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☒
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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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
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San Jose,
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CA
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95110
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(Address of principal executive offices, including zip code)
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(408)
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216-8360
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(Registrant's telephone number, including area code)
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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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our future billings, 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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our business plans, initiatives and objectives, our ability to execute such plans, initiatives and objectives in a timely manner, and the impact of such plans, initiatives and objectives on our business, operations, and financial results;
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our plans for, and the timing of, changes to our business model, including our ongoing transition to a subscription-based business model, our ability to manage, complete or realize the benefits of such transitions successfully and in a timely manner, and the short-term and long-term impacts of such transitions on our business, operations and financial results;
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the benefits and capabilities of our platform, products, services and technology;
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our growth strategy, our ability to effectively achieve and manage our growth, and the amount, timing and impact of any investments to grow our business, including plans to continue to increase demand generation and marketing spending, and continue to invest in our global engineering, research and development and sales and marketing teams;
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anticipated trends, growth rates and challenges in our business and in the markets in which we operate, including the segmentation and productivity of our sales team;
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our ability to develop new solutions, product features and technology and bring them to market in a timely manner, as well as the impact of including additional solutions in our product portfolio;
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market acceptance of new technology and recently introduced solutions;
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the interoperability and availability of our solutions with and on third-party hardware platforms;
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our ability to increase sales of our solutions, particularly to large enterprise customers;
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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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our ability to maintain and strengthen our relationships with our channel partners and OEMs, and the impact of any changes to such relationships on our business, operations and financial results;
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the effects of seasonal trends on our results of operations;
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our expectations concerning relationships with third parties, including our ability to compress and stabilize sales cycles;
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our ability to maintain, protect and enhance our intellectual property;
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our exposure to and ability to guard against cyber attacks and other actual or perceived security breaches;
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our ability to continue to expand internationally;
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the effects of increased competition in our market and our ability to compete effectively;
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anticipated capital expenditures;
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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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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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macroeconomic and industry trends, projected growth or trend analysis;
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our ability to attract and retain qualified employees and key personnel; and
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the sufficiency of cash balances to meet cash needs for at least the next 12 months.
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Virtualization. Acropolis supports all major hypervisors, including our native, free AHV.
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Platform Services. Acropolis delivers software-defined platform services that allow enterprises to consolidate and run all of their workloads on our enterprise cloud platform and manage them centrally.
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Enterprise Storage Capabilities. Building on a distributed data fabric, Acropolis enables robust enterprise storage services across multiple storage protocols. Enterprise storage capabilities include performance acceleration capabilities, such as caching, data tiering and data locality and storage optimization, such as deduplication, compression and erasure coding, along with data protection and disaster recovery features.
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Networking Services. Acropolis provides a comprehensive set of services to visualize the network, automate common network operations, secure the network through native services, such as micro-segmentation, and integrate with various third-party networking and security products.
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Xi IoT is a cloud-agnostic edge computing platform that delivers local compute and artificial intelligence for the Internet of things ("IoT") edge devices, converging the edge platform and the customer’s choice of cloud infrastructure into a single data processing platform.
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Xi Leap is a hybrid cloud disaster recovery service that enables enterprises to protect on-premises workloads and data without the need to set up a secondary datacenter by seamlessly extending their on-premises environment to the Xi Cloud. Xi Leap is natively integrated into our enterprise cloud platform and can be deployed directly from Prism.
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Xi Frame is a cloud-native and infrastructure-independent, desktop-as-a-service platform that combines the consumer-grade simplicity and web-scale design of cloud applications with the functionality of traditional virtual desktop applications. It enables the delivery of applications and desktops from public clouds, as well as from private cloud deployments with AOS and AHV.
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Xi Beam is a multi-cloud cost and security compliance optimization service that provides organizations with deep visibility into, and analytics on, their cloud consumption patterns, as well as cost optimization recommendations that can reduce a customer’s cost of ownership. Xi Beam can also automate compliance with over 250 health checks and security best practices.
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Xi Clusters, which is in development as of the date of this Annual Report, will allow deployment of AOS on Amazon Web Services ("AWS") infrastructure, giving customers the option of consuming Nutanix software via AWS.
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Continually innovate and maintain technology leadership. Since inception, we have rapidly innovated from supporting limited applications and a single hypervisor to a full enterprise cloud platform that is designed to support a wide variety of workloads across private, public and multi-cloud deployments. We intend to continue to invest heavily in developing our enterprise cloud platform with new features, services and products to expand our market opportunity.
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Invest to acquire new end customers. We completed our first end customer sale in October 2011 and have since grown to approximately 14,180 end customers. We intend to grow our base of end customers by continuing to invest in sales and marketing, leveraging our network of channel partners and OEMs, furthering our international expansion and extending our enterprise cloud platform to address new customer segments. One area of continued focus increasing our sales to new, and expanding our sales to existing, large enterprise customers.
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Continue to drive follow-on sales to existing end customers. Our end customers typically deploy our technology initially for a specific workload. Our sales teams and channel partners then seek to systematically target follow-on sales opportunities to drive additional purchases throughout our broader product portfolio. This land and expand strategy enables us to quickly expand our footprint within our existing end customer base from follow-on orders that in the aggregate are often multiples of the initial order.
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Deepen engagement with current channel and OEM partners and establish additional routes to market to enhance sales leverage. We have established meaningful channel partnerships globally and have driven strong engagement and commercial success with several major resellers and distributors. We believe that our OEM relationships can augment our routes to market to accelerate our growth and that there is a significant opportunity to grow our sales with our channel partners and OEMs. We intend to attract and engage new channel and OEM partners around the globe while also selling our standalone software for deployment on qualified hardware or a hosted service to maximize the availability of our solutions for our customers.
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Invest in rapid growth while remaining focused on our overall financial health. We intend to continue investing in our rapid growth, while balancing such growth against our operating expenses. By maintaining this balance, we believe we can drive toward our high growth potential without sacrificing our overall financial health.
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software providers, such as VMware, Inc. ("VMware"), that offer a broad range of virtualization, infrastructure and management products to build and operate enterprise and hybrid clouds;
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traditional IT systems vendors, such as Cisco Systems, Inc. ("Cisco"), Dell, HPE, Hitachi Data Systems ("Hitachi"), IBM and Lenovo, 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;
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traditional storage array vendors, such as Dell, Hitachi and NetApp, Inc. ("NetApp"), which typically sell centralized storage products; and
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providers of public cloud infrastructure and SaaS-based offerings, such as Amazon.com, Inc. ("Amazon"), Google Inc. and Microsoft Corporation.
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product features and capabilities;
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system scalability, performance and resiliency;
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management and operations, including provisioning, analytics, automation and upgrades;
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total cost of ownership over the lifetime of the technology;
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product interoperability with third-party applications, infrastructure software, infrastructure systems and platforms and public clouds;
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application mobility across disparate silos of enterprise computing, including public and private cloud infrastructure; and
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complete customer experience, including usability, support and professional services.
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if current or prospective end customers prefer our historical life-of-device licenses, adoption of our subscription-based model may not meet our expectations, or may take longer than anticipated to achieve;
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potential confusion of or creation of concerns among current or prospective end customers and channel partners, including concerns regarding changes to our pricing models;
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we may be unsuccessful in implementing or maintaining subscription-based pricing models, or we may select a pricing model that is not optimal and could negatively affect adoption, renewal rates and our business results;
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our end customers may shift purchases to our lower priced subscription offerings, which could negatively affect our overall financial results;
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when purchasing multi-year term-based subscription licenses, our customers may request to pay for only the first year of the applicable term upfront, instead of the full term as we have seen historically, which would negatively impact our operating and free cash flows, potentially significantly;
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our relationships with existing channel partners that are accustomed to selling life-of-device licenses may be damaged, and we may be required to dedicate additional time and resources to educate our channel partners about our transition, each of which may negatively affect our business and financial results;
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if we are unsuccessful in adjusting our go-to-market cost structure, or in doing so in a timely or cost-effective manner, we may incur sales compensation costs at a higher than forecasted rate, particularly if the pace of our subscription transition is faster than anticipated;
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we may face additional and/or different financial reporting obligations, or we may choose to report our financial results using new or different metrics, either of which could increase the costs associated with our financial reporting and investor relations activities; and
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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.
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software providers, such as VMware, that offer a broad range of virtualization, infrastructure and management products to build and operate enterprise and hybrid clouds;
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traditional IT systems vendors, such as Cisco, Dell, HPE, Hitachi, IBM and Lenovo, 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;
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traditional storage array vendors, such as Dell, Hitachi and NetApp, which typically sell centralized storage products; and
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providers of public cloud infrastructure and SaaS-based offerings, such as Amazon, Google Inc. and Microsoft Corporation.
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arrangements entered into on a ratable subscription basis may delay when we can recognize revenue, even when compared to similar term-based subscription sales, which we currently recognize upfront, and can require up-front costs, which may be significant;
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since revenue is recognized ratably over the term of the customer agreement, any decrease in customer purchases of our ratable 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 increase our revenue through additional ratable subscription sales in any one period;
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cloud-based ratable subscription arrangements are generally 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; and
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there is no assurance that the cloud-based solutions we offer on a ratable subscription basis, including new products that we may introduce, will receive broad marketplace acceptance.
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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;
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increased purchasing power and leverage held by large end customers in negotiating contractual arrangements with us;
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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
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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.
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the timing and magnitude of orders, shipments and acceptance of our solutions in any quarter;
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our ability to attract new and retain existing end customers;
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disruptions in our sales channels or shifts in our relationships with important channel partners and OEMs;
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the timing of revenue recognition for our sales, the impact of which is heightened by our focus on
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reductions in end customers’ budgets for information technology purchases;
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delays in end customers’ purchasing cycles or deferments of end customers’ purchases in anticipation of new products or updates from us or our competitors;
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fluctuations in demand and competitive pricing pressures for our solutions;
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the mix of solutions sold, including the mix between appliance and software-only sales and the mix between subscription-based and non-subscription-based transactions, 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 a subscription-based model;
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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;
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the timing of product releases or upgrades or announcements by us or our competitors;
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any change in the competitive dynamics of our markets, including consolidation or partnerships among our competitors or partners, new entrants or discounting of prices;
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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;
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the costs associated with acquiring new businesses and technologies and the follow-on costs of integrating and consolidating the results of acquired businesses;
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the amount and timing of stock-based compensation expenses;
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our ability to control the costs of our solutions and their key components, or to pass along any cost increases to our end customers;
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general economic, industry and market conditions; and
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future accounting pronouncements and changes in accounting policies.
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lost revenue or lost OEM or other channel partners or end customers;
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increased costs, including warranty expense and costs associated with end customer support as well as development costs to remedy the errors or defects;
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delays, cancellations, reductions or rescheduling of orders or shipments;
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product returns or discounts; and
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damage to our reputation and brand.
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public sector budgetary cycles and funding authorizations;
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changes in fiscal or contracting policies;
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decreases in available government funding;
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changes in government programs or applicable requirements;
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the adoption of new laws or regulations or changes to existing laws or regulations;
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potential delays or changes in the government appropriations or other funding authorization processes; and
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higher expenses associated with, or delays caused by, diligence and qualifying or maintaining qualification as a government vendor.
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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;
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political, economic and social instability or uncertainty around the world, including the United Kingdom's potential separation from the European Union, commonly known as "Brexit";
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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;
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the potential impact of tariffs or other trade restrictions imposed by, or threatened to be imposed by, the U.S. government, such as the recently imposed tariffs for Chinese imports to the U.S.;
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greater difficulty in enforcing contracts, judgments and arbitration awards in international courts, and in collecting accounts receivable and longer payment and collection periods;
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greater risk of unexpected changes in regulatory practices, tariffs and tax laws and treaties;
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risks associated with trade restrictions and foreign legal requirements, including the importation, certification and localization of our solutions required in foreign countries;
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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;
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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;
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requirements to comply with foreign privacy, data protection and information security laws and regulations and the risks and costs of noncompliance;
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reduced or uncertain protection for intellectual property rights in some countries;
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impediments to the flow of foreign exchange capital payments and receipts due to exchange controls instituted by certain foreign governments;
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increased expenses incurred in establishing and maintaining corporate entities, office space and equipment for our international operations;
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difficulties in managing and staffing international offices and increased travel, infrastructure and legal and regulatory compliance costs associated with multiple international locations, including costs related to additional regulatory reviews or audits, financial accounting and reporting obligations and international cybersecurity requirements;
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greater difficulty in identifying, attracting and retaining local experienced personnel, and the costs and expenses associated with such activities;
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the challenge of managing a development team in geographically disparate locations;
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management communication and integration problems resulting from cultural and geographic dispersion;
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differing employment practices and labor relations issues;
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fluctuations in exchange rates between the U.S. dollar and foreign currencies in markets where we do business; and
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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.
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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.
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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.
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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.
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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.
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price and volume fluctuations in the overall stock market from time to time;
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volatility in the market prices and trading volumes of high technology stocks;
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changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular;
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changes in financial estimates by any analysts who follow our company, including as a result of our plan to transition our business toward a subscription-based model, or our failure to meet these estimates or the expectations of investors;
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the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections;
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announcements by us or our competitors of new products or new or terminated significant contracts, commercial relationships or capital commitments;
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public analyst or investor reaction to our press releases, other public announcements and filings with the SEC;
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rumors and market speculation involving us or other companies in our industry;
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actual or anticipated changes or fluctuations in our operating results;
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actual or anticipated developments in our business or our competitors’ businesses or the competitive landscape generally;
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actual or threatened litigation involving us, our industry or both, or investigations by regulators into our operations or those of our competitors;
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developments or disputes concerning our intellectual property or our solutions, or third-party proprietary rights;
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rumored, announced or completed acquisitions of businesses or technologies of or by us or our competitors;
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new laws or regulations or new interpretations of existing laws or regulations applicable to our business;
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changes in accounting standards, policies, guidelines, interpretations or principles;
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any major changes in our management or our Board of Directors;
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general economic conditions and slow or negative growth of our markets; and
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other events or factors, including those resulting from war, incidents of terrorism or responses to these events.
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our amended and restated certificate of incorporation provides for a dual class common stock structure for 17 years following the completion of our IPO;
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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;
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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;
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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;
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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;
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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;
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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;
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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
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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.
