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Nimble Storage (NMBL) Posts Lower-than-Expected Q2 Loss

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Shares of Nimble Storage, Inc. were up nearly 2% yesterday following strong second quarter fiscal 2017 results. Nimble Storage reported second quarter loss of 47 cents a share that was narrower than the Zacks Consensus Estimate of a loss of 49 cents.

Nimble reported non-GAAP loss (excluding stock based compensation) per share of 19 cents compared with a loss of 10 cents reported in the year-ago quarter.

Revenues of $97.1 million surpassed the Zacks Consensus Estimate of $94.8 million and also improved nearly 21.2% year over year. Nimble credited strong AFA bookings for the good performance. AFA bookings grew 17% in the quarter compared with 9% in the previous quarter. The company added 133 AFA customers of which 79 customers came “with deal sizes substantially above our overall average." Overall, the company added 700 new customers in the quarter, up 43% year over year, taking the total customer base to 8,850 customers.

The company’s revenues from products increased 16.3% to $77.7 million in the quarter, while the same from support and services business improved a robust 46% to $19.5 million.

The company’s gross margin (non-GAAP) was 67%, a decrease of 80 basis points (bps) from the year-ago quarter. Non GAAP operating loss widened to $15.5 million compared with $7.2 million reported in the prior-year quarter.

Nimble Storage exited the quarter with cash and cash equivalents of $194.2 million, compared with $211.2 million as of Jan 31, 2016.

NIMBLE STORAGE Price, Consensus and EPS Surprise

 

NIMBLE STORAGE Price, Consensus and EPS Surprise | NIMBLE STORAGE Quote

In the second quarter of fiscal 2017, the company used cash from operating activities to the tune of $4.1 million. In the quarter, capex was $5 million leading to negative free cash flow of $9.1 million.

Total cash used from operating activities in the first six months amounted to $12.4 million.

Guidance

For the third quarter of fiscal 2017, the company expects revenues in a range of $100 million to $103 million. Non GAAP operating loss is expected to be $14 million to $16 million. Non-GAAP loss per share is projected in the range of 17 cents to 19 cents.

To Conclude

Nimble Storage is positioning itself to benefit from the ongoing shift to flash-centric architectures from the conventional disk-centric architectures with its Adaptive Flash platform. Meanwhile, the company has been acquiring large enterprise customers and equally concentrating on growing its mid-size customer base.

The company launched AF-series All Flash Arrays storage equipment that relies solely on flash memory chips. Analysts view this as a big positive for the company that will allow it to gain traction in the all flash segment. However, they are wary of stiff competition from existing players like EMC and Pure Storage, which might weigh on Nimble’s margins.

Currently, Nimble has a Zacks Rank #3 (Hold). Better-ranked stocks in the tech space include Facebook Inc , MeetMe Inc and VeriSign Inc. (VRSN - Free Report) . While Facebook sports a Zacks Rank #1 (Strong Buy), MeetMe and VeriSign carry a Zacks Rank #2 (Buy).

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