Good day, thank you for standing by. Welcome to the Nutanix Q1 Fiscal 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you will need to press star one on your telephone. If you require any further assistance, please press star zero. Now I'd like to hand the conference over to your first speaker today, Rich Valera, Vice President, Investor Relations. Thank you. Please go ahead. Good afternoon, and welcome to today's conference call to discuss the results of our first quarter fiscal 2022. Joining me today are Rajiv Ramaswami, Nutanix's President and CEO, and Duston Williams, Nutanix's CFO. After the market closed today, Nutanix issued a press release announcing financial results for its first quarter fiscal 2022. If you'd like to read the release, please visit the press release section of our IR website. During today's call, management will make forward-looking statements, including statements regarding our business plans, strategies, initiatives, vision, objectives, and outlook. As well as our ability to execute thereon successfully and in a timely manner, and the benefits and impact thereof on our business, operations, and financial results, our financial performance and targets, and use of new or different performance metrics in future periods, our competitive position and market opportunity, the timing and impact of our current and future business model transitions, the factors driving our growth, macroeconomic and industry trends, and the current and anticipated impact of the COVID-19 pandemic. These forward-looking statements involve risks and uncertainties, some of which are beyond our control, which could cause actual results to differ materially and adversely from those anticipated by these statements. For a detailed description of these risks and uncertainties, please refer to our SEC filings, including our most recent annual report on Form 10-K, filed with the SEC on September 21, 2021, as well as our earnings press release issued today. These forward-looking statements apply as of today, and we would undertake no obligation to revise these statements after this call. As a result, you should not rely on them as representing our views in the future. Please note, unless otherwise specifically referenced, all financial measures we use on today's call, except for revenue, are expressed on a non-GAAP basis and have been adjusted to exclude certain charges. We have provided, to the extent available, reconciliations of these non-GAAP financial measures to GAAP financial measures on our IR website and in our earnings press release. Lastly, Nutanix management will be participating in both the fifth annual Wells Fargo TMT Summit and the 45th Nasdaq Investor Conference on December 1st, and the 24th annual Needham & Company Growth Conference on January 10. We will also be holding our annual meeting of stockholders on December 10. We hope to see many of you at these upcoming events. With that, I'll turn the call over to Rajiv. Rajiv. Thank you, Rich, and good afternoon, everyone. Our first quarter was a good start to fiscal 2022, building on the momentum we established in our prior fiscal year. Despite ongoing challenges from COVID-19, we delivered another solid quarter, exceeding all our guided metrics, seeing better than expected free cash flow, delivering significant new product innovations, and making progress with our strategic partnerships. We saw healthy demand for Nutanix's Cloud Platform, driven by businesses looking to accelerate their digital transformation, modernize their data centers, and adopt hybrid multi-cloud operating models. While ongoing supply chain challenges have made it more difficult for our customers and partners to procure their hardware, thus far, we have seen minimal impact on our business, but we continue to watch the situation closely. Taking a closer look, our fiscal first quarter reflected continued execution on our ACV-based model and was marked by strong top and bottom-line performance. We saw record ACV billings, which grew 33% year-over-year, our highest growth rate in over two and a half years. We also grew revenue 21% year-over-year, our highest growth rate in over three years, despite seeing expected term compression. Once again, we saw excellent linearity, which combined with diligent expense management, enabled us to nearly achieve free cash flow breakeven in the quarter. Putting us well on track to achieving our target of sustainable positive free cash flow by the second half of calendar year 2022. We achieved these results while continuing to add to our backlog. Overall, we are pleased with our fiscal first quarter financial results and believe we remain on track to achieving our target of 25%+ annualized ACV billings growth through fiscal year 2025. We continue to see strong adoption of our hybrid multi-cloud portfolio and solutions during the quarter. Our first quarter is typically a strong one for our federal business, and this one was no exception. Our largest customer in the quarter was a federal civilian agency that substantially expanded their usage of Nutanix Cloud Platform, including our unified storage and database automation solutions. This customer is also using clusters on AWS to burst additional resource capacity to the public cloud to quickly augment their on-prem environment. Having a unified environment between on-prem and public cloud allows them to leverage the same team to manage both environments and more readily meet their business service level agreements. In another example, national retailer Lands' End purchased our Nutanix Cloud Platform, including clusters on AWS, to enable bursting of their virtual desktops into the public cloud during their peak holiday selling season. They are also utilizing our platform to run CPU-intensive CRM applications more efficiently