Everyone, welcome again, back to day one of BofA's Global Tech Conference. Delighted to have you all here. I'm Wamsi Mohan. I cover IT hardware and supply chain here for the bank, and happy to welcome Nutanix on our stage today. We have CEO Rajiv Ramaswami. We have also Rukmini Sivaraman, who's the CFO. And both of you, you kind of had a tremendous run, actually, at Nutanix of sorts, right? Like, you come in, and you've really changed sort of a lot of things you put into motion that have helped the company achieve sort of this new direction, and we're excited to have you here. So welcome. Thank you, Wamsi. Thanks for having us here. Yeah, absolutely. Thank you. Thank you. Well, there is a lot to talk about, but I think the number one thing that people are, have been kind of focused on is the change in the marketplace because of what has happened with the acquisition of VMware by Broadcom. And you spent a lot of time at VMware, Rajiv- Yep. So you, you have some real perspective here. So would love to hear sort of what, what has been going on in the marketplace, because I think people have obviously warmed up to the opportunity that this presents Nutanix, and would love to like, hear your characterization of the opportunity. Sure. So, yeah, I think Broadcom has made a number of changes after they closed the acquisition and largely following the playbook that they've done with their other acquisitions in the space. Now, what that means for customers, companies around the world, you know, VMware has about 1,000 customers or so, of course, concentrated. There's fewer larger customers there, but they have to look at their risk, and they have to look at whether they want to be long-term with VMware going forward or not. So that's opened the door from a pipeline perspective. As you look at, if you're a VMware customer and you're looking at what to do, I would say there's four options. You stay with VMware, and at that point, you have to deal with whatever pricing you have to get and whatever support you can get and, whatever roadmap is going to show up or not. Then you've got Nutanix. We are an option. You can go into a container platform and containerize all your applications, or you can look at the public clouds. I think those are the options, and all of them require some work for the customer, but of which the Nutanix platform is the easiest migration option. Everything requires some migration, but the Nutanix platform can run all their existing applications pretty much comparably to VMware without requiring any changes to the application layer. In other words, it can be an underlying infrastructure change. Everything else continues business as usual, right? Whereas if you've got to containerize, you've got to go then take, put developers to work on it, and in a lot of cases, there's no other value to containerizing an existing application. There's a lot of value in building a new application as containers, so that's more work. Migration to the public cloud is also more work, right? So those are the options in front of customers, and we've seen clearly as a result of that, a significant interest in terms of pickup from customers interested in engaging with us. Now, I think when you get to the reality of what this looks like, we've always characterized this as a long-term, multi-year tailwind. And the reason is, first of all, many customers have multi-year deals already in place with VMware, so that takes time for them to... Yeah, they have time, right? They don't have to go do something tomorrow. In fact, many of them signed three-year deals or five-year deals just before the acquisition closed. The second is, in most cases, a migration out of VMware to Nutanix, the platform requires a hardware refresh. And so this also then has to do with, okay, when is my existing hardware going to be depreciated off my books, and when can I afford to go buy new hardware? Then, of course, they have their own budget cycles, and they have their own priorities and so forth, right? So, so these things take time, and, I think that's why we say this is a long-term, multi-year opportunity for us. The good news is that we have, we know how to do these migrations. We have been doing a lot of these, over the years. In fact, we had our. NEXT conference two weeks ago, where many customers were up on stage, talking about their migrations and how they had migrated off. So, happy to give you very specific examples if you like, but several of them are pretty vocal, and it kind of also depends on what they were migrating from and where to. One example I talked about publicly, let's say the CIO of Computershare was there, talked about... They're an enterprise company. They do a lot of these, or whatever you call, all the stock transactions, right? And so for them, they're doing a full-scale migration out of VMware into Nutanix, and they aim to complete that in a year. It's a small, medium-sized environment, the way I would put it. 24,000 VMs is what he's talked about, and they're going to do this all in a year. But, and, and there, I think they're pretty clear who they want to do business with and so forth. But it's not so clear-cut for a lot of other customers, right, who have perhaps more complex environments, who have these other constraints that we talked about, which is why I come back to saying it's a long-term commitment. Yeah. How should we dimension the size of this? And when you think about the opportunity ahead of you, how would you segment that by, you know, I mean, I think