Tintri - The Next Violin Memory In The Making

Summary Recent IPO stumbles right out of the gate by reporting disappointing quarterly results and issuing abysmal forward guidance. Management largely failed to address analysts' concerns on the call. High cash burn in combination with a rather weak balance sheet already puts the company at risk of going bankrupt in the not too distant future. Management should put the company up for sale or raise additional funds as soon as possible. Investors should move to the sidelines or even consider an outright short position. Frankly speaking, #Tintri 's (NASDAQ: #TNTR ) short life as a public company hasn't exactly been a success story, to say the very least. The small provider of all-flash storage solutions almost botched its IPO in June and only managed to list on Nasdaq after cutting the targeted IPO price by more than 40% (from an initial range of $10.50 to $12.50 to $7). In consequence, net proceeds came in at just $55.8 million relative to the originally targeted $100 million.  Picture: Tintri VMstore T800 Hybrid-Flash Array - Source: Company Website In fact, Tintri would have needed the additional funds badly as the company is not only burning cash at a rather breathtaking pace at more than $20 million per quarter but, unlike other tech IPOs, also carries a meaningful amount of debt on its balance sheet ($68.5 million at the end of Q2). Unfortunately, the bad news didn't stop here for Tintri. On August 22, the company disclosed the abrupt departure of its Chief Sales Officer in a filing with the SEC. The disclosure already caused one of the IPO's lead underwriters to downgrade the stock from "overweight" to "equal weight" and cut its price target from $10 to $6. After Tintri reported Q2 results on Thursday afternoon and guided for Q3, I fully expect basically all of the remaining analysts currently covering the company to follow suit over the next couple of days. While loss per share actually came in somewhat better than expected and top line revenues of $34.9 million missed consensus expectations just slightly, Q3 guidance, in fact, was much weaker than expected as Tintri now projects revenues to increase just slightly quarter over quarter to $36-37 million compared to analysts' expectations of $42.5 million. On the conference call, one analyst pointed to the guidance actually representing a meaningful year over year revenue decline for Q3. Not surprisingly, management was given a hard time by analysts on the call and, at least in my opinion, failed to come up with credible explanations for the company's struggles besides some turnover in the sales force. Frankly speaking, with larger peers #Nutanix (NASDAQ: #NTNX ) and #PureStorage (NYSE: #PSTG ) currently firing on all cylinders and hiring salespeople like crazy, I fully understand why Tintri is currently experiencing problems in its sales organization. Even worse, #Tintri is now looking to cut back on operating expenses, a highly unusual move for a company that is in urgent need to reinvigorate growth. The disclosure perplexed analysts on the call even more, particularly after management did not anticipate growth to re-accelerate meaningfully in Q4.

https://seekingalpha.com/article/4105218-tintri-next-violin-memory-making