Investor Presentation
Suresh Vasudevan, Chief Executive Officer Anup Singh, Chief Financial Officer As of May 29, 2014
Safe Harbor
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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.
Founding Thesis: Opportunity for a Ground-Up Design of Storage
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DAS Monolithic Storage
Modular Storage
Today 1980s 1990s 2000s
Cloud Flash
Suresh Vasudevan
CEO
Varun Mehta Founder, VP of
Engineering
Umesh Maheshwari
Founder, CTO
Investment Highlights and Nimble Storage Snapshot
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Disruptive platform built on two foundational innovations: § CASL, flash-optimized file system § InfoSight, cloud-based management
Significant and broad-based traction § Diverse base of enterprises and service providers § Broad set of workloads
$18B market opportunity*
Exceptional revenue growth with scalable margin profile
Experienced technology and management team
402
1,372
3,097
Q1FY13 Q1FY14 Q1FY15
Cumulative Customer Base
$14.0
$53.8
$125.7
$22.1
$46.5
FY12 FY13 FY14 Q1FY14 Q1FY15
+134%
Revenue Growth
+110%
*Source: Based on company estimates from IDC and Gartner data
Need for Flash Varies Greatly
Analytics
VDI
File/Print
OLTP
Archives
Flash and Disk are Complementary
Component Flash Disk
Random IOPS/$ 30-100X 1X
Sequential IO/$ 1X 3X
Capacity/$ 1X 15X
Endurance Poor Proven
Low High
The key is to efficiently optimize both performance and capacity, and be flexible and media-agnostic as flash and disk evolve over time
5 5
Enterprises Today are Overwhelmed
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20X Compute
10X Network
Poor Application Performance
Storage Same 40-45%*
CAGR
Increasing Demands of Data Growth
Cloud Computing Virtualization Big Data Social and Collaboration
Exacerbating Trends
Mobility
VM / Application Data Management Complexity
CRM ERP
CRM
ERP
*Source: IDC, The Digital Universe in 2020, sponsored by EMC
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Our Innovative Platform
CASL Flash-optimized
file system software
InfoSight Cloud-based
management/support
Integrated Protection
Rapid backup and recovery
Non-disruptive, flexible scaling to
massive scale
Scale-to-Fit
Peak system health and availability
Proactive Wellness Efficiency
Significantly better performance/$ and
capacity/$
Key Decisions in Ground-Up Design
CASL: Designed from the Ground Up
How do we:
§ Leverage flash for performance?
§ Leverage disk for capacity?
§ Be media-agnostic and flexible as the relative merits of flash and disk evolve?
§ Leapfrog incumbents on data management?
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Snapshots Replication
Compression Data Management Functionality
Application Integration Hypervisors
Operating Systems
Cloning Thin Provisioning
Multi-tenancy
File System Software
Traditional File Systems / Tiering Nimble Advantage CASL Innovations
CASL: A Breakthrough File System
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Uses 30-70% less disk and flash resources
Inline Compression, using variable blocks
Fixed blocks: No compression
Fast random writes need a flash tier
Uses low-cost HDDs to deliver SSD-like write performance
Inline Serialization of all incoming write IO
Disk
SSD (Flash) Cache
More Disk
More Flash Dynamic Caching to serve reads from flash
Uses substantially less, low-cost flash to accelerate reads
Fast reads by migrating between tiers wastes flash
Copy-based snapshots waste capacity and degrade performance
Pointer-Based Snapshots
Integrated, rapid backup and recovery
Non-disruptive scaling in least-cost increments
Scale-to-Fit: Scale-up, deep and scale-out
Scale-Up OR Limited Scale-Out
CASL is more performance and capacity efficient and easy to scale, while delivering integrated data protection
Lower TCO: Global Office Products Company
Competitor Solution 3 Racks of “Tier 1” storage
40TB Usable Storage in 126U
Nimble Solution 2 CS 460 arrays
59TB Usable Storage in 6U
“Nimble has given us much more flexibility with primary storage and data protection and a much more resilient infrastructure – all at a much lower cost.”
