Less than 6 months after its IPO, storage firm Tintri considers selling out
Less than six months after going public, storage firm Tintri Inc. today said it’s considering a sale of the company following a second straight quarter of disappointing results.
In a surprise move, the Mountain View, California-based company said during its third-fiscal-quarter earnings conference call that it’s looking at a potential sale or options to reduce its cash burn significantly. “We are exploring strategic options available to the company to deliver value to our stockholders, including retaining investment bank advisors to assist us in this process and optimizing our operating model to reduce our cash burn rate and shorten the time to generate positive cash flow,” Chairman and Chief Executive Ken Klein said in a statement.
Shares of Tintri plunged as much as 14 percent in after-hours trading, though later after the earnings call, shares were up 0.36 percent. They had fallen by the same fraction in regular trading, to $5.48 a share. After another disappointing quarter reported in September, shares had plummeted 13 percent.
The nine-year-old company makes storage appliances using all flash-memory chips. They’re intended for virtual machines, or computers emulated in software, and software containers, which bundle an application and other software so it can run on multiple computer operating systems as needed. Both are ways to save money and provide more flexible data center setups in the rapidly developing cloud computing era.
In its quarter ended Oct. 31, Tintri reported revenue fell 6 percent from a year ago, to $31.8 million. That was far below the $36.6 million analysts on average had forecast.
The company also lost $37.9 million, or $1.21 a share, higher than the loss of $23.8 million, or $6.87 a share, a year ago. The adjusted loss, not including certain costs such as stock compensation, was 79 cents a share.
For the fourth quarter, Tintri forecast an adjusted loss of 79 to 83 cents on revenue of $25 million to $27 million. Analysts were modeling 68-cent loss on revenue of $42.9 million.
Klein blamed the shortfalls on delayed and reduced purchases by some accounts, though he added that some of those delayed transactions closed in November. During the earnings call, oddly, analysts didn’t ask about the potential sale of the company, but they did have many questions about sales momentum.
“Many of the purchase delays that we’ve seen stem primary from concerns about the strength of our balance sheet, which we are addressing, and to a lesser extent realignment of our sales force, which naturally takes some time,” Klein said, adding that the main shortfalls in revenue came from midsized customers who have bought between $400,000 and $1 million worth of products. “We believe that our model can be fully funded through cash generation.”
Klein also emphasized that Tintri continued to gain customers, adding 77 to top 1,500 total. He also cited several instances in which he said Tintri beat out competitors such as NetApp Inc., Hewlett Packard Enterprise Co.’s Nimble Storage unit and Dell EMC.
Analysts and investors were downbeat on Tintri even before its IPO, though it’s unusual for a company to consider selling out so soon after going public. The company faces heightened competition from both traditional storage companies and younger upstarts, many of which are rapidly consolidating into bigger entities.
For one, NetApp Inc. acquired all-flash storage provider SolidFire in early 2016. Then there was Dell Inc.’s massive acquisition of EMC Corp. that closed in September 2016. In February, Hewlett-Packard Enterprise Co. acquired SimpliVity Corp., a developer of competing hyperconverged systems. And in April, HPE struck another blow by buying Nimble Storage Inc., another all-flash storage provider, for more than $1 billion.
Tintri had raised $61 million in its IPO June 30, but the $7-a-share price at which it debuted, down from its planned range of $10.50 to $12.50 a share, gave it a valuation of only $216 million. That was far below the $785 million valuation in its last venture capital round in July 2015. At the time, co-founder and Chief Technology Officer Kieran Harty told Fortune explained the so-so reaction of investors to other enterprise infrastructure companies that weren’t doing that well. “It is kind of like being in a good house in a bad neighborhood,” he said.
Since you’re here …
Show your support for our mission with our one-click subscription to our YouTube channel (below). The more subscribers we have, the more YouTube will suggest relevant enterprise and emerging technology content to you. Thanks!
Support our mission: >>>>>> SUBSCRIBE NOW >>>>>> to our YouTube channel.
… We’d also like to tell you about our mission and how you can help us fulfill it. SiliconANGLE Media Inc.’s business model is based on the intrinsic value of the content, not advertising. Unlike many online publications, we don’t have a paywall or run banner advertising, because we want to keep our journalism open, without influence or the need to chase traffic.The journalism, reporting and commentary on SiliconANGLE — along with live, unscripted video from our Silicon Valley studio and globe-trotting video teams at theCUBE — take a lot of hard work, time and money. Keeping the quality high requires the support of sponsors who are aligned with our vision of ad-free journalism content.