What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2024-09-19 compared with 2023-09-21 · 307 added, 456 removed, 892 unchanged (46% of the section changed)

5 unchanged sentences

Consolidated Statements of Comprehensive Loss

Consolidated Statements of Stockholders’

Consolidated Statements of Stockholders’ Deficit

Consolidated Statements of Cash Flows

1 unchanged sentence

Overview and Summary of Significant Accounting Policies

Correction to Prior Period Financial Statements

Revenue, Deferred Revenue and Deferred Commissions

8 unchanged sentences

Segment Information

Subsequent Event

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of July 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended July 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated September 21, 2023, expressed an adverse opinion on the Company's internal control over financial reporting.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of July 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated September 19, 2024, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

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The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Revenue Recognition —

Refer to Notes 1 and 3 to the financial statements

Revenue Recognition — Refer to Notes 1 and 2 to the financial statements

Critical Audit Matter Description

1 unchanged sentence

The Company offers customers an enterprise cloud platform, which can be pre-installed on hardware or delivered separately, as well as related support subscriptions and professional services.

Product revenue was $912.1 million and support, entitlements, and other services was $950.8 million for the year ended July 31, 2023.

Significant judgment is exercised by the Company in determining revenue recognition for the Company’s customer contracts, and includes the following:

Determination of whether promised goods or services 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.

Product revenue was $1.1 billion and support, entitlements and other services was $1.1 billion for the year ended July 31, 2024.

Significant judgment is exercised by the Company in determining revenue recognition for the Company’s customer contracts, and includes the following:

• Determination of whether promised goods or services 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 identified revenue recognition as a critical audit matter because of these significant judgments required by management.

1 unchanged sentence

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the Company’s revenue recognition for the Company’s customer contracts included the following, among others:

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.

Our audit procedures related to the Company’s revenue recognition for the Company’s customer contracts included the following, among others:

• We tested the effectiveness of controls related to the identification of distinct performance obligations and determination of the standalone selling prices

• 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 contract, master agreement and any related amendments, if applicable.

Testing the mathematical accuracy of management’s calculations of revenue and the associated timing of revenue recognized in the financial statements.

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.

– Evaluating management’s application of their accounting policy and tested revenue recognition for specific performance obligations by comparing management’s conclusions to the underlying contract, master agreement, and any related amendments, if applicable.

– Testing the mathematical accuracy of management’s calculations of revenue recognized in the financial statements

• 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

1 unchanged sentence

September 19, 2024

We have served as the Company’s auditor since 2013.

NUTANIX, INC.

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Accounts receivable, net of allowances of $ 733 and $ 772 , respectively

Deferred commissions—current

Prepaid expenses and other current assets

2 unchanged sentences

Operating lease right-of-use assets

Deferred commissions—non-current

Intangible assets, net

Other assets—non-current

Liabilities and Stockholders’

Other assets—non-current

Liabilities and Stockholders’ Deficit

Current liabilities:

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Accrued expenses and other current liabilities

Deferred revenue—current

Operating lease liabilities—current

Convertible senior notes, net—current

Deferred revenue—current

Operating lease liabilities—current

Total current liabilities

Deferred revenue—non-current

Operating lease liabilities—non-current

Deferred revenue—non-current

Operating lease liabilities—non-current

Convertible senior notes, net

Other liabilities—non-current

Total liabilities

Commitments and contingencies (Note 7)

Stockholders’

Preferred stock, par value of $ 0.000025 per share—

200,000 shares

Stockholders’ deficit:

Preferred stock, par value of $ 0.000025 per share— 200,000 shares

authorized as of July 31, 2023 and 2024;

no shares issued

and outstanding as of July 31, 2022 and 2023

Common stock, par value of $ 0.000025 per share—

1,042,004 ( 1,000,000

Class A, 42,004 Class B) and 1,000,000 Class A shares authorized as

of July 31, 2022 and 2023, respectively;

226,938 and 239,607 Class A

shares issued and outstanding as of July 31, 2022 and 2023,

no shares issued and

outstanding as of July 31, 2023 and 2024

Common stock, par value of $ 0.000025 per share— 1,000,000 Class

A shares authorized as of July 31, 2023 and 2024;

and 265,181 Class A shares issued and outstanding as of July 31,

2023 and 2024, respectively

Additional paid-in capital

Accumulated other comprehensive loss

Accumulated other comprehensive (loss) income

Accumulated deficit

Total stockholders’

Total liabilities and stockholders’

Total stockholders’ deficit

Total liabilities and stockholders’ deficit

See the accompanying notes to the consolidated financial statements.

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Total operating expenses

Loss from operations

(Loss) income from operations

Other expense, net

1 unchanged sentence

Provision for income taxes

Net loss per share attributable to Class A and Class B

common stockholders—basic and diluted (1)

Weighted average shares used in computing net loss

per share attributable to Class A and Class B

common stockholders—basic and diluted (1)

Net loss per share attributable to Class A and Class

B common stockholders, basic and diluted (1)

Weighted average shares used in computing net

loss per share attributable to Class A and Class B

common stockholders, basic and diluted (1)

(1) Effective January 3, 2022, all of the then outstanding shares of Nutanix, Inc.

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Other comprehensive (loss) income, net of tax:

Change in unrealized loss on available-for-sale

Change in unrealized (loss) gain on available-for-sale

securities, net of tax

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NUTANIX, INC.

CONSOLIDATED STATE MENTS OF STOCKHOLDERS’

CONSOLIDATED STATE MENTS OF STOCKHOLDERS’ DEFICIT

Fiscal Year Ended July 31, 2024

Comprehensive

Stockholders’

Income (Loss)

Stockholders’

(Loss) Income

(in thousands)

Balance - July 31, 2021

Adoption of ASU 2020-06

2026 Notes derivative liability reclassification

Issuance of common stock through employee equity

2 unchanged sentences

Repurchase and retirement of common stock

Unwinding of 2023 Notes hedges

Unwinding of 2023 Notes warrants

Stock-based compensation

1 unchanged sentence

Balance - July 31, 2022

Adoption of ASU 2020-06

2026 Notes derivative liability reclassification

Issuance of common stock through employee equity

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Issuance of common stock from ESPP purchase

Repurchase and retirement of common stock

Unwinding of 2023 Notes hedges

Unwinding of 2023 Notes warrants

Shares withheld related to net share settlement of

equity awards

Stock-based compensation

Other comprehensive loss

Other comprehensive income

Balance - July 31, 2023

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equity awards

Repurchase and retirement of common stock

Issuance of common stock related to conversion of

Stock-based compensation

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Cash flows from operating activities:

Adjustments to reconcile net loss to net cash (used in) provided by

operating activities:

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization

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Amortization of debt discount and issuance costs

Conversion of convertible senior notes attributable to debt discount and issuance costs

Operating lease cost, net of accretion

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Deferred revenue

Net cash (used in) provided by operating activities

Net cash provided by operating activities

Cash flows from investing activities:

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Proceeds from Frame divestiture

Payments for acquisitions, net of cash acquired

Purchases of property and equipment

Net cash used in investing activities

Net cash (used in) provided by investing activities

Cash flows from financing activities:

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Payments for unwinding of warrants

Proceeds from sales of shares through employee equity incentive

Proceeds from sales of shares through employee equity incentive plans

Taxes paid related to net share settlement of equity awards

Proceeds from the issuance of convertible notes, net of issuance

Proceeds from the issuance of convertible notes, net of issuance costs

Repurchases of common stock

1 unchanged sentence

Net cash provided by (used in) financing activities

Net (decrease) increase in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash—beginning of period

Cash, cash equivalents and restricted cash—end of period

Net increase in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash—beginning of period

Cash, cash equivalents and restricted cash—end of period

Restricted cash (1)

Cash and cash equivalents—end of period

Supplemental disclosures of cash flow information:

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and accrued and other liabilities

Finance lease liabilities arising from obtaining right-of-use assets

(1) Included within other assets—non-current in the consolidated balance sheets.

Forfeited paid-in-kind interest recognized in equity upon note conversion

(1) Included within other assets—non-current in the consolidated balance sheets.

See the accompanying notes to the consolidated financial statements.

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is headquartered in San Jose, California, and together with its wholly-owned subsidiaries (collectively, "we," "us," "our," or "Nutanix"), has operations throughout North America, Europe, Asia Pacific, the Middle East, Latin America, and Africa.

We provide a leading enterprise cloud platform, which we call the Nutanix Cloud Platform, that consists of software solutions and cloud services that power our customers’

enterprise infrastructure.

Our solutions deliver a consistent cloud operating model across edge, private-, hybrid- and multicloud environments for all applications and their data.

Our solutions allow organizations to simply run and move their workloads, including enterprise applications, high-performance databases, end-user computing and virtual desktop infrastructure services, container-based modern applications, and analytics applications, between on-premises and public clouds.

We are a global leader in cloud software, offering organizations a single platform for running applications and managing data, anywhere.

Our vision is to make hybrid multicloud deployments simple and free customers to focus on achieving their business outcomes.

Our mission is to delight customers with an open hybrid multicloud platform with rich data services to run and manage any application, anywhere.

Our Nutanix Cloud Platform is designed to enable organizations to build a hybrid multicloud infrastructure, providing a consistent cloud operating model with a single platform for running applications and managing data in core data centers, at the edge, and in public clouds, all while supporting a variety of hypervisors and container platforms.

Nutanix Cloud Platform supports a wide variety of workloads with varied compute, storage, and network requirements, including business-critical applications, data platforms (including SQL and NoSQL databases and business intelligence applications), general-purpose workloads (including system infrastructure, networking, and security), and end-user computing and virtual desktop infrastructure services, as well as enterprise artificial intelligence ("AI") workloads (including machine learning and generative AI workloads) and cloud native applications (including modern, containerized applications).

Our business is organized into a single operating and reportable segment.

Our subscription-based business model provides our customers with the flexibility to choose their preferred license levels and durations based on their specific business needs.

A subscription-based business model means one in which our products, including associated support and entitlement arrangements, are sold with a defined duration.