—IT Platform Lead
§ SQL Server and SAP applications
§ Incumbent: Traditional “Tier 1” Storage
§ Core project drivers: – Minimize data center
costs like power, cooling – Reduce storage
capacity costs – Reduce complexity
9X Reduction in Storage Costs
20X Reduction Footprint
50% Savings in Data Protection Costs
Zero Impact to Performance
Replaced With
Challenges
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§ Local storage approach could not keep up with Big Data business demands
§ Constant trade-off between IO and capacity
§ Lack of consolidated provisioning and management
§ Adding nodes to support storage was not a cost effective solution
§ Individual storage pools present challenges for data protection
Challenges
§ CASL meets IO demands for mixed workloads
§ Nimble scale-to-fit architecture meets both IO and capacity requirements
§ Achieved a more consolidated and efficient approach to storage management
§ Reduced cost by reducing the number of required HP Vertica nodes
§ Nimble snapshots, clones and replication improve data protection and eliminate risk
Nimble Advantage Nimble Solution
Customer Case Study: Fortune 50 Telecommunications Company
Fortune 500 Engineering & Construction Company
Competitor Solution Nimble Solution
Fortune 500 Engineering & Construction Company
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§ Challenges with environment including almost 80% physical servers & multiple SAN storage from EMC and NetApp
§ Struggled with performance for Autonomy e-discovery & Oracle data warehouse on existing SAN.
§ Data protection was at risk with application backups taking over 10 hour
Challenges § Increased performance for Autonomy & Oracle data warehousing
§ Application performance was up by 130%
§ Snapshot-based backup and replication for DR has allowed them to eliminate tape and eliminate traditional backup windows
§ Data reduction allowed them to store 2.3 times more data per TB of useable capacity, thus substantially lowering capital costs
§ Saving $3,500 per month in power, cooling and space
Nimble Advantage
Nimble SmartStack
Consolidation and Efficiency at a Global Oil and Gas Leader
§ Global Energy leader with hundreds of remote sites
§ Initial VDI project goal to consolidate thousands of employee desktops at hundreds of field locations
§ XenDesktop deployment with incumbent storage experienced serious performance issues, prompting a competitive bake-off with Nimble
Challenges
§ Price-performance: 72% lower cost per IOPS
§ Cost of capacity: 37% compression, coupled with low-cost, high-density HDDs
§ Time to recover virtual PCs lower by 50%
§ Calls to help desk reduced dramatically
Nimble VDI Solution
§ 3000 VDI users § 64TB and 30K
IOPS on average
Nimble Expanded Use Cases
Phase 2: Exchange § 11,500 mailboxes § ~60TB used § HA architecture across
two data centers
Phase 3: ESX Farm § 600 VMs § 4 systems with over
200 TBs
10 systems and over 600 TB of capacity in
18 months
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Traditional Storage Management is Inefficient and Expensive
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Vendor Support Customers
Q&A
Diagnostics
Logs
? # !
