Q4 fy16 nimble storage

© 2016 Nimble Storage | Confidential: Do Not Distribute

Fourth Quarter & FY2016 Earnings Results

Suresh Vasudevan, Chief Executive Officer Anup Singh, Chief Financial Officer

March 3, 2016

© 2016 Nimble Storage | Confidential: Do Not Distribute 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.


Fourth Quarter Fiscal Year 2016 Financial Results

Q4 FY16 Q4 FY15 Y/Y

Revenue $90.1M* $68.3M +32%*

Gross Margin** 66.4% 67.2% -0.8pts

Operating Income** ($9.4M) ($8.5M) -$0.9M

Operating Margin -10% -12% +2pts

EPS ($0.12) ($0.13) +1 cent

EBITDA Margin -6% -10% +4pts

Cash Balance $211.2M $208.4M +$2.8M

* Excluding fluctuations in foreign currency, revenue would have been $92.6M representing a 36% increase over fourth quarter of fiscal 2015. ** Reflects Non-GAAP Gross Margin and Non-GAAP Operating Income, which excludes stock based compensation expense. See slide 18 for reconciliation


Fiscal Year 2016 Financial Results

FY16 FY15 Y/Y

Revenue $322.2M* $227.7M +42%*

Gross Margin** 67.1% 67.0% +0.1pts

Operating Income** ($35.3M) ($39.0M) +$3.7M

Operating Margin -11% -17% +6pts

EPS ($0.47) ($0.58) +11 cents

EBITDA Margin -6% -14% +8pts

Cash Balance $211.2M $208.4M +$2.8M

* Excluding fluctuations in foreign currency, revenue would have been $332.3M representing a 46% increase over fiscal 2015. ** Reflects Non-GAAP Gross Margin and Non-GAAP Operating Income, which excludes stock based compensation expense. See slide 18 for reconciliation


Revenue ($M)*

Strong Revenue Growth

$53.8

$125.7

$227.7

$322.2

$68.3 $90.1

FY2013 FY2014 FY2015 FY2016 Q4FY15 Q4FY16

Product Revenue Support & Service Revenue

CAGR 82%

32%

* Excluding fluctuations in foreign currency, Q4FY16 revenue would have been $92.6M representing a 36% increase over fourth quarter of fiscal 2015.


Industry Leading Gross Margins

62.3%

65.4% 67.0% 67.1%

FY13 FY14 FY15 FY16

Long Term Target Range 63%-65%*

Annual Gross Margin Quarterly Gross Margin*

67.2% 66.4%

Q4FY15 Q4FY16

*Reflects Non-GAAP Gross Margin, which excludes stock based compensation expense. See slide 19 for reconciliation. Long-term Gross Margin target range is 63%-65%. *Reflects Non-GAAP Gross Margin, which excludes stock based compensation expense. See slide 19 for reconciliation. Long-term Gross Margin target range is 63%-65%.

*Reflects Non-GAAP Gross Margin, which excludes stock based compensation expense. See slide 19 for reconciliation. Long-term Gross Margin target range is 63%-65%.



Investing To Drive Sustainable Growth

*Reflects Non-GAAP Gross Margin, which excludes stock based compensation expense. See slide 19 for reconciliation. Long-term Gross Margin target range is 63%-65%. *Reflects Non-GAAP Gross Margin, which excludes stock based compensation expense. See slide 19 for reconciliation. Long-term Gross Margin target range is 63%-65%.


FY2014 FY2015 FY2016

Company Headcount Growth

FY2014 FY2015 FY2016

Rest of Company Headcount

R&D HC

S&M HC

Capital Investments

CAGR 30%


Average Annual Bookings per Commercial Sales Team

Year 1 Year 2 Year 3

Average Bookings per Sales Team to Support Break Even Target

Average Bookings per Sales Team to Support Long-Term Profitability Target §  Commercial sales teams

operate above breakeven levels of productivity during their 2nd year and at target operating margin levels in their 3rd year.

Improving Sales Productivity Drives Business Model


Improving Operating And EBITDA Margin

*Reflects Non-GAAP Operating Margin, which excludes stock based compensation expense. See slide 19 for reconciliation

Annual Operating

& EBITDA Margin Quarterly Operating* & EBITDA Margin

-21%

-12% -10% -17%

-10% -6%

Q4FY14 Q4FY15 Q4FY16

Operating Margin Adjusted EBITDA Margin -47%

-27%

-17%

-11%

-45%

-23%

-14%

-6% FY13 FY14 FY15 FY16

Operating Margin Adjusted EBITDA Margin



Cash Balance Remains Very Healthy


Cash Flow from Operations* Free Cash Flow*

-$6.7

$5.4 $5.8

FY14 FY15 FY16

-$20.4

-$15.4

-$23.7

FY14 FY15 FY16 $208.5 $208.4 $211.2

FY14 FY15 FY16

Ending Cash*

*($M)