VMware or rather Broadcom has had, historically had a focus on, like, top 500 customers- Yeah. After doing a deal, right? So how would you characterize sort of the TAM at those top 500 and then beyond the top 500? Yes, those are both very good questions. I'll give you somewhat qualitative color, but on the TAM first, overall TAM, look, we've talked about us being in a $76 billion TAM. A good majority of it is what I call three-tier. So which means servers, virtualized servers connected to third-party storage. Yeah. We've been eating our way into that and displacing legacy architectures. I think what this particular transaction will do from a Broadcom VMware perspective is help us further accelerate our, you know, conversion of some of those opportunities. That's the way I look at it overall, right? Now, I think, again, if you sort of dive down into the next level, I think if you look at the VMware install base, the vast majority of it is actually three-tier. There is some HCI, and for the HCI portion, it's more for a like-for-like migration, although not 100% hardware compatible, but more hardware compatible than this left side, which is this big VMware three-tier opportunity. And the three-tier opportunity is the one that I think, again, like I said, takes the time and so forth. Now, then I think the sort of the other thing is the complexity of the stack itself. If it's just a simple hypervisor, we can do the migration fairly easily, fairly automated. If large customers have done a lot of integration on top of it, I think this is, this takes more work and more professional services work, which we are happy to do ourselves or also work with our, our integration partners. Now, going to the more specific large versus small kind of question that you asked about. So I think, we have been recognizing for even prior to this Broadcom opportunity, that more of our TAM is actually in the larger customers, and we have been tilting our go-to-market to go focus on those, right? So we have a three-tier approach to our segmentation. Tier one being the top enterprise, tier two being, medium enterprise, and going down to commercial, and then tier three being smaller customers, and we've largely channeled that in the, the last year for us. And while, so in those larger customers, and we see a bigger chunk of the TAM there over time. And we have, like I said, independent of Broadcom, we've been working our way towards that. And now I think the larger customers generally have more complex environments. And by the way, this is one of the reasons why we've talked about how our deal sizes have gotten larger, right, in the pipeline. And those larger deal sizes typically result in longer times, to close them with some more variability. Yeah. I would say perhaps more of the TAM, generally in the higher segment. When you think about, I don't know, if we're reading too much into this, right? But as you look at the last several quarters, you've spoken about some of the macro impacts that have been- —a headwind for the business. I think last quarter, you definitely pointed out that there was some dynamic pricing that was taking place in the marketplace. Would you say that the competitive environment has changed or is evolving in some way different than maybe what you thought, like, 6, 9 months ago? It, it is evolving, I would say, because I think over the last four or five months is when Broadcom has made all those pricing changes, and I don't think it's settled down because I think those changes are very dynamic, right? They've announced a lot of things, and then they're testing to see what's happening in the customer base. And of course, we, as we would expect at that point, some of this is dynamic and it's evolving. I don't think it's gone into a steady state yet. It's still early, right? So I think, it'll probably take a few more quarters to get to a steady state. But would you say that as part of that change or your thinking, that either the TAM or your pipeline has changed in some way? I don't think so. I think our pipeline has actually continued to grow, and I don't think the TAM has changed. If anything, I would say, again, you know, we have been opening up more of the TAM with some of the recent announcements. For example, we just announced a partnership with Dell, where for the first time, we are going to be supporting a third-party storage array, which is a deviation from our typical HCI mindset with our hypervisor as a standalone entity. Now, that opens up a bigger portion of the TAM for easier replacement because now this would be a drop-in replacement for a hypervisor without having to go to a new architecture. But I would also say that this is a smaller sale for us. -compared to selling the whole portfolio. So easier insertion, opening up the TAM faster, but getting to a smaller portion of the TAM and hoping to convert that over time, as customers are willing to modernize and go to a newer architecture. So that's an example of how I would say we have been trying to grow our TAM. Okay. Okay, that's helpful. If I can add something there, Wamsi. Yeah. What's changed, I think, is that we have a larger mix of bigger deals in the pipeline, as we've talked about. Yeah. That has changed in the last few- Yeah ... in the last few months. And that, we believe, is also leading to this dynamic of just things taking longer than we had expected, right? When you go back a few months. So that's different, I think, today versus a few quarters ago. Okay. I think, Rukmini, you've