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With trepidation, Tintri storage takes Nasdaq plunge

Tintri heads into the July 4 holiday wearing a new status symbol: publicly traded company. Still, it’s initial public offering came a day late and $40 million short.

Shares in Tintri storage (Nasdaq: TNTR) rose 3% to close at $7.30 on Friday as the flash vendor completed its initial public offering, albeit one day later than expected. Trading started above the issue price of $7 and flirted with the $7.50 midpoint in afternoon trades, spiking at one point to $7.75 a share.

The stock sale netted nearly $60 million in proceeds, roughly 40% lower than Tintri’s original target range of $100 million to $109 million. It had planned on Thursday to sell 8.7 million shares for as high as $12.50, but postponed the equity issue at the last minute. The company blamed the delay on lackluster tech stocks, which ultimately caused Nasdaq valuations to plummet 1.5% on Thursday.

Another closely watched IPO debut on Thursday, from food-kit specialist Blue Apron, took a beating even after its valuation was sliced by 33%. Tintri CTO and founder Kieran Harty said bankers were “a little skittish” about the market prompting Tintri to revise its offering to 8.5 million shares at $7 to $8 a share.

“What we learned from talking to investors is that they have experienced the pain of other enterprise infrastructure companies (going public),” Harty said. “That certainly impacts their view of companies like ours in a similar space.

“But we believe the benefits of being a public company outweigh the temporary cyclical conditions of the market. Ultimately we care about where the stock is – and where the company is – in a few years.”

Tintri storage products include the flagship VMstore line of all-flash and hybrid storage arrays, although the nine-year-old company is shifting its business model to storage software for deploying Web-scale cloud services. Its storage revolves around a deep integration of VMware virtualization technologies.

The company has raccumulated $376 million in financial operating losses since its 2008 inception, but it has narrowed the gap of late between sales and expenses. In fiscal year 2017, Tintri posted $125 million in sales in 2017, up 45%, while expenses grew 21%. It will need to accelerate that trend line to turn the corner toward profitability, however.

Harty cited other positive financials, such as Tintri’s 65% gross margin during the last fiscal year and an average 19% repurchase rate by its largest customers, which include global Fortune 100 companies such as Comcast, Chevron, Toyota and United Healthcare.

Harty declined to project how soon before Tintri storage and services sales will rise enough to bring the company a profit. Hitting the break-even mark on cash flow is a more immediate priority. He said revenue growth will be measured, not “growth at all costs.”

“A few years ago, investors didn’t care so much about (how soon) you were going to be profitable. Now they do,” Harty said.

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