Nimble's plan is to break even "on an operating income basis" by January 2016. We can add or subtract storage capacity rapidly in response to changing customer needs," argued Vasudevan. Our system works so well that we initiate 90% of the service calls with our customers and Better data protection since our data management as a service lets users store de-duplicated backup images of their data every 15 to 30 minutes.Our hardware costs about 20% of what they charge customers and it requires less power and cooling Nimble claims to be taking customers from EMC (its midrange VNX line) and NetApp (its FAS products) for four reasons: "Operating leverage in marketing and sales will help us to break even at the end of our fiscal 2015." Explained Vasudevan, "Our R&D investment enabled us to broaden our addressable market from $5 billion for our iSCSI-based hybrid flash and disk storage product to $20 billion with the recent introduction of Fibre Channel versions of our arrays - a $15 billion market."Īnother reason is that Nimble has been spending on sales and marketing to enter "dozens of countries and to add Fortune 1000 companies to its target market." But Vasudevan expects that spending to grow more slowly while Nimble's revenues continue their rapid uptrend. One reason for its operating losses is R&D spending. It remains on track to reach breakeven by the end of calendar 2015," according to Pacific Crest Securities which has a price target of $44 on the shares that traded at $25.52 on November 26.
"Nimble's operating losses narrowed slightly to $9.7 million from $10.7 million last quarter. In its fiscal third quarter, Nimble's revenue rose 77% to $59.1 million - $1.3 million more than the consensus estimate. On November 25, Nimble Storage reported rapid revenue growth and a net loss. We ought to manage our R&D to generate a steady stream of new products and get operating leverage from our sales and marketing expenses so that we can sustain our fast revenue growth with slower operating expense growth." "As we approach $500 million in revenue, we think it's reasonable for investors to expect us to be profitable. Nimble Storage believes it has found a way to square the circle. But this spring, investors changed their minds and decided that profits and growth matter." His answer to that question is a conditional "No." Explained Vasudevan, "We went public about a year ago in an investing climate that valued high growth and did not focus on profitability. Before joining Nimble, he was a public company executive experience - over 10 years as a senior executive at NetApp where he led product strategy and development - and a consultant - he was a senior engagement manager in McKinsey's Chicago office. His background yields an interesting perspective on this question. On November 26, I interviewed Nimble Storage CEO, Suresh Vasudevan (I have no financial interest in the company's shares). This raises a question I find interesting: Should the CEO try to adapt the company's business strategy in anticipation of changes in investor sentiment?
Sometimes investors want companies that are growing fast but losing money and suddenly they get spooked and decide to sell their shares in such companies until they show that they can grow fast and make money at the same time. Investors' appetites change faster than the pace at which companies can alter their business strategies.
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