mentioned that your new and expansion ACV was tracking a little bit lower than what you expected, maybe at the start of the year. Yes. In totality, your ACV billings have been very good. Yes. You've been overachieving in totality. So I guess to reconcile those things, your renewals are obviously doing quite well. Last year, you had a lot of co-terming that kind of drove this uplift in, in renewals. So how should we think about this year or next year in terms of progression of relative to maybe what you had laid out at Investor Day, how these renewals are tracking? So the renewals have outperformed our own expectations from the beginning of the year, and we've said that's because of three reasons. So one is better economics at the time of renewal, and we tend to try to be reasonable about this, but the team has executed well in a more disciplined way, so that's helped us. Second is better on-time renewal performance than we had expected, and the third piece is what you alluded to, which is more early renewals and co-terms than we had predicted at the beginning of the year. And then to the third piece, specifically to your question, Wamsi, I think early renewals we view them as generally a good sign, right? That the customer... Often it's customer-driven because they either have a budget reason to do so or they know they're going to renew on Nutanix, so why not go ahead and do it? We typically get the cash upfront, but the revenue is typically at the time it's due. Right, so I want to point out that nuance, but we welcome those, especially if it's good economics, right? So we don't want to give away value to go get in early, but if it's coming at good economics, the customer is happy, we're of course happy to retain them. Now, we did have some of that last year, as you point out, and what we had said was, if you look at our available to renew pool, ATR, or think of that as renewal pipeline, we had said that that is expected to grow in 2025 relative to 2024 and grow at an accelerated growth rate. Based on our current view, that is still the case. We didn't comment on the magnitude of it relative, but, you know, we did say that some of the outperformance this year is because of early and co-terms. So in general, we think that's a good thing. Similar on the co-terms, customers like it because now they're converging all of their dates into one. Simplicity for them. It's simple for us because we're doing fewer renewal events than for our renewals team. So that, too, is something we like, but those can be harder to predict because the customer has to have the budget, right, to go and quote them a bunch of things. So yeah, overall, I would say I think our renewals business in general provides a good foundation for us. It's more predictable, of course, given we have our GRR is quite high, that it's more predictable and allows that, a nice foundation for our billings. If I could follow up on one of the things that came up in the quarter was that, you got this OpEx benefit from a partner payment. Can you elaborate on what that was specifically and maybe provide some color around that? Yes. What we said was we are getting about a $40 million benefit in OpEx, as you said, over the course of this year. We expect that to be non-recurring, so, and not expected to recur next year. That is in the R&D line, and so we didn't name the... It related to a partner. We said we didn't name the partner, Wamsi, but think of that as, it's in the R&D line. So as you can imagine, think of that as sort of a joint development that we're doing, with one of our partners, and so we're getting compensated for that. So absent that, our R&D would have been $40 million higher this year, is how to think about it, and therefore, next year, that is, will be a headwind for us going into it. That's a pretty unique arrangement of sorts, right? Like, I mean, you must love that kind of arrangement, that you're getting to get this nice like investment. Well, I mean, this is one time, right? Yeah. I mean, it's not something that recurs typically or something that we typically do all the time. Yeah. It's a symptom of, you know, how well we're doing with one of these partners. Yeah. When you think about the opportunity here, right, like in some ways, when you look at the Cisco opportunity, for as an example, right? Like that is interesting, but in the scheme of like your TAM, it's actually not that big in some ways, right? Would you agree with that statement, and where would you say sort of the partner opportunity can be a lot larger? And I have a name in mind, too, but like, I'm wondering. Well, let's start talking maybe about Cisco and Dell. Yeah. Okay. That was the other one that came to mind. Yes, sure. Yes. So, look, Cisco, I think, obviously a big company, great company. I worked there for many years. Yeah. And their footprint in the server space is small, relatively. Their market share is small. They also have a HyperFlex install base, which is their product in the space that we are in. They've since end-of-lifed that product, and they're reselling our product. So the opportunity with Cisco, I classify as twofold, okay? One is, of course, replacing their HyperFlex install base with our product. That's sort of... But that's a small number, relatively speaking. Right. But the bigger opportunity is Cisco has commanding sales presence across so many countries, so many accounts globally, and they also tend to do much larger, sort of, you know, bigger solution sales. And to the extent that we can be