Existing Approach
Traditional Storage Management is Inefficient and Expensive
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§ 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
? ! #
Existing Approach
Vendor
InfoSight: Cloud-Based Management
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§ Between 12 and 70M sensors per array, daily
§ Data collected every 5 minutes and on-demand
Comprehensive Telemetry
§ Systems modeling
§ Correlations, trending, and projections
Analysis and Automation
Leveraging pervasive network connectivity and big data analytics to automate support and enable cloud-based management
§ Vast majority of cases opened by Nimble
§ Secure, on-demand system access
Proactive Wellness
§ Monitoring and alerting
§ Visualization, capacity planning, performance management
Storage Management SaaS Offering
Nimble Approach Customer Benefits
InfoSight Impact
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Predicting Customers’ Storage Expansion Needs**
customers expanded capacity
385 103 customers
expanded flash
37 customers
upgraded controllers
Proactive Support Prevents Problems*
92%
81%
of the cases automatically opened by Nimble
of support cases auto-closed by Nimble
* InfoSight case percentages based on 9 month period through Q1FY15 ** Customer storage expansion needs based on 12 month period through Q1FY15
Market Response Has Led to Rapid Growth in Our Installed Base
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33
97
211
Q1FY13 Q1FY14 Q1FY15
40
131
285
Q1FY13 Q1FY14 Q1FY15
Cumulative Customer Base Number of Large Enterprises*
Number of Cloud Service Providers
402
1,372
3,097
Q1FY13 Q1FY14 Q1FY15
*Company estimates of Global 5,000 customers
Broad Appeal
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Diversified Workloads*
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
VMware SQL Exchange VDI File / Print Sharepoint HyperV Web Apps Oracle
7% Manufacturing
7% State/Local
Govt 9%
Healthcare
10% Education
10% Hi Tech
11% Service Provider
14% Financial
24% Other
3% Legal
5% Energy
Diversified Market Verticals*
*Based on 12 month period through Q1 FY15. Y axis represents % of systems in the field that handle this type of workload
Land and Expand Strategy: 2-Year Bookings After Initial Sale
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Note: Bookings defined as a purchase order received; statistics as of April 30, 2014 * Top 50 of all customers that have been Nimble Storage customers for 4 or more quarters; Of the 50, 20 customers have 8 quarters of history.
Average: All Customers
Initial Sale Total: Year 1 and 2
4.8X
1X
Top 50 Customers*
Initial Sale Total: Year 1 and 2
2.1X 1X
Channel Leverage
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Base of Accredited SEs**
Active Reseller AEs*
Engagement Levels
732
2,189
Q1FY14 Q1FY15
+199%
Reseller Led New Customer Wins****
Channel Generated Opportunities***
Opportunities & Customer Wins
1,013
1,751
Q1FY14 Q1FY15
+73%
66
178
Q1FY14 Q1FY15
+170%
335
685
Q1FY14 Q1FY15
+104%
* Total number of reseller AEs that closed 1 or more deals during the fiscal quarter ** Total cumulative number of accredited SEs as of the end of each fiscal quarter *** Total number of opportunities generated by partners during the fiscal quarter **** Total number of new customers during the quarter where the reseller contributed 75% (or greater) of total effort to close the deal.
Competitive Landscape
Tape; Low-cost RAID; NAS; Object Storage
Flash-Optimized Hybrid
Flash in Server All-Flash Arrays
Tape; Low-cost RAID/NAS
Monolithic (e.g., VMAX)
Archives
Mainstream Applications
Real-Time Analytics
Modular
Legacy
VDI File/Print
OLTP
Modern
