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Investor Presentation


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Investor Presentation

  1. 1. Investor Presentation Suresh Vasudevan, Chief Executive Officer Anup Singh, Chief Financial Officer As of February 27, 2014
  2. 2. Safe Harbor This presentation and the accompanying oral presentation contain “forward-looking” statements that are based on our management’s beliefs and assumptions and on information currently available to management. We intend for such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements other than statements of historical fact contained in this presentation, including information concerning our financial outlook, business plans and objectives, potential growth opportunities, competitive position, industry environment and potential market opportunities. Forward-looking statements are subject to known and unknown risks, uncertainties, assumptions and other factors including, but not limited to, those related to our future financial performance, market acceptance of our solutions, our ability to increase sales of our solutions, including to attract and retain customers and to selling additional solutions to our existing customers, our ability to develop new solutions and bring them to market in a timely manner, pricing pressure (as a result of competition or otherwise), our ability to maintain, protect and enhance our brand and intellectual property, global economic conditions and our ability to continue to expand our business and manage our growth. Moreover, we operate in very competitive and rapidly changing environments, and new risks may emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. Further information on these and other factors that could affect our financial results are included in our filings we make with the Securities and Exchange Commission, and may cause our actual results, performance or achievements to differ materially and adversely from those anticipated or implied by our forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. Although our management believes that the expectations reflected in our forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances described in the forward-looking statements will be achieved or occur. Moreover, neither we, nor any other person, assume responsibility for the accuracy and completeness of the forward-looking statements. We undertake no obligation to publicly update any forward-looking statements for any reason after the date of this presentation to conform these statements to actual results or to changes in our expectations, except as required by law. In addition to GAAP financial information, this presentation includes certain non-GAAP financial measures. The non-GAAP measures have limitations and you should not consider them in isolation or as a substitute for our GAAP financial information. There are limitations to the use of non-GAAP measures. For example, bookings and free cash flow are not substitutes for revenues or cash provided by operations. In addition, non-GAAP operating expenses exclude the impact of stock-based compensation expense, which is a recurring expense for us. See the Appendix for a reconciliation of these non-GAAP financial measures to their nearest GAAP equivalent. 1
  3. 3. Founding Thesis: Opportunity for a Ground-Up Design of Storage Umesh Maheshwari Founder, CTO DAS Monolithic Storage Modular Storage 1980s 1990s 2000s Suresh Vasudevan CEO Varun Mehta Founder, VP of Engineering Flash Cloud Today 2
  4. 4. Investment Highlights and Nimble Storage Snapshot Disruptive platform built on two foundational innovations: Cumulative Customer Base 2,645  CASL, flash-optimized file system  InfoSight, cloud-based management $18B market opportunity* Significant and broad-based traction  Diverse base of enterprises and service providers  Broad set of workloads 1,095 275 FY12 FY13 FY14 Revenue Growth ($M) +134% $125.7 Exceptional revenue growth with scalable margin profile $53.8 Experienced technology and management team *Source: Based on company estimates from IDC and Gartner data $1.7 FY11 $14.0 FY12 FY13 FY14 3