Strategy For Revenue Growth

Diversified Customer Base

Continued expansion into international, large enterprise and service

provider customers

New Customer Acquisition

Invest aggressively to deepen sales coverage within existing territories,

increase opportunities and drive channel leverage

Larger Transactions

Expansion into larger transactions with unique Scale-to-fit capabilities, AFA and FC

Land & Expand Drive repeat business with rapidly growing install base through InfoSight predictive analytics and

industry leading customer satisfaction Driving

Revenue Growth


Record Pace Of New Customer Acquisition

Cumulative Customer Base

2,645

4,979

7,580

FY14 FY15 FY16

542

690 617

752

Q1 Q2 Q3 Q4

Quarterly Customers Added In FY16

Record number of new customers acquired in Q4FY16 2,600+ customers added in FY16; 52% growth over FY15


Land And Expand Drives Repeat Business

Overall Repeat Bookings

41% 48%

59% 52%

FY15 FY16 Existing Customers New Customers

1X

2.5X

Initial Sale Total: Year 1, 2 & 3

% New vs. Existing Customer Bookings

Initial Sale Total: Year 1, 2 and 3

3.9X

1X

Cloud SP Repeat Bookings

Initial Sale Total: Year 1, 2 and 3

4.3X

1X

Enterprise Repeat Bookings


Diversified Customer Base Driving Growth

Enterprise and Cloud SP Bookings G5K Bookings $

International Revenue

66%

FY15 FY16

International Revenue $ Growth

Cloud SP Bookings $

32%

FY15 FY16

50%

FY15 FY16


Larger Deals Fueling Growth

Bookings % > $250K

Bookings $ > $250K

62%

FY15 FY16

13% 16%

FY15 FY16

Deals > $250K Bookings $ > $100K

Deals > $100K

Bookings % > $100K

44%

FY15 FY16

40% 43%

FY15 FY16


Q1 Fiscal Year 2017 Financial Guidance

Q1 FY17 Guidance

Revenue $83.0M ~ $86.0M

Operating Loss ($20.0M) ~ ($22.0M)

EPS ($0.25) ~ ($0.27)

Weighted Average Basic Shares Outstanding

~ 83.0M

Q1 Guidance considerations:

•  Seasonality effect of Q1 being our slowest quarter

•  Impact of AFA introduction on existing sales cycles

•  Incremental costs associated with the launch of our Predictive Flash Platform and AFA of approximately $4M

•  Increased investments in Sales and Marketing to re-accelerate growth in our commercial business


Making Progress Towards Target Operating Model

FY13 FY14 FY15 FY16 Long-Term Model

Gross Margin* 62.3% 65.4% 67.0% 67.1 % Currently operating above target model 63%–65%

R&D as % of Revenue* 28% 26% 24% 22% Leverage from investments we have made in our rich

product roadmap 11%–13%

S&M as % of Revenue* 72% 57% 51% 49%

Improved sales productivity driven by higher ASPs, maturity of enterprise and international sales teams, growth in repeat business and increase in channel

leverage 28%–31%

G&A as % of Revenue* 9% 10% 9% 7% Continuous efficiency and economies of scale 5%–6%

Non-GAAP Operating Margin

-47% -27% -17% -11% 16%–20%

*Reflects Non-GAAP Gross Margin, R&D, S&M, G&A and Operating Margin, see slide 18 for reconciliation Note: due to rounding, numbers presented above may not sum to total.

How We Get There


GAAP to Non-GAAP Reconciliation ($ in thousands) FY12 FY13 FY14 FY15 FY16 Q4FY14 Q1FY15 Q2FY15 Q3FY15 Q4FY15 Q1FY16 Q2FY16 Q3FY16 Q4FY16

GAAP Product Gross Profit 7,880 32,499 76,581 135,349 179,096 25,626 28,224 32,326 34,716 40,083 41,052 45,625 44,202 48,217% GAAP Product Gross Margin 60.1% 65.3% 67.9% 68.3% 67.4% 69.0% 68.4% 68.6% 67.9% 68.3% 68.2% 68.4% 67.4% 66.0%(+) Stock-based Compensation 10 48 232 1,508 1,972 102 231 374 486 417 545 660 265 502

Non-GAAP Product Gross Profit 7,890 32,547 76,813 136,857 181,068 25,728 28,455 32,700 35,202 40,500 41,597 46,285 44,467 48,719Non-GAAP Product Gross Margin 60.2% 65.4% 68.1% 69.1% 68.2% 69.2% 69.0% 69.4% 68.9% 69.1% 69.1% 69.3% 67.8% 66.7%

GAAP Support and Service Gross Profit (145) 891 4,941 13,371 30,484 2,113 1,988 2,919 3,716 4,748 5,443 6,720 8,488 9,833% GAAP Support and Service Gross Margin -16.1% 21.9% 38.2% 45.3% 53.8% 46.4% 37.4% 44.0% 46.6% 49.3% 49.1% 50.3% 56.0% 57.8%(+) Stock-based Compensation 31 114 468 2,380 4,743 210 393 593 749 645 1,157 1,304 1,026 1,256

