
Regarding Forward-Looking Statements" above.

Insight

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' enterprise
infrastructure. 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. Our goal is to provide a single, simple, open software platform
for all hybrid and multicloud applications and data - a true hybrid cloud
infrastructure.

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 licenses are
delivered or sold alongside configured-to-order appliances and can be used over
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 in limited cases, directly from Nutanix. Our
enterprise cloud platform typically includes one or more years of support and
entitlements, which provides customers with 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 and 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 21,980 end customers as of
April 30, 2022, including approximately 970 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, and the total number of end customers may contract due
to mergers, acquisitions, or other consolidation among existing end customers.
Since shipping our first product in fiscal 2012, our end customer base has grown
rapidly.
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Management report and analysis of the financial situation and the results of

                             Operations (Continued)


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.

We continue to invest in the growth of our business over the long-run, including
the development of our solutions and investing in sales and marketing to
capitalize on our market opportunities, while improving our operating cash flow
performance by focusing on go-to-market efficiencies. By maintaining this
balance, we believe we can drive toward our high growth potential without
sacrificing our overall financial health. As discussed further in the "Impact of
the COVID-19 Pandemic" and "Factors Affecting Our Performance" sections below,
both in response to the ongoing and continuously evolving COVID-19 pandemic and
as part of our overall efforts to improve our operating cash flow performance,
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.

Late in the fiscal quarter ended April 30, 2022, we saw an unexpected impact
from increased supply chain challenges with increased hardware supply chain
delays resulting in an increasing percentage of orders having start dates in
future quarters and certain customers delaying their purchase of our software
pending availability of the hardware on which our software runs. This impact
affected both our ACV billings and revenue for the fiscal quarter ended April
30, 2022, and we expect this trend to continue in the fiscal quarter ending July
31, 2022 and potentially beyond.

Impact of the COVID-19 pandemic

The ongoing and continuously evolving pandemic caused by the COVID-19 virus
(collectively with any new variants or related strains thereof, "COVID-19" and
the ongoing pandemic caused thereby, the "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 vacillated between implementing
and lifting numerous unprecedented measures, including travel bans and
restrictions, quarantines, shelter-in-place, stay-at-home, remote work and
social distancing orders, and shutdowns, depending on the severity of the
pandemic. The COVID-19 pandemic has impacted and may continue to impact our
workforce and operations, as well as those of our customers, vendors, suppliers,
partners, and communities, and there is substantial uncertainty in the nature
and degree of its continued effects over time.

In response to the COVID-19 pandemic, we have also taken 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. 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 sales cycles, particularly with new
customers and partners who do not have prior experience with our solutions;
supply chain disruptions; increased cybersecurity risks or other security
challenges; delays or disruptions to our product roadmap and our ability to
deliver new products, features, or enhancements; 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, or delay the availability of hardware platforms that our customers
use to operate our software. Travel bans, shutdowns, social distancing
restrictions and remote work policies also make 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.
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Management report and analysis of the financial situation and the 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. Additionally, we
have seen a reduction in our operating expenses in recent quarters, including
sales and marketing expenses, some of which is due to a number of proactive
actions that we took to manage our operating expenses in light of the
uncertainty caused by the COVID-19 pandemic, and some of which is a natural
result of the continued restrictions on travel and in-person events from the
pandemic. Although the full impact of these actions is uncertain, some of these
cost savings measures are temporary. While we do expect to see some of our
operating expenses increase from the suppressed levels in recent quarters as
some of the proactive cost savings measures expire and some level of travel and
other related expenses return, we are focused on improving our operating cash
flow performance and we do not expect that travel or other related expenses will
return to pre-pandemic levels. See the section titled "Risk Factors" in Part I,
Item 1A of our Annual Report on Form 10-K for the fiscal year ended July 31,
2021 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 I, Item 1A of our Annual Report on Form
10-K for the fiscal year ended July 31, 2021 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.

Main financial and performance indicators

We monitor the following key financial and performance indicators:

                                                          As of and for the
                                         Three Months Ended               Nine Months Ended
                                              April 30,                       April 30,
                                        2021            2022            2021            2022
                                                 (in thousands, except percentages)
Total revenue                        $   344,508     $   403,658     $ 1,003,644     $ 1,195,256
Year-over-year percentage increase           8.2 %          17.2 %           2.4 %          19.1 %
Subscription revenue                 $   307,332     $   370,496     $   891,443     $ 1,083,141
Total billings                       $   371,147     $   447,955     $ 1,091,608     $ 1,310,521
Subscription billings                $   330,774     $   412,720     $   963,865     $ 1,199,447
Annual contract value ("ACV")
billings                             $   159,919     $   204,724     $   430,747     $   577,519
Annual recurring revenue ("ARR")     $   762,024     $ 1,114,420     $   762,024     $ 1,114,420
Run-rate ACV                         $ 1,447,274     $ 1,728,620     $ 1,447,274     $ 1,728,620
Gross profit                         $   270,034     $   323,809     $   790,257     $   953,992
Non-GAAP gross profit                $   281,356     $   336,314     $   823,942     $   993,297
Gross margin                                78.4 %          80.2 %          78.7 %          79.8 %
Non-GAAP gross margin                       81.7 %          83.3 %          82.1 %          83.1 %
Operating expenses                   $   450,607     $   416,157     $ 1,309,151     $ 1,278,016
Non-GAAP operating expenses          $   361,486     $   341,715     $ 1,056,256     $ 1,041,626
Total deferred revenue               $ 1,274,036     $ 1,431,980     $ 1,274,036     $ 1,431,980
Net cash (used in) provided by
operating activities                 $   (55,551 )   $    (3,167 )   $   (75,180 )   $    29,539
Free cash flow                       $   (71,494 )   $   (20,056 )   $  (116,291 )   $    (4,740 )
Total end customers                       19,430          21,980          19,430          21,980



