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Nutanix at a Crossroads: Private Equity Arrives, CEO Plans to Depart

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On the one hand, Nutanix is a growing company with a strong brand in the hyperconverged infrastructure (HCI) software market. But on the other hand, Nutanix must navigate major market challenges that extend from public clouds to on-premises systems.

The upside story goes something like this: Nutanix quarterly revenue for fiscal Q4 2020 was $327.9 million, up 9 percent from Q4 of fiscal 2019. Moreover, subscription services now drive 88 percent of Nutanix billings. Optimists point out a successful transition to recurring revenues, and continued CIO demand for HCI technologies that simplify and unify server, storage and network infrastructure management.

Nutanix: Business Challenges, CEO Change

Still, the downside story goes something like this: Nutanix faces a potential squeeze between public clouds like Amazon Web Services (AWS) and hybrid cloud options like Dell Technologies coupled with VMware. Further complicating matters, Nutanix must navigate those challenges while searching for a new CEO.

Indeed, Nutanix CEO Dheeraj Pandey plans to retire -- and the company's board of directors has formed a search committee to find Pandey's successor. Moreover, the company has been furloughing roughly 27 percent of employees on a rotating basis through October 2020.

Amid those variables, private equity funding has arrived. Indeed, Bain Capital is making a $750 million convertible notes investment into the HCI company.

Nutanix: So What's Next?

Yes, Nutanix has a strategy that cooperates with AWS and Dell. But ultimately, the company will need to find a leader and a direction that catapults the business into new markets, and eliminates some of the competitive financial pressures vs. AWS, VMware and more, ChannelE2E believes.

Nutanix CEO Dheeraj Pandey plans to retire
Nutanix CEO Dheeraj Pandey plans to retire

One option, ultimately, could involve selling the business -- as The Information speculated in July 2020. Both Cisco Systems and Hewlett Packard Enterprise (HPE) tried to purchase Nutanix before the company went public in 2016. HPE instead purchased SimpliVity and Cisco purchased Springpath. Now, Cisco is said to be preparing some competitive moves vs. HPE GreenLake.

Those Cisco and HPE moves -- coupled with Bain Capital's investment in Nutanix -- begs a logical question: Will more private equity arrive to ultimately take Nutanix private?

Regardless of the financial path forward, Nutanix is gearing up for the company's Next Digital Experience 2020 conference -- an online event for partners and customers that's set for September 8-11. No doubt, the HCI company will share plenty of technology roadmap details during the gathering.

How will the pending CEO transition and Bain Capital private equity dollars influence that roadmap?  We'll be poking around for answers to those questions.

Joe Panettieri

Joe Panettieri is co-founder & editorial director of MSSP Alert and ChannelE2E, the two leading news & analysis sites for managed service providers in the cybersecurity market.