Market Overview

Nutanix Reports Fourth Quarter and Fiscal 2018 Financial Results

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--Drives 66 Percent YoY Growth in Q4 Software and Support Billings
and 49 Percent YoY Increase in Q4 Software and Support Revenue

--Delivers 78 Percent Q4 Non-GAAP Gross Margin as Company Continues
Successful Shift to Software-Defined Business

Nutanix,
Inc.
(NASDAQ: NTNX),
a leader in enterprise cloud computing, today announced financial
results
for its fourth quarter and fiscal year ended July 31, 2018.

This press release features multimedia. View the full release here:
https://www.businesswire.com/news/home/20180830005715/en/

Nutanix Q4 and Fiscal 2018 Highlights (Graphic: Business Wire)

Nutanix Q4 and Fiscal 2018 Highlights (Graphic: Business Wire)

Fourth Quarter Fiscal 2018 Financial Highlights

  • Revenue: $303.7 million (at 77.7% non-GAAP gross margin), up
    from $252.5 million (at 62.6% non-GAAP gross margin) in the fourth
    quarter of fiscal 2017, reflecting the elimination of approximately
    $95 million in pass-through hardware revenue in the quarter as the
    company continues to execute its shift toward increasing software
    revenue1
  • Software and Support Revenue: $267.9 million, growing 49%
    year-over-year from $179.6 million in the fourth quarter of fiscal 2017
  • Billings: $395.1 million, growing 37% year-over-year from
    $289.2 million in the fourth quarter of fiscal 2017
  • Software and Support Billings: $359.2 million, growing 66%
    year-over-year from $216.3 million in the fourth quarter of fiscal 2017
  • Gross Margin: GAAP gross margin of 75.9%, up from 61.4% in the
    fourth quarter of fiscal 2017; Non-GAAP gross margin of 77.7%, up from
    62.6% in the fourth quarter of fiscal 2017
  • Net Loss: GAAP net loss of $87.4 million, compared to a GAAP
    net loss of $66.1 million in the fourth quarter of fiscal 2017;
    Non-GAAP net loss of $19.0 million, compared to a non-GAAP net loss of
    $26.0 million in the fourth quarter of fiscal 2017
  • Net Loss Per Share: GAAP net loss per share of $0.51, compared
    to a GAAP net loss per share of $0.43 in the fourth quarter of fiscal
    2017; Non-GAAP net loss per share of $0.11, compared to a non-GAAP net
    loss per share of $0.17 in the fourth quarter of fiscal 2017
  • Cash and Short-term Investments: $934.3 million, up 168% from
    the fourth quarter of fiscal 2017
  • Deferred Revenue: $631.2 million, up 71% from the fourth
    quarter of fiscal 2017
  • Operating Cash Flow: $22.7 million, compared to $5.9 million in
    the fourth quarter of fiscal 2017
  • Free Cash Flow: $6.5 million, compared to negative free cash
    flow of $6.5 million in the fourth quarter of fiscal 2017

Fiscal Year 2018 Financial Highlights

  • Revenue: $1.16 billion (at 68.1% non-GAAP gross margin), up
    from $845.9 million (at 63.1% non-GAAP gross margin) in fiscal 2017,
    reflecting the elimination of approximately $169 million in
    pass-through hardware revenue in fiscal 2018 as the company continues
    to execute its shift toward increasing software revenue1
  • Software and Support Revenue: $898.1 million, growing 47%
    year-over-year from $609.6 million in fiscal 2017
  • Billings: $1.42 billion, growing 43% year-over-year from $990.5
    million in fiscal 2017
  • Software and Support Billings: $1.16 billion, growing 54%
    year-over-year from $754.2 million in fiscal 2017
  • Gross Margin: GAAP gross margin of 66.6%, up from 61.3% in
    fiscal 2017; Non-GAAP gross margin of 68.1%, up from 63.1% in fiscal
    2017
  • Net Loss: GAAP net loss of $297.2 million, compared to a GAAP
    net loss of $379.6 million in fiscal 2017; Non-GAAP net loss of $101.5
    million, compared to a non-GAAP net loss of $120.7 million in fiscal
    2017
  • Net Loss Per Share: GAAP net loss per share of $1.81, compared
    to a GAAP net loss per share of $2.96 in fiscal 2017; Non-GAAP net
    loss per share of $0.62, compared to a pro forma non-GAAP net loss per
    share of $0.85 in fiscal 2017
  • Operating Cash Flow: $92.6 million, compared to $13.8 million
    in fiscal 2017
  • Free Cash Flow: $30.2 million, compared to negative free cash
    flow of $36.4 million in fiscal 2017

Reconciliations between GAAP and non-GAAP financial measures and key
performance measures are provided in the tables of this press release.

