Tintri teeters on the edge of oblivion

Management faces the ghoulish and grisly truth


Storage array supplier Tintri is circling the drain as it issues preliminary first fiscal 2019 quarter results and issues dire warnings, really dire warnings, about its prospects.

Revenues are expected to be $22m, 27 per cent down on a year ago. A net loss of $1.14/share is expected, implying an overall net loss of c.$30m.

The company has debts of $15.4m under its line of credit with Silicon Valley Bank, and $50m under its credit facility with TriplePoint Capital; $65.4m in total. It had $11.5m aggregate cash and cash equivalents at the end of May and no facilities to borrow more cash.

It has not been in compliance with certain financial and other covenants under these credit facilities since the end of May and the debts could be called in. Tintri does not seem to have the cash to pay them.

There is also also an additional $25m in principal amount of subordinated indebtedness.

The upshot is that Tintri likely does not have sufficient funds to continue its operations beyond June 30, 2018 - based on current cash projections, and regardless of whether its lenders choose to accelerate the repayment of the company’s indebtedness under its credit facilities,

Tintri’s board is evaluating options such as selling the company or bankruptcy, which could result in a total loss of shareholder investment.

Concerns

Customers have said they are concerned about Tintri’s future state and may cease buying products until some reassurance could be provided. Ditto suppliers shipping parts to Tintri. The release of this preliminary results statement and its open warnings is likely to strengthen these concerns.

Tintri expects liquidity constraints and its financial condition overall to significantly impact bookings and revenues in the second quarter. It faces NYSE delisting.

This is a preliminary results statement because Tintri has filed a Notice of Late Filing for the quarter’s Form 10-Q with the Securities and Exchange Commission (SEC).

The company has also experienced recent losses of employees whose job functions related to the preparation of the Quarterly Report.

It anticipates the report will be filed this month. Tintri is providing no guidance for the next quarter or conducting a results conference call; hardly surprising.

Shares have dropped to $0.30, down 56.5 per cent compared to yesterday, and its market capitalisation is a pitiful $9.64m.

Outcomes

There are only two likely outcomes here: a company sale, in a distressed condition, or bankruptcy. Fingers will be pointed, long and hard, at previous senior management and also at a board that let said senior management effectively ruin the company.

For founders, investors, employees and customers it is a sad and disappointing outcome for a promising startup that became an unwanted orphan in the shared external storage array family as its unique technology was effectively copied.

After its botched IPO it seemed Tintri had nowhere to go except downhill and dishearteningly has careered that way ever since. ®


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