Tintri cloud forecast: stormy, with slight chance of revenue

Flash storage vendor Tintri has had an inauspicious start to life as a public company. On Wednesday, during only its second earnings call, there were hints that Tintri may already be on life support.

The Tintri cloud customer base added 80 new logos last quarter, yet it won’t allay fears that the newly minted public company will struggle to outrun mounting losses. Despite recent restructuring, including cutting about 80 jobs last quarter, Tintri is rapidly burning through cash and will need supplemental capital to stay afloat.

CEO Ken Klein said all options are on the table, including entertaining potential buyers.  “We are exploring strategic options available to the company to deliver value to shareholders, including the sale of the company” and further optimizations to hasten positive cash flow, Klein said.

Investors predictably pulled back on the news, with Tintri shares tumbling 13% at Thursday’s open to $4.50.

Tintri’s adjusted earnings per share of 79 cents was within its guidance, but quarter-over-quarter revenue fell 6% to $31.77 million. Tintri had forecast $36.5 million in revenue for the quarter. Tintri’s year-to-date revenue of $97 million is up 15% year over year.

Tintri carries an accumulated deficit of $439.2 million, up $101 million from last quarter.  The revenue miss was blamed on “delayed and reduced purchases” of Tintri cloud storage gear. Tintri booked, but did not close, a number of deals ranging from $400,000 to $1 million.

“Our third quarter revenue was impacted by continued headwinds we have faced since our IPO in June,” Klein said.

Those deals remain in the pipeline, with “cautious” revenue guidance next quarter in the range of $25 million to $27 million, Tintri CFO Ian Halifax said.

Tintri cloud arrays package flash storage and web-scale software to design private cloud infrastructure that mimics the performance of the public cloud. Tintri Enterprise Cloud Series 6000 arrays, rolled out in September, are gaining traction with users, Klein said. The EC 6000 accounted for half of the vendor’s $22.8 million in product revenue last quarter. The vendor also rolled out the T1000 platform for remote branch office and departmental deployments.

Software sales accounted for 16% of total product revenue ($3.64 million), up 2%. The increase was fueled in part by the launch of Tintri Cloud Connector, an S3-compatible integration that allows customers to tie local Tintri storage to Amazon Web Services and IBM Cloud Object Storage. Tintri also includes predictive analytics for sizing compute and storage.

What will Tintri do next?

At the time of its initial public offering in June, Tintri claimed its revenue soared 150% percent between 2015 and 2017, although debt and expenses kept the balance sheet in the red. Tintri’s IPO also came at a time when investors started to sour on storage infrastructure equities.

Lukewarm interest forced Tintri to revise its share price from $11 to $7 per share. It wound up netting proceeds of about $60 million, slightly less than half its initial $109 million target.

The Tintri cloud hardware model faces a changing competitive landscape. More and more hardware-centric vendors are shifting to software-defined storage services. Klein said Tintri plans to stay the course for now.

“The feedback from our customers, particularly the use cases that we are addressing, is that we have the right model,” Klein said.