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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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27-0989767
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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1740 Technology Drive, Suite 150
San Jose, CA 95110
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(Address of principal executive offices, including zip code)
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(408) 216-8360
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(Registrant's telephone number, including area code)
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Large accelerated filer
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x
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Accelerated filer
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o
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Non-accelerated filer
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o (Do not check if a smaller reporting company)
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Smaller reporting company
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o
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Emerging growth company
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o
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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 standards provided pursuant to Section 13(a) of the Exchange Act.
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o
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Securities registered pursuant to Section 12(b) of the Act:
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||||
Title of each class
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Trading symbol(s)
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Name of each exchange on which registered
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Class A Common Stock, $0.000025 par value per share
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NTNX
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NASDAQ Global Select Market
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PAGE
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Item 3
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Item 4
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Item 5
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•
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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, entitlements and other services revenue and changes in research and development, sales and marketing and general and administrative expenses;
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•
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our business plan, our growth strategy and our ability to effectively manage our growth;
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•
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anticipated trends, growth rates and challenges in our business and in the markets in which we operate, including the productivity of our sales team;
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•
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our ability to develop new solutions, product features and technology and bring them to market in a timely manner;
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•
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market acceptance of new technology and recently introduced solutions;
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•
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the interoperability and availability of our solutions with and on third-party hardware platforms;
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•
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the amount and timing of investments to grow our business and our plans and objectives for future operations, including plans to continue to invest in our global engineering, research and development and sales and marketing teams, and continued investment in sales and marketing programs, and the impact of such investments;
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•
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our ability to increase sales of our solutions;
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•
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our ability to attract new end customers and retain and grow sales from our existing end customers;
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•
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our ability to maintain and strengthen our relationships with our channel partners and OEMs;
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•
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the effects of seasonal trends on our results of operations;
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•
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our expectations concerning relationships with third parties, including our ability to compress and stabilize sales cycles;
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•
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our ability to maintain, protect and enhance our intellectual property;
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•
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our exposure to and ability to guard against cyber attacks;
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•
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our ability to continue to expand internationally;
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•
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the effects of increased competition in our market and our ability to compete effectively;
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•
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anticipated capital expenditures;
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•
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future acquisitions or investments in complementary companies, products, services or technologies and the ability to successfully integrate completed acquisitions;
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•
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our ability to stay in compliance with laws and regulations that currently apply or become applicable to our business both in the United States and internationally, including recent changes in global tax laws;
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•
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economic and industry trends, projected growth or trend analysis;
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•
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our ability to attract and retain qualified employees and key personnel;
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•
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our plans for, the timing of, and the impact of changes to our business model, including our shift to a more subscription-based model;
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•
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our expectations concerning future shifts in the mix of whether our solutions are sold as an appliance or as software-only, and in the mix of the types of appliances we sell; and
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•
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the sufficiency of cash balances to meet cash needs for at least the next 12 months.
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Page
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As of
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||||||
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July 31, 2018
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|
April 30, 2019
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||||
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(in thousands, except share and per share data)
|
||||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
305,975
|
|
|
$
|
445,119
|
|
Short-term investments
|
628,328
|
|
|
495,633
|
|
||
Accounts receivable, net
|
258,289
|
|
|
244,445
|
|
||
Deferred commissions—current
|
33,691
|
|
|
40,309
|
|
||
Prepaid expenses and other current assets
|
36,818
|
|
|
73,744
|
|
||
Total current assets
|
1,263,101
|
|
|
1,299,250
|
|
||
Property and equipment, net
|
85,111
|
|
|
134,562
|
|
||
Deferred commissions—non-current
|
80,688
|
|
|
98,889
|
|
||
Intangible assets, net
|
45,366
|
|
|
71,118
|
|
||
Goodwill
|
87,759
|
|
|
185,180
|
|
||
Other assets—non-current
|
37,855
|
|
|
12,820
|
|
||
Total assets
|
$
|
1,599,880
|
|
|
$
|
1,801,819
|
|
|
|
|
|
||||
Liabilities and Stockholders’ Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
65,503
|
|
|
$
|
82,597
|
|
Accrued compensation and benefits
|
85,398
|
|
|
75,032
|
|
||
Accrued expenses and other current liabilities
|
31,682
|
|
|
20,019
|
|
||
Deferred revenue—current
|
275,648
|
|
|
361,432
|
|
||
Total current liabilities
|
458,231
|
|
|
539,080
|
|
||
Deferred revenue—non-current
|
355,559
|
|
|
476,830
|
|
||
Convertible senior notes, net
|
429,598
|
|
|
451,399
|
|
||
Other liabilities—non-current
|
29,713
|
|
|
29,064
|
|
||
Total liabilities
|
1,273,101
|
|
|
1,496,373
|
|
||
Commitments and contingencies (Note 7)
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock, par value of $0.000025 per share— 200,000,000 shares authorized as of July 31, 2018 and April 30, 2019; no shares issued and outstanding as of July 31, 2018 and April 30, 2019
|
—
|
|
|
—
|
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||
Common stock, par value of $0.000025 per share—1,200,000,000 (1,000,000,000 Class A, 200,000,000 Class B) shares authorized as of July 31, 2018 and April 30, 2019; 172,858,082 (135,109,672 Class A and 37,748,410 Class B) and 185,900,407 (153,349,844 Class A and 32,550,563 Class B) shares issued and outstanding as of July 31, 2018 and April 30, 2019
|
4
|
|
|
5
|
|
||
Additional paid-in capital
|
1,355,907
|
|
|
1,760,083
|
|
||
Accumulated other comprehensive (loss) income
|
(1,002
|
)
|
|
329
|
|
||
Accumulated deficit
|
(1,028,130
|
)
|
|
(1,454,971
|
)
|
||
Total stockholders’ equity
|
326,779
|
|
|
305,446
|
|
||
Total liabilities and stockholders’ equity
|
$
|
1,599,880
|
|
|
$
|
1,801,819
|
|
|
Three Months Ended
April 30, |
|
Nine Months Ended
April 30, |
||||||||||||
|
2018
|
|
2019
|
|
2018
|
|
2019
|
||||||||
|
(in thousands, except share and per share data)
|
||||||||||||||
Revenue:
|
|
|
|
|
|
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|
||||||||
Product
|
$
|
221,117
|
|
|
$
|
184,794
|
|
|
$
|
663,339
|
|
|
$
|
646,072
|
|
Support, entitlements and other services
|
68,296
|
|
|
102,830
|
|
|
188,370
|
|
|
290,195
|
|
||||
Total revenue
|
289,413
|
|
|
287,624
|
|
|
851,709
|
|
|
936,267
|
|
||||
Cost of revenue:
|
|
|
|
|
|
|
|
||||||||
Product
|
66,680
|
|
|
29,528
|
|
|
235,059
|
|
|
114,755
|
|
||||
Support, entitlements and other services
|
28,935
|
|
|
45,549
|
|
|
77,706
|
|
|
120,410
|
|
||||
Total cost of revenue
|
95,615
|
|
|
75,077
|
|
|
312,765
|
|
|
235,165
|
|
||||
Gross profit
|
193,798
|
|
|
212,547
|
|
|
538,944
|
|
|
701,102
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Sales and marketing
|
169,860
|
|
|
245,703
|
|
|
466,466
|
|
|
655,907
|
|
||||
Research and development
|
81,291
|
|
|
137,982
|
|
|
216,727
|
|
|
371,550
|
|
||||
General and administrative
|
24,929
|
|
|
33,040
|
|
|
56,929
|
|
|
89,167
|
|
||||
Total operating expenses
|
276,080
|
|
|
416,725
|
|
|
740,122
|
|
|
1,116,624
|
|
||||
Loss from operations
|
(82,282
|
)
|
|
(204,178
|
)
|
|
(201,178
|
)
|
|
(415,522
|
)
|
||||
Other expense, net
|
(4,235
|
)
|
|
(3,212
|
)
|
|
(5,285
|
)
|
|
(10,314
|
)
|
||||
Loss before (benefit from) provision for income taxes
|
(86,517
|
)
|
|
(207,390
|
)
|
|
(206,463
|
)
|
|
(425,836
|
)
|
||||
(Benefit from) provision for income taxes
|
(843
|
)
|
|
2,423
|
|
|
3,329
|
|
|
1,005
|
|
||||
Net loss
|
$
|
(85,674
|
)
|
|
$
|
(209,813
|
)
|
|
$
|
(209,792
|
)
|
|
$
|
(426,841
|
)
|
Net loss per share attributable to Class A and Class B common stockholders—basic and diluted
|
$
|
(0.51
|
)
|
|
$
|
(1.15
|
)
|
|
$
|
(1.30
|
)
|
|
$
|
(2.38
|
)
|
Weighted average shares used in computing net loss per share attributable to Class A and Class B common stockholders—basic and diluted
|
166,845,544
|
|
|
182,962,921
|
|
|
161,709,365
|
|
|
179,235,498
|
|
|
Three Months Ended
April 30, |
|
Nine Months Ended
April 30, |
||||||||||||
|
2018
|
|
2019
|
|
2018
|
|
2019
|
||||||||
|
(in thousands)
|
||||||||||||||
Net loss
|
$
|
(85,674
|
)
|
|
$
|
(209,813
|
)
|
|
$
|
(209,792
|
)
|
|
$
|
(426,841
|
)
|
Other comprehensive loss, net of tax:
|
|
|
|
|
|
|
|
||||||||
Change in unrealized (loss) gain on available-for-sale securities, net of tax
|
(517
|
)
|
|
478
|
|
|
(1,131
|
)
|
|
1,331
|
|
||||
Comprehensive loss
|
$
|
(86,191
|
)
|
|
$
|
(209,335
|
)
|
|
$
|
(210,923
|
)
|
|
$
|
(425,510
|
)
|
|
Nine Months Ended April 30, 2018
|
|||||||||||||||||||||
|
Common Stock
|
|
Additional
Paid-In
Capital
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Accumulated
Deficit
|
|
Total
Stockholders’
Equity
|
|||||||||||||
|
Shares
|
|
Amount
|
|
||||||||||||||||||
|
(in thousands, except share data)
|
|||||||||||||||||||||
Balance - July 31, 2017
|
154,636,520
|
|
|
$
|
4
|
|
|
$
|
948,134
|
|
|
$
|
(106
|
)
|
|
$
|
(730,969
|
)
|
|
$
|
217,063
|
|
Issuance of common stock through employee equity incentive plans, net of repurchases
|
3,989,701
|
|
|
—
|
|
|
7,968
|
|
|
—
|
|
|
—
|
|
|
7,968
|
|
|||||
Issuance of common stock from ESPP purchase
|
1,261,104
|
|
|
—
|
|
|
17,402
|
|
|
—
|
|
|
—
|
|
|
17,402
|
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
35,515
|
|
|
—
|
|
|
—
|
|
|
35,515
|
|
|||||
Vesting of early exercised stock options
|
—
|
|
|
—
|
|
|
249
|
|
|
—
|
|
|
—
|
|
|
249
|
|
|||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(130
|
)
|
|
—
|
|
|
(130
|
)
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(61,487
|
)
|
|
(61,487
|
)
|
|||||
Balance - October 31, 2017
|
159,887,325
|
|
|
4
|
|
|
1,009,268
|
|
|
(236
|
)
|
|
(792,456
|
)
|
|
216,580
|
|
|||||
Issuance of common stock through employee equity incentive plans
|
4,178,590
|
|
|
|
|
11,419
|
|
|
—
|
|
|
—
|
|
|
11,419
|
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
42,011
|
|
|
—
|
|
|
—
|
|
|
42,011
|
|
|||||
Equity component of the convertible senior notes, net
|
—
|
|
|
—
|
|
|
148,598
|
|
|
—
|
|
|
—
|
|
|
148,598
|
|
|||||
Sale of warrants related to the convertible senior notes
|
—
|
|
|
—
|
|
|
87,975
|
|
|
—
|
|
|
—
|
|
|
87,975
|
|
|||||
Cost of the bond hedges related to the convertible senior notes
|
—
|
|
|
—
|
|
|
(143,175
|
)
|
|
—
|
|
|
—
|
|
|
(143,175
|
)
|
|||||
Vesting of early exercised stock options
|
—
|
|
|
—
|
|
|
186
|
|
|
—
|
|
|
—
|
|
|
186
|
|
|||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(484
|
)
|
|
—
|
|
|
(484
|
)
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(62,631
|
)
|
|
(62,631
|
)
|
|||||
Balance - January 31, 2018
|
164,065,915
|
|
|
4
|
|
|
1,156,282
|
|
|
(720
|
)
|
|
(855,087
|
)
|
|
300,479
|
|
|||||
Issuance of common stock through employee equity incentive plans
|
3,748,870
|
|
|
—
|
|
|
9,825
|
|
|
—
|
|
|
—
|
|
|
9,825
|
|
|||||
Issuance of common stock from ESPP purchase
|
1,156,746
|
|
|
—
|
|
|
21,607
|
|
|
—
|
|
|
—
|
|
|
21,607
|
|
|||||
Issuance of common stock in connection with a business combination
|
1,310,790
|
|
|
—
|
|
|
63,780
|
|
|
—
|
|
|
—
|
|
|
63,780
|
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
44,946
|
|
|
—
|
|
|
—
|
|
|
44,946
|
|
|||||
Vesting of early exercised stock options
|
—
|
|
|
—
|
|
|
135
|
|
|
—
|
|
|
—
|
|
|
135
|
|
|||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(517
|
)
|
|
—
|
|
|
(517
|
)
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(85,674
|
)
|
|
(85,674
|
)
|
|||||
Balance - April 30, 2018
|
170,282,321
|
|
|
$
|
4
|
|
|
$
|
1,296,575
|
|
|
$
|
(1,237
|
)
|
|
$
|
(940,761
|
)
|
|
$
|
354,581
|
|
|
Nine Months Ended April 30, 2019
|
|||||||||||||||||||||
|
Common Stock
|
|
Additional
Paid-In
Capital
|
|
Accumulated
Other
Comprehensive
(Loss) Income
|
|
Accumulated
Deficit
|
|
Total
Stockholders’
Equity
|
|||||||||||||
|
Shares
|
|
Amount
|
|
||||||||||||||||||
|
(in thousands, except share data)
|
|||||||||||||||||||||
Balance - July 31, 2018
|
172,858,082
|
|
|
$
|
4
|
|
|
$
|
1,355,907
|
|
|
$
|
(1,002
|
)
|
|
$
|
(1,028,130
|
)
|
|
$
|
326,779
|
|
Issuance of common stock through employee equity incentive plans
|
2,629,079
|
|
|
—
|
|
|
3,680
|
|
|
—
|
|
|
—
|
|
|
3,680
|
|
|||||
Issuance of common stock from ESPP purchase
|
1,127,728
|
|
|
—
|
|
|
26,318
|
|
|
—
|
|
|
—
|
|
|
26,318
|
|
|||||
Issuance of common stock in connection with a business combination
|
2,451,322
|
|
|
—
|
|
|
102,978
|
|
|
—
|
|
|
—
|
|
|
102,978
|
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
65,925
|
|
|
—
|
|
|
—
|
|
|
65,925
|
|
|||||
Vesting of early exercised stock options
|
—
|
|
|
—
|
|
|
70
|
|
|
—
|
|
|
—
|
|
|
70
|
|
|||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(166
|
)
|
|
—
|
|
|
(166
|
)
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(94,265
|
)
|
|
(94,265
|
)
|
|||||
Balance - October 31, 2018
|
179,066,211
|
|
|
4
|
|
|
1,554,878
|
|
|
(1,168
|
)
|
|
(1,122,395
|
)
|
|
431,319
|
|
|||||
Issuance of common stock through employee equity incentive plans
|
2,967,649
|
|
|
—
|
|
|
3,341
|
|
|
—
|
|
|
—
|
|
|
3,341
|
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
72,565
|
|
|
—
|
|
|
—
|
|
|
72,565
|
|
|||||
Vesting of early exercised stock options
|
—
|
|
|
—
|
|
|
50
|
|
|
—
|
|
|
—
|
|
|
50
|
|
|||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
1,019
|
|
|
—
|
|
|
1,019
|
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(122,763
|
)
|
|
(122,763
|
)
|
|||||
Balance - January 31, 2019
|
182,033,860
|
|
|
4
|
|
|
1,630,834
|
|
|
(149
|
)
|
|
(1,245,158
|
)
|
|
385,531
|
|
|||||
Issuance of common stock through employee equity incentive plans
|
2,980,448
|
|
|
—
|
|
|
3,154
|
|
|
—
|
|
|
—
|
|
|
3,154
|
|
|||||
Issuance of common stock from ESPP purchase
|
880,354
|
|
|
1
|
|
|
30,899
|
|
|
—
|
|
|
—
|
|
|
30,900
|
|
|||||
Issuance of common stock in connection with a business combination
|
5,745
|
|
|
—
|
|
|
327
|
|
|
—
|
|
|
—
|
|
|
327
|
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
94,832
|
|
|
—
|
|
|
—
|
|
|
94,832
|
|
|||||
Vesting of early exercised stock options
|
—
|
|
|
—
|
|
|
37
|
|
|
—
|
|
|
—
|
|
|
37
|
|
|||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
478
|
|
|
—
|
|
|
478
|
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(209,813
|
)
|
|
(209,813
|
)
|
|||||
Balance - April 30, 2019
|
185,900,407
|
|
|
$
|
5
|
|
|
$
|
1,760,083
|
|
|
$
|
329
|
|
|
$
|
(1,454,971
|
)
|
|
$
|
305,446
|
|
|
Nine Months Ended
April 30, |
||||||
|
2018
|
|
2019
|
||||
|
(in thousands)
|
||||||
Cash flows from operating activities:
|
|
|
|
||||
Net loss
|
$
|
(209,792
|
)
|
|
$
|
(426,841
|
)
|
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
36,013
|
|
|
55,740
|
|
||
Stock-based compensation
|
122,472
|
|
|
233,322
|
|
||
Change in fair value of contingent consideration
|
(3,371
|
)
|
|
(832
|
)
|
||
Amortization of debt discount and issuance costs
|
7,654
|
|
|
21,802
|
|
||
Other
|
(186
|
)
|
|
(1,837
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable, net
|
(15,307
|
)
|
|
16,734
|
|
||
Deferred commissions
|
(29,201
|
)
|
|
(24,819
|
)
|
||
Prepaid expenses and other assets (1)
|
(5,333
|
)
|
|
(5,095
|
)
|
||
Accounts payable
|
(6,407
|
)
|
|
18,461
|
|
||
Accrued compensation and benefits
|
3,700
|
|
|
(10,366
|
)
|
||
Accrued expenses and other liabilities
|
(1,147
|
)
|
|
(31,180
|
)
|
||
Deferred revenue
|
170,709
|
|
|
206,735
|
|
||
Net cash provided by operating activities (1)
|
69,804
|
|
|
51,824
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Maturities of investments
|
147,868
|
|
|
460,563
|
|
||
Purchases of investments
|
(485,777
|
)
|
|
(324,581
|
)
|
||
Purchases of property and equipment
|
(46,089
|
)
|
|
(94,815
|
)
|
||
Payments for business combinations, net of cash and restricted cash acquired
|
(22,792
|
)
|
|
(19,017
|
)
|
||
Net cash (used in) provided by investing activities
|
(406,790
|
)
|
|
22,150
|
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from sales of shares through employee equity incentive plans, net of repurchases
|
68,186
|
|
|
67,277
|
|
||
Payment of contingent consideration associated with a business combination
|
—
|
|
|
(1,040
|
)
|
||
Payment of debt in conjunction with business combinations
|
(1,428
|
)
|
|
(991
|
)
|
||
Proceeds from issuance of convertible senior notes, net
|
563,937
|
|
|
(75
|
)
|
||
Proceeds from issuance of warrants
|
87,975
|
|
|
—
|
|
||
Payments for convertible note hedges
|
(143,175
|
)
|
|
—
|
|
||
Payment of offering costs
|
(85
|
)
|
|
—
|
|
||
Net cash provided by financing activities
|
575,410
|
|
|
65,171
|
|
||
Net increase in cash, cash equivalents and restricted cash (1)
|
$
|
238,424
|
|
|
$
|
139,145
|
|
Cash, cash equivalents and restricted cash—beginning of period (1)
|
139,497
|
|
|
307,098
|
|
||
Cash, cash equivalents and restricted cash—end of period (1)
|
$
|
377,921
|
|
|
$
|
446,243
|
|
Restricted cash (1)(2)
|
1,132
|
|
|
1,124
|
|
||
Cash and cash equivalents—end of period
|
$
|
376,789
|
|
|
$
|
445,119
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
||||
Cash paid for income taxes
|
$
|
8,038
|
|
|
$
|
26,731
|
|
Supplemental disclosures of non-cash investing and financing information:
|
|
|
|
||||
Issuance of common stock in connection with business combinations
|
$
|
63,780
|
|
|
$
|
103,305
|
|
Purchases of property and equipment included in accounts payable and accrued liabilities
|
$
|
9,285
|
|
|
$
|
11,671
|
|
Vesting of early exercised stock options
|
$
|
570
|
|
|
$
|
157
|
|
Convertible senior notes offering costs included in accounts payable and accrued liabilities
|
$
|
425
|
|
|
$
|
—
|
|
|
(1)
|
During the first quarter of fiscal 2019, we adopted Accounting Standards Update ("ASU") No. 2016-18, which requires that the statement of cash flows explain the change during the period in the total of cash, cash equivalents and restricted cash. We adopted the standard retrospectively for the prior period presented. Our adoption of ASU 2016-18 did not have any significant impact on our condensed consolidated statements of cash flows.
