Why Shares of Tintri Inc. Crashed Today

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What happened

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Shares of enterprise cloud-platform provider Tintri Inc. (NASDAQ: TNTR) tumbled on Friday after the company reported mixed second-quarter financial results. Revenue came in below the average analyst estimate and at the low end of the company's own expectations, and Tintri's third-quarter guidance called for minimal sequential revenue growth. The stock was down about 27% at 11:15 a.m. EDT.

So what

Tintri reported second-quarter revenue of $34.9 million, up 27% year over year but roughly $0.8 million below the average analyst estimate. Tintri's total customer count now exceeds 1,400; the company did not disclose the precise number of new enterprise and cloud service provider customers gained during the quarter.

The bottom line looked better relative to expectations. Non-GAAP earnings came in at a loss of $0.91 per share, up from a loss of $1.03 per share during the prior-year period and $0.02 better than analysts were expecting. The loss was $2.05 per share on a GAAP basis, driven by significant increases in spending. Research and development spending soared 78% year over year to $23.1 million, while sales and marketing spending surged 33% to $32.6 million.

Tintri CEO Ken Klein acknowledged the weaker-than-expected revenue growth, but pointed to the positives:

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While the company's revenue came in at the low end of our expectations, we delivered stronger than projected profitability and cash flow improvements. We remain confident in our competitive position and in the strength of our value proposition. In the quarter we received the largest order in the company's history and added new enterprise logos.

Now what

Tintri expects to produce third-quarter revenue between $36 million and $37 million, up just 4.6% at the midpoint from the second quarter. A non-GAAP net loss between $0.77 and $0.81 per share is expected. The company is hoping that a recently announced all-flash platform and new software offerings will help drive growth in the second half.

Tintri went public in July, and the second-quarter report was its first as a publicly traded company. Big losses and slowing growth were the themes, and investors responded by pushing down the stock. Tintri has about $80 million of cash on the balance sheet, but with a negative free cash flow of $23.9 million during the second quarter, that cash won't last very long.

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Timothy Green has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.