Nutanix posts 16% ARR growth and $841m free cash flow in FY2026

Nutanix (NASDAQ: NTNX) closed its fiscal year ended 31 July 2026 with annual recurring revenue of $2.55 billion, a 16% year-on-year increase, and free cash flow of $840.7 million, up from $750.2 million in the prior year. The San Jose-based hybrid cloud and hyperconverged infrastructure vendor also reported full-year revenue of $2.85 billion, a 12% increase, and added more than 3,000 net new customers during the period.

The fourth quarter was particularly strong. Quarterly revenue reached $757.1 million, up 16% year-on-year, while non-GAAP operating margin expanded to 26.2% from 18.3% in the same quarter last year, a 790 basis point improvement. GAAP net income for Q4 was $1.27 billion, inflated by a $1.19 billion tax benefit following a valuation allowance release on US deferred tax assets. Excluding that one-time item, the underlying non-GAAP net income for the quarter was $175.4 million.

Financial detail

For the full fiscal year, non-GAAP operating income grew to $675.4 million from $536.1 million, and GAAP operating margin widened by 280 basis points to 9.6%. Remaining performance obligations totalled $3.44 billion as of 31 July 2026, up from $2.69 billion a year earlier, providing meaningful revenue visibility. Average contract duration ticked up to 3.2 years for the full year, suggesting customers are committing to longer subscription terms.

Chief financial officer Rukmini Sivaraman said the results demonstrated "a good balance of top and bottom line performance," pointing to the combination of ARR growth and free cash flow generation as evidence of a sustainable model. Chief executive Rajiv Ramaswami highlighted partnership progress during the year, citing new or expanded agreements with AMD, Lenovo, NetApp and NVIDIA as indicators of the company's direction on AI infrastructure and external storage support.

On the product side, Nutanix shipped general availability of Enterprise AI 2.8, launched a Model Context Protocol server for its Nutanix Cloud Platform to support agentic AI workflows, announced Dell PowerStore integration with its cloud infrastructure stack, and disclosed an upcoming Kubernetes Platform 2.19 release. A strategic partnership with ChronoScale was also announced to accelerate AI server adoption.

Market context and outlook

Nutanix competes in a hybrid cloud infrastructure market that has become considerably more complex as hyperscalers extend their on-premises reach via products such as AWS Outposts, Azure Stack and Google Distributed Cloud. VMware's acquisition by Broadcom and subsequent licensing changes have created displacement pressure in the virtualisation and private cloud segment, which a number of infrastructure vendors including Nutanix have positioned themselves to capture. How durable that tailwind proves will depend on enterprise migration timelines and whether organisations consolidate around single-vendor stacks or adopt multi-platform architectures.

The company's push into agentic AI and enterprise AI infrastructure reflects a broader industry bet that on-premises and hybrid AI workloads will grow substantially as data-sovereignty requirements, latency constraints and cost optimisation drive a portion of AI inference back towards private infrastructure. Regulated sectors including financial services, healthcare and public sector remain Nutanix's core verticals, and the company's own Enterprise Cloud Index survey highlighted shadow AI, data sovereignty and compliance as the top concerns for those customers.

For fiscal 2027, Nutanix guided revenue of $3.18 billion to $3.23 billion, non-GAAP operating margin of 24% to 25%, and free cash flow of $850 million to $950 million. First-quarter revenue guidance of $755 million to $765 million implies broadly flat sequential performance as the company moves into the new financial year. Investors and enterprise buyers will watch whether the partnership pipeline with AMD and NVIDIA translates into AI infrastructure wins, and whether the VMware displacement opportunity continues to generate net new customer additions at a similar pace to fiscal 2026.