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                                 NUTANIX, INC.

Management report and analysis of the financial situation and the results of

                             Operations (Continued)

Revenue and billing disaggregation

The following table shows the breakdown of revenue and billings by type, consistent with how we assess our financial performance:

                                   Three Months Ended             Nine Months Ended
                                        April 30,                     April 30,
                                   2021          2022           2021            2022
                                                     (in thousands)
Disaggregation of revenue:
Subscription revenue             $ 307,332     $ 370,496     $   891,443     $ 1,083,141
Non-portable software revenue       16,741         9,368          58,445    

38,247

Hardware revenue                       975         1,329           3,025    

5,245

Revenue from professional services 19,460 22,465 50,731

      68,623
Total revenue                    $ 344,508     $ 403,658     $ 1,003,644     $ 1,195,256
Disaggregation of billings:
Subscription billings            $ 330,774     $ 412,720     $   963,865     $ 1,199,447
Non-portable software billings      16,741         9,368          58,445    

38,247

Hardware billings                      975         1,329           3,025    

5,245

Billing for professional services 22,657 24,538 66,273

      67,582
Total billings                   $ 371,147     $ 447,955     $ 1,091,608     $ 1,310,521



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 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 $159.5 million and
$466.5 million of our subscription revenue for the three and nine months ended
April 30, 2021, respectively, and $191.1 million and $565.5 million for the
three and nine months ended April 30, 2022, respectively.

Upfront – Revenue from our subscription software licenses is generally recognized in advance upon the transfer of control to the customer, which occurs when we make the software available to the customer. These subscription software licenses represented approximately $147.8 million and $424.9 million of our subscription revenue for the three and nine months ended April 30, 2021respectively, and $179.4 million and $517.6 million for the three and nine months ended April 30, 2022respectively.

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 can be used over 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 the hardware appliance is purchased
directly from Nutanix, 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 from professional services as they are rendered.

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Management report and analysis of the financial situation and the results of

                             Operations (Continued)

Non-GAAP Financial Measures and Key Performance Measures

We regularly monitor total billings, subscription billings, ACV billings, ARR,
run-rate ACV, non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating
expenses, and free cash flow, 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, particularly as we progress
through our transition to a subscription-based business model;

are widely used as a measure of financial performance to understand and evaluate businesses in our industry; and

are used by management to prepare and approve our annual budget and to develop short- and long-term compensation and operating plans, as well as to assess our actual performance against our objectives.

Total billings is a performance measure which we believe provides useful
information to our management and investors, as it represents the dollar value
under binding purchase orders received and billed during a given period.
Subscription billings is a performance measure that we believe provides useful
information to our management and investors as it allows us to better track the
growth of the subscription-based portion of our business, which is a critical
part of our business plan. ACV billings and run-rate ACV are performance
measures that we believe provide useful information to our management and
investors as they allow us to better track the topline growth of our business
during our transition to a subscription-based business model because they take
into account variability in term lengths. ARR is a performance measure that we
believe provides useful information to our management and investors as it allows
us to better track the topline growth of our subscription business because it
only includes non-life-of-device contracts and takes into account variability in
term lengths. Non-GAAP gross profit, non-GAAP 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. 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. 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, ACV billings, ARR, run-rate ACV, non-GAAP
gross profit, non-GAAP gross margin, non-GAAP operating expenses, and free cash
flow 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, non-GAAP gross profit, non-GAAP gross margin, non-GAAP
operating expenses and free cash flow are not substitutes for total revenue,
subscription revenue, gross profit, gross margin, operating expenses or cash
provided by (used in) operating activities, respectively. There is no GAAP
measure that is comparable to either ACV billings, ARR or run-rate ACV, so we
have not reconciled ACV billings, ARR or run-rate ACV numbers included in this
Quarterly Report on Form 10-Q 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 between the start and end of the period to total revenue recognized in
the same period.

Subscription billings – We calculate subscription billings by adding the change in deferred subscription revenue between the start and end of the period to the subscription revenue recognized during the same period.

