‘These larger opportunities often involve strategic decisions and C-suite approvals, causing them to take longer to close and to have greater variability in timing, outcome and deal structure,’ Nutanix CEO Rajiv Ramaswami told investors this week.

Nutanix CEO Rajiv Ramaswami told investors that in the wake of Broadcom’s price changes, more and larger VMware customers are talking about switching, however the size and complexity of those deals is making the short-term revenue outlook difficult to predict.

“We continue to see a higher mix of larger deals in our pipeline, which is driving greater variability in our new and expansion business,” he told investors during the company’s third quarter earnings call Wednesday.

He said the number of deals more than $1 million in annual contract value that are in Nutanix’s pipeline has grown at more than 30 percent for each of the last three quarters compared to the corresponding quarters last year.

The biggest win of the quarter was an “eight-figure” annual contract value deal with a “North America-based Fortune 50 financial services company” that needs to streamline and automate the deployment of it fleet of databases, he said. The deal was focused on updating all of that company’s database architecture, but due to the size and complexity it took two years to close, Ramaswami said.

“These larger opportunities often involve strategic decisions and C-suite approvals, causing them to take longer to close and to have greater variability in timing, outcome and deal structure,” Ramaswami told investors.

Nutanix CFO Rukmini Sivaraman said this will likely be the norm with larger deals going forward. While the contracts are larger and for longer periods of time, they can take months to close and to monetize,

“As an example, for the eight-figure ACV transaction in Q3 that Rajiv (Ramaswami) mentioned, we expect the billings and cash collection to be in Q4, while the associated subscription revenue is expected to be recognized over multiple years starting in fiscal year ’25,” she told investors on the earnings call. “Additionally, it is worth noting that this transaction was approximately two years in the making, taking longer to close than our prior expectations, but came in with a longer contract duration and a higher total contract value than expected. We anticipate similar variability in deal structures and longer sales cycles for some of the larger opportunities in our pipeline.”

Nutanix revenue came in at $525 million for the quarter, up 17 percent, year over year, and well over the $510 million which was the low end of what the company had guided to last quarter. As a result, Nutanix said it expects annual revenue to come in around $2.14 billion for growth of about 15 percent versus last year. Net income was $85 million for earnings per share of $0.28. Additionally, the company said it has repurchased about $106 million worth of shares as part of $350 million buy back that was authorized by Nutanix board in August.

Nutanix is also partnering with Round Rock, Texas-based Dell Technologies to create a hyperconverged infrastructure solution built on Dell PowerEdge servers.

“This will provide our customers with the choice of procuring Nutanix platform directly from there,” Ramaswami told investors. “Second, we will together deliver the Nutanix start platform powered by AHV hypervisor for compute and Dell PowerFlex for storage.”

Michael Dell – who owned a majority of VMware until Broadcom’s $69 billion acquistion closed in November — recently told CRN that Dell’s PowerFlex is an option for customers looking for VMware alternatives.

Ramaswami said the optionality of using Nutanix on Dell allows customers to reuse existing IP-based Dell 3-tier storage hardware to extend the life of that investment.

“I want to say that, first of all, we are only initially supporting one storage platform, and that is PowerFlex, OK? But the concept is about offering AHV standalone to work with third-party storage, right, which is a big chunk of the installed base out there, legacy installed base, which is separate ritualized servers connected to three tier storage,” Ramaswami told investors. “Now we are starting out with a very small footprint to be clear, right? We are not — we’re only supporting one storage array and it’s an IP-based storage array … We will start with Dell PowerFlex and then over time, incrementally add other IP-based storage arrays, right, not fibre channel storage. So I expect that this is something that we can get a broader and broader opportunity scope over time but it does open the door to supporting third-party storage.”

Nutanix stock sank 23 percent Thursday along with the broader market.