Our solutions are primarily sold through channel partners and original equipment manufacturers ("OEMs") (collectively, "Partners") and delivered directly to our end customers.

3 unchanged sentences

All intercompany accounts and transactions have been eliminated in consolidation.

NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Use of Estimates

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accounting for income taxes, including the valuation allowance on deferred tax assets and uncertain tax positions;

warranty liability;

purchase commitment liabilities to our contract manufacturers;

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the incremental borrowing rate to measure the present value of right-of-use assets and lease liabilities;

the inputs used to determine the fair value of the contingent liability associated with the conversion feature of the 2.50 % convertible senior notes due 2026 (the "2026 Notes");

the inputs used to determine the fair value of the contingent liability associated with the conversion feature of the previously outstanding 2.50% convertible senior notes due 2026 (the "2026 Notes");

and contingencies and litigation.

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As future events and their effects cannot be determined with precision, actual results could materially differ from those estimates and assumptions.

NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Concentration of Risk

Credit Risk —

Financial instruments that potentially subject us to concentrations of credit risk consist of cash and cash equivalents and accounts receivable.

Credit Risk — Financial instruments that potentially subject us to concentrations of credit risk consist of cash and cash equivalents and accounts receivable.

We invest only in high-quality credit instruments and maintain our cash and cash equivalents and available-for-sale investments in fixed income securities.

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We provide credit, in the normal course of business, to a number of companies and perform credit evaluations of our customers.

Concentration of Revenue and Accounts Receivable —

We sell our products primarily through our Partners and occasionally directly to end customers.

Concentration of Revenue and Accounts Receivable — We sell our products primarily through our Partners and occasionally directly to end customers.

For the fiscal years ended July 31, 2022, 2023 and 2024 , no end customer accounted for more than 10 % of total revenue or accounts receivable.

3 unchanged sentences

(1) Less than 10%

NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Summary of Significant Accounting Policies

9 unchanged sentences

The impairment loss will be recorded as a write-down of investments in our consolidated balance sheets and a realized loss within other expense in our consolidated statements of operations.

NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Fair Value Measurement

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The fair value of the previously outstanding 0 % convertible senior notes due 2023 (the "2023 Notes") was determined based on the closing trading price per $ 100 of the 2023 Notes as of the last day of trading for the period.

The fair value of the 2.50 % convertible senior notes due 2026 is determined based on a binomial model.

The fair value of the 0.25 % convertible senior notes due 2027 (the "2027 Notes") is determined based on the closing trading price per $ 100 of the 2027 Notes as of the last day of trading for the period.

The fair value of the previously outstanding 2.50% convertible senior notes due 2026 was determined based on a binomial model.

The fair value of the outstanding 0.25% convertible senior notes due 2027 (the "2027 Notes") is determined based on the closing trading price per $ 100 of the 2027 Notes as of the last day of trading for the period.

NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Convertible Senior Notes

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Issuance costs are amortized to interest expense using the effective interest rate method over the term of the notes.

In accounting for conversions of the notes, the carrying amount of the converted notes is reduced by the total consideration paid or issued for the respective converted notes and the difference is recorded to additional paid-in capital on our consolidated balance sheets.

In accounting for a holder’s exercise in accordance with a note’s original conversion terms of a conversion option for which the carrying amount has previously been reclassified to equity, any unamortized discount remaining at the date of conversion is first recognized as interest, and then the remaining carrying amount of the converted notes is reduced by the cash transferred and then recognized in equity to reflect the shares issued, such that no gain or loss is recognized.

In accounting for extinguishments of the notes, the reacquisition price of the extinguished notes is compared to the carrying amount of the respective extinguished notes and a gain or loss is recorded in other expense, net on our consolidated statements of operations.

1 unchanged sentence

We evaluate convertible notes or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for under the relevant sections of Accounting Standards Codification ("ASC") 815-40, Derivatives and Hedging:

Contracts in Entity’s Own Equity.

The result of this accounting guidance could result in the fair value of a financial instrument being classified as a derivative instrument and recorded at fair market value at each balance sheet date and recorded as a liability.

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We perform ongoing credit evaluations of our customers and maintain an allowance for credit losses.

NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The allowance for credit losses is based on the best estimate of the amount of probable credit losses in existing accounts receivable.

We assess credit losses on accounts receivable by taking into consideration past collection experience, the credit quality of the customer, the age of the receivable balance, current and future economic conditions, and forecasts that may affect the collectibility of the reported amount.

In circumstances where we are aware of a specific customer’s inability to meet its financial obligations (e.g., bankruptcy filings or substantial downgrading of credit ratings), we record an allowance for credit losses in order to reduce the net recognized receivable to the amount we reasonably believe will be collected.

For all other customers, we record an allowance for credit losses based on the length of time the receivable is past due and our historical experience of collections and write-offs.

NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The changes in the allowance for credit losses are as follows:

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(in thousands)

Allowance for credit losses—beginning balance

Charged to allowance for credit losses

Allowance for credit losses—ending balance

Property and Equipment

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Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the related assets.

We determine if an arrangement is or contains a lease at inception by evaluating various factors, including whether a vendor’s right to substitute an identified asset is substantive.

Lease classification is determined at the lease commencement date when the leased assets are made available for our use.

Operating leases are included in operating lease right-of-use assets, operating lease liabilities—current and operating lease liabilities—non-current in our consolidated balance sheets.

Finance leases are included in property and equipment, net, accrued expenses and other current liabilities and other liabilities—non-current in our consolidated balance sheets.

NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Operating leases are included in operating lease right-of-use assets, operating lease liabilities—current and operating lease liabilities—non-current in our consolidated balance sheets.

Finance leases are included in property and equipment, net, accrued expenses and other current liabilities and other liabilities—non-current in our consolidated balance sheets.

Right-of-use assets ("ROU assets") represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make payments arising from the lease.

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Additionally, we do not record leases on our consolidated balance sheet that have a lease term of 12 months or less at the lease commencement date.

NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Goodwill, Intangible Assets and Other Long-Lived Assets

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Finite-lived intangible assets are amortized on a straight-line basis over their estimated useful lives.

Amortization expense is included as a component of cost of product revenue and sales and marketing expense in the accompanying consolidated statements of operations.

Amortization expense is included as a component of cost of product revenue and sales and marketing expense in our consolidated statements of operations.

Amounts included in sales and marketing expense relate to customer relationships and trade names.

10 unchanged sentences

or (ix) a higher discount rate used in the impairment analysis as impacted by an increase in interest rates.

NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Goodwill is tested for impairment by comparing the reporting unit's carrying value, including goodwill, to the fair value of the reporting unit.

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There have been no indicators of impairment of goodwill, intangible assets or other long-lived assets and we did not record any material impairment losses during fiscal 2022, 2023 or 2024 .

NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Revenue Recognition

1 unchanged sentence

This principle is achieved by applying the following five-step approach:

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.

NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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.

• 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.

• 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.

• 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").

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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.

• 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 2 of Notes to Consolidated Financial Statements.

Contracts with multiple performance obligations —

The majority of our contracts with customers contain multiple performance obligations.

Contracts with multiple performance obligations — The majority of our contracts with customers contain multiple performance obligations.

For these contracts, we account for individual performance obligations separately if they are distinct.

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For those that are not sold routinely, we determine SSP based on our overall pricing trends and objectives, taking into consideration market conditions and other factors, including the value of our contracts, the products sold and geographic locations.

Contract balances —

The timing of revenue recognition may differ from the timing of invoicing to customers.

NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Contract balances — The timing of revenue recognition may differ from the timing of invoicing to customers.

Accounts receivable are recorded at the invoiced amount, net of an allowance for credit losses.

2 unchanged sentences

The balance of unbilled accounts receivable, included in accounts receivable, net on our consolidated balance sheets, was $ 16.3 million and $ 41.1 million as of July 31, 2023 and 2024, respectively.

Payment terms on invoiced amounts are typically 30-45 days.

Our customers are typically invoiced upfront, including invoices for multi-year subscriptions, with payment terms of 30-45 days.

The balance of accounts receivable, net of allowance for credit losses, as of July 31, 2023 and 2024 is presented in the accompanying consolidated balance sheets.

NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Costs to obtain and fulfill a contract —

We capitalize commissions paid to sales personnel and the related payroll taxes when customer contracts are signed.

Costs to obtain and fulfill a contract — We capitalize commissions paid to sales personnel and the related payroll taxes when customer contracts are signed.

These costs are recorded as deferred commissions in our consolidated balance sheets, current and non-current.

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Taxes assessed by a government authority that are both imposed on and concurrent with specific revenue transactions between us and our customers are presented on a net basis in our consolidated statements of operations.

Deferred revenue —

Deferred revenue primarily consists of amounts that have been invoiced but not yet recognized as revenue and primarily pertain to software entitlement and support subscriptions and professional services.

Deferred revenue — Deferred revenue primarily consists of amounts that have been invoiced but not yet recognized as revenue and primarily pertains to software entitlement and support subscriptions and professional services.

The current portion of deferred revenue represents the amounts that are expected to be recognized as revenue within one year of the consolidated balance sheet date.

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Allocated costs consist of certain facilities, depreciation and amortization, recruiting, and information technology costs, allocated based on headcount.

NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

We generally provide a one-year warranty on hardware sold by us and a 90-day warranty on software licenses.

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With respect to the hardware warranty obligation, we have a warranty agreement with our contract manufacturers under which the OEMs are generally required to replace defective hardware within three years of shipment.

Furthermore, our post-contract customer support ("PCS") agreements provide for the same parts replacement that customers are entitled to under the warranty program, except that replacement parts are delivered according to targeted response times to minimize disruption to the customers’

critical business applications.

Substantially all customers purchase PCS agreements.

Given the warranty agreement with our OEMs and considering that substantially all products are sold together with PCS agreements, we generally have very limited exposure related to warranty costs and therefore no warranty reserve has been recognized.

NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Research and Development

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The fair value of restricted stock units ("RSUs") is determined using the fair value of our common stock on the date of grant.

The fair value of awards with a market-based condition is measured using a Monte Carlo simulation, which requires the use of various assumptions, including the stock price volatility and risk-free interest rate as of the valuation date corresponding to the length of time remaining in the performance period and expected dividend yield.