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Fiscal 2018
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Fiscal 2019
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||||||||||||
Fiscal Quarter:
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High
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Low
|
|
High
|
|
Low
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||||||||
First quarter
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$
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28.50
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|
|
$
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20.70
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$
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61.13
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|
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$
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35.95
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Second quarter
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$
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38.41
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|
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$
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27.33
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|
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$
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52.23
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|
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$
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36.13
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Third quarter
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$
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55.51
|
|
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$
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30.34
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|
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$
|
54.14
|
|
|
$
|
33.51
|
|
Fourth quarter
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$
|
63.71
|
|
|
$
|
48.88
|
|
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$
|
42.98
|
|
|
$
|
22.70
|
|
|
Fiscal Quarter
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||||||||||||||||||||||||||||||||||||||||||||||||||
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9/30/16
|
|
10/31/16
|
|
1/31/17
|
|
4/30/17
|
|
7/31/17
|
|
10/31/17
|
|
1/31/18
|
|
4/30/18
|
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7/31/18
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10/31/18
|
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1/31/19
|
|
4/30/19
|
|
7/31/19
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||||||||||||||||||||||||||
Nutanix, Inc.
|
$
|
100
|
|
|
$
|
66.22
|
|
|
$
|
81.81
|
|
|
$
|
41.05
|
|
|
$
|
57.42
|
|
|
$
|
77.03
|
|
|
$
|
86.76
|
|
|
$
|
136.73
|
|
|
$
|
132.14
|
|
|
$
|
112.19
|
|
|
$
|
138.46
|
|
|
$
|
116.73
|
|
|
$
|
61.35
|
|
NASDAQ Composite Index
|
$
|
100
|
|
|
$
|
97.73
|
|
|
$
|
106.07
|
|
|
$
|
114.58
|
|
|
$
|
120.60
|
|
|
$
|
128.15
|
|
|
$
|
141.54
|
|
|
$
|
135.30
|
|
|
$
|
147.29
|
|
|
$
|
140.63
|
|
|
$
|
140.57
|
|
|
$
|
156.70
|
|
|
$
|
158.70
|
|
NASDAQ Computer Index
|
$
|
100
|
|
|
$
|
100.24
|
|
|
$
|
106.62
|
|
|
$
|
118.53
|
|
|
$
|
126.31
|
|
|
$
|
142.43
|
|
|
$
|
153.29
|
|
|
$
|
146.66
|
|
|
$
|
161.52
|
|
|
$
|
155.46
|
|
|
$
|
151.01
|
|
|
$
|
177.43
|
|
|
$
|
180.56
|
|
|
(1)
|
Includes stock-based compensation expense as follows:
|
|
Fiscal Year Ended July 31,
|
||||||||||||||||||
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Cost of revenue:
|
|
|
|
|
|
|
|
|
|
||||||||||
Product
|
$
|
363
|
|
|
$
|
391
|
|
|
$
|
3,066
|
|
|
$
|
2,580
|
|
|
$
|
3,535
|
|
Support, entitlements and other services
|
718
|
|
|
968
|
|
|
10,411
|
|
|
8,945
|
|
|
15,326
|
|
|||||
Total cost of revenue
|
1,081
|
|
|
1,359
|
|
|
13,477
|
|
|
11,525
|
|
|
18,861
|
|
|||||
Sales and marketing
|
6,474
|
|
|
8,006
|
|
|
78,117
|
|
|
65,060
|
|
|
107,751
|
|
|||||
Research and development
|
5,411
|
|
|
6,259
|
|
|
109,044
|
|
|
74,389
|
|
|
140,519
|
|
|||||
General and administrative
|
4,174
|
|
|
4,432
|
|
|
30,853
|
|
|
26,894
|
|
|
39,598
|
|
|||||
Total stock-based compensation expense
|
$
|
17,140
|
|
|
$
|
20,056
|
|
|
$
|
231,491
|
|
|
$
|
177,868
|
|
|
$
|
306,729
|
|
(2)
|
Includes amortization of intangible assets as follows:
|
|
Fiscal Year Ended July 31,
|
||||||||||||||||||
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Product cost of revenue
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,314
|
|
|
$
|
5,641
|
|
|
$
|
14,248
|
|
Sales and marketing
|
—
|
|
|
—
|
|
|
915
|
|
|
914
|
|
|
2,528
|
|
|||||
Total amortization of intangible assets
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,229
|
|
|
$
|
6,555
|
|
|
$
|
16,776
|
|
|
As of July 31,
|
||||||||||||||||||
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Consolidated Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash, cash equivalents and short-term investments
|
$
|
150,539
|
|
|
$
|
185,200
|
|
|
$
|
349,053
|
|
|
$
|
934,303
|
|
|
$
|
908,834
|
|
Total assets
|
$
|
249,831
|
|
|
$
|
411,715
|
|
|
$
|
738,212
|
|
|
$
|
1,599,880
|
|
|
$
|
1,786,042
|
|
Deferred revenue (current and non-current portion)
|
$
|
103,598
|
|
|
$
|
218,481
|
|
|
$
|
369,056
|
|
|
$
|
631,207
|
|
|
$
|
910,044
|
|
Long-term debt
|
$
|
—
|
|
|
$
|
73,260
|
|
|
$
|
—
|
|
|
$
|
429,598
|
|
|
$
|
458,910
|
|
Preferred stock warrant liability
|
$
|
11,683
|
|
|
$
|
9,679
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Convertible preferred stock
|
$
|
310,379
|
|
|
$
|
310,379
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Total stockholders’ (deficit) equity
|
$
|
(234,734
|
)
|
|
$
|
(285,827
|
)
|
|
$
|
217,063
|
|
|
$
|
326,779
|
|
|
$
|
186,893
|
|
|
As of and for the Fiscal Year Ended July 31,
|
||||||||||
|
2017
|
|
2018
|
|
2019
|
||||||
|
(in thousands, except percentages)
|
||||||||||
Total revenue
|
$
|
845,903
|
|
|
$
|
1,155,457
|
|
|
$
|
1,236,143
|
|
Year-over-year percentage increase
|
68.0
|
%
|
|
36.6
|
%
|
|
7.0
|
%
|
|||
Subscription revenue
|
$
|
172,530
|
|
|
$
|
330,645
|
|
|
$
|
648,415
|
|
Software and support revenue
|
$
|
609,587
|
|
|
$
|
898,143
|
|
|
$
|
1,130,822
|
|
Total billings
|
$
|
990,467
|
|
|
$
|
1,417,484
|
|
|
$
|
1,514,660
|
|
Subscription billings
|
$
|
311,913
|
|
|
$
|
581,923
|
|
|
$
|
916,000
|
|
Software and support billings
|
$
|
754,151
|
|
|
$
|
1,160,170
|
|
|
$
|
1,409,339
|
|
Gross profit
|
$
|
518,572
|
|
|
$
|
769,427
|
|
|
$
|
932,015
|
|
Adjusted gross profit
|
$
|
533,363
|
|
|
$
|
786,593
|
|
|
$
|
965,287
|
|
Gross margin
|
61.3
|
%
|
|
66.6
|
%
|
|
75.4
|
%
|
|||
Adjusted gross margin
|
63.1
|
%
|
|
68.1
|
%
|
|
78.1
|
%
|
|||
Total deferred revenue
|
$
|
369,056
|
|
|
$
|
631,207
|
|
|
$
|
910,044
|
|
Net cash provided by operating activities
|
$
|
14,779
|
|
|
$
|
92,540
|
|
|
$
|
42,168
|
|
Free cash flow
|
$
|
(35,402
|
)
|
|
$
|
30,168
|
|
|
$
|
(76,284
|
)
|
Non-GAAP operating expenses
|
$
|
645,456
|
|
|
$
|
883,244
|
|
|
$
|
1,239,567
|
|
Total end customers
|
7,050
|
|
|
10,610
|
|
|
14,180
|
|
|
Fiscal Year Ended July 31,
|
||||||||||
|
2017
|
|
2018
|
|
2019
|
||||||
|
(in thousands, except percentages)
|
||||||||||
Disaggregation of revenue:
|
|
|
|
|
|
||||||
Subscription revenue
|
$
|
172,530
|
|
|
$
|
330,645
|
|
|
$
|
648,415
|
|
Non-portable software revenue
|
421,048
|
|
|
543,952
|
|
|
449,131
|
|
|||
Hardware revenue
|
236,316
|
|
|
257,314
|
|
|
105,321
|
|
|||
Professional services revenue
|
16,009
|
|
|
23,546
|
|
|
33,276
|
|
|||
Total revenue
|
$
|
845,903
|
|
|
$
|
1,155,457
|
|
|
$
|
1,236,143
|
|
|
|
|
|
|
|
||||||
Disaggregation of billings:
|
|
|
|
|
|
||||||
Subscription billings
|
$
|
311,913
|
|
|
$
|
581,923
|
|
|
$
|
916,000
|
|
Non-portable software billings
|
421,048
|
|
|
543,952
|
|
|
449,131
|
|
|||
Hardware billings
|
236,316
|
|
|
257,314
|
|
|
105,321
|
|
|||
Professional services billings
|
21,190
|
|
|
34,295
|
|
|
44,208
|
|
|||
Total billings
|
$
|
990,467
|
|
|
$
|
1,417,484
|
|
|
$
|
1,514,660
|
|
•
|
Ratable — We recognize revenue from software entitlement and support subscriptions and SaaS offerings ratably over the contractual service period, the substantial majority of which relate to software entitlement and support subscriptions. These offerings represented approximately $156.6 million, $243.9 million and $376.4 million of our subscription revenue for fiscal 2017, 2018 and 2019, respectively.
|
•
|
Upfront — Revenue from our subscription software licenses is generally recognized upfront upon transfer of control to the customer, which happens when we make the software available to the customer. These subscription software licenses represented approximately $15.9 million, $86.7 million and $272.0 million of our subscription revenue for fiscal 2017, 2018 and 2019, respectively. For fiscal 2017, 2018 and 2019, the weighted average term for these subscription term-based licenses was approximately 2.9 years, 3.7 years and 3.8 years, respectively.
|
•
|
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.
|
|
Fiscal Year Ended July 31,
|
||||||||||
|
2017
|
|
2018
|
|
2019
|
||||||
|
(in thousands, except percentages)
|
||||||||||
Total revenue
|
$
|
845,903
|
|
|
$
|
1,155,457
|
|
|
$
|
1,236,143
|
|
Change in deferred revenue, net of acquisitions (1)
|
144,564
|
|
|
262,027
|
|
|
278,517
|
|
|||
Total billings (non-GAAP)
|
$
|
990,467
|
|
|
$
|
1,417,484
|
|
|
$
|
1,514,660
|
|
|
|
|
|
|
|
||||||
Gross profit
|
$
|
518,572
|
|
|
$
|
769,427
|
|
|
$
|
932,015
|
|
Stock-based compensation
|
13,477
|
|
|
11,525
|
|
|
18,861
|
|
|||
Amortization of intangible assets
|
1,314
|
|
|
5,641
|
|
|
14,248
|
|
|||
Other
|
—
|
|
|
—
|
|
|
163
|
|
|||
Adjusted gross profit (non-GAAP)
|
$
|
533,363
|
|
|
$
|
786,593
|
|
|
$
|
965,287
|
|
|
|
|
|
|
|
||||||
Gross margin
|
61.3
|
%
|
|
66.6
|
%
|
|
75.4
|
%
|
|||
Stock-based compensation
|
1.6
|
%
|
|
1.0
|
%
|
|
1.5
|
%
|
|||
Amortization of intangible assets
|
0.2
|
%
|
|
0.5
|
%
|
|
1.2
|
%
|
|||
Other
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|||
Adjusted gross margin (non-GAAP)
|
63.1
|
%
|
|
68.1
|
%
|
|
78.1
|
%
|
|||
|
|
|
|
|
|
||||||
Operating expenses
|
$
|
866,981
|
|
|
$
|
1,049,835
|
|
|
$
|
1,530,056
|
|
Stock-based compensation
|
(218,014
|
)
|
|
(166,343
|
)
|
|
(287,868
|
)
|
|||
Change in fair value of contingent consideration
|
(1,924
|
)
|
|
2,423
|
|
|
832
|
|
|||
Amortization of intangible assets
|
(915
|
)
|
|
(914
|
)
|
|
(2,528
|
)
|
|||
Acquisition-related costs
|
(672
|
)
|
|
(1,757
|
)
|
|
(721
|
)
|
|||
Other
|
—
|
|
|
—
|
|
|
(204
|
)
|
|||
Operating expenses (non-GAAP)
|
$
|
645,456
|
|
|
$
|
883,244
|
|
|
$
|
1,239,567
|
|
|
|
|
|
|
|
||||||
Net cash provided by operating activities
|
$
|
14,779
|
|
|
$
|
92,540
|
|
|
$
|
42,168
|
|
Purchases of property and equipment
|
(50,181
|
)
|
|
(62,372
|
)
|
|
(118,452
|
)
|
|||
Free cash flow (non-GAAP)
|
$
|
(35,402
|
)
|
|
$
|
30,168
|
|
|
$
|
(76,284
|
)
|
|
(1)
|
Excludes deferred revenue assumed in acquisitions of approximately $6.0 million, $0.1 million and $0.3 million for fiscal 2017, 2018 and 2019, respectively.
|
|
Fiscal Year Ended July 31,
|
||||||||||
|
2017
|
|
2018
|
|
2019
|
||||||
|
(in thousands, except percentages)
|
||||||||||
Subscription revenue
|
$
|
172,530
|
|
|
$
|
330,645
|
|
|
$
|
648,415
|
|
Change in subscription deferred revenue, net of acquisitions (2)
|
139,383
|
|
|
251,278
|
|
|
267,585
|
|
|||
Subscription billings
|
$
|
311,913
|
|
|
$
|
581,923
|
|
|
$
|
916,000
|
|
|
|
|
|
|
|
||||||
Professional services revenue
|
$
|
16,009
|
|
|
$
|
23,546
|
|
|
$
|
33,276
|
|
Change in professional services deferred revenue
|
5,181
|
|
|
10,749
|
|
|
10,932
|
|
|||
Professional services billings
|
$
|
21,190
|
|
|
$
|
34,295
|
|
|
$
|
44,208
|
|
|
|
|
|
|
|
||||||
Software revenue
|
$
|
436,981
|
|
|
$
|
630,675
|
|
|
$
|
727,098
|
|
Hardware revenue
|
236,316
|
|
|
257,314
|
|
|
105,321
|
|
|||
Product revenue
|
673,297
|
|
|
887,989
|
|
|
832,419
|
|
|||
Support, entitlements and other services revenue
|
172,606
|
|
|
267,468
|
|
|
403,724
|
|
|||
Total revenue
|
$
|
845,903
|
|
|
$
|
1,155,457
|
|
|
$
|
1,236,143
|
|
|
|
|
|
|
|
||||||
Total software and support revenue (1)
|
$
|
609,587
|
|
|
$
|
898,143
|
|
|
$
|
1,130,822
|
|
Change in software and support deferred revenue, net of acquisitions (2)
|
144,564
|
|
|
262,027
|
|
|
278,517
|
|
|||
Software and support billings (1)
|
$
|
754,151
|
|
|
$
|
1,160,170
|
|
|
$
|
1,409,339
|
|
|
(1)
|
Software and support revenue and billings include software and support, entitlements and other services revenue and billings.
|
(2)
|
Excludes deferred revenue assumed in acquisitions of approximately $6.0 million, $0.1 million and $0.3 million for fiscal 2017, 2018 and 2019, respectively.