part of that, to me, the opportunity is, the bigger opportunity is not the HyperFlex installed base, but it is the ability to capture new customers at a scale that would, you know, be accelerated for us. Sure. So that's the promise of the Cisco relationship. What we've seen so far, it's still early days. They're ramping up with their sales force. Their sellers are compensated fully on it as a bit with a Cisco product, and we've seen some good new logos come through, but the numbers are still small for this year, as we indicated, you know, when we got into this relationship, and we expect it to be a bit more significant for us in FY 2025. So that's Cisco, and the good news with Cisco is, while the share is small, they're all in on this one. Yeah. More recently, two weeks ago, we announced our partnership with Dell, or an expansion of our collaboration with Dell, I should say, because we've been working with Dell for a long time. Sure. There are two elements to that collaboration. The first is Dell is also going to be reselling an appliance with our software on their server- Yeah ... HCI appliance, and that will be available in the market later this year. Okay. To be fair, our software already works with their hardware. Yeah. Customers, and so customers just buying them separately and putting them together. Now, Dell will sell them a complete offering. Yeah ... and their sellers will also be compensated on it. Now, from Dell's perspective, I look at this as saying Dell, you know, again, I would expect that Dell sells their own storage, right? So clearly, their own products, and then they have options from us and options from VMware. Right. So they'll probably be able to offer choice in the market. They, of course, have a large presence in the market, but we are going to be one of many offerings that they have in their portfolio. Sure. And then the second part is this, I think we covered this a bit- Yeah ... standalone HyperFlex. Yeah. With Dell products. Right. Which will come to market only sometime next year in 2025 and won't have, it may, will start impacting revenue, but that's possibly in FY 2026. Yeah. But on the HCI opportunity with Dell, that's actually a fairly large opportunity, given sort of their market share. But, I mean, you have obviously significant market share there, too. Yeah, certainly. I mean, I think we are. It's, it's certainly a positive for us, right? And of course, we have a significant market share ourselves in that market- Yeah ... and I think Dell could help accelerate that. Yeah. But again, I just want to bear in mind that Dell has got lots of choices, right? Sure. This is one of many that can be bought, but we're glad that Dell is now able to go sell it- Yeah ... and, have a full-fledged offering based on their banks. So a full 18 minutes have passed, and we haven't mentioned the word AI yet, so we gotta, we gotta get there. Maybe, maybe talk a little bit about what your GPT- in-a- Box solution is, and what are you, what are you, what are your expectations around that? Yeah, I think enterprises, if you look at AI today, a lot of AI is in training large language models and massive compute clusters, largely in either the hyperscalers or in specific GPU clouds. The enterprise journey is just starting with what I would call enterprise AI. And that is about running AI where their data is, and really using it for inferencing for specific needs. And so far, I would say that's very early stages. But companies have to run AI ultimately wherever the data is. And of course, some of the data will be in the public cloud, and they can run both the training and the inferencing right there, but a lot of the data is not. Also, a lot of data is being generated outside of the public cloud in terms of the data that you need to do inferencing on. For that, again, therefore, your AI has to run where the data is fundamentally. Data gravity has a big impact on your AI algorithm. So we think there's a significant growing market over time for running enterprise AI in a secure, private setting that protects your data, your IP, right, or company's data and company's IP. That's what GPT-in-a-Box is for. What we do with that is very simply provide a turnkey platform for companies to run their AI applications without having to worry about all the nuts and bolts of what it takes to get that set up. Right. So it's our infrastructure platform, the same infrastructure platform. We integrate a number of the ML operations tooling that's needed. And with our most recent release, GPT 2.0, which I'm quite thrilled with, the announcement we made two weeks ago, we integrate a lot of the workflows and enterprise-grade security access control to help a customer go to a, a well-known repository, either a Hugging Face or an NVIDIA repository, download a large language model of their choice, whatever it may be, Llama, Mistral, whatever they like, connect it and tie it to their infrastructure endpoint, which is running GPU. So our software platform running on a server with GPUs, automatically tie all the workflows automated, and then provide an API, standard API, to an application. So it really becomes a turnkey platform for people to run their AI applications. It's early days for us, but it brings this whole notion of simplicity. We want to be the platform for modern applications for companies. Of course, today, we're already a platform for all the VM applications. For our future, it's all about modern applications and being the platform for that, and modern applications