and support their security and compliance needs. We see Lands' End as a great example of the natural fit of our clusters offering for businesses with seasonal workloads. Finally, during the quarter, a European-based multinational pharmaceutical company substantially expanded their usage of our hybrid multi-cloud platform, including our unified storage and database automation solutions, to run a number of virtualized applications and enable virtual desktops in their branch offices. In September, Nutanix customers, prospects, and partners from all over the world joined us for our.NEXT digital experience. We were pleased with the attendance and engagement at our signature event, where we saw a record number of new Nutanix professional certifications and viewership for our keynotes and breakout sessions. We made several announcements at.NEXT, starting with the launch of a major release of our cloud platform, AOS 6.0, with new integrated zero trust security, disaster recovery, and virtual networking innovations. We also introduced new capabilities that make it easier for our customers to simplify data management and optimize database and big data workload performance on our Nutanix Cloud Platform. Finally, we announced a new partnership with Citrix through which the two companies will deliver remote work solutions that can be deployed across private and public clouds, combining the simplicity of the Nutanix Cloud Platform with Citrix virtual apps and desktop services to provide secure, on-demand, and elastic access to apps, desktops, and data from any device in any location at any scale. Nutanix is now a preferred choice for HCI and hybrid multi-cloud solutions for Citrix virtual apps and desktop services. Citrix is a preferred choice for enterprise end user computing on the Nutanix Cloud Platform. The two companies will also partner on customer support and product roadmaps to ensure a seamless customer experience and timely validation and interoperability respectively. Finally, our go-to-market teams will partner to sell to new and existing customers and enable channel partners. We see this partnership as another proof point in our strategy of furthering customer choice and enhancing our platform by partnering with other best-in-class providers. We're pleased with the industry recognition we continue to receive for our solutions. Earlier today, Nutanix was named as a leader in Gartner's Magic Quadrant for Hyperconverged Infrastructure for the fifth time in a row. In a testament to the growing breadth of our platform, the company was also recently named for the first time as a visionary in Gartner's Magic Quadrant for Distributed File Systems and Object Storage. I am excited about our recent announcement that Dominick Delfino will be joining Nutanix as our Chief Revenue Officer on December 6th. Dom brings deep and relevant domain knowledge as well as go-to-market experience at scale. He will be a great spokesperson for us with customers, partners, and the industry at large. We expect him to hit the ground running when he joins us in a couple of weeks. As I approach my one-year anniversary as CEO and reflect on an eventful year, the journey so far has been unquestionably gratifying, and I'm proud of what we've been able to achieve against a challenging backdrop. We unveiled our new vision, shared our multi-year strategy and financial plan, and delivered significant enhancements to our Nutanix Cloud Platform while reshaping it with a focus on solutions. We also made significant progress on our strategic partnerships, signing new or expanded agreements with Red Hat, Lenovo, HPE, and Citrix. Finally, we began to see the benefits of our subscription transition in the form of consistent delivery of results ahead of expectations. An accelerating top line and a meaningfully improving bottom line. As I look forward, I'm excited by what's ahead. We address large and growing markets which are benefiting from the secular tailwind of an increasingly digital world. We have a strong hybrid multi-cloud platform to address this opportunity. Our subscription business model positions us to continue to deliver strong growth with the opportunity for substantial sales and marketing expense leverage as renewals become a larger portion of our business. We are focused on disciplined and purposeful spending to help us reach our profitability goals. Through it all, we continue to delight our customers and they continue to love us. In closing, I am pleased with our performance in the first quarter and optimistic about our ability to continue to deliver against the vast opportunity ahead of us. With that, I will hand it over to Duston Williams. Duston? Thank you, Rajiv. Rajiv provided a good overview for the quarter, so I will get right into some of the specific Q1 highlights. ACV billings for Q1 were $183 million, reflecting 33% growth year-over-year, above our guidance range of $172 million-$177 million, and ahead of the street consensus number of $175 million. Our renewals business performed as expected. ARR as of the end of Q1 was $0.95 billion, growing 67% year-over-year and slightly ahead of our expectation of 65% growth. Run rate ACV as of the end of Q1 was $1.59 billion, growing 23% year-over-year. As expected, our average contract term lengths decreased to 3.1 years versus 3.4 years in Q4 2021, driven by our usual Q1 surge in federal business. On average, our federal customers typically have much shorter contract term lengths. Revenue was $379 million, growing 21% from Q1 2021, above the street consensus number of $369 million. We added approximately 560 new logos in Q1 2022 versus the Q4 2021 new logo count of 700 versus the Q1 2021 new logo count of 680. In the prior three fiscal years, our Q1 new logo count on average dropped by 115 new logos versus