Nimble Storage's (NMBL) Q4 Loss Widens, Revenues Improve Y/Y

Nimble Storage, Inc. NMBL reported fourth-quarter fiscal 2016 non GAAP loss of 12 cents a share that was narrower than the loss of 13 cents reported in the year-earlier quarter. However, on a GAAP basis, loss per share of 40 cents came in much wider than loss of 33 cents reported in the year-ago quarter.

On the other hand, revenues of $90.1 million surpassed the Zacks Consensus Estimate of $88.4 million and also improved nearly 32% year over year. However, shares tanked 8.7% in the aftermarket as the company's guidance for the first quarter of fiscal 2017 failed to meet analysts' expectations.

The company's revenues from products increased 24.6% to $73.1 million in the quarter, while the same from support and services business improved a robust 76.7% to $17 million.

The company's gross margin was 66.4%, a decrease of 80 basis points (bps) from the year-ago quarter marred by forex fluctuations.

Nimble Storage exited the quarter with cash and cash equivalents of $211.2 million, compared with $208.4 million as of Jan 31, 2015.

For fiscal 2016, the company generated cash from operating activities to the tune of $5.8 million compared with $5.4 million in the prior fiscal.

Guidance

For the first quarter of fiscal 2017, the company expects revenues in the range of $83 million to $86 million. Non GAAP operating loss is expected to be $20 million to $22 million. Non-GAAP loss per share is projected in the range of 25 cents to 27 cents.

As for fiscal 2017, management refrained to provide guidance but stated that investments are likely to drag down margins in the first half of the year. The company expects to spend over $25 million to $30 million as capex while cash generated at the end of fiscal 2017 will likely be in the band of $185 million to $190 million.

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.

Recently, 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 the 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 space that may be considered instead include Silicon Graphics International Corp. SGI, Hutchinson Technology Inc. HTCH and Qumu Corporation QUMU. While Silicon Graphics sports a Zacks Rank #1 (Strong Buy), Hutchinson and Qumu carry a Zacks Rank #2 (Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>