|
|
Fiscal Year Ended July 31,
|
||||||||||
|
2017
|
|
2018
|
|
2019
|
||||||
|
(in thousands)
|
||||||||||
Revenue:
|
|
|
|
|
|
||||||
Product
|
$
|
673,297
|
|
|
$
|
887,989
|
|
|
$
|
832,419
|
|
Support, entitlements and other services
|
172,606
|
|
|
267,468
|
|
|
403,724
|
|
|||
Total revenue
|
845,903
|
|
|
1,155,457
|
|
|
1,236,143
|
|
|||
Cost of revenue:
|
|
|
|
|
|
||||||
Product (1)(2)
|
249,393
|
|
|
276,127
|
|
|
143,078
|
|
|||
Support, entitlements and other services (1)
|
77,938
|
|
|
109,903
|
|
|
161,050
|
|
|||
Total cost of revenue
|
327,331
|
|
|
386,030
|
|
|
304,128
|
|
|||
Gross profit
|
518,572
|
|
|
769,427
|
|
|
932,015
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Sales and marketing (1)(2)
|
501,021
|
|
|
649,657
|
|
|
909,750
|
|
|||
Research and development (1)
|
288,619
|
|
|
313,777
|
|
|
500,719
|
|
|||
General and administrative (1)
|
77,341
|
|
|
86,401
|
|
|
119,587
|
|
|||
Total operating expenses
|
866,981
|
|
|
1,049,835
|
|
|
1,530,056
|
|
|||
Loss from operations
|
(348,409
|
)
|
|
(280,408
|
)
|
|
(598,041
|
)
|
|||
Other expense, net
|
(26,377
|
)
|
|
(9,306
|
)
|
|
(15,019
|
)
|
|||
Loss before provision for income taxes
|
(374,786
|
)
|
|
(289,714
|
)
|
|
(613,060
|
)
|
|||
Provision for income taxes
|
4,852
|
|
|
7,447
|
|
|
8,119
|
|
|||
Net loss
|
$
|
(379,638
|
)
|
|
$
|
(297,161
|
)
|
|
$
|
(621,179
|
)
|
|
(1)
|
Includes stock-based compensation expense as follows:
|
|
Fiscal Year Ended July 31,
|
||||||||||
|
2017
|
|
2018
|
|
2019
|
||||||
|
(in thousands)
|
||||||||||
Cost of revenue:
|
|
|
|
|
|
||||||
Product
|
$
|
3,066
|
|
|
$
|
2,580
|
|
|
$
|
3,535
|
|
Support, entitlements and other services
|
10,411
|
|
|
8,945
|
|
|
15,326
|
|
|||
Total cost of revenue
|
13,477
|
|
|
11,525
|
|
|
18,861
|
|
|||
Sales and marketing
|
78,117
|
|
|
65,060
|
|
|
107,751
|
|
|||
Research and development
|
109,044
|
|
|
74,389
|
|
|
140,519
|
|
|||
General and administrative
|
30,853
|
|
|
26,894
|
|
|
39,598
|
|
|||
Total stock-based compensation expense
|
$
|
231,491
|
|
|
$
|
177,868
|
|
|
$
|
306,729
|
|
(2)
|
Includes amortization of intangible assets as follows:
|
|
Fiscal Year Ended July 31,
|
||||||||||
|
2017
|
|
2018
|
|
2019
|
||||||
|
(in thousands)
|
||||||||||
Product cost of revenue
|
$
|
1,314
|
|
|
$
|
5,641
|
|
|
$
|
14,248
|
|
Sales and marketing
|
915
|
|
|
914
|
|
|
2,528
|
|
|||
Total amortization of intangible assets
|
$
|
2,229
|
|
|
$
|
6,555
|
|
|
$
|
16,776
|
|
|
Fiscal Year Ended July 31,
|
|||||||
|
2017
|
|
2018
|
|
2019
|
|||
|
(as a percentage of total revenue)
|
|||||||
Revenue:
|
|
|
|
|
|
|||
Product
|
79.6
|
%
|
|
76.9
|
%
|
|
67.3
|
%
|
Support, entitlements and other services
|
20.4
|
%
|
|
23.1
|
%
|
|
32.7
|
%
|
Total revenue
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Cost of revenue:
|
|
|
|
|
|
|||
Product
|
29.5
|
%
|
|
23.9
|
%
|
|
11.6
|
%
|
Support, entitlements and other services
|
9.2
|
%
|
|
9.5
|
%
|
|
13.0
|
%
|
Total cost of revenue
|
38.7
|
%
|
|
33.4
|
%
|
|
24.6
|
%
|
Gross profit
|
61.3
|
%
|
|
66.6
|
%
|
|
75.4
|
%
|
Operating expenses:
|
|
|
|
|
|
|||
Sales and marketing
|
59.2
|
%
|
|
56.2
|
%
|
|
73.6
|
%
|
Research and development
|
34.1
|
%
|
|
27.2
|
%
|
|
40.5
|
%
|
General and administrative
|
9.2
|
%
|
|
7.5
|
%
|
|
9.7
|
%
|
Total operating expenses
|
102.5
|
%
|
|
90.9
|
%
|
|
123.8
|
%
|
Loss from operations
|
(41.2
|
)%
|
|
(24.3
|
)%
|
|
(48.4
|
)%
|
Other expense, net
|
(3.1
|
)%
|
|
(0.8
|
)%
|
|
(1.2
|
)%
|
Loss before provision for income taxes
|
(44.3
|
)%
|
|
(25.1
|
)%
|
|
(49.6
|
)%
|
Provision for income taxes
|
0.6
|
%
|
|
0.6
|
%
|
|
0.7
|
%
|
Net loss
|
(44.9
|
)%
|
|
(25.7
|
)%
|
|
(50.3
|
)%
|
|
Fiscal Year Ended July 31,
|
|
Change
|
|
Fiscal Year Ended July 31,
|
|
Change
|
||||||||||||||||||||||
|
2017
|
|
2018
|
|
$
|
|
%
|
|
2018
|
|
2019
|
|
$
|
|
%
|
||||||||||||||
|
(in thousands, except percentages)
|
||||||||||||||||||||||||||||
Product
|
$
|
673,297
|
|
|
$
|
887,989
|
|
|
$
|
214,692
|
|
|
32
|
%
|
|
$
|
887,989
|
|
|
$
|
832,419
|
|
|
$
|
(55,570
|
)
|
|
(6
|
)%
|
Support, entitlements and other services
|
172,606
|
|
|
267,468
|
|
|
94,862
|
|
|
55
|
%
|
|
267,468
|
|
|
403,724
|
|
|
136,256
|
|
|
51
|
%
|
||||||
Total revenue
|
$
|
845,903
|
|
|
$
|
1,155,457
|
|
|
$
|
309,554
|
|
|
37
|
%
|
|
$
|
1,155,457
|
|
|
$
|
1,236,143
|
|
|
$
|
80,686
|
|
|
7
|
%
|
|
Fiscal Year Ended July 31,
|
|
Change
|
|
Fiscal Year Ended July 31,
|
|
Change
|
||||||||||||||||||||||
|
2017
|
|
2018
|
|
$
|
|
%
|
|
2018
|
|
2019
|
|
$
|
|
%
|
||||||||||||||
|
(in thousands, except percentages)
|
||||||||||||||||||||||||||||
U.S.
|
$
|
488,079
|
|
|
$
|
648,805
|
|
|
$
|
160,726
|
|
|
33
|
%
|
|
$
|
648,805
|
|
|
$
|
682,340
|
|
|
$
|
33,535
|
|
|
5
|
%
|
Asia Pacific
|
186,864
|
|
|
240,247
|
|
|
53,383
|
|
|
29
|
%
|
|
240,247
|
|
|
271,712
|
|
|
31,465
|
|
|
13
|
%
|
||||||
Europe, the Middle East and Africa
|
138,815
|
|
|
224,392
|
|
|
85,577
|
|
|
62
|
%
|
|
224,392
|
|
|
238,356
|
|
|
13,964
|
|
|
6
|
%
|
||||||
Other Americas
|
32,145
|
|
|
42,013
|
|
|
9,868
|
|
|
31
|
%
|
|
42,013
|
|
|
43,735
|
|
|
1,722
|
|
|
4
|
%
|
||||||
Total revenue
|
$
|
845,903
|
|
|
$
|
1,155,457
|
|
|
$
|
309,554
|
|
|
37
|
%
|
|
$
|
1,155,457
|
|
|
$
|
1,236,143
|
|
|
$
|
80,686
|
|
|
7
|
%
|
|
Fiscal Year Ended July 31,
|
|
Change
|
|
Fiscal Year Ended July 31,
|
|
Change
|
||||||||||||||||||||||
|
2017
|
|
2018
|
|
$
|
|
%
|
|
2018
|
|
2019
|
|
$
|
|
%
|
||||||||||||||
|
(in thousands, except percentages)
|
||||||||||||||||||||||||||||
Cost of product revenue
|
$
|
249,393
|
|
|
$
|
276,127
|
|
|
$
|
26,734
|
|
|
11
|
%
|
|
$
|
276,127
|
|
|
$
|
143,078
|
|
|
$
|
(133,049
|
)
|
|
(48
|
)%
|
Product gross margin
|
63.0
|
%
|
|
68.9
|
%
|
|
|
|
|
|
68.9
|
%
|
|
82.8
|
%
|
|
|
|
|
||||||||||
Cost of support, entitlements and other services revenue
|
$
|
77,938
|
|
|
$
|
109,903
|
|
|
$
|
31,965
|
|
|
41
|
%
|
|
$
|
109,903
|
|
|
$
|
161,050
|
|
|
$
|
51,147
|
|
|
47
|
%
|
Support, entitlements and other services gross margin
|
54.8
|
%
|
|
58.9
|
%
|
|
|
|
|
|
58.9
|
%
|
|
60.1
|
%
|
|
|
|
|
||||||||||
Total gross margin
|
61.3
|
%
|
|
66.6
|
%
|
|
|
|
|
|
|
66.6
|
%
|
|
75.4
|
%
|
|
|
|
|
|
|
Fiscal Year Ended July 31,
|
|
Change
|
|
Fiscal Year Ended July 31,
|
|
Change
|
||||||||||||||||||||||
|
2017
|
|
2018
|
|
$
|
|
%
|
|
2018
|
|
2019
|
|
$
|
|
%
|
||||||||||||||
|
(in thousands, except percentages)
|
||||||||||||||||||||||||||||
Sales and marketing
|
$
|
501,021
|
|
|
$
|
649,657
|
|
|
$
|
148,636
|
|
|
30
|
%
|
|
$
|
649,657
|
|
|
$
|
909,750
|
|
|
$
|
260,093
|
|
|
40
|
%
|
Percent of total revenue
|
59.2
|
%
|
|
56.2
|
%
|
|
|
|
|
|
56.2
|
%
|
|
73.6
|
%
|
|
|
|
|
|
Fiscal Year Ended July 31,
|
|
Change
|
|
Fiscal Year Ended July 31,
|
|
Change
|
||||||||||||||||||||||
|
2017
|
|
2018
|
|
$
|
|
%
|
|
2018
|
|
2019
|
|
$
|
|
%
|
||||||||||||||
|
(in thousands, except percentages)
|
||||||||||||||||||||||||||||
Research and development
|
$
|
288,619
|
|
|
$
|
313,777
|
|
|
$
|
25,158
|
|
|
9
|
%
|
|
$
|
313,777
|
|
|
$
|
500,719
|
|
|
$
|
186,942
|
|
|
60
|
%
|
Percent of total revenue
|
34.1
|
%
|
|
27.2
|
%
|
|
|
|
|
|
27.2
|
%
|
|
40.5
|
%
|
|
|
|
|
|
Fiscal Year Ended July 31,
|
|
Change
|
|
Fiscal Year Ended July 31,
|
|
Change
|
||||||||||||||||||||||
|
2017
|
|
2018
|
|
$
|
|
%
|
|
2018
|
|
2019
|
|
$
|
|
%
|
||||||||||||||
|
(in thousands, except percentages)
|
||||||||||||||||||||||||||||
General and administrative
|
$
|
77,341
|
|
|
$
|
86,401
|
|
|
$
|
9,060
|
|
|
12
|
%
|
|
$
|
86,401
|
|
|
$
|
119,587
|
|
|
$
|
33,186
|
|
|
38
|
%
|
Percent of total revenue
|
9.2
|
%
|
|
7.5
|
%
|
|
|
|
|
|
7.5
|
%
|
|
9.7
|
%
|
|
|
|
|
|
Fiscal Year Ended July 31,
|
|
Change
|
|
Fiscal Year Ended July 31,
|
|
Change
|
||||||||||||||||||||||
|
2017
|
|
2018
|
|
$
|
|
%
|
|
2018
|
|
2019
|
|
$
|
|
%
|
||||||||||||||
|
(in thousands, except percentages)
|
||||||||||||||||||||||||||||
Other expense, net
|
$
|
(26,377
|
)
|
|
$
|
(9,306
|
)
|
|
$
|
(17,071
|
)
|
|
(65
|
)%
|
|
$
|
(9,306
|
)
|
|
$
|
(15,019
|
)
|
|
$
|
5,713
|
|
|
61
|
%
|
|
Fiscal Year Ended July 31,
|
|
Change
|
|
Fiscal Year Ended July 31,
|
|
Change
|
||||||||||||||||||||||
|
2017
|
|
2018
|
|
$
|
|
%
|
|
2018
|
|
2019
|
|
$
|
|
%
|
||||||||||||||
|
(in thousands, except percentages)
|
||||||||||||||||||||||||||||
Provision for income taxes
|
$
|
4,852
|
|
|
$
|
7,447
|
|
|
$
|
2,595
|
|
|
53
|
%
|
|
$
|
7,447
|
|
|
$
|
8,119
|
|
|
$
|
672
|
|
|
9
|
%
|
|
Fiscal Year Ended July 31,
|
||||||||||
|
2017
|
|
2018
|
|
2019
|
||||||
|
(in thousands)
|
||||||||||
Net cash provided by operating activities
|
$
|
14,779
|
|
|
$
|
92,540
|
|
|
$
|
42,168
|
|
Net cash used in investing activities
|
(176,094
|
)
|
|
(503,555
|
)
|
|
(16,850
|
)
|
|||
Net cash provided by financing activities
|
201,422
|
|
|
578,616
|
|
|
67,104
|
|
|||
Net increase in cash, cash equivalents and restricted cash
|
$
|
40,107
|
|
|
$
|
167,601
|
|
|
$
|
92,422
|
|
|
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
|
197,227
|
|
|
39,540
|
|
|
83,241
|
|
|
70,935
|
|
|
3,511
|
|
|||||
Other commitments (2)
|
64,808
|
|
|
62,827
|
|
|
1,981
|
|
|
—
|
|
|
—
|
|
|||||
Guarantees with contract manufacturers and OEMs
|
144,929
|
|
|
72,054
|
|
|
72,875
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
981,964
|
|
|
$
|
174,421
|
|
|
$
|
158,097
|
|
|
$
|
645,935
|
|
|
$
|
3,511
|
|
|
(1)
|
For additional information regarding our convertible senior notes, refer to Note 6 of Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.
|
(2)
|
Purchase obligations and other commitments pertaining to our normal operations.
|
•
|
We tested the effectiveness of controls over the fair value of developed technology, including managements forecast and operating plan review control over the forecasted revenue growth, cost of sales, and operating expenses. We further tested management’s control over the valuation report, including key inputs such as forecasts and the discount rate.
|
•
|
With the assistance of our fair value specialists, we evaluated the valuation methodologies and valuation assumptions used by management to develop fair value estimates for developed technology, including:
|
–
|
Testing the mathematical accuracy of the calculation.
|
–
|
Developing a range of independent discount rate estimates and comparing those to the discount rate selected by management.
|
–
|
Assessing the source information underlying the Company’s determination of the discount rate.
|
–
|
Evaluating whether the fair value model being used is appropriate considering the Company’s circumstances and valuation premise identified.
|
•
|
We performed a comparison of management’s forecasted revenue growth, cost of sales, and operating expenses against various other sources, including:
|
–
|
Historical performance of Frame.
|
–
|
Industry data and analyst reports.
|
–
|
Internal communications to management and the Board of Directors.
|
–
|
Forecasted information as well as analyst and industry reports for the Company and certain of its peer companies.
|
•
|
Determination of whether promised goods or services, such as hardware and software licenses, are capable of being distinct and are distinct in the context of the Company’s customer contracts which leads to whether they should be accounted for as individual or combined performance obligations.
|
•
|
Determination of standalone selling prices for each distinct performance obligation and for products and services that are not sold separately.
|
•
|
Determination of the timing of when revenue is recognized for each distinct performance obligation either over time or at a point in time.
|
•
|
We tested the effectiveness of controls related to the identification of distinct performance obligations, determination of the standalone selling prices, and the determination of the timing of revenue recognition.
|
•
|
We evaluated management’s significant accounting policies related to revenue recognition for reasonableness.
|
•
|
We selected a sample of recorded revenue transactions and performed the following procedures:
|
–
|
Obtaining and reading customer source documents and the contract for each selection, including master agreements and related amendments to evaluate if relevant contractual terms have been appropriately considered by management.