Q4. This year we experienced a drop of 140 new logos from Q4 to Q1, slightly higher than the prior three-year average of 115. We note that our new logo average selling prices continued to rise, which is in line with our strategy over the last year or so to focus on the quality and efficiency of new logo adds as measured by ASP per new logo. In fact, in FY 2021, a year that was influenced by the pandemic, we saw our average selling prices per new logo increase by almost 25%. Our new logo average selling prices were also up in Q1 2022 versus Q1 2021 and versus Q4 2021. In short, we are generating more new logo ACV bookings with less new logos. Coming off a difficult prior year comparison of 86% year-over-year growth and following a very strong Q4 2021, our emerging product new ACV bookings grew 11% year-over-year in Q1 2022. We expect significant growth in emerging products, new ACV bookings in Q2 2022, although the year-over-year comps will remain difficult. In Q1, on a limited basis, we started to roll out our new solution offerings. As we have previously stated, many emerging products will morph into these new solutions as we move through the current fiscal year, and therefore, any year-over-year comparisons will become less relevant. We have also adjusted our compensation plans accordingly, no longer providing bonuses for selling most standalone emerging products. The emerging products tax rate was 42%. We are mindful of the importance of quality new logo additions and emerging products, and we will continue to keep the appropriate focus on them, including adjusting our incentive plans as required. Q1 sales rep productivity exceeded our forecast, and we increased our total net sales reps in Q1. Our non-GAAP gross margin in Q1 was 82.1% versus our guidance of 81.5%. Operating expenses were $353 million, lower than our guidance of $365 million-$370 million. Our non-GAAP net loss was $47 million for the quarter, or a loss of $0.22 per share. Our Q1 linearity remained very good and receivable collections were excellent. DSOs in Q1 were 28 days, down from 43 days in Q4 2021. Our Q1 free cash flow was once again aided by the good linearity in collections, coming in at -$2 million, over $40 million better than the street consensus. We closed the quarter with cash and short-term investments of $1.28 billion, up from $1.21 billion in Q4 2021. Now turning to our guidance. With the continued progress we've made on our subscription model, we believe it's now appropriate to provide annual guidance. Additionally, having gained a better understanding of potential fluctuations in our average contract term lengths, we are guiding to revenue on both a quarterly and annual basis. The guidance for Q2 is as follows: ACV billings to be between $195 million and $200 million, representing year-over-year growth of 23%-26%. Revenue of $400 million-$410 million. Gross margin of approximately 82%-82.5%. Operating expenses between $360 million and $365 million. Weighted average shares outstanding of approximately 218 million. The Q2 ACV billings guidance, which calls for year-over-year growth of 23%-26%, compares to the actual growth of 14% in Q2 2021 and Street consensus growth of 21% for Q2 2022. We expect a considerable quarter-over-quarter increase in emerging products new ACV bookings in Q2. Our average contract term lengths will most likely increase slightly in Q2 as our federal business will return to a lower percentage of the overall business mix. Also, just a quick modeling reminder regarding our Q3 top line performance. In Q3, over the last three years, we have averaged a small sequential decline in ACV billings of approximately 3%-4%. We would expect a similar trend for Q3 2022 for both ACV billings and revenue. We will use a bit of cash in Q2, mostly related to a slight build-up in receivables associated with higher projected Q2 billings. From a free cash flow perspective, we would expect something close to the current consensus estimate of a usage of approximately $25 million. The guide for FY 2022 is as follows. ACV billings to be between $740 million and $750 million, representing year-over-year growth of 25%-26%. Revenue of $1.615 billion-$1.630 billion. Gross margin of approximately 82%. Operating expenses between $1.48 billion and $1.49 billion. One last reminder about the annual ACV billings guide. As we have often mentioned, our total fiscal year ACV billings are not derived from the simple addition of the four fiscal quarters. For our reported quarterly ACV billings, we annualize any deal that is less than one year in term length, and our yearly ACV billings calculations eliminate any duplication that happens with the renewal of a deal that occurs within the period and is less than one year in duration. Based on this methodology, over the last three fiscal years, the sum of the four fiscal quarters of ACV billings have exceeded the adjusted annual ACV billings by 6%-7%. Some analysts have applied the required adjustment to their annual FY 2022 billings estimates and others have not, resulting in an inflated FY 2022 ACV billings consensus. That said, if you apply this methodology to the sum of the pre-earnings call quarterly ACV billings consensus numbers, it suggests a current FY 2022 ACV billings consensus of approximately $720 million-$725 million. We would once again encourage investors to account for this distinction during the modeling process. With that, operator, could you please open the call up for questions? Thank you. Thank you. Thank you, sir. As a reminder to all participants, if you would like to ask a question, please press star one on your telephone keypad. Again, it's star one on your telephone keypad. Please stand by while we compile the Q&A roster. Your first question is from the line of James Fish with Piper Sandler. Your