|
(2)
|
Included within other assets—non-current in the condensed consolidated balance sheets.
|
|
|
Revenue
|
|
Accounts Receivable
as of
|
||||||||||||||
|
|
Three Months Ended
April 30, |
|
Nine Months Ended
April 30, |
|
|||||||||||||
Partners
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
July 31, 2018
|
|
April 30, 2019
|
||||||
Partner A
|
|
(1)
|
|
|
(1)
|
|
|
10
|
%
|
|
10
|
%
|
|
16
|
%
|
|
(1)
|
|
Partner B
|
|
15
|
%
|
|
10
|
%
|
|
20
|
%
|
|
11
|
%
|
|
13
|
%
|
|
(1)
|
|
Partner C
|
|
18
|
%
|
|
26
|
%
|
|
17
|
%
|
|
23
|
%
|
|
15
|
%
|
|
25
|
%
|
Partner D
|
|
(1)
|
|
|
(1)
|
|
|
10
|
%
|
|
(1)
|
|
|
(1)
|
|
|
(1)
|
|
Partner E
|
|
13
|
%
|
|
13
|
%
|
|
13
|
%
|
|
12
|
%
|
|
12
|
%
|
|
13
|
%
|
|
(1)
|
Less than 10%
|
|
Estimated Fair Value
|
||
|
(in thousands)
|
||
Goodwill
|
$
|
97,328
|
|
Amortizable intangible assets
|
38,180
|
|
|
Tangible assets acquired
|
10,811
|
|
|
Liabilities assumed
|
(16,293
|
)
|
|
Total consideration
|
$
|
130,026
|
|
|
Three Months Ended
April 30, |
|
Nine Months Ended
April 30, |
||||||||||||
|
2018
|
|
2019
|
|
2018
|
|
2019
|
||||||||
|
(in thousands)
|
||||||||||||||
Subscription
|
$
|
80,105
|
|
|
$
|
168,447
|
|
|
$
|
216,668
|
|
|
$
|
452,779
|
|
Non-portable software
|
140,879
|
|
|
88,719
|
|
|
396,986
|
|
|
366,910
|
|
||||
Hardware
|
62,617
|
|
|
21,853
|
|
|
221,454
|
|
|
92,319
|
|
||||
Professional services
|
5,812
|
|
|
8,605
|
|
|
16,601
|
|
|
24,259
|
|
||||
Total revenue
|
$
|
289,413
|
|
|
$
|
287,624
|
|
|
$
|
851,709
|
|
|
$
|
936,267
|
|
|
Deferred Revenue
|
|
Deferred Commissions
|
||||
|
(in thousands)
|
||||||
Balance as of July 31, 2018
|
$
|
631,207
|
|
|
$
|
114,379
|
|
Additions
|
159,210
|
|
|
33,958
|
|
||
Revenue/commissions recognized
|
(88,937
|
)
|
|
(26,230
|
)
|
||
Assumed in a business combination
|
320
|
|
|
—
|
|
||
Balance as of October 31, 2018
|
701,800
|
|
|
122,107
|
|
||
Additions
|
176,487
|
|
|
37,280
|
|
||
Revenue/commissions recognized
|
(98,428
|
)
|
|
(29,353
|
)
|
||
Balance as of January 31, 2019
|
779,859
|
|
|
130,034
|
|
||
Additions
|
161,233
|
|
|
38,396
|
|
||
Revenue/commissions recognized
|
(102,830
|
)
|
|
(29,232
|
)
|
||
Balance as of April 30, 2019
|
$
|
838,262
|
|
|
$
|
139,198
|
|
|
As of July 31, 2018
|
||||||||||||||
|
Level I
|
|
Level II
|
|
Level III
|
|
Total
|
||||||||
|
(in thousands)
|
||||||||||||||
Financial Assets:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
41,763
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
41,763
|
|
Commercial paper
|
—
|
|
|
77,818
|
|
|
—
|
|
|
77,818
|
|
||||
U.S. government securities
|
—
|
|
|
4,985
|
|
|
—
|
|
|
4,985
|
|
||||
Short-term investments:
|
|
|
|
|
|
|
|
|
|||||||
Corporate bonds
|
—
|
|
|
448,458
|
|
|
—
|
|
|
448,458
|
|
||||
Commercial paper
|
—
|
|
|
120,772
|
|
|
—
|
|
|
120,772
|
|
||||
U.S. government securities
|
—
|
|
|
59,098
|
|
|
—
|
|
|
59,098
|
|
||||
Total measured at fair value
|
$
|
41,763
|
|
|
$
|
711,131
|
|
|
$
|
—
|
|
|
$
|
752,894
|
|
Cash
|
|
|
|
|
|
|
181,409
|
|
|||||||
Total cash, cash equivalents and short-term investments
|
|
|
|
|
|
|
$
|
934,303
|
|
||||||
Financial Liabilities:
|
|
|
|
|
|
|
|
||||||||
Contingent consideration
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,872
|
|
|
$
|
1,872
|
|
|
As of April 30, 2019
|
||||||||||||||
|
Level I
|
|
Level II
|
|
Level III
|
|
Total
|
||||||||
|
(in thousands)
|
||||||||||||||
Financial Assets:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
61,373
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
61,373
|
|
Commercial paper
|
—
|
|
|
118,773
|
|
|
—
|
|
|
118,773
|
|
||||
Short-term investments:
|
|
|
|
|
|
|
|
|
|||||||
Corporate bonds
|
—
|
|
|
355,259
|
|
|
—
|
|
|
355,259
|
|
||||
Commercial paper
|
—
|
|
|
96,214
|
|
|
—
|
|
|
96,214
|
|
||||
U.S. government securities
|
—
|
|
|
44,160
|
|
|
—
|
|
|
44,160
|
|
||||
Total measured at fair value
|
$
|
61,373
|
|
|
$
|
614,406
|
|
|
$
|
—
|
|
|
$
|
675,779
|
|
Cash
|
|
|
|
|
|
|
264,973
|
|
|||||||
Total cash, cash equivalents and short-term investments
|
|
|
|
|
|
|
$
|
940,752
|
|
|
As of July 31, 2018
|
|
As of April 30, 2019
|
||||||||||||
|
Carrying Value
|
|
Estimated Fair Value
|
|
Carrying Value
|
|
Estimated Fair Value
|
||||||||
|
(in thousands)
|
||||||||||||||
Convertible senior notes, net
|
$
|
429,598
|
|
|
$
|
685,527
|
|
|
$
|
451,399
|
|
|
$
|
657,921
|
|
|
Nine Months Ended
April 30, |
||||||
|
2018
|
|
2019
|
||||
|
(in thousands)
|
||||||
Contingent consideration—beginning balance
|
$
|
4,295
|
|
|
$
|
1,872
|
|
Change in fair value (1)
|
(3,371
|
)
|
|
(832
|
)
|
||
Payment
|
—
|
|
|
(1,040
|
)
|
||
Contingent consideration—ending balance
|
$
|
924
|
|
|
$
|
—
|
|
|
(1)
|
Recognized in the condensed consolidated statements of operations within general and administrative expenses.
|
|
As of
April 30, 2019
|
||
|
(in thousands)
|
||
Due within one year
|
$
|
373,305
|
|
Due in one to two years
|
122,328
|
|
|
Total
|
$
|
495,633
|
|
|
Estimated
Useful Life |
|
As of
|
||||||
|
|
July 31, 2018
|
|
April 30, 2019
|
|||||
|
(in months)
|
|
(in thousands)
|
||||||
Computer, production, engineering and other equipment
|
36
|
|
$
|
131,805
|
|
|
$
|
187,380
|
|
Demonstration units
|
12
|
|
53,547
|
|
|
59,254
|
|
||
Leasehold improvements
|
(1)
|
|
19,916
|
|
|
42,862
|
|
||
Furniture and fixtures
|
60
|
|
7,636
|
|
|
13,051
|
|
||
Total property and equipment, gross
|
|
|
212,904
|
|
|
302,547
|
|
||
Less: accumulated depreciation
|
|
|
(127,793
|
)
|
|
(167,985
|
)
|
||
Total property and equipment, net
|
|
|
$
|
85,111
|
|
|
$
|
134,562
|
|
|
(1)
|
Leasehold improvements are amortized over the shorter of the estimated useful lives of the improvements or the remaining lease term.
|
|
Carrying Amount
|
||
|
(in thousands)
|
||
Balance as of July 31, 2018
|
$
|
87,759
|
|
Acquired in Frame Acquisition
|
97,328
|
|
|
Other
|
93
|
|
|
Balance as of April 30, 2019
|
$
|
185,180
|
|
|
As of
|
||||||
|
July 31, 2018
|
|
April 30, 2019
|
||||
|
(in thousands)
|
||||||
Developed technology
|
$
|
47,500
|
|
|
$
|
79,300
|
|
Customer relationships
|
6,650
|
|
|
8,860
|
|
||
Trade name
|
—
|
|
|
4,170
|
|
||
Total intangible assets, gross
|
54,150
|
|
|
92,330
|
|
||
Less:
|
|
|
|
||||
Accumulated amortization of developed technology
|
(6,956
|
)
|
|
(17,515
|
)
|
||
Accumulated amortization of customer relationships
|
(1,828
|
)
|
|
(3,002
|
)
|
||
Accumulated amortization of trade name
|
—
|
|
|
(695
|
)
|
||
Total accumulated amortization
|
(8,784
|
)
|
|
(21,212
|
)
|
||
Total intangible assets, net
|
$
|
45,366
|
|
|
$
|
71,118
|
|
Fiscal Year Ending July 31:
|
Amount
|
||
|
(in thousands)
|
||
2019 (remaining three months)
|
$
|
4,345
|
|
2020
|
17,380
|
|
|
2021
|
17,380
|
|
|
2022
|
16,183
|
|
|
2023
|
10,856
|
|
|
Thereafter
|
4,974
|
|
|
Total
|
$
|
71,118
|
|
|
As of
|
||||||
|
July 31, 2018
|
|
April 30, 2019
|
||||
|
(in thousands)
|
||||||
Other tax assets—non-current
|
$
|
30,927
|
|
|
$
|
—
|
|
Deferred tax assets—non-current
|
2,860
|
|
|
3,064
|
|
||
Other
|
4,068
|
|
|
9,756
|
|
||
Total other assets—non-current
|
$
|
37,855
|
|
|
$
|
12,820
|
|
|
As of
|
||||||
|
July 31, 2018
|
|
April 30, 2019
|
||||
|
(in thousands)
|
||||||
Accrued commissions
|
$
|
21,660
|
|
|
$
|
23,881
|
|
Accrued vacation
|
10,548
|
|
|
14,963
|
|
||
Contributions to ESPP withheld
|
21,931
|
|
|
8,901
|
|
||
Accrued bonus
|
12,129
|
|
|
8,110
|
|
||
Payroll taxes payable
|
9,563
|
|
|
7,382
|
|
||
Other
|
9,567
|
|
|
11,795
|
|
||
Total accrued compensation and benefits
|
$
|
85,398
|
|
|
$
|
75,032
|
|
|
As of
|
||||||
|
July 31, 2018
|
|
April 30, 2019
|
||||
|
(in thousands)
|
||||||
Accrued professional services
|
$
|
5,838
|
|
|
$
|
2,593
|
|
Income taxes payable
|
20,863
|
|
|
2,901
|
|
||
Other
|
4,981
|
|
|
14,525
|
|
||
Total accrued expenses and other current liabilities
|
$
|
31,682
|
|
|
$
|
20,019
|
|
|
Amount
|
||
|
(in thousands)
|
||
Principal amount
|
$
|
575,000
|
|
Less: initial purchasers' discount
|
(10,781
|
)
|
|
Less: cost of the bond hedges
|
(143,175
|
)
|
|
Add: proceeds from the sale of warrants
|
87,975
|
|
|
Less: other issuance costs
|
(707
|
)
|
|
Net proceeds
|
$
|
508,312
|
|
1)
|
during any fiscal quarter commencing after the fiscal quarter ending on April 30, 2018 (and only during such fiscal quarter), if the last reported sale price of our Class A common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding fiscal quarter, is greater than or equal to 130% of the conversion price on each applicable trading day;
|
2)
|
during the five business day period after any five consecutive trading day period (the "measurement period") in which the trading price per $1,000 principal amount of Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our Class A common stock and the conversion rate for the Notes on each such trading day; or
|
3)
|
upon the occurrence of certain specified corporate events.
|
|
As of
|
||||||
|
July 31, 2018
|
|
April 30, 2019
|
||||
|
(in thousands)
|
||||||
Principal amounts:
|
|
|
|
||||
Principal
|
$
|
575,000
|
|
|
$
|
575,000
|
|
Unamortized debt discount (1)
|
(137,719
|
)
|
|
(117,070
|
)
|
||
Unamortized debt issuance costs (1)
|
(7,683
|
)
|
|
(6,531
|
)
|
||
Net carrying amount
|
$
|
429,598
|
|
|
$
|
451,399
|
|
Carrying amount of equity component (2)
|
$
|
148,598
|
|
|
$
|
148,598
|
|
|
(1)
|
Included in the condensed consolidated balance sheets within convertible senior notes, net and amortized over the remaining life of the Notes using the effective interest rate method. The effective interest rate is 6.62%.
|
(2)
|
Included in the condensed consolidated balance sheets within additional paid-in capital, net of $3.0 million in equity issuance costs.
|
|
Three Months Ended
April 30, |
|
Nine Months Ended
April 30, |
||||||||||||
|
2018
|
|
2019
|
|
2018
|
|
2019
|
||||||||
|
(in thousands)
|
||||||||||||||
Interest expense related to amortization of debt discount
|
$
|
6,550
|
|
|
$
|
6,997
|
|
|
$
|
7,250
|
|
|
$
|
20,650
|
|
Interest expense related to amortization of debt issuance costs
|
366
|
|
|
390
|
|
|
404
|
|
|
1,152
|
|
||||
Total interest expense
|
$
|
6,916
|
|
|
$
|
7,387
|
|
|
$
|
7,654
|
|
|
$
|
21,802
|
|
Fiscal Year Ending July 31:
|
Amount
|
||
|
(in thousands)
|
||
2019 (remaining three months)
|
$
|
9,244
|
|
2020
|
39,122
|
|
|
2021
|
35,738
|
|
|
2022
|
33,927
|
|
|
2023
|
31,386
|
|
|
Thereafter
|
26,244
|
|
|
Total
|
$
|
175,661
|
|
•
|
If the Average Stock Price on any given quarterly measurement date does not equal or exceed $80, then none of the MSUs will vest that quarter, and any unvested MSUs will carry over to the next quarter (the “Carryover MSUs”);
|
•
|
If the Average Stock Price on any given quarterly measurement date equals or exceeds $80, then 1/18th of the MSUs plus the applicable Carryover MSUs, if any, would vest; and/or
|
•
|
If the Average Stock Price never equals or exceeds $80 during the Performance Period, the MSUs would terminate at the end of the Performance Period.
|
|
Nine Months Ended
April 30, |
||||
|
2018
|
|
2019
|
||
Expected term (in years)
|
0.75
|
|
|
0.84
|
|
Risk-free interest rate
|
1.4
|
%
|
|
2.5
|
%
|
Volatility
|
49.8
|
%
|
|
69.0
|
%
|
Dividend yield
|
—
|
%
|
|
—
|
%
|
|
Three Months Ended
April 30, |
|
Nine Months Ended
April 30, |
||||||||||||
|
2018
|
|
2019
|
|
2018
|
|
2019
|
||||||||
|
(in thousands)
|
||||||||||||||
Cost of revenue:
|
|
|
|
|
|
|
|
||||||||
Product
|
$
|
634
|
|
|
$
|
953
|
|
|
$
|
1,888
|
|
|
$
|
2,523
|
|
Support, entitlements and other services
|
1,951
|
|
|
4,542
|
|
|
6,156
|
|
|
11,072
|
|
||||
Sales and marketing
|
18,051
|
|
|
35,257
|
|
|
47,759
|
|
|
81,325
|
|
||||
Research and development
|
16,474
|
|
|
42,265
|
|
|
49,039
|
|
|
107,953
|
|
||||
General and administrative
|
7,836
|
|
|
11,815
|
|
|
17,630
|
|
|
30,449
|
|
||||
Total stock-based compensation expense
|
$
|
44,946
|
|
|
$
|
94,832
|
|
|
$
|
122,472
|
|
|
$
|
233,322
|
|
|
Three Months Ended
April 30, |
|
Nine Months Ended
April 30, |
||||||||||||
|
2018
|
|
2019
|
|
2018
|
|
2019
|
||||||||
|
(in thousands, except share and per share data)
|
||||||||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net loss
|
$
|
(85,674
|
)
|
|
$
|
(209,813
|
)
|
|
$
|
(209,792
|
)
|
|
$
|
(426,841
|
)
|
Denominator:
|
|
|
|
|
|
|
|
||||||||
Weighted average shares—basic and diluted
|
166,845,544
|
|
|
182,962,921
|
|
|
161,709,365
|
|
|
179,235,498
|
|
||||
Net loss per share attributable to common stockholders—basic and diluted
|
$
|
(0.51
|
)
|
|
$
|
(1.15
|
)
|
|
$
|
(1.30
|
)
|
|
$
|
(2.38
|
)
|
|
Three and Nine Months Ended
April 30, |
||||
|
2018
|
|
2019
|
||
Outstanding stock options and RSUs
|
35,206,318
|
|
|
32,337,562
|
|
Employee stock purchase plan
|
1,341,470
|
|
|
1,657,333
|
|
Contingently issuable shares pursuant to business combinations
|
276,625
|
|
|
748,172
|
|
Common stock subject to repurchase
|
73,360
|
|
|
6,251
|
|
Common stock warrants
|
34,180
|
|
|
34,180
|
|
Total
|
36,931,953
|
|
|
34,783,498
|
|
|
Three Months Ended
April 30, |
|
Nine Months Ended
April 30, |
||||||||||||
|
2018
|
|
2019
|
|
2018
|
|
2019
|
||||||||
|
(in thousands)
|
||||||||||||||
U.S.
