According to a report by Allied Market Research, the global Hadoop market is projected to grow 58% annually over the period 2013 through 2020. The market estimated to be worth $2 billion in 2013 is expected to be worth $50.2 billion by the year 2020. The increase in the adoption of Hadoop is attributed to the demand for Big Data analytics.
Palo Alto-based Hortonworks was founded in 2011 to cater to this rapidly growing Hadoop market. The company was established with the mission of making Hadoop the technological foundation of the modern enterprise data architecture.
Traditional Hadoop offerings are based on managing Big Data by using computing clusters that have been siloed by application. This method results in restricted accessibility and interoperability of computing. Hortonworks has helped transform that by helping in the development of YARN, an advancement that eliminates the need to silo data sets and enables a wide range of shared data sets on which mixed workloads can be simultaneously processed. The platform enables real-time processing and is aligned to data management, data access, data governance and integrity, security, and operations.
Hortonworks integrates the stable releases of open source developed applications and programs that are ready for enterprise consumption to their open source Hortonworks Data Platform. As of September this year, Hortonworks had 233 support subscription customers and nearly 300 total customers. They have tie-ups with industry veterans like Hewlett-Packard, Microsoft, Rackspace Hosting, Red Hat, and SAP to name a few. These partnerships help Hortonworks with development, marketing, and support strategies.
Hortonworks is a commercial OpenSource company. While their platform is accessible for free, they earn revenues through software support subscriptions and provision of other services such as training and consulting. Their support subscription packages provide enterprises 24×7 phone and web support for the platform including access to upgrades and patches and support for installation, configuration, and performance issues. According to the Corporate Strategy VP Shaun Connolly, 70% of their revenues comes from software support subscriptions and the remaining 30% from other services.
The rapid adoption of Hadoop has also led to significant revenue increases for Hortonworks. For the years ended April, revenues grew from $1.6 million in 2012 to $11 million in 2013. Hortonworks is shifting their fiscal year end from April to December. For the nine months ended September this year, revenues have nearly doubled to $33.4 million. Hortonworks is still a loss making organization and reported a net loss of $11.5 million for the year ended April 2012. Losses increased to $36.6 million in 2013. For the nine months ended September this year, losses grew from $48.4 million a year ago to $86.7 million.
Hortonworks has been venture funded so far with $248 million raised from investors including Hewlett-Packard, Tenaya Capital, Dragoneer Investment Group, Index Ventures, Benchmark, Yahoo!, and Passport Capital. They received their last round of funds in July this year when HP invested $50 million with them at a $1 billion valuation.
Last month, Hortonworks filed their S-1. Yesterday, they announced pricing of the IPO and are looking to raise $78 million at a price of $12-$14 per share. Recent financial disclosures in the filing have resulted in a more conservative valuation and the company is now valued at $592.2 million instead.