Tintri postpones stock sale
In the latest sign that investors are taking a tougher stance toward new companies listing their shares, Tintri, a Mountain View storage-hardware business, postponed a public offering planned for Thursday by a day and cut the price range for the stock sale.
“Investors didn’t really line up to own this,” said Kathleen Smith, a principal analyst at Renaissance Capital, a manager of IPO-focused exchange traded funds. “This is the summer of tough love for the IPO market.”
The timing seemed abrupt.
“Tintri’s plan to list tomorrow has changed,” a company spokesman said in an email Wednesday evening. The company disclosed the changes to its offering in an amended filing to the Securities and Exchange Commission on Thursday morning.
Delaying an IPO the day before its listing is not unprecedented, but this move apparently caught employees by surprise. Rick Ehrhart, a developer evangelist, posted a photo of himself Monday on Twitter smiling and wearing a T-shirt printed with the company’s planned Nasdaq ticker symbol, TNTR, and the expected date, “6.29.17.” Sumedh Sakdeo, a senior staff engineer, posted a photo of colleagues at an airport Wednesday morning: “Folks ready to board the plane to NY!” Sakdeo deleted the tweet Thursday.
“You file your prospectus, you go on a roadshow, and then find out after the roadshow that you didn’t get as many orders as you thought you would,” analyst Smith said. A company spokesman declined to comment on the tweets.
Companies postpone or cancel stock offerings for a variety of reasons. In 2014, Box postponed its offering in the face of unfavorable market conditions; it did not go public until January 2015. In January, Cisco, the San Jose networking giant, agreed to buy San Francisco’s AppDynamics on the eve of its scheduled offering, after executives had already flown to New York to celebrate the listing of its shares.
Tintri, led by Kenneth Klein, a former Wind River Systems executive, planned to raise $100 million by offering 8.7 million shares at a price range of $10.50 to $12.50, according to Renaissance Capital.
In its Thursday filing, Tintri said that it would instead price its shares between $7 and $8, and that it plans to offer 8.5 million shares. As a result, the company expects to raise approximately $53.8 million instead of $87.5 million.
It has raised $260 million in venture funding since 2011, according to Crunchbase.
Tintri’s revenue grew from $49.8 million to $125.1 million in the past two years, but it lost $105.8 million in the most recent fiscal year, compared with $69.1 million in 2015. In the most recent quarter, which ended April 30, it lost $30.7 million on revenue of $30.4 million. Sales and marketing expenses accounted for more than half of its operating costs.
As of the end of April, the company had $48.7 million in cash and was spending roughly $20 million a quarter. Money raised through the revised offering will significantly extend the time the company has before it needs to raise more money or find a buyer.
The company was founded in 2008. Tintri faces “intense competition” from established companies such as Nutanix, NetApp, IBM and VMware, according to a prospectus filed with the Securities and Exchange Commission. It has more than 1,000 corporate clients, including Sony and MillerCoors.
“There is a big market for having more flexible storage,” Smith said. But Tintri’s high cash burn is a concern, she said.
Tintri’s offering, now expected for Friday, will be the fourth major Bay Area tech IPO this year, and one of several offerings scheduled for this week. Blue Apron, a New York online mealkit delivery, held its offering Thursday as planned, albeit at a lower price. The company sold shares at $10, with the stock rising 9 percent before falling to close at the offering price.