|
$
|
135,276
|
|
|
$
|
158,263
|
|
|
$
|
488,416
|
|
|
$
|
519,923
|
|
Asia Pacific
|
68,622
|
|
|
66,105
|
|
|
172,774
|
|
|
205,115
|
|
||||
Europe, the Middle East and Africa
|
74,916
|
|
|
52,853
|
|
|
164,089
|
|
|
177,260
|
|
||||
Other Americas
|
10,599
|
|
|
10,403
|
|
|
26,430
|
|
|
33,969
|
|
||||
Total revenue
|
$
|
289,413
|
|
|
$
|
287,624
|
|
|
$
|
851,709
|
|
|
$
|
936,267
|
|
|
As of and for the
|
||||||||||||||
|
Three Months Ended
April 30, |
|
Nine Months Ended
April 30, |
||||||||||||
|
2018
|
|
2019
|
|
2018
|
|
2019
|
||||||||
|
(in thousands, except percentages)
|
||||||||||||||
Total revenue
|
$
|
289,413
|
|
|
$
|
287,624
|
|
|
$
|
851,709
|
|
|
$
|
936,267
|
|
Year-over-year percentage increase (decrease)
|
40.7
|
%
|
|
(0.6
|
)%
|
|
43.5
|
%
|
|
9.9
|
%
|
||||
Subscription revenue
|
$
|
80,105
|
|
|
$
|
168,447
|
|
|
$
|
216,668
|
|
|
$
|
452,779
|
|
Software and support revenue
|
$
|
226,796
|
|
|
$
|
265,771
|
|
|
$
|
630,255
|
|
|
$
|
843,948
|
|
Total billings
|
$
|
351,178
|
|
|
$
|
346,027
|
|
|
$
|
1,022,418
|
|
|
$
|
1,143,002
|
|
Subscription billings
|
$
|
142,965
|
|
|
$
|
224,312
|
|
|
$
|
378,444
|
|
|
$
|
652,692
|
|
Software and support billings
|
$
|
291,952
|
|
|
$
|
324,174
|
|
|
$
|
800,964
|
|
|
$
|
1,050,683
|
|
Gross profit
|
$
|
193,798
|
|
|
$
|
212,547
|
|
|
$
|
538,944
|
|
|
$
|
701,102
|
|
Adjusted gross profit
|
$
|
197,830
|
|
|
$
|
221,736
|
|
|
$
|
550,494
|
|
|
$
|
725,414
|
|
Gross margin
|
67.0
|
%
|
|
73.9
|
%
|
|
63.3
|
%
|
|
74.9
|
%
|
||||
Adjusted gross margin
|
68.4
|
%
|
|
77.1
|
%
|
|
64.6
|
%
|
|
77.5
|
%
|
||||
Total deferred revenue
|
$
|
539,889
|
|
|
$
|
838,262
|
|
|
$
|
539,889
|
|
|
$
|
838,262
|
|
Net cash provided by (used in) operating activities
|
$
|
13,292
|
|
|
$
|
(36,490
|
)
|
|
$
|
69,804
|
|
|
$
|
51,824
|
|
Free cash flow
|
$
|
(804
|
)
|
|
$
|
(58,922
|
)
|
|
$
|
23,715
|
|
|
$
|
(42,991
|
)
|
Non-GAAP operating expenses
|
$
|
232,398
|
|
|
$
|
326,516
|
|
|
$
|
627,397
|
|
|
$
|
895,083
|
|
Total end customers
|
9,690
|
|
|
13,190
|
|
|
9,690
|
|
|
13,190
|
|
|
Three Months Ended
April 30, |
|
Nine Months Ended
April 30, |
||||||||||||
|
2018
|
|
2019
|
|
2018
|
|
2019
|
||||||||
|
(in thousands)
|
||||||||||||||
Disaggregation of revenue:
|
|
|
|
|
|
|
|
||||||||
Subscription revenue
|
$
|
80,105
|
|
|
$
|
168,447
|
|
|
$
|
216,668
|
|
|
$
|
452,779
|
|
Non-portable software revenue
|
140,879
|
|
|
88,719
|
|
|
396,986
|
|
|
366,910
|
|
||||
Hardware revenue
|
62,617
|
|
|
21,853
|
|
|
221,454
|
|
|
92,319
|
|
||||
Professional services revenue
|
5,812
|
|
|
8,605
|
|
|
16,601
|
|
|
24,259
|
|
||||
Total revenue
|
$
|
289,413
|
|
|
$
|
287,624
|
|
|
$
|
851,709
|
|
|
$
|
936,267
|
|
|
|
|
|
|
|
|
|
||||||||
Disaggregation of billings:
|
|
|
|
|
|
|
|
||||||||
Subscription billings
|
$
|
142,965
|
|
|
$
|
224,312
|
|
|
$
|
378,444
|
|
|
$
|
652,692
|
|
Non-portable software billings
|
139,092
|
|
|
88,719
|
|
|
396,986
|
|
|
366,910
|
|
||||
Hardware billings
|
59,226
|
|
|
21,853
|
|
|
221,451
|
|
|
92,319
|
|
||||
Professional services billings
|
9,895
|
|
|
11,143
|
|
|
25,537
|
|
|
31,081
|
|
||||
Total billings
|
$
|
351,178
|
|
|
$
|
346,027
|
|
|
$
|
1,022,418
|
|
|
$
|
1,143,002
|
|
•
|
are used by management and the Board of Directors to understand and evaluate our performance and trends, as well as to provide a useful measure for period-to-period comparisons of our core business;
|
•
|
are widely used as a measure of financial performance to understand and evaluate companies in our industry; and
|
•
|
are used by management to prepare and approve our annual budget and to develop short-term and long-term operational and compensation plans, as well as to assess our actual performance against our goals.
|
|
Three Months Ended
April 30, |
|
Nine Months Ended
April 30, |
||||||||||||
|
2018
|
|
2019
|
|
2018
|
|
2019
|
||||||||
|
(in thousands, except percentages)
|
||||||||||||||
Total revenue
|
$
|
289,413
|
|
|
$
|
287,624
|
|
|
$
|
851,709
|
|
|
$
|
936,267
|
|
Change in deferred revenue, net of acquisitions (1)
|
61,765
|
|
|
58,403
|
|
|
170,709
|
|
|
206,735
|
|
||||
Total billings (non-GAAP)
|
$
|
351,178
|
|
|
$
|
346,027
|
|
|
$
|
1,022,418
|
|
|
$
|
1,143,002
|
|
|
|
|
|
|
|
|
|
||||||||
Gross profit
|
$
|
193,798
|
|
|
$
|
212,547
|
|
|
$
|
538,944
|
|
|
$
|
701,102
|
|
Stock-based compensation
|
2,585
|
|
|
5,495
|
|
|
8,044
|
|
|
13,595
|
|
||||
Amortization of intangible assets
|
1,447
|
|
|
3,694
|
|
|
3,506
|
|
|
10,554
|
|
||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
163
|
|
||||
Adjusted gross profit (non-GAAP)
|
$
|
197,830
|
|
|
$
|
221,736
|
|
|
$
|
550,494
|
|
|
$
|
725,414
|
|
|
|
|
|
|
|
|
|
||||||||
Gross margin
|
67.0
|
%
|
|
73.9
|
%
|
|
63.3
|
%
|
|
74.9
|
%
|
||||
Stock-based compensation
|
0.9
|
%
|
|
1.9
|
%
|
|
0.9
|
%
|
|
1.5
|
%
|
||||
Amortization of intangible assets
|
0.5
|
%
|
|
1.3
|
%
|
|
0.4
|
%
|
|
1.1
|
%
|
||||
Other
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
||||
Adjusted gross margin (non-GAAP)
|
68.4
|
%
|
|
77.1
|
%
|
|
64.6
|
%
|
|
77.5
|
%
|
||||
|
|
|
|
|
|
|
|
||||||||
Net cash provided by (used in) operating activities
|
$
|
13,292
|
|
|
$
|
(36,490
|
)
|
|
$
|
69,804
|
|
|
$
|
51,824
|
|
Purchases of property and equipment
|
(14,096
|
)
|
|
(22,432
|
)
|
|
(46,089
|
)
|
|
(94,815
|
)
|
||||
Free cash flow (non-GAAP)
|
$
|
(804
|
)
|
|
$
|
(58,922
|
)
|
|
$
|
23,715
|
|
|
$
|
(42,991
|
)
|
|
|
|
|
|
|
|
|
||||||||
Operating expenses
|
$
|
276,080
|
|
|
$
|
416,725
|
|
|
$
|
740,122
|
|
|
$
|
1,116,624
|
|
Stock-based compensation
|
(42,361
|
)
|
|
(89,337
|
)
|
|
(114,428
|
)
|
|
(219,727
|
)
|
||||
Amortization of intangible assets
|
(222
|
)
|
|
(661
|
)
|
|
(625
|
)
|
|
(1,877
|
)
|
||||
Change in fair value of contingent consideration
|
(584
|
)
|
|
37
|
|
|
3,371
|
|
|
832
|
|
||||
Acquisition-related costs
|
(515
|
)
|
|
(200
|
)
|
|
(1,043
|
)
|
|
(721
|
)
|
||||
Other
|
—
|
|
|
(48
|
)
|
|
—
|
|
|
(48
|
)
|
||||
Operating expenses (non-GAAP)
|
$
|
232,398
|
|
|
$
|
326,516
|
|
|
$
|
627,397
|
|
|
$
|
895,083
|
|
|
(1)
|
Amount for the nine months ended April 30, 2019 excludes approximately $0.3 million of deferred revenue assumed in an acquisition.
|
|
Three Months Ended
April 30, |
|
Nine Months Ended
April 30, |
||||||||||||
|
2018
|
|
2019
|
|
2018
|
|
2019
|
||||||||
|
(in thousands)
|
||||||||||||||
Subscription revenue
|
$
|
80,105
|
|
|
$
|
168,447
|
|
|
$
|
216,668
|
|
|
$
|
452,779
|
|
Change in subscription deferred revenue, net of acquisitions (2)
|
62,860
|
|
|
55,865
|
|
|
161,776
|
|
|
199,913
|
|
||||
Subscription billings
|
$
|
142,965
|
|
|
$
|
224,312
|
|
|
$
|
378,444
|
|
|
$
|
652,692
|
|
|
|
|
|
|
|
|
|
||||||||
Professional services revenue
|
$
|
5,812
|
|
|
$
|
8,605
|
|
|
$
|
16,601
|
|
|
$
|
24,259
|
|
Change in professional services deferred revenue
|
4,083
|
|
|
2,538
|
|
|
8,936
|
|
|
6,822
|
|
||||
Professional services billings
|
$
|
9,895
|
|
|
$
|
11,143
|
|
|
$
|
25,537
|
|
|
$
|
31,081
|
|
|
|
|
|
|
|
|
|
||||||||
Software revenue
|
$
|
158,500
|
|
|
$
|
162,941
|
|
|
$
|
441,885
|
|
|
$
|
553,753
|
|
Hardware revenue
|
62,617
|
|
|
21,853
|
|
|
221,454
|
|
|
92,319
|
|
||||
Product revenue
|
221,117
|
|
|
184,794
|
|
|
663,339
|
|
|
646,072
|
|
||||
Support, entitlements and other services revenue
|
68,296
|
|
|
102,830
|
|
|
188,370
|
|
|
290,195
|
|
||||
Total revenue
|
$
|
289,413
|
|
|
$
|
287,624
|
|
|
$
|
851,709
|
|
|
$
|
936,267
|
|
|
|
|
|
|
|
|
|
||||||||
Total software and support revenue (1)
|
$
|
226,796
|
|
|
$
|
265,771
|
|
|
$
|
630,255
|
|
|
$
|
843,948
|
|
Change in software and support deferred revenue, net of acquisitions (2)(3)
|
65,156
|
|
|
58,403
|
|
|
170,709
|
|
|
206,735
|
|
||||
Software and support billings (1)
|
$
|
291,952
|
|
|
$
|
324,174
|
|
|
$
|
800,964
|
|
|
$
|
1,050,683
|
|
|
(1)
|
Software and support revenue and billings include software and support, entitlements and other services revenue and billings.
|
(2)
|
Amount for the nine months ended April 30, 2019 excludes approximately $0.3 million of deferred revenue assumed in an acquisition.
|
(3)
|
Approximately $3.4 million of hardware was included in deferred revenue as of January 31, 2018.
|
|
Three Months Ended
April 30, |
|
Nine Months Ended
April 30, |
||||||||||||
|
2018
|
|
2019
|
|
2018
|
|
2019
|
||||||||
|
(in thousands)
|
||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
Product
|
$
|
221,117
|
|
|
$
|
184,794
|
|
|
$
|
663,339
|
|
|
$
|
646,072
|
|
Support, entitlements and other services
|
68,296
|
|
|
102,830
|
|
|
188,370
|
|
|
290,195
|
|
||||
Total revenue
|
289,413
|
|
|
287,624
|
|
|
851,709
|
|
|
936,267
|
|
||||
Cost of revenue:
|
|
|
|
|
|
|
|
||||||||
Product (1)(2)
|
66,680
|
|
|
29,528
|
|
|
235,059
|
|
|
114,755
|
|
||||
Support, entitlements and other services (1)
|
28,935
|
|
|
45,549
|
|
|
77,706
|
|
|
120,410
|
|
||||
Total cost of revenue
|
95,615
|
|
|
75,077
|
|
|
312,765
|
|
|
235,165
|
|
||||
Gross profit
|
193,798
|
|
|
212,547
|
|
|
538,944
|
|
|
701,102
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Sales and marketing (1)(2)
|
169,860
|
|
|
245,703
|
|
|
466,466
|
|
|
655,907
|
|
||||
Research and development (1)
|
81,291
|
|
|
137,982
|
|
|
216,727
|
|
|
371,550
|
|
||||
General and administrative (1)
|
24,929
|
|
|
33,040
|
|
|
56,929
|
|
|
89,167
|
|
||||
Total operating expenses
|
276,080
|
|
|
416,725
|
|
|
740,122
|
|
|
1,116,624
|
|
||||
Loss from operations
|
(82,282
|
)
|
|
(204,178
|
)
|
|
(201,178
|
)
|
|
(415,522
|
)
|
||||
Other expense, net
|
(4,235
|
)
|
|
(3,212
|
)
|
|
(5,285
|
)
|
|
(10,314
|
)
|
||||
Loss before provision for (benefit from) income taxes
|
(86,517
|
)
|
|
(207,390
|
)
|
|
(206,463
|
)
|
|
(425,836
|
)
|
||||
Provision for (benefit from) income taxes
|
(843
|
)
|
|
2,423
|
|
|
3,329
|
|
|
1,005
|
|
||||
Net loss
|
$
|
(85,674
|
)
|
|
$
|
(209,813
|
)
|
|
$
|
(209,792
|
)
|
|
$
|
(426,841
|
)
|
|
|
|
|
|
|
|
|
||||||||
(1) Includes stock-based compensation expense as follows:
|
|
|
|
|
|
|
|
||||||||
Product cost of revenue
|
$
|
634
|
|
|
$
|
953
|
|
|
$
|
1,888
|
|
|
$
|
2,523
|
|
Support, entitlements and other services cost of revenue
|
1,951
|
|
|
4,542
|
|
|
6,156
|
|
|
11,072
|
|
||||
Sales and marketing
|
18,051
|
|
|
35,257
|
|
|
47,759
|
|
|
81,325
|
|
||||
Research and development
|
16,474
|
|
|
42,265
|
|
|
49,039
|
|
|
107,953
|
|
||||
General and administrative
|
7,836
|
|
|
11,815
|
|
|
17,630
|
|
|
30,449
|
|
||||
Total stock-based compensation expense
|
$
|
44,946
|
|
|
$
|
94,832
|
|
|
$
|
122,472
|
|
|
$
|
233,322
|
|
|
|
|
|
|
|
|
|
||||||||
(2) Includes amortization of intangible assets as follows:
|
|
|
|
|
|
|
|
||||||||
Product cost of revenue
|
$
|
1,447
|
|
|
$
|
3,694
|
|
|
$
|
3,506
|
|
|
$
|
10,554
|
|
Sales and marketing
|
222
|
|
|
661
|
|
|
625
|
|
|
1,877
|
|
||||
Total amortization of intangible assets
|
$
|
1,669
|
|
|
$
|
4,355
|
|
|
$
|
4,131
|
|
|
$
|
12,431
|
|
|
Three Months Ended
April 30, |
|
Nine Months Ended
April 30, |
||||||||
|
2018
|
|
2019
|
|
2018
|
|
2019
|
||||
|
(as a percentage of total revenue)
|
||||||||||
Revenue:
|
|
|
|
|
|
|
|
||||
Product
|
76.4
|
%
|
|
64.2
|
%
|
|
77.9
|
%
|
|
69.0
|
%
|
Support, entitlements and other services
|
23.6
|
%
|
|
35.8
|
%
|
|
22.1
|
%
|
|
31.0
|
%
|
Total revenue
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Cost of revenue:
|
|
|
|
|
|
|
|
||||
Product
|
23.0
|
%
|
|
10.3
|
%
|
|
27.6
|
%
|
|
12.2
|
%
|
Support, entitlements and other services
|
10.0
|
%
|
|
15.8
|
%
|
|
9.1
|
%
|
|
12.9
|
%
|
Total cost of revenue
|
33.0
|
%
|
|
26.1
|
%
|
|
36.7
|
%
|
|
25.1
|
%
|
Gross profit
|
67.0
|
%
|
|
73.9
|
%
|
|
63.3
|
%
|
|
74.9
|
%
|
Operating expenses:
|
|
|
|
|
|
|
|
||||
Sales and marketing
|
58.7
|
%
|
|
85.4
|
%
|
|
54.8
|
%
|
|
70.1
|
%
|
Research and development
|
28.1
|
%
|
|
48.0
|
%
|
|
25.4
|
%
|
|
39.7
|
%
|
General and administrative
|
8.6
|
%
|
|
11.5
|
%
|
|
6.7
|
%
|
|
9.5
|
%
|
Total operating expenses
|
95.4
|
%
|
|
144.9
|
%
|
|
86.9
|
%
|
|
119.3
|
%
|
Loss from operations
|
(28.4
|
)%
|
|
(71.0
|
)%
|
|
(23.6
|
)%
|
|
(44.4
|
)%
|
Other expense, net
|
(1.5
|
)%
|
|
(1.1
|
)%
|
|
(0.6
|
)%
|
|
(1.1
|
)%
|
Loss before provision for (benefit from) income taxes
|
(29.9
|
)%
|
|
(72.1
|
)%
|
|
(24.2
|
)%
|
|
(45.5
|
)%
|
Provision for (benefit from) income taxes
|
(0.3
|
)%
|
|
0.8
|
%
|
|
0.4
|
%
|
|
0.1
|
%
|
Net loss
|
(29.6
|
)%
|
|
(72.9
|
)%
|
|
(24.6
|
)%
|
|
(45.6
|
)%
|
|
Three Months Ended
April 30, |
|
Change
|
|
Nine Months Ended
April 30, |
|
Change
|
||||||||||||||||||||||
|
2018
|
|
2019
|
|
$
|
|
%
|
|
2018
|
|
2019
|
|
$
|
|
%
|
||||||||||||||
|
(in thousands, except percentages)
|
||||||||||||||||||||||||||||
Product
|
$
|
221,117
|
|
|
$
|
184,794
|
|
|
$
|
(36,323
|
)
|
|
(16
|
)%
|
|
$
|
663,339
|
|
|
$
|
646,072
|
|
|
$
|
(17,267
|
)
|
|
(3
|
)%
|
Support, entitlements and other services
|
68,296
|
|
|
102,830
|
|
|
34,534
|
|
|
51
|
%
|
|
188,370
|
|
|
290,195
|
|
|
101,825
|
|
|
54
|
%
|
||||||
Total revenue
|
$
|
289,413
|
|
|
$
|
287,624
|
|
|
$
|
(1,789
|
)
|
|
(1
|
)%
|
|
$
|
851,709
|
|
|
$
|
936,267
|
|
|
$
|
84,558
|
|
|
10
|
%
|
|
Three Months Ended
April 30, |
|
Change
|
|
Nine Months Ended
April 30, |
|
Change
|
||||||||||||||||||||||
|
2018
|
|
2019
|
|
$
|
|
%
|
|
2018
|
|
2019
|
|
$
|
|
%
|
||||||||||||||
|
(in thousands, except percentages)
|
||||||||||||||||||||||||||||
U.S.