"We ended the year on a high note with a record quarter on many fronts,
positioning us extremely well for the future. We will continue to invest
in talent and hybrid cloud technology while incubating strategic
multi-cloud investments such as Netsil, Beam, and now Frame," said
Dheeraj Pandey, Chairman, Founder and CEO of Nutanix. "Frame increases
our addressable market, brings another service to our growing platform,
and adds employees with insurgent mindsets who will help us continue to
challenge the status quo."

"The company's strong achievement of 78 percent non-GAAP gross margin,
the best in our history, is the direct result of our successful
execution toward a software-defined business model," said Duston
Williams, CFO of Nutanix. "We're also tracking above our target
performance we set using the ‘Rule of 40' framework, demonstrating our
ability to balance growth and cash flow."

Recent Company Highlights

  • Completed the Acquisition of Frame: Acquired Frame,
    a leader in cloud-based Windows desktop and application delivery,
    increasing the company's addressable market. IDC estimates that the
    desktops-as-a-service (DaaS) software market is forecast to grow to $3
    billion in 2021 at a compound annual growth rate of 32%.2
    With the addition of Frame, Nutanix customers will be able to deliver
    desktops-as-a-service from multiple clouds, combining the
    consumer-grade simplicity and web-scale design of cloud applications
    with the functionality of traditional virtual desktop applications.
  • Achieved Milestone of $1 Billion+ in Annual Revenue in Less Than a
    Decade from Inception
    : Grew fiscal 2018 revenue to $1.16 billion,
    excluding $169 million in pass-through hardware revenue eliminated,
    crossing the $1 billion milestone.
  • Expanded Customer Base Hitting Milestone 10,000+ Customers and
    Signed Largest Deal in History
    : Nutanix ended the fourth quarter
    of fiscal 2018 with 10,6103 end-customers, adding 1,000 new
    end-customers in the quarter. Notably, the company passed an important
    milestone, adding its 10,000th customer during the quarter. The
    company also expanded an existing customer engagement by closing a
    deal greater than $20 million in the quarter, the largest in Nutanix
    history.
  • Successfully Continued Transition to a Software-Defined Business
    Model
    : Grew software and support billings by 66 percent
    year-over-year in the fourth quarter. Pass-through hardware billings
    decreased to 9 percent of total billings in the quarter, down from 25
    percent in the fourth quarter of fiscal 2017.
  • Launched 12 Culture Principles Representative of Company Values: Codified
    the company's corporate values with the articulation and launch of 12
    culture principles
    . These principles serve as the foundation for
    how Nutanix employees work with each other, with partners, and with
    customers.
  • Added Two New Executives in Key Functions: Prabha
    Krishna
    joined Nutanix as the SVP of People and Places, and is
    responsible for the HR and facilities teams worldwide. In addition, Ben
    Ravani
    joined as the SVP of Xi Reliability Engineering to oversee
    building and operating Xi Cloud Services as well as serve as the
    General Manager of the Nutanix Seattle site.
  • Introduced New Velocity Program for Scaling Growth in the
    Mid-Market:
    The company launched its Velocity
    channel program
    in June, aimed at accelerating the selling
    processes, incentives, and marketing investments for strategic,
    mid-market focused channel partners. The program provides a
    frictionless experience for channel partners, giving them more
    leverage to grow their business.
  • Expanded its Global Workforce: Nutanix has rapidly increased
    and evolved its operations in India over the past five years and
    recently ranked
    second
    on "India's Great Mid-Size Workplaces 2018" list.
    Additionally, the company continues to increase its headcount in
    Bangalore, Belgrade and Berlin as it further disrupts traditional
    enterprise IT incumbents with an increasingly global workforce.
  • Certified as the First Hyperconvergence-Based Solution for SAP
    HANA®:
    In August, the company received certification from SAP for
    its AHV hypervisor and Enterprise Cloud OS platform as the first
    Hyperconverged Infrastructure (HCI) solution to pass SAP's stringent
    criteria for running production SAP HANA® deployments. With this
    milestone achievement, customers combine the cost and operational
    benefits of modernized IT infrastructure with the scale and
    performance required for SAP HANA. For Nutanix, this presents a
    significant opportunity to broaden penetration in Global 2000 accounts.

