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Nimble Storage (NMBL) Q3 Loss Widens Y/Y; Stock Plunges

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Nimble Storage, Inc. (NMBL - Free Report) posted third-quarter fiscal 2017 results wherein loss of 45 cents a share came in narrower than the Zacks Consensus Estimate of a loss of 48 cents while revenues of $102 million were in line with the same.

However, the loss was much wider than the prior year quarter’s loss of 36 cents. Shares were down 12.9% in the aftermarket session following the results. Revenues were up 26.4%.

Nimble reported non-GAAP loss (excluding stock based compensation) per share of 18 cents compared with a loss of 14 cents reported in the year-ago quarter.

Nimble credited strong AFA bookings for the good performance. AFA bookings grew 24% in the quarter compared with 17% in the previous quarter. The company added 217 AFA customers. Overall, the company’s customer base grew 38% year over year, taking the total count to 9,450 customers.

The company’s revenues from products increased 24% to $81.3 million in the quarter, while the same from support and services business improved a robust 36.9% to $20.7 million.

The company’s gross margin (non-GAAP) was 66%, a decrease of 90 basis points (bps) from the year-ago quarter. Non GAAP net loss widened to $15.4 million from $10.8 million reported in the prior-year quarter.

Nimble Storage exited the quarter with cash and cash equivalents of $180.7 million, compared with $211.2 million as of Jan 31, 2016.

In the third quarter of fiscal 2017, the company used cash from operating activities to the tune of $11.3 million. In the quarter, capex was $6.7 million leading to negative free cash flow of nearly $18 million.

Total cash used from operating activities in the first nine months amounted to $23.7 million.

NIMBLE STORAGE Price, Consensus and EPS Surprise

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

Guidance

For the fourth quarter of fiscal 2017, the company expects revenues in a range of $112 million to $115 million. Non GAAP operating loss is expected to be $11 million to $13 million. Non-GAAP loss per share is projected in the range of 13 cents to 15 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. Nimble struck a deal with Lenovo that will enhance its converged infrastructure solutions portfolio.

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 #4 (Sell). Some better-ranked stocks in the tech space include TiVo Corp. (TIVO - Free Report) , Sabre Corporation (SABR - Free Report) and Facebook Inc. (FB - Free Report) While TiVo sports a Zacks Rank #1 (Strong Buy), Sabre and Facebook carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

TiVo, Sabre and Facebook have posted positive earnings surprises of 97.76%, 9.67%, and 21.11%, respectively, in the trailing four quarters.

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