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Management report and analysis of the financial situation and the results of

                             Operations (Continued)


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 such contract, using,
where applicable, an assumed term of five years for contracts that do not have a
specified term.

ARR - We calculate ARR as the sum of ACV for all non-life-of-device contracts in
effect as of the end of a specific period. For the purposes of this calculation,
we assume that the contract term begins on the date a contract is booked, unless
the terms of such contract prevent us from fulfilling our obligations until a
later period, and irrespective of the periods in which we would recognize
revenue for such contract.

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.

Non-GAAP gross profit and non-GAAP gross margin - We calculate non-GAAP gross
margin as non-GAAP gross profit divided by total revenue. We define non-GAAP
gross profit as gross profit adjusted to exclude stock-based compensation
expense, amortization of acquired intangible assets, impairment of lease-related
assets, and costs associated with other non-recurring transactions. Our
presentation of non-GAAP 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.

Non-GAAP operating expenses - We define non-GAAP operating expenses as total
operating expenses adjusted to exclude stock-based compensation expense,
impairment of lease-related assets, 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.

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.
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                                 NUTANIX, INC.

Management report and analysis of the financial situation and the results of

                             Operations (Continued)


The following table presents a reconciliation of total billings, non-GAAP gross
profit, non-GAAP gross margin, non-GAAP operating expenses and free cash flow to
the most directly comparable GAAP financial measures, for each of the periods
indicated:

                                          Three Months Ended             Nine Months Ended
                                               April 30,                     April 30,
                                          2021          2022           2021            2022
                                                  (in thousands, except percentages)
Total revenue                           $ 344,508     $ 403,658     $ 1,003,644     $ 1,195,256
Change in deferred revenue                 26,639        44,297          87,964         115,265
Total billings (non-GAAP)               $ 371,147     $ 447,955     $ 1,091,608     $ 1,310,521

Gross profit                            $ 270,034     $ 323,809     $   790,257     $   953,992
Stock-based compensation                    7,628         9,137          22,316          29,093
Amortization of intangible assets           3,694         3,368          11,082          10,212
Impairment of lease-related assets              -             -             287               -
Non-GAAP gross profit                   $ 281,356     $ 336,314     $   823,942     $   993,297

Gross margin                                 78.4 %        80.2 %          78.7 %          79.8 %
Stock-based compensation                      2.2 %         2.3 %           2.2 %           2.4 %
Amortization of intangible assets             1.1 %         0.8 %           1.1 %           0.9 %
Impairment of lease-related assets              - %           - %           0.1 %             - %
Non-GAAP gross margin                        81.7 %        83.3 %          82.1 %          83.1 %

Operating expenses                      $ 450,607     $ 416,157     $ 1,309,151     $ 1,278,016
Stock-based compensation                  (87,658 )     (75,369 )      (246,622 )      (234,005 )
Amortization of intangible assets            (651 )        (651 )        (1,953 )        (1,953 )
Impairment of lease-related assets              -             -          (2,535 )             -
Other                                        (812 )       1,578          (1,785 )          (432 )
Non-GAAP operating expenses             $ 361,486     $ 341,715     $ 1,056,256     $ 1,041,626

Net cash (used in) provided by
operating activities                    $ (55,551 )   $  (3,167 )   $   (75,180 )   $    29,539
Purchases of property and equipment       (15,943 )     (16,889 )       (41,111 )       (34,279 )
Free cash flow (non-GAAP)               $ (71,494 )   $ (20,056 )   $  (116,291 )   $    (4,740 )

The following table provides a reconciliation of subscription and professional services billings to the most directly comparable GAAP financial measures, for each of the periods indicated:

                                             Three Months Ended            Nine Months Ended
                                                  April 30,                    April 30,
                                             2021          2022          2021           2022
                                                              (in thousands)
Subscription revenue                       $ 307,332     $ 370,496     $ 891,443     $ 1,083,141
Change in subscription deferred revenue       23,442        42,224        72,422         116,306
Subscription billings                      $ 330,774     $ 412,720     $ 963,865     $ 1,199,447

Professional services revenue              $  19,460     $  22,465     $  50,731     $    68,623
Change in professional services deferred
revenue                                        3,197         2,073        15,542          (1,041 )
Professional services billings             $  22,657     $  24,538     $  66,273     $    67,582



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                                 NUTANIX, INC.

Management report and analysis of the financial situation and the results of

                             Operations (Continued)

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" in Part I, Item 1A of our Annual Report on Form 10-K for
the fiscal year ended July 31, 2021 and the section titled "Risk Factors" in
Part II, Item 1A of this Quarterly Report on Form 10-Q for details. If we are
unable to address these challenges, our business and operating results could be
materially and adversely affected.

Investment in profitable growth

We continue to invest in our long-term growth, while improving our operating cash flow performance by focusing on go-to-market efficiency. By maintaining this balance, we believe we can achieve our strong growth potential without sacrificing our overall financial health.

