Tintri (TNTR), a developer of an enterprise cloud platform that provides public cloud capabilities, is trading sharply lower today on OctQ earnings. It made its IPO debut in late June 2017.
Since most people are unfamiliar with Tintri, a little background would help. 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.
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.
Turning to the OctQ result, TNTR reported a non-GAAP loss of $(0.79) per share, which is in-line with prior guidance of $(0.81)-(0.77). However, revenue fell 6.2% year/year to $31.8 mln, which was a good bit below prior guidance of $36-37 mln. In terms of guidance for Q4 (Jan), Tintri sees non-GAAP EPS of $(0.83)-(0.79) and revenue of $25-27 mln. Both number are below market expectations and revenue is significantly below.
While Tintri made progress in OctQ by expanding its portfolio with two new all-flash product lines and software that integrates its products with public cloud storage solutions, the company said that it was disappointed with Q3 revenue. The company was impacted by delayed and reduced purchases by some accounts, but some of the delayed transactions closed in November. Tintri also said it's exploring strategic options, including retaining investment bank advisors to assist it in this process and optimizing its operating model to reduce its cash burn rate and shorten the time to generate positive cash flow.
In sum, Tintri had a rough quarter from a revenue perspective and its JanQ revenue guidance was quite low. The stock has had a rough time since its IPO debut on June 30. The IPO priced at $7 and has been trading below that level for most of its time as a public company. On the positive side, Tintri appears to be providing an important service for its customers. However, it's not yet profitable and it sounds like that will not happen for the foreseeable future.