We grant stock awards with service conditions only and with both service and performance or market-based conditions.

3 unchanged sentences

We account for forfeitures of all share-based awards when they occur.

NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Foreign Currency

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dollar exchange rate at the end of the reporting period.

Remeasurement gains and losses are included within other expense, net in the accompanying consolidated statements of operations.

Remeasurement gains and losses are included within other expense, net in our consolidated statements of operations.

During the fiscal years ended July 31, 2022, 2023 and 2024 , we recognized foreign currency losses of $ 3.2 million, $ 1.6 million and $ 4.3 million, respectively.

To date, we have not undertaken any hedging transactions related to foreign currency exposure.

To date, we have not undertaken any hedging transactions related to foreign currency exposure, but we may do so in the future if our exposure to foreign currency should become more significant.

As our international operations grow, we will continue to reassess our approach to managing our risk relating to fluctuations in currency rates.

Our chief operating decision maker is a group which is comprised of our Chief Executive Officer and Chief Financial Officer.

1 unchanged sentence

Accordingly, we have determined that we operate as a single operating and reportable segment.

NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

We account for income taxes using the asset and liability method.

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Advertising Costs

Advertising costs are charged to sales and marketing expenses as incurred in our consolidated statements of operations.

Advertising costs are charged to sales and marketing expense as incurred in our consolidated statements of operations.

During the fiscal years ended July 31, 2022, 2023 and 2024 , advertising expense was $ 13.7 million, $ 11.6 million and $ 14.7 million, respectively.

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In May 2023, we sold our Frame Desktop-as-a-Service business.

As consideration for the sale, the buyer paid $ 7.0 million cash, adjusted by increases for the closing cash balance of the Frame business and the amount by which the closing working capital exceeded the working capital target, and reductions for closing expenses, the amount by which the closing working capital target exceeds the working capital, and any severance expenses associated with Frame employees who were terminated at or following the close of the transaction at the direction of the buyer, and a $ 5.0 million interest-bearing convertible note, which had a fair value of $ 5.7 million as of the closing date of the transaction.

As consideration for the sale, the buyer paid $ 7.0 million in cash, adjusted by increases for the closing cash balance of the Frame business and the amount by which the closing working capital exceeded the working capital target and reductions for closing expenses, the amount by which the closing working capital target exceeded the working capital, and any severance expenses associated with Frame employees who were terminated at or following the close of the transaction at the direction of the buyer, and a $ 5.0 million interest-bearing convertible note, which had a fair value of $ 5.7 million as of the closing date of the transaction.

The fair value of all consideration received exceeded the carrying amount of the Frame business upon closing, resulting in a gain of $ 11.0 million, which is included within other expense, net in our consolidated statement of operations for the fiscal year ended July 31, 2023.

Recently Adopted Accounting Pronouncements

In August 2020, the Financial Accounting Standards Board ("FASB") issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.

Under ASU 2020-06, the embedded conversion features are no longer separated from the host contract for convertible instruments with conversion features that are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in capital.

Consequently, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost and convertible preferred stock will be accounted for as a single equity instrument measured at its historical cost, as long as no other features require bifurcation and recognition as derivatives.

By removing those separation models, the interest rate of convertible debt instruments typically will be closer to the coupon interest rate.

ASU 2020-06 also provides for certain disclosures with regard to convertible instruments and associated fair values.

We early adopted the new standard using the modified retrospective method effective August 1, 2021 and have not changed any previously disclosed amounts or provided additional disclosures for the comparative periods.

NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The adoption of this new guidance resulted in an increase in the carrying value of the 2023 Notes by approximately $ 48.0 million to reflect the full principal amount of the convertible notes outstanding, net of issuance costs, a decrease in additional paid-in capital of approximately $ 148.6 million to remove the equity component separately recorded for the conversion feature associated with the 2023 Notes, and a cumulative-effect adjustment of approximately $ 100.6 million to the accumulated deficit beginning balance as of August 1, 2021 .

The remaining debt issuance costs will continue to be amortized over the term of the 2023 Notes.

The new standard had no impact on the 2026 Notes, as the embedded conversion feature on the 2026 Notes was initially accounted for as a derivative liability.

In May 2021, the FASB issued ASU 2021-04, Issuer's Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options, which provides guidance on modifications or exchanges of a freestanding equity-classified written call option (such as warrants).

An entity should treat a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange as an exchange of the original instrument for a new instrument, and provides further guidance on measuring the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange.

ASU 2021-04 also provides guidance on the recognition of the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange on the basis of the substance of the transaction, in the same manner as if cash had been paid as consideration.

The new standard is effective for all entities for fiscal years beginning after December 15, 2021, with early adoption permitted, including interim periods within those fiscal years.

We early adopted the new standard effective August 1, 2021 and the adoption did not have a material impact on our consolidated financial statements.

CORRECTION TO PRIOR PERIOD FINANCIAL STATEMENTS

In connection with the completed Audit Committee investigation, as initially disclosed in our Quarterly Report on Form 10-Q filed with the SEC on May 24, 2023, and subsequent to the issuance of the condensed consolidated financial statements for the fiscal quarter ended October 31, 2022, we discovered an error in the reporting of expenses for software licenses and support for each prior period beginning in August 2014, resulting in an immaterial understatement of operating expenses and accrued expenses and other current liabilities for these prior periods.

We have evaluated the materiality of this error and determined that the impact is not material to our previously issued financial statements.

We have determined to prospectively correct our previously issued financial statements to reflect the correction of this error rather than record a cumulative out-of-period adjustment for this error in the current period.

As a result, we have corrected the accompanying consolidated financial statements as of July 31, 2022 and for the fiscal years ended July 31, 2021 and 2022, from amounts previously reported to reflect the correction of this error.

The correction reflects our estimates of future payments for past non-compliant use of third-party software.

Actual amounts may vary materially from these estimates.

The following tables summarize the effects of the correction:

As of July 31, 2022

As Previously Reported

(in thousands)

Consolidated Balance Sheet:

Accrued expenses and other current liabilities

Total current liabilities

Total liabilities

Accumulated deficit

Total stockholders’

NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Fiscal Year Ended July 31, 2021

As Previously Reported

(in thousands)

Consolidated Statement of Operations:

Sales and marketing

Research and development

Total operating expenses

Loss from operations

Loss before provision for income taxes

Net loss per share attributable to Class A and

Class B common stockholders—basic and

Fiscal Year Ended July 31, 2022

As Previously Reported

(in thousands)

Consolidated Statement of Operations:

Sales and marketing

Research and development

Total operating expenses

Loss from operations

Loss before provision for income taxes

Net loss per share attributable to Class A and

Class B common stockholders—basic and

Fiscal Year Ended July 31, 2021

As Previously Reported

(in thousands)

Consolidated Statement of Comprehensive Loss:

Comprehensive loss

Fiscal Year Ended July 31, 2022

As Previously Reported

(in thousands)

Consolidated Statement of Comprehensive Loss:

Comprehensive loss

NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As Previously Reported

(in thousands)

Consolidated Statement of Stockholders' Deficit:

Accumulated Deficit as of:

July 31, 2020

July 31, 2021

July 31, 2022

Total Stockholders' Deficit as of:

July 31, 2020

July 31, 2021

July 31, 2022

Fiscal Year Ended July 31, 2021

As Previously Reported

(in thousands)

Consolidated Statement of Cash Flows:

Accrued expenses and other liabilities

Fiscal Year Ended July 31, 2022

As Previously Reported

(in thousands)

Consolidated Statement of Cash Flows:

Accrued expenses and other liabilities

Recently Issued and Not Yet Adopted Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board issued accounting standards update ("ASU") 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, which provides for improvements to income tax disclosures.

The standard requires disaggregated information about a reporting entity's effective tax rate reconciliation as well as information on income taxes paid.

The amendments in this update are effective for fiscal years beginning after December 15, 2024, with early adoption permitted.

We are currently evaluating the impact this new standard will have on our disclosures.

REVENUE, DEFERRED REVENUE AND DEFERRED COMMISSIONS

Disaggregation of Revenue and Revenue Recognition

We generate revenue primarily from the sale of our enterprise cloud platform, which can be delivered pre-installed on an appliance that is configured to order or delivered separately to be utilized on a variety of certified hardware platforms.

When the software license is not portable to other appliances, it can be used over the life of the associated appliance, while subscription term-based licenses typically have a term of one to five years .

Configured-to-order appliances, including our Nutanix-branded NX hardware line, can be purchased from one of our OEMs or, in limited cases, directly from Nutanix.

Our enterprise cloud platform typically includes one or more years of support and entitlements, which provides customers with the right to software upgrades and enhancements as well as technical support.

A substantial portion of sales are made through channel partners and OEM relationships.

Nutanix Cloud Platform can be deployed in core data centers, at the edge, or in public clouds, running on a variety of qualified hardware platforms (including out Nutanix-branded NX hardware line), in popular public cloud environments such as Amazon Web Services ("AWS") and Microsoft Azure through Nutanix Cloud Clusters, or, in the case of our cloud-based software and software-as-a-service ("SaaS") offerings, via hosted service.

Our subscription term-based licenses are sold separately, or can also be sold alongside configured-to-order servers.

Our subscription term-based licenses typically have durations ranging from one to five years .

Our cloud-based SaaS subscriptions generally have durations extending up to five years.

The following table depicts the disaggregation of revenue by revenue type, consistent with how we evaluate our financial performance:

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(in thousands)

Non-portable software

Professional services

Other non-subscription product (1)

Total revenue

(1) Prior to fiscal 2024, these amounts were presented as separate line items, Non-portable software and Hardware, as described below.

Prior period amounts have been updated to conform to the current period presentation.

Subscription revenue — Subscription revenue includes any performance obligation which has a defined term and is generated from the sales of software entitlement and support subscriptions, subscription software licenses and cloud-based software-as-a-service offerings.

• 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 $ 770.4 million, $ 905.8 million and $ 1.0 billion of our subscription revenue for fiscal 2022, 2023 and 2024, 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 $ 663.4 million, $ 825.0 million and $ 987.8 million of our subscription revenue for fiscal 2022, 2023 and 2024, respectively.