Investment in Sales and Marketing - Our ability to achieve billings and revenue
growth depends, in large part, on our ability to capitalize on our market
opportunity, including our ability to recruit, train and retain sufficient
numbers of ramped sales personnel to support our growth. As part of our
investment in our growth over the long-run, we plan to invest in sales and
marketing, including investing in our sales and marketing teams and continuing
our focus on opportunities with major accounts, large deals, and commercial
accounts, as well as other sales and marketing initiatives to increase our
pipeline growth. However, we have recently seen higher-than-normal attrition
among our sales representatives and our overall sales headcount being below our
targets, which may negatively impact our billings and revenue growth. While we
are actively recruiting additional sales representatives, it will take time to
replace, train, and ramp them to full productivity. As a result, our overall
sales and marketing expense may 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 April 30,
2022, we considered approximately 72% of our global sales team members to be
fully ramped, while the remaining approximately 28% 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, as well as some of the measures implemented as part of our overall
efforts to improve our operating cash flow performance and the continued
higher-than-normal attrition rates of sales representatives, may impact the
productivity of our sales teams in the near-term. We are focused on actively
managing these realignments and potential effects. As part of our overall
efforts to improve our free cash flow performance, we have also proactively
taken steps to increase our go-to-market productivity and over time, we intend
to reduce our overall sales and marketing spend as a percentage of revenue.
These measures include improving the efficiency of our demand generation spend,
focusing on lower cost renewals, increasing leverage of our channel partners,
and optimizing headcount in geographies based on market opportunities.

Investment in Research and Development and Engineering - 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 had previously effected a global hiring pause outside
of a small number of critical roles and, while the hiring pause is no longer in
effect, the overall growth in our global research and development and
engineering teams may fluctuate from quarter to quarter in the near-term.

We believe that these investments will contribute to our long-term growth, even if they could harm our short-term profitability.

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                                 NUTANIX, INC.

Management report and analysis of the financial situation and the 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 began compensating 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 2 of Notes to Condensed
Consolidated Financial Statements included in Part I, Item 1 of this Quarterly
Report on Form 10-Q.

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 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.

Leverage partners

We plan to continue to leverage our relationships with our channel and OEM
partners and expand our network of cloud and ecosystem partners, all of which
help to drive the adoption and sale of our solutions with our end customers. We
sell our solutions primarily through our partners, and our solutions primarily
run on hardware appliances which are purchased from our OEM partners. 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 reliance on manufacturers,
including our OEM partners, to produce the hardware appliances on which our
software runs exposes us to supply chain delays, which impair our ability to
provide services to end customers in a timely manner. Our business and results
of operations will be significantly affected by our success in leveraging our
relationships with our channel and OEM partners and expanding our network of
cloud and ecosystem partners.
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                                 NUTANIX, INC.

Management report and analysis of the financial situation and the 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 April 30, 2022, approximately 72%
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 6.9x greater, on average, than
their initial order. This number increases to approximately 19.9x, on average,
for Global 2000 end customers who have been with us for 18 months or longer as
of April 30, 2022. 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 solutions 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 and ongoing product transitions 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.

Components of our operating results

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
licenses are delivered or sold alongside configured-to-order appliances and can
be used over 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 in limited cases,
directly from Nutanix. Our enterprise cloud platform typically includes one or
more years of support and entitlements, which provides customers with 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.
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                                 NUTANIX, INC.

Management report and analysis of the financial situation and the 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 the hardware appliance is
purchased directly from Nutanix, 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, which typically
commences upon transfer of control of the corresponding products to the
customer. We recognize revenue related to professional services as they are
performed.

Revenue cost

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 invest in our
growth. However, as part of our overall efforts to improve our operating cash
flow performance, we have also proactively taken steps to increase our
go-to-market productivity and over time, we intend to reduce our overall sales
and marketing spend as a percentage of revenue. For example, during the fourth
quarter of fiscal 2021, we decreased our global headcount by 2.5%, primarily in
sales and marketing, as part of our continued refinement of our go-to-market
model. We have also recently seen higher-than-normal attrition among our sales
representatives, and while we are actively recruiting additional sales
representatives, it will take time to replace, train, and ramp them to full
productivity. As a result, our sales and marketing expense will fluctuate, and
may decline, in the near-term.
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                                 NUTANIX, INC.

Management report and analysis of the financial situation and the 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, unless they meet the criteria for capitalization. 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.

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.

Other income (expenses), net

Other income (expense), net consists primarily of interest income and expense,
which includes the amortization of the debt issuance costs associated with our
0% convertible senior notes due 2023 (the "2023 Notes"), our 2.50% convertible
senior notes due 2026 (the "2026 Notes") and our 0.25% convertible senior notes
due 2027 (the "2027 Notes"), changes in the fair value of the derivative
liability associated with the 2026 Notes, non-cash interest expense on the 2026
Notes, the amortization of the debt discount on the 2026 Notes, interest expense
on the 2027 Notes, debt extinguishment costs, interest income related to our
short-term investments, and foreign currency exchange gains or losses.

