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Tintri revenue misses target, but earnings are a surprise

Private enterprise cloud specialist Tintri Inc. on Thursday posted mixed financial results in its first earnings call since going public in June. The bottom line: lackluster Tintri revenue was somewhat salvaged by beating the Wall Street consensus on losses on earnings per share.

Tintri recorded a net loss of $51.7 million on revenue of $34.9 million, about 2% lower than Tintri’s revenue guidance of $35.7 million. Shares of Tintri tumbled nearly 2% on the news to close at $6.68.

Despite the revenue miss, earnings per share loss came in at 91 cents, beating loss estimates by two cents. As a percentage of revenue, Tintri’s free cash flow of $23.9 million fell to 68%, down from 79% a year ago. Gross margin, while healthy at 60.1%, fell 5 points.

Tintri launched its hybrid VMstore arrays in 2011 as storage for VMware shops. The vendor added all-flash VMstore models in 2015. It expanded its offerings this week with the introduction of the EC 6000 series all-flash nodes.

Tintri markets its arrays to hyper-scale data centers to build private enterprise cloud storage. Tintri Connect virtualization allows web services to be assembled rapidly and connected to a public host.

Tintri: IPO issues were a ‘distraction’ that stymied sales

CEO Ken Klein blamed the disappointing Tintri revenue on “distraction, disruption and sales attrition” that accompanied its initial public offering in June. Klein said part of it centered on the recent departure of chief sales officer Mike McGuire, whom Tintri lured from Dell in 2015.

In an Aug. 18 securities filing, Tintri said McGuire has ceased to serve in that role, but he was expected to assist Tintri executives in finding his successor. Tintri did not give a reason for McGuire’s departure. Prior to Tintri, McGuire was vice president of global sales at Dell and chief commercial officer at Nexsan Inc.

With McGuire out, Klein said sales efforts have been divided into international and North American sales regions, with “increased focus on training, retention and enablement.” Tintri executives declined to specify the size of the sales force or whether it planned to expand sales teams.

“We remain focused on maintaining cash generation and (achieving) profitability,” Klein said.

Tintri is a long way from profitability. It is trying to shed its identify as a flash array vendor, recasting itself as a scalable platform for integrating local web services that can connect to a public host.  But  Tintri faces competition from other erstwhile storage vendors in the private enterprise cloud market, a dynamic leading to rapid commoditization and shrinking margins for data storage gear.

According to its shelf registration with the SEC, Tintri revenue grew 150% from 2015 to 2017. Those gains were nearly all offset by corresponding mounting losses, which jumped 35% from $70 million to $106 million. Tintri also said it has an accumulated deficit of nearly $340 million.

After initially filing to raise $109 million, Tintri revised its forecast downward, eventually netting about $60 million. The IPO popped in June following a one-day postponement, but its share price never approached Tintri’s original target of $11. Shares were priced at $7, and have ranged from a high of $7.75 to a low of $5.12.

Klein said Tintri had added approximately 90 private enterprise cloud customers during the quarter, giving it more than 1,400 customers, including 21 Fortune 100 companies.  Listed among the new customers are Bechtel Corp., The Salvation Army and Volkswagen.

Klein noted a “cautious approach” to future Tintri revenue guidance. For the fourth quarter, Tintri estimates a non-GAAP loss per share ranging from 77 cents to 81 cents on revenues of $36 million to $37 million. The company said it would not provide guidance beyond the fourth quarter.

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