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Cloud Stocks: How Will Cloudera Address the Competition?

Posted on Tuesday, Jul 9th 2019

Hadoop services provider Cloudera (NYSE: CLDR) has been trying different strategies to continue to stay relevant. As part of this effort, it completed the $5.2 billion merger with Hortonworks earlier this year. The stock has fallen by 65% since the start of the year, and there doesn’t appear to be any respite in sight. The recently announced exit of its CEO did not help alleviate the market’s concerns either.

Cloudera’s Financials

Cloudera’s first quarter revenues came in at $187.5 million, missing the market’s forecast of $188.4 million. It ended the quarter with a loss of $103.1 million, or 38 cents a share. On an adjusted basis, the company reported a loss of $0.13 per share, compared with the Street’s forecast of $0.23 per share.

During the quarter, subscription revenues grew 78% to $154.8 million and services revenues grew 95% to $32.6 million.

Among other metrics, annualized recurring revenue grew 21% to $672 million and non-GAAP subscription gross margin was 85%. Customers with annualized recurring revenue greater than $100,000 grew to 929.

For the current quarter, Cloudera forecast revenues of $180-$183 million with a net loss of $0.11-$0.08 per share. It expects to end the year with revenues of $745-$765 million and adjusted loss of $0.32-$0.28 per share. Analysts had forecast revenues of $202.9 million for the quarter with a loss of $0.10 per share and revenues of $843.4 million for the year with a loss of $0.36 per share.

The disappointing results were followed by the announcement that the company’s CEO Tom Reilly was retiring. Reilly is being replaced by Chairman Martin Cole on a temporary basis while Cloudera searches for a permanent CEO. The stock fell 39% after the announcement of the results and the exit.

Cloudera’s disappointing performance has resulted in the filing of a class action suit. The Shareholders Foundation recently filed a claim that Cloudera’s management failed to disclose that it was finding it increasingly difficult to identify large enterprises interested in adopting the company’s Hadoop-based platform.

According to the lawsuit, the company should have disclosed that it needed to spend an increasing amount of capital on sales and marketing activities to generate new revenues and that it had materially diminished sales opportunities and prospects and could not generate annual positive cash flows for the foreseeable future. The plaintiffs are also contesting that the primary motivation for the merger with Hortonworks was to generate growth through the acquisition of Hortonworks’ existing customers, and that the synergies and other benefits of the merger were materially overstated.

Cloudera’s IBM Partnership

Recently, Cloudera entered into a strategic tie-up with IBM to build a stronger go-to-market solution. As part of the agreement, the companies will work together to bring big data and AI solutions to users across the open Apache Hadoop ecosystem. As part of the deal, IBM will resell Cloudera Enterprise Data Hub and Cloudera DataFlow to its customers and Cloudera will deploy IBM’s Watson Studio and BigSQL to expand IBM’s capabilities in big data analytics.

Prior to the tie-up, IBM already had a strategic with Hortonworks that provided enterprises with access to tools to help with decision making capabilities based on informative data output sets. The collaboration with Cloudera will help IBM’s customers leverage the hybrid data architecture to enable faster decision making. IBM will be able to provide its clients with access to Cloudera’s Apache platform that can accelerate analytics, business processes, data processing, and predictive capabilities.

Recently, Cloudera also announced two new products – the Cloudera Edge Management, an edge management solution for IoT and streaming data, and Cloudera Flow Management, a no-code, high-scale data ingestion, and management solution. Cloudera Edge Management can be deployed into thousands of edge devices to collect data and supports TensorFlow and allows for Machine Learning (ML) models to be executed at the edge. Cloudera Flow Management is a no-code data ingestion and management solution powered by Apache NiFi that can handle all types of data across any type of data source and offers tight integration with Cloudera Manager, Apache Impala, and Apache Kudu.

Cloudera is hoping that the partnership and new products will keep the market interested. But the stock market needs much more than that. The market is bothered with Cloudera’s performance and its stock has been downgraded by analysts who worry about Cloudera’s ability to compete with cloud vendor competition and “no visible catalysts for multiple expansion or upward revisions in the next three to six months”.

Cloudera has also failed to address competition proactively. It relied on the open source model of Hadoop to drive growth. But in the recent past, technologies like Spark and Kafka have grown far ahead to support modern data applications that use AI and ML. Hadoop may be open source, but it needs a highly talented pool of engineers to support and manage its complexity. Additionally, players like Google and Salesforce are flexing their muscles in the big data space with big acquisitions of Looker and Tableau.

Its stock has fallen to $5.24 with a market capitalization of $1.4 billion. In September last year, it was trading at a 52-week high of $20.18. Earlier this month, it had fallen to a 52-week low of $4.89.