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.
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                                 NUTANIX, INC.

Management report and analysis of the financial situation and the results of

                             Operations (Continued)


Results of Operations

The following tables set forth our condensed consolidated results of operations
in dollars and as a percentage of total revenue for the periods presented. The
period-to-period comparison of results is not necessarily indicative of results
for future periods.

                                            Three Months Ended              Nine Months Ended
                                                 April 30,                      April 30,
                                            2021           2022           2021            2022
                                                              (in thousands)
Revenue:
Product                                  $  172,308     $  199,616     $   502,858     $   588,872
Support, entitlements and other
services                                    172,200        204,042         500,786         606,384
Total revenue                               344,508        403,658       1,003,644       1,195,256
Cost of revenue:
Product (1)(2)                               12,896         13,739          39,494          43,056
Support, entitlements and other
services (1)                                 61,578         66,110         173,893         198,208
Total cost of revenue                        74,474         79,849         213,387         241,264
Gross profit                                270,034        323,809         790,257         953,992
Operating expenses:
Sales and marketing (1)(2)                  263,358        234,530         781,719         726,196
Research and development (1)                144,917        142,075         416,292         427,949
General and administrative (1)               42,332         39,552         111,140         123,871
Total operating expenses                    450,607        416,157       1,309,151       1,278,016
Loss from operations                       (180,573 )      (92,348 )      (518,894 )      (324,024 )
Other income (expense), net                  61,352        (15,676 )      (143,381 )      (309,557 )
Loss before provision for income taxes     (119,221 )     (108,024 )      (662,275 )      (633,581 )
Provision for income taxes                    4,419          3,611          13,803          12,967
Net loss                                 $ (123,640 )   $ (111,635 )   $  (676,078 )   $  (646,548 )

(1) Includes stock-based compensation
expense as

follows:

Product cost of revenue                  $    1,291     $    1,830     $     4,454     $     5,529
Support, entitlements and other
services cost of revenue                      6,337          7,307          17,862          23,564
Sales and marketing                          30,743         25,463          93,001          80,975
Research and development                     40,802         35,467         114,747         109,709
General and administrative                   16,113         14,439         

38,874 43,321 Total stock-based compensation expense $95,286 $84,506 $268,938 $263,098

(2) Includes amortization of
intangible assets as follows:
Product cost of revenue                  $    3,694     $    3,368     $    11,082     $    10,212
Sales and marketing                             651            651           1,953           1,953
Total amortization of intangible
assets                                   $    4,345     $    4,019     $    13,035     $    12,165



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                                 NUTANIX, INC.
   Management's Discussion and Analysis of Financial Condition and Results of
                             Operations (Continued)

                                              Three Months Ended              Nine Months Ended
                                                   April 30,                      April 30,
                                             2021            2022            2021           2022
                                                      (as a percentage of total revenue)
Revenue:
Product                                         50.0 %          49.5 %          50.1 %         49.3 %
Support, entitlements and other services        50.0 %          50.5 %          49.9 %         50.7 %
Total revenue                                  100.0 %         100.0 %         100.0 %        100.0 %
Cost of revenue:
Product                                          3.7 %           3.4 %           3.9 %          3.6 %
Support, entitlements and other services        17.9 %          16.4 %          17.3 %         16.6 %
Total cost of revenue                           21.6 %          19.8 %          21.3 %         20.2 %
Gross profit                                    78.4 %          80.2 %          78.7 %         79.8 %
Operating expenses:
Sales and marketing                             76.4 %          58.1 %          77.9 %         60.8 %
Research and development                        42.1 %          35.2 %          41.5 %         35.8 %
General and administrative                      12.3 %           9.8 %          11.1 %         10.4 %
Total operating expenses                       130.8 %         103.1 %         130.4 %        107.0 %
Loss from operations                           (52.4 )%        (22.9 )%        (51.7 )%       (27.2 )%
Other income (expense), net                     17.8 %          (3.9 )%        (14.3 )%       (25.9 )%
Loss before provision for income taxes         (34.6 )%        (26.8 )%        (66.0 )%       (53.1 )%
Provision for income taxes                       1.3 %           0.9 %           1.4 %          1.1 %
Net loss                                       (35.9 )%        (27.7 )%        (67.4 )%       (54.2 )%


Comparison of the three and nine month periods ended April 30, 2021 and 2022

Revenue

                    Three Months Ended                                     Nine Months Ended
                         April 30,                  Change                     April 30,                    Change
                    2021          2022           $           %           2021            2022             $           %
                                                    (in thousands, except 

percentages)

Product           $ 172,308     $ 199,616     $ 27,308         16 %   $   502,858     $   588,872     $  86,014        17 %
Support,
entitlements
  and other
services            172,200       204,042       31,842         18 %       

500,786 606,384 105,598 21% Total turnover $344,508 $403,658 $59,150 17% $1,003,644 $1,195,256 $191,612 19%


