Even as it waits for its new all-flash array (AFA) to hit the market, Nimble Storage did better than expected last quarter. However, its forecast for this quarter was below expectations, with the vendor blaming lower than expected sales and higher losses on a transition period and expenses associated with its new array.
Nimble reported $90.1 million in revenue for last quarter, 32% higher than last year and more than $1 million over the high end of its previous guidance. It lost $9.4 million, slightly up from $8.5 million last year but within the vendor’s guidance range. The forecast for this quarter is for $83 million to $86 million in revenue and a loss of between $20 million and $22 million. That revenue would be up from $71.3 million last year, but it would be by far its greatest quarterly loss since becoming a public company in 2013.
Nimble’s stock price took a big hit for the second straight quarter following earnings. It opened today at $6.63, down from $8.25 at Thursday’s close. That’s not close to the nearly 50% drop the share price took in November after earnings, but it’s still going in the wrong direction. Nimble’s stock price was $32.16 last June 15.
Nimble executives say everything will be fine once its all-flash systems get fully into the market. But the normal drop off in storage sales in the first quarter of any year will hit Nimble harder in 2016. The vendor expects customers will pause buying its hybrid arrays while they check out the all-flash systems.
“Q1 is our seasonally slowest quarter and one in which the large incumbents in our industry typically see a double-digit sequential decrease in revenue from Q4,” Nimble CFO Anup Singh said. “In addition, we have taken into account the potential impact of the AFA product introduction during the quarter will have on sales cycles.”
Singh and CEO Suresh Vasudevan said the AFA launch will cost Nimble approximately $4 million in extra expenses this quarter.
“We are making the investments that we thought were the right level of investments to make,” Vasudevan said, pointing to additional cost for demand generation and channel enablement. “We absolutely believe that it will translate into growth in the second half [of 2016].”