|
$
|
135,276
|
|
|
$
|
158,263
|
|
|
$
|
22,987
|
|
|
17
|
%
|
|
$
|
488,416
|
|
|
$
|
519,923
|
|
|
$
|
31,507
|
|
|
6
|
%
|
Asia Pacific
|
68,622
|
|
|
66,105
|
|
|
(2,517
|
)
|
|
(4
|
)%
|
|
172,774
|
|
|
205,115
|
|
|
32,341
|
|
|
19
|
%
|
||||||
Europe, the Middle East and Africa
|
74,916
|
|
|
52,853
|
|
|
(22,063
|
)
|
|
(29
|
)%
|
|
164,089
|
|
|
177,260
|
|
|
13,171
|
|
|
8
|
%
|
||||||
Other Americas
|
10,599
|
|
|
10,403
|
|
|
(196
|
)
|
|
(2
|
)%
|
|
26,430
|
|
|
33,969
|
|
|
7,539
|
|
|
29
|
%
|
||||||
Total revenue
|
$
|
289,413
|
|
|
$
|
287,624
|
|
|
$
|
(1,789
|
)
|
|
(1
|
)%
|
|
$
|
851,709
|
|
|
$
|
936,267
|
|
|
$
|
84,558
|
|
|
10
|
%
|
|
Three Months Ended
April 30, |
|
Change
|
|
Nine Months Ended
April 30, |
|
Change
|
||||||||||||||||||||||
|
2018
|
|
2019
|
|
$
|
|
%
|
|
2018
|
|
2019
|
|
$
|
|
%
|
||||||||||||||
|
(in thousands, except percentages)
|
||||||||||||||||||||||||||||
Cost of product revenue
|
$
|
66,680
|
|
|
$
|
29,528
|
|
|
$
|
(37,152
|
)
|
|
(56
|
)%
|
|
$
|
235,059
|
|
|
$
|
114,755
|
|
|
$
|
(120,304
|
)
|
|
(51
|
)%
|
Product gross margin
|
69.8
|
%
|
|
84.0
|
%
|
|
|
|
|
|
|
64.6
|
%
|
|
82.2
|
%
|
|
|
|
|
|
||||||||
Cost of support, entitlements and other services revenue
|
$
|
28,935
|
|
|
$
|
45,549
|
|
|
$
|
16,614
|
|
|
57
|
%
|
|
$
|
77,706
|
|
|
$
|
120,410
|
|
|
$
|
42,704
|
|
|
55
|
%
|
Support, entitlements and other services gross margin
|
57.6
|
%
|
|
55.7
|
%
|
|
|
|
|
|
|
58.7
|
%
|
|
58.5
|
%
|
|
|
|
|
|
||||||||
Total gross margin
|
67.0
|
%
|
|
73.9
|
%
|
|
|
|
|
|
|
63.3
|
%
|
|
74.9
|
%
|
|
|
|
|
|
|
Three Months Ended
April 30, |
|
Change
|
|
Nine Months Ended
April 30, |
|
Change
|
||||||||||||||||||||||
|
2018
|
|
2019
|
|
$
|
|
%
|
|
2018
|
|
2019
|
|
$
|
|
%
|
||||||||||||||
|
(in thousands, except percentages)
|
||||||||||||||||||||||||||||
Sales and marketing
|
$
|
169,860
|
|
|
$
|
245,703
|
|
|
$
|
75,843
|
|
|
45
|
%
|
|
$
|
466,466
|
|
|
$
|
655,907
|
|
|
$
|
189,441
|
|
|
41
|
%
|
Percent of total revenue
|
58.7
|
%
|
|
85.4
|
%
|
|
|
|
|
|
54.8
|
%
|
|
70.1
|
%
|
|
|
|
|
|
Three Months Ended
April 30, |
|
Change
|
|
Nine Months Ended
April 30, |
|
Change
|
||||||||||||||||||||||
|
2018
|
|
2019
|
|
$
|
|
%
|
|
2018
|
|
2019
|
|
$
|
|
%
|
||||||||||||||
|
(in thousands, except percentages)
|
||||||||||||||||||||||||||||
Research and development
|
$
|
81,291
|
|
|
$
|
137,982
|
|
|
$
|
56,691
|
|
|
70
|
%
|
|
$
|
216,727
|
|
|
$
|
371,550
|
|
|
$
|
154,823
|
|
|
71
|
%
|
Percent of total revenue
|
28.1
|
%
|
|
48.0
|
%
|
|
|
|
|
|
25.4
|
%
|
|
39.7
|
%
|
|
|
|
|
|
Three Months Ended
April 30, |
|
Change
|
|
Nine Months Ended
April 30, |
|
Change
|
||||||||||||||||||||||
|
2018
|
|
2019
|
|
$
|
|
%
|
|
2018
|
|
2019
|
|
$
|
|
%
|
||||||||||||||
|
(in thousands, except percentages)
|
||||||||||||||||||||||||||||
General and administrative
|
$
|
24,929
|
|
|
$
|
33,040
|
|
|
$
|
8,111
|
|
|
33
|
%
|
|
$
|
56,929
|
|
|
$
|
89,167
|
|
|
$
|
32,238
|
|
|
57
|
%
|
Percent of total revenue
|
8.6
|
%
|
|
11.5
|
%
|
|
|
|
|
|
6.7
|
%
|
|
9.5
|
%
|
|
|
|
|
|
Three Months Ended
April 30, |
|
Change
|
|
Nine Months Ended
April 30, |
|
Change
|
||||||||||||||||||||||
|
2018
|
|
2019
|
|
$
|
|
%
|
|
2018
|
|
2019
|
|
$
|
|
%
|
||||||||||||||
|
(in thousands, except percentages)
|
||||||||||||||||||||||||||||
(Benefit from) provision for income taxes
|
$
|
(843
|
)
|
|
$
|
2,423
|
|
|
$
|
3,266
|
|
|
(387
|
)%
|
|
$
|
3,329
|
|
|
$
|
1,005
|
|
|
$
|
(2,324
|
)
|
|
(70
|
)%
|
|
Nine Months Ended
April 30, |
||||||
|
2018
|
|
2019
|
||||
|
(in thousands)
|
||||||
Net cash provided by operating activities
|
$
|
69,804
|
|
|
$
|
51,824
|
|
Net cash (used in) provided by investing activities
|
(406,790
|
)
|
|
22,150
|
|
||
Net cash provided by financing activities
|
575,410
|
|
|
65,171
|
|
||
Net increase in cash, cash equivalents and restricted cash
|
$
|
238,424
|
|
|
$
|
139,145
|
|
|
Payments Due by Period
|
||||||||||||||||||
|
Total
|
|
Less than 1 Year
|
|
1 Year to 3 Years
|
|
3 to 5 Years
|
|
More than 5 Years
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Principal amount payable on convertible senior notes (1)
|
$
|
575,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
575,000
|
|
|
$
|
—
|
|
Operating lease obligations
|
175,661
|
|
|
39,003
|
|
|
70,673
|
|
|
60,461
|
|
|
5,524
|
|
|||||
Other purchase commitments (2)
|
53,384
|
|
|
53,384
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Guarantees with contract manufacturers and OEMs
|
135,725
|
|
|
62,850
|
|
|
72,875
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
939,770
|
|
|
$
|
155,237
|
|
|
$
|
143,548
|
|
|
$
|
635,461
|
|
|
$
|
5,524
|
|
|
(1)
|
For additional information regarding our convertible senior notes, refer to Note 6 of Part I, Item 1 of this Quarterly Report on Form 10-Q.
|
(2)
|
Purchase obligations pertaining to our normal operations.
|
•
|
software providers, such as Red Hat and VMware, that offer a broad range of virtualization, infrastructure and management products to build and operate enterprise clouds;
|
•
|
traditional IT systems vendors, such as Cisco Systems, Inc. ("Cisco"), Dell, Hewlett Packard Enterprise Company ("HPE"), Hitachi Data Systems Corporation ("Hitachi"), International Business Machines Corporation ("IBM"), and Lenovo Group Ltd., that offer integrated systems that include bundles of servers, storage and networking solutions, as well as a broad range of standalone server and storage products;
|
•
|
traditional storage array vendors, such as Dell, Hitachi and NetApp, Inc. ("NetApp"), which typically sell centralized storage products; and
|
•
|
providers of public cloud infrastructure, such as Amazon.com, Inc. ("Amazon"), Google Inc. and Microsoft Corporation.
|
•
|
arrangements entered into on a subscription basis may delay when we can recognize revenue and can require up-front costs, which may be significant;
|
•
|
since revenue is recognized over the term of the customer agreement in certain transactions, any decrease in customer purchases of our subscription-based products and services will not be fully reflected in our operating results until future periods. This will also make it difficult for us to rapidly increase our revenue through additional subscription sales in any one period;
|
•
|
subscription-based revenue arrangements are under short-term agreements. Accordingly, our customers generally have no long-term obligation to us and may cancel their subscription at any time, even if our customers are satisfied with our subscription products;
|
•
|
customers in a subscription arrangement may elect not to renew their contract upon expiration, or they may attempt to renegotiate pricing or other contractual terms at the point of, or prior to, renewal on terms that are less favorable to us;
|
•
|
investors, industry and financial analysts may have difficulty understanding the shift in our business model, resulting in changes in financial estimates or failure to meet investor expectations; and
|
•
|
there is no assurance that the solutions we offer on a subscription basis, including new revenue models or new products that we may introduce, will receive broad marketplace acceptance.
|
•
|
competition from companies that traditionally target larger enterprises, service providers and government entities and that may have pre-existing relationships or purchase commitments from such end customers;
|
•
|
increased purchasing power and leverage held by large end customers in negotiating contractual arrangements with us;
|
•
|
more stringent requirements in our support service contracts, including demand for quicker support response times and penalties for any failure to meet support requirements; and
|
•
|
longer sales cycles and the associated risk that substantial time and resources may be spent on a potential end customer that elects not to purchase our solutions.
|
•
|
the timing and magnitude of orders, shipments and acceptance of our solutions in any quarter;
|
•
|
our ability to attract new and retain existing end customers;
|
•
|
disruptions in our sales channels or shifts in our relationships with important channel partners and OEMs;
|
•
|
the timing of revenue recognition for our sales, the impact of which is heightened by our shift toward software-only sales and shift to a subscription-based model;
|
•
|
reductions in end customers’ budgets for information technology purchases;
|
•
|
delays in end customers’ purchasing cycles or deferments of end customers’ purchases in anticipation of new products or updates from us or our competitors;
|
•
|
fluctuations in demand and competitive pricing pressures for our solutions;
|
•
|
the mix of solutions sold, including the mix between appliance and software-only sales and the mix of the types of appliances that we sell, and the mix of revenue between products and support, entitlements and other services, which will depend in part on whether we are successful in executing our strategy to transition our business to focus on more software-only transactions;
|
•
|
our ability to develop, introduce and ship in a timely manner new solutions and product enhancements that meet customer requirements, and market acceptance of such new solutions and product enhancements;
|
•
|
the timing of product releases or upgrades or announcements by us or our competitors;
|
•
|
any change in the competitive dynamics of our markets, including consolidation or partnerships among our competitors or partners, new entrants or discounting of prices;
|
•
|
the amount and timing of expenses to grow our business and the extent to which we are able to take advantage of economies of scale or to leverage our relationships with OEM or channel partners;
|
•
|
the costs associated with acquiring new businesses and technologies and the follow-on costs of integrating and consolidating the results of acquired businesses;
|
•
|
the amount and timing of stock-based compensation expenses;
|
•
|
our ability to control the costs of our solutions and their key components, or to pass along any cost increases to our end customers;
|
•
|
general economic, industry and market conditions; and
|
•
|
future accounting pronouncements and changes in accounting policies, including our ability to implement the new procedures and processes necessary to accurately recognize our revenue under the new ASC 606 revenue recognition standard.
|
•
|
lost revenue or lost OEM or other channel partners or end customers;
|
•
|
increased costs, including warranty expense and costs associated with end customer support as well as development costs to remedy the errors or defects;
|
•
|
delays, cancellations, reductions or rescheduling of orders or shipments;
|
•
|
product returns or discounts; and
|
•
|
damage to our reputation and brand.
|
•
|
public sector budgetary cycles and funding authorizations;
|
•
|
changes in fiscal or contracting policies;
|
•
|
decreases in available government funding;
|
•
|
changes in government programs or applicable requirements;
|
•
|
the adoption of new laws or regulations or changes to existing laws or regulations;
|
•
|
potential delays or changes in the government appropriations or other funding authorization processes; and
|
•
|
higher expenses associated with, or delays caused by, diligence and qualifying or maintaining qualification as a government vendor.
|
•
|
business practices may differ from those in the United States and may require us in the future to include terms other than our standard terms in customer, channel partner, employee, consultant and other contracts;
|
•
|
political, economic and social instability or uncertainty around the world;
|
•
|
potential changes in trade relations arising from policy initiatives implemented by, or statements made by, the U.S. government, which has been critical of existing and proposed trade agreements, such as the newly imposed tariffs for Chinese imports to the U.S.;
|
•
|
greater difficulty in enforcing contracts, judgments and arbitration awards in international courts, and in collecting accounts receivable and longer payment and collection periods;
|
•
|
greater risk of unexpected changes in regulatory practices, tariffs, and tax laws and treaties;
|
•
|
risks associated with trade restrictions and foreign legal requirements, including the importation, certification and localization of our solutions required in foreign countries;
|
•
|
greater risk of a failure of foreign employees, partners, distributors and resellers to comply with both U.S. and foreign laws, including antitrust regulations, the FCPA, the U.K. Bribery Act, U.S. or foreign sanctions regimes and export or import control laws, and any trade regulations ensuring fair trade practices;
|
•
|
heightened risk of unfair or corrupt business practices in certain geographies and of improper or fraudulent sales arrangements that may impact financial results and result in restatements of, or irregularities in, financial statements;
|
•
|
requirements to comply with foreign privacy, data protection and information security laws and regulations and the risks and costs of noncompliance;
|
•
|
reduced or uncertain protection for intellectual property rights in some countries;
|
•
|
impediments to the flow of foreign exchange capital payments and receipts due to exchange controls instituted by certain foreign governments;
|
•
|
increased expenses incurred in establishing and maintaining corporate entities, office space, and equipment for our international operations;
|
•
|
difficulties in managing and staffing international offices and increased travel, infrastructure and legal compliance costs associated with multiple international locations;
|
•
|
greater difficulty in identifying, attracting and retaining local experienced personnel, and the costs and expenses associated with such activities;
|
•
|
the challenge of managing a development team in geographically disparate locations;
|
•
|
management communication and integration problems resulting from cultural and geographic dispersion;
|
•
|
differing employment practices and labor relations issues;
|
•
|
fluctuations in exchange rates between the U.S. dollar and foreign currencies in markets where we do business; and
|
•
|
treatment of revenue from international sources for tax purposes and changes in tax laws, regulations or official interpretations, including being subject to foreign tax laws and being liable for paying withholding, income or other taxes in foreign jurisdictions.
|
•
|
If open source software programmers, most of whom we do not employ, do not continue to develop and enhance open source technologies, our development expenses could increase and our product release and upgrade schedules could be delayed.
|
•
|
Open source software is open to further development or modification by anyone. As a result, others may develop such software to be competitive with our platform and may make such competitive software available as open source. It is also possible for competitors to develop their own solutions using open source software, potentially reducing the demand for, and putting price pressure on, our solutions.
|
•
|
The licenses under which we license certain types of open source software may require that, if we modify the open source software we receive, we are required to make such modified software and other related proprietary software of ours publicly available without cost and on the same terms. Accordingly, we monitor our use of open source software in an effort to avoid subjecting our proprietary software to such conditions and others we do not intend. Although we believe that we have complied with our obligations under the various applicable licenses for open source software that we use, our processes used to monitor how open source software is used could be subject to error. In addition, there is little or no legal precedent governing the interpretation of terms in most of these licenses. Therefore, any improper usage of open source could result in unanticipated obligations regarding our solutions and technologies, which could have an adverse impact on our intellectual property rights and our ability to derive revenue from solutions incorporating the open source software.
|
•
|
If an author or other third party that distributes such open source software were to allege that we had not complied with the conditions of one or more of these licenses, we could be required to incur legal expenses defending against such allegations, or engineering expenses in developing a substitute solution.
|
•
|
price and volume fluctuations in the overall stock market from time to time;
|
•
|
volatility in the market prices and trading volumes of high technology stocks;
|
•
|
changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular;
|
•
|
changes in financial estimates by any analysts who follow our company, including as a result of our plan to transition our business to focus on more software-only transactions and our announced plan to transition toward a subscription-based model, or our failure to meet these estimates or the expectations of investors;
|
•
|
the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections;
|
•
|
announcements by us or our competitors of new products or new or terminated significant contracts, commercial relationships or capital commitments;
|
•
|
public analyst or investor reaction to our press releases, other public announcements and filings with the SEC;
|
•
|
rumors and market speculation involving us or other companies in our industry;
|
•
|
actual or anticipated changes or fluctuations in our operating results;
|
•
|
actual or anticipated developments in our business or our competitors’ businesses or the competitive landscape generally;
|
•
|
actual or threatened litigation involving us, our industry or both, or investigations by regulators into our operations or those of our competitors;
|
•
|
developments or disputes concerning our intellectual property or our solutions, or third-party proprietary rights;
|
•
|
rumored, announced or completed acquisitions of businesses or technologies by us or our competitors;
|
•
|
new laws or regulations or new interpretations of existing laws or regulations applicable to our business;
|
•
|
changes in accounting standards, policies, guidelines, interpretations or principles;
|
•
|
any major changes in our management or our Board of Directors;
|
•
|
general economic conditions and slow or negative growth of our markets; and
|
•
|
other events or factors, including those resulting from war, incidents of terrorism or responses to these events.
|
•
|
our amended and restated certificate of incorporation provides for a dual class common stock structure for 17 years following the completion of our IPO;
|
•
|
a classified Board of Directors with three-year staggered terms, which could delay the ability of stockholders to change the membership of a majority of our Board of Directors;
|
•
|
the ability of our Board of Directors to issue shares of preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer;
|
•
|
upon the conversion of our Class A common stock and Class B common stock into a single class of common stock, the exclusive right of our Board of Directors to elect a director to fill a vacancy created by the expansion of our Board of Directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our Board of Directors;
|
•
|
upon the conversion of our Class A common stock and Class B common stock into a single class of common stock, a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders;
|
•
|
the requirement that a special meeting of stockholders may be called only by the chairman of our Board of Directors, our lead independent director, our president, our secretary or a majority vote of our Board of Directors, which could delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors;
|
•
|
the requirement for the affirmative vote of holders of at least 66 2⁄3% of the voting power of all of the then outstanding shares of the voting stock, voting together as a single class, to amend the provisions of our amended and restated certificate of incorporation relating to the issuance of preferred stock and management of our business or our amended and restated bylaws, which may inhibit the ability of an acquirer to effect such amendments to facilitate an unsolicited takeover attempt;
|
•
|
the ability of our Board of Directors, by majority vote, to amend our amended and restated bylaws, which may allow our Board of Directors to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend our amended and restated bylaws to facilitate an unsolicited takeover attempt; and
|
•
|
advance notice procedures with which stockholders must comply to nominate candidates to our Board of Directors or to propose matters to be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of us.
|
Date: June 5, 2019
|
|
/s/ Duston M. Williams
|
|
|
Duston M. Williams
|
|
|
Chief Financial Officer
|
|
|
(Principal Financial Officer)
|
1.
|
The Parties will work in good faith to finalize and execute an MSA by the target date listed above.
|
2.
|
Flextronics shall perform the Services for Nutanix starting as of the execution of this MOU. The performance of the Services shall be subject to the following provisions:
|
a.
|
Each month Nutanix shall provide to Flextronics an updated rolling forecast of its proposed purchases of Products for the next six (6) months. Flextronics should use such forecasts to plan for the procurement of Components and the manufacture of the Products. Except for Nutanix’ component inventory liability pursuant to section 2g below, such forecasts shall not be considered binding until Nutanix issues a purchase order for Products. Should Flextronics procure more Components than are needed to meet the 6 month forecast, Nutanix shall have no liability for the Components that are the subject of such excess procurement, unless such excess purchases were agreed for in writing (email is sufficient), e.g. in order to meet minimum order quantities, risk buys, etc.
|
b.
|
Nutanix shall issue purchase orders for Product(s) to Flextronics. Flextronics will accept Nutanix purchase orders and provide a date of shipment of the Product(s) via electronic data interchange within two (2) hours. For the purpose of clarity, Flextronics does not have the right to reject a purchase order that is consistent with this MOU (including the then current pricing), or within Nutanix’s credit limit.
|
c.
|
In acknowledging a purchase orders from Nutanix, Flextronics shall indicate the expected ship date for the Product. Flextronics shall make commercially reasonable efforts to meet the following lead times: for Products in which all the components are available in the supermarket, the lead time shall be delivery of the Product within [***] of receipt of the purchase order; and for orders which will be new builds, the lead time for delivery of the Product shall be within [***] of receipt of the purchase order.
|
d.
|
The shipment and risk of loss for the distribution of the Products shall be [***]. Nutanix will provide Flextronics with any requested documentation and any necessary information, documentation or required assistance in order to determine the export license requirements for Nutanix products.
|
e.
|
Nutanix may reschedule or cancel any purchase order up to the time of shipment.
|
f.
|
Nutanix has provided Flextronics with a bill of materials (“BOM”) of third party components, raw materials, and parts (“Components”) to be included in the Products by Flextronics as part of the performance of the Services. Flextronics has agreed to provide line item pricing on the costed BOMs related to the Products. The fees charged by Flextronics to Nutanix for the Services performed for each Product shall be the [***]. The [***] shall be the Transformation Costs related to the Products (“Transformation Costs” are described further in Section 3 below). All prices are in U.S. Dollars, and Nutanix shall make all payments in US Dollars within [***] of the date of the invoice. If any [***]. If a Product has been shipped and it does not operate in conformance with the written specifications for the Product due to a breach of Flextronics’s warranty pursuant to Exhibit A (“DOA Product”), then Nutanix shall notify Flextronics of such DOA Product within [***] of the shipment date and Flextronics shall replace the DOA Product with a new Product. In such a situation, Flextronics shall be responsible for all freight charges related to return of the DOA Product and the shipment of the new Product.
|
g.
|
Component Inventory.
|
i.
|
Flextronics will manage availability of Components (inventory, SMI, CRP, etc.) sufficient to achieve [***] of the Nutanix monthly forecast. In addition, with [***] notice that Nutanix intends to order sufficient Products, Flextronics shall manage availability of Components (inventory, SMI, CRP, etc.) sufficient to achieve [***] of the Nutanix monthly forecast.