                       Three Months Ended                                      Nine Months Ended
                            April 30,                  Change                      April 30,                     Change
                       2021          2022           $           %            2021            2022             $           %
                                                        (in thousands, except percentages)
U.S.                 $ 184,392     $ 227,195     $ 42,803         23 %    $ 

543,766 $670,782 $127,016 23%
Europethe middle

Is and Africa 82,106 96,551 14,445 18%

228,147 278,129 49,982 22%
Asia Pacific

            64,687        67,991        3,304          5 %      

190,472 208,518 18,046 9% Other Americas 13,323 11,921 (1,402 ) (11 )%

41,259 37,827 (3,432) (8)% Total revenue $344,508 $403,658 $59,150 17% $1,003,644 $1,195,256 $191,612 19%



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                                 NUTANIX, INC.

Management report and analysis of the financial situation and the results of

                             Operations (Continued)

The increase in product revenue for the three and nine months ended April 30,
2022 was due primarily to increases in software revenue resulting from an
increased adoption of our products, as well as growth in software renewals due
to our transition to selling subscription term-based licenses, partially offset
by the impact of the shorter average contract terms resulting from this
transition. For the three and nine months ended April 30, 2021, the total
average contract term was approximately 3.3 years and 3.4 years, respectively.
For the three and nine months ended April 30, 2022, the total average contract
term was approximately 3.2 years and 3.1 years, 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 for the three and
nine months ended April 30, 2022, as compared to the prior year periods, in
conjunction with the growth of our end customer base and the related software
entitlement and support subscription contracts.

Revenue Cost and Gross Margin

                     Three Months Ended                                  

Nine month period ended

                          April 30,                  Change                  April 30,                  Change
                      2021          2022          $          %          2021          2022           $           %
                                                   (in thousands, except percentages)
Cost of product
revenue            $   12,896     $ 13,739     $   843          7 %   $  39,494     $  43,056     $  3,562          9 %
Product gross
margin                   92.5 %       93.1 %                               92.1 %        92.7 %
Cost of support,
  entitlements
and
  other services
revenue            $   61,578     $ 66,110     $ 4,532          7 %   $ 173,893     $ 198,208     $ 24,315         14 %
Support,
entitlements
  and other
services
  gross margin           64.2 %       67.6 %                              
65.3 %        67.3 %
Total gross
margin                   78.4 %       80.2 %                               78.7 %        79.8 %



Cost of product revenue

Cost of product revenue increased for the three and nine months ended April 30,
2022, as compared to the prior year periods, due primarily to a corresponding
increase in hardware revenue. Slight fluctuations in hardware revenue and cost
of product revenue are anticipated, as we expect to continue selling small
amounts of hardware for the foreseeable future.

Product gross margin increased by 0.6 percentage points for both the three and
nine months ended April 30, 2022, as compared to the prior year periods, due
primarily to increasing software revenue, as we continued to focus on more
software-only transactions, which have a higher margin as compared to hardware
sales.

Cost of assistance, rights and income from other services

Cost of support, entitlements and other services revenue increased for the three
and nine months ended April 30, 2022, as compared to the prior year period, due
primarily to higher personnel-related costs, resulting from growth in our global
customer support organization.

Support, rights and other services gross margin increased 3.4 percentage points and 2.0 percentage points for the three and nine months ended
April 30, 2022respectively, compared to the prior year periods, mainly due to the growth of support, rights and other services revenues at a higher rate than personnel costs.

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                                 NUTANIX, INC.
   Management's Discussion and Analysis of Financial Condition and Results of
                             Operations (Continued)


Operating Expenses

Sales and marketing

                   Three Months Ended                                     

Nine month period ended

                        April 30,                   Change                    April 30,                  Change
                   2021          2022            $           %           2021          2022            $           %
                                                  (in thousands, except percentages)
Sales and
marketing        $ 263,358     $ 234,530     $ (28,828 )      (11 )%   $ 781,719     $ 726,196     $ (55,523 )      (7 )%
Percent of
total revenue         76.4 %        58.1 %                                  77.9 %        60.8 %


Sales and marketing expense decreased for the three and nine months ended April
30, 2022, as compared to the prior year periods, due primarily to lower
marketing costs resulting from decreased spending and increased efficiencies, as
well as lower headcount-related costs, driven by the 9% decrease in sales and
marketing headcount from April 30, 2021 to April 30, 2022. The overall decrease
in sales and marketing expense was partially offset by savings in the prior year
period due to the company-wide furlough week during the first quarter of fiscal
2021, as well as an increase in commissions expense as a result of the increase
in revenue.

Research and development

                  Three Months Ended                                    

Nine month period ended

                       April 30,                  Change                    April 30,                  Change
                  2021          2022           $           %           2021          2022           $           %
                                                 (in thousands, except percentages)
Research and
development     $ 144,917     $ 142,075     $ (2,842 )       (2 )%   $ 416,292     $ 427,949     $ 11,657          3 %
Percent of
total revenue        42.1 %        35.2 %                                 41.5 %        35.8 %


Research and development expense decreased for the three months ended April 30,
2022, as compared to the prior year period, due primarily to lower stock-based
compensation expense resulting from terminations during the period.

