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Nutanix for Sale: Will Private Equity Acquire a Hybrid Cloud Company?

Nutanix is ​​looking for a buyer after receiving buyout interest for the cloud software company, The Wall Street Journal reported.

Nutanix has a market capitalization of approximately $4.78 billion as of October 14, 2022 (premarket trading). Shares of the company ($NTNX) are down about 40% year-to-date and 20% over the past five years, according to SeekingAlpha. Still, shares jumped 16% after mergers and acquisitions speculation on October 14, 2022.

Major shareholders include Bain Capital, which invested $750 million in Nutanix in 2020. Additionally, activist hedge fund Legion Partners Asset Management has a less than 1% stake in the company, the Journal noted.

Hints of a potential sale of the Nutanix company appeared in September 2022, when the board announced various governance improvements. The changes led some Wall Street analysts to believe the board was grooming Nutanix for an exit.

Large private equity firms such as Thoma Bravo, Insight Partners and Vista Equity Partners have large enough financial war chests to buy Nutanix. Still, we don’t know if these private equity firms are interested in the software company, and it’s unclear if Nutanix will indeed be acquired.

Nutanix and Citrix Systems: Similar Business Challenges

Nutanix started out as a provider of hyperconverged infrastructure (HCI) hardware and software appliances, but the company had to pivot hard to compete with public cloud services from Microsoft Azure, Google Cloud Platform, and Amazon Web Services.

Nutanix’s current focus is hybrid multicloud computing, which primarily involves software and associated subscription services. Additionally, the company offers Security Central, a unified management system that automates incident response across multiple clouds.

Still, the backbone of the business remains a work in progress. Revenue was $385.5 million in the fourth quarter of fiscal 2022, down 1% from the fourth quarter of fiscal 2021, Nutanix said on August 31, 2022. Yet , the overall quarterly financial report was better than Wall Street expected.

Nutanix’s business challenges bear some resemblance to Citrix Systems, which has faced intense pressure in the virtual desktop infrastructure (VDI) market from pure public cloud options such as Microsoft Windows 365 and Nerdio partner solutions. Against this backdrop, Vista Equity Partners and Elliott Investment Management stepped in to acquire Citrix and merge it with Tibco Software in September 2022.

Evolution of the Nutanix Partner Program

To boost sales, Nutanix unveiled several enhancements to the Elevate Partner Program on September 21, 2022. The changes included:

  • Expand program incentives to include not only partner organizations, but also individual salespeople and system engineers to trigger growth in new customer acquisition. The new individual business incentive rewards individual salespeople and system engineers at eligible resellers and service providers each time they sell Nutanix in net new accounts, the company reported.
  • Launched a per-channel sales rebate incentive for Elevate, designed to reward resellers who drive business through the sales cycle independently, the company said.
  • Building toolsets like the newly revamped Sizer 6.0 capacity planning tool and enhancements to Nutanix’s Performance + Deal Registration program, the company said.

Also of note: Andrew Brinded succeeded Dominick Delfino as chief revenue officer in August 2022. Delfino left Nutanix that month to join Google as global vice president of cybersecurity sales.

Looking further ahead, the Nutanix .Next 2023 conference is scheduled for May 9-10 in Chicago, Illinois.

Stay tuned for potential updates on this story.