|
–
|
Evaluating management’s application of their accounting policy and tested revenue recognition for specific performance obligations by comparing management’s conclusions to the underlying master agreement and any related amendments.
|
–
|
Testing the mathematical accuracy of management’s calculations of revenue and the associated timing of revenue recognized in the financial statements.
|
•
|
For a selection of arrangements with original equipment manufacturers ("OEMs"), we confirmed accounts receivable and total billings as of and for the year ended July 31, 2019, respectively, directly with the OEM. In addition, we confirmed a sample of individual revenue orders for the year ended July 31, 2019, to evaluate the accuracy of management’s records.
|
•
|
We evaluated the reasonableness of management’s estimate of standalone selling prices for products and services that are not sold separately by performing the following:
|
–
|
Assessing the appropriateness of the Company’s methodology and mathematical accuracy of the determined standalone selling prices.
|
–
|
Testing the completeness and accuracy of the source data utilized in management’s calculations.
|
/s/ DELOITTE & TOUCHE LLP
|
|
San Jose, California
|
|
September 24, 2019
|
|
|
|
/s/ DELOITTE & TOUCHE LLP
|
|
San Jose, California
|
|
September 24, 2019
|
|
|
As of July 31,
|
||||||
|
2018
|
|
2019
|
||||
|
(in thousands, except share and per share data)
|
||||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
305,975
|
|
|
$
|
396,678
|
|
Short-term investments
|
628,328
|
|
|
512,156
|
|
||
Accounts receivable, net of allowance of $815 and $379 as of July 31, 2018 and 2019
|
258,289
|
|
|
245,475
|
|
||
Deferred commissions—current
|
33,691
|
|
|
46,238
|
|
||
Prepaid expenses and other current assets
|
36,818
|
|
|
74,665
|
|
||
Total current assets
|
1,263,101
|
|
|
1,275,212
|
|
||
Property and equipment, net
|
85,111
|
|
|
136,962
|
|
||
Deferred commissions—non-current
|
80,688
|
|
|
107,474
|
|
||
Intangible assets, net
|
45,366
|
|
|
66,773
|
|
||
Goodwill
|
87,759
|
|
|
185,180
|
|
||
Other assets—non-current
|
37,855
|
|
|
14,441
|
|
||
Total assets
|
$
|
1,599,880
|
|
|
$
|
1,786,042
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
65,503
|
|
|
$
|
74,047
|
|
Accrued compensation and benefits
|
85,398
|
|
|
99,804
|
|
||
Accrued expenses and other current liabilities
|
31,682
|
|
|
28,797
|
|
||
Deferred revenue—current
|
275,648
|
|
|
396,667
|
|
||
Total current liabilities
|
458,231
|
|
|
599,315
|
|
||
Deferred revenue—non-current
|
355,559
|
|
|
513,377
|
|
||
Convertible senior notes, net
|
429,598
|
|
|
458,910
|
|
||
Other liabilities—non-current
|
29,713
|
|
|
27,547
|
|
||
Total liabilities
|
1,273,101
|
|
|
1,599,149
|
|
||
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 2019; no shares issued and outstanding as of July 31, 2018 and 2019
|
—
|
|
|
—
|
|
||
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 2019; 172,858,082 (135,109,672 Class A, 37,748,410 Class B) and 188,595,314 (168,155,308 Class A, 20,440,006 Class B) shares issued and outstanding as of July 31, 2018 and 2019
|
4
|
|
|
5
|
|
||
Additional paid-in capital
|
1,355,907
|
|
|
1,835,528
|
|
||
Accumulated other comprehensive (loss) income
|
(1,002
|
)
|
|
669
|
|
||
Accumulated deficit
|
(1,028,130
|
)
|
|
(1,649,309
|
)
|
||
Total stockholders’ equity
|
326,779
|
|
|
186,893
|
|
||
Total liabilities and stockholders’ equity
|
$
|
1,599,880
|
|
|
$
|
1,786,042
|
|
|
Fiscal Year Ended July 31,
|
||||||||||
|
2017
|
|
2018
|
|
2019
|
||||||
|
(in thousands, except share and per share data)
|
||||||||||
Revenue:
|
|
|
|
|
|
||||||
Product
|
$
|
673,297
|
|
|
$
|
887,989
|
|
|
$
|
832,419
|
|
Support, entitlements and other services
|
172,606
|
|
|
267,468
|
|
|
403,724
|
|
|||
Total revenue
|
845,903
|
|
|
1,155,457
|
|
|
1,236,143
|
|
|||
Cost of revenue:
|
|
|
|
|
|
||||||
Product
|
249,393
|
|
|
276,127
|
|
|
143,078
|
|
|||
Support, entitlements and other services
|
77,938
|
|
|
109,903
|
|
|
161,050
|
|
|||
Total cost of revenue
|
327,331
|
|
|
386,030
|
|
|
304,128
|
|
|||
Gross profit
|
518,572
|
|
|
769,427
|
|
|
932,015
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Sales and marketing
|
501,021
|
|
|
649,657
|
|
|
909,750
|
|
|||
Research and development
|
288,619
|
|
|
313,777
|
|
|
500,719
|
|
|||
General and administrative
|
77,341
|
|
|
86,401
|
|
|
119,587
|
|
|||
Total operating expenses
|
866,981
|
|
|
1,049,835
|
|
|
1,530,056
|
|
|||
Loss from operations
|
(348,409
|
)
|
|
(280,408
|
)
|
|
(598,041
|
)
|
|||
Other expense, net
|
(26,377
|
)
|
|
(9,306
|
)
|
|
(15,019
|
)
|
|||
Loss before provision for income taxes
|
(374,786
|
)
|
|
(289,714
|
)
|
|
(613,060
|
)
|
|||
Provision for income taxes
|
4,852
|
|
|
7,447
|
|
|
8,119
|
|
|||
Net loss
|
$
|
(379,638
|
)
|
|
$
|
(297,161
|
)
|
|
$
|
(621,179
|
)
|
Net loss per share attributable to Class A and Class B common stockholders—basic and diluted
|
$
|
(2.96
|
)
|
|
$
|
(1.81
|
)
|
|
$
|
(3.43
|
)
|
Weighted average shares used in computing net loss per share attributable to Class A and Class B common stockholders—basic and diluted
|
128,295,563
|
|
|
164,091,302
|
|
|
181,030,964
|
|
|
Fiscal Year Ended July 31,
|
||||||||||
|
2017
|
|
2018
|
|
2019
|
||||||
|
(in thousands)
|
||||||||||
Net loss
|
$
|
(379,638
|
)
|
|
$
|
(297,161
|
)
|
|
$
|
(621,179
|
)
|
Other comprehensive (loss) income, net of tax:
|
|
|
|
|
|
||||||
Change in unrealized (loss) gain on available-for-sale securities, net of tax
|
(94
|
)
|
|
(896
|
)
|
|
1,671
|
|
|||
Comprehensive loss
|
$
|
(379,732
|
)
|
|
$
|
(298,057
|
)
|
|
$
|
(619,508
|
)
|
|
Convertible
Preferred Stock
|
|
|
Common Stock
|
|
Additional
Paid-In
Capital
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Accumulated
Deficit
|
|
Total
Stockholders’
(Deficit) Equity
|
||||||||||||||||||
|
Shares
|
|
Amount
|
|
|
Shares
|
|
Amount
|
|
|||||||||||||||||||||
|
(in thousands, except share data)
|
|||||||||||||||||||||||||||||
Balance - July 31, 2016
|
76,319,511
|
|
|
$
|
310,379
|
|
|
|
46,083,651
|
|
|
$
|
1
|
|
|
$
|
65,629
|
|
|
$
|
(12
|
)
|
|
$
|
(351,445
|
)
|
|
$
|
(285,827
|
)
|
Conversion of convertible preferred stock to common stock upon IPO
|
(76,319,511
|
)
|
|
(310,379
|
)
|
|
|
76,319,511
|
|
|
2
|
|
|
310,377
|
|
|
—
|
|
|
—
|
|
|
310,379
|
|
||||||
Issuance of class A common stock upon IPO, net of issuance costs
|
—
|
|
|
—
|
|
|
|
17,100,500
|
|
|
1
|
|
|
249,169
|
|
|
—
|
|
|
—
|
|
|
249,170
|
|
||||||
Reclassification of convertible preferred stock warrant liability to APIC upon IPO
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
30,812
|
|
|
—
|
|
|
—
|
|
|
30,812
|
|
||||||
Issuance of common stock upon exercise of common stock warrants
|
—
|
|
|
—
|
|
|
|
775,554
|
|
|
—
|
|
|
77
|
|
|
—
|
|
|
—
|
|
|
77
|
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
231,491
|
|
|
—
|
|
|
—
|
|
|
231,491
|
|
||||||
Issuance of common stock through employee equity incentive plans, net of repurchases
|
—
|
|
|
—
|
|
|
|
10,871,714
|
|
|
—
|
|
|
14,956
|
|
|
—
|
|
|
—
|
|
|
14,956
|
|
||||||
Issuance of common stock from ESPP purchase
|
—
|
|
|
—
|
|
|
|
1,246,054
|
|
|
—
|
|
|
16,946
|
|
|
—
|
|
|
—
|
|
|
16,946
|
|
||||||
Issuance of common stock in connection with business combinations
|
—
|
|
|
—
|
|
|
|
2,239,536
|
|
|
—
|
|
|
27,063
|
|
|
—
|
|
|
|
|
27,063
|
|
|||||||
Vesting of early exercised stock options
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
1,614
|
|
|
—
|
|
|
—
|
|
|
1,614
|
|
||||||
Cumulative effect adjustment from adoption of ASU 2016-09
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
114
|
|
|
114
|
|
||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(94
|
)
|
|
|
|
|
(94
|
)
|
||||||
Net loss
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(379,638
|
)
|
|
(379,638
|
)
|
||||||
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
|
—
|
|
|
—
|
|
|
|
14,492,922
|
|
|
—
|
|
|
33,037
|
|
|
—
|
|
|
—
|
|
|
33,037
|
|
||||||
Issuance of common stock from ESPP purchase
|
—
|
|
|
—
|
|
|
|
2,417,850
|
|
|
—
|
|
|
39,009
|
|
|
—
|
|
|
—
|
|
|
39,009
|
|
||||||
Issuance of common stock in connection with business combinations
|
—
|
|
|
—
|
|
|
|
1,310,790
|
|
|
—
|
|
|
63,780
|
|
|
—
|
|
|
—
|
|
|
63,780
|
|
||||||
Vesting of early exercised stock options
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
681
|
|
|
—
|
|
|
—
|
|
|
681
|
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
177,868
|
|
|
—
|
|
|
—
|
|
|
177,868
|
|
||||||
Equity component of convertible senior notes, net
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
148,598
|
|
|
—
|
|
|
—
|
|
|
148,598
|
|
||||||
Purchase of bond hedges related to the convertible senior notes
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
(143,175
|
)
|
|
—
|
|
|
—
|
|
|
(143,175
|
)
|
||||||
Sale of warrants related to the convertible senior notes
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
87,975
|
|
|
—
|
|
|
—
|
|
|
87,975
|
|
||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(896
|
)
|
|
—
|
|
|
(896
|
)
|
||||||
Net loss
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(297,161
|
)
|
|
(297,161
|
)
|
||||||
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
|
—
|
|
|
—
|
|
|
|
11,272,083
|
|
|
—
|
|
|
12,187
|
|
|
—
|
|
|
—
|
|
|
12,187
|
|
||||||
Issuance of common stock from ESPP purchase
|
—
|
|
|
—
|
|
|
|
2,008,082
|
|
|
1
|
|
|
57,217
|
|
|
—
|
|
|
—
|
|
|
57,218
|
|
||||||
Issuance of common stock in connection with a business combination
|
—
|
|
|
—
|
|
|
|
2,457,067
|
|
|
—
|
|
|
103,305
|
|
|
—
|
|
|
—
|
|
|
103,305
|
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
306,729
|
|
|
—
|
|
|
—
|
|
|
306,729
|
|
||||||
Vesting of early exercised stock options
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
183
|
|
|
—
|
|
|
—
|
|
|
183
|
|
||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,671
|
|
|
—
|
|
|
1,671
|
|
||||||
Net loss
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(621,179
|
)
|
|
(621,179
|
)
|
||||||
Balance - July 31, 2019
|
—
|
|
|
$
|
—
|
|
|
|
188,595,314
|
|
|
$
|
5
|
|
|
$
|
1,835,528
|
|
|
$
|
669
|
|
|
$
|
(1,649,309
|
)
|
|
$
|
186,893
|
|
|
Fiscal Year Ended July 31,
|
||||||||||
|
2017
|
|
2018
|
|
2019
|
||||||
|
(in thousands)
|
||||||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net loss
|
$
|
(379,638
|
)
|
|
$
|
(297,161
|
)
|
|
$
|
(621,179
|
)
|
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
38,399
|
|
|
50,302
|
|
|
77,612
|
|
|||
Stock-based compensation
|
231,491
|
|
|
177,868
|
|
|
306,729
|
|
|||
Amortization of debt discount and issuance cost
|
—
|
|
|
14,685
|
|
|
29,313
|
|
|||
Change in fair value of contingent consideration
|
1,924
|
|
|
(2,423
|
)
|
|
(832
|
)
|
|||
Change in fair value of convertible preferred stock warrant liability
|
21,133
|
|
|
—
|
|
|
—
|
|
|||
Loss on debt extinguishment
|
3,320
|
|
|
—
|
|
|
—
|
|
|||
Other
|
764
|
|
|
(962
|
)
|
|
(2,786
|
)
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Accounts receivable, net
|
(67,382
|
)
|
|
(79,273
|
)
|
|
15,704
|
|
|||
Deferred commissions
|
(24,006
|
)
|
|
(40,852
|
)
|
|
(39,333
|
)
|
|||
Prepaid expenses and other assets (1)
|
(14,873
|
)
|
|
(37,374
|
)
|
|
(12,037
|
)
|
|||
Accounts payable
|
21,280
|
|
|
(16,469
|
)
|
|
13,508
|
|
|||
Accrued compensation and benefits
|
32,687
|
|
|
27,877
|
|
|
14,406
|
|
|||
Accrued expenses and other liabilities
|
5,116
|
|
|
34,295
|
|
|
(17,454
|
)
|
|||
Deferred revenue
|
144,564
|
|
|
262,027
|
|
|
278,517
|
|
|||
Net cash provided by operating activities (1)
|
14,779
|
|
|
92,540
|
|
|
42,168
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Purchases of investments
|
(242,525
|
)
|
|
(716,417
|
)
|
|
(468,144
|
)
|
|||
Maturities of investments
|
84,156
|
|
|
297,461
|
|
|
588,763
|
|
|||
Sales of investments
|
32,640
|
|
|
—
|
|
|
—
|
|
|||
Purchases of property and equipment
|
(50,181
|
)
|
|
(62,372
|
)
|
|
(118,452
|
)
|
|||
Payments for business combinations, net of cash acquired
|
(184
|
)
|
|
(22,227
|
)
|
|
(19,017
|
)
|
|||
Net cash used in investing activities
|
(176,094
|
)
|
|
(503,555
|
)
|
|
(16,850
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Proceeds from sales of shares through employee equity incentive plans, net of repurchases
|
32,254
|
|
|
72,010
|
|
|
69,210
|
|
|||
Payment of contingent consideration associated with a business acquisition
|
—
|
|
|
—
|
|
|
(1,040
|
)
|
|||
Payment of debt in conjunction with business combinations
|
(7,124
|
)
|
|
(1,696
|
)
|
|
(991
|
)
|
|||
Proceeds from issuance of convertible senior notes, net
|
—
|
|
|
563,587
|
|
|
(75
|
)
|
|||
Payments for convertible note hedges
|
—
|
|
|
(143,175
|
)
|
|
—
|
|
|||
Proceeds from issuance of warrants
|
—
|
|
|
87,975
|
|
|
—
|
|
|||
Payments of offering costs
|
(1,717
|
)
|
|
(85
|
)
|
|
—
|
|
|||
Proceeds from initial public offering, net of underwriting discounts and commissions
|
254,455
|
|
|
—
|
|
|
—
|
|
|||
Repayment of senior notes
|
(75,000
|
)
|
|
—
|
|
|
—
|
|
|||
Debt extinguishment costs
|
(1,580
|
)
|
|
—
|
|
|
—
|
|
|||
Other
|
134
|
|
|
—
|
|
|
—
|
|
|||
Net cash provided by financing activities
|
201,422
|
|
|
578,616
|
|
|
67,104
|
|
|||
Net increase in cash, cash equivalents and restricted cash (1)
|
$
|
40,107
|
|
|
$
|
167,601
|
|
|
$
|
92,422
|
|
Cash, cash equivalents and restricted cash—beginning of period (1)
|
99,390
|
|
|
139,497
|
|
|
307,098
|
|
|||
Cash, cash equivalents and restricted cash—end of period (1)
|
$
|
139,497
|
|
|
$
|
307,098
|
|
|
$
|
399,520
|
|
|
Fiscal Year Ended July 31,
|
||||||||||
|
2017
|
|
2018
|
|
2019
|
||||||
|
(in thousands)
|
||||||||||
Restricted cash (1)(2)
|
1,138
|
|
|
1,123
|
|
|
2,842
|
|
|||
Cash and cash equivalents—end of period
|
$
|
138,359
|
|
|
$
|
305,975
|
|
|
$
|
396,678
|
|
|
|
|
|
|
|
||||||
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
||||||
Cash paid for income taxes
|
$
|
5,213
|
|
|
$
|
10,116
|
|
|
$
|
28,999
|
|
Cash paid for interest
|
$
|
1,271
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Supplemental disclosures of non-cash investing and financing information:
|
|
|
|
|
|
||||||
Issuance of common stock for business combinations
|
$
|
27,063
|
|
|
$
|
63,780
|
|
|
$
|
103,305
|
|
Purchases of property and equipment included in accounts payable and accrued liabilities
|
$
|
5,591
|
|
|
$
|
13,444
|
|
|
$
|
8,074
|
|
Vesting of early exercised stock options
|
$
|
1,614
|
|
|
$
|
681
|
|
|
$
|
183
|
|
Offering costs included in accounts payable
|
$
|
85
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Conversion of convertible preferred stock to common stock, net of issuance costs
|
$
|
310,379
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Reclassification of convertible preferred stock warrant liability to additional paid-in capital
|
$
|
30,812
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
(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 consolidated statements of cash flows.