Professional services revenue — We also sell professional services with our products.

We recognize revenue related to professional services as they are performed.

NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Subscription revenue —

Subscription revenue includes any performance obligation which has a defined term and is generated from the sales of software entitlement and support subscriptions, subscription software licenses and cloud-based software-as-a-service ("SaaS") offerings.

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 $ 639.3 million, $ 770.4 million and $ 905.8 million of our subscription revenue for fiscal 2021, 2022 and 2023, 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 $ 604.3 million, $ 663.4 million and $ 825.0 million of our subscription revenue for fiscal 2021, 2022 and 2023, respectively.

Non-portable software revenue —

Non-portable software revenue includes sales of our enterprise cloud platform when delivered on a configured-to-order appliance by us or one of our OEM partners.

The software licenses associated with these sales are typically non-portable and can be used over the life of the appliance on which the software is delivered.

Other non-subscription product revenue — Other non-subscription product revenue includes approximately $ 49.7 million, $ 37.4 million and $ 27.9 million of non-portable software revenue for fiscal 2022, 2023 and 2024 , respectively, and approximately $ 5.6 million, $ 2.8 million and $ 3.3 million of hardware revenue for fiscal 2022, 2023 and 2024, respectively.

• Non-portable software revenue — Non-portable software revenue includes sales of our platform when delivered on a configured-to-order server by us or one of our OEM partners.

The software licenses associated with these sales are typically non-portable and can be used over the life of the server on which the software is delivered.

Revenue from our non-portable software products is generally recognized upon transfer of control to the customer.

Hardware revenue —

In transactions where the hardware appliance is purchased directly from Nutanix, we consider ourselves to be the principal in the transaction and we record revenue and costs of goods sold on a gross basis.

• Hardware revenue — In the infrequent transactions where the hardware platform is purchased directly from Nutanix, we consider ourselves to be the principal in the transaction and we record revenue and costs of goods sold on a gross basis.

We consider the amount allocated to hardware revenue to be equivalent to the cost of the hardware procured.

Hardware revenue is generally recognized upon transfer of control to the customer.

Professional services revenue —

We also sell professional services with our products.

We recognize revenue related to professional services as they are performed.

Significant changes in the balance of deferred revenue (contract liability) and deferred commissions (contract asset) for the periods presented are as follows:

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Many of our contracted but not invoiced performance obligations are subject to cancellation terms.

Revenue allocated to remaining performance obligations represents contracted revenue that has not yet been recognized ("contracted not recognized"), which includes deferred revenue and non-cancelable amounts that will be invoiced and recognized as revenue in future periods and excludes performance obligations that are subject to cancellation

Contracted not recognized revenue was approximately $ 2.1 billion as of July 31, 2024 , of which we expect to recognize approximately 52 % over the next 12 months, and the remainder thereafter.

NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Contracted not recognized revenue was approximately $ 1.8 billion as of July 31, 2023 , of which we expect to recognize approximately 54 % over the next 12 months, and the remainder thereafter.

FAIR VALUE MEASUREMENTS

The authoritative guidance on fair value measurements establishes a three-tier fair value hierarchy based on the observability of the inputs available in the market used to measure fair value as follows:

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;

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.

• 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;

• 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.

Assets Measured at Fair Value on a Recurring Basis

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We consider this convertible note to be classified within Level III.

The fair value is determined by considering the convertible note’s principal and accrued interest, as well as the convertible note’s option to convert into equity securities, using inputs including debt yields, volatility data, and the value of the underlying equity into which the convertible note could be converted.

NUTANIX, INC.

3 unchanged sentences

(in thousands)

Financial Assets:

Financial Assets, Current:

Cash equivalents:

Money market funds

Government securities

Commercial paper

5 unchanged sentences

Total cash, cash equivalents and short-term investments

Financial Assets, Non-Current:

Convertible note receivable

As of July 31, 2024

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Financial Instruments Not Recorded at Fair Value on a Recurring Basis

We report our financial instruments at fair value, with the exception of the 2023 Notes, the 2026 Notes and the 2027 Notes (collectively, the "Notes").

We report our financial instruments at fair value, with the exception of the previously outstanding 2026 Notes and the 2027 Notes.

Financial instruments that are not recorded at fair value on a recurring basis are measured at fair value on a quarterly basis for disclosure purposes.

3 unchanged sentences

(in thousands)

The carrying value of the 2023 Notes as of July 31, 2022 was net of unamortized debt issuance costs of $ 0.2 million.

In January 2023, we settled the 2023 Notes in full at maturity with a cash payment of $ 145.7 million.

NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The carrying value of the 2026 Notes as of July 31, 2022 and 2023 included $ 28.0 million and $ 47.6 million, respectively, of non-cash interest expense that was converted to the principal balance, net of unamortized debt discounts of $ 169.4 million and $ 132.8 million, respectively, and unamortized debt issuance costs of $ 19.4 million and $ 15.2 million, respectively.

The carrying value of the 2026 Notes as of July 31, 2023 included $ 47.6 million of non-cash interest expense that was added to the principal balance, net of unamortized debt discounts of $ 132.8 million and unamortized debt issuance costs of $ 15.2 million.

The carrying value of the 2027 Notes as of July 31, 2023 and 2024 was net of unamortized debt issuance costs of $ 6.5 million and $ 4.9 million, respectively.

The total estimated fair value of the 2023 Notes was determined based on the closing trading price per $ 100 of the 2023 Notes as of the last day of trading for the period.

We considered the fair value of the 2023 Notes to be a Level II valuation due to the limited trading activity.

The total estimated fair value of the 2026 Notes is based on a binomial model.

We consider the fair value of the 2026 Notes to be a Level III valuation, as the 2026 Notes are not publicly traded.

The Level III inputs used are the same as those used to determine the estimated fair value of the associated derivative liability, as detailed below.

The total estimated fair value of the 2026 Notes was based on a binomial model.

We considered the fair value of the 2026 Notes to be a Level III valuation, as the 2026 Notes were not publicly traded.

The Level III inputs used to determine the estimated fair value of the 2026 Notes included the conversion rate, risk-free interest rate, discount rate, volatility, and the price of our Class A common stock.

The total estimated fair value of the 2027 Notes was determined based on the closing trading price per $ 100 of the 2027 Notes as of the last day of trading for the period.

We consider the fair value of the 2027 Notes to be a Level II valuation due to the limited trading activity.

Derivative Liability

The conversion feature of the 2026 Notes represented an embedded derivative at inception.

The 2026 Notes are not considered to be conventional debt and we determined that the embedded conversion feature was required to be bifurcated from the host debt and accounted for as a derivative liability, as the 2026 Notes were convertible into a variable number of shares until the conversion price became fixed in September 2021, based on the level of achievement of the associated financial performance metric.

As such, the initial fair value of the derivative instrument was recorded as a liability in our consolidated balance sheet with the corresponding amount recorded as a discount to the 2026 Notes upon issuance.

The derivative liability was considered a Level III valuation and was recorded at its estimated fair value at the end of each reporting period and as of September 15, 2021, when the conversion price became fixed, with the change in fair value recognized within other expense, net in our consolidated statements of operations.

On September 15, 2021, the conversion price of the 2026 Notes became fixed and the bifurcated liability was no longer accounted for as a separate derivative because the conversion features are now considered indexed to our own equity and meet the equity classification conditions.

We estimated the fair value of the derivative liability as of September 15, 2021 to be $ 698.2 million, which was reclassified to equity on that date.

BALANCE SHEET COMPONENTS

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As a result, as of July 31, 2023 and 2024, we did not record any credit losses for these investments.

NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table summarizes the estimated fair value of our investments in marketable debt securities by their contractual maturity dates:

2 unchanged sentences

Due within one year

Due in one to two years

Due in one to three years

Prepaid Expenses and Other Current Assets

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Total prepaid expenses and other current assets

The increase in prepaid expenses and other current assets from July 31, 2022 to July 31, 2023 was due primarily to the insurance receivable and settlement payment made to escrow related to our securities class action lawsuit.

For additional details on this legal proceeding, refer to Note 8.

The decrease in prepaid expenses and other current assets from July 31, 2023 to July 31, 2024 was due primarily to the release of the insurance receivable and the settlement payment related to the February 2023

NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

settlement of two securities class actions, as the settlement was paid out during the fiscal quarter ended October 31, 2023.

For additional details on legal proceedings, refer to Note 7.

Property and Equipment, Net

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Total property and equipment, net

NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(1) Leasehold improvements are amortized over the shorter of the estimated useful lives of the improvements or the remaining lease term.

(2) The estimated useful life of software ranges from 36 to 120 months, representing the period during which the software is expected to contribute, either directly or indirectly, to our future cash flows.

Depreciation expense related to our property and equipment was $ 69.3 million, $ 63.3 million and $ 65.6 million for the fiscal years ended July 31, 2022, 2023 and 2024, respectively.

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Total intangible assets, net

Amortization expense related to our intangible assets is being recognized in our consolidated statements of operations within product cost of revenue for developed technology and sales and marketing expense for customer relationships and trade name.

Amortization expense related to our intangible assets is recognized in our consolidated statements of operations within product cost of revenue for developed technology and sales and marketing expense for customer relationships and trade name.

NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The changes in the net book value of intangible assets, net are as follows:

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(in thousands)

Intangible assets, net—beginning balance

Amortization of intangible assets (1)

Acquisition of intangible assets

Divestiture of Frame intangible assets

Intangible assets, net—ending balance

(1) Represents amortization expense related to intangible assets recognized during the year in our consolidated statements of operations, within product cost of revenue and sales and marketing expense .