|
ii.
|
For Component demand greater than forecasted by Nutanix, Flextronics will use commercially reasonable efforts to prioritize Nutanix’ Component demand.
|
iii.
|
Nutanix agrees to purchase any Products (finished goods) and unique Nutanix work in process (“WIP”) that has been held by Flextronics for more than [***], or pay Flextronics to tear down such WIP and restock Components.
|
iv.
|
Nutanix and Flextronics shall jointly agree in writing on all Nutanix unique Components and non-cancellable and non-returnable Components (collectively “Custom Components”). For Custom Components that have been held by Flextronics for more than [***]. For any Custom Components that have been held by Flextronics between [***]. Nutanix will purchase any Custom Components held by Flextronics for more than [***]. Once a month, Nutanix and Flextronics will review the inventory report and determine inventory aging. Flextronics shall obtain Nutanix’s written approval prior to purchasing any Custom Components that exceed the applicable monthly forecasts.
|
3.
|
Certain exceptional items, including but not limited to expedited freight, will be agreed upon in advance and in writing and will be charged separately by Flextronics and paid by Nutanix. The Parties have agreed that the [***] for the Transformation Costs shall be valid until [***] based on the forecasted sales by Flextronics to Nutanix beginning on [***] of a minimum of [***]. Transformation Costs include the following:
|
4.
|
A revaluation process will be used in connection with quarterly pricing reviews between the Parties. The parties agree that material price will be reviewed and adjusted on a quarterly basis, and product quotes will be updated accordingly. For the term of this MOU, Component price changes will be identified and implemented as part of the revaluation process for Products. Any purchase order in backlog from Nutanix priced at the [***] pricing will be repriced to the new standard priced BOM plus the Transformation Costs described in this MOU. Any adjustments to the cost of Components due to a revaluation process must be completed before purchase orders are revalued. The Parties shall
|
5.
|
The Parties agree that time is of the essence in the performance of the Services. In the event that a Flextronics committed order is delayed by more than [***] from the committed shipment date due to reasons solely within Flextronics’s control, which shall include delays caused by subcontractors or suppliers selected by Flextronics, (“Late Delivery”), Nutanix shall be allowed to cancel such order at Nutanix’s sole discretion. [***].
|
6.
|
Non-Recurring Expenses (“NRE”): Based on the current assumptions and based on information provided by Nutanix, the NREs for setting up the Nutanix business in Milpitas are as described below and Nutanix shall issue a purchase order for the amounts listed below [***] of the execution of this MOU:
|
•
|
For EDI setup: [***]; and
|
•
|
For Manufacturing Test Setup: [***].
|
7.
|
This MOU shall continue to be in effect until it is terminated by either Party or until the Parties execute the MSA. The MOU may be terminated for any reason by either Party upon one hundred eighty days written notice to the other Party.
|
8.
|
Excluding payment obligations, neither Party shall be liable to the other Party if it is unable to perform its obligations for any cause beyond the reasonable control of the Party. Each Party will bear its own expenses incurred in connection with this MOU and the proposed engagement between the Parties.
|
9.
|
The Parties will make commercially reasonable efforts to ensure that the time from execution of this MOU to first shipment of Products is approximately [***].
|
10.
|
FOR PURPOSES OF THIS MOU, NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, CONSEQUENTIAL, OR PUNITIVE DAMAGES INCLUDING, BUT NOT LIMITED TO LOST PROFITS, LOSS OF DATA, OR LOSS OF REVENUE ARISING OUT OF OR RELATING TO THIS MOU OR THE SALE OF PRODUCTS HEREUNDER, WHETHER SUCH LIABILITY IS ASSERTED ON THE BASIS OF CONTRACT, TORT (INCLUDING THE POSSIBILITY OF NEGLIGENCE OR STRICT LIABILITY) OR OTHERWISE, EVEN IF THE PARTY HAS BEEN WARNED OF THE POSSIBILITY OF ANY SUCH LOSS OR DAMAGE. IN ADDITION, IN NO EVENT SHALL EITHER PARTY’S LIABILITY FOR ALL CLAIMS ARISING OUT OF OR RELATING TO THIS MOU EXCEED [***], EXCEPT FOR NUTANIX’S PAYMENT OBLIGATIONS FOR PRODUCT AND COMPONENTS HEREUNDER AND FLEXTRONICS’S WARRANTY OBLIGATIONS UNDER SECTION 1.1 c) OF EXHIBIT A.
|
11.
|
Neither Party may assign this MOU in whole or in part without the express written consent of the other Party except to each party’s respective affiliates. Such consent shall not be unreasonably withheld. Any permitted assignment of this MOU shall be binding upon and enforceable by and against the Parties’ successors and assigns, provided that any unauthorized assignment shall be null and void and constitute a breach of this MOU. This MOU shall be governed by and interpreted in accordance with the laws of the state of California. Any dispute, claim or controversy arising from or related in any way to this MOU or the interpretation, application, breach, termination or validity thereof, will be submitted for resolution by binding arbitration in accordance with the Comprehensive Arbitration Rules & Procedures of JAMS. The arbitration will be held in Santa Clara County, California and it shall be conducted in the English language. Judgment on any award in arbitration may be entered in any court of competent jurisdiction. Notwithstanding the above, each Party shall have the right to file in the Santa Clara, California state court or the federal courts in and for the Northern District of California an application for temporary or preliminary injunctive relief, writ of attachment, writ of possession, temporary protective order, and/or appointment of a receiver on the grounds that the arbitration award to which the applicant may be entitled may be rendered ineffectual in the absence of such relief. IN THE EVENT OF ANY DISPUTE BETWEEN THE PARTIES, THE PARTIES HEREBY KNOWINGLY AND VOLUNTARILY AGREE THAT ANY AND ALL MATTERS SHALL BE DECIDED BY A JUDGE OR ARBITRATOR WITHOUT A JURY TO THE FULLEST EXTENT PERMISSIBLE UNDER APPLICABLE LAW.
|
12.
|
New Product Introduction (“NPI”) cost structure: Post go-live and from time to time, Nutanix may decide to develop and ask Flextronics to produce new products. Flextronics would charge Nutanix for certain costs associated with the NPI including but not limited to the cost of acquisition for any required equipment or tooling needed in production, or for any certifications required to support the new product. The parties agree to a [***] Transformation Cost (as described in item #4 above) or [***] the transformation rate for manufacturing, to convert existing part numbers to new top level assemblies (“TLA”). This charge does not include Components which will be priced separately. The parties agree that the number of NPI’s would not exceed [***] TLAs per quarter and the number of NPI Products to be tested would be [***].
|
13.
|
Engineering Change Orders (“ECO”) price structure: Flextronics will support up to [***] ECOs per month within the current transformation cost noted in sections 3 and 13. The parties agree that for any volume above the [***] ECO processing charge would be utilized for each 2 hours’ effort in processing these additional ECO’s. Any inventory impacts or assembly cost impacts would be priced separately on each ECO.
|
14.
|
Refurbishment price structure: The Parties agree to [***] per unit for refurbishment of a Product. This charge is to receive in, test, inspect and re-pack these Products. Any replacement parts not under warranty, additional labor and/or packaging will be priced separately.
|
Nutanix Inc.
|
Flextronics Telecom Systems Ltd.
|
1.
|
WARRANTY
|
1.
|
TERM OF AGREEMENT
|
2.
|
PRODUCTS
|
3.
|
PRICE
|
4.
|
PURCHASE ORDERS
|
5.
|
LIMITED USE
|
6.
|
NON-BINDING FORECAST
|
7.
|
RESCHEDULES AND CANCELLATIONS
|
8.
|
[INTENTIONALLY LEFT BLANK]
|
9.
|
INVENTORY LIABILITY
|
10.
|
PAYMENT
|
11.
|
TAXES
|
12.
|
DELIVERY TERMS
|
13.
|
SHORTAGE
|
14.
|
ENVIRONMENTAL COMPLIANCE
|
15.
|
INCOMING INSPECTION AND ACCEPTANCE
|
16.
|
EPIDEMIC FAILURES
|
17.
|
LIMITED WARRANTY AND DISCLAIMER
|
18.
|
LIMITATION OF LIABILITY
|
19.
|
INDEMNIFICATION
|
20.
|
NOTICE
|
For OEM:
|
|
Nutanix, Inc.
|
|
|
|
1740 Technology Drive, Suite 150
|
|
|
|
San Jose, California 95110
|
|
Attn:
|
|
Legal Counsel
|
|
Phone:
|
|
855-NUTANIX (688-2649)
|
|
Facsimile:
|
|
408-916-4039
|
|
21.
|
CONFIDENTIAL INFORMATION
|
22.
|
INTELLECTUAL PROPERTY
|
23.
|
PRODUCT DISCONTINUANCE; SUPPLY CONTINUITY; END OF LIFE
|
24.
|
ARBITRATION
|
25.
|
TERMINATION
|
26.
|
EXPORT REGULATION COMPLIANCE
|
27.
|
RELATIONSHIP OF PARTIES
|
28.
|
GOVERNING LAW
|
29.
|
FORCE MAJEURE
|
30.
|
ASSIGNMENT
|
31.
|
ATTORNEY FEES
|
32.
|
SEVERABILITY
|
33.
|
ENTIRE AGREEMENT
|
34.
|
SURVIVAL
|
|
|
|
|
|
Supplier:
|
|
OEM:
|
|
|
Super Micro Computer, Inc
|
|
NUTANIX INC.
|
|
|
|
|
|
|
|
By:
|
/s/ Robert Aeschliman
|
|
By:
|
/s/ Kenneth Long
|
Name:
|
Robert Aeschliman
|
|
Name:
|
Kenneth Long
|
Title:
|
General Counsel
|
|
Title:
|
VP of Accounting
|
•
|
Three-year labor1 :
|
•
|
Three-year parts2 [***]
|
•
|
One-year Advance parts replacement services [***]
|
•
|
120 days parts DOA cross ship3
|
•
|
One-year parts2
|
•
|
120 days parts DOA cross ship3 [***]
|
•
|
Return within 30 days return for credit4
|
•
|
Five-year parts2 [***]
|
•
|
120 days parts DOA cross ship3
|
•
|
Return within 30 days return for credit4
|
•
|
Five-year parts2
|
•
|
120 days parts DOA cross ship3 [***]
|
•
|
Return within 30 days return for credit4
|
•
|
Three-year parts2
|
•
|
120 days parts DOA cross ship3 [***]
|
•
|
Return within 30 days return for credit4
|
1.
|
Labor coverage includes any labor costs incurred for repairs by Supermicro during coverage period.
|
2.
|
Parts coverage includes any material and parts costs incurred for repairs by Supermicro during coverage period.
|
3.
|
In the event a product is dead on arrival (“DOA”), Supermicro shall directly ship to Nutanix, at’s direction, a replacement product during the coverage period, which shall begin on the date of Supermicro’s invoice.
|
4.
|
Supermicro shall refund a credit for the current value of the product if said product is returned under the following criteria: (i) the product is returned for refund during thirty (30) day from Supermicro’s invoice date; and (ii) Supermicro is unable to repair or replace the product. The date of return shall be the date Customer ships product to Supermicro as long as the refund request is made within the thirty (30) day period described in this section.
|
1.
|
The Parties agree that Nutanix Netherlands B.V., an entity affiliated with Nutanix, Inc., should be added to the Agreement as a party. Therefore all references to “OEM” in the Agreement, as amended, shall include both Nutanix, Inc. and Nutanix Netherlands, B.V.
|
2.
|
A new paragraph is added to the end of Section 2 as follows:
|
3.
|
Section 8 of the Agreement is deleted in its entirety and replaced with the following:
|
a.
|
Life Cycle [***] will [***] and provide such [***]. For the purpose of clarity, no [***] shall be [***] to them.
|
b.
|
[***]. Supplier shall use commercially reasonable efforts to [***] manufacturing as part of the forecasting mechanism described in Section 6 of the Agreement [***].
|
c.
|
[***]. OEM [***] of Software at Scale Products as part of performing [***] be solely [***] Software at Scale Hardware (as defined in Exhibit D). OEM [***] the Software at Scale Hardware and [***]. However, OEM [***] that [***] the Software at Scale Hardware utilizing [***].
|
4.
|
A new Exhibit D is added to the Agreement as attached to this Amendment.
|
5.
|
No other changes are made to the Agreement, and following the Amendment Effective Date, all references to the “Agreement” shall mean the Agreement as amended by this Amendment.
|
1.
|
INTRODUCTION
|
•
|
[***] will be made by the [***].
|
•
|
The Parties shall enable the End Customer to [***] with Products contemplated under the Agreement as of the Effective Date of the Agreement.
|
•
|
The Supplier shall [***] and OEM shall provide the software license [***] to the End Customer.
|
•
|
Supplier may impose any qualifications to do business [***] and may choose to [***], at its sole discretion.
|
•
|
Provided that the End Customer purchases Nutanix support, OEM shall support the hardware and software [***] as set forth in Section 6 of this Exhibit D.
|
•
|
OEM has no involvement or responsibility for any associated [***] and therefore, is not qualified for any promotion program for its customers related to its [***].
|
2.
|
DEFINITIONS. Capitalized terms in this Exhibit D shall have the meanings set forth below.
|
a.
|
“[***]” means another entity in the sales channel for the [***] and not use the [***].
|
b.
|
“End Customer” means the last entity who purchases the Software at Scale Products for their own use and not for resale to another entity.
|
c.
|
”Software at Scale [***]” means [***] as described in this Agreement.
|
d.
|
“Software at Scale Hardware” means the [***].
|
e.
|
“Software at Scale Products” means [***] as part of the Software at Scale program. These Software at Scale Products shall be designated with the suffix [***].
|
f.
|
“Territory” means the United States of America.
|
a.
|
Non-Exclusive Appointment. Supplier [***], and [***] such appointment, to act as an [***] during the term of Agreement (as described in Section 1 of the Agreement), solely in accordance with the terms and conditions of this Agreement.
|
b.
|
OEM Marketing Obligations as [***]. OEM shall, at its own expense, market the Software at Scale program including, advertising, promoting, and soliciting the sale of the Software at Scale Products [***] consistent with good business practice. OEM is not qualified for Supplier’s marketing promotion program.
|
c.
|
OEM Obligations to Provide Quotes [***]. For expediency purposes, [***]. For the purpose of clarity, the Parties agree that the sales quotes [***] are not binding until agreed to in writing [***]. Supplier may reject any such quotes before they become an Order in its sole discretion.
|
a.
|
Supplier shall fulfill any [***] that it [***] as part of the processes outlined in this Exhibit D.
|
b.
|
Supplier shall provide End Customers (through the sales channel) with a standard [***] portion of the [***] consistent with or equivalent to the [***].
|
c.
|
As part of fulfilling any Software at Scale Orders, Supplier shall also meet the following requirements in a timely fashion such that an [***]. At a minimum, Supplier shall:
|
i.
|
[***];
|
ii.
|
Maintain a [***] on time ship rate for all Software at Scale Products shipped based on a [***] lead time;
|
iii.
|
[***]; and
|
iv.
|
Manage transportation and return material authorization [***] as they arise.
|
1.
|
The Parties agree that Exhibit C is deleted in its entirety and replaced with the following:
|
1.
|
As stated in Section 9.1 of the Agreement, OEM has no inventory liability inventory other than the Non-Standard Material, which is described in the spreadsheet attached to this Amendment 2.
|
2.
|
Where a component in the list of Non-Standard Material is listed in the “Nutanix Liability” column as being “[***] of On Hand Value & On Order to Lead Time”, Nutanix shall only have liability of [***] of the price of the relevant Non-Standard Material component.
|
3.
|
No other changes are made to the Agreement, and following the Amendment Two Effective Date, all references to the “Agreement” shall mean the Agreement as amended by this Amendment Two.
|
Supermicro Part Number
|
Nutanix Part Number
|
Lead Time (Work Days)
|
Nutanix Liability
|
Cost $
|
1.DEFINITIONS
|
|
2
|
|
2.SCOPE OF AGREEMENT
|
|
5
|
|
3.MANUFACTURING SERVICES
|
|
5
|
|
4.NUTANIX DEMAND FORECAST
|
|
6
|
|
5.ORDERS
|
|
6
|
|
6.PRICING
|
|
7
|
|
7.DELIVERY, REJECTION AND ACCEPTANCE
|
|
10
|
|
8.PAYMENT
|
|
10
|
|
9.CANCELLATION AND RE-SCHEDULING
|
|
11
|
|
10.ENGINEERING CHANGE ORDER MANAGEMENT
|
|
11
|
|
11.QUALITY
|
|
12
|
|
12.MATERIALS MANAGEMENT
|
|
13
|
|
13.COMPONENT LIABILITY
|
|
15
|
|
14.SOFTWARE AT SCALE
|
|
16
|
|
15.WARRANTIES
|
|
16
|
|
16.ADMINISTRATION AND DISPUTES
|
|
17
|
|
17.INTELLECTUAL PROPERTY
|
|
19
|
|
18.LIMITATION OF LIABILITY.
|
|
19
|
|
19.INDEMNIFICATION
|
|
20
|
|
20.CONFIDENTIAL INFORMATION
|
|
21
|
|
21.TERM AND TERMINATION
|
|
21
|
|
22.GENERAL
|
|
22
|
|
EXHIBIT A: FLEXTRONICS WARRANTY
|
|
26
|
|
EXHIBIT B - RETURN MATERIALS AUTHORIZATION (“RMA”) PROCESS
|
|
27
|
|
EXHIBIT C - MANUFACTURING TEST REQUIREMENTS
|
|
28
|
|
EXHIBIT D - QUALITY PLAN
|
|
29
|
|
EXHIBIT E - SOFTWARE AT SCALE
|
|
30
|
|
EXHIBIT F - PRODUCT LIST
|
|
31
|
|
EXHIBIT G - L10/SHIP AND DEBIT PROCESS
|
|
37
|
|
EXHIBIT H - NUTANIX/FLEXTRONICS NDA
|
|
38
|
|
1.
|
DEFINITIONS
|
1.1
|
Affiliates means, with respect to a party, any corporation or other business entity Controlled by, Controlling or under common Control with that party, whereby Control means the direct or indirect ownership of more than 50% (fifty percent) of the equity interest in such corporation or business entity, or the ability in fact to control the management decisions of such corporation or business entity. An entity will be deemed an Affiliate only so long as such Control exists.
|
1.2
|
Approved Vendor List or AVL means the list of vendors approved to sell Components to Flextronics for inclusion in Products.
|
1.3
|
Arena means the Nutanix operated system which stores information about the Products including but not limited to the Approved Vendor List and the Specifications. Nutanix shall ensure that Flextronics has adequate access to Arena.
|
1.4
|
Bill of Materials or BOM means the list of Components that make up a particular Product.
|
1.5
|
Components shall mean all Components and other materials included in Products provided by third parties and approved in writing by Nutanix. Components shall be either Standard, Non-Standard or Custom Components. Nutanix and Flextronics shall jointly agree in writing as part of the Quarterly Pricing process, on all Nutanix “Standard”, “Non-Standard or Custom Components product type designations”.
|
1.5.1
|
Standard Components - shall mean ‘off the shelf,’ generally available Components that meet the standard cancellation terms (i.e. Components that can be rescheduled, cancelled, or returned by Flextronics at any time without notice or liability). Nutanix shall have no component inventory liability for Standard Components.
|
1.5.2
|
Non-Standard Components means Components that are Nutanix controlled Components or that may not be Nutanix specific items, but for which Flextronics cannot cancel or return without notice or liability. Nutanix shall have component inventory liability for Non-Standard Components per Section 13.
|
1.5.3
|
Custom Components means Nutanix specific items such as bezels, Nutanix-designed packaging, labels, cables and any other Nutanix specific items. Custom Components also include Components that may not be Nutanix specific items, but for which Flextronics cannot cancel or return without notice or liability. Nutanix shall have component inventory liability for Custom Components per Section 13.
|
1.6
|
Component Standard Price means the price for each Component as agreed to between the parties during the quarterly pricing process as described in Section 6.
|
1.7
|
Costed Bill of Materials means the Bill of Materials or “BOM” that includes the Component Standard Prices for each Component of the Product.
|
1.8
|
Counterfeit Component(s) means an unlawful or unauthorized reproduction, substitution, or alteration of a Component that has been knowingly mismarked, misidentified, or otherwise misrepresented to be an authentic, unmodified electronic part from the original manufacturer. Unlawful or unauthorized substitutions include used electronic parts represented as new, or the false identification of grade, serial number, lot number, date code, or performance characteristics.
|
1.9
|
Delivery means Flextronics’s successful delivery of the Product(s) to the Nutanix carrier at Flextronics’ manufacturing site.
