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Hybrid Storage Startup Nimble Storage Files For IPO

Emboldened by a hot storage market and an even hotter technology IPO market, Nimble Storage recently filed a form with the SEC in hopes of raising $150 million in an initial public offering that would essentially serve as a war chest to fund its expanding business.

The IPO move by Nimble, which makes flash-optimized hybrid storage, comes on the heels of a trio of hot September tech IPOs. According to IPO research firm Renaissance Capital, the mid-September IPOs of FireEye, Benefitfocus and Rocket Fuel all rank in the five best-performing IPOs of 2013 thus far. As of Sept. 30, FireEye’s stock was up 107.7% over the initial IPO price, while Benefitfocus and Rocket Fuel had risen 85.5% and 85.3%, respectively.

Greg Schulz, senior analyst at storage research firm StorageIO, said via email that while storage stalwarts such as EMC, Dell, HP, Hitachi Data Systems and IBM all offer hybrid storage solutions, the fact that Nimble’s core technology is built to support both flash and disc storage, and that its messaging reflects this, gives the startup an advantage with customers interested in hybrid storage.

That and the enthusiastic reception tech IPOs have been getting make the timing of Nimble’s S-1 filing logical, Schulz said.

“Given that the IPO market window has opened up a bit, now's probably as good as any for Nimble to take the plunge and help provide some exit relief for early investors while gaining some new capital via the markets to support growth and expansion,” he said.

But Schulz cautioned against expecting Nimble to achieve a FireEye-like return given the lukewarm reception some storage and data infrastructure vendors have received. Most recently, Violin Memory, which went public a week after FireEye, Benefitfocus and RocketFuel, saw shares plummet 22%, from $9 to $7.02 on the first day of trading. The stock hasn’t recovered and has hovered at just over $7 a share ever sense.

Schulz also suggested that the legacy storage vendors represent a big threat if they ever turn their focus to hybrid storage systems.

“The established vendors don’t make noise about being hybrid,” he said. “Perhaps they should state the obvious a bit more.”

[Read David Hill's analysis of EMC's flash-optimized storage arrays in "EMC VNX: Flash Storage Takes Center Stage."]

Still, the growth that was indicated in Nimble’s S-1 filing is hard to ignore. According to the filing, Nimble pulled in revenue of $50.6 million for the six months ended July 31, not far off the $53.8 million it made for the entire previous year, and more than three times the $14 million it logged in the 12 months ended Jan. 31, 2012.

Nimble said it should have every opportunity to continue that growth trajectory given that IDC expects worldwide sales of storage systems costing more than $15,000 to reach $28 billion in 2017. Meanwhile, Gartner predicts the market for storage management, data replication and device resource management will reach $7.9 billion in the same timeframe.

“We believe the combination represents our addressable markets,” Nimble wrote in the filing.

Along those lines, Schulz said Nimble’s approach, which gives customers the ability to shift between flash and disk storage as business requirements change, should continue to be popular with buyers who want more flexible storage infrastructures.

“For customers who want more flash, they can do so, and for those who need a mix of HDD and SDD, they can have it their way to support different applications,” Schulz said.