line is open. Hey, guys. Thanks for the questions here and great quarter. Appreciate all the details on guide moving forward, Duston. Maybe, Rajiv, I want to go back to your comments around the supply chain. You know, a lot of push and pull from others around just the indirect supply chain impacts. I guess how much push or pull are you guys seeing? It sounds like you guys were pretty insulated to it. Why do you think this was the case that hyperconverged, and specifically Nutanix, really moved up in the priority list here? Yes, James. Thank you for the question. First of all, I think in our case, we run our software on a variety of hardware platforms, so our customers have a lot of choice, including, by the way, hardware platforms on AWS and soon to be Azure. While there's certainly supply chain issues out there that we are all aware of, our customers so far have been able to get what they need by the choice that we provide. As a result, we've seen some pull-ins and some pushouts, but the net impact is minimal so far. We are comfortable with our forecast. We'll continue to monitor the situation in terms of supply chain, but so far so good, James. That's great. Maybe just on the go-to-market, guys, why the decision to no longer incentivize the sales team to sell those standalone emerging products? Any update as to how that, the early leads on the Red Hat partnership are going. Thanks, guys. Sure. Let me do the Red Hat first, and then I'll go to the emerging products. Red Hat, the partnership is going, I would say really well. We got good momentum in the first quarter, which is really our first full quarter of the strategic partnership. It's resulted in wins for both Red Hat Linux running on top of the Nutanix Cloud Platform, as well as OpenShift on the Nutanix Cloud Platform. We are going forward with expanding our go-to-market collaboration, including bringing in channel, Global Systems Integrators, and our OEM partners. I'll give you two specific examples. One example, just last quarter, we had a FinTech customer who adopted OpenShift running on the Nutanix Cloud Platform to deliver banking Software as a Service. This is a SaaS company. That's one example of OpenShift on a Nutanix Cloud Platform. Another example here was a large bank for running their mission-critical applications. One of the important things they wanted to make sure was that application runs on RHEL, that had Linux on Nutanix. The fact that we had a combined certified solution made them very comfortable to run that mission-critical application on our platform. That is a win that we got purely because of this relationship. We're seeing good traction there. Now, to your question on the emerging product and the space there and so forth. First of all, as we said earlier in the call, we had some difficult year-over-year comparisons in fiscal 2021. We had an 86% comp in Q1 2020. As you know, James, there's a transitioning to solution selling, and we're also changing some of the incentives. I'll tell you why. At first, we were expecting a deceleration to approximately 20% this quarter. Now, in fiscal 2021, we had a sales accelerator that was tied exclusively to sales of emerging products. Now, we removed that, because we wanted to focus on not just selling them separately, but selling them first as part of our solutions portfolio, and we wanted to drive both sales and consumption of these solutions. Now, perhaps we should have done a more gradual transition of our emerging product incentives. In Q2, we're implementing a revised incentive program, which will be more targeted. It will include a deployment component. That said, we continue to be excited by the market opportunity overall, for our solutions portfolio. Your next question is from the line of Jack Andrews with Needham. Your line is open. Good afternoon, and congratulations on the results. Rajiv, when we think about your software alliances now, you've got Red Hat, Citrix, AWS, Microsoft. What other areas do you think could be of interest? Do you think that there's anything missing from we'll call it a Nutanix platform story perspective? Jack, good question here. Obviously, we have a lot of work ahead in terms of continuing to grow those partnerships that you just mentioned. Now, in addition, I think, you know, there's more opportunities for us to do more work with our global systems integrators. We continue to use them, especially in larger accounts, where I think we can get a lot more leverage through the GSIs. You know, again, I think the rest of it really is on expanding these partnerships in multiple vectors. We've done that this year with many of our partnerships. We expanded our HPE partnership, we expanded our Lenovo partnership, and now, you know, with Citrix and Red Hat, we are in the early stages. Azure, again, I think we've got a great potential here, lots of customer interest. A lot of execution ahead of us on these partnerships. In terms of new ones, I look forward to doing more with Global Systems Integrators. Well, thanks for the perspective on that. Just as a follow-up question, is there any update you can provide in terms of just traction with Era in particular and around the database opportunity? Indeed. I think this is one of our big bets that we've talked about. Very excited. We had a big quarter for Era in Q4. We are actually renewing, doubling down our investment on both R&D and go-to-market for Era. We have a full 360 plan that we're executing too. I'm still very excited about the potential for this because truly the vision is it's a multi-cloud database-as-a-service offering that can work with a range of database engines. So we've got good product market fit. We've got large customers who have bet on this platform in a pretty substantial way. We are excited about the market opportunity, continue