Nutanix shares rose 1.8% to $69.94 on Thursday. The latest annual filing shows a business that grew revenue 12.4% and operating income 58.8%, but also a $1.5 billion net profit built largely around a non-cash tax release.
That distinction matters. Revenue reached $2.9 billion for the twelve months ended July 31, up from $2.5 billion a year earlier. Operating income rose to $274.0 million, lifting the operating margin to 9.6% from 6.8%. The much larger move came below the operating line: net income rose from $188.4 million to $1.5 billion.
Nutanix released a valuation allowance on most of its US deferred-tax assets. In plain English, the company decided those tax benefits were now usable and recorded the accounting benefit, without receiving a matching cash payment.
"The increase in cash generated from operating activities for fiscal 2026 was due primarily to the $1,318.5 million increase in our net income from operations, $357.7 million of stock-based compensation expense, and a $315.0 million increase in deferred revenue, partially offset by $1,198.9 million of deferred income taxes related to the release of our valuation allowance on the majority of our U.S. federal and state deferred tax assets."
Nutanix, 10-K, September 18, 2026
Operating cash flow still rose, but only 11.6%, to $916.7 million. The tax release boosted reported earnings while the deferred-tax entry itself was a partial offset in the cash-flow bridge. Cash ended the year at $777.3 million, barely changed from $769.5 million.
The operating business was not merely a tax artifact. Gross margin held at 86.8%, while operating expenses grew more slowly than revenue in percentage terms. Research and development rose 7% as headcount increased 5%, and sales and marketing rose 9% as headcount increased 3%. Nutanix also disclosed severance expense tied to a headcount reduction announced in August 2026, after the reported year ended.
Management attributed some product-margin improvement to a combination that is simple enough to be useful: more product revenue, alongside lower product costs.
"Product gross margin increased by approximately 0.7 percentage points in fiscal 2026 due to product revenue increasing while cost of product revenue decreased."
Nutanix, 10-K, September 18, 2026
That improvement did not change the consolidated gross margin, which stayed flat at 86.8%. The larger operating-margin gain came from revenue growing faster than operating expenses, not from a dramatic shift in the company’s high-margin profile.
There is also a cash-quality wrinkle. Operating cash flow covered net income by 4.36 times in the prior year, but just 0.61 times in fiscal 2026, as the tax release widened the gap between accounting profit and cash generation. Accounts receivable fell 14.4% to $289.3 million, so the filing does not show the weaker conversion coming from a receivables build.
At the latest annual earnings figure, Nutanix’s 109.2 times price-to-earnings multiple is difficult to read without separating the tax benefit from recurring operations. The next reported period’s tax footnote and operating cash flow will put that separation on a fresh line.
The unresolved tension is straightforward: Nutanix grew the business, but the year’s headline profit came from a non-cash tax release.