Hortonworks Reports Second Quarter 2016 Financial Results

SANTA CLARA, Calif., Aug. 5 — Hortonworks, Inc. (NASDAQ: HDP), a leading innovator of open and connected data platforms, has announced financial results for the second quarter 2016.

“Our second quarter performance was highlighted by strong support subscription revenue growth and a material improvement in operating cash flow,” said Rob Bearden, chief executive officer and chairman of the board of directors of Hortonworks. “We remain focused on transforming our enterprise customers’ business models while also improving our own business model.”

Second Quarter 2016 Financial Highlights:

Revenue: Total GAAP revenue was $43.6 million for the second quarter of 2016, an increase of 46 percent compared to the second quarter of 2015.

Operating Billings: Operating billings, the aggregate value of all invoices sent to our customers in a given period, were $62.2 million for the second quarter of 2016, an increase of 49 percent compared to the second quarter of 2015. We have historically disclosed gross billings as a non-GAAP financial measure that presented total revenue plus the change in deferred revenue for the same period. Going forward, one would need to add our revenue to our change in deferred revenue to calculate a number that is comparable to our historically reported gross billings numbers.

Gross Profit: Total GAAP gross profit was $25.6 million for the second quarter of 2016, compared to gross profit of $16.7 million in the same period last year. Non-GAAP gross profit for the second quarter of 2016 was $27.0 million compared to $17.3 million in the second quarter of 2015. GAAP gross margin was 59 percent for the second quarter of 2016, compared to 56 percent during the same period last year. Non-GAAP gross margin was 62 percent for the second quarter 2016, compared to 58 percent during the same period last year.

Operating Loss: GAAP operating loss for the second quarter of 2016 totaled $64.3 million, compared to a loss of $42.9 million during the second quarter last year. Non-GAAP operating loss for the second quarter of 2016 was $41.6 million, compared to a loss of $34.7 million for the same period last year.

Net Loss: GAAP net loss for the second quarter of 2016 was $64.2 million, or $1.12 per basic and diluted share, compared to a net loss of $43.0 million, or $1.01 per basic and diluted share, in the second quarter of 2015. Non-GAAP net loss for the second quarter of 2016 was $41.5 million, or $0.72 per basic and diluted share, compared to a net loss of $34.8 million, or $0.82 per basic and diluted share, in the same period last year.

Deferred Revenue: Deferred revenue was $131.8 million for the second quarter of 2016, a 23 percent increase over the $106.8 million reported as of December 31, 2015 and a 64 percent increase over the $80.6 million reported as of June 30, 2015.

Cash & Investments: As of June 30, 2016, Hortonworks had cash and investments of $130.1 million, compared to $96.9 million as of December 31, 2015 and $144.4 million as of June 30, 2015.
A reconciliation of GAAP to non-GAAP financial measures has been provided in the financial statement tables included in this press release.

Recent Business Highlights:

Open Energi Deploys Hortonworks DataFlow for a Smarter Energy Grid. In June 2016, Hortonworks announced Open Energi expanded its data management and enrichment investment to include Hortonworks DataFlow (HDF). HDF has enabled Open Energi to analyze data in motion in order to better serve businesses looking to optimize energy use. HDF has proved an invaluable addition to Hortonworks Data Platform (HDP) at Open Energi.

Hortonworks Data Platform Modernizes IT for Hewlett Packard Enterprise. In June 2016, Hortonworks announced Hewlett Packard Enterprise (HPE) upgraded its Enterprise Analytics and Business Intelligence capabilities using HDP. HDP enabled HPE to securely integrate the tools it needs and achieve higher performance, all at a significantly lower cost. This modernization of its current data architecture with HDP decreased operating costs by millions, but also delivered significant improvements in HPE’s Enterprise Analytics and Business Intelligence areas.

Hortonworks Advances Enterprise Innovations for Connected Data Platforms. In June 2016, Hortonworks announced new innovations to HDP, including industry-leading security and governance, enterprise Apache Spark at scale, streamlined operations and developer productivity. Hortonworks executed on its new distribution strategy to deliver rapid innovations from the Apache Hadoop community to its customers with this latest Extended Services release.

Hortonworks Addresses Growing and Open Ecosystem with Expansion of Partnerworks Program. In June 2016, Hortonworks announced the expansion of its successful Partnerworks program to include new offerings for Managed Service Providers and Integrated Software Vendor/Integrated Hardware Vendor partners. Partnerworks is a comprehensive global program to support and enable partners selling, implementing and innovating with Hortonworks solutions.

Hortonworks Offers Business Intelligence on Hadoop Powered by AtScale. In June 2016, Hortonworks announced it will resell technology from AtScale, providing business users with a fast and secure self-service business intelligence (BI) platform for Hadoop. With AtScale, users can query data as soon it lands in Apache Hadoop, without any data movement and from any BI tool.

