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February 9, 2018

Hortonworks Breaks Even on Cash Flow

Hortonworks broke even on a cash-flow basis during the fourth quarter of 2017, a significant milestone for the big data platform developer, which posted total quarterly revenues of $75.0 million, a 44% increase from a year ago.

Like many software companies in the big data space, Hortonworks has been losing money from quarter to quarter. But it’s not something that has concerned management or investors too much, as the long-range benefits from rapidly growing the company are considered greater than the short-term profits that could be made now if it just restrained spending.

Just the same, every company eventually has to make a profit. And while Hortonworks is not yet profitable from a GAAP standpoint, the difference between income and outflow has narrowed enough that the company is breaking even now on a cash-flow basis.

“We completed 2017 with a significant amount of momentum, resulting in record revenue of $261.8 million for the year and achievement of operating cash flow break-even exiting the fourth quarter,” Hortonworks chairman and CEO Rob Bearden stated in a press release late Thursday after the markets had closed.

Revenues for fiscal 2017 came in at $261.8 million, a 42% increase from the $184.5 million it had for 2016. Total operating expenses for the year came to $379.6 million, a 4.4% increase from the $363.5 million Hortonworks spent in 2016.

On a GAAP basis, the company recorded a net loss of $48.2 million for the fourth quarter, compared to a net loss of $57.1 million for the same quarter a year ago. For the year, the GAAP net loss came in at $204.5 million, compared to a net loss of $251.7 million, a year ago.  Total assets came to $250.7 million compared to $235.8 million a year ago.

The results of the company, whose stock is traded on the NASDAQ market under the ticker symbol HDP, were not rewarded on Wall Street. Despite the fact that Hortonworks’ financial results beat revenue expectations and kept the net loss in line with expectations, the company’s stock was down more than 9% this morning. Of course, stocks have been falling sharply across the board, as Wall Street has its worst week since the financial crisis of 2008.

The company touted a big win at Nissan Motor Company, which will adopt the company’s Hadoop distribution, HDP, to power its data lake. The company had 20 deals that exceeded $1 million over the quarter, compared to nine in the fourth quarter of 2016. What’s more, 11 of those $1M+ deals in 4Q17 included Hortonworks Data Flow (HDP), its streaming data management platform based on its acquisition of Apache NiFi developer Onyara.

“2017 was a pivotal year for us,” Bearden said during a conference call with analysts yesterday. “We continue to see opportunity for growth within our core business of managing data in motion and data at rest. We also continue to see new opportunities in emerging use cases, related to managing high velocity data in the IoT and data streaming space.”

Bearden said he expects Hortonworks’ new DataPlane offering — which Hortonworks unveiled at the Strata Data Conference in September and which extends data governance and security to the edge and also allows users to spin up clusters to process data that’s managed via Ranger and Atlas API hook — to begin helping the top line revenue figure soon. While the DPS offering is “very early,” it carries promise in boosting subscription revenue from HDF and HDP. “It’s actually an accelerant to all of the other platforms that we have,” Bearden said.

Hortonworks says it expects to have revenues of $75 million for the first quarter of 2018, and between $322 million and $327 million for the year as a whole. Baked into those numbers is a $15 million hit that the company will take on annual revenues as a result of shifting to the ASC 606 and ASC 340-40 accounting standards beginning on January 1.

Related Items:

Hortonworks Close to Breaking Even on Cash Flow

Data Plane Offering Marks New Phase for Hortonworks