Nutanix told investors it has been improperly using licensed software for years and it is now trying to determine how much it may owe one of its vendors.
The statement has meant that the company could not accurately report expenses for the quarter.
Nutanix CFO Rukmini Sivaraman said his company had hired an outside lawyer to investigate what it may owe the undisclosed software vendor after management learned the software had been misused.
“What we discovered is that certain evaluation software from one of our third-party providers , someone who provides us software, which is intended for evaluation purposes, was instead used for validation, interoperability testing and proof of concepts over a multi-year period,” Sivaraman told investors.
“Because of that we weren’t able to disclose expense information on the call and we have announced that we expect to be unable to file our 10-Q in a timely manner, given that we want to make sure this is resolved first,” she said.
Nutanix said it does not expect the issue to have a significant impact on the fundamentals of its business or overall prospects but declined to go into further detail.
CEO Rajiv Ramaswami mentioned that the problem seemed to be over some evaluation software.
“Eval software is meant for eval use. So you go and try it out for whatever you are using it for. So you try it out and at some point you purchase it,” he said,
“What we found was in some cases, we were using the eval software for doing interoperability testing or customer proof of concepts, validating. So that goes beyond the scope of what eval software was being used for. … What this means is therefore there might be some additional expense, in terms of usage of that.”
Ramaswami said the fundamentals of Nutanix’s business are unchanged by the issue.
“So this matter doesn’t impact our market opportunity or the demand for our solutions,” he said. “We’re working diligently to solve it as quickly as possible. And we are focused on driving sustainable and profitable growth.”
