On Friday, Nimble Storage became the latest enterprise tech company to go public.
Investors are loving the stock. Nimble set an initial price of $US21 a share, raising the price at the last minute from the range it announced earlier this week, $US18-$20.
And the shares popped on the opening bid, climbing as high as $US35. It closed at $US33.93 today, up 61%.
It was a risky move for the company to proceed with an IPO today and not just because it’s Friday the 13th. (Although the ill-omened date did cross the CEO Suresh Vasudevan’s mind, he jokingly told Business Insider.)
As we previously reported, two of his competitors have really been struggling to grow since they went public. Their stock is struggling and there’s been executive turnover. Violin Memory went public only two months ago. It’s IPO didn’t go well and after reporting worse-than-expected earnings in November, the stock crashed. Business Insider also discovered that the CTO left the company. Meanwhile, 2011 IPO darling Fusion-io has been struggling, too.
It seemed brave for Nimble Storage to ask investors to take a chance on another player in this field, the enterprise flash storage market.
Nimble makes a product that combines flash storage and traditional storage tech. Flash is the same type of storage used by thumb drives and smartphones. Flash drives (also called solid state drives) are faster than traditional enterprise storage methods, which use disk drives or tape.
Vasudevan told us that Nimble has two things over its competitors. For one, its technology is less expensive than some others, which makes it popular with smaller companies. That means it has more potential customers.
He said Nimble is signing up “350 to 400 new customers a quarter.”
Second, Nimble has fat profit margins of about 65 points, compared to the typical 40-50 points in the industry, he said. That’s because Nimble uses low-cost commodity hardware to build its product. It’s secret sauce is its software that makes its storage hardware work faster and store more data than competitors, he said.
Flash storage is becoming a big trend for the enterprise data center. IDC expects it to be a $US1.2 billion market by 2015.
Investors want to grab a piece of that and they are, so far, liking what they see in Nimble.