Q1 Fiscal 2019 Financial Outlook

For the first quarter of fiscal 2019, Nutanix expects:

  • Revenue between $295 and $310 million, implying software and support
    revenue growth of approximately 40-45% YoY;
  • Billings between $370 and $390 million, implying software and support
    billings growth of 50-55% YoY;
  • Bill-to-revenue ratio of approximately 1.26x;
  • Non-GAAP gross margin between 78% and 79%;
  • Non-GAAP operating expenses between $280 and $290 million;
  • Non-GAAP loss per share between $0.26 and $0.28, using approximately
    176 million weighted shares outstanding

First quarter guidance reflects a faster removal of pass-through
hardware than originally anticipated, accelerating the reduction of zero
margin billings and revenue with the benefit of improved gross margins.
Additionally, the Q1 expected bill-to-revenue ratio of 1.26x is higher
than street consensus of 1.21x, implying an approximate $12 million in
deferred revenue that would have otherwise been in revenue and gross
profit.

1The elimination of hardware revenue is based on the
estimated cost of hardware in transactions where our customers purchase
such hardware directly from our contract manufacturers.

2IDC Worldwide Desktop-as-a-Service Software Forecast,
2017-2021, Robert Young, June 2017, IDC

3Final customer count reflects standard adjustments to
certain customer accounts within our system of record.

Supplementary materials to this earnings release, including the
company's fourth quarter fiscal 2018 investor presentation, can be found
at https://ir.nutanix.com/company/financial.

All forward-looking non-GAAP financial measures contained in the section
titled "Q1 Fiscal 2019 Financial Outlook" exclude stock-based
compensation expense and amortization of intangible assets and may also
exclude, as applicable, other special items. The company has not
reconciled guidance for non-GAAP gross margin, non-GAAP operating
expenses and non-GAAP loss per share to their most directly comparable
GAAP measures because such items that impact these measures are not
within its control and are subject to constant change. While the actual
amounts of such items will have a significant impact on the company's
non-GAAP gross margin, non-GAAP operating expenses and non-GAAP loss per
share, a reconciliation of the non-GAAP financial measure guidance to
the corresponding GAAP measures is not available without unreasonable
effort.

Webcast and Conference Call Information

Nutanix executives will discuss the company's fourth quarter and fiscal
2018 financial results on a conference call at 4:30 p.m. Eastern
Time/1:30 p.m. Pacific Time today. To listen to the call via telephone,
dial 1-833-227-5841 in the United States or 1-647-689-4068 from outside
the United States. The conference ID is 7794736. This call will be
webcast live and available to all interested parties on our Investor
Relations website at ir.nutanix.com.
Shortly after the conclusion of the conference call, a replay of the
audio webcast will be available on the Nutanix Investor Relations
website. A telephonic replay will be available for one week following
the conference call at 1-800-585-8367 or 1-416-621-4642, conference ID
7794736.

New Accounting Standard

The Company adopted ASC 606, the new standard related to revenue
recognition effective August 1, 2017. Prior period information has been
adjusted to reflect the adoption of this new standard.

