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Nimble's sales slow down, losses expand

Nimble Storage’s drive for profitability took a major hit last quarter. Nimble, which was believed to be one of the smaller competitors eating away at large storage vendors’ sales, won’t hit break-even this quarter as it previously forecasted.

Nimble’s revenue of $80.7 million was up 37% from last year, but roughly the same as the previous quarter and below the hybrid array vendor’s forecast of from $86 million to $88 million. Nimble lost $11 million in the quarter – its largest quarterly loss since going public in 2013 — and increased spending this quarter will push back profitability indefinitely. Nimble forecasted revenue of $87 million to $90 million and losses in the $8 million to $10 million range for this year-ending quarter, typically the best sales period for storage vendors.

Reaction from Wall Street was potentially devastating. Nimble’s share price fell from $20.39 to $10.00 overnight – a drop of nearly 50% — and at least 11 financial analyst firms downgraded the stock.

CEO Suresh Vasudevan blamed the problems on two things. He said Nimble is affected more by large vendors’ price cuts as it moves deeper into the enterprise. And it has struggled to balance growth in the enterprise and its traditional commercial markets while trying to control spending with an eye on profitability. He said Nimble will beef up its commercial sales staff and is working on an all-flash array to help enterprise sales.

“We now believe that this approach of constraining investments at the same time that we diversify our customer base may have impacted our growth,” Vasudevan said on Nimble’s earnings call Thursday night.

He repeated what he has hinted at in the past – that Nimble will add all-flash arrays. Nimble has an all-flash expansion shelf and its arrays can pin data to all-flash volumes, but it lacks an all-flash product as more enterprises are looking to go in that direction.

“We have said that we have a very concrete plan for broadening our flash platform to compete in the entire space and that is still very much on target,” Vesudevan said. “You should expect to see us participating in the entire market with both hybrid flash and all-flash.”

The price cuts from the likes of EMC, NetApp and Hewlett Packard Enterprise could be a tougher problem to solve. Vasudevan really had no specific counters when asked his plans for dealing with that.

“We believe our business foundation remains extremely strong,” he said.

That belief will be tested in coming months. Meanwhile, the drastic drop in Nimble’s stock price is likely to attract some potential suitors who want to broaden their storage portfolios in the wake of the Dell-EMC deal.

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