Nutanix reported record earnings and profits during the fourth quarter of fiscal 2021, and the hyperconverged infrastructure vendor also achieved another milestone: 91% of its total billings now come from subscription software sales.

In an interview with SDxCentral after the company’s earnings call, CEO Rajiv Ramaswami said this signals that Nutanix’s software transformation that it began in 2017 is complete.

“We set out to transform our company initially from a hardware-appliance company to a software company and now from a software company to a pure software-subscription company,” he said. “And the fact that 91% of our business is now pure subscription — by the way, the rest of it is mostly our professional services — we have completed the journey of migrating our entire customer base to subscription.”

In addition to the subscription billings boost, Nutanix also grew its hyperconverged infrastructure (HCI) win rate against its largest competitor, VMware, as well as others HCI vendors, Ramaswami said. The vendor’s AHV hypervisor adoption increased 5% year over year, and now 53% of all of its customers running Nutanix’s core platform use its hypervisor.

“HCI got its start from virtual desktop and supporting remote users, but that’s only about 20%, 25% of our business right now,” Ramaswami said. “Today, HCI is used for pretty much any workload that can be virtualized in the enterprise, including the mission critical work.”

Additionally, 41% of its HCI platform deals for the quarter also included at least one of Nutanix’s emerging products such as its cloud-delivered database software, file and object storage, cloud management, and software-defined networking.

As example of this: During Q4, Nutanix closed a five-year, “multi-million” dollar AHV deal with a Fortune 100 financial services company, Ramaswami said. This is an existing customer that now runs its mission-critical applications and databases on Nutanix’s HCI stack, and it also expanded its Era footprint — this is Nutanix’s cloud-delivered database software — to automate and simplify its database management.

The core HCI software stack and Nutanix’s emerging product complement each other, and together they represent a $61 billion market opportunity, Ramaswami added. While existing HCI customers can run Nutanix’s emerging products on top of the core platform, customers that choose Nutanix for one of its newer products like Era may then decide to buy Nutanix’s HCI platform as well.

“Era helps our customers automate and simplify how they manage their databases, and by running Era on a Nutanix core platform, we’re able to do things like much faster backups, much faster restore of databases, using the underlying capabilities of our platform,” he explained. “At the same time, we tell database admins that we can simplify your database management and Era can help pull in our core platform as well. It works both ways.”

On the conference call with investors, Ramaswami highlighted Nutanix’s partnership with Red Hat that the companies announced in July. Under this new partnership, which designates both as “preferred” platforms to the other, Nutanix’s platform supports Red Hat’s OpenShift and Enterprise Linux (RHEL) platforms. In turn, Red Hat’s OpenShift and RHEL are certified to run on Nutanix’s platform including its Acropolis Operating System (AOS) and AHV hypervisor.

This partnership targets companies that want to build and manage cloud-native applications on premises and in hybrid clouds. And it also helps both vendors better compete against VMware’s Tanzu portfolio.

Later, during an interview with SDxCentral, Ramaswami said this partnership illustrates another example of modern workloads running on Nutanix’s core platform.

“Cloud native is a pretty substantial area,” he said, noting Nutanix’s home-growth runtime Kubernetes software called Karbon. “That’s just one element of a much broader cloud-native stack that we don’t quite have. So rather than trying to build a full stack ourselves, we felt there’s a lot of value in bringing together the industry-leading cloud native stack, Red Hat. Now we get to have modern applications built on containers as another workload on our platform. From Red Hat’s perspective, this gives them a full stack comprised of their OpenShift container platform but with all the underlying infrastructure layers provided from Nutanix.”

This partnership is still in its early days, so it’s too soon to tell how it will compete against VMware, but Ramaswami said both vendors are beginning to jointly add customers. “The whole value proposition here is you now have one platform where you can run all your applications: your traditional applications as well as your modern applications,” he said.

During Q4 Nutanix outperformed across all of its key metrics. Revenue rose 19% from $327.9 million a year ago to $390.7 million in the fourth quarter of fiscal 2021. Additionally, Nutanix annual contract value billings grew 26% year over year to $176.3 million, and its annual recurring revenue jumped 83% to $878.7 million.

The company also reported a fourth-quarter loss of $358.2 million, or $1.68 a share, compared with a loss of $185.3 million, or 93 cents a share, in Q4 of last year.

For the full fiscal year, Nutanix revenue grew 7% year over year to $1.39 billion while its annual contract value billings increased 18% to $594 million.