Dell EQL/CML EMC VNX NetApp FAS HP 3PAR
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Exchange CRM SQL
Financial Highlights
Strong revenue growth with a significant “land and expand” opportunity
Attractive and best-in-class gross margin profile
Investments to expand differentiation and capitalize on large market opportunity
Improving operating leverage and cash flow from operations
Attractive long term financial model
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$8.2 $11.0
$14.6
$20.2 $22.1
$28.5
$ 41.7
$ 46.5
Q1FY13 Q2FY13 Q3FY13 Q4FY13 Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15
Product Revenue Support and Service Revenue
Quarterly Revenue
Rapid Revenue Growth
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Annual and Q1 Revenue*
$33.4
$14.0
$53.8
$125.7
$22.1
FY12 FY13 FY14 Q1FY14 Q1FY15
$46.5
Product Revenue Support and Service Revenue
+ 134%
+ 110%
*Fiscal year ends on January 31
Growth Drivers
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402
1,372
3,097
Q1FY13 Q1FY14 Q1FY15
Cumulative Customer Base Customers
% New vs. Existing Customer Bookings
100 49
58
0
100
200
Initial Sale Year 1 Year 2 Total
2-Year Bookings* After Initial Sale Average Across All Customers
207
New customers
Existing customers
64%
36%
12 months thru Q1FY15
Land and Expand
7 4 %
12months thru Q1FY14
26%
* Defined as the dollar value of a purchase order received; statistics as of April 30, 2014 ** Number of deals for 12 month period through Q1FY14 and Q1FY15
% Customer Bookings > $100K
Number of Deals > $100K**
Bookings <$100K
Bookings >$100k
64%
36%
12 months thru Q1FY15
Deals >$100K
177
393
TTM Q1FY14 TTM Q1FY15
+122%
Attractive Gross Margin Profile
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61.8%
64.3%
66.4% 67.2%
66.2%
Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15
65.8% 69.0%
22.8%
44.8%
Q1FY14 Q1FY15
Product Gross Margin Support and Service Gross Margin
Quarterly Gross Margin* Product and Support and Service Gross Margin*
*Reflects Non-GAAP Gross Margin; see appendix for reconciliation
$6
$14
$24
Q1FY13 Q1FY14 Q1FY15
$3 $6
$12
Q1FY13 Q1FY14 Q1FY15
Investing Aggressively for Continued Growth
60
120
188
Q1FY13 Q1FY14 Q1FY15 Head Count
72% 62% 52%
Q1FY13 Q1FY14 Q1FY15 % of Revenue Head Count
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$ Millions
$ Millions
93
211
356
Q1FY13 Q1FY14 Q1FY15
Research and Development*
Sales and Marketing*
37% 27% 25%
Q1FY13 Q1FY14 Q1FY15 % of Revenue
*Reflects Non-GAAP Research and Development and Sales and Marketing, which excludes stock based compensation expense. See appendix for reconciliation.
-47%
-27%
-36%
-22%
FY13 FY14 Q1FY14 Q1FY15
Demonstrating Operating Leverage
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v
Cash Flow From Operations and Free Cash Flow % of Revenue**
Improving Operating Margin*
*Reflects Non-GAAP Operating Margin, which excludes stock based compensation expense. See appendix for reconciliation **Free cash flow is defined as net cash from operating activities minus capital expenditures
-33%
1%
-39%
-7%
Q2FY13 Q3FY13 Q4FY13 Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15
Operating Cash Flow as % of Total Revenue
Free Cash Flow as % of Total Revenue
Business Model
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FY13 FY14 Q1FY15 Long-Term Model Gross Margin* 62% 65% 66% 63%–65%
R&D as % of Revenue* 28% 26% 25% 11%–13%
S&M as % of Revenue* 72% 57% 52% 28%–31%
G&A as % of Revenue* 9% 9% 10% 5%–6%
Non-GAAP Operating Margin -47% -27% -22% 16%–20%
*Reflects Non-GAAP Gross Margin, R&D, S&M, G&A and Operating Margin, see appendix for reconciliation Note: due to rounding, numbers presented above may not sum to total.