Non-GAAP Financial Measures and Other Key Performance Measures

To supplement our condensed consolidated financial statements, which are
prepared and presented in accordance with GAAP, we use the following
non-GAAP financial and other key performance measures: billings,
non-GAAP gross margin, non-GAAP operating expenses, non-GAAP net loss,
pro forma non-GAAP net loss per share, free cash flow, software and
support revenue, and software and support billings. In computing these
non-GAAP financial measures and key performance measures, we exclude
certain items such as stock-based compensation and the related income
tax impact, costs associated with our acquisitions (such as amortization
of acquired intangible assets, revaluation of contingent consideration,
income tax-related impact, and other acquisition-related costs), loss on
debt extinguishment, amortization of debt discount and issuance costs,
changes in the fair value of our preferred stock warrant liability,
other non-recurring transactions and the related tax impact and the
revenue and billings associated with pass-through hardware. Billings is
a performance measure which our management believes provides useful
information to investors because it represents the amounts under binding
purchase orders received by us during a given period that have been
billed, and we calculate billings by adding the change in deferred
revenue between the start and end of the period to total revenue
recognized in the same period. Free cash flow is a performance measure
that our management believes provides useful information to management
and investors about the amount of cash generated by the business after
necessary capital expenditures, and we define free cash flow as net cash
(used in) provided by operating activities less purchases of property
and equipment. Non-GAAP gross margin, non-GAAP operating expenses,
non-GAAP net loss, and pro forma non-GAAP net loss per share are
financial measures which our management believes provide useful
information to investors because they provide meaningful supplemental
information regarding our performance and liquidity by excluding certain
expenses and expenditures such as stock-based compensation expense that
may not be indicative of our ongoing core business operating results.
Software and support revenue and software and support billings are
performance measures that our management believes provide useful
information to our management and investors as it allows us to better
track the true growth of our software business by excluding the amounts
attributable to the pass-through hardware that we use to deliver our
solutions. We use these non-GAAP financial and key performance measures
for financial and operational decision-making and as a means to evaluate
period-to-period comparisons. However, these non-GAAP financial and key
performance measures have limitations as analytical tools and you should
not consider them in isolation or as substitutes for analysis of our
results as reported under GAAP. Billings, non-GAAP gross margin,
non-GAAP operating expenses, non-GAAP net loss, pro forma non-GAAP net
loss per share, and free cash flow are not substitutes for total
revenue, gross margin, operating expenses, net loss, net loss per share,
or net cash (used in) provided by operating activities, respectively,
and software and support revenue and software and support billings are
not substitutes for total revenue. In addition, other companies,
including companies in our industry, may calculate non-GAAP financial
measures and key performance measures differently or may use other
measures to evaluate their performance, all of which could reduce the
usefulness of our non-GAAP financial measures and key performance
measures as tools for comparison. We urge you to review the
reconciliation of our non-GAAP financial measures and key performance
measures to the most directly comparable GAAP financial measures
included below in the tables captioned "Reconciliation of Revenue to
Billings," "Disaggregation of Revenue and Reconciliation of Software and
Support Revenue to Software and Support Billings," "Reconciliation of
GAAP to Non-GAAP Profit Measures," and "Reconciliation of GAAP Net Cash
(Used In) Provided By Operating Activities to Non-GAAP Free Cash Flow,"
and not to rely on any single financial measure to evaluate our business.

Forward-Looking Statements

This press release contains express and implied forward-looking
statements, including, but not limited to, statements relating to the
impact of recent acquisitions to our business, our products, our total
addressable market, the integration of recently acquired products,
services, intellectual property and technology, our continued investment
in talent and technology, industry estimates regarding the size and
growth of the DaaS software market, the impact of the Velocity channel
program, our continued geographic expansion, including in Bangalore,
Belgrade and Berlin, our performance under the "Rule of 40" framework,
plans and timing for, and the impact of, our transition to a
software-defined business model, and anticipated future financial
results, including but not limited to our guidance on estimated
revenues, billings, non-GAAP gross margin, non-GAAP operating expenses
and non-GAAP net loss per share for future fiscal periods. These
forward-looking statements are not historical facts and instead are
based on our current expectations, estimates, opinions, and beliefs.
Consequently, you should not rely on these forward-looking statements.
The accuracy of such forward-looking statements depends upon future
events and involves risks, uncertainties, and other factors beyond our
control that may cause these statements to be inaccurate and cause our
actual results, performance or achievements to differ materially and
adversely from those anticipated or implied by such statements,
including, among others: failure to develop, or unexpected difficulties
or delays in developing, new products, services, product features or
technology in a timely or cost-effective basis; delays in or lack of
customer or market acceptance of our new products, services, product
features or technology; our ability to successfully integrate acquired
companies, employees and intellectual property; delays in the transition
to focus primarily on software-only transactions; the rapid evolution of
the markets in which we compete; our ability to sustain or manage future
growth effectively; factors that could result in the significant
fluctuation of our future quarterly operating results, including, among
other things, anticipated changes to our revenue and product mix which
will slow revenue growth during such transition and make forecasting
future performance more difficult, unanticipated challenges in the
integration of recently acquired companies, the timing and magnitude of
orders, shipments and acceptance of our solutions in any given quarter,
our ability to attract new and retain existing end-customers, changes in
the pricing of certain components of our solutions, and fluctuations in
demand and competitive pricing pressures for our solutions; the
introduction, or acceleration of adoption of, competing solutions,
including public cloud infrastructure; and other risks detailed in our
quarterly report on Form 10-Q for the quarter ended April 30, 2018,
filed with the SEC on June 12, 2018. Additional information will also be
set forth in our Form 10-K that will be filed for the fiscal year ended
July 31, 2018, which should be read in conjunction with these financial
results. Our SEC filings are available on the Investor Relations section
of the company's website at ir.nutanix.com
and on the SEC's website at www.sec.gov.
These forward-looking statements speak only as of the date of this press
release and, except as required by law, we assume no obligation to
update forward-looking statements to reflect actual results or
subsequent events or circumstances.