to invest in it and you know, driving very hard. Great. Thanks for taking my questions. Thank you, Jack. Your next question is from the line of Pinjalim Bora with JP Morgan. Your line is open. Oh, great. Hey, congrats guys on the quarter. Thank you for taking my questions. Staying on that topic of Era, we picked up a data point in doing our channel work that Era is starting to drive eight-figure deals on its own. Might be an outlier, but I mean, I don't think people are really thinking of Era to drive such big deals. Is that a norm, or do you feel like those could be large outliers? Yeah. I think what we see with Era is there's certainly potential of large deals. Last quarter, we talked about a large financial services company betting big on Era. Typically, these wins start out smaller, of course, Pinjalim. They'll start out by looking at a particular use case for one database, and it won't be the most mission-critical database that they have, but something below that. Once they establish the use case and validate it, then they actually go down and buy a lot more. Usually it's our second deal or the third deal with a customer that's gonna be bigger, right? The initial deals are gonna be, let me try this out for one use case, see how it works, and if I like it, I'm gonna go big. We are excited about the potential for Era. You know, the other thing is, as you go further up the stack, it's worth more from an ACV per core that we can get, right? There's a lot of value that we can expect from the solution, it's, and the use cases are very strong because customers are, you know, they have a huge number of databases and that they manage. Simplifying the operations of those databases is a massive value proposition. Making that work in future in a multi-cloud world is another added value proposition on top of that. I think Pinjalim and I'm excited about it, and I continue to invest and believe in its prospects. Got it. Just taking a step back, I guess. When I look at the ACV growth, obviously really good, I think when you guide it to it, you kind of guided a sequential dip in Q1. When I look at the actuals now, it seems like the sequential is even better than two years ago. What surprised you in the quarter? Is there anything that went much more positive than you thought in any particular areas to highlight? I would say largely. Yeah. Go ahead. No, go ahead. Go ahead, Duston. Yeah, no, I think you know, basically, things came in as planned. A couple things ran a little bit ahead. Federal, you know, as we expect in Q1, had a good quarter, which helped things out. The renewals remained very much on track, which is good. We continue to grow and mature that team internally. You know, we had some significant upsell business as you might expect in the quarter too. I think it was, you know, a little bit of everything, clearly as we expected, though, like every Q1 led by Federal. Understood. Thank you. Yeah. The only other thing I would add there is I think we, you know, we came close to breakeven on free cash flow. Again, that was a little better than we expected. Yep. Got that. Thank you. Your next question is from the line of Matt Hedberg with RBC Capital Markets. Your line is open. Hey, Dan Bergstrom for Matt Hedberg. Thanks for taking our questions. I really like the guidance around revenue and for the full year. Could you expand upon that decision? You know, what gave you the confidence to expand guidance, and why now? Sure, yeah. No, I'd be happy to. You know, from a guidance perspective, we actually talked last quarter about doing it a little bit earlier internally, and I just felt comfortable getting you know, one more quarter under our belt before we kind of went back to annual guidance. But again, as we're coming through the subscription transition, so much more is known. We've done a pretty good job of estimating where terms fluctuate, you know, as they do a little bit quarter over quarter. So we're clearly more comfortable with that. The renewals have you know, started to play out as planned, which add predictability. I think with the backdrop of that, at some point, when we talk about all the improvements that's happened to the business, and as we believe it gets more predictable, I think it becomes a bit awkward not to give annual guidance, quite honestly. That's what we've done. We also heard it loud and clear from investors that they were tired of doing a little math, which I completely understand. So, with the term stabilizing a little bit, the big ask from the investment community was revenue guidance. You know, don't have us do the math, just give us the revenue guidance. We also did that not only on a quarterly basis but an annual basis. We hope that helps out, shows our confidence in the business and, you know, we'll continue to back the level of guidance throughout the fiscal year. Yeah, that's great, Duston. You know, could you drill down into a little bit what you saw from the federal vertical in the quarter with fiscal year-end? Sounded positive from the prepared remarks. It's been mentioned a few times, but just, you know, more details there would be helpful. Yeah. You know, again, you know, Federal always comes in strong. We saw nice new customer wins, a lot of upsell business there also. Again, pretty much as we expected, broad terms down. Federal usually has shorter terms. That played out basically exactly as we had expected there. Overall, a good Federal performance. I should also mention in the quarter that EMEA, although typically not Q1 always, but EMEA showed really well in the quarter, so really our top-performing region in the quarter. That was nice to see, especially in a Q1. I don't know if you'd add anything, Rajiv, about the Federal business or not. Yeah. Yes. I mean, Q1 is always a strong quarter for