Hortonworks Initiates Precision Medicine Consortium to Explore Next Generation Genomics Open Source Platform. In June 2016, Hortonworks announced the formation of a new consortium to define and develop an open source genomics platform to accelerate genomics-based precision medicine in research and clinical care. Other founding members include Arizona State University, Baylor College of Medicine, Booz Allen Hamilton, Mayo Clinic, OneOme and Yale New Haven Health.

Hortonworks Names Microsoft Azure HDInsight as its Premier Connected Data Platforms Cloud Solution. In June 2016, Hortonworks announced Microsoft Azure HDInsight as its Premier Connected Data Platforms cloud solution to give customers Apache Hadoop in cloud environments. The two companies have been pioneering cloud solutions for the past four years together through a strategic partnership spanning joint engineering and go-to-market motions, giving customers the most flexible big data environments.

Hortonworks Extends Professional Services and Training Offerings to Meet Growing Customer Demand. In June 2016, Hortonworks announced updates to its Global Professional Services (GPS) program to support and enable Hortonworks Connected Data Platforms customers at any point in their big data journey. The new GPS program helps customers speed their business transformation by providing specific and tailored services.

AGL Selects Hortonworks to Help Improve Customer Experience. In June 2016, Hortonworks announced AGL Energy Limited, one of Australia’s largest energy providers, has selected HDP to help deliver a better customer experience. With HDP, AGL will streamline business processes across its customer service, digital and marketing teams.

Financial Outlook

As of August 4, 2016, Hortonworks is providing the following financial outlook for its third quarter of 2016 and full year 2016:

For the third quarter of 2016:

We expect total GAAP revenue to be $45.0 million.

We expect operating billings, the aggregate value of all invoices sent to our customers in a given period, to be $68.0 million.

We expect non-GAAP gross billings to be $68.0 million. Note that this is the last quarter we will provide guidance for non-GAAP gross billings. Going forward, to calculate a figure that is comparable to our historically reported gross billings, one would need to add revenue to the change in deferred revenue for the respective period.

We expect Adjusted EBITDA to be negative $13.0 million, and as we have previously disclosed, we expect to achieve Adjusted EBITDA breakeven in the fourth quarter of this year, due to a combination of billings growth and cost containment. Note this is the last quarter we will provide guidance for Adjusted EBITDA. Through the fourth quarter of 2016, when we expect to achieve Adjusted EBITDA breakeven, we will guide to each element of Adjusted EBITDA separately. To calculate a figure that is comparable to our historically reported Adjusted EBITDA, one would, starting with revenue, add the change in deferred revenue, subtract non-GAAP expenses and add depreciation. To illustrate this approach, we guide the following for the third quarter of 2016:

• Revenue: $45.0 million
• plus Change in Deferred Revenue: $23.0 million
• minus Non-GAAP Expenses: $83.0 million
• plus Depreciation: $ 2.0 million

For the full year 2016:

We currently estimate our total GAAP revenue to be $177.0 million in 2016. This is the result, as previously mentioned, of the increase in multi-year deals that we saw in the first half of 2016 that we expect will impact the contours of our revenue growth trajectory starting in the second half of 2016.

We estimate operating billings, the aggregate value of all invoices sent to our customers in a given period, of $265.0 million in 2016.

We estimate non-GAAP gross billings of $259.0 million in 2016, which includes the negative impact of a $5.9 million deferred revenue reserve established in the second quarter of 2016. Note that this is the last quarter we will provide guidance for gross billings as a non-GAAP measure. Going forward, to calculate a figure that is comparable to our historically reported gross billings, one would need to add together revenue and change in deferred revenue.

We expect 2016 Adjusted EBITDA of negative $61.2 million which includes the negative impact of the $5.9 million deferred revenue reserve established in the second quarter of 2016. Note this is the last quarter we will provide guidance for Adjusted EBITDA. Through the fourth quarter of 2016, when we expect to achieve Adjusted EBITDA breakeven, we will guide to each element separately. To calculate a figure that is comparable to our historically reported Adjusted EBITDA, one would, starting with revenue, add the change in deferred revenue, subtract non-GAAP expenses and add depreciation. To illustrate this approach, we guide the following for the full year 2016:

• Revenue: $177.0 million
• plus Change in Deferred Revenue: $ 82.0 million
• minus Non-GAAP Expenses: $327.5 million
• plus Depreciation: $ 7.3 million

Hortonworks has not reconciled its expectations as to non-GAAP Expenses to its most directly comparable GAAP measure because of the uncertainty regarding, and the potential variability of, certain costs and expenses that may be incurred in the future, such as stock-based compensation and lawsuit litigation expenses. Accordingly, reconciliation is not available without unreasonable effort, although these factors could be material to Hortonworks’s results computed in accordance with GAAP.

About Hortonworks

Hortonworks is an industry leading innovator that creates, distributes and supports enterprise-ready open data platforms and modern data applications that deliver actionable intelligence from all data: data-in-motion and data-at-rest. Hortonworks is focused on driving innovation in open source communities such as Apache Hadoop, NiFi and Spark. Along with its 1,800+ partners, Hortonworks provides the expertise, training and services that allow customers to unlock transformational value for their organizations across any line of business.

Source: Hortonworks