About Nutanix

Nutanix is a global leader in cloud software and hyperconverged
infrastructure solutions, making infrastructure invisible so that IT can
focus on the applications and services that power their business.
Companies around the world use Nutanix Enterprise Cloud OS platform to
bring one-click application management and mobility across public,
private and distributed edge clouds so they can run any application at
any scale with a dramatically lower total cost of ownership. The result
is organizations that can rapidly deliver a high-performance IT
environment on demand, giving application owners a true cloud-like
experience. Learn more at www.nutanix.com
or follow us on Twitter @nutanix.

© 2018 Nutanix, Inc. All rights reserved. Nutanix, the Nutanix logo,
Frame, and all product and service names mentioned herein are registered
trademarks or trademarks of Nutanix, Inc. in the United States and other
countries. All other brand names mentioned herein are for identification
purposes only and may be the trademarks of their respective holder(s).

 
NUTANIX, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
    As of
July 31,     July 31,
2017 2018
(in thousands)
Assets
Current assets:
Cash and cash equivalents $ 138,359 $ 305,975
Short-term investments 210,694 628,328
Accounts receivable, net 178,876 258,289
Deferred commissions—current 23,843 33,691
Prepaid expenses and other current assets 28,362   36,818  
Total current assets 580,134 1,263,101
Property and equipment, net 58,072 85,111
Deferred commissions—non-current 49,684 80,688
Intangible assets, net 26,001 45,366
Goodwill 16,672 87,759
Other assets—non-current 7,649   37,855  
Total assets $ 738,212   $ 1,599,880  
 
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 73,725 $ 65,503
Accrued compensation and benefits 57,521 85,398
Accrued expenses and other current liabilities 9,707 31,682
Deferred revenue—current 170,123   275,648  
Total current liabilities 311,076 458,231
Deferred revenue—non-current 198,933 355,559
Convertible senior notes, net 429,598
Other liabilities—non-current 11,140   29,713  
Total liabilities 521,149   1,273,101  
Stockholders' equity:
Common stock 4 4
Additional paid-in capital 948,134 1,355,907
Accumulated other comprehensive loss (106 ) (1,002 )
Accumulated deficit (730,969 ) (1,028,130 )
Total stockholders' equity 217,063   326,779  
Total liabilities and stockholders' equity $ 738,212   $ 1,599,880  
 

 
NUTANIX, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
    Three Months Ended     Fiscal Year Ended
July 31, July 31,
2017     2018 2017     2018
(in thousands, except share and per share data)
Revenue:
Product $ 201,472 $ 224,650 $ 673,297 $ 887,989
Support, entitlements and other services 50,986   79,098   172,606   267,468  
Total revenue 252,458   303,748   845,903   1,155,457  
Cost of revenue:
Product (1)(2) 76,187 41,068 249,393 276,127
Support, entitlements and other services (1) 21,330   32,197   77,938   109,903  
Total cost of revenue 97,517   73,265   327,331   386,030  
Gross profit 154,941   230,483   518,572   769,427  
Operating expenses:
Sales and marketing (1)(2) 134,276 183,191 501,021 649,657
Research and development (1) 67,817 97,050 288,619 313,777
General and administrative (1) 16,878   29,472   77,341   86,401  
Total operating expenses 218,971   309,713   866,981   1,049,835  
Loss from operations (64,030 ) (79,230 ) (348,409 ) (280,408 )
Other expense, net (547 ) (4,021 ) (26,377 ) (9,306 )
Loss before provision for income taxes (64,577 ) (83,251 ) (374,786 ) (289,714 )
Provision for income taxes 1,555   4,118   4,852   7,447  
Net loss $ (66,132 ) $ (87,369 ) $ (379,638 ) $ (297,161 )
Net loss per share attributable to Class A and Class B common
stockholders—basic and diluted
$ (0.43 ) $ (0.51 ) $ (2.96 ) $ (1.81 )
Weighted average shares used in computing net loss per share
attributable to Class A and Class B common stockholders—basic and
diluted
152,581,557   171,197,547   128,295,563   164,091,302  