Federal. Now, one thing I would say is we are seeing Federal business also starting to use our cloud offerings. One of the largest deals this quarter was with that Federal agency that we talked about on the call earlier. Again, they are using clusters on AWS for temporary capacity expansions, right? When they need it. We're starting to see the multi-cloud adoption, our hybrid multi-cloud platform as such being adopted in Federal agencies as well. That's great. Thank you. Your next question is from the line of Aaron Rakers with Wells Fargo. Your line is open. Yes. Thank you. This is Michael on behalf of Aaron. Could you provide any color or maybe quantification, if possible, on what your backlog currently looks like? We usually don't do that. We give a qualitative version. Rajiv mentioned that it went up quarter-over-quarter, which we were pleased in the Q1, 'cause that's not always the case. Q1's usually a little soft, and Q3's usually a little bit soft from a seasonality perspective. We were pleased t o add a little backlog in the quarter, and it's been several quarters now that we've been able to add some backlogs, so we're happy with that. Okay. Thank you. Just looking into 2022, I'm curious how you're thinking about the overall, you know, demand backdrop in terms of just enterprise spending environment. There's, you know, ongoing server CPU refresh cycle. I'm just curious if that impacts Nutanix, to what degree. Yeah. I'll take that. In general, I think we have a good backdrop here. As customers continue to come out of COVID and invest in their strategic initiatives, they're investing in digital transformation, they're investing in modernizing their infrastructure, and looking at cloud use cases. All of these in general, I think, bode well to what we do. The last bit, of course, is everybody is now in a hybrid work environment as well, and that'll continue into next year as well. All of these line up quite well with what we sell from a solutions perspective. I expect the demand environment to continue to be healthy. Thanks, guys. Your next question is from the line of Rod Hall with Goldman Sachs. Your line is open. Hi, this is Archie on behalf of Rod. Thanks for taking my question, and congrats on the nice results. Duston, could you give us an idea of how much Red Hat-related revenues you saw in the quarter? Rajiv, can you talk about your strategy on how you approach the broader hybrid cloud software market between your own products versus partnerships? Thank you. Yeah. I'll let Rajiv answer. Take the Red Hat piece there. Yeah. Look, the Red Hat partnership is pretty early, right? What we're really doing is co-selling together in specific accounts and the go-to-market motion has really just started. What I would say is, it's still early days. This was our first full quarter, and as you can see, the wins are starting to come in now. We talked about two wins here early days there. Again, those two categories are quite solid, right? One is just comfort with running mainstream applications on Red Hat Linux on our cloud platform with our hypervisor. That's very clear. That's an immediate opportunity here. We can go out there and prosecute that independently almost. Then the second really where we do a lot of co-work with Red Hat is around OpenShift and Nutanix Cloud Platform providing a best-of-breed total stack solution. Both of those, I think, are that solutions are worthy of, and we're seeing good starting and great go-to-market engagement in the field at this point. Still, it's only the first quarter here, right? Of the partnership really in motion. To your second question around hybrid cloud and how we think of hybrid cloud software. Again, I think, we look at this as us providing a runtime foundation, right? Infrastructure as a Service foundation with our hybrid cloud infrastructure, hybrid cloud management, and on top of that, unified storage and then database solutions. Database automation solutions. That's our stack when it comes to a hybrid multicloud. Not all of it is available on every cloud today. Our base platform is available on AWS, soon to be on Azure. While some of the database solutions are largely today on our platform and not quite yet in native public clouds yet. That's our vision. Now, how do we complement that? For example, Red Hat delivers a PaaS Platform as a service with OpenShift in a hybrid multi-cloud world. Red Hat plus Nutanix delivers a complete stack, PaaS and IaaS, right? Platform and Infrastructure as a service all the way in a multi-cloud world. We have ecosystem partners that are doing added value functions, things like backup, for example, that we partner with, and they reside along with our platform. Those also play in a hybrid multi-cloud world. We're looking at disaster recovery and working with potentially service provider partners, right? To go bring some of those capabilities to market as well. So there is a broad ecosystem, and we continue to leverage that ecosystem in addition to providing our own stack. Thanks, Rajiv. Could you also talk about which emerging products you are most excited about for Q2? Well, I think, look, fundamentally, we piloted our new solutions offering this quarter in select regions, and I look forward to continuing to drive that into the marketplace, right? Hybrid cloud infrastructure, hybrid cloud management, unified storage, database automation solutions, right? I'm excited about actually getting these solution sales rolling on a broader basis and really driving that into the marketplace. Because when we do that, we sell more of our products. It's easy for our customers to consume them. As we've talked about before, you know, database, I mean, Era is a big bet for us. I'm excited about that opportunity and driving growth there or as perhaps one of the big bets