Virtualization Technology News and Information
Nutanix IPO a Reality - Finally a Public Company

Nutanix Building Ten long months after filing its paperwork, Nutanix, the next-generation hyperconverged and enterprise cloud platform, has finally become a public company. 

With its initial public offering (IPO), Nutanix said it would sell nearly 15 million shares for $16, bringing in a total of roughly $238 million.  Underwriting banks had access to another 2.2 million additional shares of Class A common stock, which would push that total higher.  That pricing has helped Nutanix receive a slighter higher bump from its earlier valuation when it was originally valued at $2 billion.  A $16 share price implies an initial market capitalization of about $2.2 billion.  But not long after the IPO, Nutanix shares were trading at around $33 at one point valuing the company at well over $4 billion.

With this IPO, the entire tech industry is now watching and taking notice.  The company's higher-than-expected valuation and first-day share price increase showed there was still demand for companies that are growing, even if they are not yet profitable.

Nutanix has posted growing revenue of $127 million in 2014, $241 million in 2015 and $445 million in 2016.  But the seven-year old company has been running up losses over the past few years.  Net losses have widened from $84 million in 2014, to $126 million in 2015 and $168 million in 2016.  The company has also never been profitable, and it said they expect to see net losses continue for the foreseeable future.

Nutanix points to the fact that the IT market is changing, marking a shift away from traditional siloes to a more modern solution architecture that better scales and is more efficient.  Backing that up, a recent report by 451 Research showed 40% of enterprises are using hyperconverged systems.  And 451 also stated hyperconverged infrastructures represent the next evolutionary step of standard converged infrastructure.

Other established startups such as Pivot3, Scale Computing, and Simplivity followed Nutanix into the hyperconvergence market as did larger, more established players like Cisco, Dell, EMC, and HPE.

Jeff Ready, CEO and co-founder of Scale Computing told, "Hyperconvergence is rapidly taking over the antiquated method of managing separate servers, storage, and virtualization platforms.  The incumbent system hardware and virtualization vendors are getting smoked by hyperconvergence because it is better."

Ready added, "Now, Wall Street is seeing this trend as well.  At Scale, we have taken a different tack, with a focus on midmarket and distributed enterprise companies, and with an eye toward profitability, but the market opportunity remains the same.  The technology we have built is not just about eliminating the SAN but is about a software-defined-everything stack that radically simplifies IT for customers and deployments of all sizes."  

Nutanix claims it helped invent the hyperconverged computing market.  They make equipment for data centers that combine compute with storage and the virtualization software that makes it all run more efficiently.  To help power it, the company created its own software products, Prism and Acropolis. 

Nutanix Prism gives administrators a simple way to manage virtual environments.  Powered by data analytics and heuristics, Prism simplifies and streamlines common workflows within a data center eliminating the need to have disparate management solutions.  Nutanix Acropolis, the company's own KVM-based hypervisor, allows the company to directly compete with virtualization giant VMware.  Acropolis is a powerful scale-out data fabric for storage, compute and virtualization.  It combines feature-rich software-defined storage with built-in virtualization in a turn-key hyperconverged infrastructure solution that can run any application at any scale.  The two software products tie the entire solution together and the company plans on leveraging this technology to go after the growing cloud market, and compete with VMware and Amazon.

Negative market conditions discouraged many companies, including Nutanix, from going public for much of 2016.  With this latest move, activity may begin to pick up.

"The IPO tech market is turning the corner and there is definitely a shift to fresher and newer storage offerings vs. old guard, inflexible and repackaged solutions," said Peter Godman, co-founder and CEO of Qumulo.  "This is total validation that the market wants and needs better storage alternatives.  Qumulo sees this with new customers routinely and we expect to see a lot more disruption in enterprise storage."  

Nutanix was added to the Nasdaq Global Select Market under the ticker symbol NTNX.

Nutanix's venture backers included Lightspeed Venture Partners and Khosla Ventures.  Goldman Sachs & Co, Morgan Stanley & Co LLC, J.P. Morgan Securities LLC and RBC Capital Markets were among the offering's 12-member underwriting syndicate.

Published Friday, September 30, 2016 3:25 PM by David Marshall
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