|
(2)
|
Included within other assets—non-current in the consolidated balance sheets.
|
|
|
Revenue
|
|
Accounts Receivable
as of July 31,
|
|||||||||||
|
|
Fiscal Year Ended July 31,
|
|
||||||||||||
Partners
|
|
2017
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|||||
Partner A
|
|
(1)
|
|
|
10
|
%
|
|
10
|
%
|
|
16
|
%
|
|
(1)
|
|
Partner B
|
|
19
|
%
|
|
20
|
%
|
|
10
|
%
|
|
13
|
%
|
|
(1)
|
|
Partner C
|
|
16
|
%
|
|
18
|
%
|
|
24
|
%
|
|
15
|
%
|
|
27
|
%
|
Partner D
|
|
10
|
%
|
|
(1)
|
|
|
(1)
|
|
|
(1)
|
|
|
(1)
|
|
Partner E
|
|
14
|
%
|
|
13
|
%
|
|
13
|
%
|
|
12
|
%
|
|
18
|
%
|
|
(1)
|
Less than 10%
|
|
Fiscal Year Ended July 31,
|
||||||||||
|
2017
|
|
2018
|
|
2019
|
||||||
|
(in thousands)
|
||||||||||
Allowance for doubtful accounts—beginning balance
|
$
|
132
|
|
|
$
|
132
|
|
|
$
|
815
|
|
Charged to allowance for doubtful accounts
|
—
|
|
|
815
|
|
|
437
|
|
|||
Recoveries
|
—
|
|
|
—
|
|
|
(290
|
)
|
|||
Write-offs
|
—
|
|
|
(132
|
)
|
|
(583
|
)
|
|||
Allowance for doubtful accounts—ending balance
|
$
|
132
|
|
|
$
|
815
|
|
|
$
|
379
|
|
•
|
Identification of the contract, or contracts, with a customer — A contract with a customer exists when (i) we enter into an enforceable contract with a customer that defines each party’s rights regarding the goods or services to be transferred and identifies the payment terms related to these goods or services, (ii) the contract has commercial substance and (iii) we determine that collection of substantially all consideration for goods or services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. We apply judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors, including the customer’s historical payment experience or, in the case of a new customer, published credit and financial information pertaining to the customer.
|
•
|
Identification of the performance obligations in the contract — Performance obligations promised in a contract are identified based on the goods or services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the goods or services either on their own or together with other resources that are readily available from third parties or from us, and are distinct in the context of the contract, whereby the transfer of the goods or services is separately identifiable from other promises in the contract. To the extent a contract includes multiple promised goods or services, we apply judgment to determine whether promised goods or services are capable of being distinct and distinct in the context of the contract. If these criteria are not met, the promised goods or services are accounted for as a combined performance obligation.
|
•
|
Determination of the transaction price — The transaction price is determined based on the consideration to which we will be entitled in exchange for transferring goods or services to the customer.
|
•
|
Allocation of the transaction price to the performance obligations in the contract — If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price ("SSP"). We determine SSP based on the price at which the performance obligation is sold separately. If the SSP is not observable through past transactions, we estimate the SSP, taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations.
|
•
|
Recognition of revenue when, or as, performance obligations are satisfied — We satisfy performance obligations either over time or at a point in time. Revenue is recognized at the time the related performance obligation is satisfied with the transfer of a promised good or service to a customer. For additional details on revenue recognition, refer to Note 3 of Notes to Consolidated Financial Statements.
|
|
As of July 31,
|
||||||
|
2018
|
|
2019
|
||||
|
(in thousands)
|
||||||
Goodwill
|
$
|
71,087
|
|
|
$
|
97,328
|
|
Amortizable intangible assets
|
25,920
|
|
|
38,180
|
|
||
Tangible assets acquired
|
842
|
|
|
10,811
|
|
||
Liabilities assumed
|
(11,041
|
)
|
|
(16,293
|
)
|
||
Total consideration
|
$
|
86,808
|
|
|
$
|
130,026
|
|
|
Fiscal Year Ended July 31,
|
||||||||||
|
2017
|
|
2018
|
|
2019
|
||||||
|
(in thousands)
|
||||||||||
Subscription
|
$
|
172,530
|
|
|
$
|
330,645
|
|
|
$
|
648,415
|
|
Non-portable software
|
421,048
|
|
|
543,952
|
|
|
449,131
|
|
|||
Hardware
|
236,316
|
|
|
257,314
|
|
|
105,321
|
|
|||
Professional services
|
16,009
|
|
|
23,546
|
|
|
33,276
|
|
|||
Total revenue
|
$
|
845,903
|
|
|
$
|
1,155,457
|
|
|
$
|
1,236,143
|
|
•
|
Ratable — We recognize revenue from software entitlement and support subscriptions and SaaS offerings ratably over the contractual service period, the substantial majority of which relate to software entitlement and support subscriptions. These offerings represented approximately $156.6 million, $243.9 million and $376.4 million of our subscription revenue for fiscal 2017, 2018 and 2019, respectively.
|
•
|
Upfront — Revenue from our subscription software licenses is generally recognized upfront upon transfer of control to the customer, which happens when we make the software available to the customer. These subscription software licenses represented approximately $15.9 million, $86.7 million and $272.0 million of our subscription revenue for fiscal 2017, 2018 and 2019, respectively. For fiscal 2017, 2018 and 2019, the weighted average term for these subscription term-based licenses was approximately 2.9 years, 3.7 years and 3.8 years, respectively.
|
|
Deferred Revenue
|
|
Deferred Commissions
|
||||
|
(in thousands)
|
||||||
Balance as of July 31, 2017
|
$
|
369,056
|
|
|
$
|
73,527
|
|
Additions
|
529,495
|
|
|
150,122
|
|
||
Revenue/commissions recognized
|
(267,468
|
)
|
|
(109,270
|
)
|
||
Assumed in a business combination
|
124
|
|
|
—
|
|
||
Balance as of July 31, 2018
|
631,207
|
|
|
114,379
|
|
||
Additions
|
682,241
|
|
|
158,062
|
|
||
Revenue/commissions recognized
|
(403,724
|
)
|
|
(118,729
|
)
|
||
Assumed in a business combination
|
320
|
|
|
—
|
|
||
Balance as of July 31, 2019
|
$
|
910,044
|
|
|
$
|
153,712
|
|
•
|
Level I — Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date;
|
•
|
Level II — Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities; and
|
•
|
Level III — Unobservable inputs that are significant to the measurement of the fair value of the assets or liabilities that are supported by little or no market data.
|
|
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 July 31, 2019
|
||||||||||||||
|
Level I
|
|
Level II
|
|
Level III
|
|
Total
|
||||||||
|
(in thousands)
|
||||||||||||||
Financial Assets:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
33,156
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
33,156
|
|
Commercial paper
|
—
|
|
|
103,029
|
|
|
—
|
|
|
103,029
|
|
||||
U.S. government securities
|
—
|
|
|
119,933
|
|
|
—
|
|
|
119,933
|
|
||||
Corporate bonds
|
—
|
|
|
9,996
|
|
|
—
|
|
|
9,996
|
|
||||
Short-term investments:
|
|
|
|
|
|
|
|
|
|||||||
Corporate bonds
|
—
|
|
|
354,549
|
|
|
—
|
|
|
354,549
|
|
||||
Commercial paper
|
—
|
|
|
92,851
|
|
|
—
|
|
|
92,851
|
|
||||
U.S. government securities
|
—
|
|
|
64,756
|
|
|
—
|
|
|
64,756
|
|
||||
Total measured at fair value
|
$
|
33,156
|
|
|
$
|
745,114
|
|
|
$
|
—
|
|
|
$
|
778,270
|
|
Cash
|
|
|
|
|
|
|
130,564
|
|
|||||||
Total cash, cash equivalents and short-term investments
|
|
|
|
|
|
|
$
|
908,834
|
|
|
As of July 31, 2018
|
|
As of July 31, 2019
|
||||||||||||
|
Carrying Value
|
|
Estimated Fair Value
|
|
Carrying Value
|
|
Estimated Fair Value
|
||||||||
|
(in thousands)
|
||||||||||||||
Convertible senior notes, net
|
$
|
429,598
|
|
|
$
|
685,527
|
|
|
$
|
458,910
|
|
|
$
|
527,275
|
|
|
Fiscal Year Ended July 31,
|
||||||
|
2018
|
|
2019
|
||||
|
(in thousands)
|
||||||
Contingent consideration—beginning balance
|
$
|
4,295
|
|
|
$
|
1,872
|
|
Change in fair value (1)
|
(2,423
|
)
|
|
(832
|
)
|
||
Payment
|
—
|
|
|
(1,040
|
)
|
||
Contingent consideration—ending balance
|
$
|
1,872
|
|
|
$
|
—
|
|
|
(1)
|
Recognized in the consolidated statements of operations within general and administrative expenses.
|
|
As of
July 31, 2019
|
||
|
(in thousands)
|
||
Due within one year
|
$
|
408,459
|
|
Due in one to two years
|
103,697
|
|
|
Total
|
$
|
512,156
|
|
|
As of July 31,
|
||||||
|
2018
|
|
2019
|
||||
|
(in thousands)
|
||||||
Prepaid operating expenses
|
$
|
23,169
|
|
|
$
|
37,864
|
|
Prepaid income taxes
|
1,629
|
|
|
19,690
|
|
||
VAT receivables
|
2,281
|
|
|
5,068
|
|
||
Other current assets
|
9,739
|
|
|
12,043
|
|
||
Total prepaid expenses and other current assets
|
$
|
36,818
|
|
|
$
|
74,665
|
|
|
Estimated
Useful Life
|
|
As of July 31,
|
||||||
|
2018
|
|
2019
|
||||||
|
(in months)
|
|
(in thousands)
|
||||||
Computer, production, engineering and other equipment
|
36
|
|
$
|
131,805
|
|
|
$
|
200,762
|
|
Demonstration units
|
12
|
|
53,547
|
|
|
59,981
|
|
||
Leasehold improvements
|
(1)
|
|
19,916
|
|
|
46,520
|
|
||
Furniture and fixtures
|
60
|
|
7,636
|
|
|
12,868
|
|
||
Total property and equipment, gross
|
|
|
212,904
|
|
|
320,131
|
|
||
Less: accumulated depreciation
|
|
|
(127,793
|
)
|
|
(183,169
|
)
|
||
Total property and equipment, net
|
|
|
$
|
85,111
|
|
|
$
|
136,962
|
|
|
(1)
|
Leasehold improvements are amortized over the shorter of the estimated useful lives of the improvements or the remaining lease term.
|
|
As of July 31,
|
||||||
|
2018
|
|
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
|
)
|
|
(21,210
|
)
|
||
Accumulated amortization of customer relationships
|
(1,828
|
)
|
|
(3,392
|
)
|
||
Accumulated amortization of trade name
|
—
|
|
|
(955
|
)
|
||
Total accumulated amortization
|
(8,784
|
)
|
|
(25,557
|
)
|
||
Total intangible assets, net
|
$
|
45,366
|
|
|
$
|
66,773
|
|
|
As of July 31,
|
||||||
|
2018
|
|
2019
|
||||
|
(in thousands)
|
||||||
Intangible assets, net—beginning balance
|
$
|
26,001
|
|
|
$
|
45,366
|
|
Acquired intangible assets
|
25,920
|
|
|
38,180
|
|
||
Amortization of intangible assets (1)
|
(6,555
|
)
|
|
(16,773
|
)
|
||
Intangible assets, net—ending balance
|
$
|
45,366
|
|
|
$
|
66,773
|
|
|
(1)
|
Represents amortization expense related to intangible assets recognized during the year in the consolidated statements of operations, within product cost of revenue and sales and marketing expense.
