Storage provider Tintri’s IPO filing shows mounting losses

Blue Apron wasn’t the only venture-backed business to announce its IPO this week. Tintri, an enterprise cloud platform company, unveiled its filing. 

The stock market is doing well and there’s been a strong appetite for tech offerings, so it’s a good time to go public.  But Tintri’s mounting losses could prove to be problematic.

Tintri brought in $125.1 million in revenue for its latest fiscal year, but their losses were nearly as big, at negative $105.8 million. Although it’s a better ratio than last year, when revenue was $86 million and losses were $100.1 million. The year before also had losses that exceeded the revenue.

So where is the money going? It looks like “sales and marketing” is Tintri’s biggest expense, which cost the company $108.9 million in the latest year. Tintri also spent $53.4 million on research and development.

In the “risk factors” section of the filing, the company warns it has “‘a history of losses and may not be able to achieve or maintain profitability.” They said the accumulated deficit is $338.7 million. “We anticipate that our operating expenses will increase substantially in the foreseeable future as we continue to hire additional employees, develop our technology and enhance our product and service offerings, expand our sales and marketing teams, make investments in our distribution channels, expand our operations and prepare to become a public reporting company,” said the filing.

They also acknowledge they face “intense competition” from “numerous established companies that sell competitive enterprise cloud infrastructure systems or storage solutions.” Some of the data center competitors listed include EMC, Dell, NetApp, IBM and VMware. Flash storage rivals include Nimble Storage from HP Enterprise, Nutanix and Pure Storage.

Nutanix went public last year and is still trading above its IPO price, a decent sign for Tintri if investors consider them a comparable. But Pure Storage is trading below its 2015 IPO price, a bad indicator for the category.

Tintri touts its big customers. They have over 1250 enterprise clients, including 21 of the Fortune 100 companies. Sony Computer, MillerCoors, and The Carlyle Group are some of their notable users.

Venture capitalists like Tintri. The Mountain View, California-based company has raised at least $260 million in funding, dating back to 2011. Its valuation at the last funding round was said to be $785 million.

New Enterprise Associates (NEA) has the largest stake at 22.7%. Silver Lake owns 20.4%, Insight Venture Partners owns 20.2% and Lightspeed Venture Partners owns 14.5%.

The company is listing on the Nasdaq, under the ticker “TNTR.” Morgan Stanley and Merrill Lynch are leading the offering.

Due to the JOBS Act, companies generally unveil their filing 15 days before the investor roadshow. The timing suggests they are aiming for a debut in late June or early July.