Photo Credit: techmsg/

This segment is a part in the series : Cloud Stocks

. Smartsheet Acquiring Bootstrapped Startups to Drive Growth
. Bootstrapped Unicorn Atlassian is Acquiring Capital Efficient Startups
. Netflix Price Hike Ruffles Competition
. How Will Carbon Black Differentiate?
. ServiceNow Grows Through Addition of Capital-Efficient Startups
. Zendesk and Freshworks Follow Different Acquisition Strategies
. Tableau Grows Through Small Acquisitions
. Open Platform Strategy Stands Intuit in Good Stead
. Will GoDaddy Follow the PaaS Route?
. Adobe Delivers Via PaaS
. A Look at Oracle’s 2018 M&A Activity
. What Apps Will Drive More Traction for Cloudera?
. Slack's App Focus Will Be Key to Post-IPO Success
. IBM Counts on its Cloud and Platform for the Turnaround
. Atlassian Acquires From its PaaS Marketplace
. What Should SAP Acquire to Triple its Value by 2023?
. Expect ServiceNow to Acquire From App Marketplace
. Should Follow a PaaS Strategy?
. How Upwork Can Leverage the Virtual Company Trend
. Qualys Scouting For Acquisitions
. Should SAP Acquire Zendesk or Freshworks?
. HubSpot Counts on its API Strategy
. SurveyMonkey Eyes Acquisitions for Growth
. Workday Wants to Disrupt Cloud Computing Using Machine Learning
. Einstein and Open-Source Platform Lead the Charge for Salesforce
. DocuSign Prepares to Beat Rival Adobe
. Veeva Soars, But Dassault Acquires Medidata for $5.8 Billion
. Tableau Acquisition Signals Massive Analytics Push for Salesforce
. Oracle Joins Hands with Microsoft to Take on Amazon
. GoDaddy is Making Strategic Acquisitions for the Next Level of Growth
. Alteryx Sees Strong Momentum
. Adobe Leveraging Magento and Marketo to Deliver Blockbuster Performance
. Is Slack Overvalued?
. How Will Cloudera Address the Competition?
. Zoom is Not Bothered by Cisco or Microsoft
. Domo Counts on Enterprise Revenue for Growth
. Netflix Plays with Pricing and Games to Attract Subscribers
. CrowdStrike Has a Successful IPO
. Atlassian Crosses the Billion Dollar Revenue Milestone
. ServiceNow Believes Strength Lies in Tie-ups
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. HubSpot Soars to a New High
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. Forescout Partners with Big Names
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. Splunk Should Open up About its PaaS Metrics
. Okta Benefiting from App Diversity
. Oracle Sees Growth Momentum
. Xero Focuses on a PaaS Strategy
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. Paylocity Delivers Solid Results
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. AppFolio Leverages AI for Product Enhancement
. Will Adobe Open Up About its PaaS Statistics?
. Change Healthcare Pushes APIs
. Dropbox Needs to Share API Metrics
. Upwork Improves Monetization
. MongoDB has Miles to go
. Nutanix Needs to Define a PaaS Strategy
. Cloudera Focuses on Hybrid Cloud
. Atlassian Gears Up for Growth, Unfazed by Covid-19
. Shopify Helps Merchants Pivot to Online Stores
. ServiceNow Steady in Turbulent Seas
. RingCentral Sees Strong Traction
. Twilio Hits 52-Week High Amidst COVID Crisis
. HubSpot Lowers Outlook Amidst Virus Concerns
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. Splunk Rides High on Cloud Initiatives
. Salesforce Partners with Workday to Address the New Normal
. Veeva Scales New Highs
. Is Smartsheet’s Pullback a Buying Opportunity?
. MongoDB Soars Even in the Crisis
. Okta Reiterates Outlook
. Is Anaplan a Prospect for Oracle, SAP?
. Oracle Relies on Autonomous Offerings
. Adobe Shifts its Focus
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. Paylocity Acquires Amid Crisis
. Datadog's Integrations and Upgrades Help it Soar
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. Cloudera Powers its Data Platform with Partnerships
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. The PaaS Landscape
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. Blackline Needs a PaaS Strategy
. Twilio - A Successful PaaS Story
. Zendesk Invests in the Future
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. Fastly Needs to Diversify from TikTok
. Way to Go, Salesforce
. Intuit Continues to Acquire
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. Analysis of Five9's PaaS Strategy
. Okta Expands Alliances to Attract Enterprises
. Palo Alto Continues to Acquire
. Analysis of Splunk's PaaS Strategy
. BigCommerce Goes Big with IPO
. Analysis of Workday's PaaS Strategy
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. Sees Strong Demand
. Analysis of MongoDB's PaaS Strategy
. Analysis of Wix's Platform Strategy
. New Relic Product Upgrades Deliver Growth
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. Smartsheet Should Follow Atlassian’s Example
. Adobe's Relentless Growth Continues
. SurveyMonkey's PaaS Prospects

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