Nutanix, Inc. (NTNX) Earnings Call Transcript & Summary

Okay. Okay. So I'll just pick up on a point you made that, Tarkan. The ROI figures are quite impressive, 9 months payback time. Can you give us more detail as to where those savings came from? Was that on the cost of the hardware, the software, the management, the support?

Yes, multiple dimensions, right? Support is part of this, obviously, cost of hardware, obviously, the integration of multiple components from server, storage, compute, network coming together with some of the automation software on top of what makes this easier for our customers to consume. And obviously, services at the end, both presales and post-sales services, customization, integration and also, look, we're not doing this alone. Vik knows well. Vik is actually traveling, doing this probably overseas. He's meeting with partners, we are constantly working with our SI partners, the seller partners, distribution partners, solution provider partners, [ ISE ] partners like Citrix and Red Hat. Our GSI partners like Wipro, TCS, InfoSys, Accenture, making sure customers have strong outcomes end to end for the entire engagement model. And by the way, these are not just numbers that are coming out of it. We've done a lot of analysis with our current customers and prospects about some of these results. And some of these actually we share on our website, both on supermicro.com and nutanix.com. I welcome everyone to come in and check out with some of these figures and how we're reaching them.

So one thing I wanted to comment on here is talking, so how many applications are actually currently supported on Nutanix?

Look, the number is countless right? I cannot even count because we are the de facto platform both of us, right?

Exactly. So the reason I'm basically asking the question that way is because if one were to have individual platform for each of those applications and just imagine how much that hardware cost and how much the service cost and maintenance and everything is -- it's just going to [ balloon ], right? So the whole idea about this hyper convergence and how Nutanix actually pull all these different partnerships together to provide these applications to the customers, that is where the real savings and the ROI coming into picture. When the -- hardware point of view, from Supermicro side, we do our best in terms of getting the most efficiency and performance out of it. But ultimately, the big savings comes from the software and service and all those expenses. This is where I think when Nutanix mentioned that, okay, you are going to recover the cost in no time and you are able to reduce your ROI by like 80% or 90% quarterly, but all these things basically come from that.

Okay. All right. And tell us a bit more about how you work together. This is joint marketing, joint support, you certify each other's solutions for operation with your own? What's going on?

So... go ahead. Go ahead, Tarkan.

Maybe it's easier. From my end, at least, look, I've been personally partners with Supermicro for more than 2 decades. Over the past few years, and especially in the last 10 years, basically Nutanix built its business around Supermicro. Supermicro has been our key partner, most strategic partner for a decade to build the entire solution architecture, so to speak. So the partnership is all over the world to mention from go-to-market angle to manufacturing, supply chain, architectural design and obviously join R&D and not only for hardware to hardware but also provide our software and automation capabilities on the hardware-joint certification. And as Vik said, it is not only us, the 2 companies. Bringing the right channel ecosystem around this because it takes a family to succeed with our customers and making sure things are based on open systems. So our reseller distributor, ISV, GSI, telco, cloud partners are all part of the love here. And that is the reason the combined partnership -- the combination of these 2 companies coming together not only in one dimension, but multiple dimensions were a big differentiator from sales and marketing to R&D, to engineering, to design and to services, both pre sales and post sales. All those things make this a better solution for our customers with better outcomes as we discussed earlier.

Okay. Sorry, yes, go ahead.

Yes, yes, sorry. I think the -- on the hardware front, what we have done is Nutanix as they start looking at what would be the next-generation features and functionalities that they want to bring, what kind of application that they want to deliver to the customers, that basically drives the requirements by the platform. And as we start developing the platform, like, for example, the upcoming let's say, Sapphire Rapids from Intel, it hasn't been launched yet, but we've been working with Nutanix for like almost like 9 months or 10 months in understanding the requirements for what would be needed and whether it's a single socket or a dual socket and how much memory is needed, whether it can be making use of DC-persistent memory, what kind of IO would be needed, what kind of NVMe and storage capacity would be needed. Whether there would be a need for any kind of accelerator because of the AI workloads that are coming up. So these are all the things that we look into and define the features for the platform. And the best part of it is that as Supermicro starts looking into all these standard platform architectures, Nutanix actually helps us and pushes us to push that edge basically take it to the maximum performance, maximum efficiency, maximum density you think about whatever the best that we can derive out of these platforms. They challenge us. And the same is the case with us in terms of, okay, if these are the features and functionality needed, why would certain things be needed and whatnot. So the collaboration goes from a feature definition to platform requirements to the schedule of what needs to be done and when it needs to be enabled from a sample state to production schedule. So this is like each of these platform releases, we are kind of going in lockstep process. And it has been the case for at least the last 4 generations, if I recall. And every time it actually gets better and the relationship gets deeper as we try to tackle more complex platform -- platforms and try to solve the complex problems.

Okay. All right. And the -- as we go forward, obviously, at the moment, there's a lot of momentum behind hybrid cloud and multi-cloud, and people mixing it up with on-premise and off-premise architectures depending on their requirements. Do you see that continuing as it is? Is there any going back to on-prem or solely into the cloud? Was it very much a hybrid approach, well, for us as far as the future can see, however, that long that is?

