On Feb. 10, Apache Hadoop distributor Hortonworks reported results for the fourth quarter and full year that beat analyst estimates, with Q4 revenue of $37.4 million compared to $12.7 million for the same period a year ago. Executives said the company's strong performance and growth had allowed them to pull forward to Q4 2016 estimates about when the company's adjusted EBITDA (earnings before income tax, depreciation, and amortization) number would hit break-even.
And that's important because Hortonworks' cost structure is still that of a young, rapidly growing company with net losses that outpace revenues. Hortonworks net loss for the fourth quarter was $50.2 million, a number that has narrowed significantly from the net loss for the same period a year ago of $90.6 million. Yet it's still much more than revenues.
For the full year that ended Dec. 31, 2015, Hortonworks reported revenue of $121.9 million, up 165% from the previous year's $46 million. Net loss for 2015 was $179 million in 2015 compared with $177 million for 2014.
Hortonworks is the only Apache Hadoop distribution company that is publicly traded. Its Hadoop distribution competitors, Cloudera and MapR, are both venture-funded companies that don't publish financial results.
[ Learn more about Hortonworks' IPO last year. Read Hortonworks Big IPO: Why CIOs Should Care. ]
Hortonworks raised $100 million a year ago in its initial public offering, and just last month the company announced a follow-on offering of 8.4 million shares to raise approximately $80 million more.
Hortonworks earnings report comes a week after big data visualization company Tableau spooked Wall Street investors with its quarterly results, which showed significant growth yet disappointed analysts on one key performance indicator, setting off the negative market reaction. LinkedIn's quarterly earnings, also reported last week, contributed to Wall Street's worries, too; and Twitter's earnings released Wednesday that revealed stagnation in new users of the social media service didn't help either.
Earnings report disappointments by these digital pioneers are contributing to a larger concern over economic conditions in the market overall, and one analyst during the Hortonworks earnings call asked executives directly if they've noticed any early warning signs of softening IT spending. Hortonworks CEO Robert Bearden answered with an emphatic no.
Bearden was quick to say that the company had seen absolutely no signs of weakness anywhere, and added that even if weaknesses were there, open source companies tend to do better when budgets are tight.
"We have not seen any disruption whatsoever in our pipeline or deal velocity or where we should be in our selling cycles within our committed and forecasted deals," he told analysts during the earnings conference call on Feb. 10.
"…Pressure on IT budgets generally tends to be an accelerant for open source platforms. When IT budgets have constraints placed on them, there will be an acceleration in moving away from proprietary or very high spend kinds of environments to an open source alternative."
But Bearden said that he'd seen no such tightness in IT budgets. Indeed, in the most recent quarter the company inked five deals that were each worth more than $1 million. The company has increased sales with existing customers with its diversified product line -- which includes its Hadoop platform distribution, Hortonworks Data Platform (HDP) -- with technology from last year's acquisition of Onyara, the Apache NiFi project to manage IoT data flow originally developed by the NSA. Now called Hortonworks Data Flow or HDF, the technology provides real-time data streaming capabilities for IoT and gives Hortonworks another technology to offer its customers, Bearden told analysts.
"This platform captures data that's generated mostly outside the traditional data center that may ultimately come to rest within HDP… By combining HDP and HDF, we're now positioned to capture all facets of the enterprise data lifecycle, and this significantly increases our addressable market," Bearden said.
Looking ahead, CFO Scott Davidson told analysts that Hortonworks expects Q1 revenue of $39.5 million and adjusted EBITDA of negative $23.5 million. For the full year, the company estimates revenue of $188 million and adjusted EBITDA of negative $55 million.
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Executives said the company's strong performance and growth had allowed them to pull forward to Q4 2016 estimates about when the company's adjusted EBITDA (earnings before income tax, depreciation, and amortization) number would hit break-even.