Why Shares of Tintri Inc. Crashed Today

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What happened

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.

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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:

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.