2017 Annual Report

TO OUR STOCKHOLDERS I am honored to address our stockholders in our very first annual report since going public in September 2016. Nutanix is an 8-year old company, and I am incredibly proud of what we have achieved in the first arc of our company’s life. In less than six years since landing our first paying customer, we’ve sold products and services worth $2 billion, and more than 3/4 of that business has come in the last 24 months. We are one of the rare companies that achieved a $1 billion billings run rate at more than 50 percent annual growth. And yet we’ve barely begun our journey of transforming the computing landscape of the enterprise. Foresight and Simplicity Digitization (virtualization) is an unstoppable phenomenon in computing. We saw this with music, photography, and maps, as they all converged into pure software and as digital constructs in our consumer lives. We brought that foresight to enterprise storage and compute. And by doing so, we improved machine productivity by bringing data closer to applications, and also human productivity by breaking down artificial walls in IT departments. By standardizing on commodity hardware and a common operating system, we delivered eco- nomies of scale that were unprecedented in enterprise datacenters. But none of this would have been possible if we hadn’t obsessively focused on product design. The elegance of Nutanix products is in their simplicity, and in our ability to bring a consumer-grade experience to enterprise-grade systems. We are now on a path to digitizing networking, security, and effectively the entire datacenter. This architecture — of an undifferentiated hardware running software services (that bring all the differentiation) — is the only way to operate a cloud, if the enterprise wants to stay in the business of computing. The Future of Cloud is Dispersed The first few years of cloud were unclear. There was an argument that all computing would be rented from public cloud providers. Now, consumption realities are sinking in. Renting for long durations, especially for predictable production workloads, is expensive. The laws of the land — driven by data sovereignty and compliance — are forcing the enterprise to think beyond centralized cloud architectures. Laws of physics are dictating why computing needs to be local to enterprise operations — the network being the real enemy. And with IoT devices producing so much data, it is imperative to disperse the cloud to the edge — and yet manage it from a central command and control center. That, to us, is the enterprise cloud operating system. The future of cloud is in distributed software, not in building large datacenters! The Engine of Growth Our repeat business with existing customers fuels our growth. A Net Promoter Score (NPS) of 90 over the last several years underscores our focus on customer service and product reliability. That is the kind of reliability we aspire to bring to our business execution and quarterly performance. We are in the business of changing the architecture of computing. That path was never easy, and will not be any easier in the years ahead. But by bringing delight and reducing waste one customer, one workload, one quarter at a time, we can build a business of lasting value that our stockholders will cherish for years to come. With Regards, Dheeraj Pandey Chief Executive Officer and Chairman UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) _ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended July 31, 2017 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-37883 NUTANIX, INC. (Exact name of registrant as specified in its charter) Delaware 27-0989767 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1740 Technology Drive, Suite 150 San Jose, CA 95110 (Address of principal executive offices, including zip code) (408) 216-8360 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes _ No Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes _ No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K, or any amendment to this Form 10-K. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer Accelerated filer (Do not check if a smaller reporting Non-accelerated filer company) Smaller reporting company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting Emerging growth company _ standards provided pursuant to Section Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act). Yes No _ The aggregate market value of the registrant's common stock held by non-affiliates of the registrant as of January 31, 2017 (the last business day of the registrant's most recently completed second fiscal quarter) was approximately $2.7 billion, based upon the closing sale price of such stock on the NASDAQ Global Select Market. The registrant has no non- voting common equity. As of August 31, 2017, the registrant had 95,793,160 shares of Class A common stock, $0.000025 par value per share, and 59,150,486 shares of Class B common stock, $0.000025 par value per share, outstanding. DOCUMENTS INCORPORATED BY REFERENCE As noted herein, the information called for by Parts II and III is incorporated by reference to specified portions of the registrant’s definitive proxy statement to be filed in conjunction with the registrant’s 2017 annual meeting of stockholders, which is expected to be filed not later than 120 days after the registrant's fiscal year ended July 31, 2017. TABLE OF CONTENTS Page Special Note Regarding Forward-Looking Statements ii PART I 1 Item 1. Business 1 Item 1A. Risk Factors 11 Item 1B. Unresolved Staff Comments 46 Item 2. Properties 47 Item 3. Legal Proceedings 47 Item 4. Mine Safety Disclosures 47 PART II 48 Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and issuer Purchases of Equity Securities 48 Item 6. Selected Consolidated Financial and Other Data 51 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 53 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 7 Item 8. Financial Statements and Supplementary Data 7 Item 9. Change in and Disagreements with Accountants on Accounting Financial Disclosure 12 Item 9A. Controls and Procedures 12 Item 9B. Other Information 12 PART III 12 Item 10. Directors, Executive Officers, and Corporate Governance 12 Item 11. Executive Compensation 12 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 12 Item 13. Certain Relationships and Related Transactions, and Directors Independence 12 Item 14. Principal Accountant Fees and Services 12 PART IV 12 Item 15. Exhibits and Financial Statement Schedules 12 Item 16. Form 10-K Summary 12 Exhibit Index 12 Signatures 12 i SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, which statements involve substantial risks and uncertainties. All statements contained in this Annual Report on Form 10-K other than statements of historical fact, including statements regarding our future results of operations and financial position, our business strategy and plans, and our objectives for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “potentially,” “estimate,” “continue,” “anticipate,” “plan,” “intend,” “could,” “would,” “expect” and similar expressions that convey uncertainty of future events or outcomes are intended to identify forward-looking statements. Forward-looking statements included in this Annual Report on Form 10-K include, but are not limited to, statements regarding: • our future revenue, cost of revenue, and operating expenses, as well as changes in the cost of product revenue, component costs, product gross margins and support and other services revenue, and

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