2 unchanged sentences

(in thousands)

NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The changes in the carrying amount of goodwill are as follows:

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Balance at July 31, 2022

Adjustment for Frame divestiture

Balance at July 31, 2023

Adjustment for acquisition

Balance at July 31, 2024

Accrued Compensation and Benefits

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(in thousands)

Accrued commissions

Accrued vacation

Accrued commissions and taxes

Payroll taxes payable

Accrued vacation

Contributions to ESPP withheld

Accrued bonus

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Accrued wages and taxes

Contributions to ESPP withheld

Retirement 401(k) payable

Total accrued compensation and benefits

NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Accrued Expenses and Other Current Liabilities

2 unchanged sentences

(in thousands)

Litigation settlement reserves

Software usage liability

Income taxes payable

Accrued professional services

Litigation settlement reserves

Software usage liability

Total accrued expenses and other current liabilities

NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The increase in accrued expenses and other current liabilities from July 31, 2022 to July 31, 2023 was due primarily to an increase in the litigation settlement reserve related to our securities class action lawsuit.

For additional details on this legal proceeding, refer to Note 8.

The decrease in accrued expenses and other current liabilities from July 31, 2023 to July 31, 2024 was due primarily to the release of the litigation settlement reserve related to the settlement of two securities class actions, which was agreed to in February 2023 but paid out during the fiscal quarter ended October 31, 2023.

For additional details on legal proceedings, refer to Note 7.

In addition, we released the software usage liability related to the completed Audit Committee investigation, as we settled with the vendor.

CONVERTIBLE SENIOR NOTES

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In January 2023, we settled the 2023 Notes in full at maturity with a cash payment of $ 145.7 million.

The 2023 Notes consisted of the following:

As of July 31,

(in thousands)

Principal amounts:

Unamortized debt issuance costs (1)

Repayment of convertible senior notes

Net carrying amount

(1) Included in our consolidated balance sheets within convertible senior notes, net and amortized over the remaining life of the 2023 Notes using the effective interest rate method.

The effective interest rate was 0.41 %.

The following table sets forth the total interest expense recognized related to the 2023 Notes:

1 unchanged sentence

(in thousands)

Interest expense related to amortization of debt discount

Interest expense related to amortization of debt issuance costs

Total interest expense

Interest expense related to amortization of debt issuance

NUTANIX, INC.

8 unchanged sentences

The amounts paid and received as part of the unwind transactions were recorded to additional paid-in capital within the consolidated balance sheet.

In January 2023, the convertible note hedges and warrant transactions expired concurrently with the expiration of the 2023 Notes.

In January 2023, the convertible note hedges and warrant transactions expired concurrently with the maturity of the 2023 Notes.

No settlement is required as the stock has remained below the strike price throughout the unwind settlement averaging period.

1 unchanged sentence

The total net proceeds from this offering were approximately $ 723.7 million, after deducting $ 26.3 million of debt issuance costs.

The 2026 Notes bear interest at a rate of 2.5 % per annum, with such interest to be paid in kind ("PIK") on the 2026 Notes held by Bain through an increase in the principal amount of the 2026 Notes, and paid in cash on any 2026 Notes transferred to entities that are not affiliated with Bain.

Interest on the 2026 Notes has accrued from the date of issuance, September 24, 2020, and is added to the principal amount, in the case of the 2026 Notes held by Bain, or paid in cash, in the case of the 2026 Notes held by entities that are not affiliated with Bain, as applicable, on a semi-annual basis (on March 15 and September 15 of each year).

The 2026 Notes mature on September 15, 2026, subject to earlier conversion, redemption or repurchase.

The 2026 Notes are convertible at an initial conversion rate of 36.036 shares of Class A common stock per $ 1,000 principal amount of the 2026 Notes, which is equal to an initial conversion price of $ 27.75 per share, subject to customary anti-dilution and other adjustments, including in connection with any make-whole adjustments as a result of certain extraordinary transactions.

In September 2021, the one-year anniversary of the issuance of the 2026 Notes, the conversion price was subject to a one-time adjustment, based on the level of achievement of certain financial milestones and as a result, the conversion price became fixed at $ 27.75 per share.

For each $ 1,000 principal amount of 2026 Notes a holder elects to convert, we have initially elected to pay cash with respect to the first $ 1,000 of conversion value and deliver shares of Class A common stock with respect to any conversion value in excess of $ 1,000 .

Pursuant to the indenture governing the 2026 Notes, we may elect to change such default settlement method with respect to any conversion of 2026 Notes held by Bain by delivering written notice to Bain at least five trading days prior to the effective time of such settlement election.

Additionally, if Bain elects to convert any 2026 Notes it holds upon our delivery of a notice of redemption, Bain will have the right to elect whether such conversion is settled in cash, shares of our Class A common stock or a combination thereof.

The 2026 Notes bore interest at a rate of 2.50 % per annum, with such interest paid in kind ("PIK") on the 2026 Notes held by Bain through an increase in the principal amount of the 2026 Notes, and to be paid in cash on any 2026 Notes transferred to entities that are not affiliated with Bain.

Interest on the 2026 Notes accrued from the date of issuance, September 24, 2020, and was added to the principal amount on a semi-annual basis (on March 15 and September 15 of each year).

The 2026 Notes were set to mature on September 15, 2026, subject to earlier conversion, redemption or repurchase.

In accordance with accounting guidance on embedded conversion features, at issuance, we valued and bifurcated the conversion option associated with the 2026 Notes from the respective host debt instrument, which is treated as a debt discount, and initially recorded the conversion option of $ 230.9 million as a derivative liability in our consolidated balance sheet, with the corresponding amount recorded as a discount to the 2026 Notes and amortized over the term of the 2026 Notes using the effective interest method.

Upon the conversion price of the 2026 Notes becoming fixed, subject to customary anti-dilution and other adjustments, in September 2021, the embedded conversion option for the 2026 Notes no longer required bifurcation because the conversion features were considered indexed to our own equity and met the equity classification conditions.

The carrying amount of the derivative liability of $ 698.2 million as of that date was reclassified to additional paid-in capital within our consolidated balance sheet.

The remaining debt discount that arose from the original bifurcation was amortized over the term of the 2026 Notes.

NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

On or after September 15, 2025, the 2026 Notes will be redeemable by us, at our option, in the event that the closing sale price of our Class A common stock has been at least 150 % of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide the redemption notice, for cash, at a redemption price of 100 % of the principal amount of such 2026 Notes, plus any accrued and unpaid interest to, but excluding, the redemption date.

A holder who converts their 2026 Notes in connection with certain corporate events that constitute a "make-whole fundamental change" (as defined in the indenture governing the 2026 Notes) is, under certain circumstances, entitled to an increase in the conversion rate.

In addition, if we undergo a "fundamental change" (as defined in the indenture governing the 2026 Notes) prior to the maturity date, holders of the 2026 Notes may require us to repurchase for cash all or a portion of their 2026 Notes at a repurchase price equal to 100 % of the principal amount of the repurchased 2026 Notes, plus accrued and unpaid interest thereon.

In accordance with accounting guidance on embedded conversion features, we valued and bifurcated the conversion option associated with the 2026 Notes from the respective host debt instrument, which is treated as a debt discount, and initially recorded the conversion option of $ 230.9 million as a derivative liability in our consolidated balance sheet, with the corresponding amount recorded as a discount to the 2026 Notes to be amortized over the term of the 2026 Notes using the effective interest method.

On June 6, 2024, Bain delivered a notice of conversion to convert $ 817.6 million aggregate principal amount of the 2026 Notes, representing all of the outstanding principal amount as of that date.

Under the terms of the indenture governing the 2026 Notes, the conversion was settled by paying the $ 817.6 million principal amount in cash and delivering the conversion spread of approximately 16.9 million shares of our Class A common stock.

The cash portion was settled using a portion of our existing cash, cash equivalents and short-term investments.

The 2026 Notes were converted in accordance with its original terms and conditions.

Upon conversion, because the carrying amount of the conversion option was previously reclassified to equity, the unamortized discount remaining at the date of conversion was recognized as interest expense.

The remaining carrying amount of the 2026 Notes was reduced by the cash transferred and then recognized in equity, such that no gain or loss was recognized.

In addition, the accrued and unpaid interest as of the conversion date was forgiven pursuant to the terms of the indenture and recognized in equity.

The 2026 Notes consisted of the following:

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(1) Included in our consolidated balance sheets within convertible senior notes, net and amortized over the remaining life of the 2026 Notes using the effective interest rate method.

The effective interest rate is 7.05 % .

As of July 31, 2023, the remaining life of the 2026 Notes was approximately 3.1 years .

The effective interest rate was 7.05 % .

The following table sets forth the total interest expense recognized related to the 2026 Notes:

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Interest expense related to amortization of debt discount

Interest expense related to amortization of debt issuance costs

Interest expense related to amortization of debt issuance

Non-cash interest expense

Interest expense related to conversion of 2026 Notes

attributable to debt discount and issuance costs

Total interest expense

Non-cash interest expense is related to the 2.5 % PIK interest that we accrued from the issuance of the 2026 Notes through July 31, 2023 and was recognized within other expense, net in our consolidated statement of operations and other liabilities–non-current in our consolidated balance sheet.

The accrued PIK interest will be converted to the principal balance of the 2026 Notes at each payment date and will be convertible to shares of our Class A common stock at maturity or when converted.

Non-cash interest expense was related to the 2.5% PIK interest that we accrued from the issuance of the 2026 Notes through the conversion date and was recognized within other expense, net in our consolidated statement of operations and other liabilities–non-current in our consolidated balance sheet.

The accrued PIK interest was converted to the principal balance of the 2026 Notes at each payment date.

NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Upon the conversion price of the 2026 Notes becoming fixed, subject to customary anti-dilution and other adjustments, in September 2021, the embedded conversion option for the 2026 Notes no longer required bifurcation because the conversion features are now considered indexed to our own equity and meet the equity classification conditions.

The carrying amount of the derivative liability of $ 698.2 million as of that date was reclassified to additional paid-in capital within our consolidated balance sheet.

The remaining debt discount that arose from the original bifurcation continues to be amortized over the term of the 2026 Notes.

In September 2021, we issued $ 575 million in aggregate principal amount of 0.25 % convertible senior notes due 2027 consisting of (i) approximately $ 477.3 million principal amount of 2027 Notes in exchange for approximately $ 416.5 million principal amount of the 2023 Notes (the "Exchange Transactions") and (ii) approximately $ 97.7 million principal amount of 2027 Notes for cash (the "Subscription Transactions").

