Nutanix for Sale: Will Private Equity Acquire Hybrid Cloud Company?
Nutanix is seeking a buyer after receiving takeover interest for the cloud software company, The Wall Street Journal reported.
Nutanix has a market cap of about $4.78 billion as of October 14, 2022 (pre-market trading). The company’s stock ($NTNX) is down about 40% year to date, and down 20% over the past five years, according to SeekingAlpha. Still, shares jumped 16% after the M&A speculation surfaced on October 14, 2022.
Key shareholders include Bain Capital, which invested $750 million in Nutanix in 2020. Also, activist hedge fund Legion Partners Asset Management has a less than 1% stake in the company, The Journal noted.
Clues about a potential Nutanix company sale surfaced in September 2022, when the board announced various governance enhancements. The changes led some Wall Street analysts to believe the board was prepping Nutanix for an exit.
Big private equity firms such as Thoma Bravo, Insight Partners and Vista Equity Partners have financial war chests large enough to buy Nutanix. Still, we don’t know if those private equity firms are interested in the software company, and it’s unclear if Nutanix will actually be acquired.
Nutanix and Citrix Systems: Similar Business Challenges
Nutanix started as a hyperconverged infrastructure (HCI) hardware appliance and software supplier, but the company had to pivot hard to compete against public cloud services from Microsoft Azure, Google Cloud Platform and Amazon Web Services.
Nutanix’s current focus is hybrid multicloud computing — which mostly involves software and associated subscription services. Moreover, the company offers Security Central, a unified management system that automates incident response across multiple clouds.
Still, the business pivot remains a work in progress. Revenue was $385.5 million in Q4 of fiscal 2022, down 1% from Q4 of fiscal 2021, Nutanix said on August 31, 2022. Still, the overall quarterly financial report was better than Wall Street expected.
The Nutanix business challenges are somewhat akin to Citrix Systems, which has faced intense pressure in the Virtual Desktop Infrastructure (VDI) market from pure public cloud options such as Microsoft Windows 365 and partner solutions from Nerdio. Amid that backdrop, Vista Equity Partners and Elliott Investment Management stepped in to acquire Citrix and merge it into Tibco Software in September 2022.
Nutanix Partner Program Evolution
To boost sales, Nutanix unveiled multiple Elevate partner program enhancements on September 21, 2022. The moves included:
- Extending program incentives to include not only partner organizations, but individual sellers and systems engineers to ignite new customer acquisition growth. The New Business Individual Incentive rewards individual sellers and systems engineers at eligible resellers and services providers each time they sell Nutanix into net-new accounts, the company reported.
- Launching a Channel Led Selling Rebate Incentive for Elevate, built to reward resellers who drive deals through the entire sales cycle autonomously, the company said.
- Building tool sets like the recently revamped Sizer 6.0 capacity planning tool and enhancements to Nutanix’s Performance + Deal Registration program, the company indicated.
Also of note: Andrew Brinded succeeded Dominick Delfino as chief revenue officer in August 2022. Delfino that month exited Nutanix to join Google as global vice president for cyber security sales.
Looking further ahead, the Nutanix .Next 2023 conference is scheduled for May 9-10 in Chicago, Illinois.
Stay tuned for potential updates on this story.