Non-GAAP Support and Service Gross Profit (114) 1,005 5,409 15,751 35,227 2,323 2,381 3,512 4,465 5,393 6,600 8,024 9,514 11,089Non-GAAP Support and Service Gross Margin -12.7% 24.7% 41.9% 53.3% 62.2% 51.0% 44.8% 52.9% 56.0% 56.0% 59.5% 60.1% 62.8% 65.2%

GAAP Gross Profit 7,735 33,390 81,522 148,720 209,580 27,739 30,212 35,245 38,432 44,831 46,495 52,345 52,690 58,050% GAAP Gross Margin 55.2% 62.0% 64.8% 65.3% 65.0% 66.5% 64.9% 65.6% 65.0% 65.7% 65.2% 65.3% 65.3% 64.4%(+) Stock-based Compensation 41 162 700 3,888 6,715 312 624 967 1,235 1,062 1,702 1,964 1,291 1,758

Non-GAAP Gross Profit 7,776 33,552 82,222 152,608 216,295 28,051 30,836 36,212 39,667 45,893 48,197 54,309 53,981 59,808% Non-GAAP Gross Margin 55.5% 62.3% 65.4% 67.0% 67.1% 67.2% 66.2% 67.4% 67.1% 67.2% 67.6% 67.8% 66.9% 66.4%

GAAP Research and Development 7,903 16,135 35,247 70,338 93,990 11,510 14,217 17,417 19,679 19,025 21,709 24,539 22,936 24,806(-) Stock-based Compensation 268 874 3,049 15,137 23,259 1,354 2,440 3,692 4,595 4,410 5,431 6,638 4,888 6,302

Non-GAAP Research and Development 7,635 15,261 32,198 55,201 70,731 10,156 11,777 13,725 15,084 14,615 16,278 17,901 18,048 18,504

GAAP Sales and Marketing 12,863 39,851 75,107 143,575 197,979 23,777 29,202 36,639 36,994 40,740 44,443 47,860 49,853 55,823(-) Stock-based Compensation 244 1,029 3,674 27,752 39,648 1,703 4,921 8,664 7,575 6,592 10,111 9,389 9,132 11,016

Non-GAAP Sales and Marketing 12,619 38,822 71,433 115,823 158,331 22,074 24,281 27,975 29,419 34,148 34,332 38,471 40,721 44,807

GAAP General and Administrative 3,756 5,168 13,737 30,884 36,247 5,265 6,437 7,101 8,887 8,459 9,261 9,449 8,249 9,288(-) Stock-based Compensation 267 539 1,726 10,290 13,682 733 1,572 1,846 4,001 2,871 3,741 4,330 2,219 3,392

Non-GAAP General and Administrative 3,489 4,629 12,011 20,594 22,565 4,532 4,865 5,255 4,886 5,588 5,520 5,119 6,030 5,896

GAAP Operating Expenses 24,522 61,154 124,091 244,797 328,216 40,552 49,856 61,157 65,560 68,224 75,413 81,848 81,038 89,917(-) Stock-based Compensation 779 2,442 8,449 53,179 76,589 3,790 8,933 14,202 16,171 13,873 19,283 20,357 16,239 20,710

Non-GAAP Operating Expenses 23,743 58,712 115,642 191,618 251,627 36,762 40,923 46,955 49,389 54,351 56,130 61,491 64,799 69,207

GAAP Operating Loss (16,787) (27,764) (42,569) (96,077) (118,636) (12,813) (19,644) (25,912) (27,128) (23,393) (28,918) (29,503) (28,348) (31,867)% of Revenue -120% -52% -34% -42% -37% -31% -42% -48% -46% -34% -41% -37% -35% -35%(+) Stock-based Compensation 820 2,604 9,149 57,067 83,304 4,102 9,557 15,169 17,406 14,935 20,985 22,321 17,530 22,468

Non-GAAP Operating Loss (15,967) (25,160) (33,420) (39,010) (35,332) (8,711) (10,087) (10,743) (9,722) (8,458) (7,933) (7,182) (10,818) (9,399)% of Revenue -114% -47% -27% -17% -11% -21% -22% -20% -16% -12% -11% -9% -13% -10%

Net Cash Provided by (Used in) Operating Activities (14,841) (18,754) (6,742) 5,376 5,755 2,185 452 2,837 (6,522) 8,609 (8,307) 14,876 (3,104) 2,290% of Revenue -105.9% -35% -5% 2% 2% 5% 1% 5% -11% 13% -12% 19% -4% 3%(-) Property and Equipment, Net 1,303 3,954 13,613 20,820 29,423 5,461 3,728 4,179 4,933 7,980 8,057 5,901 9,073 6,392

Free Cash Flow (16,144) (22,708) (20,355) (15,444) (23,668) (3,276) (3,276) (1,342) (11,455) 629 (16,364) 8,975 (12,177) (4,102)% of Revenue -115.2% -42% -16% -7% -7% -8% -7% -2% -19% 1% -23% 11% -15% -5%

Q4 fy16 nimble storage

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