Nutanix continued to steal hundreds of VMware customers during the first quarter of its fiscal 2026, but the complexity of those migrations and the recent push of revenues from new deals toward later in the fiscal year squandered most of that momentum.

Nutanix CEO Rajiv Ramaswami told investors during the vendor’s latest earnings call that it attracted 640 VMware customers during the quarter, clients who dropped at least one VMware service in favor of a Nutanix offering. This growth built on the more than 2,700 such migrations Nutanix reported for its full fiscal 2025.

Ramaswami further touted that momentum by stating Nutanix was garnering a “good chunk” of those wandering VMware customers “compared to Red Hat.”

“Red Hat tends to be playing primarily where containerization is the main thing,” Ramaswami said. “Our platform is very solid when it comes to virtualization, the ability to run mission-critical workloads, and the flexibility to provide both virtualization solutions and container solutions. And we see some significant wins now, which are public.”

Nutanix and Red Hat have been viewed by many analysts as two of the most potentially attractive alternatives for VMware customers looking to move away from that vendor in light of Broadcom’s overhaul of VMware’s legacy licensing structures.

Broadcom, for its part, remains unconcerned by this leakage as it continues to strike new licensing deals with a vast majority of VMware’s largest legacy customers and has even openly questioned the need to go after smaller customers.

Despite continued success in the luring of disgruntled VMware customers, Ramaswami did admit that some of these migrations are taking longer than expected. The executive pointed to challenges in extracting some customers from their deeply embedded VMware integrations, and that this in turn has required Nutanix to provide some flexibility toward those migrations.

“I think in the past they were a smaller portion of our business,” Ramaswami said of these migrators. “Now we got [a] growing set of Broadcom migrations, so as that grows … we're finding that … there's more of this that requires that flexibility. And that's really, I think, the impression that we saw, and we saw the very latest in Q1 as well on this front, so I would say just the fact that we have more of this coming now, that's the primary driver.”

Ramaswami added further color on this challenge by noting that when Nutanix goes into these opportunities, it usually can impress with proof-of-concepts (PoCs). However, it’s a combination of legacy dependencies, hardware refresh cycles, and long-term support for those migrated applications that draw out the contract wins.

Nutanix’s strategy also involves finding specific Broadcom pain points that it can help an enterprise smooth over.

“We try to find places where … they can use our solution for, say, specific workload, specific use cases,” Ramaswami explained. “For example, we have a pretty good database management solution. We have a good Kubernetes offering. So these are things where I think we try to differentiate and also try to get in with [a] subset of applications. And so that's, I think, typically what we do.”

Revenue push pulls down stock

This drag on actual deployments also impacted Nutanix’s ability to secure financial returns. Company management noted that it accounts for revenues from a deal only when a product or platform license is activated.

While Nutanix’s actual revenues for the quarter came in at the low-end of previous guidance, it’s now expecting the full revenue benefit from new deals to start hitting its books later in the year or even spill into next year than previously forecast.

“We saw more business than expected with start dates outside of the quarter. This resulted in some revenue being shifted out of Q1,” Ramaswami said during prepared remarks of this observed trend. “As we evaluated the impact of this recent change in our business mix on our fiscal 2026 outlook, we now expect to see more revenue defer than we had previously planned, driving a reduction in our full-year revenue guidance.”

This news did not sit well with high-expectation investors, with Nutanix’s stock plummeting 17% in after-hours trading following the release of its latest earnings and hitting a new 52-week low.