largely are going to be containerized. There's probably going to be a doubling of applications in the enterprise over the next 3-4 years, and a lot of the new applications are going to be container applications, and we have a platform that runs them very well. In fact, we announced our Kubernetes portfolio at our.NEXT conference two weeks ago, and it's a three-part portfolio that allows, at the end of the day, companies to build a container application, run it in a multi-cloud environment, wherever they'd like to run it, along with a set of data and platform services that make these applications truly portable. Build once and run it anywhere. And so we are excited about that as a future direction, and of which AI is a great example of the most modern of modern applications, right? Which it has all those attributes, right? Most new AI applications are Kubernetes-based, containerized. They need these data services. They have a lot of data that they have to manage, and so it fits that bill perfectly. Yeah. Yeah. We had also an earlier session with Red Hat CEO, Matt Hicks. Matt, yes. Yes. And, Good friend. Yes, and he was very complimentary of the Nutanix partnership. I say thank you, Matt. Yeah. We are complimentary of that partnership, too. What would you say the opportunity there is for Nutanix? Yeah, I think again, we are largely complementary with some overlap, but if you look at customers, they can deploy a Red Hat OpenShift platform on top of a Nutanix Cloud Platform. And Red Hat has a full stack for developers, facing developers, for them to build these applications. And then we have a platform to run all those applications and manage them. And both of us have a view of being hybrid and multi-cloud. You know, we also have a vision of customers being able to run these applications wherever, right? In any platform, anywhere, and it fits the vision. And we can also complement the Red Hat offering with our data services offering quite a bit, right? Our ability to offer a consistent set of storage services that will enable companies to build these more complex modern applications, run them anywhere. So we have that. That's complementary. The platform services that we have, starting with our database service, is also very complementary to what Red Hat has. So together, of course, you know, our platform's quite powerful for the enterprise. Yeah, absolutely. Maybe just switching a little bit to free cash flow, Rukmini. I think you alluded to some one-times that have been a benefit to free cash flow in, in this fiscal year. How should investors think about the quantification of that, and what is the implication of that to next year's free cash flow? Yeah. So I'll say what I can now. We haven't guided, as you know, Wamsi, and so we'll do that on our next call when we guide our full year fiscal year 25 free cash flow. So, this year, you know, we're really happy on our last week's call to be able to raise our free cash flow guidance by $100 million, and we said a few things about that. One is we did book this fairly large, unusually large for us, eight-figure ACV deal. It was booked in Q3, but it will be billed and we expect to be collected in Q4. And as you will recall, we collect all of our cash upfront, even for multi-year contracts. So that was definitely a significant factor in our ability to raise our free cash flow number by as much as we did. And then I think the second piece that we've talked about is, to your point earlier on the, on the partner payment, the $40 million, that's in OpEx, about $30 million of that is in free cash flow as well as a non-recurring payment. So that's the second piece we called out. And maybe thinking about next year, the one other additional comment I will add is, if you think about our expense profile over the years, if you go back fiscal year 2021 to 2023 and look at our OpEx number, they were more or less flat. We really, you know, chose to keep it there while we completed some of our subscription transition and things like that. In 2024, this fiscal year, we made a deliberate choice to invest, to start to invest more, and you can see that in our implied operating expenses, even though we're taking margins up quite significantly, actually, both on free cash flow and operating margin. So, as a result of that investment, we have hired people along the year, and all of the folks that were hired in the second half will all be full year next year, right? So that from a run rate perspective, you should assume that our starting point for 2025 is higher than... it was in 2024. So that's the other piece that I'll say that folks should keep in mind. Maybe more generally, our overall philosophy, you know, Rajiv, I know, is very aligned to this, but our overall philosophy is on driving towards a sustainable sort of Rule of 40+ company. I think you've seen us make significant progress towards that- Yeah. Over the last few years. So that philosophy itself hasn't changed. Yeah. And more generally on investment, we have to sort of balance this idea of anything that we invest will take a little time for the payoff. So we have to keep that in mind and try to balance them as much as possible. On the other side, we don't want to invest so late that, you know, we miss something, right? So we're balancing those two in the midst of our 25 planning. So that's, that's how we're thinking about it. Again, with this longer-term idea of being a consistently Rule of 40+ company over time. I know you haven't guided fiscal 25, but as we think