(1) Includes the following stock-based compensation expense:

    Three Months Ended     Fiscal Year Ended
July 31, July 31,
2017     2018 2017     2018
(in thousands)
Product cost of sales $ 642 $ 692 $ 3,066 $ 2,580
Support, entitlements and other services cost of sales 2,201 2,789 10,411 8,945
Sales and marketing 12,972 17,301 78,117 65,060
Research and development 19,218 25,350 109,044 74,389
General and administrative 2,772   9,264   30,853   26,894
Total stock-based compensation expense $ 37,805   $ 55,396   $ 231,491   $ 177,868

(2) Includes the following amortization of intangible assets:

    Three Months Ended     Fiscal Year Ended
July 31, July 31,
2017     2018 2017     2018
(in thousands)
Product cost of sales $ 358 $ 2,135 $ 1,314 $ 5,641
Sales and marketing 250 289 915   914
Total amortization of intangible assets $ 608 $ 2,424 $ 2,229   $ 6,555
 

 

NUTANIX, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 
    Fiscal Year Ended
July 31,
2017     2018
(in thousands)
Cash flows from operating activities:
Net loss $ (379,638 ) $ (297,161 )
Adjustments to reconcile net loss to net cash provided by operating
activities:
Depreciation and amortization 38,399 50,302
Stock-based compensation 231,491 177,868
Amortization of debt discount and debt issuance cost 14,685
Change in fair value of contingent consideration 1,924 (2,423 )
Loss on debt extinguishment 3,320
Change in fair value of convertible preferred stock warrant liability 21,133
Other 764 (962 )
Changes in operating assets and liabilities:
Accounts receivable, net (67,382 ) (79,273 )
Deferred commissions (24,006 ) (40,852 )
Prepaid expenses and other assets (15,830 )

(37,359

)
Accounts payable 21,280 (16,469 )
Accrued compensation and benefits 32,687 27,877
Accrued expenses and other liabilities 5,116 34,295
Deferred revenue 144,564   262,027  
Net cash provided by operating activities 13,822  

92,555

 
Cash flows from investing activities:
Purchases of investments (242,525 ) (716,417 )
Maturities of investments 84,156 297,461
Sales of investments 32,640
Purchases of property and equipment (50,181 ) (62,372 )
Payments for business combinations, net of cash acquired (184 )

(22,227

)
Net cash used in investing activities (176,094 )

(503,555

)
Cash flows from financing activities:
Proceeds from issuance of convertible senior notes, net 563,587
Proceeds from issuance of warrants 87,975
Payments for the cost of convertible note hedges (143,175 )
Proceeds from sales of shares through employee equity incentive
plans, net of repurchases
32,254 72,010
Payment of debt in conjunction with business combinations (7,124 ) (1,696 )
Proceeds from initial public offering, net of underwriting discounts
and commissions
254,455
Repayment of senior notes (75,000 )
Debt extinguishment costs (1,580 )
Payments of offering costs (1,717 ) (85 )
Other 134    
Net cash provided by financing activities 201,422   578,616  
Net increase in cash and cash equivalents 39,150 167,616
Cash and cash equivalents—beginning of period 99,209   138,359  
Cash and cash equivalents—end of period $ 138,359   $ 305,975  

Supplemental disclosures of cash flow information:

Cash paid for income taxes

$ 5,213 $ 10,116
Cash paid for interest $ 1,271 $
Supplemental disclosures of non-cash investing and financing
information:
Issuance of common stock for business combinations $ 27,063 $ 63,780
Purchases of property and equipment included in accounts payable and
accrued liabilities
$ 5,591 $ 13,444
Vesting of early exercised stock options $ 1,614 $ 681
Offering costs included in accounts payable $ 85 $
Conversion of convertible preferred stock to common stock, net of
issuance costs
$ 310,379 $
Reclassification of convertible preferred stock warrant liability to
additional paid-in capital
$ 30,812 $
 

 
Reconciliation of Revenue to Billings
(Unaudited)
 
    Three Months Ended     Fiscal Year Ended
July 31, July 31,
2017     2018 2017     2018
(in thousands)
Total revenue $ 252,458 $ 303,748 $ 845,903 $ 1,155,457
Change in deferred revenue, net of acquisitions (1) 36,715   91,318   144,564   262,027
Billings $ 289,173   $ 395,066   $ 990,467   $ 1,417,484

_____________________

(1)     Amount for the fiscal year ended July 31, 2017 excludes
approximately $6.0 million of deferred revenue assumed in the
PernixData acquisition. Amount for the twelve months ended July 31,
2018 excludes approximately $0.1 million of deferred revenue assumed
in an acquisition.