  5. 5. Flash and Disk are Complementary The key is to efficiently optimize both performance and capacity, and be flexible and media-agnostic as flash and disk evolve over time Component Flash Disk Random IOPS/$ 30-100X 1X Sequential IO/$ 1X 3X Need for Flash Varies Greatly Analytics VDI File/Print Capacity/$ 1X 15X Endurance Poor Proven OLTP Archives Low High 4
  6. 6. Enterprises Today are Overwhelmed Exacerbating Trends Virtualization Cloud Computing Poor Application Performance Compute Network Storage 20X 10X Same Mobility Increasing Demands of Data Growth Big Data Social and Collaboration VM / Application Data Management Complexity CRM %* 40-45 CAGR ERP CRM ERP *Source: IDC, The Digital Universe in 2020, sponsored by EMC 5
  7. 7. Our Innovative Platform CASL InfoSight Flash-optimized file system software Cloud-based management Efficiency Scale-to-Fit Integrated Protection Ease of Operations Significantly better performance/$ and capacity/$ Non-disruptive, flexible scaling to massive scale Rapid backup and recovery Predictive support and operational simplicity 6
  8. 8. CASL: Designed from the Ground Up Operating Systems Hypervisors Key Decisions in Ground-Up Design Application Integration  Leverage flash for performance? Replication Snapshots Compression Cloning Thin Provisioning Multi-tenancy File System Software How do we: Data Management Functionality  Leverage disk for capacity?  Be media-agnostic and flexible as the relative merits of flash and disk evolve?  Leapfrog incumbents on data management? 7
  9. 9. CASL: A Breakthrough File System Traditional File Systems / Tiering Nimble Advantage CASL Innovations Fixed blocks: No compression Inline Compression, using variable blocks Uses 30-70% less disk and flash resources Fast random writes need a flash tier Inline Serialization of all incoming write IO Uses low-cost HDDs to deliver SSD-like write performance Fast reads by migrating between tiers wastes flash More Flash More Disk Dynamic Caching to serve reads from flash SSD (Flash) Cache Disk Uses substantially less, lowcost flash to accelerate reads Copy-based snapshots waste capacity and degrade performance Pointer-Based Snapshots Integrated, rapid backup and recovery Scale-Up OR Limited Scale-Out Scale-to-Fit: Scale-up, deep and scale-out Non-disruptive scaling in least-cost increments CASL is more performance and capacity efficient and easy to scale, while delivering integrated data protection 8
  10. 10. Transforming Storage Efficiency at a Large Bank Challenges  Storage costs were 30% of the capital budget Competitor Hybrid Disk-Flash Solution • • Nimble 6 Racks Phase 1: Exchange ½ Rack  Core project drivers: • VS. Performance scaling Storage budget Datacenter footprint 3 Racks Phase 2: SQL Databases ¾ Rack Nimble Advantage  1.5x usable capacity and 50% lower capital costs  10x lower power and cooling costs  Dramatically simpler storage management  2.5x performance and 2x usable capacity at much lower capital costs  75% lower power and cooling costs  Dramatically simpler storage management 9
  11. 11. Transforming Data Protection at a Global Consulting Firm Challenges Rethinking infrastructure at all of their 11 sites Aging storage infrastructure in their main data centers: Boston and Chicago Inadequate data protection in 9 remote sites: • • Tapes for backup Offsite tape copies for disaster recovery Nimble Approach 9 Remote Sites  Nimble chosen as the platform for all 11 sites  Each site protected with hourly snapshots for rapid recovery  Data replicated between offices for cost-effective and simple DR  Significant savings on storage and bandwidth Boston Data Center Chicago Data Center 10
  12. 12. Traditional Storage Management is Inefficient and Expensive Existing Approach ! ? # Q&A Diagnostics Logs Vendor Support Customers 11
  13. 13. Traditional Storage Management is Inefficient and Expensive Existing Approach ?! # Vendor  In a connected world why can’t vendors proactively monitor customer deployed systems?  With modern data analytics tools can vendors predict and prevent problems before they occur? x1,000s of Customers 12
  14. 14. InfoSight: Cloud-Based Management Nimble Approach Customer Benefits Comprehensive Telemetry Storage Management SaaS Offering  Between 12 and 70M sensors per array, daily  Monitoring and alerting  Data collected every 5 minutes and on-demand Analysis and Automation  Systems modeling  Correlations, trending, and projections  Visualization, capacity planning, performance management Proactive Wellness  Vast majority of cases opened by Nimble  Secure, on-demand system access Leveraging pervasive network connectivity and big data analytics to automate support and enable cloud-based management 13
