New Chance To Buy Into Shares Of Tintri At IPO Quiet Period Expiration

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Includes: TNTR-OLD
by: Don Dion

Summary

After 7.25, the IPO quiet period on shares of TNTR will expire and the firm's underwriters will be able to release research reports and recommendations.

The team includes BofA Merrill Lynch, Morgan Stanley, Pacific Crest Securities, Needham & Co., Raymond James & Associates, and William Blair & Co.

Although TNTR has had a somewhat slow start to trading, we see several reasons for underwriters to put out positive news, including an attractive valuation on a P/S basis.

Experienced investors might consider purchasing shares of TNTR ahead of the event to take advantage of a likely ramp up in price surrounding the event.

The 25-day IPO quiet period on Tintri Inc. (NASDAQ GLOBAL: TNTR) will end on July 25, allowing the firm's IPO underwriters to publish reports and recommendations on Tintri, beginning July 26.

The share price of Tintri Inc. will likely see a temporary increase as a result of a flood of positive underwriter reports. The event could open a buying opportunity for experienced investors. A handful of select IPO quiet period expirations produce buying opportunities. (Please refer to our firm’s research for full details.)

We previewed this event on our IPO Insights platform.

Business Overview: Provider of Enterprise Cloud Platform

Tintri develops and sells an enterprise cloud platform that combines cloud management software with an all-flash storage system. The platform provides both cloud service providers and large organizations with public cloud capabilities inside their data centers.

See more in our IPO preview.

The company focuses on a range of functionalities, including disaster recovery, development operations, data protection, desktop virtualization, and server virtualization.

In addition, Tintri offers related support, installation, and training services for its products. The company serves the public and private sectors in technology, manufacturing, healthcare, insurance, and financial services.

Tintri was founded in 2008 and is headquartered in Mountain View, California.

Financial Highlights



According to the company’s S-1/A filing, Tintri has grown topline revenue but at a decreasing rate. As use of of cash in operations has skyrocketed, the company maintains an uneven but generally increasing gross margin.

For FY ending the Q1 2018, Tintri reported total revenue of $30.4 million, a 33% increase from the prior year. For the fiscal year ending 2017, Tintri reported revenue of $125.1 million, a 45% increase from 2016, in which it brought in $86 million.

MD&A Overview

Tintri derives revenue primarily from sales of enterprise cloud platform products. A majority of its customers also purchase supporting service contracts, which include software patches, bug fixes, updates, upgrades, hardware repair and replacement parts, and technical support.

The company has a client base of 1,273 that spans education, financial services and insurance, healthcare, manufacturing and automotive and technology, and includes seven of the top 15 Fortune 100 companies.

As mentioned above, despite significant revenue growth, the company has had net losses for the three previous fiscal years. As of January 31, 2017, the accumulated deficit reached approximately $338.7 million. Tintri notes in its SEC filings: "Unless and until we are able to generate sufficient revenue from sales of our products and services to generate positive cash flows from operations, we expect such losses to continue. We are also subject to certain financial covenants related to our debt facilities that, if breached, could result in the debt becoming immediately due.”

Management Team

Chairman and CEO Ken Klein has served in his positions since 2013. He became a director in 2012. His previous experience comes from Wind River Systems, and he serves on the board of MobileIron. Mr. Klein holds a bachelor of science degree in electrical engineering and biomedical engineering from the University of Southern California.

CFO Ian Halifax has served in his position since 2013. He has held senior financial positions at Host Analytics, Grass Valley USA LLC, Wind River Systems, Macrovision, and Micromuse. Mr. Halifax is a certified public accountant and holds a bachelor of arts degree from the University of York and an MBA from Henley Management College in the United Kingdom.

Solid Early Market Performance

TNTR was priced at $7, significantly below its expected price range of $10.50 to $12.50. The stock closed at $7.41 on its first day of trading. It dropped to a low of $6.75 on July 10, but then recovered to reach its IPO price. The stock currently trades at $6.75 (mid day session 7.21).

Conclusion & Summary of Buying Opportunity

Although TNTR has had a slightly more gradual beginning to its market performance, and is still not yet profitable, we believe its powerful team of underwriters will list many reasons to buy shares after July 25th.

Although smaller than some of its peers, TNTR is priced competitively on a P/S basis. TNTR's P/S of 1.74 is well below the industry average of 5.8.

As our research states above, a select group of firms (often tech), such as TNTR, occasionally pop in price in a short period of time surrounding quiet period expirations.

The team includes BofA Merrill Lynch, Morgan Stanley, Pacific Crest Securities, Needham & Co., Raymond James & Associates, and William Blair & Co.

We suggest investors purchase shares of TNTR days prior to 7.25 and sell shortly after to take full advantage.

Don Dion's IPO Insights provides up-to-date information and analysis on the major IPOs each week, along with additional opportunities to invest and short these stocks at their quiet period and lockup period expirations, respectively. Consider following us at the link above. We will continue our PRO offerings on Seeking Alpha alongside our more exclusive research.

Disclosure: I am/we are long TNTR.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.