about this kind of OpEx step up, I mean, if I'm interpreting what you're saying, right, you're also saying that some of this investment doesn't really pay off necessarily in 25. It's a longer-term investment that takes a longer term to pay off, from a top-line growth perspective, whereas some of the investment has to be done earlier in time. There's an element of that, and we're trying to balance that with our overall philosophy, which has been generally, right- Yeah. Like, we need to get to this rule of 40 consistently. So, yeah. Yeah. I just think, I think you should expect that we will continue to be disciplined in our investments, continue to drive both growth and profitability, and like Rukmini said, Rule of 40+, right? Yeah. It's the nature of our business, right? Anything that we add in terms of investment, you know, takes time to return. Sure. That's just natural, and it's just part of our overall planning process. Where is the investment specifically directed to that this sort of, let's say, incremental sort of investment? Yeah. So I'll maybe comment on it. You know, largely, of course, you know, most of our investments is either on the product side, R&D, or on pit. Yeah. Okay? So on the R&D side, I think, we have, you know, again, as Rukmini said, we've had an OpEx flat for quite a while, and we think it's time for us to invest and become... We are here to win, right? Yeah. And we want to be the platform of the future. So certainly in terms of shoring up our core, first of all, doing more with the core to enable opening up of a broader TAM. Yeah. That's something we, I think we have to do now, and we are—there's the opportunities that we're doing some of that. And we announced a lot of this at our.NEXT. And then really focusing on the future, becoming that platform, right? The, the platform for all applications, including the most modern applications, being a multi-cloud platform and being the platform for running AI applications like GPT-in-a-Box 2.0. So, and continue to invest in growing the partnerships. So that's a lot of the R&D incremental investment is focused on that. Okay. And most of it is organic. We do do some tuck-ins. Like last year, we did a tuck-in of, D2iQ, which brought us this Kubernetes platform. Yeah. Right. So that's part one. Part two of the investment is, of course, in sales. We want to capture this opportunity that's out there. We have been moving further upmarket. We have been going aggressively after this VMware opportunity that's out there. And we are seeing the, I would say, the signs of the pipeline there. We are seeing the fact that with our portfolio now, we can command these deals like an eight-figure deal, right, with a Fortune 50 company, and deliver a lot of value to these big customers with complex environments. So we are investing from a sales perspective as well, but again, all in a moderated way to line up with this notion of both growth and profitability. Yeah. The one additional area I might add is around awareness. Yeah. So we've talked about this too, from a marketing perspective, because we've talked about how big- Yeah the VMware install base and so on, and, we are smaller, but we think to reduce when we're here to win, so we want to make sure there's awareness in the market. So we have turned up the volume, and some of that incremental investment has gone towards marketing campaign and brand awareness and things like that, which we think is important to have that mind share. Is there—what, what else needs to be done, Rajiv, to maybe think about the largest of VMware customers? These are fairly complex environments- Fairly large-scale environments. And a lot of these customers have never thought of dual sourcing in some ways. So is there—what else does Nutanix need to do to really say, "We are—we can credibly migrate you off of VMware at, like, scale? Yeah. At a larger scale, maybe. I think we've actually already proven that, right? So we have been doing these migrations for years, and we've automated a lot of the simpler migrations, and for the more complex migrations, we have services. But at the end of the day, I think we've earned our trust to be a partner at the table. We have about thousands of the Global 2000, that's our customers already. Now, I think the biggest change that we are seeing is we typically would land in a small portion, and we would expand afterwards. But now, I think with the portfolio that we have, we can capture a much bigger portion of their wallet share, and we are doing that. I mean, I mean, you know, we, we don't do a lot of eight-figure ACV deals, right? But we did one, and this was our land deal. This was the initial deal with the Fortune 50 company, and there is... You know, again, this is not their full wallet share, right? By no means have we tapped it out. And this particular company is only using us for database workloads. One workload, really. And we have room to expand, right, on top of that. So I think we've earned that trust to be at the table. We've also, you know, honed our go-to-market engine in terms of having deal pursuit teams to be able to go after these larger deals that include cross-functional, you know, executive sponsorship, sales, cloud economists, product and finance teams that work together to go drive these deals. Yeah. No, that's excellent. Unfortunately, we're out of time. 30 minutes is just too short to cover so much. But, Rajiv, Rukmini, thank you so much for joining us here today. Thank you, Wamsi. Thank you. Thank you for having us.