Research and development expense increased for the nine months ended April 30,
2022, as compared to the prior year periods, due primarily to higher
personnel-related costs resulting from growth in our R&D headcount, which grew
13% from April 30, 2021 to April 30, 2022, partially offset by lower stock-based
compensation expense resulting from terminations during the period.

general and administrative

                      Three Months Ended                                    Nine Months Ended
                           April 30,                  Change                    April 30,                  Change
                       2021          2022          $           %           2021          2022           $           %
                                                     (in thousands, except percentages)
General and
administrative      $   42,332     $ 39,552     $ (2,780 )       (7 )%   $
111,140     $ 123,871     $ 12,731         11 %
Percent of total
revenue                   12.3 %        9.8 %                                 11.1 %        10.4 %


General and administrative expense decreased for the three months ended April
30, 2022, as compared to the prior year period, due primarily to lower legal and
outside services costs as well as lower stock-based compensation expense
resulting from terminations during the period, partially offset by an increase
in personnel-related costs resulting from growth in our G&A headcount, which
grew 14% from April 30, 2021 to April 30, 2022.

General and administrative expenses increased for the nine months ended April 30, 2022compared to the prior year period, mainly due to an increase in personnel costs resulting from the growth of our G&A workforce.

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Management report and analysis of the financial situation and the results of

                             Operations (Continued)


Other Expense, Net

                      Three Months Ended                                    

Nine month period ended

                           April 30,                   Change                     April 30,                     Change
                      2021          2022           $            %            2021           2022            $            %
                                                        (in thousands, except percentages)
Interest income,
net                 $     940     $   1,123     $   (183 )       (19 )%   $    3,418     $    2,199     $   1,219           36 %
Change in fair
value of
  derivative
liability              85,027             -       85,027         100 %       (81,353 )     (198,038 )     116,685          143 %
Amortization of
debt
  discount and
issuance
  costs and
interest
  expense             (22,098 )     (15,325 )     (6,773 )       (31 )%      (57,508 )      (45,209 )     (12,299 )        (21 )%
Debt
extinguishment
costs                       -             -            -           0 %             -        (64,911 )      64,911          100 %
Other                  (2,517 )      (1,474 )     (1,043 )       (41 )%    

(7,938 ) (3,598 ) (4,340 ) (55 )% Other income (expenses), net $61,352 ($15,676) $77,028 126% ($143,381) ($309,557) $166,176 116%


Other income (expense), net increased for the three months ended April 30, 2022,
as compared to the prior year period, due primarily to the change in the fair
value of the derivative liability related to the 2026 Notes, which was
reclassified to equity during the first quarter of fiscal 2022.

Other income (expense), net increased for the nine months ended April 30, 2022,
as compared to the prior year period, due primarily to the change in the fair
value of the derivative liability related to the 2026 Notes and the debt
extinguishment costs resulting from the exchange of $416.5 million in aggregate
principal amount of the 2023 Notes for $477.3 million in aggregate principal
amount of the 2027 Notes.

Provision for Income Taxes

                     Three Months Ended                                  

Nine month period ended

                          April 30,                  Change                  April 30,                  Change
                      2021          2022          $          %           2021          2022          $          %
                                                  (in thousands, except percentages)
Provision for
income taxes       $    4,419      $ 3,611     $  (808 )      (18 )%   $  13,803     $ 12,967     $  (836 )       (6 )%


The decreases in the income tax provision for the three and nine months ended
April 30, 2022, as compared to the prior year periods, were due primarily to tax
benefits from the release of acquisition-related unrecognized tax positions,
partially offset by an increase in foreign taxes from higher taxable earnings in
foreign jurisdictions, as we continued to grow our business globally. 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.

Cash and capital resources

As of April 30, 2022, we had $386.7 million of cash and cash equivalents, $3.1
million of restricted cash and $913.9 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. In September 2021, we entered
into privately negotiated exchange and note repurchase transactions, after which
$145.7 million in aggregate principal amount of 2023 Notes remains outstanding.
There are no required principal payments prior to the maturity of the 2023
Notes. For additional information, see Note 5 of Notes to Condensed Consolidated
Financial Statements included in Part I, Item 1 of this Quarterly Report on Form
10-Q.

In September 2020, we issued $750.0 million in aggregate principal amount of
2.50% convertible senior notes due 2026 to BCPE Nucleon (DE) SVP, LP, an entity
affiliated with Bain Capital, LP. For additional information, see Note 5 of
Notes to Condensed Consolidated Financial Statements included in Part I, Item 1
of this Quarterly Report on Form 10-Q.
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                                 NUTANIX, INC.