|
Fiscal Year Ending July 31:
|
Amount
|
||
|
(in thousands)
|
||
2020
|
$
|
17,380
|
|
2021
|
17,380
|
|
|
2022
|
16,183
|
|
|
2023
|
10,856
|
|
|
2024
|
3,210
|
|
|
Thereafter
|
1,764
|
|
|
Total
|
$
|
66,773
|
|
|
Carrying Amount
|
||
|
(in thousands)
|
||
Balance at July 31, 2017
|
$
|
16,672
|
|
Acquired in Netsil Acquisition
|
53,085
|
|
|
Acquired in Minjar Acquisition
|
18,002
|
|
|
Balance at July 31, 2018
|
87,759
|
|
|
Acquired in Frame Acquisition
|
97,328
|
|
|
Other
|
93
|
|
|
Balance at July 31, 2019
|
$
|
185,180
|
|
|
As of July 31,
|
||||||
|
2018
|
|
2019
|
||||
|
(in thousands)
|
||||||
Other tax assets—non-current
|
$
|
30,927
|
|
|
$
|
—
|
|
Deferred tax assets—non-current
|
2,860
|
|
|
4,607
|
|
||
Other
|
4,068
|
|
|
9,834
|
|
||
Total other assets—non-current
|
$
|
37,855
|
|
|
$
|
14,441
|
|
|
As of July 31,
|
||||||
|
2018
|
|
2019
|
||||
|
(in thousands)
|
||||||
Accrued commissions
|
$
|
21,660
|
|
|
$
|
31,703
|
|
Contributions to ESPP withheld
|
21,931
|
|
|
20,778
|
|
||
Accrued vacation
|
10,548
|
|
|
15,475
|
|
||
Accrued bonus
|
12,129
|
|
|
11,413
|
|
||
Payroll taxes payable
|
9,563
|
|
|
8,504
|
|
||
Other
|
9,567
|
|
|
11,931
|
|
||
Total accrued compensation and benefits
|
$
|
85,398
|
|
|
$
|
99,804
|
|
|
As of July 31,
|
||||||
|
2018
|
|
2019
|
||||
|
(in thousands)
|
||||||
Income taxes payable
|
$
|
20,863
|
|
|
$
|
9,651
|
|
Accrued professional services
|
5,838
|
|
|
2,996
|
|
||
Other
|
4,981
|
|
|
16,150
|
|
||
Total accrued expenses and other current liabilities
|
$
|
31,682
|
|
|
$
|
28,797
|
|
|
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
|
|
2019
|
||||
|
(in thousands)
|
||||||
Principal amounts:
|
|
|
|
||||
Principal
|
$
|
575,000
|
|
|
$
|
575,000
|
|
Unamortized debt discount (1)
|
(137,719
|
)
|
|
(109,956
|
)
|
||
Unamortized debt issuance costs (1)
|
(7,683
|
)
|
|
(6,134
|
)
|
||
Net carrying amount
|
$
|
429,598
|
|
|
$
|
458,910
|
|
Carrying amount of equity component (2)
|
$
|
148,598
|
|
|
$
|
148,598
|
|
|
(1)
|
Included in the 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 consolidated balance sheets within additional paid-in capital, net of $3.0 million in equity issuance costs.
|
|
Fiscal Year Ended July 31,
|
||||||
|
2018
|
|
2019
|
||||
|
(in thousands)
|
||||||
Interest expense related to amortization of debt discount
|
$
|
13,909
|
|
|
$
|
27,764
|
|
Interest expense related to amortization of debt issuance costs
|
776
|
|
|
1,549
|
|
||
Total interest expense
|
$
|
14,685
|
|
|
$
|
29,313
|
|
Fiscal Year Ending July 31:
|
Amount
|
||
|
(in thousands)
|
||
2020
|
$
|
39,540
|
|
2021
|
41,909
|
|
|
2022
|
41,332
|
|
|
2023
|
40,695
|
|
|
2024
|
30,240
|
|
|
Thereafter
|
3,511
|
|
|
Total
|
$
|
197,227
|
|
|
As of July 31, 2019
|
|
Shares reserved for future equity grants
|
12,594,167
|
|
Shares underlying outstanding stock options
|
8,740,309
|
|
Shares underlying outstanding restricted stock units
|
22,136,072
|
|
Shares reserved for future employee stock purchase plan awards
|
1,402,959
|
|
Shares underlying outstanding common stock warrants
|
34,180
|
|
Total
|
44,907,687
|
|
•
|
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.
|
|
Fiscal Year Ended July 31,
|
||||||||||||
|
2018
|
|
2019
|
||||||||||
|
Number of
Shares |
|
Grant Date Fair Value per Share
|
|
Number of
Shares |
|
Grant Date Fair Value per Share
|
||||||
Outstanding at beginning of period
|
17,376,090
|
|
|
$
|
18.85
|
|
|
23,597,499
|
|
|
$
|
31.20
|
|
Granted
|
14,947,403
|
|
|
$
|
39.44
|
|
|
11,204,016
|
|
|
$
|
42.23
|
|
Released
|
(5,823,800
|
)
|
|
$
|
19.96
|
|
|
(8,716,764
|
)
|
|
$
|
30.15
|
|
Forfeited
|
(2,902,194
|
)
|
|
$
|
22.34
|
|
|
(3,948,679
|
)
|
|
$
|
33.86
|
|
Outstanding at end of period
|
23,597,499
|
|
|
$
|
31.20
|
|
|
22,136,072
|
|
|
$
|
36.72
|
|
|
Fiscal Year Ended July 31,
|
||||||||||||||||||||||||
|
2018
|
|
2019
|
||||||||||||||||||||||
|
Number of
Shares
|
|
Weighted Average
Exercise
Price
|
|
Weighted
Average
Remaining
Contractual
Life
|
|
Aggregate
Intrinsic
Value
|
|
Number of
Shares
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Remaining
Contractual
Life
|
|
Aggregate
Intrinsic
Value
|
||||||||||
|
|
|
|
|
(in years)
|
|
(in thousands)
|
|
|
|
|
|
(in years)
|
|
(in thousands)
|
||||||||||
Outstanding at beginning of period
|
20,334,531
|
|
|
$
|
4.59
|
|
|
6.4
|
|
$
|
338,787
|
|
|
11,332,554
|
|
|
$
|
5.12
|
|
|
5.6
|
|
$
|
496,022
|
|
Options granted
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
—
|
|
|
$
|
—
|
|
|
|
|
|
||||
Options exercised
|
(8,672,623
|
)
|
|
$
|
3.81
|
|
|
|
|
|
|
(2,554,706
|
)
|
|
$
|
4.77
|
|
|
|
|
|
||||
Options canceled/forfeited
|
(329,354
|
)
|
|
$
|
6.63
|
|
|
|
|
|
|
(37,539
|
)
|
|
$
|
10.09
|
|
|
|
|
|
||||
Outstanding at end of period
|
11,332,554
|
|
|
$
|
5.12
|
|
|
5.6
|
|
$
|
496,022
|
|
|
8,740,309
|
|
|
$
|
5.20
|
|
|
4.6
|
|
$
|
153,000
|
|
Exercisable at end of period
|
11,159,045
|
|
|
$
|
5.01
|
|
|
5.5
|
|
$
|
489,682
|
|
|
8,720,993
|
|
|
$
|
5.18
|
|
|
4.6
|
|
$
|
152,837
|
|
Vested and expected to vest at end of period
|
11,332,554
|
|
|
$
|
5.12
|
|
|
5.6
|
|
$
|
496,022
|
|
|
8,740,309
|
|
|
$
|
5.20
|
|
|
4.6
|
|
$
|
153,000
|
|
|
Fiscal Year Ended July 31,
|
|||||||
|
2017
|
|
2018
|
|
2019
|
|||
Expected term (in years)
|
0.75
|
|
|
0.75
|
|
|
0.84
|
|
Risk-free interest rate
|
0.6
|
%
|
|
1.4
|
%
|
|
2.5
|
%
|
Volatility
|
51.0
|
%
|
|
49.8
|
%
|
|
69.0
|
%
|
Dividend yield
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
Fiscal Year Ended July 31,
|
||||||||||
|
2017
|
|
2018
|
|
2019
|
||||||
|
(in thousands)
|
||||||||||
Cost of revenue:
|
|
|
|
|
|
||||||
Product
|
$
|
3,066
|
|
|
$
|
2,580
|
|
|
$
|
3,535
|
|
Support, entitlements and other services
|
10,411
|
|
|
8,945
|
|
|
15,326
|
|
|||
Sales and marketing
|
78,117
|
|
|
65,060
|
|
|
107,751
|
|
|||
Research and development
|
109,044
|
|
|
74,389
|
|
|
140,519
|
|
|||
General and administrative
|
30,853
|
|
|
26,894
|
|
|
39,598
|
|
|||
Total stock-based compensation expense
|
$
|
231,491
|
|
|
$
|
177,868
|
|
|
$
|
306,729
|
|
|
Fiscal Year Ended July 31, 2017
|
||
Fair value of common stock
|
$
|
12.14
|
|
Expected term (in years)
|
6.1
|
|
|
Risk-free interest rate
|
1.3
|
%
|
|
Volatility
|
52
|
%
|
|
Dividend yield
|
—
|
%
|
|
Fiscal Year Ended July 31,
|
||||||||||
|
2017
|
|
2018
|
|
2019
|
||||||
|
(in thousands, except share and per share data)
|
||||||||||
Numerator:
|
|
|
|
|
|
||||||
Net loss
|
$
|
(379,638
|
)
|
|
$
|
(297,161
|
)
|
|
$
|
(621,179
|
)
|
Denominator:
|
|
|
|
|
|
||||||
Weighted average shares—basic and diluted
|
128,295,563
|
|
|
164,091,302
|
|
|
181,030,964
|
|
|||
Net loss per share attributable to common stockholders—basic and diluted
|
$
|
(2.96
|
)
|
|
$
|
(1.81
|
)
|
|
$
|
(3.43
|
)
|
|
As of July 31,
|
|||||||
|
2017
|
|
2018
|
|
2019
|
|||
Outstanding stock options and RSUs
|
37,710,621
|
|
|
34,930,053
|
|
|
30,876,381
|
|
Employee stock purchase plan
|
1,447,385
|
|
|
1,310,653
|
|
|
1,659,233
|
|
Common stock subject to repurchase
|
243,148
|
|
|
47,691
|
|
|
—
|
|
Contingently issuable shares pursuant to business combinations
|
—
|
|
|
276,625
|
|
|
748,172
|
|
Common stock warrants
|
34,180
|
|
|
34,180
|
|
|
34,180
|
|
Total
|
39,435,334
|
|
|
36,599,202
|
|
|
33,317,966
|
|
|
Fiscal Year Ended July 31,
|
||||||||||
|
2017
|
|
2018
|
|
2019
|
||||||
|
(in thousands)
|
||||||||||
Domestic
|
$
|
(304,363
|
)
|
|
$
|
(201,666
|
)
|
|
$
|
(658,938
|
)
|
Foreign
|
(70,423
|
)
|
|
(88,048
|
)
|
|
45,878
|
|
|||
Loss before provision for income taxes
|
$
|
(374,786
|
)
|
|
$
|
(289,714
|
)
|
|
$
|
(613,060
|
)
|
|
Fiscal Year Ended July 31,
|
||||||||||
|
2017
|
|
2018
|
|
2019
|
||||||
|
(in thousands)
|
||||||||||
Current:
|
|
|
|
|
|
||||||
U.S. federal
|
$
|
—
|
|
|
$
|
2,059
|
|
|
$
|
(1,998
|
)
|
State and local
|
193
|
|
|
429
|
|
|
312
|
|
|||
Foreign
|
8,196
|
|
|
8,541
|
|
|
17,270
|
|
|||
Total current taxes
|
8,389
|
|
|
11,029
|
|
|
15,584
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
U.S. federal
|
(1,342
|
)
|
|
(3,387
|
)
|
|
(4,949
|
)
|
|||
State and local
|
13
|
|
|
(718
|
)
|
|
(770
|
)
|
|||
Foreign
|
(2,208
|
)
|
|
523
|
|
|
(1,746
|
)
|
|||
Total deferred taxes
|
(3,537
|
)
|
|
(3,582
|
)
|
|
(7,465
|
)
|
|||
Provision for income taxes
|
$
|
4,852
|
|
|
$
|
7,447
|
|
|
$
|
8,119
|
|
|
Fiscal Year Ended July 31,
|
||||||||||
|
2017
|
|
2018
|
|
2019
|
||||||
|
(in thousands)
|
||||||||||
U.S. tax reform impact
|
$
|
—
|
|
|
$
|
93,352
|
|
|
$
|
—
|
|
U.S. federal income tax at statutory rate
|
(127,427
|
)
|
|
(75,779
|
)
|
|
(128,680
|
)
|
|||
Stock-based compensation
|
6,701
|
|
|
(73,631
|
)
|
|
(23,378
|
)
|
|||
Effect of foreign operations
|
16,891
|
|
|
26,117
|
|
|
14,305
|
|
|||
Change in valuation allowance
|
86,941
|
|
|
25,274
|
|
|
142,273
|
|
|||
Transfer pricing adjustments
|
11,822
|
|
|
4,584
|
|
|
(3
|
)
|
|||
Intangible asset migration
|
—
|
|
|
4,461
|
|
|
(2,027
|
)
|
|||
Non-deductible expenses
|
1,693
|
|
|
2,115
|
|
|
4,651
|
|
|||
State income taxes
|
206
|
|
|
(290
|
)
|
|
(458
|
)
|
|||
Warrant revaluation
|
7,185
|
|
|
—
|
|
|
—
|
|
|||
Other
|
840
|
|
|
1,244
|
|
|
1,436
|
|
|||
Total
|
$
|
4,852
|
|
|
$
|
7,447
|
|
|
$
|
8,119
|
|
|
As of July 31,
|
||||||
|
2018
|
|
2019
|
||||
|
(in thousands)
|
||||||
Deferred tax assets:
|
|
|
|
||||
Net operating loss carryforward
|
$
|
162,914
|
|
|
$
|
294,577
|
|
Tax credit carryforward
|
47,839
|
|
|
109,921
|
|
||
Deferred revenue
|
27,577
|
|
|
71,859
|
|
||
Intangible assets
|
—
|
|
|
35,764
|
|
||
Stock-based compensation expense
|
21,252
|
|
|
27,493
|
|
||
Other assets
|
—
|
|
|
24,258
|
|
||
Accruals and reserves
|
8,370
|
|
|
14,825
|
|
||
Total deferred tax assets
|
267,952
|
|
|
578,697
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Deferred commission expense
|
(27,829
|
)
|
|
(35,814
|
)
|
||
Acquisition-related
|
(5,909
|
)
|
|
(11,515
|
)
|
||
Property and equipment
|
(3,870
|
)
|
|
(8,541
|
)
|
||
Foreign branch taxes
|
—
|
|
|
(4,607
|
)
|
||
Prepaid expenses
|
—
|
|
|
(2,303
|
)
|
||
Other
|
(497
|
)
|
|
(1,621
|
)
|
||
Total deferred tax liabilities
|
(38,105
|
)
|
|
(64,401
|
)
|
||
Valuation allowance
|
(226,987
|
)
|
|
(509,764
|
)
|
||
Net deferred tax assets
|
$
|
2,860
|
|
|
$
|
4,532
|
|
|
Fiscal Year Ended July 31,
|
||||||
|
2018
|
|
2019
|
||||
|
(in thousands)
|
||||||
Balance at the beginning of the year
|
$
|
42,655
|
|
|
$
|
91,716
|
|
Increases related to current year tax positions
|
58,727
|
|
|
13,736
|
|
||
Increases related to prior year tax positions
|
4,893
|
|
|
301
|
|
||
Decreases related to prior year tax positions
|
(14,559
|
)
|
|
(23,782
|
)
|
||
Settlements with tax authorities
|
—
|
|
|
(721
|
)
|
||
Balance at the end of the year
|
$
|
91,716
|
|
|
$
|
81,250
|
|
|
Fiscal Year Ended July 31,
|
||||||||||
|
2017
|
|
2018
|
|
2019
|
||||||
|
(in thousands)
|
||||||||||
U.S.
