Nutanix CEO found VMware customers are looking for alternatives due to the concerns with the ongoing Broadcom acquisition. Meanwhile, Nutanix plans to slash 4% of its workforce despite reporting a strong fourth fiscal quarter of 2022 earnings. 

Many customers have reached out to Nutanix proactively as they are running mission-critical applications on VMware but are concerned about the impact of the acquisition including the potential price changes, customer and partner support, and roadmap implications, Nutanix CEO Rajiv Ramaswami told SDxCentral. “They're looking at contingency plans and they're looking at exploring alternatives.”

“There is definitely a higher level of engagement from VMware customers as a result of what’s going on out there, and they’re more open to discussions with us,” Ramaswami said during the earnings call. “We’re also seeing more talent out there looking -- from VMware looking for new career opportunities,” 

And Nutanix is ready to support those customers. “When they come to us, we tell them: it's very simple, right? We are here for them,” Ramaswami said. “We give them a lot of flexibility and choice. We don't lock them in, and we manage all their applications and data very well.”

He noted those are the same messages Nutanix sent out even before the acquisition news came out, while the deal accelerates its win rate growth in the hyper-converged infrastructure (HCI) and other markets.

“We see a market opportunity for that continuing to grow as we continue to displace largely three-tiered [architecture] and continue to improve our win rates versus VMware or other players,” Ramaswami touted. 

He didn’t expect the Broadcom-VMware deal to impact Nutanix’s 2023 fiscal year outlook. “But in the long term, I think this should result in some tailwind for us.”

VMware and Nutanix are the top vendors in the HCI software market. Over the past few years, Nutanix has been building its hybrid, multicloud platform and a simplified portfolio focusing on five core areas: cloud infrastructure, cloud management, complementary storage, database, and desktop services. VMware also has been pushing its multicloud architecture and recently entered the multicloud management market with its new Aria portfolio.

The vendor reported $386 million in revenue for the quarter, a slightly 1.3% down year-over-year, but it’s above the company’s guidance range of $340 million to $360 million, according to Nutanix CFO Rukmini Sivaraman.

Both Sivaraman and Ramaswami noted in the earnings call that the company is currently focusing on driving toward sustainable, profitable growth. “Towards this end, as part of our comprehensive review of our business and operating model and along with a number of other expense reduction actions, we made a difficult decision to reduce our headcount by approximately 4%,” Ramaswami said during the earnings call.

The decision is “difficult but necessary,” he told SDxCentral. “And the point being now going forward, we are much more efficient and more flexible. We can focus on customer needs, and we are able to handle potentially a range of macroeconomic scenarios. So that's the rationale for what we did.”

Most of the reductions are out of the sales and marketing department, Ramaswami added. “It's partly because that's the area where we've been working to improve our productivity quite a bit, and we are continuing to make sure that we look at sales and marketing spend as a functional revenue coming down over time.” 

The headcount cut is expected to result in an estimated annualized expense reduction of approximately $55 million to $60 million, largely completed by the end of the first quarter of next fiscal year, Sivaraman said.