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Nutanix prepares for 2016 IPO

Hyper-converged vendor Nutanix set itself up to become the first storage vendor to go public in 2016.

Nutanix filed an S-1 statement, which is the first step towards an initial public offering (IPO). IPOs have been rare in technology recently. Among storage companies, only all-flash array vendor Pure Storage went public in 2015.

Like Pure, Nutanix’s S-1 filing shows a history of impressive revenue for a young company but heavy losses as well with no sign of profitability in the near future.

Nutanix reported revenue of $30.5 million for fiscal year (ending July 31) of 2013, $127.1 million for 2014 and $241.1 million for 2015. It claimed $87.8 million in revenue last quarter.

But Nutanix lost $44.7 million in 2013, $84 million in 2014 and $126.1 million in 2015. It lost another $38.5 million last quarter, for total losses of $312 million over its history.

The filing gave no forecast of when Nutanix expects to become profitable.

Nutanix raised more than $312 million in venture funding, including a $140 million round in Aug. 2014.

Nutanix claims approximately 2,100 customers, including 226 of the Global 2000. More than 1,000 customers were added during fiscal 2015, and Nutanix added another 345 last quarter.  The Nutanix S-1 filing listed Activision Blizzard, Best Buy, Kellogg,, Nasdaq, Nintendo, Nordstrom, Inc., Toyota Motors of North America, and the U.S. Department of Defense as customers.

Those customers have come at a great cost. Sales and marketing is Nutanix’s largest expense. The vendor spent $161.8 million of its total $259.2 million sales/marketing in 2015 and another $58.6 million (of $89.8 million total expenses) last quarter. Research and development cost $73.5 million in 2015 and $23.9 million last quarter.

Hyper-converged systems combine storage, compute and virtualization in one box. Nutanix, founded in 2009, began selling the first hyper-converged systems on the market in Oct. 2011. Its early systems were targeted to VMware customers, but that strong partnership frayed after VMware launched its own Virtual SAN (VSAN) hyper-converged software in 2014. Nutanix developed its own hypervisor called Acropolis that became available this year to compete with VMware. Nutanix also supports Microsoft Hyper-V and KVM hypervisors along with Acropolis and VMware vSphere. Prism management software is the other key piece of the Nutanix platform.

Nutanix sells its software on appliances built by Super Micro. It also sells through OEM partners Dell and Lenovo, who sell Nutanix software on their servers.

Nutanix mentioned those OEM deals in the filing. Nutanix did not say how much revenue has come through Dell since Dell started selling Nutanix systems in late 2014, but did mention that the relationship is complicated by Dell’s proposed $67 billion acquisition of EMC. Dell will also acquire EMC-owned VMware, which competes with Nutanix.

“Dell will control VMware, and could combine the Dell, EMC and VMware product portfolios into unified offerings optimized for their platforms,” the filing stated.

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