Tintri: Fiscal 3Q18 Financial Results

Comments

The company continues to have many difficulties to survive in the highly competitive and crowded all-flash market because of it small size and huge losses.

Tintri is exploring the possibility to sell the company but to whom? About all the relatively big storage firms have already offerings in this field but, as the firm is struggling, the price could be modest for several reasons.

3FQ18 revenue, much lower than anticipated, $32 million vs. $36 to $37 million, was down 9% sequentially. The vendor recorded more losses than revenue for the quarter and the first nine months of fiscal year. Furthermore, it never was profitable since inception in 2008 with an accumulated deficit of $439 million. For next quarter, sales are projected to once more diminishing, about 18% sequentially, to approach $123 million for the year. Headcount at the end of 3FQ18 was 508, down 76 sequentially. It was 527 just before IPO. Gross margin in the most recent quarter was 61.7% compared with 66.9% in the same quarter a year ago. This change is due to industry-wide increases in flash and DRAM pricing and lower product revenue but the company expect flash prices to stabilize with DRAM memory pricing to continue to increase over the near to mid-term. Sales and marketing expenses were $26 million in 3FQ18, down 3% from the $26.9 million in the same quarter a year ago.

Per comparison, other public company Pure Storage is also far to be profitable but has nine times more revenue and got 300 new organizations in last known fiscal quarter, increasing total to 4,000 . It could approach the $1 billion annual revenue mark for FY ended January 2018 with first profitable period expected for 4FQ18 on a non-GAAP basis.

More specifically, Tintri's product revenue, consisting of systems sales and software license sales, fell 15% Y/Y to $22.8 million. Services revenue, which stem from maintenance and support agreements, grew yearly 28% to $9 million. It accounted for 28.4% of total revenue compared with 20.8% in the same quarter a year ago. In 3FQ18, 73% of revenue came from the U.S. and 27% from international operations. This compares with 71% and 29% respectively in the same quarter one year ago.

Tintri's chairman and CEO Ken Klein explains the difficulties: "Our third quarter revenue was impacted by continued headwinds we have faced since our IPO in June (...) We were impacted by delay and reduced purchases from some customers in our pipeline. We believe that many of the purchase delays that we have seen stem primarily from concern about the strength of our balance sheet, which we are addressing, and, to a lesser extent the realignment of our sales force which naturally takes some time."

The firm had $55 million of cash, cash equivalents and investments as of October 31.

But there are nevertheless some positive points:

• ♦ Tintri won some customers against HPE, Nimble, Pure Storage, NetApp and HDS.
• ♦ Top 25 clients have invested on average 23x their initial purchases in their lifetime. In other words, an initial spend of $100,000 is turned into an average of $2.3 million.
• ♦ The number of customers pur♦chasing greater than $1 million increased 59% from last year.
• ♦ In the quarter, software represented 16% of total product revenue, up from 14% in the same quarter last year.
• ♦ Launched within the quarter, the EC 6000 accounted for more than half of product systems revenue during 3FQ18.

Yearly revenue, profitability and total customers
(for fiscal year ended January 31, in $ million)

*Estimations

Quarterly revenue and profitability
(in $ million)

*Estimations

To read the earnings call transcript