that we're taking. Great. Thank you. Your next question is from the line of Nehal Chokshi with Northland Capital Markets. Your line is open. Thank you. Congrats on the very strong results. Impressive ACV billings acceleration well above your long-term model. Congrats on that. In that context, why are you guiding to 24% midpoint year-over-year growth on the ACV billings given that you just, you know, accelerated way above your target model here? Yeah, Nehal, Duston. Yeah, I've got a little different number, I think. You know, somewhere around 25%-26% is the number I have there, so we can reconcile that offline. But that's right in line with what we've been saying. Matter of fact, we said it compounded through 25. We actually gave, I think for 22 a little bit lower expectation at Investor Day. Now we're happy to provide that level of guidance and that growth rate year-over-year. Yep. Okay, great. You mentioned renewals did really well. Can you divvy that up between life of device maintenance and term-based licenses? Yes, we've got the two pieces there, both, you know, going in opposite directions. Life of device starts to get phased out over time, and that's getting phased out not quite as fast, quite honestly, as we thought in the plan, but that's getting phased out. As we've talked about, certainly as we get in the second half of this fiscal year, the subscription renewals start to come in and we saw good traction in Q2 that will continue into Q3, and then we've got a bump up in Q4. Basically both on track and performing as expected. We still have some back office systems work that we're doing and we'll continue to do that. Overall, the renewals are basically playing out as planned, and the LOD support not quite going away as fast, but definitely coming down. Any thoughts on why the LOD is not fading as fast as you thought it might? You know, we had to kind of estimate in the plan as far as how that would transition and how fast people will do it, and some folks want to do it sooner, some folks wait. Obviously, they have the optionality of increasing support one year, for instance, if they want, so they can run the hardware a little bit longer if they want to. But it's not all that different, but just a little bit stronger. Got it. Thank you. Congratulations. Mm-hmm. Your next question is from the line of Jason Ader with William Blair. Your line is open. Yeah, thank you. Quick one for Duston. Did I miss this? I've been jumping around, but did you quantify renewal ACVs in the first quarter? We didn't, Jason. You know, we said we would during Investor Day on that disclosure sheet there, that we would do that on an annual basis. Gotcha. Well within our range, well within our expectations. Perfect. Okay. Can you remind us, kind of roughly, where that is as a percentage of total ACV right now? Uh, for Q- Rough terms. Well, we did that for the fiscal year, but we're not again breaking that out on a quarterly basis. It ended at what percentage of the year? Oh, I'd have to get the exact. Last fiscal year. Yeah, I'd have to get the All right. Well, don't worry about it. I'll- Yeah, we can just reference the Investor Day there. Yep, yep. Okay. Rajiv, have you noticed any changes in the competitive environment with VMware/Dell now that Dell has spun off VMware? Is that changing any of the dynamics around competing with VxRail? Not really, at this point, I would say, Jason. I would say things are about the same as they were. We continue to focus on our value proposition with our customers and continuing to work with all the partners that we talk about, right? So HPE, Lenovo, etc., and Fujitsu and many others that we continue to work. I haven't seen much so far in terms of a change. Again, you know, you saw the Magic Quadrant come out, and we continue to be a leader there for the fifth time. Then you saw the new Magic Quadrant on files and objects, and we were thrilled to be a visionary there. I would say at this point, really no change in our in the competitive landscape. We continue to see a higher win ratio for us, partly perhaps because our pipeline discipline has gotten better and we are much more disciplined in terms of our execution. Really largely no change yet. Thanks very much. Your next question is from the line of Wamsi Mohan with Bank of America. Your line is open. Hi. Thanks for taking my questions. It's actually Ruplu filling in for Wamsi today. Congrats on the quarter and on giving annual guidance. I have one for Rajiv and a couple for Duston. Rajiv, in the prepared remarks, it sounded like new logo adds this quarter were a little bit weaker than expected. Is there any dynamic to that? What and you know, what caused that, and how do you expect that to trend over the next couple of quarters? Yeah, sure. Duston, you want to take that? You got a detail? You know, as we mentioned in the call, you know, typically over the last three years, you just average them. They bounce around a little bit, but average them. You know, Q1 new logos, as I said, came down roughly 115 on average. We came down 140. So it's not that much different from the prior Q1s, Q4 to Q1 transition there. You know, we've been over the last year or more, really focusing again on, you know, the efficiency of adding new logos and the quality of new logos, and that shows pretty clearly when you look at just the ASPs on new logos going up 25% year-over-year and 21% versus 20%. You can see there that we're focused. We're again basically driving more new logo ACV dollars per logo there. We're happy about that and, you know, we'll continue to have that focus. Again, you know, we'll continue to look at new logos and, you know, adjust comp plans. We always do that more outside of the comp plan, more spiffs and bonuses. We're always moving those around a little bit to reflect