We did not receive any cash proceeds from the Exchange Transactions.

The net cash proceeds from the Subscription Transactions was approximately $ 88.4 million after deducting the offering expenses for both the Exchange Transactions and the Subscription Transactions.

The net cash proceeds from the Subscription Transactions were approximately $ 88.4 million after deducting the offering expenses for both the Exchange Transactions and the Subscription Transactions.

We used (i) approximately $ 14.7 million of the net cash proceeds from the Subscription Transactions to repurchase approximately $ 12.8 million principal amount of the 2023 Notes and (ii) approximately $ 58.5 million of the net cash proceeds from the Subscription Transactions to repurchase approximately 1.4 million shares of our Class A common stock.

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(1) during any fiscal quarter, and only during such fiscal quarter, if the closing price of our common stock for at least 20 trading days in a period of 30 consecutive trading days ending on, and including, the last trading day of the preceding fiscal quarter is greater than or equal to 130 % of the then applicable conversion price for the Notes per share of common stock;

(2) during the five business day period after any five consecutive trading day period in which, for each trading day of that period, the trading price per $ 1,000 principal amount of 2027 Notes for such trading day was less than 98 % of the product of the closing price of our common stock and the then applicable conversion rate on each such trading day;

(2) during the five business day period after any consecutive five trading day period in which, for each trading day of that period, the trading price per $ 1,000 principal amount of 2027 Notes for such trading day was less than 98 % of the product of the closing price of our common stock and the then applicable conversion rate on each such trading day;

(3) if we call the 2027 Notes for redemption, at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date;

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Upon conversion of the 2027 Notes, we will pay or deliver, as the case may be, cash, shares of our Class A common stock or a combination of cash and shares of Class A common stock, at our election.

We intend to settle the principal of the 2027 Notes in cash.

The conversion rate will be subject to adjustment in certain events, but will not be adjusted for any accrued or unpaid interest.

A holder who converts their 2027 Notes in connection with certain corporate events that constitute a

Holders who convert their 2027 Notes in connection with certain corporate events that constitute a "make-whole fundamental change" (as defined in the indenture governing the 2027 Notes) are, under certain circumstances, entitled to an increase in the conversion rate.

In addition, if we undergo a "fundamental change" (as defined in the indenture governing the 2027 Notes) prior to the maturity date, holders of the 2027 Notes may require us to repurchase for cash all or a portion of their 2027 Notes at a repurchase price equal to 100 % of the principal amount of the repurchased 2027 Notes, plus accrued and unpaid interest thereon.

NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

"make-whole fundamental change" (as defined in the indenture governing the 2027 Notes) are, under certain circumstances, entitled to an increase in the conversion rate.

In accounting for the exchange of convertible notes, we evaluated whether the transaction should be treated as a modification or extinguishment transaction.

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Contractual interest expense

Interest expense related to amortization of debt issuance costs

Interest expense related to amortization of debt issuance

Total interest expense

We have operating leases for offices, research and development facilities and datacenters and finance leases for certain datacenter equipment.

Our leases have remaining lease terms of one year to approximately seven years , some of which include options to renew or terminate.

We have operating leases for offices, research and development facilities and data centers and finance leases for certain data center equipment.

Our leases have remaining lease terms of one year to approximately six years , some of which include options to renew or terminate.

We do not include renewal options in the lease terms for calculating our lease liability, as we are not reasonably certain that we will exercise these renewal options at the time of the lease commencement.

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Total finance lease cost was $ 2.4 million, $ 3.9 million, and $ 4.8 million for the fiscal years ended July 31, 2022, 2023 and 2024, respectively.

NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

During fiscal 2021, we recorded additional impairment charges related to certain international office spaces, as well as an impairment charge related to an office space in the United States.

We recorded a $ 1.4 million net impairment in our consolidated statement of operations for the fiscal year ended July 31, 2021.

Of the $ 1.4 million impairment, approximately $ 0.5 million related to the impairment of our operating lease right-of-use assets and approximately $ 0.9 million related to the impairment of leasehold improvements.

Additional charges related to asset impairments may be recorded in the future.

During fiscal 2022, we signed agreements to early exit certain office spaces in the United States.

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In addition, we recorded $ 0.6 million of expense in our consolidated statement of operations for the fiscal year ended July 31, 2022.

NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

During fiscal 2023, we signed agreements to early exit certain office spaces in the United States and the Netherlands.

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In addition, we recorded $ 1.7 million of expense in our consolidated statement of operations for the fiscal year ended July 31, 2023.

Supplemental balance sheet information related to leases is as follows:

Supplemental balance sheet information related to our leases is as follows:

As of July 31,

(in thousands)

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Operating lease right-of-use assets, net

Operating lease liabilities—current

Operating lease liabilities—non-current

Operating lease liabilities—current

Operating lease liabilities—non-current

Total operating lease liabilities

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Weighted average discount rate:

As of July 31,

(in thousands)

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Finance lease right-of-use assets , net (1)

Finance lease liabilities—current (2)

Finance lease liabilities—non-current (3)

Finance lease liabilities—current (2)

Finance lease liabilities—non-current (3)

Total finance lease liabilities

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(2) Included in our consolidated balance sheets within accrued expenses and other current liabilities.

(3) Included in our consolidated balance sheets within other liabilities—non-current.

NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Supplemental cash flow and other information related to leases is as follows:

(3) Included in our consolidated balance sheets within other liabilities—non-current.

Supplemental cash flow and other information related to our leases is as follows:

Fiscal Year Ended July 31,

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Operating cash flows from operating leases

Operating cash flows from finance leases

Financing cash flows from finance leases

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Finance leases

NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The undiscounted cash flows for our lease liabilities as of July 31, 2024 were as follows:

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As of July 31, 2024 , we had additional operating lease commitments of approximately $ 2.3 million on an undiscounted basis for certain office leases that have not yet commenced.

These operating leases will commence during fiscal 2024, with lease terms of approximately five years .

These operating leases will commence during fiscal 2025, with lease terms of approximately one year .

COMMITMENTS AND CONTINGENCIES

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Our historical charges have not been material.

As of July 31, 2023, we had up to approximately $ 100.0 million of non-cancelable purchase obligations and other commitments pertaining to our daily business operations, and up to approximately $ 45.3 million in the form of guarantees to certain of our contract manufacturers.

NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of July 31, 2024, we had approximately $ 110.6 million of non-cancelable purchase obligations and other commitments pertaining to our daily business operations, and approximately $ 85.2 million in the form of guarantees to certain of our contract manufacturers.

Guarantees and Indemnifications

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Other guarantees or indemnification arrangements include guarantees of product and service performance.

We have also agreed to indemnify our directors, executive officers and certain other officers for costs associated with any fees, expenses, judgments, fines and settlement amounts incurred by any of these persons in any action or proceeding to which any of those persons is, or is threatened to be, made a party by reason of the person’s service as a director or officer, including any action by us, arising out of that person’s services as a director or officer of our company or that person’s services provided to any other company or enterprise at our request.

We maintain director and officer insurance coverage that may enable us to recover a portion of any future amounts paid.

The fair value of liabilities related to indemnifications and guarantee provisions are not material and have not had any material impact on our consolidated financial statements to date.

NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

We have also agreed to indemnify our directors, executive officers and certain other officers for costs associated with any fees, expenses, judgments, fines, and settlement amounts incurred by any of these persons in any action or proceeding to which any of those persons is, or is threatened to be, made a party by reason of the person’s service as a director or officer, including any action by us, arising out of that person’s services as a director or officer of our company or that person’s services provided to any other company or enterprise at our request.

We maintain director and officer insurance coverage that may enable us to recover a portion of any future amounts paid.

The fair value of liabilities related to indemnifications and guarantee provisions are not material and have not had any material impact on our consolidated financial statements to date.

Legal Proceedings

Securities Class Actions .

Beginning on March 29, 2019, several purported securities class actions were filed in the United States District Court for the Northern District of California against us and two of our officers.

The initial complaints generally alleged that the defendants made false and misleading statements in violation of Sections 10(b) and 20(a) of the Exchange Act and SEC Rule 10b-5.

In July 2019, the court consolidated the actions into a single action, and appointed a lead plaintiff, who then filed a consolidated amended complaint (the "Original Complaint").

The action was brought on behalf of those who purchased or otherwise acquired our stock between November 30, 2017 and May 30, 2019, inclusive.

The defendants subsequently filed a motion to dismiss the Original Complaint, which the court granted on March 9, 2020, while providing the lead plaintiff leave to amend.

On April 17, 2020, the lead plaintiff filed a second amended complaint (the "Amended Complaint"), again naming us and two of our officers as defendants.

The Amended Complaint alleges the same class period, includes many of the same factual allegations as the Original Complaint, and again alleges that the defendants violated Sections 10(b) and 20(a) of the Exchange Act, as well as SEC Rule 10b-5.

The Amended Complaint sought monetary damages in an unspecified amount.

On September 11, 2020, the court denied the defendants' motion to dismiss the Amended Complaint and held that the lead plaintiff adequately stated a claim with respect to certain statements regarding our new customer growth and sales productivity.

On January 27, 2021, lead plaintiff, Shimon Hedvat, filed a motion to (i) withdraw as lead plaintiff and (ii) substitute proposed new lead plaintiffs and approve their appointment of a new co-lead counsel.

On March 1, 2021, the court granted the lead plaintiff’s motion to withdraw as lead plaintiff but denied without prejudice his motion to substitute proposed new lead plaintiffs.

The court also reopened the lead plaintiff selection process, allowing any putative class member interested in serving as the new lead plaintiff to file a lead plaintiff application.

Following the lead plaintiff selection hearing on April 28, 2021, on June 10, 2021 the court appointed California Ironworkers Field Pension Trust as lead plaintiff and approved its appointment of counsel.

On May 28, 2021, one of the movants for lead plaintiff, John P.

