Initial Public offerings are the very first time that the stock of a private company is offered to the public. Most IPO’s are offered by younger companies that want to expand their business. In the market of cloud platforms largely dominated by Dell, IBM and VMware, the name Tintri may not ring a bell. But the company has earned a reputation for itself for its VMstore, a storage appliance built for virtual machines since its launch in April 2011. This week Tintri has filed for IPO with the SEC.
Tintri’s moves come on the heels of its rival Nutanix, which made its stock market debut with a bang last year. Nutanix’s goal is to make it easier for companies to manage their data centers. Tech IPO’s are usually dominated by the big internet giants, but the few small tech IPO’s which are braving the public markets are doing pretty well. However, financially, Nutanix is not earning profits and Tintri’s increasing losses are also a cause of worry.
For the latest fiscal year Tintri brought in $125.1 million and their losses amounted to $105.8 million. The preceding two fiscal years had them operating at a loss. Their major expenses seemed to be from the ‘sales and marketing’ and the ‘research and development’ sector. Therefore, in terms of risk factors, Tintri has warned ‘that it has a history of losses and may not be able to achieve or maintain profitability.’
But the larger cloud platform market is a lucrative field for investors. Virtual desktop infrastructure for companies that are growing is indispensable. When the volume of the work goes up, virtual machines are able to smoothly manage the increased flow in traffic by efficiently using the physical computers on which the business operates.
Virtual machines operate with large scale private clouds, databases, and applications that host tens of thousands of computers and mobile devices. This technology is used by hospitals, manufacturers, sports and entertainment agencies in order to run their businesses across a large volume of computers covering distance and appliances. In the future it is expected that in the Internet of Things (IoT) there will be a hybrid or a largely virtualized environment. Therefore the sales for virtual machines that are efficient and reliable is only expected to increase.
Even today the producers of cloud infrastructure systems and storage solutions are numerous. The competition could also make it difficult for Tintri to breakeven anytime soon. Flash storage rivals like Nimble storage, Nutanix, and Pure Storage are also gearing to improve products. The large number of efficient rivals could be one of the reasons that Tintri is spending big in its ‘sales and research department.’
Nutanix is currently trading above its IPO price which could mean that Tintri would have made a wise move by offering its IPO. This can help it generate the much needed funds to improve its financial position. It could also utilize these funds for investment in the R&D sector to produce better products that can offer it a competitive edge over other rivals. Since Tintri already boasts of 1250 enterprise clients (Sony Computers, Miller, and Coors to name a few) it shouldn’t be difficult for them to get ‘quality feedback’.
They have opted to list on the Nasdaq stock exchange under the stock symbol ‘TNTR’. In a stock market that has a good offering for tech startups, it’s a good time to go public. Only time will tell if they go big, or go home.