Well, Nimble missed their revenue and profitability targets this quarter, and the market reacted viciously. As Tintri's CFO has warned us on multiple occasions. The stock lost about half its value. They also pulled down Pure Storage by about 15%. Incumbent storage companies (EMC, NTAP, etc.) went up. The dominant story today seems to be "gosh, selling storage is tough and there's a lot of competition."
BMO Capital analyst Keith Bachman wrote
Our original thesis on Nimble is broken. We had previously assumed (incorrectly) that Nimble’s technology advantage would enable the company to take share in both the midmarket and enterprise, while also gradually growing profits and cash flows. However, we think the challenges of Nimble’s competitors are now engulfing Nimble, in terms of both revenue growth and profits. Moreover, while Nimble envisions improving profitability in 2H FY2017, we are less convinced.
Hence, we are moving to our back up thesis. We believe that Nimble could make an interesting take out target for the very same reasons mentioned above. The incumbent storage vendors are seeking growth and could meaningfully improve Nimble’s sales leverage. In addition, Nimble is a lot less expensive than it used to be. Nimble’s gross margins remain 67%, which would be accretive to Nimble’s competitors. Moreover, R&D is only about 22% of revenues, whereas S&M and G&A combined are about 58% of revenues. Further, we believe a large portion of non-R&D spending could be meaningfully reduced or eliminated.
Frankly, I *don't* think Nimble has a technology advantage. They lack an all-flash array (though one is coming) so can't compete with Pure, EMC's ExtremeIO, Netapp, Tintri, and Tegile in that market. They have good analytics capability in InfoSight but no real-time analytics on the box (which particularly hurts federal and financial customers) and no per-VM features like Tintri. The areas where Nimble has been strongest is in the commercial sector where they have affordable products and a very strong channel presence.
There is a tendency of market analysts to treat public companies as the only companies around. If somebody is going to get snapped up in an acquisition, I don't think it's going to be Nimble. (The fact that it's cheap hasn't helped Violin.)