Norton on behalf of the Norton Family Living Trust UAD 11/15/2002, filed a separate class action complaint (the "Options Class Action Complaint") in the Northern District of California on behalf of a class of persons or entities who transacted in publicly traded call options and/or put options on Nutanix stock during the period from November 30, 2017 and May 30, 2019, containing allegations substantively the same as those alleged in the Amended Complaint (the "Options Class Action") and naming the same defendants.

On September 8, 2021, the court appointed the John P.

Norton on behalf of the Norton Family Living Trust UAD 11/15/2002 as the lead plaintiff in the Options Class Action.

On April 26, 2022, the parties met for mediation, which did not result in a settlement.

On September 1, 2022, California Ironworkers Field Pension Trust filed a third amended complaint (which amends the Amended Complaint, the "Third Amended Complaint") and John P.

Norton on behalf of the Norton Family Living Trust UAD 11/15/2002 filed an amended complaint (which amends the Options Class Action Complaint, the "First Amended Complaint").

On November 14, 2022, the defendants filed a motion to dismiss the Third Amended Complaint and the First Amended Complaint.

On February 9, 2023, the plaintiffs and the defendants agreed to a mediator’s recommendation to settle these actions for a total of $ 71.0 million, which is accrued as of July 31, 2023 and included within accrued expenses and other current liabilities on our consolidated balance sheet.

On May 19, 2023, the court granted its preliminary approval of the settlement and the notice to class members.

In June 2023, the $ 31.1 million of settlement funds were deposited in escrow and are included within prepaid expenses and other current assets on our consolidated balance sheet as of July 31, 2023.

A final settlement hearing is scheduled for October 4, 2023.

The settlement accrual is partially offset by a receivable of $ 39.9 million for amounts recoverable under our applicable insurance policies, which is included within prepaid expenses and other current assets on our consolidated balance sheet as of July 31, 2023.

In February 2023, we settled the two previously disclosed securities class actions that were brought on behalf of persons or entities who purchased or otherwise acquired our securities and/or transacted in publicly traded call options and/or put options on our stock between November 30, 2017 and May 30, 2019.

The total settlement amount was $ 71.0 million, which was accrued as of July 31, 2023 and included within accrued expenses and other current liabilities on our consolidated balance sheet.

In June 2023, $ 31.1 million of the settlement funds were deposited in escrow and were included within prepaid expenses and other current assets on our consolidated balance sheet as of July 31, 2023.

In October 2023, the court granted final approval of the settlement and the funds were subsequently released from escrow and paid out to the plaintiffs.

The settlement accrual was partially offset by a receivable of $ 39.9 million for amounts recoverable under our applicable insurance policies, which was included within prepaid expenses and other current assets on our consolidated balance sheet as of July 31, 2023.

During the fiscal year ended July 31, 2023, we recorded charges of $ 38.7 million for the settlement and applicable legal fees, net of our insurance receivable.

NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

On April 14, 2023, a purported federal securities class action complaint was filed in the United States District Court for the Northern District of California against us, two of our current officers, and a former officer.

The complaint generally alleges that the defendants made false and misleading statements in violation of Sections 10(b) and 20(a) of the Exchange Act and SEC Rule 10b-5.

The court has appointed a lead plaintiff for the putative class in this action, consisting of those who purchased or otherwise acquired our securities between September 21, 2021 and March 6, 2023, inclusive.

In addition, on May 5, 2023, a purported stockholder derivative complaint was filed in the United States District Court for the Northern District of California, naming our current directors as defendants and our company as a nominal defendant.

The complaint generally alleges violations of Section 14(a) of the Exchange Act and breach of fiduciary duties, and aiding and abetting breach of fiduciary duties, based on similar underlying allegations contained in the purported federal securities class action complaint described above.

The court has ordered that all proceedings in this stockholder derivative action be stayed pending the court's decision on any motion to dismiss in the federal securities class action.

These cases are in their very early stages, and we are not able to determine what, if any, liabilities will attach to these complaints.

We are not currently a party to any other legal proceedings that we believe to be material to our business or financial condition.

In September 2023, we settled the previously disclosed securities class action that was brought on behalf of a putative class consisting of persons or entities who purchased or otherwise acquired our securities between September 21, 2021 and March 6, 2023.

The settlement payment was not material.

In November 2023, the court dismissed the securities class action pursuant to the settlement agreement with prejudice as to the lead plaintiff and without prejudice as to the other members of the putative class.

In addition, in December 2023, the plaintiff in the related previously disclosed stockholder derivative action voluntarily dismissed the action.

We are not currently a party to any legal proceedings that we believe to be material to our business or financial condition.

From time to time, we may become party to various litigation matters and subject to claims that arise in the ordinary course of business.

STOCKHOLDERS’

Effective January 3, 2022, all of our then outstanding shares of Class B common stock, par value $ 0.000025 per share, were automatically converted into the same number of shares of the Company’s Class A common stock, par value $ 0.000025 per share, pursuant to the terms of our Amended and Restated Certificate of Incorporation.

STOCKHOLDERS’ EQUITY

Effective January 3, 2022, all of our then outstanding shares of Class B common stock, par value $ 0.000025 per share, were automatically converted into the same number of shares of our Class A common stock, par value $ 0.000025 per share, pursuant to the terms of our Amended and Restated Certificate of Incorporation.

No additional shares of Class B common stock will be issued following such conversion.

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In December 2022, our stockholders approved an amendment and restatement of our Amended and Restated Certificate of Incorporation, which includes the removal of all provisions related to Class B common stock.

NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of July 31, 2024 , we had 1.0 billion shares of Class A common stock authorized, with a par value of $ 0.000025 per share.

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Holders of Class A common stock are entitled to one vote for each share of Class A common stock held on all matters submitted to a vote of stockholders.

Share Repurchase

Share Repurchases

In September 2021, we used approximately $ 58.5 million of the net cash proceeds from the issuance of $ 97.7 million in aggregate principal amount of 2027 Notes to repurchase 1.4 million shares of Class A common stock in open market transactions at an average price of $ 42.77 per share.

For additional details on these transactions, refer to Note 5.

NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In August 2023, our Board of Directors authorized the repurchase of up to $ 350.0 million of our Class A common stock.

Repurchases may be made from time to time through open market purchases or through privately negotiated transactions subject to market conditions, applicable legal requirements and other relevant factors.

The authorization has no expiration date, does not obligate us to acquire any particular amount of our common stock, and may be suspended at any time at our discretion.

During the fiscal year ended July 31, 2024 , we repurchased 2.6 million shares of Class A common stock in open market transactions at a weighted average price of $ 50.77 per share for an aggregate purchase price of $ 131.1 million.

As of July 31, 2024 , $ 218.9 million remained available for future share repurchases under the authorization.

Common Stock Reserved for Issuance

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EQUITY INCENTIVE PLANS

We have three equity incentive plans, the 2010 Stock Plan ("2010 Plan"), 2011 Stock Plan ("2011 Plan") and 2016 Equity Incentive Plan ("2016 Plan").

We have one active equity incentive plan, the 2016 Equity Incentive Plan (the "2016 Plan"), and two inactive equity incentive plans, the 2010 Stock Plan ("2010 Plan") and the 2011 Stock Plan ("2011 Plan") (collectively, the "Stock Plans").

Our stockholders approved the 2016 Plan in March 2016 and it became effective in connection with our initial public offering ("IPO").

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Any outstanding stock awards under the 2010 Plan and 2011 Plan remain outstanding, subject to the terms of the applicable plan and award agreements, until such shares are issued under those stock awards, by exercise of stock options or settlement of RSUs, or until those stock awards become vested or expired by their terms.

NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Under the 2016 Plan, we may grant incentive stock options, non-statutory stock options, restricted stock, RSUs, and stock appreciation rights to employees, directors and consultants.

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The number of shares of Class A common stock available for issuance under the 2016 Plan also includes an annual increase on the first day of each fiscal year, beginning in fiscal 2018, equal to the lesser of:

18.0 million shares, 5 % of the outstanding shares of all classes of common stock as of the last day of our immediately preceding fiscal year, or such other amount as may be determined by the Board.

18.0 million shares, 5 % of the outstanding shares of all classes of common stock as of the last day of our immediately preceding fiscal year, or such other amount as may be determined by our Board of Directors.

Accordingly, on August 1, 2022 and 2023, the number of shares of Class A common stock available for issuance under the 2016 Plan increased by 11.3 million and 12.0 million shares, respectively, pursuant to these provisions.

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Restricted Stock Units

Performance RSUs —

We have granted RSUs that have both service and performance conditions to our executives and employees ("Performance RSUs").

Vesting of Performance RSUs is subject to continuous service and the satisfaction of certain performance targets.

While we recognize cumulative stock-based compensation expense for the portion of the awards for which both the service condition has been satisfied and it is probable that the performance conditions will be met, the actual vesting and settlement of Performance RSUs are subject to the performance conditions actually being met.

RSUs settle into shares of Class A common stock upon vesting.

During the second quarter of fiscal 2024, we began funding withholding taxes due on the vesting of employee RSUs by net share settlement, rather than our previous approach of selling shares of Class A common stock to cover taxes upon vesting of such awards.

The payment of the withheld taxes to the tax authorities is reflected as a financing activity within the consolidated statements of cash flows.

Performance RSUs

From time to time, we grant RSUs that have both service and performance conditions to our executives and employees ("PRSUs").

Vesting of PRSUs is subject to continuous service and the satisfaction of certain performance targets.

While we recognize cumulative stock-based compensation expense for the portion of the awards for which both the service condition has been satisfied and it is probable that the performance conditions will be met, the actual vesting and settlement of PRSUs are subject to the performance conditions actually being met.

In January 2024, the Compensation Committee of our Board of Directors approved the grant of approximately 0.3 million RSUs subject to certain performance conditions ("PRSUs") to our President and CEO.

These PRSUs have a grant date fair value per unit of $ 45.86 and will vest up to 200 % based on achievement of specified annual recurring revenue and free cash flow hurdles over a performance period of approximately 3.6 years, subject to his continuous service as CEO through the vesting date.

Market Stock Units

We also grant RSUs that have both service and market-based conditions to our executives and employees ("MSUs").

Vesting of MSUs is subject to continuous service and the satisfaction of certain market-based performance targets.