Sales and Marketing Invest aggressively to deepen
sales coverage within existing territories, expand internationally, and drive continued
channel leverage
Customers Continue expansion into
large enterprise and service provider customers
People Build best-in-class company
founded on recruiting and retaining the industry’s best talent
Our Strategic Priorities
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Technology Platform Build on our broad technology
foundation to further extend our differentiation, broaden feature coverage,
and further expand our target market
Positioned To Lead In the Flash-Optimized Storage Era
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1980s DAS
1990s Monolithic Storage
2000s Modular Storage
Today Flash-Optimized Storage
Providing Our Customers with the Industry’s Most Efficient Data Storage Platform
GAAP to Non-GAAP Reconciliation
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($ in thousands) FY12 FY13 FY14 Q1FY13 Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15
GAAP Product Gross Profit 7,880 32,499 76,581 4,965 13,151 17,240 20,564 25,626 28,224% GAAP Product Gross Margin 60.1% 65.3% 67.9% 65.9% 65.6% 67.0% 68.8% 69.0% 68.4%(+) Stock-based Compensation 10 48 232 4 40 38 52 102 231
Non-GAAP Product Gross Profit 7,890 32,547 76,813 4,969 13,191 17,278 20,616 25,728 28,455Non-GAAP Product Gross Margin 60.2% 65.4% 68.1% 66.0% 65.8% 67.2% 69.0% 69.2% 69.0%
GAAP Support and Service Gross Profit (145) 891 4,941 213 430 940 1,458 2,113 1,988% GAAP Support and Service Gross Margin -16.1% 21.9% 38.2% 34.2% 20.7% 34.1% 41.3% 46.4% 37.4%(+) Stock-based Compensation 31 114 468 21 43 88 127 210 393
Non-GAAP Support and Service Gross Profit (114) 1,005 5,409 234 473 1,028 1,585 2,323 2,381Non-GAAP Support and Service Gross Margin -12.7% 24.7% 41.9% 37.6% 22.8% 37.3% 44.9% 51.0% 44.8%
GAAP Gross Profit 7,735 33,390 81,522 5,178 13,581 18,180 22,022 27,739 30,212% GAAP Gross Margin 55.2% 62.0% 64.8% 63.5% 61.4% 63.8% 65.9% 66.5% 64.9%(+) Stock-based Compensation 41 162 700 25 83 126 179 312 624
Non-GAAP Gross Profit 7,776 33,552 82,222 5,203 13,664 18,306 22,201 28,051 30,836% Non-GAAP Gross Margin 55.5% 62.3% 65.4% 63.8% 61.8% 64.3% 66.4% 67.2% 66.2%
GAAP Research and Development 7,903 16,135 35,247 3,150 6,318 8,058 9,361 11,510 14,217(-) Stock-based Compensation 268 874 3,049 159 367 547 781 1,354 2,440
Non-GAAP Research and Development 7,635 15,261 32,198 2,991 5,951 7,511 8,580 10,156 11,777
GAAP Sales and Marketing 12,863 39,851 75,107 6,040 14,160 17,268 19,902 23,777 29,202(-) Stock-based Compensation 244 1,029 3,674 176 498 623 850 1,703 4,921
Non-GAAP Sales and Marketing 12,619 38,822 71,433 5,864 13,662 16,645 19,052 22,074 24,281
GAAP General and Administrative 3,756 5,168 13,737 1,047 2,301 3,041 3,130 5,265 6,437(-) Stock-based Compensation 267 539 1,726 117 207 331 455 733 1,572
Non-GAAP General and Administrative 3,489 4,629 12,011 930 2,094 2,710 2,675 4,532 4,865
GAAP Operating Expenses 24,522 61,154 124,091 10,237 22,779 28,367 32,393 40,552 49,856(-) Stock-based Compensation 779 2,442 8,449 452 1,072 1,501 2,086 3,790 8,933
Non-GAAP Operating Expenses 23,743 58,712 115,642 9,785 21,707 26,866 30,307 36,762 40,923
GAAP Operating Loss (16,787) (27,764) (42,569) (5,059) (9,198) (10,187) (10,371) (12,813) (19,644)% of Revenue -120% -52% -34% -62% -42% -36% -31% -31% -42%(+) Stock-based Compensation 820 2,604 9,149 477 1,155 1,627 2,265 4,102 9,557
Non-GAAP Operating Loss (15,967) (25,160) (33,420) (4,582) (8,043) (8,560) (8,106) (8,711) (10,087)% of Revenue -114% -47% -27% -56% -36% -30% -24% -21% -22%
Net Cash Provided by (Used in) Operating Activities (14,841) (18,754) (6,742) (6,093) (4,876) (3,780) (271) 2,185 452% of Revenue -105.9% -35% -5% -75% -22% -13% -1% 5% 1%(-) Property and Equipment, Net 1,303 3,954 13,613 658 1,884 1,542 4,726 5,461 3,728
Free Cash Flow (16,144) (22,708) (20,355) (6,751) (6,760) (5,322) (4,997) (3,276) (3,276)% of Revenue -115.2% -42% -16% -83% -31% -19% -15% -8% -7%