Nutanix employees face layoffs, analysts cite ‘significant overspending’

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It was “long overdue,” one analyst said.

Cloud computing company Nutanix plans to lay off 4% of its workforce, or 270 employees, by the end of October. According to an SEC filing, the downsizing “is part of the company’s ongoing efforts to move toward profitable growth.”

An analyst said the layoffs were “long overdue” and that the Nutanix CEO’s predecessors had “significantly overspent”.

A company spokesperson said, “As difficult as it is to make decisions that impact employees, we believe this will allow Nutanix to be more efficient and flexible in the future as we are navigating in a difficult macroeconomic environment.

Follow our Telecom-IT Layoff Tracker to see which companies are cutting jobs and the resulting impact on channels.

The company estimates that it “will incur a pre-tax charge in the range of $20 million to $25 million in the fiscal quarter ending October 31.” This will consist of a one-time severance and other severance costs, all of which are expected to incur future cash outlays.

Supply chain concerns

Nutanix’s latest quarterly report shows strong earnings. Third-quarter revenue was $404 million, up 17% year-on-year, with a net loss of about $112 million. Annual recurring revenue increased 46% year-on-year to $1.1 billion. The company forecast total revenue of $1.55 billion for 2022, an 11% increase from 2021.

Nutanix’s Rajiv Ramaswami

Despite these projections, Nutanix CEO Rajiv Ramaswami said supply chain issues were a concern. On an earnings call in May, he said increased supply chain delays with hardware partners had heavily influenced the company’s outlook. The company works with vendors such as HP, Lenovo, Dell and Supermicro. Channel Futures could not confirm whether these companies were also experiencing supply chain issues. Ramaswami said he expects supply chain challenges to persist for several quarters.

However, he added, “We do not believe these challenges reflect a shift in demand for our hybrid multicloud platform, and we remain focused on mitigating the impact of these issues and continuing to of the opportunity presented to us”.

Nutanix will release its fiscal fourth quarter financial results on August 31.

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