  15. 15. InfoSight Impact In 2HFY14 Proactive Support Prevents Problems 92% of the cases automatically opened by Nimble 82% of support cases auto-closed by Nimble Predicting Customers’ Storage Expansion Needs 193 42 14 customers expanded capacity customers expanded flash customers upgraded controllers 14
  16. 16. Market Response Has Led to Rapid Growth in Our Installed Base Cumulative Customer Base Number of Large Enterprises* 183 2,645 86 26 FY12 1,095 FY13 FY14 Number of Service Providers 241 275 105 FY12 FY13 *Company estimates of Global 5,000 customers FY14 27 FY12 FY13 FY14 15
  17. 17. Broad Appeal FY14 Diversified Workloads* FY14 Diversified Market Verticals 14% 20% 90% Service Provider & Services Other 80% 12% 70% 4% 60% Financial Services Legal 4% 50% Energy 40% 30% 12% 8% Hi Tech Manufacturing 20% 8% 10% Healthcare 0% VMware SQL Exchange VDI File / Print Sharepoint HyperV Web Apps Oracle 8% State/Local Gov’t 10% Education *Y axis represents % of systems in the field that handle this type of workload 16
  18. 18. Land and Expand Strategy: 2-Year Bookings After Initial Sale Na me Q3-2011 Cus tomer1 Cus tomer2 Cus tomer3 Cus tomer4 Cus tomer5 Cus tomer6 Cus tomer7 Cus tomer8 Cus tomer9 Cus tomer10 Cus tomer11 Cus tomer12 Cus tomer13 Cus tomer14 Cus tomer15 Cus tomer16 Cus tomer17 Cus tomer18 Cus tomer19 Cus tomer20 Cus tomer21 Cus tomer22 Cus tomer23 Cus tomer24 Cus tomer25 Cus tomer26 Cus tomer27 Cus tomer28 Cus tomer29 Cus tomer30 Cus tomer31 Cus tomer32 Cus tomer33 Cus tomer34 Cus tomer35 Cus tomer36 Cus tomer37 Cus tomer38 Cus tomer39 Cus tomer40 Cus tomer41 Cus tomer42 Cus tomer43 Cus tomer44 Cus tomer45 Cus tomer46 Cus tomer47 Cus tomer48 Cus tomer49 Note: Bookings defined as Cus tomer50 Q4-2011 Q1-2012 Average: All Customers Q3-2012 Q4-2012 Q1-2013 Q2-2013 Q3-2013 Q4-2013 Q1-2014 Q2-2014 Q3-2014 Q4-2014 Top 50 Customers* 4.10X 2.16X 1X 1X Initial Sale Q2-2012 Total: Year 1 and 2 Initial Sale Total: Year 1 and 2 a purchase order received; statistics as of Jan 31, 2014 * Top 50 of all customers that have been Nimble Storage customers for 4 or more quarters; Of the 50, 18 customers have 8 quarters of history. 17
  19. 19. Highly Leveraged Go to Market Approach >900 cumulative channel partners 918 channel SEs trained in FY14 434  51% of opportunities in FY14 originated by channel 119 FY12  975 channel sales reps and FY13 FY14 18
  20. 20. Competitive Landscape Legacy Modern Monolithic Flash in Server All-Flash Arrays (e.g., VMAX) Modular Dell EQL/CML EMC VNX NetApp FAS HP 3PAR Tape; Low-cost RAID/NAS Real-Time Analytics Mainstream Applications VDI File/Print OLTP Flash-Optimized Hybrid Exchange CRM SQL Archives Tape; Low-cost RAID; NAS; Object Storage 19
  21. 21. Financial Highlights Strong revenue growth with an attractive and expanding margin profile Significant “land and expand” opportunity Investments to expand differentiation and capitalize on large market opportunity Improving operating leverage and cash flow from operations Attractive long term financial model 20
  22. 22. Rapid Revenue Growth Annual Revenue ($M)* Quarterly Revenue ($M) $125.7 $ 41.7 + 134% $33.4 $28.5 $20.2 $53.8 $22.1 $14.6 $11.0 $8.2 $14.0 $1.7 FY11 FY12 Product Revenue FY13 FY14 Support and Service Revenue Q1FY13 Q2FY13 Q3FY13 Q4FY13 Product Revenue Q1FY14 Q2FY14 Q3FY14 Q4FY14 Support and Service Revenue *Fiscal year ends on January 31 21
  23. 23. Growth Drivers Land and Expand 2-Year Bookings* After Initial Sale Average Across All Customers Customers Cumulative Customer Base 2,645 216 64 200 100 100 Number of Deals >$100K 52 + 182% 0 Initial Sale 1,095 customers New customers FY13 Year 2 Total % New vs. Existing Customer Bookings % Existing 275 FY12 Year 1 366 FY14 25 130 7 5 % 34% 32 FY13 FY12 FY13 FY14 66% FY14 *Defined as the dollar value of a purchase order received; statistics as of Jan 31, 2014 22
  24. 24. Attractive Gross Margin Profile Annual Gross Margin* Product and Support and Service Gross Margin* 68.1% 65.4% 65.4% 41.9% 62.3% 24.7% 55.5% FY12 FY13 FY14 FY13 Product Gross Margin FY14 Support and Service Gross Margin *Reflects Non-GAAP Gross Margin; see appendix for reconciliation 23