Management report and analysis of the financial situation and the results of

                             Operations (Continued)


In September 2021, we issued convertible senior notes with a 0.25% interest rate
for an aggregate principal amount of $575.0 million due 2027, of which $477.3
million was issued in exchange for approximately $416.5 million principal amount
of the 2023 Notes and the remaining $97.7 million was issued for cash. There are
no required principal payments prior to the maturity of the 2027 Notes. For
additional information, see Note 5 of Notes to Condensed Consolidated Financial
Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

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 fluctuate 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.

Cash flow

The following table summarizes our cash flows for the periods presented:

                                                            Nine Months Ended April 30,
                                                             2021                  2022
                                                                   (in thousands)

Net cash (used in) provided by operating activities ($75,180)

   $       29,539
Net cash used in investing activities                          (629,751 )            (31,546 )
Net cash provided by financing activities                       660,881     

102,916

Net (decrease) increase in cash, cash equivalents and
restricted cash                                         $       (44,050 )     $      100,909


Cash flow from operating activities

Net cash provided by operating activities was $29.5 million for the nine months
ended April 30, 2022, compared to net cash used in operating activities of $75.2
million for the nine months ended April 30, 2021. The increase in cash provided
by operating activities for the nine months ended April 30, 2022 was due
primarily to an increase in cash collections during the period.

Cash flow from investing activities

Net cash used in investing activities of $629.8 million for the nine months ended April 30, 2021 included $1,145.3 million purchases of short-term investments and $41.1 million purchases of property, plant and equipment, partially offset by $486.6 million maturities of short-term investments and $70.1 million sales of short-term investments.

Net cash used in investing activities of $31.5 million for the nine months ended
April 30, 2022 included $794.2 million of short-term investment purchases and
$34.3 million of purchases of property and equipment, partially offset by $778.9
million of maturities of short-term investments and $18.0 million of sales of
short-term investments.

Cash flow from financing activities

Net cash provided by financing activities of $660.9 million for the nine months
ended April 30, 2021 consisted of $723.6 million of proceeds from the issuance
of the 2026 Notes, net of issuance costs, and $62.3 million of proceeds from the
sale of shares through employee equity incentive plans, partially offset by
$125.1 million of repurchases of our Class A common stock.
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                                 NUTANIX, INC.

Management report and analysis of the financial situation and the results of

                             Operations (Continued)


Net cash provided by financing activities of $102.9 million for the nine months
ended April 30, 2022 included $88.7 million of proceeds from the issuance of the
2027 Notes, net of issuance costs, $66.6 million of proceeds from the sale of
shares through employee equity incentive plans, and $39.9 million of proceeds
from the unwinding of convertible note hedges related to the 2023 Notes,
partially offset by $58.6 million of repurchases of our Class A common stock,
$18.4 million of payments for the unwinding of warrants related to the 2023
Notes, and $14.7 million of debt extinguishment costs.

Contractual obligations

The following table summarizes our contractual obligations as of April 30, 2022:

                                                            Payments Due by Period
                                                    Less than       1 Year to        3 to        More than
                                       Total          1 Year         3 Years        5 Years       5 Years
                                                                (in thousands)
Principal amount payable on
convertible
  senior notes (1)                  $ 1,498,701     $  145,704     $         -     $ 777,997     $  575,000
Interest on convertible senior
notes (1)                                 2,601            116               -         2,485              -
Operating leases (undiscounted
basis) (2)                              107,282         49,573          52,014         5,695              -
Other commitments (3)                    99,147         89,811           6,263         3,073              -
Guarantees with OEMs                     89,627         89,627               -             -              -
Total                               $ 1,797,358     $  374,831     $    58,277     $ 789,250     $  575,000




(1)
Includes accrued paid-in-kind interest on the 2026 Notes and accrued interest on
the 2027 Notes. For additional information regarding our convertible senior
notes, refer to Note 5 of Notes to Condensed Consolidated Financial Statements
included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
(2)
For additional information regarding our operating leases, refer to Note 6 of
Notes to Condensed Consolidated Financial Statements included in Part I, Item 1
of this Quarterly Report on Form 10-Q.
(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.

From April 30, 2022, we had accrued liabilities related to uncertain tax positions, which are reflected in our condensed consolidated balance sheet. These accruals are not reflected in the contractual obligations presented in the table above, as it is uncertain if or when these amounts will ultimately be settled.

Off-balance sheet arrangements

As of April 30, 2022, 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.

Significant Accounting Policies and Estimates

Our condensed consolidated financial statements are prepared in accordance with
U.S. GAAP. The preparation of these condensed 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 condensed consolidated financial statements, which, in turn, could change
the results from those reported.
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                                 NUTANIX, INC.

Management report and analysis of the financial situation and the results of

                             Operations (Continued)

There have been no material changes in our critical accounting policies and estimates from those described in our Annual Report on Form 10-K for the year ended July 31, 2021.

Recent accounting pronouncements

See Note 1 of Notes to Condensed Consolidated Financial Statements included in
Part I, Item 1 of this Quarterly Report on Form 10-Q for a full description of
recent accounting pronouncements.
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