2016 IPO Prospects: IPO-Ready Cloudera Wants To Wait And Watch

| About: Cloudera, Inc. (CLDR)
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Summary

Cloudera has long been seen as one of the next hot IPOs.

In recent times, shares of Big Data and cloud players like Tableau and Hortonworks have plummeted, and the market volatility has affected the IPO plans of Cloudera.

For fiscal 2015, Cloudera disclosed that its unaudited revenue was over $100 million. About 70% to 75% of its revenue is from software licenses.

Driven by businesses accelerating their transformation into data-driven companies, the Big Data technology and services market is expected by IDC to grow at a CAGR of 23.1% over the 2014-2019 period with annual spending reaching $48.6 billion in 2019. However, the Big Data market is maturing and the y-o-y growth is forecast to gradually slow. Cloudera (CLOUD) has long been seen as one of the next hot IPOs. In recent times, shares of Big Data and cloud players like Tableau (NYSE:DATA) and Hortonworks (NASDAQ:HDP) have plummeted, and the market volatility has affected the IPO plans of Cloudera.

Cloudera's Offerings

Cloudera was founded in 2008 by engineers Christophe Bisciglia, Amr Awadallah and Jeff Hammerbacher together with Oracle executive Mike Olson to provide Big Data analytics leveraging the power of Hadoop. Cloudera became one of the first companies to commercialize Apache Hadoop and to develop solutions for enterprises built on this open source technology. Cloudera released its first product in 2009 and today has become the leading innovator and the largest contributor in the Hadoop software community.

Cloudera provides an enterprise data hub (EDH) software platform that enables organizations to store, process and analyze enterprise data at faster speeds and lower costs. The platform helps companies get started with Hadoop and leverage the power of the cloud. Additionally, they also offer consulting services for web servers, distributed logging, message buses, search indexing and databases and provides organizations with training for developers, administrators and data analysts.

More than 20,000 enterprises use its software and it has over 1,100 employees. It has proprietary software on top of the core open source, and it licenses that software to more than 825 large enterprises.

Cloudera recently announced the general availability of Cloudera Enterprise 5.7. This new release provides an average 3x improvement for data processing with added support for Hive-on-Spark. Hive-on-Spark is a community-driven initiative launched by Cloudera, IBM (NYSE:IBM), Intel (NASDAQ:INTC), MapR and others. Cloudera has built an ecosystem of over 2,100 partners including Tableau, Qlik (NASDAQ:QLIK), SAS, and Accenture (NYSE:ACN).

Cloudera's Financials

Cloudera does not disclose details of its financials. For fiscal 2015, Cloudera disclosed that its unaudited revenue was over $100 million. About 70% to 75% of its revenue is from software licenses, 15% to 20% is from professional services, and 5% to 10% from training.

They have been venture funded so far with $1.04 billion in funding from investors including Intel Capital, Google Ventures, T. Rowe Price, Accel Partners, Ignition Partners, Greylock Partners, Meritech Capital Partners, In-Q-Tel, Caterina Fake, Youssri Helmy, Diane Greene, Qi Lu, and Jeff Weiner. Their last round of funding was held in March 2014 when they raised $900 million from Intel Capital at a valuation of $4.1 billion.

Cloudera CEO Tom Reily is confident that they are operating well enough to be a successful public company. However, he adds that it's not a market that they would want to enter as a public company right now.

That might well be a wise decision as Cloudera isn't yet profitable. The company claims it has more than enough cash to become profitable. But it still needs to address the profitability issue before it goes public or it will not be able to sustain its sky high valuation.

Besides, the $4.1 billion private market valuation from the last round is very unlikely to hold up given that the over bloated market conditions have started puncturing. So there will be some degree of misery ahead for the company, even though its core value proposition is sound and the market continues to adopt its technology steadily.