  25. 25. Investing Aggressively for Continued Growth Research and Development* 172 $32 99 51 FY12 $8 FY13 FY14 Head Count FY12 55% 28% $15 FY13 FY14 FY12 26% FY13 FY14 % of Revenue $ Millions Sales and Marketing* 311 $71 177 $39 75 FY12 90% 72% 57% $13 FY13 Head Count FY14 FY12 FY13 FY14 $ Millions FY12 FY13 FY14 % of Revenue *Reflects Non-GAAP Research and Development and Sales and Marketing, which excludes stock based compensation expense. See appendix for reconciliation. 24
  26. 26. Demonstrating Operating Leverage Improving Operating Margin* FY12 FY13 Cash Flow From Operations and Free Cash Flow % of Revenue ** FY14 Q1FY13 Q2FY13 Q3FY13 Q4FY13 Q1FY14 Q2FY14 Q3FY14 Q4FY14 5% -8% -27% -47% v -75% -83% Operating Cash Flow as % of Total Revenue -114% Free Cash Flow as % of Total Revenue *Reflects **Free Non-GAAP Operating Margin, which excludes stock based compensation expense. See appendix for reconciliation cash flow is defined as net cash from operating activities plus cash used to purchase property and equipment 25
  27. 27. Business Model FY13 FY14 Q4FY14 Long-Term Model Gross Margin* 62% 65% 67% 63%–65% R&D as % of Revenue* 28% 26% 24% 11%–13% S&M as % of Revenue* 72% 57% 53% 28%–31% G&A as % of Revenue* 9% 9% 11% 5%–6% Non-GAAP Operating Margin* -47% -27% -21% 16%–20% *Reflects Non-GAAP Gross Margin, R&D, S&M, G&A and Operating Margin, see appendix for reconciliation 26
  28. 28. Our Strategic Priorities Customers Technology Platform Continue expansion into large enterprise and service provider customers Build on our broad technology foundation to further extend our differentiation, broaden feature coverage, and further expand our target market Sales and Marketing People Invest aggressively to deepen sales coverage within existing territories, expand internationally, and drive continued channel leverage Build best-in-class company founded on recruiting and retaining the industry’s best talent 27
  29. 29. Positioned To Lead In the Flash-Optimized Storage Era 1980s 1990s 2000s Today DAS Monolithic Storage Modular Storage Flash-Optimized Storage Providing Our Customers with the Industry’s Most Efficient Data Storage Platform 28
  30. 30. GAAP to Non-GAAP Reconciliation ($ in thousands) FY12 FY13 FY14 4QFY14 GAAP Product Gross Profit % GAAP Product Gross Margin (+) Stock-based Compensation Non-GAAP Product Gross Profit Non-GAAP Product Gross Margin 7,880 60.1% 10 7,890 60.2% 32,499 65.3% 48 32,547 65.4% 76,581 67.9% 232 76,813 68.1% 25,626 69.0% 102 25,728 69.2% GAAP Support and Service Gross Profit % GAAP Support and Service Gross Margin (+) Stock-based Compensation Non-GAAP Support and Service Gross Profit Non-GAAP Support and Service Gross Margin (145) -16.1% 31 (114) -12.7% 891 21.9% 114 1,005 24.7% 4,941 38.2% 468 5,409 41.9% 2,113 46.4% 210 2,323 51.0% GAAP Gross Profit % GAAP Gross Margin (+) Stock-based Compensation Non-GAAP Gross Profit % Non-GAAP Gross Margin 7,735 55.2% 41 7,776 55.5% 33,390 62.0% 162 33,552 62.3% 81,522 64.8% 700 82,222 65.4% 27,739 66.5% 312 28,051 67.2% GAAP Research and Development (-) Stock-based Compensation Non-GAAP Research and Development 7,903 268 7,635 16,135 874 15,261 35,247 3,049 32,198 11,510 1,354 10,156 12,863 244 12,619 39,851 1,029 38,822 75,107 3,674 71,433 23,777 1,703 22,074 3,756 267 3,489 5,168 539 4,629 13,737 1,726 12,011 5,265 733 4,532 GAAP Operating Expenses (-) Stock-based Compensation Non-GAAP Operating Expenses 24,522 779 23,743 61,154 2,442 58,712 124,091 8,449 115,642 40,552 3,790 36,762 GAAP Operating Loss % of Revenue (+) Stock-based Compensation Non-GAAP Operating Loss % of Revenue (16,787) -120% 820 (15,967) -114% (27,764) -52% 2,604 (25,160) -47% (42,569) -34% 9,149 (33,420) -27% (12,813) -31% 4,102 (8,711) -21% Net Cash Provided by (Used in) Operating Activities % of Revenue (-) Property and Equipment, Net Free Cash Flow % of Revenue (14,841) -105.9% 1,303 (16,144) -115.2% (18,754) -35% 3,954 (22,708) -42% (6,742) -5% 13,613 (20,355) -16% 2,185 5% 5,461 (3,276) -8% GAAP Sales and Marketing (-) Stock-based Compensation Non-GAAP Sales and Marketing GAAP General and Administrative (-) Stock-based Compensation Non-GAAP General and Administrative 29