what we need to do in the business, and we'll continue to do that. I think the other question you had was Q2 and what that looks like potentially from a new logo perspective. The only thing I can tell you is that I believe every Q1 to Q2 new logos have increased. We'll see how this Q2 plays out. Every other Q1 to Q2, we've seen an increase sequentially in new logos. Okay, thanks for the details on that. That's quite helpful. Can I ask you on free cash flow? I mean, you're almost breakeven even this quarter in fiscal 1Q. So why is the guidance still that you'll get to breakeven by the end of the fiscal year or by calendar second half of 2022? Or what are the dynamics happening in free cash flow over the next couple of quarters? Sure. You know, clearly this performance and the performance over the last couple quarters gives us, you know, more confidence in, you know, our projection of the second half of the calendar 2022 to reach free cash flow positive. Again, you know, we've done an outstanding job on two fronts there, linearity and collections. The combination of those two things are really, you know, a killer from a free cash flow perspective in a positive manner. This quarter we hit both of them really nice and collections were great. If you but go back to a year ago, you know, we brought AR down, I believe somewhere around 35% year-over-year, while billings have gone up 20%. We can't continue to keep that type of performance. We'll continue to do very well on both those metrics. In Q2, just because we expect increase in just total billings, naturally AR is gonna go up a little bit, so we're gonna pump a little bit back into the working capital. That's gonna use a little cash. Then, you know, that kind of bounces around. Again, this combined with the, you know, overall performance of the business just gives us, you know, more confidence in that, again, the second half 2022 calendar, our projection of reaching, free cash flow positive. Got it. Thanks for the details on that as well. Mm-hmm. If I can just sneak one more in. I wanted to ask you about seasonality of ACV billings in the sense that, I guess you talked about Q3 being down 3%-4% sequentially. I think in the last earnings call you talked about Q4 being sequentially up primarily because of the renewals business. I wanted to ask you, as that renewals business grows, should we expect that seasonality to become more pronounced, like would Q3 be, you know, lower more sequentially in the coming years and then, Q4 sees a more expanded recovery or not? I just wanted to get your thoughts on how the ACV billing seasonality trends as your renewals business increases. Thanks. Yeah. Yeah, it's a good question and it doesn't really change it that much. The only reason why we're seeing a pop up in Q4, it's just the initial wave, if you will, of renewals coming in. There's nothing magical about Q4. At this point, we're not, you know, co-terming a bunch of stuff to make sure it goes into Q4. It's just where the ATR resides. They are available to renew on kind of the, you know, the initial flow of renewals. This isn't a change in seasonality, it's just how the renewals are flowing. Eventually, you know, once we get into a rhythm here with renewals, that kind of starts to even out and you know, you'd see a natural progression upwards in a little bit more linear manner, probably. Great. Thanks again and congrats again. Sure. Your last question is from the line of Erik Suppiger with JMP Securities. Your line is open. Yeah. Thanks for taking the question. Congrats on a good quarter. I'm curious about hardware constraints. You had said they didn't have much impact in the quarter, but I'm curious if your hardware partners have some of them been constrained and customers are shifting from one platform to another, or have you been pretty free of any constraints across all of your partners? No, I would say, Erik, that's again, a good question. We've certainly seen customers having to pay more attention to managing their hardware, supply chain for sure, right? They can't get, you know, what they need from one vendor, they go to another vendor and try to get what they need, right? Definitely the fact that we've got some flexibility in terms of hardware choices, helps us bridge the gap or deal with the situation. Our customers as well get to leverage a variety of commodity servers, right? At the end of the day, the hardware that our stuff runs on is the standard servers and so they have a lot of choice. They will certainly pick one increasingly, they might pick one that's available versus one that may be from a preferred vendor for that. So I think the customers definitely are paying more attention to managing their supply chain for the hardware and we see that. Like we said earlier in the call, it hasn't really impacted us from a software perspective in any way yet. Do you anticipate, or did it get worse during the course of the quarter in terms of the constraints and what do you anticipate in terms of constraints through the end of the year or through early next year? I mean it's not for us, Erik. I mean, I think for us it's been essentially we've seen some pull, some push. For the most part, the business impact has been minimal. Now, it's hard for me to predict here. Clearly, there's significant supply chain constraints out there in the hardware space, no doubt about it. We're comfortable with our second quarter, I can tell you that for sure. We'll continue to monitor the situation here as we go by. Of course, you saw that we provided annual guidance as well, and we have confidence in our ability to go hit those as well. Okay. Very good. Thank you. If there are no more questions, we will now end the call. Thank you everyone for joining. This concludes today's conference call. You may now disconnect.