Posted on Monday, May 18th 2015
According to IDC, the global Big Data and Analytics market is expected to grow to $125 billion in 2015. The Big Data growth will be driven by the increasing adoption of mobile devices, social media activity, and the rise of the Internet of Things. Billion Dollar Unicorn club member Cloudera is delivering on this growth by leveraging the power of open-source tool Hadoop for Big Data Analytics.
Cloudera does not yet disclose detailed financials. But the company is estimated to be tracking at annual revenues of $200 million this year. Cloudera had recently announced that they ended 2014 with revenues of over $100 million. Analysts estimate that last year’s revenues were really $107 million. Two thirds of their revenues last year were from software licenses and the remaining from deployment services. The market estimates Cloudera to grow to $329 million by the next fiscal.
Despite this steep revenue growth, Cloudera remains unprofitable. In fact, Cloudera does not expect to turn profitable soon. Analysts do not estimate them to turn in an operating profit before the year 2018. One of the big drivers for their unprofitability lies in the fact that Hadoop itself is an open-source platform. Vendors like Cloudera have to rely on support services and other add-ons as sources of revenues, making it difficult to earn profits. Cloudera is not the only one suffering from this issue. Rival Hortonworks, which went public recently, announced annual revenues of $46 million with a net loss of $24.16 per share.
But the absence of profits has not stopped the meteoric rise of the valuation of these companies, which offer a strong product line. Cloudera itself has seen valuation soar from $700 million in 2012 to $4.1 billion in March 2014. Recent estimates peg the valuation closer to $5 billion.
Cloudera’s Apache Growth
Cloudera continues to improve their Apache Hadoop offerings. Earlier this month, they announced their plans to lead an initiative to create open source API compatibility testing frameworks for accelerating the adoption of Apache Sqoop and Apache Flume. Cloudera realizes that developers who build applications that include Apache Sqoop and Apache Flume don’t have access to open source tools for validating compatibility of their implementations. Through the initiative, Cloudera will help streamline the process of building next-generation products and apps for ingesting and analyzing data.
Cloudera has not yet confirmed plans of going public. They claim to have enough cash to reinvest in growth from the $1.2 billion venture funding they have received so far from investors including Intel Capital, Google Ventures, T. Rowe Price, Accel Partners, Ignition Partners, Greylock Partners, Meritech Capital Partners, In-Q-Tel, Caterina Fake, Youssri Helmy, Diane Greene, Qi Lu, and Jeff Weiner.
It would be helpful for the company to address profitability concerns around their core business model before entering the public market, or else these sky high valuations may not sustain. Meanwhile, the funny money Unicorn business of late stage venture capital rages on in Silicon Valley, and even elsewhere.
More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns. Unicorns will also be discussed with some special guests during our 1M/1M Roundtable programs over the next few weeks. To be a part of the conversation, please register here. The term Unicorn was coined in a TechCrunch article by Aileen Lee of Cowboy Ventures.
This segment is a part in the series : Billion Dollar Unicorns
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