Nimble Storage (NMBL) Q1 Loss Narrows, Revenues Up Y/Y

Nimble Storage, Inc. (NYSE:NMBL) reported first-quarter fiscal 2017 loss of 51 cents a share that was narrower than the Zacks Consensus Estimate of loss of 53 cents.

Revenues of $86.4 million surpassed the Zacks Consensus Estimate of $84.8 million and also improved nearly 21.2% year over year. Given the strong quarterly results, shares were up 11.7% in the aftermarket. The company’s guidance for the second quarter of fiscal 2017 also came above expectations.

The company’s revenues from products increased 13.6% to $68.4 million in the quarter, while the same from support and services business improved a robust 62.5% to $18 million.

The company’s gross margin (non GAAP) was 65.7%, a decrease of 70 basis points (bps) from the year-ago quarter marred by decreased volume.

Nimble Storage exited the quarter with cash and cash equivalents of $203 million, compared with $211.2 million as of Jan 31, 2016.

In the first quarter of fiscal 2017, the company used cash from operating activities to the tune of $8.3 million, almost at the same level as in the prior fiscal quarter. Capex was $6.8 million leading to negative free cash flow of $15.1 million.

Guidance

For the second quarter of fiscal 2017, the company expects revenues in a range of $93 million to $96 million. Non GAAP operating loss is expected to be $16 million to $18 million. Non-GAAP loss per share is projected in the range of 19 cents to 21 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. In the first quarter, its customer base grew 48% while AFA bookings constituted 12% of total bookings in the quarter.

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 that may be considered instead include Facebook Inc (NASDAQ:FB) , EMC Corporation (NYSE:EMC) and Imation Corp. (NYSE:IMN) . While Facebook sports a Zacks Rank #1 (Strong Buy), EMC Corp. and Imation Corp carry a Zacks Rank #2 (Buy).