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2017 IPO Prospects: Cloudera Files for IPO

Posted on Monday, Apr 10th 2017

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There has been a flurry of IPO activity over the last few weeks with more than seven companies joining the IPO pipeline. Among them is Billion Dollar Unicorn player Cloudera. 

Cloudera’s Journey

Palo Alto-based Big Data vendor Cloudera was founded in 2008 by engineers Christophe Bisciglia, Amr Awadallah, and Jeff Hammerbacher together with Oracle executive Mike Olson to leverage the power of Hadoop. It released its first product in 2009 and today has the leading Big Data platform for data management, machine learning, and advanced analytics.

Cloudera became one of the first companies to commercialize Apache Hadoop and to develop solutions for enterprises built on this open source technology. Its software platform combines the open source software with proprietary software to meet the requirements of large enterprises. It has more than 1,000 large enterprise customers in more than 45 countries, as well as the governments of 29 countries. Customers include BT Group, Citigroup Global Markets, Experian, and Navistar International.

Last year, it acquired Sense, a startup that built a cloud service enabling multiple data scientists to collaborate and share self-service analytics reports. Previous Cloudera acquisitions include DataPad and Xplain.io.

Cloudera’s Financials

Revenue was $166 million in 2015 and grew 57% to $261 million in 2016. Over the same period, operating cash outflows increased from $90.5 million to $116.6 million. Net losses decreased from $203.1 million in 2015 to $187.3 million in 2016. Cloudera had over 1,470 full-time employees in 2016, up from 1,140 in 2015.

Subscriptions account for about 72% of its revenues, up from about 67% in 2015. Services account for the remaining 28% of revenues. Enterprise customers accounted for 73% of revenue in 2016.

Within operating expenses of $295.3 million in 2016, sales and marketing account for the lion’s share at $161.6 million and research and development accounts for $99.3 million. It ended fiscal 2016 with total assets of $442.5 million including cash and cash equivalents of $74.2 million.

Cloudera is closely affiliated with Intel, which owns 22% of the company. Accel Partners was Cloudera’s first investor and owns 16.3% of the company, followed by Greylock Partners, which owns 12.5% of Cloudera’s shares.

Cloudera has raised $1.04 billion in funding 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. Its last round of funding was held in March 2014 when it raised $740 million from Intel Capital at a valuation of $4.1 billion. Just prior to that, it had raised $160 million at a valuation of $1.8 billion. In December 2012, it had raised $65 million at a valuation of $718 million.

Even though its core value proposition is sound, and the market continues to adopt its technology steadily, analysts doubt whether it would be able to sustain the $4.1 billion valuation under public scrutiny. Rival Hortonworks (NASDAQ: HDP), which went public in 2014, was valued at $1.38 billion in its last private funding round before it went public. At the time of filing, it was valued at $592 million, but its successful IPO valued it at $1 billion. Since then, its value has plummeted to $678 million. Its revenue in 2016 was $184.5 million with a net loss of $251.7 million.

On the other hand, Red Hat (NYSE: RHT), the open source-based enterprise software company, has a market cap of $15 billion. Its revenue was $2.4 billion with net income of $254 million.

Cloudera has not yet indicated a price range and valuation for its IPO. It expects to raise $200 million from its IPO on the NYSE under the ticker CLDR. CBN Insights pegs $866 million as a more likely valuation based on Hortonworks’ price-to-revenue multiple.

More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns. The term Unicorn was coined in a TechCrunch article by Aileen Lee of Cowboy Ventures.

Photo Credit: techmsg/Flickr.com

This segment is a part in the series : 2017 IPO Prospects

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