Enterprise cloud platform company Tintri Inc TNTR reported third quarter results after the market close Wednesday, with a 6-percent year-over-year decline in revenue to $97 million and a narrower loss of 79 cents per share on a non-GAAP basis.
Tintri guided for fourth-quarter revenue of $25 million to $27 million and a non-GAAP loss of 79-83 cents per share, falling below Street expectations.
The Analyst
KeyBanc Capital Markets analyst Alex Kurtz downgraded the shares of the company from Overweight to Sector Weight.
The analyst attributed the downgrade to multiple headwinds, including end customer concerns over Tintri's cash position.
The Thesis
Tintri is fighting a two-front battle, with negatively impacted customer confidence and the challenge of retaining key sales representatives, contributing to the weak guidance, Kurtz said in a Wednesday note. (See Kurtz' track record here.)
"The biggest impact to Tintri was deals in the $400K-$1M range, which have softened in the pipeline, leading to the weaker outlook," Kurtz said.
Looking ahead, the analyst projects that the company's architecture and file system will value in the high-end network attached storage market. Tintri's board might consider strategic options, apart from cutting costs and increasing the cash conversion cycle, the analyst said.
KeyBanc expects the company's 2019 revenues to decline 18 percent year-over-year.
Kurtz surveyed the bull and bear takes on Tintri's Q3:
The bulls, according to the firm, were appeased by the company exploring strategic options, which could create a floor on any further downside scenario.
The company is likely to achieve cash flow break-even sooner than expected.
The Q4 guidance that calls for a 25-percent sequential drop in product revenue and flat service revenue may prove conservative.
On the other hand, the bears liked the fact that some of the company's deals slipped as customers fretted over its balance sheet. The naysayers see this as driving concern and limiting revenue growth, Kurtz said.
The Price Action
Tintri shares are down about 25 percent year-to-date. The stock was down 12.41 percent at $4.80 at the time of publication.
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