|
1.10
|
Demand Forecast shall mean a projection of Nutanix’s Product mix and volume requirements over a [***] period or such other period designated by the parties. The Demand Forecast will be provided frequently, but no less than on a monthly basis.
|
1.11
|
End Customer means Nutanix or Nutanix’s customer that will receive the Products as indicated on an Order.
|
1.12
|
Epidemic Failure means the failure of more than [***] of the Products that occur within [***] from the date of shipment and where there is a single root cause of the failure which is a result of a breach of the Flextronics warranty attached hereto as Exhibit A.
|
1.13
|
Gold Material means Products or Components utilized solely for test purposes. Flextronics will manage dedicated Gold Material to test the Products in accordance with the terms of Exhibit C and will be held by Flextronics at [***]-unit cost. Nutanix shall consign Gold Material and be responsible for the replacement and maintenance of Gold Material. Flextronics is responsible for Risk of Loss of Gold Material.
|
1.14
|
Intellectual Property means all industrial and other intellectual property rights comprising or relating to: (a) Patents; (b) Trademarks; (c) internet domain names, whether or not Trademarked, registered by any authorized private registrar or Governmental Authority, or web addresses, web pages, or website and URLs; (d) works of authorship, expressions, designs and design registrations, whether or not copyrightable, including copyrights and copyrightable works, software and firmware, application programming interfaces, architecture, files, records, schematics, data, data files, databases, and any other specifications and documentation; (e) Trade Secrets; and (f) all industrial and other intellectual property rights, and all rights, interests and protections that are associated with, equivalent or similar to, or required for the exercise of, any of the foregoing, however arising, in each case whether registered or unregistered and including all registrations and applications for, and renewals or extensions of, such rights or forms of protection pursuant to the laws of any jurisdiction throughout any part of the world.
|
1.15
|
Lead Time means the time required for Flextronics to assemble the Products after it has received an Order from Nutanix. For Products in which all the Components are in the supermarket the Lead Time shall be Delivery of the Product within [***] of receipt of the Order; and for Orders which will be a new build, the Lead Time for Delivery of the Product to the End Customer shall be [***] from receipt of the Order.
|
1.16
|
Manufacturing Facility shall mean Flextronics’s manufacturing facility approved in advance by authorized Nutanix personnel.
|
1.17
|
New Product Introduction or “NPI” means Nutanix’s launch and/or commercialization of a new or newly converted product within a Nutanix product family
|
1.18
|
Nutanix Consigned Material means any raw material, tooling and fixtures, test equipment, or Product provided by Nutanix in connection with the assembly by Flextronics of the Product.
|
1.19
|
Order shall mean any order placed by Nutanix, including a purchase order for Products and/or Services placed by Nutanix.
|
1.20
|
PPV or Purchase Price Variance means the difference between the Component Standard Price and the actual unit price paid by Flextronics for the Component.
|
1.21
|
Prices shall mean the prices for Products and shall equal the Component Standard Prices in the Product(s) plus the Transformation Costs.
|
1.22
|
Product(s) means the Nutanix products or systems that are marketed and sold to End Customers, (an initial list of which is listed in Exhibit F and which shall be updated from time to time by Nutanix). Flextronics agrees to procure Components, assemble, test and package these Products in accordance with the product Specifications provided by Nutanix and the terms of this Agreement.
|
1.23
|
QBR means a Quarterly Business Review held jointly between Nutanix and Flextronics.
|
1.24
|
Quality Plan means the Quality System and Product Quality Requirements provided by Nutanix to Flextronics and in accordance with Exhibit D.
|
1.25
|
Quarterly Pricing Process means a quarterly meeting or series of meetings in which the price for the Product shall be established by looking at the price of the Components individually as further described in Section 6.8 herein.
|
1.26
|
Quarterly Settlement Process means a quarterly meeting or series of meetings between Nutanix and Flextronics in which the parties will resolve any price issues from the previous quarter for the Products or Components and as further described in Section 6.10 herein.
|
1.27
|
Rejected Product(s) shall mean any Products that either (i) failed functional or cosmetic testing during the manufacturing process at Flextronics and are rejected by Nutanix or (ii) returned to Flextronics as field failures by the End Customer pursuant to this Agreement.
|
1.28
|
Return Material Authorization or RMA means the authorization by Nutanix for Flextronics to engage in the return process of a Product(s) as further described in Exhibit B.
|
1.29
|
Services shall mean the Component procurement and system integration services performed by Flextronics for the final assembly, test, and packaging for creation and Delivery of the Products.
|
1.30
|
Software means the object code version of the software provided by Nutanix for integration into a Product.
|
1.31
|
Specifications mean the manufacturing, assembly and testing specifications related to the Products as agreed by the Parties and supplemented by the parties in writing from time to time.
|
1.32
|
Supermarket means test WIP held in a location pending an Order for assembling.
|
1.33
|
Top Level Assembly or “TLA” means: the highest level of component assembly for the Product based on Specifications or through NPI.
|
1.34
|
L10: Ship and debit products that will be purchased as a completely configured, ready to ship product by a designated 3rd party supplier.
|
2.
|
SCOPE OF AGREEMENT
|
2.1
|
This Agreement constitutes the entire integrated agreement between the parties with respect to Products purchased and or Services supplied hereunder and supersedes all prior written or oral understandings or agreements relating to the same including, but not limited to, the Memorandum of Understanding between the parties with an effective date of December 1, 2016. In the event of any conflict between these terms and the terms on the face of any Order, the terms of this Agreement will govern. The parties agree that all pre-printed terms on any Order, Order Acknowledgment or other forms submitted by either party shall be void and of no effect.
|
2.2
|
No modification of this Agreement will be binding on either party unless set forth in writing and specifically referencing this Agreement and signed by an authorized agent of each party.
|
3.
|
MANUFACTURING SERVICES
|
3.1
|
Services. Flextronics shall perform the Services in accordance with (a) the terms of this Agreement; (b) using personnel of required skill, experience and qualifications; (c) in a timely, workmanlike and professional manner; and (d) in accordance with the industry standards; and (e) to the reasonable satisfaction of Nutanix. In performing the Services, Flextronics shall ensure the Products meet the Specifications. The Parties agree that time is of the essence in performance and completion of the Services.
|
3.2
|
Capacity. Flextronics shall provide sufficient capacity at the applicable Manufacturing Facility to manufacture Products to meet the Demand Forecast. If Flextronics believes that it will not have sufficient capacity at the applicable Manufacturing Facility to satisfy this requirement, Flextronics will immediately notify Nutanix and use commercially reasonable efforts to remedy the issue; provided, however, Flextronics understands and agrees that Flextronics may not manufacture Products at such other Manufacturing Facilities without Nutanix’s prior written approval.
|
3.3
|
Software Load. As part of performing the Services, Flextronics shall load the Software onto Products in accordance with the Specifications. Nutanix shall provide to Flextronics the required Software versions, files and other material needed to load the Software onto the Products and Flextronics shall take all reasonable steps to ensure the security of the Software.
|
3.4
|
Use of Subcontractors. Flextronics may perform portions of the Services using subcontractors provided that Nutanix has agreed in writing to the use of such subcontractors. Flextronics shall remain jointly and severally liable for the acts and omissions of its subcontractors and any breach of this Agreement by subcontractors shall be considered a breach of the Agreement by Flextronics.
|
3.5
|
Exchange of Electronic Data. The parties will enable various types of electronic data exchange to facilitate Orders and other communications.
|
3.6
|
Nutanix Personnel Access. Flextronics shall reasonably permit Nutanix personnel access to the Manufacturing Facilities in which the Services are being performed. Flextronics shall permit Nutanix personnel to inspect the manufacturing lines and testing facilities used for the Products. In addition, Flextronics shall provide Nutanix personnel with a work area within the Manufacturing Facility during the visit of such Nutanix personnel. As further described in the applicable section(s), Flextronics will also allow Nutanix reasonable access for the purpose of performing inventory counts.
|
3.7
|
Testing. Flextronics shall perform testing Services on each of the Products it provides to the End Customer (“Test” or “Testing”). The exact Test requirements for Flextronics’s performance of the Services are defined in Exhibit C, “Manufacturing Test Requirements Specification” and as may be updated from time to time by Nutanix.
|
3.8
|
Non-Recurring Expenses. For certain portions of the Services, Nutanix may be required to pay non-recurring expenses (“NRE”) to Flextronics. Such NRE shall be agreed upon by the parties in writing.
|
4.
|
NUTANIX DEMAND FORECAST
|
4.1
|
Each calendar month, Nutanix will provide to Flextronics a rolling Demand Forecast for Products for the following [***].
|
4.2
|
Flextronics shall respond to the Demand Forecast with a commitment to meet the Demand Forecast noting any exceptions to the requested Demand Forecast. Flextronics shall provide a monthly capacity analysis report detailing Manufacturing Facility capacity available for Nutanix with reference to Nutanix’s monthly Demand Forecast and Component availability for the period outlined in such Demand Forecast. Flextronics shall provide for an overall Product Manufacturing capacity upside of [***] which may be exercised by Nutanix upon [***] days prior notice to Flextonics. This [***] upside may be exercised [***] by Nutanix, unless more frequently agreed to by Flextronics.
|
4.3
|
Should Flextronics procure more Components than are needed to meet the Demand Forecast, Nutanix shall have no liability for the Components that are the subject of such excess procurement, unless such excess purchases were agreed upon in writing (including by email) in order to meet minimum order quantities, risk buys, etc.
|
4.4
|
Except to the extent that Flextronics is entitled to procure Components under Section 12 below and for the purposes of Section 13 below, Nutanix will not be bound by the Nutanix Demand Forecast or other sales information it may provide to Flextronics.
|
5.
|
ORDERS
|
5.1
|
Nutanix shall submit Orders and Flextronics shall accept such Orders within [***] of receipt of the Order and provide an estimated ship date for the Order at the time of such acceptance. For the purpose of clarity, Flextronics does not have the right to reject an Order that is consistent with this Agreement or within Nutanix’s credit limit.
|
5.2
|
Orders will include the description and Price per unit of Product; the quantities ordered, delivery information, and any other such information as the parties agree to from time to time. Orders will be issued in writing and delivered by e-mail, facsimile, electronic data exchange means or by other methods that the parties agree to from time to time.
|
5.3
|
Flextronics shall fill accepted Orders within the Lead Time. The parties agree that time is of the essence in the performance of the Services. In the event that a Flextronics committed order is delayed by more than [***] from the committed shipment date due to reasons solely within Flextronics control, which shall include delays caused by subcontractors and suppliers selected by Flextronics (“Late Delivery”), Nutanix shall be allowed to cancel such order at Nutanix’s sole discretion. Any materials liability for Nutanix that occurred as a result of a Late Delivery of an order which was then cancelled by Nutanix shall be considered a direct damage (with Flextronics being liable to Nutanix for such direct damage) under the Agreement. Repeated and uncured Late Delivery shall be deemed a material breach of the Agreement.
|
5.4
|
Orders are cancelable and reschedulable per Section 9.
|
6.
|
PRICING
|
6.1
|
Product pricing shall be in U.S. Dollars on the Order, unless otherwise agreed in writing between the parties, and are exclusive of applicable duties, sales or use taxes, but are inclusive of all other charges including charges for labeling, packaging and crating, any inspection fees, and all other taxes.
|
6.2
|
Flextronics agrees to provide Nutanix with a detailed costed Bill of Materials (“BOM”) with respect to each Product showing a breakdown of the Component Standard Price,
|
6.3
|
The pricing of the Products will consist of the Component Standard Prices that make up the Costed Bill of Materials for a particular Product that has been ordered plus a Transformation Cost (“TC”). The TC is inclusive of all direct labor, and all indirect overheads such as profit, warranty and SG&A.
|
6.4
|
Transformation Cost for Production Units. The parties have agreed that the TC for production volumes shall be [***] and shall be valid until [***] based on the forecasted sales by Flextronics to Nutanix beginning on [***]. The parties also agree that the TC for production volumes shall be [***]. After this period has lapsed, the Transformation Cost shall be agreed to by the parties on an annual basis. Certain exceptional items, including but not limited to expedited freight, will be agreed upon in advance and in writing and will be charged separately by Flextronics and paid by Nutanix.
|
•
|
Fully burdened manufacturing assembly costs (to include Ongoing Reliability Testing (ORT) and Out of Box Audit (OBA));
|
6.5
|
Transformation Price for Prototypes. At the time of execution of the Agreement, the parties agree that the TC for NPI activities is [***] to convert existing part numbers to new TLAs. This charge does not include Components which will be priced separately. There is no established limit to count of products in NPI.
|
6.6
|
During NPI activities, if the same physical product is returned to any steps previously completed successfully, such product will be considered to be in a new iteration cycle and the [***] of the standard cost of product will apply. This excludes debug related reprocessing. Any hardware changes in the iteration cycles will be charged separately.
|
6.7
|
Test Development: The [***] does not include test development requests. Test development requests will be quoted on a case-by-case basis, based on Statement of Work received with the request. Development work will continue after written approval via email.
|
6.8
|
RMA: The Parties agree to [***] per unit for refurbishment of a Product. This charge is to receive in, test, inspect and re-pack such Products, as described in section 15.5.1.
|
6.9
|
L10 Pricing: L10 ship and debit process shall be as described in Exhibit G and Nutanix shall pay a [***] adder per L10 system.
|
6.10
|
Quarterly Pricing Process
|
6.10.1
|
For the Quarterly Pricing Process, the Parties agree to meet at least once during the Nutanix fiscal quarter (Nutanix’s fiscal year is August 1 through July 31) and review prices of the Products and the individual Components and establish Component Standard Prices for the following fiscal quarter. Prices will be adjusted to reflect any; (i) substantial increase or decrease in volume; (ii) change in market conditions or end user sales price of Products; and (iii) pass through of Price adjustments for Components passed
|
6.10.2
|
Any Product price increases due to increased Prices on Flextronics controlled Components will not be effective until they have been: (a) reviewed in detail with Nutanix; (b) agreed upon by Nutanix and Flextronics in writing; such agreement shall not be unreasonably delayed or withheld.
|
6.10.3
|
In the event of an agreed-upon price increase, Flextronics will fill, at the lower purchase price, all Orders placed prior to the effective date of the agreed-upon price increase unless those Orders require Components purchased at the agreed upon price increase. In the case that Component pricing is responsible for the price increase, it is assumed that Component inventory at Flextronics at the lower price (purchased within a reasonable required lead time to meet Nutanix’s demand) is such that all Orders placed prior to the effective date of the agreed-upon price increase can be fulfilled. If inventory is not sufficient for Flextronics to fill, at the lower purchase price, all Orders placed prior to the effective date of the agreed-upon price increase (and inventory was in fact purchased within a reasonable required lead time to meet Nutanix’s demand), then Flextronics and Nutanix will set a mutually agreed-upon cut-in date for the agreed-upon price increase for the balance.
|
6.11
|
Nutanix Audit Rights. Nutanix has the right to verify compliance with this Agreement by Flextronics, including but not limited to compliance with this Section 6. Any audit undertaken by Nutanix shall be at Nutanix’s expense as follows:
|
6.11.1
|
Subject at all times to Flextronics confidentiality obligations to its Component suppliers, not more than twice per calendar year, Nutanix may provide Flextronics at least thirty (30) days’ notice of its intent to verify Flextronics’s compliance with its obligations during the immediately preceding twelve (12) calendar months. Nutanix will engage a mutually agreed independent auditor, such agreement not to be unreasonably withheld, which will be subject to a confidentiality obligation. Verification will take place during normal business hours and in a manner that does not interfere unreasonably with Flextronics’s operations. Flextronics must promptly provide the independent auditor with any information necessary to complete the verification, including evidence of Prices for Nutanix controlled Components, as designated at the time of purchase, which Flextronics procured to perform the Services. Nutanix Controlled Components shall be Components for which the pricing is determined directly between Nutanix and the relevant supplier
|
6.11.2
|
If the verification reveals any prices for Nutanix controlled Components procured by Flextronics were misstated on a Bill of Materials, the parties will promptly settle the misstated amounts, such amounts will be paid to the damaged party within [***] of such settlement. By exercising the rights and procedures described above, Nutanix does not waive its rights to enforce this agreement or to protect its intellectual property by any other means permitted by law.
|
6.12
|
Quarterly Settlement Process. Each Nutanix fiscal quarter, the parties will meet and compare the Component Standard Prices with the actual prices paid by Flextronics for Components. The goal of this process is to settle the differences between the Component Standard Prices and the market Prices for the relevant Component. Further, as part of this Quarterly Settlement Process, the parties may agree to resolve other pricing and expense issues. The parties shall resolve any such issues as described below:
|
6.13
|
Component and Product Revaluation Process: Flextronics and Nutanix shall review all Component and Product price changes (increases or decreases) quarterly. Where the prices of Components have increased (”buy up”) there shall be offset against the value of inventory where the prices of Components have decreased (“buy down”). In the event the buy up value exceeds the buy down value, Flex shall issue a purchase order to Nutanix for the delta difference in values. In the event the buy down value exceeds the buy up value, Nutanix shall issue a purchase order to Flex. The parties will use best efforts to issue an applicable purchase order within [***] of the agreed-to reconciliation.
|
6.14
|
PPV: The parties shall review PPV as part of the quarterly Settlement Process. Based on the mutual agreement from the quarterly settlement process, the parties agree to issue credits to each other. PPV may occur as a result of one of the following events:
|
(i)
|
Component manufacturer or supplier charges Flextronics a price different, higher than the Component Standard Price for that Component;
|
(ii)
|
regular price changes for Component(s) that traditionally occur on a calendar basis and result in a price difference from the Component Standard Price.
|
6.15
|
Freight Expedites. To fulfill Orders within the Lead Time, Flextronics may need to expedite receipt of inbound Components and/or shipment of Products to End Customers. Flextronics may expedite these shipments only with the prior written approval of Nutanix. Should the reason for any expedite be as a result of an act or omission of Flextronics, Flextronics shall take financial responsibility for such expedite. The parties shall review these expedited freight Prices as part of the Quarterly Settlement Process and determine how these Prices should be allocated.
|
7.
|
DELIVERY, REJECTION AND ACCEPTANCE
|
7.1
|
On-Time Shipment. Flextronics shall make commercially reasonable efforts to meet the target goal of [***] on-time Delivery, defined as the shipment of Product by Flextronics within a maximum window of [***] based on the Lead Time. Flextronics shall use its commercial best efforts to Deliver Products in accordance with the Lead Time.
|
7.2
|
Title. All Products delivered to Nutanix shall be [***]. Title and risk to all Products shall pass to Nutanix upon Flextronics’s tendered delivery to common carrier or Nutanix designee. As part of providing the Services, Flextronics shall load the products on the collecting vehicle and bear the risk of loss for such Products in the course of such loading process at no additional cost to Nutanix.
|
7.3
|
Packaging. Flextronics will handle, pack, mark and ship Products in accordance with written instructions communicated to Flextronics, or if no instructions are provided or such instructions are silent in a particular area, Flextronics will handle and ship in accordance with Flextronics’s normal practice provided that such practice is consistent with industry standards.
|
7.4
|
Delivery Documentation. Each Delivery of Products must be accompanied by Flextronics’s delivery document, located in a clearly marked ship-to label, in the format described in Arena attached to each appropriate shipping carton. Each delivery document must at a minimum clearly state the following data: (a) Nutanix Order number; (b) End-Customer PO number, (c) Nutanix Product number, (d) serial numbers where appropriate, (e) the quantity shipped
|
7.5
|
Delivery Schedules. In the event that Flextronics has reason to believe that any shipment of Product to the End Customer may not meet Delivery (and without waiver of any rights by either party), Flextronics shall provide advance notification to Nutanix, along with detailed proposed solutions and recovery plans. To the extent such delay is not attributable to Nutanix, Flextronics shall bear any additional expenses including material expediting costs, premium transportation costs or labor overtime, associated with meeting the specified Delivery date or minimize the lateness of such deliveries.
|
7.6
|
Rejected Product. Rejected Product may be returned to Flextronics. The parties will follow Flextronics’s Return Material Authorization (RMA) process for the return of Rejected Products.
|
7.7
|
Acceptance. In the absence of earlier notification of rejection, Nutanix will be deemed to have accepted the Products [***] after Delivery.
|
8.
|
PAYMENT
|
8.1
|
Terms of payment are [***] from date of invoice. All dollar amounts in the Agreement are in US Dollars. All payments will be made in U.S. Dollars.
|
8.2
|
As full consideration for the performance of the Services, Nutanix shall pay Flextronics the undisputed amount stated on invoices from Flextronics to Nutanix. Applicable taxes and other charges such as shipping costs, duties, customs, tariffs, imposts, and government-imposed surcharges (where appropriate) shall be stated separately on Flextronics’ invoice. Payment shall not constitute acceptance; Acceptance is covered in Section 7.7 above. All duties and taxes assessable upon the Products and Components prior to receipt by Nutanix of the Products shall be borne by Flextronics. Flextronics shall invoice Nutanix for all Products delivered and all Services actually performed. If any [***].