|
$
|
488,079
|
|
|
$
|
648,805
|
|
|
$
|
682,340
|
|
Asia Pacific
|
186,864
|
|
|
240,247
|
|
|
271,712
|
|
|||
Europe, the Middle East and Africa
|
138,815
|
|
|
224,392
|
|
|
238,356
|
|
|||
Other Americas
|
32,145
|
|
|
42,013
|
|
|
43,735
|
|
|||
Total revenue
|
$
|
845,903
|
|
|
$
|
1,155,457
|
|
|
$
|
1,236,143
|
|
|
Three Months Ended
|
||||||||||||||||||||||||||||||
|
October 31, 2017
|
|
January 31, 2018
|
|
April 30, 2018
|
|
July 31, 2018
|
|
October 31, 2018
|
|
January 31, 2019
|
|
April 30, 2019
|
|
July 31, 2019
|
||||||||||||||||
|
(unaudited, in thousands, except per share amounts)
|
||||||||||||||||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Product
|
$
|
219,052
|
|
|
$
|
223,170
|
|
|
$
|
221,117
|
|
|
$
|
224,650
|
|
|
$
|
224,346
|
|
|
$
|
236,932
|
|
|
$
|
184,794
|
|
|
$
|
186,347
|
|
Support, entitlements and other services
|
56,500
|
|
|
63,574
|
|
|
68,296
|
|
|
79,098
|
|
|
88,937
|
|
|
98,428
|
|
|
102,830
|
|
|
113,529
|
|
||||||||
Total revenue
|
275,552
|
|
|
286,744
|
|
|
289,413
|
|
|
303,748
|
|
|
313,283
|
|
|
335,360
|
|
|
287,624
|
|
|
299,876
|
|
||||||||
Cost of revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Product (2)(3)
|
85,162
|
|
|
83,217
|
|
|
66,680
|
|
|
41,068
|
|
|
39,261
|
|
|
45,966
|
|
|
29,528
|
|
|
28,323
|
|
||||||||
Support, entitlements and other services (2)
|
23,460
|
|
|
25,311
|
|
|
28,935
|
|
|
32,197
|
|
|
34,845
|
|
|
40,016
|
|
|
45,549
|
|
|
40,640
|
|
||||||||
Total cost of revenue
|
108,622
|
|
|
108,528
|
|
|
95,615
|
|
|
73,265
|
|
|
74,106
|
|
|
85,982
|
|
|
75,077
|
|
|
68,963
|
|
||||||||
Gross profit
|
166,930
|
|
|
178,216
|
|
|
193,798
|
|
|
230,483
|
|
|
239,177
|
|
|
249,378
|
|
|
212,547
|
|
|
230,913
|
|
||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Sales and marketing (2)(3)
|
145,405
|
|
|
151,201
|
|
|
169,860
|
|
|
183,191
|
|
|
196,497
|
|
|
213,707
|
|
|
245,703
|
|
|
253,843
|
|
||||||||
Research and development (2)
|
64,512
|
|
|
70,924
|
|
|
81,291
|
|
|
97,050
|
|
|
110,531
|
|
|
123,037
|
|
|
137,982
|
|
|
129,169
|
|
||||||||
General and administrative (2)
|
16,052
|
|
|
15,948
|
|
|
24,929
|
|
|
29,472
|
|
|
27,339
|
|
|
28,788
|
|
|
33,040
|
|
|
30,420
|
|
||||||||
Total operating expenses
|
225,969
|
|
|
238,073
|
|
|
276,080
|
|
|
309,713
|
|
|
334,367
|
|
|
365,532
|
|
|
416,725
|
|
|
413,432
|
|
||||||||
Loss from operations
|
(59,039
|
)
|
|
(59,857
|
)
|
|
(82,282
|
)
|
|
(79,230
|
)
|
|
(95,190
|
)
|
|
(116,154
|
)
|
|
(204,178
|
)
|
|
(182,519
|
)
|
||||||||
Other expense, net
|
(189
|
)
|
|
(861
|
)
|
|
(4,235
|
)
|
|
(4,021
|
)
|
|
(2,703
|
)
|
|
(4,399
|
)
|
|
(3,212
|
)
|
|
(4,705
|
)
|
||||||||
Loss before provision for income taxes
|
(59,228
|
)
|
|
(60,718
|
)
|
|
(86,517
|
)
|
|
(83,251
|
)
|
|
(97,893
|
)
|
|
(120,553
|
)
|
|
(207,390
|
)
|
|
(187,224
|
)
|
||||||||
Provision for (benefit from) income taxes
|
2,259
|
|
|
1,913
|
|
|
(843
|
)
|
|
4,118
|
|
|
(3,628
|
)
|
|
2,210
|
|
|
2,423
|
|
|
7,114
|
|
||||||||
Net loss
|
$
|
(61,487
|
)
|
|
$
|
(62,631
|
)
|
|
$
|
(85,674
|
)
|
|
$
|
(87,369
|
)
|
|
$
|
(94,265
|
)
|
|
$
|
(122,763
|
)
|
|
$
|
(209,813
|
)
|
|
$
|
(194,338
|
)
|
Net loss per share attributable to Class A and Class B common stockholders—basic and diluted (1)
|
$
|
(0.39
|
)
|
|
$
|
(0.39
|
)
|
|
$
|
(0.51
|
)
|
|
$
|
(0.51
|
)
|
|
$
|
(0.54
|
)
|
|
$
|
(0.68
|
)
|
|
$
|
(1.15
|
)
|
|
$
|
(1.04
|
)
|
|
(1)
|
Basic and diluted earnings per share are computed independently for each of the quarters presented. Therefore, the sum of quarterly basic and diluted per share amounts may not equal annual basic and diluted per share amounts.
|
(2)
|
Includes stock-based compensation as follows:
|
|
Three Months Ended
|
||||||||||||||||||||||||||||||
|
October 31, 2017
|
|
January 31, 2018
|
|
April 30, 2018
|
|
July 31, 2018
|
|
October 31, 2018
|
|
January 31, 2019
|
|
April 30, 2019
|
|
July 31, 2019
|
||||||||||||||||
|
(unaudited, in thousands)
|
||||||||||||||||||||||||||||||
Product cost of sales
|
$
|
570
|
|
|
$
|
684
|
|
|
$
|
634
|
|
|
$
|
692
|
|
|
$
|
698
|
|
|
$
|
872
|
|
|
$
|
953
|
|
|
$
|
1,012
|
|
Support, entitlements and other services cost of sales
|
2,072
|
|
|
2,133
|
|
|
1,951
|
|
|
2,789
|
|
|
3,157
|
|
|
3,373
|
|
|
4,542
|
|
|
4,254
|
|
||||||||
Sales and marketing
|
13,766
|
|
|
15,942
|
|
|
18,051
|
|
|
17,301
|
|
|
22,606
|
|
|
23,462
|
|
|
35,257
|
|
|
26,426
|
|
||||||||
Research and development
|
15,542
|
|
|
17,023
|
|
|
16,474
|
|
|
25,350
|
|
|
31,009
|
|
|
34,679
|
|
|
42,265
|
|
|
32,566
|
|
||||||||
General and administrative
|
3,565
|
|
|
6,229
|
|
|
7,836
|
|
|
9,264
|
|
|
8,455
|
|
|
10,179
|
|
|
11,815
|
|
|
9,149
|
|
||||||||
Total
|
$
|
35,515
|
|
|
$
|
42,011
|
|
|
$
|
44,946
|
|
|
$
|
55,396
|
|
|
$
|
65,925
|
|
|
$
|
72,565
|
|
|
$
|
94,832
|
|
|
$
|
73,407
|
|
(3)
|
Includes amortization of intangible assets as follows:
|
|
Three Months Ended
|
||||||||||||||||||||||||||||||
|
October 31, 2017
|
|
January 31, 2018
|
|
April 30, 2018
|
|
July 31, 2018
|
|
October 31, 2018
|
|
January 31, 2019
|
|
April 30, 2019
|
|
July 31, 2019
|
||||||||||||||||
|
(unaudited, in thousands)
|
||||||||||||||||||||||||||||||
Product cost of sales
|
$
|
895
|
|
|
$
|
1,164
|
|
|
$
|
1,447
|
|
|
$
|
2,135
|
|
|
$
|
3,168
|
|
|
$
|
3,692
|
|
|
$
|
3,694
|
|
|
$
|
3,694
|
|
Sales and marketing
|
211
|
|
|
192
|
|
|
222
|
|
|
289
|
|
|
550
|
|
|
666
|
|
|
661
|
|
|
651
|
|
||||||||
Total
|
$
|
1,106
|
|
|
$
|
1,356
|
|
|
$
|
1,669
|
|
|
$
|
2,424
|
|
|
$
|
3,718
|
|
|
$
|
4,358
|
|
|
$
|
4,355
|
|
|
$
|
4,345
|
|
|
NUTANIX, INC.
|
|
|
|
|
Date: September 24, 2019
|
By:
|
/s/ Dheeraj Pandey
|
|
|
Dheeraj Pandey
Chief Executive Officer and Chairman |
Signature
|
|
Title
|
|
Date
|
/s/ Dheeraj Pandey
|
|
Chief Executive Officer and Chairman
(Principal Executive Officer)
|
|
September 24, 2019
|
Dheeraj Pandey
|
|
|
||
|
|
|
|
|
/s/ Duston M. Williams
|
|
Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)
|
|
September 24, 2019
|
Duston M. Williams
|
|
|
||
|
|
|
|
|
/s/ Susan L. Bostrom
|
|
Director
|
|
September 24, 2019
|
Susan L. Bostrom
|
|
|
||
|
|
|
|
|
/s/ Craig Conway
|
|
Director
|
|
September 24, 2019
|
Craig Conway
|
|
|
||
|
|
|
|
|
/s/ Steven J. Gomo
|
|
Director
|
|
September 24, 2019
|
Steven J. Gomo
|
|
|
||
|
|
|
|
|
/s/ John McAdam
|
|
Director
|
|
September 24, 2019
|
John McAdam
|
|
|
||
|
|
|
|
|
/s/ Ravi Mhatre
|
|
Director
|
|
September 24, 2019
|
Ravi Mhatre
|
|
|
||
|
|
|
|
|
/s/ Jeffrey T. Parks
|
|
Director
|
|
September 24, 2019
|
Jeffrey T. Parks
|
|
|
||
|
|
|
|
|
/s/ Michael P. Scarpelli
|
|
Director
|
|
September 24, 2019
|
Michael P. Scarpelli
|
|
|
||
|
|
|
|
|
/s/ Brian M. Stevens
|
|
Director
|
|
September 24, 2019
|
Brian M. Stevens
|
|
|
•
|
1,000,000,000 shares are designated as Class A common stock;
|
•
|
200,000,000 shares are designated as Class B common stock; and
|
•
|
200,000,000 shares are designated as preferred stock.
|
•
|
if we were to seek to amend our amended and restated certificate of incorporation to increase or decrease the par value of a class of our capital stock, then that class would be required to vote separately to approve the proposed amendment; and
|
•
|
if we were to seek to amend our amended and restated certificate of incorporation in a manner that alters or changes the powers, preferences or special rights of a class of our capital stock in a manner that affected its holders adversely, then that class would be required to vote separately to approve the proposed amendment.
|
•
|
prior to the date of the transaction, our board of directors approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder;
|
•
|
upon completion of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the voting stock outstanding, but not the outstanding voting stock owned by the interested stockholder, (1) shares owned by persons who are directors and also officers and (2) shares owned by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or
|
•
|
at or subsequent to the date of the transaction, the business combination is approved by our board of directors and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least two-thirds of the outstanding voting stock that is not owned by the interested stockholder.
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A.
|
Landlord (as successor in interest to CA-Metro Plaza Limited Partnership, a Delaware limited partnership) and Tenant are parties to that certain lease dated April 23, 2014, as previously amended by that certain First Amendment dated March 23, 2015, by that certain Second Amendment dated January 28, 2016, by that certain Third Amendment dated July 28, 2016, by that certain Fourth Amendment dated April 4, 2018, and by that certain Fifth Amendment dated October 1, 2018 (as amended, the "Lease").
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B.
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Pursuant to the Lease, Landlord has leased to Tenant the "Premises" comprised of: (i) approximately 28,121 rentable square feet in the building located at 181 Metro Drive, San Jose, California 95110 comprised of (a) 9,716 rentable square feet described as Suite No. 280 located on the second (2nd) floor, and (b) approximately 18,405 rentable square feet described as Suite No. 300 located on the third (3rd) floor; and (ii) a total of approximately 80,489 rentable square feet in the building located at 25 Metro Drive, San Jose, California 95110 comprised of (a) approximately 7,396 rentable square feet described as Suite No. 220 on the second (2nd) floor, (b) approximately 23,135 rentable square feet described as the sixth (6th) floor, (c) approximately 24,337 rentable square feet described as the 5th floor, and (d) approximately 25,621 rentable square feet described as the 4th floor.
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C.
|
By this Sixth Amendment, Landlord and Tenant desire to modify the Lease as provided herein.
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D.
|
Unless otherwise defined herein, capitalized terms as used herein shall have the same meanings as given thereto in the Lease.
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1.
|
Building-Top Signage. The reference to "82,989 rentable square feet" contained in 23rd line of Section 6 of the Fifth Amendment is hereby deleted and a reference to "80,489 rentable square feet" is substituted in lieu thereof.
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2.
|
No Further Modification. Except as set forth in this Sixth Amendment, all of the terms and provisions of the Lease shall remain unmodified and in full force and effect. Effective as of the date hereof, all references to the "Lease" shall refer to the Lease as amended by this Sixth Amendment.
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LANDLORD:
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HUDSON METRO PLAZA, LLC,
a Delaware limited liability company
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||||
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By:
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Hudson Pacific Properties, L.P.,
a Maryland limited partnership,
its sole member
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By:
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Hudson Pacific Properties, Inc.,
a Maryland corporation,
its general partner
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||
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By: /s/ Mark. T. Lammas
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Name: Mark. T. Lammas
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||
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Title:
|
Chief Operating Officer,
Chief Financial Officer & Treasurer
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TENANT:
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NUTANIX, INC.,
a Delaware corporation,
By: /s/ Duston Williams
Name: Duston Williams
Title: CFO
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A.
|
Landlord (as successor in interest to CA-Metro Plaza Limited Partnership, a Delaware limited partnership) and Tenant are parties to that certain lease dated April 23, 2014, as previously amended by that certain First Amendment dated March 23, 2015, by that certain Second Amendment dated January 28, 2016, by that certain Third Amendment dated July 28, 2016, by that certain Fourth Amendment dated April 4, 2018, by that certain Fifth Amendment dated October 1, 2018, and by that certain Sixth Amendment dated April 5, 2019 (as amended, the "Lease").
|
B.
|
Pursuant to the Lease, Landlord has leased to Tenant the "Premises" comprised of: (i) approximately 28,121 rentable square feet in the building located at 181 Metro Drive, San Jose, California 95110 comprised of (a) 9,716 rentable square feet described as Suite No. 280 located on the second (2nd) floor, and (b) approximately 18,405 rentable square feet described as Suite No. 300 located on the third (3rd) floor; and (ii) a total of approximately 80,489 rentable square feet in the building located at 25 Metro Drive, San Jose, California 95110 comprised of (a) approximately 7,396 rentable square feet described as Suite No. 220 on the second (2nd) floor, (b) approximately 23,135 rentable square feet described as the sixth (6th) floor, (c) approximately 24,337 rentable square feet described as the 5th floor, and (d) approximately 25,621 rentable square feet described as the 4th floor.
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C.
|
By this Seventh Amendment, Landlord and Tenant desire to modify the Lease as provided herein.
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D.
|
Unless otherwise defined herein, capitalized terms as used herein shall have the same meanings as given thereto in the Lease.
|
1.
|
Allowance Sunset Date. The reference to "December 31, 2019" contained in 10th line of Section 1.6(B) and Section 2.6(B) of the Fifth Amendment is hereby deleted and a reference to "August 31, 2020" is substituted in lieu thereof.