 
Disaggregation of Revenue and Reconciliation of Software and
Support Revenue to Software and Support Billings
(Unaudited)
 
    Three Months Ended     Fiscal Year Ended
July 31, July 31,
2017     2018 2017     2018
(in thousands)
Software revenue $ 128,581 $ 188,790 $ 436,981 $ 630,675
Hardware revenue 72,891 35,860 236,316 257,314
Product revenue 201,472 224,650 673,297 887,989
Support, entitlements and other services revenue 50,986 79,098 172,606 267,468
Total revenue $ 252,458 $ 303,748 $ 845,903 $ 1,155,457
 
Total software and support revenue $ 179,567 $ 267,888 $ 609,587 $ 898,143
Change in software and support deferred revenue, net of acquisitions (1) 36,715 91,318 144,564 262,027
Software and support billings $ 216,282 $ 359,206 $ 754,151 $ 1,160,170

_____________________

(1)     Amount for the fiscal year ended July 31, 2017 excludes
approximately $6.0 million of deferred revenue assumed in the
PernixData acquisition. Amount for the twelve months ended July 31,
2018 excludes approximately $0.1 million of deferred revenue assumed
in an acquisition.

 
Reconciliation of GAAP to Non-GAAP Profit Measures
(Unaudited)
 
    GAAP     Non-GAAP Adjustments     Non-GAAP
Three Months                     Three Months

Ended July 31,

Ended July 31,

2018

(1)     (2)     (3)     (4)     (5)     (6)

2018

(in thousands, except share and per share data)
Gross profit $ 230,483 $ 3,481 $ 2,135 $ $ $ $ $ 236,099
Gross margin 75.9 % 1.1 % 0.7 % 77.7 %
Operating expenses:
Sales and marketing 183,191 (17,301 ) (289 ) 165,601
Research and development 97,050 (25,350 ) 71,700
General and administrative 29,472   (9,264 )   (948 ) (714 )     18,546  
Total operating expenses 309,713 (51,915 ) (289 ) (948 ) (714 ) 255,847
Loss from operations (79,230 ) 55,396 2,424 948 714 (19,748 )
Net loss $ (87,369 ) $ 55,396 $ 2,424 $ 948 $ 714 $ 7,031 $ 1,834 $ (19,022 )
Weighted shares outstanding, basic and diluted 171,197,547   171,197,547  
Net loss per share, basic and diluted $ (0.51 ) $ 0.32 $ 0.02 $ 0.01 $ $ 0.04 $ 0.01 $ (0.11 )

_____________________

(1)     Stock-based compensation expense
(2) Amortization of intangible assets
(3) Change in fair value of contingent consideration assumed in the
PernixData acquisition
(4) Acquisition-related costs
(5) Amortization of debt discount and issuance costs
(6) Income tax effect primarily related to stock-based compensation and
migration of certain intangible assets.
 

 
    GAAP     Non-GAAP Adjustments     Non-GAAP
Three Months             Three Months

Ended July 31,

Ended July 31,

2017

(1)     (2)     (3)     (4)

2017

(in thousands, except share and per share data)
Gross profit $ 154,941 $ 2,843 $ 358 $ $ $ 158,142
Gross margin 61.4 % 1.1 % 0.1 % 62.6 %
Operating expenses:
Sales and marketing 134,276 (12,972 ) (250 ) 121,054
Research and development 67,817 (19,218 ) 48,599
General and administrative   16,878   (2,772 )           (1,748 )       12,358  
Total operating expenses 218,971 (34,962 ) (250 ) (1,748 ) 182,011
Loss from operations (64,030 ) 37,805 608 1,748 (23,869 )
Net loss $ (66,132 ) $ 37,805 $ 608 $ 1,748 $ (78 ) $ (26,049 )
Weighted shares outstanding, basic and diluted 152,581,557   152,581,557  
Net loss per share, basic and diluted $ (0.43 ) $ 0.25 $ $ 0.01 $ $ (0.17 )

_____________________

(1)     Stock-based compensation expense
(2) Amortization of intangible assets
(3) Change in fair value of contingent consideration assumed in the
PernixData acquisition
(4) Income tax effect primarily related to stock-based compensation
expense
 

