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Subject:  Re: Mid-month update. What I've done and why Date:  1/19/2019  11:55 PM
Author:  Darthtaco Number:  50678 of 59910

but now the conversion to SaaS is really muddying the waters. Could be a good thing, of course, but it's very unclear. Non-SaaS software revenue was significantly down from last quarter

Nutanix OS is not SaaS, there is no conversion to SaaS. They are offering the OS under subscription terms. But Core OS is 100% on premises, not SaaS. Nutanix SaaS offerings are newer products mostly released in last few weeks. They are hosted add in products that greatly enhance the OS and solve many problems that IT deal with in managing public and private clouds.

Not sure what you mean by non-SaaS revenue was down from last quarter. Subscription revenue, which includes a small amount of new SaaS revenue as well as subscription and term based software was up q to q. And non-portable software was exactly flat. No aspect of their business was down from last quarter, except $4M less in recognized hardware. They still sold more hardware, just eliminated even more from revenue. I would expect as time goes on for subscription terms to be the way most future Nutanix sales go, and being that subscription Billings was about $100 year ago and now are almost $200M as the previous billings get recognized into subscription revenue when contracts lap, those subscription revenues will move way past non-portable. Higher software revenue gets easier and easier before even making new sales. Non-portable will linger, it will probably continue to be fairly flat or maybe even decrease over time. It’s still a product some companies want, but way more will want portable and subscription based terms. It’s just easier to budget and doesn’t have device lock in.

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