Look, we need to talk about from our perspective, I'm sure Vik has his own views on this as well. As 2 partners, we see hybrid multi-cloud is basically a reality. And 1-year trend or 2-year trends. We believe customers, enterprises, both in public and the nonpublic sector -- private sector are looking for efficiencies. And they want to be able to run their applications, build their applications, manage their application securely wherever those applications behave the best and most optimal. So from that perspective, we have many joint customers like Mercedes-Benz, Total oil company. And we have a federal government that we do tons of work with. We have the telco organizations. I was just spending some time with a U.S. seller in Chicago, one of the leading mobility companies. They chose our platforms together because they want to be able to run those critical applications anywhere they want to and their developers want to build new applications anywhere they want to, where ever that's most optimal for their business is. So in that context, it's not like on-prem is going to go away or off-prem is going to go away or coming in and taking it away. It's basically an and. It's not an or. Meaning you're seeing on-prem deployments, off-prem deployments, those off-prem deployments sometimes happens to an ISV's cloud infrastructure, sometimes to a telco cloud infrastructure like SingTel. Sometimes happens through a SI cloud infrastructure like Wipro virtuadesk, which is their Desktop as a Service cloud service that Wipro provides. Infosys, TCS, Accenture, they have their own cloud services. And then obviously, all these service providers. We have a new service provider ecosystem partnership model, which we have 100-plus ASPs working with us and Supermicro providing local cloud services in respective regions like in India, China, Japan, through these uniquely defined local companies and obviously the hyperscalers, with Azure, AWS, GCP and others. So we believe the combined platform here, Nutanix and Supermicro has a de facto optimal solution for those application developers to develop applications, manage those applications through there ops teams and secure those applications with their dev SecOps and IT SecOps teams anywhere they want to. And that's the beauty of this. Wherever the applications and data move, we are there for the customer to provide the best platform for them to do so.

Okay. You see that too, Vik, is it an any app, anywhere type of approach, which is going to prevail?

So Tarkan started off with the word efficiency. I think that summarizes this the best. At the end of the day, customers want to have a solution that is going to be the most optimal and efficient for running their business. And sometimes the pendulum swings, right? I mean, you think about like going into public cloud service providers will actually be cheaper, but then now getting the data back is more expensive and on-prem is difficult to deploy. And at the end of the day, the approach that Nutanix is taking, an approach that to the point that you are talking about this whole hybrid multi-cloud, I think this is going to be the dominating way of the growth going forward because as people start deploying this -- the new infrastructure and new services that they need to provide to their customers, they need to look at what would be the best. And they look at it and say, like, if they were to take a piece of hardware and then go into the old method of doing everything by themselves is one way to do that or throw everything into a public cloud and say, like, okay, you know what, whatever the price that it is I'm going to pay. But there's another thing that you just mentioned, whether it's difficult economic conditions or not, ultimately, companies look at it, okay, the speed to take something to market that is going to be extremely important. But how we do that while we keep the checkbook in check in a way, right? So ultimately, it boils down to the economies and the efficiency in how you do that and how much time you save and how quickly you get things done. It's a combination of all this that is going to drive. And the overall whether it is public or private cloud, on-prem or off-prem, a combination of it is not going to direct the future.

Okay. All right. Well, thank you both. So we've heard a lot about the technology and the portfolios and market demand and the economy is involved. But we're running out of time. So as a way of closing off, let's delve a little bit more into the sort of character of your 2 companies I've seen. So Nutanix, for instance, has got a very alliterative corporate philosophy of hungry, humble and honest. So Tarkan, explain what you mean by that? And particularly, how it impacts the way you deal with customers?

Yes. Look, thank you for the close as such. Look, from our funding years with Dheeraj Pandey, Mohit and few other original founders, that was the philosophy and it's a beautifully designed philosophy around entrepreneurial nature of the business. Take no, not as an answer, make sure find a way to help the customers and be hungry about it. And obviously, with all the success, don't lose your sense of gravity. Stay humble. Because humility gives you more opportunities to succeed more. So you are always on your toes and you're paranoid and you are doing the right things for the customers. And obviously, the honesty is critically important because if you're not, you're not going to improve. You're going to fool yourself and on you. And the key point in this in tying all these things together and which is a very similar philosophy that Vik and Charles and Sandy and Don all the leadership at Supermicro instill is, is both as 2 companies, super focused on customer-partner experience and intimacy with our channels and all the ISP, SI and cloud partners that we mentioned earlier. I know Vik is nonstop visiting customers and partners all the time. And as I said, it's not his job, he's doing this call probably on the road in between meetings, and same for me. And at the same time, doing all that intimacy with differentiated IP. It has to be different. It has to be unique. It has to be patent driven. It has to be given something that the customers are not getting from somewhere else and that is the secret sauce. Our joint hardware-software service differentiation, with our patents, with our unique approach and super NPS scores combined. And lastly, obviously operational excellence. We can do all these great things, stay humble, honest, driven, entrepreneurial. But at the end of the day, we need to be operating. We need to be financially disciplined, and we need to have the best hiring, best -- keeping the best talent in the company, making sure legally, financially, operationally, we're tight. And in these difficult times to make sure we're cash driven managing our OpEx and CapEx carefully and grow our businesses in a sustainable way. So again, customer-partner intimacy, making sure our key differentiation is there and always there; and then thirdly, operate with excellence. I know those are the pieces that I would say that defines both of our companies in some shape or form.

Okay. Thank you for that. Thank you, gentlemen, both. I'm afraid we've run out of time now. So all that's left for me to do is to thank the audience for watching. Thank you again very much to Tarkan and Vik for your insight. Otherwise, that's it from us for now. So goodbye, and we'll see you next time.