 
    GAAP     Non-GAAP Adjustments     Non-GAAP
Fiscal Year                     Fiscal Year

Ended July 31,

Ended July 31,

2018

(1)     (2)     (3)     (4)     (5)     (6)

2018

(in thousands, except share and per share data)
Gross profit $ 769,427 $ 11,525 $ 5,641 $ $ $ $ $ 786,593
Gross margin 66.6 % 1.0 % 0.5 % 68.1 %
Operating expenses:
Sales and marketing 649,657 (65,060 ) (914 ) 583,683
Research and development 313,777 (74,389 ) 239,388
General and administrative 86,401   (26,894 )           2,423       (1,757 )             60,173  
Total operating expenses 1,049,835 (166,343 ) (914 ) 2,423 (1,757 ) 883,244
Loss from operations (280,408 ) 177,868 6,555 (2,423 ) 1,757 (96,651 )
Net loss $ (297,161 ) $ 177,868 $ 6,555 $ (2,423 ) $ 1,757 $ 14,685 $ (2,819 ) $ (101,538 )
Weighted shares outstanding, basic and diluted 164,091,302   164,091,302  
Net loss per share, basic and diluted $ (1.81 ) $ 1.08 $ 0.04 $ (0.01 ) $ 0.01 $ 0.09 $ (0.02 ) $ (0.62 )

_____________________

(1)     Stock-based compensation expense
(2) Amortization of intangible assets
(3) Change in fair value of contingent consideration assumed in the
PernixData acquisition
(4) Acquisition-related costs
(5) Amortization of debt discount and issuance costs

(6)

Income tax effect primarily related to release of valuation
allowance due to acquisitions, stock-based compensation and
migration of certain intangible assets.
 

 
    GAAP     Non-GAAP Adjustments     Non-GAAP
Fiscal Year                         Fiscal Year

Ended July 31,

Ended July 31,

2017

(1)     (2)     (3)     (4)     (5)     (6)     (7)

2017

(in thousands, except share and per share data)
Gross profit $ 518,572 $ 13,477 $ 1,314 $ $ $ $ $ $ 533,363
Gross margin 61.3 % 1.6 % 0.2 % 63.1 %
Operating expenses:
Sales and marketing 501,021 (78,117 ) (915 ) 421,989
Research and development 288,619 (109,044 ) 179,575
General and administrative 77,341   (30,853 )           (672 )     (1,924 )                   43,892  
Total operating expenses 866,981 (218,014 ) (915 ) (672 ) (1,924 ) 645,456
Loss from operations (348,409 ) 231,491 2,229 672 1,924 (112,093 )
Net loss $ (379,638 ) $ 231,491 $ 2,229 $ 672 $ 1,924 $ 21,133 $ 3,320 $ (1,846 ) $ (120,715 )
Weighted shares outstanding, basic and diluted 128,295,563 128,295,563
Pro forma adjustment 13,418,815   13,418,815  
Pro forma weighted shares outstanding, basic and diluted 141,714,378   141,714,378  
Net loss per share, basic and diluted $ (2.96 )
Pro forma net loss per share, basic and diluted (8) $ (2.68 ) $ 1.63 $ 0.02 $ 0.01 $ 0.01 $ 0.15 $ 0.02 $ (0.01 ) $ (0.85 )

_____________________

(1)     Stock-based compensation expense
(2) Amortization of intangible assets
(3) Acquisition-related costs
(4) Change in fair value of contingent consideration assumed in the
PernixData acquisition
(5) Change in fair value of preferred stock warrant liability
(6) Loss on debt extinguishment
(7) Income tax effect primarily related to release of valuation
allowance due to acquisitions and stock-based compensation
(8) Pro forma non-GAAP basic and diluted net loss per share was computed
to give effect to the conversion of all outstanding convertible
preferred stock upon closing of our initial public offering on
October 5, 2016, as if the conversion had occurred at the beginning
of the period.
 

 
Reconciliation of GAAP Net Cash Provided by Operating Activities
to Non-GAAP Free Cash Flow
(Unaudited)
 
    Three Months Ended     Fiscal Year Ended
July 31, July 31,
2017     2018 2017     2018
(in thousands)
Net cash provided by operating activities $ 5,919 $

22,745

$ 13,822 $

92,555

Purchases of property and equipment (12,384 ) (16,283 ) (50,181 ) (62,372 )
Free cash flow $ (6,465 ) $

6,462

  $ (36,359 ) $

30,183

 
 

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