While we recognize cumulative stock-based compensation expense for the portion of the awards for which the service condition has been satisfied, regardless of achievement of the specified targets, the actual vesting and settlement of MSUs are subject to the market-based conditions actually being met.

NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Market Stock Units

In connection with his hiring, in December 2020, the Compensation Committee of our Board of Directors approved the grant of 0.7 million RSUs subject to certain market conditions ("MSUs") to our President and CEO.

These MSUs have a weighted average grant date fair value per unit of $ 35.69 and will vest up to 133 % based upon the achievement of certain stock price targets over a performance period of approximately 4.0 years, subject to his continuous service on each vesting date.

In October 2021, August 2022, and August 2023, the Compensation Committee of our Board of Directors granted approximately 0.4 million, 1.3 million, and 0.8 million MSUs, respectively, to certain of our executives.

During fiscal 2022, 2023 and 2024, the Compensation Committee of our Board of Directors approved the grant of approximately 0.7 million, 1.3 million and 0.8 million, respectively, RSUs subject to certain market conditions to certain of our executives.

These MSUs have a weighted average grant date fair value per unit of approximately $ 46.80 , $ 27.89 and $ 47.65 , respectively, and will vest up to 200 % of the target number of MSUs based upon our total shareholder return relative to the total shareholder return of companies in the Nasdaq Composite Index over a performance period of approximately 2.8 years, 3.1 years and 3.0 years, respectively, subject to continuous service on each vesting date.

Additional MSUs have been granted with similar terms, but were not material.

We used Monte Carlo simulations to calculate the fair value of these awards on the grant date, or modification date, as applicable.

A Monte Carlo simulation requires the use of various assumptions, including the stock price volatility and risk-free interest rate as of the valuation date corresponding to the length of time remaining in the performance period and expected dividend yield.

We recognize stock-based compensation expense related to these MSUs using the graded vesting attribution method over the respective performance periods.

As of July 31, 2023 , approximately 2.0 million MSUs remained outstanding.

Below is a summary of RSU activity, including MSUs, under the Stock Plans:

Fiscal Year Ended July 31,

In January 2024, the Compensation Committee of our Board of Directors approved the grant of approximately 0.2 million MSUs to our President and CEO.

These MSUs have a weighted average grant date fair value of $ 62.85 and will vest up to 200 % based on achievement of specified stock price hurdles at any time during a performance period of approximately 3.6 years, subject to his continuous service as CEO through the vesting date.

Below is a summary of RSU activity and PRSU and MSU (collectively, "PSU") activity under the Stock Plans:

Weighted Average

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(in thousands)

Outstanding at beginning of period

Outstanding at end of period

The aggregate grant date fair value of RSUs, including MSUs, vested was $ 317.4 million, $ 314.6 million and $ 281.8 million for the fiscal years ended July 31, 2021, 2022 and 2023, respectively.

Outstanding at July 31, 2021

Outstanding at July 31, 2022

Outstanding at July 31, 2023

Outstanding at July 31, 2024

The aggregate grant date fair value of RSUs, including PSUs, vested was $ 314.6 million, $ 281.8 million and $ 299.5 million for the fiscal years ended July 31, 2022, 2023 and 2024, respectively.

Stock Options

The Board determines the period over which stock options become exercisable and stock options generally vest over a four-year period.

Our Board of Directors determines the period over which stock options become exercisable and stock options generally vest over a four-year period.

Stock options generally expire 10 years from the date of grant.

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The exercise price of an ISO will not be less than 100 % of the estimated fair value of the shares of common stock underlying the stock option (or 110 % of the estimated fair value in the case of an ISO granted to a 10% stockholder) on the date of grant.

The exercise price of an NSO is determined by the Board at the time of grant and is generally not less than 100 % of the estimated fair value of the shares of common stock underlying the stock option on the date of grant.

The exercise price of an NSO is determined by our Board of Directors at the time of grant and is generally not less than 100 % of the estimated fair value of the shares of common stock underlying the stock option on the date of grant.

NUTANIX, INC.

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Cash received from option exercises was $ 6.5 million, $ 3.7 million and $ 4.2 million for the fiscal years ended July 31, 2022, 2023 and 2024 , respectively.

The total grant date fair value of stock options vested was not material for the fiscal years ended July 31, 2021 and 2022.

There were no stock options that vested during the fiscal year ended July 31, 2023.

The total grant date fair value of stock options vested was not material for the fiscal year ended July 31, 2022.

There were no stock options that vested during the fiscal years ended July 31, 2023 or 2024.

We did no t grant any stock options during the fiscal years ended July 31, 2022, 2023 or 2024.

Employee Stock Purchase Plan

In December 2015, the Board adopted the 2016 Employee Stock Purchase Plan, which was subsequently amended in January 2016 and September 2016 and approved by our stockholders in March 2016 (the "Original 2016 ESPP").

In December 2015, our Board of Directors adopted the 2016 Employee Stock Purchase Plan, which was subsequently amended in January 2016 and September 2016 and approved by our stockholders in March 2016 (the "Original 2016 ESPP").

The Original 2016 ESPP became effective in connection with our IPO.

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Of the approximately $ 16.3 million recognized, $ 0.4 million is included within support, entitlements and other services cost of revenue, $ 13.4 million is included within sales and marketing expense, $ 2.3 million is included within research and development expense, and $ 0.2 million is included within general and administrative expense on our consolidated statements of operations.

During the fiscal quarter ended July 31, 2023 , we did not make any cash payments.

During the fiscal year ended July 31, 2023, we made cash payments of approximately $ 15.8 million.

As of July 31, 2023 , we had a remaining restructuring liability of approximately $ 0.6 million, included within accrued compensation and benefits in our consolidated balance sheet.

We do not expect to record any material future charges related to this reduction in force.

During the fiscal year ended July 31, 2023, we recognized restructuring charges of approximately $ 5.3 million and made cash payments of approximately $ 15.8 million.

During the fiscal year ended July 31, 2024 , we did no t incur any charges and made cash payments of approximately $ 0.4 million.

As of July 31, 2024 , we had no remaining restructuring liability.

NUTANIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NET LOSS PER SHARE

NET INCOME (LOSS) PER SHARE

We adopted ASU 2020-06 on August 1, 2021 using the modified retrospective method, applicable to our convertible senior notes outstanding as of adoption.

4 unchanged sentences

Diluted net income (loss) per share is computed by giving effect to potentially dilutive common stock equivalents outstanding during the period, as their effect would be dilutive.

Potentially dilutive common shares include participating securities and shares issuable upon the exercise of stock options, the exercise of common stock warrants, the exercise of convertible preferred stock warrants, the vesting of RSUs and each purchase under the 2016 ESPP, under the if-converted method.

Potentially dilutive common shares include shares issuable upon the exercise of stock options, the vesting of RSUs, each purchase under the 2016 ESPP, and common stock issuable upon the conversion of convertible debt under the if-converted method.

In loss periods, basic net loss per share and diluted net loss per share are the same, as the effect of potential common shares is antidilutive and therefore excluded.

Prior to this conversion, the rights, including the liquidation and dividend rights, of the holders of our Class A and Class B common stock were identical, except with respect to voting.

4 unchanged sentences

(in thousands, except per share data)

Weighted average shares—basic and diluted

Net loss per share attributable to common stockholders—

basic and diluted

The potential shares of common stock that were excluded from the computation of diluted net loss per share attributable to common stockholders for the fiscal years presented because including them would have been antidilutive are as follows:

Weighted average shares, basic and diluted

Net loss per share attributable to common

stockholders, basic and diluted

The following shares of common stock were excluded from the computation of diluted net loss per share for the periods presented, as their effect would have been antidilutive:

Fiscal Year Ended July 31,

2 unchanged sentences

Employee stock purchase plan

Common stock issuable upon the conversion of the Notes

Contingently issuable shares pursuant to acquisitions

Common stock issuable upon the conversion of convertible

NUTANIX, INC.

1 unchanged sentence

Shares that will be issued in connection with our stock awards and shares that will be purchased under the employee stock purchase plan are generally automatically converted into shares of our Class A common stock.

Common stock issuable upon the conversion of convertible debt represents the antidilutive impact of the 2023 Notes, 2026 Notes and 2027 Notes under the if-converted method.

Common stock issuable upon the conversion of convertible notes represents the antidilutive impact of the 2023 Notes, 2026 Notes and 2027 Notes under the if-converted method.

Loss before provision for income taxes by fiscal year consisted of the following:

35 unchanged sentences

Tax credit carryforward

Deferred revenue

Capitalized research expenses

Deferred revenue

Accruals and reserves

Stock-based compensation

Interest expense carryforward

Intangibles and goodwill

Property and equipment

Interest expense carryforward

Total deferred tax assets

1 unchanged sentence

Deferred commission expense

Convertible notes

Prepaid expenses

Intangibles and goodwill

Property and equipment

Acquisition-related

Convertible notes

Total deferred tax liabilities

18 unchanged sentences

It is not practical to estimate the withholding tax liability if these earnings were to be repatriated.

The 2017 Tax Cuts and Jobs Act requires research and development expenditures incurred for the tax year beginning after December 31, 2021 to be capitalized and amortized ratably over five years for domestic research and 15 years for international research.

The impact of the mandatory capitalization requirement for the fiscal year ended July 31, 2023 was fully offset by our tax attributes carryover and full valuation allowance position.

On August 16, 2022, the U.S.

enacted the Inflation Reduction Act ("IRA") of 2022, which, among other things, implemented a 15% minimum tax on book income for certain large corporations, a 1% excise tax on net stock repurchases, and several tax incentives to promote clean energy.

The provisions of the IRA had no impact on our income tax provision for the fiscal year ended July 31, 2023.

We recognize uncertain tax positions in our financial statements if that position will more likely than not be sustained on audit, based on the technical merits of the position.

39 unchanged sentences

Total long-lived assets

SUBSEQUENT EVENT

Share Repurchase

In August 2023, our Board of Directors authorized the repurchase of up to $ 350.0 million of our Class A common stock.

The repurchase program does not obligate us to acquire any particular amount of our common stock, and may be suspended at any time at our discretion.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data