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2.
|
Second Expansion Space - Abatement of Base Rent. The reference to "April and May 2019" contained in the last paragraph of Section 2.3 of the Fifth Amendment is hereby deleted in its entirety and a reference to "April 2019 and January 2121" is substituted in lieu thereof.
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3.
|
No Further Modification. Except as set forth in this Seventh Amendment, all of the terms and provisions of the Lease shall remain unmodified and in full force and effect. Effective as of the date hereof, all references to the "Lease" shall refer to the Lease as amended by this Seventh Amendment.
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LANDLORD:
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|||
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HUDSON METRO PLAZA, LLC,
a Delaware limited liability company
|
||||
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By:
|
Hudson Pacific Properties, L.P.,
a Maryland limited partnership,
its sole member
|
|||
|
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By:
|
Hudson Pacific Properties, Inc.,
a Maryland corporation,
its general partner
|
||
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|
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By: /s/ Mark. T. Lammas
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||
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Name: Mark. T. Lammas
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||
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Title:
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Chief Operating Officer,
Chief Financial Officer & Treasurer
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TENANT:
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|||
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NUTANIX, INC.,
a Delaware corporation,
By: /s/ Duston Williams
Name: Duston Williams
Title: CFO
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A.
|
Landlord and Tenant are parties to that certain Office Lease dated April 4, 2018 (the "Lease"). Pursuant to the Lease, Landlord has leased to Tenant space containing a total of approximately 58,714 rentable square feet (collectively, the "Premises") on the fifth (5th) and sixth (6th) floors of the building commonly known as 1745 Technology Drive located at 1745 Technology Drive, San Jose, California 95110 (the "Building").
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B.
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The parties wish to expand the Premises to include that certain space containing approximately 29,357 rentable square feet and known as Suite No. 700 located on the seventh (7th) floor of the Building and shown on Exhibit A attached hereto (the "Suite 700 Must Take Space"), on the following terms and conditions.
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1.
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Suite 700 Must Take Space.
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6.1
|
Effective Date of Suite 700 Must Take. Effective as of the Suite 700 Expansion Effective Date (defined in Section 1.2 below), the Premises shall be increased by the addition of the Suite 700 Must Take Space. The term of the Lease for the Suite 700 Must Take Space (the "Suite 700 Expansion Term") shall commence on the Suite 700 Expansion Effective Date and, unless extended (pursuant to Section 2 of Exhibit "E" to the Lease) or sooner terminated in accordance with the Lease, end on the Expiration Date (i.e., May 31, 2024). From and after the Suite 700 Expansion Effective Date, the Suite 700 Must Take Space shall be subject to all the terms and conditions of the Lease except as provided herein. Except as may be expressly provided herein, (1) no representation or warranty made by Landlord with respect to the Premises shall apply to the Suite 700 Must Take Space, (2) Tenant shall not be entitled to receive, with respect to the Suite 700 Must Take Space, any allowance, free rent or other financial concession granted with respect to the Premises, and (3) the Suite 700 Must Take Space shall be accepted by Tenant in its configuration and condition existing on the date hereof (or, subject to Section 1.10 below, in such other configuration and condition as the existing tenant thereof may cause to exist in accordance with its lease), without any obligation of Landlord to perform or pay for any alterations to the Suite 700 Must Take Space, and without any representation or warranty regarding the configuration or condition of the Suite 700 Must Take Space.
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6.2
|
Suite 700 Expansion Effective Date. As used in this Section 1, "Suite 700 Expansion Effective Date" means the date upon which Landlord delivers possession (if ever and pursuant to the Lease, as amended hereby) of the Suite 700 Must Take Space to Tenant free from occupancy by any party (including, without limitation, free of any such parties' personal property), which delivery date is anticipated to be no later than April 1, 2019 (the "Suite 700 Target Delivery Date"). The adjustment of the Suite 700 Expansion Effective Date and, accordingly, the postponement of Tenant's obligation
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6.3
|
Confirmation Letter. At any time after the Suite 700 Expansion Effective Date, Landlord may deliver to Tenant a notice substantially in the form of Exhibit B attached hereto, as a confirmation of the information set forth therein. Tenant shall execute and return (or, by written notice to Landlord, reasonably object to) such notice within ten (10) business days after receiving it.
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6.4
|
Base Rent. With respect to the Suite 700 Must Take Space, commencing on the Suite 700 Expansion Effective Date and continuing during the Suite 700 Expansion Term, Tenant shall pay Base Rent at the same then applicable annual rate per square foot as described in the rent table depicted in Section 1.4 of the Lease (as thereafter increased annually pursuant to such rent table). Notwithstanding the foregoing, Base Rent for the Suite 700 Must Take Space shall be abated for the first (2) full months of the Suite 700 Expansion Term; provided, however, that if a Default exists when any such abatement would otherwise apply, such abatement shall be deferred until the date, if any, on which such Default is cured. All such Base Rent shall be payable monthly by Tenant in accordance with the terms of the Lease provided, however, that the installment of Base Rent for the third full calendar month for which Base Rent is payable hereunder and the installment of Additional Rent for Expenses and Taxes for the third full calendar month for which such Additional Rent is payable hereunder shall be paid upon Tenant's execution and delivery of this First Amendment.
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6.5
|
Tenant's Share. With respect to the Suite 700 Must Take Space during the Suite 700 Expansion Term, Tenant's Share shall be 12.8584%.
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6.6
|
Expenses and Taxes. With respect to the Suite 700 Must Take Space during the Suite 700 Expansion Term, Tenant shall pay for Tenant's Share of Expenses and Taxes in accordance with the terms of the Lease.
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6.7
|
Improvements to the Suite 700 Must Take Space. Following the Suite 700 Expansion Effective Date, Tenant shall be entitled to perform improvements to the Suite 700 Must Take Space, in accordance with the Work Letter attached to the Lease as Exhibit B, provided that (i) the Allowance for the Suite 700 Must Take Space shall be $733,925.00 (based upon $25.00 per rentable square foot of the Suite 700 Must Take Space) and may be used at Tenant's election for improvements to the Suite 700 Must Take Space and/or to the original Premises (i.e., Suite 500 and Suite 600), and (ii) if Tenant fails to use the entire Allowance (as calculated under this Section 1.7) by December 31, 2020, the unused amount shall revert to Landlord and Tenant shall have no further rights with respect thereto.
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6.8
|
Parking. During the Suite 700 Expansion Term with respect to the Suite 700 Must Take Space, Tenant shall be entitled to use an additional eighty-eight (88) unreserved parking spaces in the Parking Facility in accordance with the terms of the Lease.
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6.9
|
Existing Tenant. The parties acknowledge and agree that Landlord has previously leased the Suite 700 Must Take Space to a third party (such party, and any successor or assignee thereto, the "Suite 700 Existing Tenant") for a lease term extending through March 31, 2019 (the "Suite 700 Existing Lease"). If the Suite 700 Existing Tenant fails to surrender possession of the Suite 700 Must Take Space by the expiration of the Suite 700 Existing Lease, then Landlord shall use commercially reasonable efforts to recover possession of the Suite 700 Must Take Space from the Suite 700 Existing Tenant as soon thereafter as reasonably possible (including, if necessary in Landlord's reasonable judgement, by commencing and pursuing an unlawful detainer).
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6.10
|
Walk Through of the Suite 700 Must Take Space. Landlord shall use commercially reasonable efforts, subject to the rights of the Suite 700 Existing Tenant under the Suite 700 Existing Lease, to
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6.11
|
Increased Security Deposit. Concurrently with Tenant's execution of this First Amendment, Tenant shall deposit with Landlord an additional $90,713.13, for a total Security Deposit under the Lease, as amended herein, of $301,035.89. Landlord shall continue to hold the Security Deposit, as increased herein, in accordance with the terms and conditions of Section 21 of the Lease.
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2.
|
California Civil Code Section 1938. Pursuant to California Civil Code § 1938, Landlord hereby states that the Suite 700 Must Take Space has not undergone inspection by a Certified Access Specialist (CASp) (defined in California Civil Code § 55.52). Accordingly, pursuant to California Civil Code § 1938(e), Landlord hereby further states as follows: "A Certified Access Specialist (CASp) can inspect the subject premises and determine whether the subject premises comply with all of the applicable construction-related accessibility standards under state law. Although state law does not require a CASp inspection of the subject premises, the commercial property owner or lessor may not prohibit the lessee or tenant from obtaining a CASp inspection of the subject premises for the occupancy or potential occupancy of the lessee or tenant, if requested by the lessee or tenant. The parties shall mutually agree on the arrangements for the time and manner of the CASp inspection, the payment of the fee for the CASp inspection, and the cost of making any repairs necessary to correct violations of construction-related accessibility standards within the premises". In accordance with the foregoing, Landlord and Tenant agree that if Tenant requests a CASp inspection of the Suite 700 Must Take Space, then Tenant shall pay (i) the fee for such inspection, and (ii) the cost of making any repairs necessary to correct violations of construction-related accessibility standards within the Suite 700 Must Take Space; provided, that, if Tenant is required to obtain such CASp inspection by applicable Law or to avoid any penalty imposed under applicable Law, then the cost of and obligation for making any repairs necessary to correct violations of construction-related accessibility standards within the Premises shall be governed by the provisions of the Lease.
|
3.
|
Package HVAC Units. In the event Tenant desires to utilize any existing dedicated heating, ventilation and air conditioning units ("Package Units") within the Premises, or installs, as an Alteration, new Package Units within the Premises, the plans and specifications for any Package Units shall be subject to Landlord's reasonable approval. If Tenant elects to utilize or install Package Units within the Premises, Tenant shall also install, at Tenant's sole cost and expense, separate meters or at Landlord's option, sub-meters, in order to measure the amount of electricity furnished to such Package Units and Tenant shall be responsible for Landlord's actual cost of supplying electricity to such units as reflected by such meters or sub-meters, which amounts shall be payable on a monthly basis as Additional Rent. Tenant shall be responsible for maintenance and repair of the Package Units pursuant to Section 25.5 of the Lease and such units may be subject to removal by Tenant upon the expiration or earlier termination of the Lease pursuant to Section 25.5 of the Lease.
|
4.
|
Signage. Landlord, at Landlord's sole expense, shall include Tenant's name in any tenant directory located in the lobby on the first floor of the Building.
|
5.
|
Surrender. Except as required under Section 23 of the Original Lease (regarding removal of Lines) and except as required under Section 25.5 of the Original Lease and Section 3 above (regarding Units and Package Units), upon the expiration or earlier termination of the Lease, as amended hereby, Tenant shall surrender possession of the original Premises (i.e., Suite 500 and Suite 600) to Landlord in as good condition and repair as exists
|
6.
|
Miscellaneous.
|
6.1
|
This First Amendment and the attached exhibits, which are hereby incorporated into and made a part of this First Amendment, set forth the entire agreement between the parties with respect to the matters set forth herein. There have been no additional oral or written representations or agreements. Tenant shall not be entitled, in connection with entering into this First Amendment, to any free rent, allowance, alteration, improvement or similar economic incentive to which Tenant may have been entitled in connection with entering into the Lease, except as may be otherwise expressly provided in this First Amendment.
|
6.2
|
Except as herein modified or amended, the provisions, conditions and terms of the Lease shall remain unchanged and in full force and effect.
|
6.3
|
In the case of any inconsistency between the provisions of the Lease and this First Amendment, the provisions of this First Amendment shall govern and control.
|
6.4
|
Submission of this First Amendment by Landlord is not an offer to enter into this First Amendment but rather is a solicitation for such an offer by Tenant. Landlord shall not be bound by this First Amendment until Landlord has executed and delivered it to Tenant.
|
6.5
|
Capitalized terms used but not defined in this First Amendment shall have the meanings given in the Lease.
|
6.6
|
Tenant shall indemnify and hold Landlord, its trustees, members, principals, beneficiaries, partners, officers, directors, employees, mortgagee(s) and agents, and the respective principals and members of any such agents harmless from all claims of any brokers in connection with this First Amendment other than Savills Studley, claiming to have represented Tenant in connection with this First Amendment. Tenant acknowledges that any assistance rendered by any agent or employee of any affiliate of Landlord in connection with this First Amendment has been made as an accommodation to Tenant solely in furtherance of consummating the transaction on behalf of Landlord, and not as agent for Tenant.
|
6.7
|
This First Amendment may be executed in any number of duplicate originals, all of which shall be of equal legal force and effect. Additionally, this First Amendment may be executed in counterparts, but shall become effective only after each party has executed a counterpart hereof; all said counterparts when taken together, shall constitute the entire single agreement between the parties. This First Amendment may be executed by a party’s signature transmitted by portable document format ("pdf") or email or by a party's electronic signature (collectively, "pdf Signatures"), and copies of this First Amendment executed and delivered by electronic means or originals of this First Amendment executed by pdf Signature shall have the same force and effect as copies hereof executed and delivered with original wet signatures. All parties hereto may rely upon emailed or pdf Signatures as if such signatures were original wet signatures. Any party executing and delivering this First Amendment by pdf or
|
6.8
|
Landlord and Tenant hereby acknowledge that in the event the Lease terminates pursuant to Section 2.3 of the Lease, this First Amendment shall likewise be terminated.
|
|
LANDLORD:
|
|
|||
|
|
|
|
|
|
|
HUDSON CONCOURSE, LLC,
a Delaware limited liability company
|
||||
|
By:
|
Hudson Pacific Properties, L.P.,
a Maryland limited partnership,
its sole member
|
|||
|
|
By:
|
Hudson Pacific Properties, Inc.,
a Maryland corporation,
its general partner
|
||
|
|
|
By: /s/ Mark. T. Lammas
|
||
|
|
|
Name: Mark. T. Lammas
|
||
|
|
|
Title:
|
Chief Operating Officer,
Chief Financial Officer & Treasurer
|
|
|
|
|
|
|
|
|
TENANT:
|
|
|||
|
|
|
|
|
|
|
NUTANIX, INC., a Delaware corporation,
By: /s/ Kenneth Long
Name: Kenneth Long
|
||||
|
Title:
|
VP, Corporate Controller
Chief Accounting Officer
|
To:
|
_______________________
|
1.
|
The Suite 400 Expansion Delivery Date is _____________ and the Expiration Date is May 31, 2024.
|
2.
|
The exact number of rentable square feet within the Suite 700 Must Take Space is _________ square feet, subject to Section 2.1.1 of the Lease.
|
3.
|
Tenant's Share, based upon the exact number of rentable square feet within the entire Premises, is ____________%, subject to Section 2.1.1 of the Lease.
|
|
"Landlord":
_______________________________,
a ________________________
By:
Name:
Title:
|
Agreed and Accepted as of _________, 20 .
"Tenant":
_______________________________,
a ________________________
By:
Name:
Title:
|
|
Name
|
|
Jurisdiction
|
|
|
|
Nutanix Netherlands B. V.
|
|
Netherlands
|
Nutanix Cayman Islands Ltd.
|
|
Cayman Islands
|
1.
|
I have reviewed this Annual Report on Form 10-K 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: September 24, 2019
|
|
/s/ Dheeraj Pandey
|
|
|
Dheeraj Pandey
|
|
|
Chairman and Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
1.
|
I have reviewed this Annual Report on Form 10-K 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: September 24, 2019
|
|
/s/ Duston M. Williams
|
|
|
Duston M. Williams
|
|
|
Chief Financial Officer
|
|
|
(Principal Financial Officer)
|
Date: September 24, 2019
|
|
/s/ Dheeraj Pandey
|
|
|
Dheeraj Pandey
|
|
|
Chairman and Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
Date: September 24, 2019
|
|
/s/ Duston M. Williams
|
|
|
Duston M. Williams
|
|
|
Chief Financial Officer
|
|
|
(Principal Financial Officer)
|