TNTR is a developer of an enterprise cloud platform that provides public cloud capabilities. From a general sense, the conventional IT model, which has been constrained by siloed, costly and inflexible infrastructure, is giving way to cloud architectures. Cloud Computing can be Public (Amazon, Azure, Rackspace), where the focus is providing the lowest cost shared computing service where you pay for services as you need them (pay as you go), and there is Private Cloud Computing, where the entire cloud infrastructure (servers, storage, network) is dedicated to a single company and is behind the company firewall.
Enterprises are seeking to deploy cloud technologies through either public clouds or private clouds, which includes both on-premise and hosted options. Many companies have realized that while public cloud delivers many benefits, it's not the right solution for all problems. Moving applications to public cloud platforms can result in significant migration cost and effort, requiring applications to be recoded, reconfigured, refactored, and reintegrated.
On the other hand, private clouds provide many of the benefits of public clouds. Private clouds give organizations more control over access and usage of their applications, making private clouds ideal for larger businesses or those with strict data, regulatory and governance obligations. Unlike public cloud solutions, private clouds can satisfy the needs of both enterprise and cloud-native applications.
The compelling benefits of private cloud and the desire to have access to public cloud give rise to what is generally referred to as an enterprise cloud, which is a cloud infrastructure deployed in an organization's own data center with connections to public cloud services. An enterprise cloud possesses many of the same benefits and capabilities as public cloud, including autonomous services, automation, self-service and analytics, with added control, security, and support for enterprise applications that only a private cloud can provide.
While private cloud can deliver many of the benefits of public cloud, Tintri believes that organizations have difficulty deploying an enterprise cloud platform built using conventional architectures. While many infrastructure components, including server, network and security, have evolved to support virtualized infrastructure and migration to the cloud, innovation in storage has lagged and lacked granular level operation at the VM and container level.
In simple terms, Tintri provides large companies with an enterprise cloud platform that offers public cloud capabilities inside their own data centers that can also connect to public cloud services. Its enterprise cloud platform combines cloud management software, web services and a range of all-flash storage systems. It sells storage appliances intended for virtual machines and software containers.
Tintri's enterprise cloud platform not only delivers many of the benefits of public cloud infrastructure, but also gives organizations the control and functionality they need to run both enterprise and cloud-native applications in their own private cloud. Organizations use Tintri's platform as a foundation for their own private clouds.
The first thing to point out is that Tintri is not and has never been profitable. And they expect losses for the foreseeable future. In fact, the company expects that operating expenses will increase substantially in the foreseeable future as the company continues to hire more employees, develop its technology, expand its sales and marketing teams, make investments in distribution channels, expand its operations and prepare to become a public reporting company. And as you can see in the table below, they are a good amount away from profits.
With that said, Tintri is seeing very strong revenue growth. In FY16 revenue grew 73% to $86.0 million then it grew another 45% in FY17 to $125.1 million. In 1Q18 (Apr), revenue grew 33% YoY to $30.4 mln. As you can see, revenue comes from two primary sources: product and support & maintenance.
In terms of margins, the only positive ones are gross margin and they have been expanding nicely from 56.4% in FY15 to 62.5% in FY16 to 64.7% in FY17. It's always good to see expanding margins. However, all the investments they are making are hurting the operating income line.