|
8.3
|
If Nutanix disputes the accuracy of an invoice (a "Billing Dispute"), Nutanix will, not later than [***] following the date of such invoice, notify Flextronics in writing of the nature of the Billing Dispute. Nutanix may withhold payment of the disputed amount and such payment will not be considered past due during Flextronics's investigation. Flextronics will make commercially reasonable efforts to completely resolve the Billing Dispute within [***] following the date on which Flextronics received Nutanix's initial billing inquiry. This section in no way limits the audit rights for Nutanix which are stated in Section 6.11 above.
|
8.4
|
Nutanix will be responsible for all taxes with respect to Orders placed by Nutanix (except Flextronics’s income taxes), unless Nutanix provides Flextronics with tax exemption documentation required by the applicable taxing authority.
|
9.
|
CANCELLATION AND RE-SCHEDULING
|
9.1
|
Flextronics agrees the following cancellation terms:
|
9.1.1
|
Nutanix may cancel or reschedule any Orders in its sole discretion at any time before the actual shipment of the Order at no additional cost to Nutanix. If Nutanix directs Flextronics to disassemble the Product that is the subject of such cancellation such disassembly shall be subject to a flat fee of [***]. In case of rework conversions (tested components in the Supermarket that are required to be converted before consumption) of CTO orders, Nutanix shall pay Flextronics a flat fee of [***]. Cost for material, if any, will be charged separately.
|
9.1.2
|
To assist Flextronics with capacity planning, Nutanix will make commercially reasonable efforts to provide adequate, advance notice of cancellations
|
9.1.3
|
In instances where business conditions mandate Nutanix’s cancellation of Product, Flextronics will exercise commercially reasonable efforts to de-book, re-schedule or otherwise dispose of Components on backlog so as to minimize liability passed on to Nutanix.
|
10.
|
ENGINEERING CHANGE ORDER MANAGEMENT
|
10.1
|
Flextronics or Nutanix may at any time propose changes to the relevant Specification, manufacturing process or any other process described in Exhibit D by a written Engineering Change Notice (“ECN”).
|
10.2
|
The recipient of an ECN will use all reasonable efforts to confirm receipt within [***] and to provide a detailed response within [***] of receipt.
|
10.3
|
Flextronics will advise Nutanix of the likely impact of an ECN (including, but not limited to, scheduling and Prices) on the provision of any relevant Order. For significant Product changes, Flextronics shall review the
|
10.4
|
Any ECNs relating to personal and product safety will be implemented without delay.
|
10.5
|
Until an ECN and any associated impact on any relevant Order have been agreed in writing, the parties will continue to perform their obligations under the relevant Order without taking account of that ECN.
|
10.6
|
In the event Nutanix initiates an ECN, Flextronics will support up to [***] ECOs per month within the current transformation cost noted in sections 3 and 13. The parties agree that for any volume above the [***] processing charge would be utilized for each [***] in processing these additional ECO’s. Any inventory impacts or assembly cost impacts will be priced separately on each ECO.
|
10.7
|
In the event Flextronics initiates an ECN, Nutanix shall not be liable for such costs unless otherwise agreed in writing, such agreement not to be unreasonably withheld.
|
10.8
|
Mandatory ECN’s shall be applied as specified by Nutanix in each individual ECN instruction. All line and field Rejected Products shall be repaired and upgraded to the latest mandatory ECN level.
|
11.
|
QUALITY
|
11.1
|
Product quality is a material term of this Agreement
|
11.2
|
Quality Program. Flextronics agrees to maintain objective quality programs for all Products and commits to achieve agreed-to quality goals as set forth in Exhibit D.
|
11.3
|
Epidemic Failures. Epidemic failures as defined in Section 1.12 above may be identified by Nutanix, Nutanix’s designated service provider, Flextronics’s or Nutanix’s test procedures, or may appear as End-Customer-reported failures.
|
11.3.1
|
Upon occurrence of an Epidemic Failure, Nutanix may invoke a production line shutdown ("Stop Ship”) until root cause is determined.
|
11.3.2
|
Flextronics shall promptly notify Nutanix and shall provide, if known, a description of the failure, and the suspected lot numbers, serial numbers or other identifiers, and Delivery dates, of the failed Products.
|
11.3.3
|
Nutanix shall make available to Flextronics, samples of the failed Products for Testing and analysis. Upon receipt of such failed Product from Nutanix, Flextronics shall promptly provide its preliminary findings regarding the cause of the failure. The parties shall cooperate and work together to determine the root cause. Thereafter, Flextronics shall promptly provide the results of its root cause corrective analysis, its proposed plan for the identification of and the repair and/or replacement of the affected Products, and such other appropriate information. Flextronics shall recommend a corrective action program which identifies the affected Products for repair or replacement and which minimizes disruption to the End Customer. Nutanix and Flextronics shall consider, evaluate and determine the corrective action program.
|
11.3.4
|
Should failures of the Product be the result of an Epidemic Failure, the parties shall mutually agree whether Flextronics shall either repair or replace Products subject to such Epidemic Failure. In addition, Flextronics shall credit Nutanix for reasonable direct costs that are incurred by Nutanix as a result of an Epidemic Failure. Such remedies for Epidemic Failure shall be in addition to any other remedies Nutanix may have under this Agreement.
|
11.3.5
|
Product Hazard. In the event either Flextronics or Nutanix becomes aware of any information that reasonably supports a conclusion that a defect may exist in any Product covered by this Agreement and
|
11.4
|
Advanced Replacement Components. Should Flextronics receive a notice that a Component in a Product has failed, Flextronics shall use commercially reasonable efforts to make a replacement Component available as soon as possible but no longer than [***] after receiving the original, failed Component and at no additional charge to Nutanix.
|
12.
|
MATERIALS MANAGEMENT
|
12.1
|
Procurement. Flextronics is authorized to purchase materials using industry standard purchasing practices including, but not limited to, acquisition of material recognizing minimum order quantities, ABC buy policy and long lead time Component management to meet the Demand Forecast and Product Order requirements.
|
12.2
|
AVL. Flextronics shall procure all Components according to the AVL as may be referred to as “Sourcing” in Arena.
|
12.3
|
Component Lead Time. The parties shall review Component lead-time no less frequently than quarterly, or more frequently if requested by Nutanix in writing. Updates shall be made to Flextronics’s MRP system no less than weekly for the purposes of avoiding excess or insufficient inventory of Components.
|
12.4
|
Component Suppliers. Nutanix may designate Component suppliers (“Component Suppliers”) from whom Flextronics is required to procure Components to integrate into the Products. Flextronics agrees that it is responsible for contracting the Component Suppliers and Nutanix is not responsible for any transactions between Flextronics and Component Suppliers.
|
12.5
|
Counterfeit Components. Flextronics shall establish and maintain an acceptable Counterfeit Component detection and avoidance system.
|
12.5.1
|
Any Counterfeit Components discovered in the Products must be immediately replaced at Flextronics’s expense even if such detection occurs after the warranty period described in Section 15; provided that these Components were procured by a supplier solely selected by Flextronics.
|
12.5.2
|
Nutanix will have no liability for Counterfeit Components procured by Flextronics unless Nutanix directed Flextronics to procure such Components from a specific supplier. Flextronics shall advise Nutanix at the earliest possible time if Flextronics reasonably suspects a particular Component may be Counterfeit.
|
12.5.3
|
In addition to any other remedies Nutanix may have under this Agreement and at law, any Counterfeit Components discovered in the Products shall be treated as an Epidemic Failure in accordance with section 11.3, provided that Flextronics is in breach of its Express Limited Warranty under section 1.1 of Exhibit A.
|
12.6
|
Upside. Except in end-of-life situations, the parties shall use their respective commercially reasonable efforts to secure Components supply coverage to achieve [***] of the Demand Forecast. These efforts shall include, but not be limited to, improvements in forecasting accuracy, negotiating and implementation of Vendor
|
12.7
|
Flextronics will review with Nutanix prior to entering into any binding (non-cancelable) contractual agreement for Custom Components beyond those required by the Demand Forecast and notify Nutanix in writing of such non-cancelable contractual agreements and the applicable lead times that vary from the standard lead time listed in Flextronics’s MRP system. Unless otherwise agreed (and such agreement not to be unreasonably delayed or withheld) Nutanix shall have no responsibility, financial or otherwise, for excess or obsolete inventory or long lead materials acquired by Flextronics which are in excess of these requirements.
|
12.8
|
Component Change Notification Should Flextronics be notified that a Component may no longer be available from the manufacturer of the Component then Flextronics may discontinue the availability of Components by providing Nutanix with [***] prior written notice (an “End of Life Notice”) unless otherwise mutually agreed upon in writing. Nutanix may continue to place Orders for Products that utilize the Components for [***] after the End of Life Notice is issued under the same terms and conditions available prior to the End of Life Notice being issued. If an End of Life Notice has been issued, Flextronics will seek to reduce Component liability to what is required solely to satisfy pending Orders.
|
12.9
|
Shortages or Lead Time changes. Flextronics will promptly notify Nutanix in writing of any shortage in available supply of Components or if there is a longer lead-time for a specific Component.
|
12.10
|
PPV Approval. Prior written approval shall be required before the purchase of any Components where there is a Purchase Price Variance. Upon receipt of an approval request for PPV, Nutanix will endeavor to provide such approval within [***] so as not to disrupt the supply chain of Components. Flextronics will provide Nutanix with a PPV report on a weekly basis and all supporting documents will be presented to Nutanix as part of the Quarterly Settlement Process.
|
12.11
|
FIFO. Flextronics shall maintain a “first-in, first-out” inventory system, and shall ensure that all new Product and repaired Product (except in instances where it is not commercially or technically practicable) is shipped at the latest Product revision
|
12.12
|
Consigned Material. Flextronics shall act in a commercially reasonable and prudent manner in its handling and storage of Nutanix Consigned Material so as to minimize any loss or damage. Flextronics shall segregate Nutanix Consigned Material from other materials in Flextronics possession to ensure that at all times the Nutanix Consigned Material is clearly marked as being the property of Nutanix. Flextronics shall provide counts of the Nutanix Consigned Material as part of the quarterly review process or more frequently as mutually agreed by both parties. Flextronics assumes full liability for any losses of Nutanix Consigned Material in Flextronics’s possession
|
12.13
|
In the event that Nutanix (or a third party on behalf of Nutanix) purchases Components from Flextronics, the Parties shall from time to time agree on the appropriate adder to the Component Standard Price for such purchases as a compensation for Flextronic’s handling costs. While the adder percentage is in negotiation, material shall not be held from shipment.
|
12.14
|
Inventory inspection. On or around the first day of each Nutanix fiscal quarter, Nutanix shall be allowed to perform an on-site physical inventory inspection. Any discrepancy that is discovered during such inspection shall be discussed as part of the QBR.
|
13.
|
COMPONENT LIABILITY
|
13.1
|
Both Parties desire to effectively manage all Components, demand, and material inventory such that the inventory will be completely consumed by the end-of-support of the Products and Nutanix will consequently have limited material liability for unused Components.
|
13.2
|
Nutanix shall have no liability for Components except for Non-Standard or Custom Components except as noted above.
|
13.3
|
The Non-Standard and Custom Components for which Nutanix has liability under this Agreement shall be reviewed no less frequently than on a quarterly basis and both parties shall work together with the aim of converting as many Components as reasonably practical from Non-Standard and Custom Components to Standard Components
|
13.4
|
Inventory liability for Products on the Exhibit F Product list shall be as follows:
|
13.4.1
|
For finished Products, the current Price for the Product at issue; Nutanix agrees to purchase any Products (finished goods) and unique Nutanix work in process.
|
13.4.2
|
Nutanix will incur Inventory liability for (“WIP”), including supermarket inventory, that has been held by Flextronics for more than [***] or Nutanix may choose to pay Flextronics to tear down such WIP and restock Components at an agreed charge per unit as set forth in Section 9.1.1.
|
13.4.3
|
Flextronics shall exercise commercially reasonable mitigation efforts to reduce Nutanix’s Inventory Liability for finished Products and WIP.
|
13.5
|
If, after employing commercially reasonable practices in accordance with the demand signal per the Nutanix provided Demand Forecast, Components are in excess, the Inventory liability for Non-Standard and Custom Components that are excess or obsolete shall be as follows:
|
13.5.1
|
Excess Inventory. For Non-Standard or Custom Components that have been held by Flextronics for more than [***] for the carrying of such Non-Standard or Custom Components. For any Non-Standard or Custom Components that have been held by Flextronics [***]. Nutanix will purchase any Non-Standard or Custom Components held by Flextronics for more than [***]. Once a month, Nutanix and Flextronics will review the inventory report and determine inventory aging. Flextronics shall obtain Nutanix’s written approval prior to purchasing any Non-Standard or Custom Components that exceed the applicable monthly forecasts.
|
13.5.2
|
Obsolete Inventory: Any Non-Standard or Custom Components are obsolete (“Obsolete Inventory”) when they are no longer forecasted, or have a disposition of ‘scrap’ within an ECN. With regard to Obsolete Components, Flextronics shall:
|
(i)
|
Cancel outstanding orders for such Non-Standard and/or Custom Components
|
(ii)
|
Return, return for credit, or sell such Non-Standard and/or Custom Components back to the original supplier or to a third party;
|
(iii)
|
Use Obsolete Components for the manufacture of other products for other Flextronics customers; or
|
(i)
|
Flextronics will, at Nutanix’s option, deliver to Nutanix (or if Nutanix so requests, otherwise dispose of) all Obsolete Inventory then held by Flextronics; and
|
(ii)
|
Flextronics shall be entitled to invoice Nutanix for the current standard Prices of the Obsolete Inventory.
|
13.6
|
Flextronics shall measure Excess Inventory or Obsolete Inventory monthly, but the parties shall resolve any Excess or Obsolete Inventory issues as part of the Quarterly Settlement Process.
|
13.7
|
Flextronics will undertake reasonable efforts to reduce Excess Inventory and Obsolete Inventory through open order cancellations, return for credit programs, reworks or allocation to alternative programs (if available and appropriate).
|
13.8
|
Both parties shall meet quarterly regarding Excess Inventory and Obsolete Inventory to determine the best method to mitigate Nutanix’s potential inventory liability. Inventory liability for Non-Standard and Custom Components will be evaluated monthly or as mutually agreed by the parties.
|
14.
|
SOFTWARE AT SCALE
|
14.1
|
Should the parties intend to engage in future transactions to effect the sale of Software at Scale products, such transactions shall be mutually agreed upon in an executed document which may replace Exhibit E attached hereto.
|
15.
|
WARRANTIES
|
15.1
|
Flextronics EXPRESS LIMITED WARRANTY is incorporated herein and attached hereto as Exhibit A
|
15.2
|
Repaired Products returned to Nutanix shall be covered under the remaining portion of the original warranty period, provided however, that the specific repair shall be subject to a ninety (90) day workmanship warranty even if the original workmanship warranty period expires sooner.
|
15.3
|
Flextronics warrants that Nutanix will acquire good and marketable title to the Products upon Delivery to Nutanix.
|
15.4
|
Omitted.
|
15.5
|
No Representations or Other Warranties. EXCEPT AS OTHERWISE EXPRESSLY STATED OR INCORPORATED BY REFERENCE IN THIS SECTION 15, FLEXTRONICS MAKES NO OTHER REPRESENTATIONS OR WARRANTIES ON THE PERFORMANCE OF THE SERVICES, OR THE PRODUCTS, EXPRESS, IMPLIED, STATUTORY, OR IN ANY OTHER PROVISION OF THIS AGREEMENT OR COMMUNICATION WITH NUTANIX, AND FLEXTRONICS SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTY OR CONDITION OF MERCHANTABILITY, TITLE OR FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT.
|
15.6
|
Field Returns
|
15.6.1
|
For Products failing in the field, Nutanix may ship Rejected Product directly to Flextronics in accordance with Flextronics standard Return Material Authorization (“RMA”) process. The Parties agree to [***] for refurbishment of a Product that is outside of the warranty period. This charge is to receive in, test, inspect, and re-pack these Products. For any replacement parts required to complete a field return, but not under warranty, additional labor and/or packaging is not included in the [***] price and will be priced separately and agreed upon by the parties.
|
15.6.2
|
Flextronics will analyze any such RMA Product and, if a breach of warranty is found ("Defect"), then Flextronics will repair or replace at no cost to Nutanix the RMA Product within [***] of receipt by Flextronics of the RMA Product and all required associated documentation.
|
15.6.3
|
Flextronics may repair Field Rejected Product, no more than [***] and return such Products to Nutanix.
|
15.6.4
|
Flextronics is responsible for all freight and insurance charges (for transfer between The End Customer and Flextronics premises) associated with verified defects on in-warranty Product. Nutanix will be
|
15.7
|
Out of Warranty Repairs
|
15.7.1
|
Flextronics will make available an out-of-warranty repair service to Nutanix and to End-Customer’s for at least [***] after Delivery of the last unit of Product from a volume production run at a mutually agreeable commercially reasonable price using the rates described in Section 6.7 herein. This obligation is conditioned on the required Components being commercially available.
|
15.7.2
|
At the end of the Product life cycle, Nutanix and Flextronics shall mutually collaborate on a periodic forecast of requirements for service parts for such Products based upon agreed-to lead times for the service parts. If a Component vendor cannot support the Product for [***], Flextronics shall notify Nutanix of opportunities to procure these parts on behalf of Nutanix and inventory such parts at Nutanix’s expense or Nutanix shall purchase the parts directly from the Component vendor based on Nutanix’s buy requirements.
|
16.
|
ADMINISTRATION AND DISPUTES
|
16.1
|
For each Product shipment to the End-Customer, Flextronics will provide a copy of the applicable shipping documentation to Nutanix including reference to the relevant Order, quantity shipped, and shipping documentation. This may be done via e-mail, facsimile, or electronic data interchange.
|
16.2
|
Flextronics will (at a minimum) on a weekly basis provide to Nutanix; (i) an open Order status report which includes the status of all open Orders; (ii) an in-transit Order status report which includes the status of all Orders in transit detailing quantity, ship date, carrier and air waybill number; (iii) a projected ship plan for the following [***]; (iv) an inventory of Products at each Flextronics manufacturing location where Nutanix Products are manufactured; and (v) Purchase Price Variance (PPV) report.
|
16.3
|
Nutanix's designated Flextronics Business Manager will conduct Quarterly Business Reviews (QBRs with the Flextronics-Nutanix account management team. Nutanix and Flextronics will determine the location and times for these meetings. The Parties will ensure appropriate participants from functional areas capable of addressing the items on the QBR agenda will be in attendance. Typical agenda items will include:
|
•
|
Review Flextronics's performance over the past quarter, including KPIs such as on time ship, lead time and product quality
|
•
|
Review Price reduction plans and opportunities
|
•
|
Review action items and resolution
|
•
|
Identify opportunities and areas of improvement
|
•
|
Agree on commitments, set target dates, and define responsible persons to follow through
|
•
|
Review appropriate Flextronics reports
|
•
|
Review Flextronics quality and reliability improvement plans
|
•
|
Review the accuracy of Nutanix's forecasting process
|
•
|
Resolve any outstanding payment issues
|
16.4
|
In the event of any dispute arising from or regarding the subject matter of this Agreement, the Parties agree to negotiate in good faith to find an equitable resolution to the disputed matter. To this end, the Party seeking to initiate a lawsuit or arbitration proceeding must formally request in writing that the other Party designate a senior executive employee with authority to bind that Party to meet to resolve the dispute within [***] in the offices of the other Party or other location agreed to by the Parties. During these discussions, each Party shall honor the other’s reasonable requests for non-privileged and relevant information. The Parties may agree to include an independent mediator in the discussions. If the dispute is not resolved within [***] from the end of the period set forth above, then either Flextronics or Nutanix may commence legal, equitable or other action. The requirements set forth above are a condition precedent to initiating a legal, equitable or other
|
16.5
|
Neither Party may assign this Agreement in whole or in part without the express written consent of the other Party except to each party’s respective affiliates. Such consent shall not be unreasonably withheld. Any permitted assignment of this Agreement shall be binding upon and enforceable by and against such party’s successors and assigns, provided that any unauthorized assignment shall be null and void and constitute a breach of this Agreement. This Agreement shall be governed by and interpreted in accordance with the laws of the state of California. Any dispute, claim or controversy arising from or related in any way to this Agreement or the interpretation, application, breach, termination or validity thereof, will be submitted for resolution by binding arbitration in accordance with the Comprehensive Arbitration Rules & Procedures of JAMS. The arbitration will be held in Santa Clara County, California and it shall be conducted in the English language. Judgment on any award in arbitration may be entered in any court of competent jurisdiction. Notwithstanding the above, each Party shall have the right to file in the Santa Clara, California state court or the federal courts in and for the Northern District of California an application for temporary or preliminary injunctive relief, writ of attachments, writ of possession, temporary protective order, and/or appointment of a receiver on the grounds that the arbitration award to which the applicant may be entitled may be rendered ineffectual in the absence of such relief. IN THE EVENT OF ANY DISPUTE BETWEEN THE PARTIES, THE PARTIES HEREBY KNOWINGLY AND VOLUNTARILY AGREE THAT ANY AND ALL MATTERS SHALL BE DECIDED BY A JUDGE OR ARBITRATOR WITHOUT A JURY TO THE FULLEST EXTENT PERMISSIBLE UNDER APPLICABLE LAW.
