And like we’ve said with other G2K customers, generally, once we get in the door, they’re pretty happy with us, and they do expand with us over time. In fact, we’ve given you some data at Investor Day in terms of how much the expansion is, like I think it was 25x or 26x over life. So this particular bank was similar, right? They liked us. They were comfortable with us. And then now they have this additional trigger that they were concerned about what would happen on the other side. So when they did do the expansion with us, they went with us as a sole vendor. So that’s sort of how it played out for us.
Rukmini Sivaraman: If I can add to that, Ben. I think you had a question on ACV ramp. And just to clarify, our contracts, typically, they’re sort of evenly spread up. There isn’t a ramp within the year. So like this transaction and typically most of our transactions, it would be a total TCV amount divided by the contract duration. That’s how we calculate the ACV of any given transaction.
Ben Bollin: Okay. That’s great. The other item, Rajiv, I’m curious, you talked about the MSP awards. Can you share any thoughts about your strategy around go-to-market efforts? Do you have some programs specifically geared to pursue more of these partners that are potentially alienate by this deal? That’s it for me.
Rajiv Ramaswami: Yes, I think that’s — again, that’s both an MSP specific thing here and a broader thing here, as well in your questions, Ben. So on the MSP specific, I mean, for us, independent of this transaction. This was a an area that we want to do more in because traditionally, we have not had a big route to market through MSPs. So for the last couple of years, we’ve been building up our MSP presence and recruiting more of these MSPs to come on board as partners. And that continues. And this particular deal this last quarter was a good example of an expansion opportunity where they had done something small with us and now the standard is a significant expansion with us. So I do think that with the transaction happening, it’s not only the customers of VMware that are going to be concerned, but there’s also their partners and that includes the MSP partners.
So, we are talking to the MSP partners, just like people with other customers and trying to recruit more of them on to the Nutanix platform. And so, this is still — I would say, we are young when it comes to the MSP route to market. And so, there’s potentially a lot more MSPs that we do need to recruit over time and get on board as our partners. And we have a team at Nutanix that’s focused on recruiting these partners and enabling that.
Operator: The next question is coming from Ruplu Bhattacharya from Bank of America.
Wamsi Mohan: It’s actually Wamsi here at Bank of America. I guess, Rukmini, if you could address seasonality. Your Q2 revenue guidance at the midpoint is calling for 8% growth. That is the lowest that we’ve seen over the last four or five years, but you’re calling for Q3 seasonality to be down similar to fiscal ’23, which is down the highest in the last several years. And I’m just wondering, are you seeing something around the macro that’s causing you to view the seasonality this way, which is actually a little bit bias lower towards Q3 than historically, a little bit lower also in Q2 to the upside. Just wondering if you could share any color there.
Rukmini Sivaraman: Hi Wamsi, thanks for the question. So a few things I would say. One, on the Q1 to Q2 dynamic. We talked about Q1, of course, came in at a bit higher than our expectations, given the beat across revenue and ACV billings, Wamsi. So I think relative to that Q2, I think, to your point, still going to look based on our guidance, right, higher than Q1 as we seasonally see. So, I wouldn’t read too much into that dynamic. And then, the reason we sort of gave the color on Q3 is to just note what we’re seeing right now, based on pipeline and all the various factors we’ve talked about already, as it relates to things that are driving the top line. And I’ll just remind folks, again, as we said in the prepared remarks as well that the full year ACV billings is at about a 5% or 6% discount with some of the four quarters given the annualization that we do each quarter for contracts less than one year.
So overall, I’d say, Wamsi, I think I wouldn’t read too much into the seasonality point, other than we’re seeing — this is what we’re seeing in our pipeline. I wanted to give folks an update on that. And overall, we’re happy to be able to raise our ’24 ACV billings guidance, right, following a solid first quarter, but we’ve also factored in some caution overall regarding how the rest of the year plays out given some of this macro uncertainity.
Wamsi Mohan: Okay. Thank you. I appreciate the color. And just on free cash flow out of clarification. When you think about what you would have normally called a normal booking linearity in the quarter, what was — what would you say is the delta of overachievement in fiscal 1Q? And is that overachievement primarily what’s driving the full year free cash flow increase, or are you expecting sort of — is that free cash flow weighs beyond sort of the 1Q overachievement? Thank you so much.
Rukmini Sivaraman: Yes, great question, Wamsi. So two thoughts. So one on Q1, we, of course, don’t guide to quarterly free cash flow. So I’m not able to sort of give you specifically how much we overachieved our own expectations for Q1 free cash flow, but we did overachieve it. And I will say that, in addition to the billings number coming higher, right, given we had a beat on ACV billings as well for Q1. So that helped, but the linearity was a significant factor in Q1, okay? So that did have a significant impact on the outperformance for free cash flow in Q1. And I think the second part of your question is around the full year free cash flow guidance. And what I’d say there is that in addition to benefiting from the raised top line guide, and of course, as you know, billings has a very high correlation with free cash flow, right?
So the fact that we were able to raise our full year billings number. So that’s one factor. But we’re also expecting to see some benefit from somewhat better working capital management within the year than previously expected, including from improved linearity. So that is helping us to raise the full year free cash flow guide as well.
Operator: And the next question is coming from Simon Leopold of Raymond James.
Unidentified Analyst: This is Victor Chiu [ph] in for Simon Leopold. Regarding the share shifts and competitive dynamics with VMware, are there instances where customers use both VMware and Nutanix?
Rajiv Ramaswami: A lot of customers use both VMware and Nutanix. And again, I think just to clarify, how they use. Sometimes their users is just — they’ll have a dual vendor strategy. They’ll do some with VMware, some with Nutanix. There’s also — we work together with Nutanix — I mean, Nutanix works together with VMware’s hypervisor, ESX. So, we have a lot of customers who are deploying Nutanix on top of VMS hypervisor, ESX. And over the years, many of these have also migrated from ESX to our own built-in hypervisor that’s included in the platform. In fact, again, I would say, over the years, we came up with our own hypervisor back in 2015. And today, if you look at our workloads across the entire spectrum of customers, about 65% of those workloads have migrated and they are now on just a Nutanix hypervisor.
