When Hortonworks went public late last year, the open enterprise Hadoop provider did it for two specific reasons.
First, to raise the capital it needed to accelerate the growth of its business and second to open its kimono in a very public way to show everyone just how well it's doing.
“We were comfortable putting transparency into the market,” Hortonworks President Herb Cunitz told me just after the company’s Q2 earnings call last night.
Wall Street certainly likes what it’s seeing.
Beating the Street
In its second quarter earnings call yesterday, the company revealed revenues of $30.7 million, beating Wall Street’s projections of $23.3 million by 32 percent.
The company’s revenues are up 154 percent year-over-year and support subscription is up 178 percent. The company reported a net loss of $42.3 million (more on this later.)
It’s also worth noting that Hortonworks added 119 new logo customers last quarter, giving it a total of more than 550.
For those who aren’t into analyzing numbers, let’s just say this: Hortonworks shares have traded as much as 18 per cent higher today.
Even simpler that than that is a Barclay’s report released in July that noted Hortonworks is expected to become the fastest growing software company — reaching $100 million in annual revenue in just four years from inception.
Hortonworks $HDP predicted by Barclays to be fastest ever public company from founding to $100m of revenue #bigdata pic.twitter.com/msUARR2bj4
— Andy Leaver (@AndyLeaver) August 6, 2015Consider that Salesforce took five years to hit that number and that other vendors known for their skyrocketing growth like Workday, Tableau and Splunk all took six to nine years.
Those kind of figures and that kind of transparency might very well quiet the likes of Amr Awadallah, the co-founder and CTO of Hortonworks’ competitor Cloudera, who claimed that Hortonworks’ business model was unsustainable.
Sean Udall, Chief Investment Officer at Quantum Trading Strategies, certainly doesn’t share his sentiment.
"(Hortonworks) actually has a GAAP gross profit, which is a pretty big deal for a company this young post-IPO," he told Benzinga, a go-to publication for traders after last night’s report. “They have GAAP gross profit of $17.5 million … with these young companies, the GAAP loss and GAAP gross profit, some of these things can look a little funky. But deferred revenue is great, grew 104 percent over the prior period. Really nice report”
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On last night’s post earnings conference call every analyst, without exception, expressed a similar sentiment.
The Secret Sauce
While you can read all about Hortonworks’ accomplishments in the last quarter, such as its go-to-market partnership with EMC, its strategic relationship with Microsoft via HDInsight (Microsoft’s Hadoop service on Azure), its IoT collaboration with Harman around connected automobiles, and the overwhelming success of its Hadoop Summit user conferences in the company’s post earnings announcement press release, we talked to Cunitz about what else made Hortonworks standout.
There’s the fact that it sells the only 100 percent open source, enterprise-grade Hadoop distribution on the planet — something that inspires co-innovation with enterprises like Target, JP Morgan and Merck — the fact that it employs so many experts who are influencers in Hadoop and Hadoop-related Apache projects (therefore making it the best place to go for support) and so on.
“If you think of the Open Source lifecycle,” said Cunitz, made up of Architecture, Development, Distribution and Support, “Hortonworks is the only (Hadoop) vendor that delivers on all four."
About That Loss
Wall Street analysts don’t seem worried about Hortonworks loss and tech industry analysts seem to understand.
“It is land grab time for big data vendors — so what matters most is that Hortonworks is growing fast. Increased number of supported customers and rising deferred revenue are good signs,” said Holger Mueller an analyst at Constellations Research.
It’s also worth noting that Hortonworks has brought some industry bigshots into its executive ranks as of late. There’s Scott Gnau, former president of Teradata Labs, who joined as CTO in April and Ingrid Burton, former SVP, Technology and Innovation Marketing at SAP, who joined as CMO last month.
These C-level positions are new and they were created to help take Hortonworks to the next level. “Someone like Scott has been where Hortonworks is going, he’s lived the journey,” said Cunitz.
That’s something that Cunitz would probably want to say about himself in the future.