|
17.
|
INTELLECTUAL PROPERTY
|
17.1
|
All existing Intellectual Property owned by or licensed to Nutanix (including, but not limited to, Product designs, manufacturing, and/or test processes) will continue to be owned by, or exclusively licensed to Nutanix (“Nutanix Intellectual Property”). Nutanix hereby grants to Flextronics under Nutanix’s Intellectual Property rights, a limited, nonexclusive, worldwide, non-transferable, non-royalty bearing license to use the Nutanix Intellectual Property, including the Software, solely in conjunction with the performance of the Services. All other rights to the Nutanix Intellectual Property, including but not limited to the Software, are reserved to Nutanix. All existing Intellectual Property owned by or licensed to Flextronics will continue to be owned by, or exclusively licensed to, Flextronics and accordingly Nutanix is licensed to use such of it as may be necessary for Nutanix to meet its obligations and exercise its rights pursuant to this Agreement.
|
17.2
|
With respect to Intellectual Property created through the performance of the Agreement, Nutanix shall own all Intellectual Property relating to; (i) the design and specifications of the Products; (ii) any Testing requirements, processes, or policies created or supplied by Nutanix for the purposes of facilitating the Services or assembly of the Product; or (iii) any manufacturing procedures, processes, or policies created or supplied by Nutanix for the purposes of facilitating the Services or assembly of the Product. Flextronics shall own all Intellectual Property relating to the manufacturing process.
|
17.3
|
Except as provided above in this Section 17 nothing in this Agreement grants or can be capable of granting to a party (whether directly or by implication, estoppel or otherwise) any rights to any Intellectual Property owned by or licensed to the other party or any affiliate of that other party.
|
17.4
|
Nutanix Trademarks. Nutanix grants to Flextronics a limited, non-exclusive, non-assignable, non-transferable, royalty free license to affix and apply the Nutanix Trademarks to the Products as directed by Nutanix for the sole purpose of performing the Services. Flextronics shall not use Nutanix Trademarks for any other purpose and only in such manner as to preserve all rights of Nutanix. Flextronics acquires no right to Nutanix Trademarks by its use and all uses by Flextronics of the Nutanix Trademarks will inure to Nutanix’s sole benefit. As used herein, “Nutanix Trademarks” means those trademarks, trade names, service marks, slogans, designs, distinctive advertising, labels, logos, and other trade-identifying symbols as are or have been developed
|
18.
|
LIMITATION OF LIABILITY.
|
18.1
|
EXCEPT FOR; (A) NUTANIX’S PAYMENT OBLIGATIONS FOR PRODUCT AND COMPONENTS HEREUNDER; (B) FLEXTRONICS WARRANTY OBLIGATIONS UNDER SECTION 1.1c OF EXHIBIT A; OR (C) EITHER PARTY’S INDEMNIFICATION OBLIGATIONS UNDER SECTION 19 OR BREACH OF ITS RESPECTIVE CONFIDENTIALITY OBLIGATIONS HEREUNDER, IN NO EVENT SHALL EITHER PARTY’S LIABILITY FOR ALL CLAIMS ARISING OUT OF OR RELATING TO THIS AGREEMENT EXCEED [***].
|
18.2
|
FOR PURPOSES OF THIS AGREEMENT, NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, CONSEQUENTIAL, OR PUNITIVE DAMAGES INCLUDING, BUT NOT LIMITED TO, LOST PROFITS, LOSS OF DATA, OR LOSS OF REVENUE ARISING OUT OF OR RELATING TO THIS AGREEEMNT OR THE SALE OF PRODUCTS HEREUNDER, WHETHER SUCH LIABILITY IS ASSERTED ON THE BASIS OF CONTRACT, TORT (INCLUDING THE POSSIBILITY OF NEGLIGENCE OR STRICT LIABILITY), OR OTHERWISE, EVEN IF THE PARTY HAS BEEN WARNED OF THE POSSIBILITY OF ANY SUCH LOSS OR DAMAGE.
|
19.
|
INDEMNIFICATION
|
19.1
|
Indemnity by Nutanix. Nutanix shall fully defend Flextronics and its Affiliates, officers, directors, employees and agents (“Flextronics Indemnitees”) from and against any third party claims, actions, suits, legal proceedings and demands arising out of or related to; (a) infringement by the Products, including but not limited to Specifications or Software of any Intellectual Property Rights of a third party; (b) damage to any tangible property, personal injury, or death, resulting or claimed to have resulted from any alleged defect in the Products, including but not limited to Specifications or Software; and shall indemnify and hold harmless the Flextronics Indemnitees for all liabilities, damages, losses, judgments, settlements, costs and pay expenses as incurred in defense of such claims, including without limitation, attorney fees.
|
19.2
|
Notwithstanding the terms above, Nutanix shall have no liability for any claims of any kind to the extent that they result from: (a) modifications to the Nutanix Specifications or Software made by Flextronics without Nutanix’s written agreement, if a claim would not have occurred but for such modifications; or (b) the combination, operation or use of the Software by Flextronics with equipment, devices, software or data not approved by Nutanix, if a claim would not have occurred but for such combination, operation or use.
|
19.3
|
Indemnity by Flextronics. Flextronics shall fully defend Nutanix and its Affiliates, officers, directors, employees and agents (“Nutanix Indemnitees”) from and against any third party claims, actions, suits, legal proceedings and demands arising out of or related to; (a) infringement based on any aspect of performing the Services that is not specifically required in writing by Nutanix in its specified designs, processes or other instructions or any deviations from such requirements by Flextronics or its agents of any Intellectual Property rights of a third party; (b) damage to any tangible property, personal injury, or death, resulting or claimed to have resulted by a breach of Flextronics of this Agreement; and shall indemnify and hold harmless the Nutanix Indemnitees for all liabilities, damages, losses, judgments, settlements, Prices and pay expenses as incurred in defense of such claims, including without limitation, attorney fees.
|
19.4
|
If either Party becomes aware of a claim under which it could seek indemnification (“Indemnification Claim”), the Party seeking indemnification (the “Indemnitee”) shall; (a) promptly notify the Party from which indemnification is sought (the “Indemnitor”) of such claim; (b) provide commercially reasonable assistance and cooperate with the Indemnitor in the defense thereof; and (c) grant the Indemnitor sole control of the defense and settlement of the claim, including but not limited to the selection of outside counsel. The Indemnitee
|
19.5
|
If the Indemnitee is unable to lawfully exercise the rights and licenses granted to it under this Agreement as a result of a claim, the Indemnitor shall, at its own expense, procure for Indemnitee the right to exercise the rights and licenses granted to it under this Agreement or modify the subject of the Indemnification Claim such that it is no longer infringing; provided that if indemnifying party is unable to accomplish either of the foregoing despite its reasonable commercial efforts, then either Party may terminate this Agreement.
|
20.
|
CONFIDENTIAL INFORMATION
|
20.1
|
The parties will comply with the provisions of the Non-Disclosure Agreement entered into by and between Flextronics and Nutanix on August 31, 2016 attached hereto as Exhibit G.
|
21.
|
TERM AND TERMINATION
|
21.1
|
The term of this Agreement shall commence on the Effective Date and continue for a period of three (3) years (“Initial Term”) and shall thereafter be automatically renewed for additional one (1) year periods unless either party gives written Notice of termination at least one-hundred and eighty (180) days before the anniversary of the Initial Term or any renewal term, as applicable.
|
21.2
|
Effect of Termination or Expiration. In the event of a termination or expiration of this Agreement, the provisions of this Agreement will continue to apply to all Orders placed by Nutanix prior to the effective date of such termination or expiration except for any Order, or portion thereof, canceled pursuant to “Termination for Cause”. Termination or expiration of this Agreement will not, however, relieve or release either party from making payments or any other obligations which it may have to the other party under the terms of this Agreement.
|
21.3
|
Termination for Cause. Either party may terminate this Agreement immediately for cause by giving written notice to the other party in the event the other party:
|
21.3.1
|
becomes insolvent or unable to meet its obligations as they become due or files or has filed against a petition under the bankruptcy laws;
|
21.3.2
|
ceases to function as a going concern or to conduct its operations in the normal course of business;
|
21.3.3
|
except in the instances of a merger or acquisition, assigns or transfers, either voluntarily or by operation of law, any rights or obligations under this Agreement without consent of the party seeking to terminate; or
|
21.3.4
|
materially breaches an obligation under this Agreement and such breach is not remedied within thirty (30) days of written notice of such breach.
|
22.
|
GENERAL
|
22.1
|
Costs. Except as specifically provided herein, each party will be solely responsible for its costs and expenses related to this Agreement and the activities contemplated by this Agreement, including but not limited to engineering work.
|
22.2
|
Interpretation. Unless otherwise indicated, all references to “in writing” or “written approval” shall include written communications via electronic mail. Unless otherwise indicated, the words “include”, “includes” and “including” shall be deemed in each case to be followed by the words “without limitation.”
|
22.3
|
Freedom of Action. This Agreement shall in no way preclude either Party from independently developing, having developed, or acquiring, marketing, offering to sell or selling any products or services, nor shall it in any way preclude either Party from entering into any similar agreement with any third party.
|
22.4
|
Obligations. There is no obligation for either party to purchase Products or Services under this Agreement unless a valid Order is issued.
|
22.5
|
Force Majeure. Neither party will be in default or liable for any delay or failure to comply with material aspects of this Agreement due to forces beyond their reasonable control, including but not limited to acts of god, provided such party immediately notifies the other and implements a reasonable mitigation plan and takes reasonable mitigating actions in response thereto.
|
22.6
|
Governing Law. This Agreement shall be governed by and interpreted in accordance with the laws of the state of California. Except for any dispute, claim, or controversy related to the intellectual property rights of a party, any dispute, claim or controversy arising from or related in any way to this Agreement or the interpretation, application, breach, termination or validity thereof, will be submitted for resolution by binding arbitration in accordance with the Comprehensive Arbitration Rules & Procedures of JAMS. The arbitration will be held in Santa Clara County, California and it shall be conducted in the English language. Judgment on any award in arbitration may be entered in any court of competent jurisdiction. Notwithstanding the above, each Party shall have the right to file in the Santa Clara, California state court or the federal courts in and for the Northern District of California an application for temporary or preliminary injunctive relief, writ of attachment, writ of possession, temporary protective order, and/or appointment of a receiver on the grounds that the arbitration award to which the applicant may be entitled may be rendered ineffectual in the absence of such relief. The Parties exclude application of the 1980 United Nations Convention on Contracts for the International Sale of Goods, if applicable.
|
22.7
|
EXCEPT AS OTHERWISE DESCRIBED HEREIN, IN THE EVENT OF ANY DISPUTE BETWEEN THE PARTIES, THE PARTIES HEREBY KNOWINGLY AND VOLUNTARILY AGREE THAT ANY AND ALL MATTERS SHALL BE DECIDED BY A JUDGE OR ARBITRATOR WITHOUT A JURY TO THE FULLEST EXTENT PERMISSIBLE UNDER APPLICABLE LAW.
|
22.8
|
Regulatory Approvals. Nutanix is responsible for the Product’s compliance with all applicable UL, CSA, FCC, and other approvals, standards and regulations. Nutanix will designate Flextronics’s appropriate manufacturing location as the manufacturing location for the purposes of such approvals. Flextronics will cooperate with public and private regulatory organizations to allow periodic factory inspections at mutually agreeable times to maintain such approvals. Should the Products fail to meet the applicable approvals, standards or regulations due to a failure in Flextronics’s manufacturing process to comply with such approvals, standards or regulations, (a) Flextronics may cease production, (b) Flextronics will follow Nutanix’s reasonable direction to institute the required changes and (c) Flextronics may require a delay in manufacturing, without being in breach of this Agreement, until applicable qualifications are met.
|
22.9
|
Import/Export Regulations: Each party shall comply with all applicable import, export and re-export control laws and regulations, including the U.S. Export Administration Regulations, the International Traffic in Arms Regulations, and the sanctions maintained by the Treasury Department’s Office of Foreign Assets Control. Each party represents and warrants that items will not be exported, re-exported, or transferred directly or indirectly to any location, entity, government or person prohibited by the applicable laws or regulations of any jurisdiction, without prior authorization from the relevant government authorities. As necessary and reasonably requested, each party will provide export information such as the Export Classification Control Number
|
22.10
|
Data Privacy. Each Party will comply with all applicable data privacy laws and otherwise protect personal data and will not use, disclose, or transfer across borders personal data except as necessary to perform under this Agreement.
|
22.11
|
Relationship of the parties. Each Party is an independent contractor and neither Party is an agent, servant, representative, partner, joint venture, or employee of the other or has any authority to assume or create any obligation or liability of any kind on behalf of the other.
|
22.12
|
Publicity. Except as otherwise set forth herein, neither Party shall publicize the existence of this Agreement nor refer to the other Party in connection with any promotion or publication without the prior written approval of such Party. Further, neither Party shall disclose the terms and conditions of this Agreement to any third party, including but not limited to any financial terms, except as required by law or with the prior written consent of the non- disclosing party.
|
22.13
|
Notices. Any and all written notices, communications, and deliveries between Nutanix and Flextronics with reference to this Agreement shall be effective as of and deemed made on the date of mailing if sent by registered or certified mail, or by overnight courier, to the address of the other party as follows:
|
22.14
|
Severability. Should any provision herein be held by a court of competent jurisdiction to be illegal, invalid, or unenforceable, such provision shall be modified to reflect the intentions of the parties. All other terms and conditions shall remain in full force and effect.
|
22.15
|
Waiver. No amendment, modification, or waiver of any provision of this Agreement shall be effective unless set forth in a writing executed by an authorized representative of each party. No failure or delay by either party in exercising any right, power, or remedy will operate as a waiver of any such right, power, or remedy. No waiver of any provision of this Agreement shall constitute a continuing waiver or a waiver of any similar provision unless expressly set forth in a writing signed by an authorized representative of each party.
|
22.16
|
Amendment: This Agreement may be amended by the parties in an executed document and on a mutually agreeable basis.
|
22.17
|
Days: Whenever a reference is made herein to "days", the reference means business days, not calendar days, unless the reference is specifically to "calendar days". Business days shall mean a day that the relevant Flextronics manufacturing site normally operates
|
22.18
|
FCPA. Each party acknowledges that it is familiar with the Foreign Corrupt Practices Act (“FCPA”) of the United States, the UK Bribery Act 2010 and all applicable local laws relating to anti-corruption or anti-bribery (the “Anti-corruption Laws”). Each party agrees not to violate the Anti-Corruption Laws with respect to the subject of this Agreement.
|
NUTANIX, INC.
|
FLEXTRONICS TELECOM SYSTEMS, LTD.
|
By:_____________________________
|
By:______________________________
|
Name:___________________________
|
Name:____________________________
|
Title:____________________________
|
Title:_____________________________
|
Date:____________________________
|
Date:_____________________________
|
1.
|
WARRANTY
|
Nutanix Item Number
|
Description
|
[***]
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[***]
|
2.9
|
The definition of “Software” in Section 1.30 is deleted and replaced with the following:
|
3.9
|
The definition of “Specifications” in Section 1.31 is deleted and replaced with the following:
|
4.9
|
A new Section 5.5 is added to the Agreement as follows:
|
5.9
|
A new Section 5.7 is added to the Agreement as follows:
|
6.9
|
Section 14 is deleted in its entirety and replaced with the following:
|
7.9
|
An additional section is added to the end of Section 19.1 as follows:
|
8.9
|
An additional sentence is added to the end of Section 19.2 as follows:
|
9.9
|
An additional sentence is added to the end of Section 19.3
|
10.9
|
Exhibit E is deleted in its entirety and replaced with the following Exhibit E as attached to this Amendment #1.
|
11.9
|
The Parties previously entered into an Amendment dated November 11, 2017 regarding the subject matter of this Amendment #1. This Amendment #1 supersedes in its entirety the Amendment and the Amendment shall be of no further force and effect.
|
12.9
|
No other changes are made to the Agreement, and following the Amendment Effective Date, all references to the “Agreement” shall mean the Agreement as amended by this Amendment #1.
|
2.10
|
INTRODUCTION
|
2.11
|
[***] for Software at Scale Hardware will be [***].
|
3.11
|
The Parties shall enable the Software at Scale Customer to experience a [***] with Products contemplated under the Agreement.
|
4.11
|
Flextronics shall directly sell Software at Scale Hardware to [***] and Nutanix shall provide the software license [***] to the End Customer.
|
5.11
|
Flextronics may impose any qualifications to do business [***] and may choose [***] or to reject specific [***] from any [***].
|
6.11
|
Provided that the End Customer purchases after sales support from Nutanix, Nutanix shall support the hardware and software in [***] as set forth in Section 6 of this Exhibit E.
|
7.11
|
Nutanix has no involvement or responsibility for any [***] other than in the performance of [***].
|
3.10
|
DEFINITIONS. Capitalized terms in this Exhibit E shall have the meanings set forth below.
|
a.
|
[***] means another entity in the sales channel [***].
|
b.
|
“Software at Scale Customer” or “End Customer” means the last entity who purchases the Software at Scale Products for their own use and not for resale to another entity.
|
c.
|
“Software at Scale [***]” means [***] for Software at Scale Hardware which [***] as described in section [***] of the Agreement and [***] below.
|
d.
|
“Software at Scale Hardware” means the [***] of certain Products that have been designated by Nutanix to be part of the Software at Scale Program.
|
e.
|
“Software at Scale Products” means [***] sold by Flextronics [***]. These Software at Scale Products shall be designated with the suffix [***].
|
f.
|
“Territory” means the world.
|
2.13
|
Non-Exclusive Appointment. Flextronics hereby [***], and [***] such appointment, to [***] during the term of the Agreement solely in accordance with the terms and conditions of this Agreement.
|
3.13
|
Nutanix Marketing Obligations as [***]. Nutanix shall, at its own expense, market the Software at Scale program including, advertising, promoting, and soliciting the sale of the Software at Scale Products [***] consistent with good business practice.
|
4.13
|
Nutanix Obligations to Provide Quotes [***]. For expediency purposes, [***] for Software at Scale Orders [***]. For the purpose of clarity, the Parties agree that the sales quotes [***] are not binding. [***].
|
5.13
|
Once Nutanix has received a confirmation on a Software at Scale Order [***]. In the event that Flextronics decides to reject a [***].
|
2.14
|
Flextronics shall be responsible for 1) its own [***] with regard to any Software at Scale Hardware [***] and, 2) the fulfillment of any Software at Scale Order that it thereby agrees to as part of the processes outlined in this Exhibit E.
|
3.14
|
Flextronics shall provide Software at Scale Customers (through the sales channel) with a [***] Software at Scale Hardware portion of the [***] consistent with the [***] of the Agreement.
|
4.14
|
As part of fulfilling any Software at Scale Orders, Flextronics shall also meet the following requirements in a timely fashion. At a minimum, Flextronics shall:
|
i.
|
[***] Software at Scale Hardware;
|
ii.
|
Maintain a [***] on time ship rate for all Software at Scale Hardware shipped based on a seven [***] lead time; and
|
iii.
|
[***] Software at Scale Hardware.
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Nutanix, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(c)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date: June 5, 2019
|
|
/s/ Dheeraj Pandey
|
|
|
Dheeraj Pandey
|
|
|
Chairman and Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Nutanix, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(c)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date: June 5, 2019
|
|
/s/ Duston M. Williams
|
|
|
Duston M. Williams
|
|
|
Chief Financial Officer
|
|
|
(Principal Financial Officer)
|
Date: June 5, 2019
|
|
/s/ Dheeraj Pandey
|
|
|
Dheeraj Pandey
|
|
|
Chairman and Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
Date: June 5, 2019
|
|
/s/ Duston M. Williams
|
|
|
Duston M. Williams
|
|
|
Chief Financial Officer
|
|
|
(Principal Financial Officer)
|