Hortonworks Reports Financial Results for Fourth Quarter and Full Year 2015

10 Feb, 2016, 16:02 ET from Hortonworks, Inc.

SANTA CLARA, Calif., Feb. 10, 2016 /PRNewswire/ -- Hortonworks, Inc.® (NASDAQ: HDP) today announced financial results for the fourth quarter and full year 2015.

"We are pleased with our fourth quarter performance, which was highlighted by support subscription revenue growth of 146% year-over-year," said Rob Bearden, chief executive officer and chairman of the board of directors of Hortonworks. "We more than doubled our customer base in 2015 and exited the year with over 800 customers. As evidenced by our 159% dollar-based net expansion rate over the trailing four quarters, we are excited to serve as the preferred IT partner during this transformational period in the data management industry."

Fourth Quarter 2015 Financial Highlights:

  • Revenue: Total GAAP revenue was $37.4 million for the fourth quarter of 2015, an increase of 196 percent compared to the fourth quarter of 2014.
  • Gross Billings: Gross billings were $52.1 million for the fourth quarter of 2015, a 63 percent increase over gross billings of $31.9 million in the same period last year.
  • Gross Profit: Total GAAP gross profit was $21.7 million for the fourth quarter of 2015, compared to gross loss of $46.2 million in the same period last year. Non-GAAP gross profit for the fourth quarter of 2015 was $22.8 million, compared to $6.0 million in the fourth quarter of 2014. Non-GAAP gross margin was 61 percent for the fourth quarter of 2015, compared to 36 percent during the same period last year.
  • Operating Loss: GAAP operating loss for the fourth quarter of 2015 totaled $50.6 million, compared to a loss of $92.5 million during the fourth quarter last year. Non-GAAP operating loss for the fourth quarter of 2015 was $32.9 million, compared to a loss of $37.0 million for the same period last year.
  • Net Loss: GAAP net loss for the fourth quarter of 2015 was $50.2 million, or $1.11 per basic and diluted share, compared to a net loss of $90.6 million, or $5.38 per basic and diluted share, in the fourth quarter of 2014. Non-GAAP net loss for the fourth quarter of 2015 was $32.7 million, or $0.72 per basic and diluted share, compared to a net loss of $36.9 million, or $2.19 per basic and diluted share, in the same period last year.
  • Adjusted EBITDA: Adjusted EBITDA for the fourth quarter of 2015 resulted in a loss of $16.8 million, compared to a loss of $21.3 million for the fourth quarter of 2014.
  • Deferred Revenue: Deferred revenue was $106.8 million for the fourth quarter of 2015, a 16 percent increase over the $92.1 million reported as of September 30, 2015 and a 70 percent increase over the $62.9 million reported as of December 31, 2014.
  • Cash & Investments: As of December 31, 2015, Hortonworks had cash and investments of $96.9 million, compared to $116.3 million as of September 30, 2015 and $204.5 million as of December 31, 2014.

Full Year 2015 Financial Highlights:

  • Revenue: Total GAAP revenue was $121.9 million for the year ended December 31, 2015, an increase of 165 percent compared to last year.
  • Gross Billings: Gross billings were $165.9 million, a 90 percent increase over gross billings of $87.1 million in fiscal year 2014.
  • Gross Profit: Total GAAP gross profit was $66.8 million, compared to gross loss of $34.8 million in fiscal year 2014. Non-GAAP gross profit for the year was $69.5 million, compared to $19.8 million in fiscal year 2014. Non-GAAP gross margin was 57 percent for fiscal year 2015, compared to 38 percent in fiscal year 2014.
  • Operating Loss: GAAP operating loss totaled $179.6 million, compared to a loss of $173.5 million during fiscal year 2014. Non-GAAP operating loss for the year was $133.6 million, compared to a loss of $105.7 million for fiscal year 2014.
  • Net Loss: GAAP net loss for the year was $179.1 million, or $4.13 per basic and diluted share, compared to a net loss of $177.4 million, or $24.16 per basic and diluted share, in fiscal year 2014. Non-GAAP net loss for fiscal year 2015 was $133.3 million, or $3.08 per basic and diluted share, compared to a net loss of $105.5 million, or $14.37 per basic and diluted share, in fiscal year 2014.
  • Adjusted EBITDA: Adjusted EBITDA for the year resulted in a loss of $85.3 million for fiscal year 2015, compared to a loss of $69.5 million for fiscal year 2014.

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

  • Booz Allen Hamilton. In February 2016, Hortonworks and Booz Allen Hamilton announced a strategic alliance to advance business transformation. Through this alliance, clients across the federal and commercial sectors will now seamlessly access both Hortonworks Data Platform (HDP™) and Booz Allen's expertise to build and gain transformational insights.
  • Partnerworks. In January 2016, Hortonworks announced Partnerworks, a comprehensive global program to support and enable partners selling, implementing and innovating with Hortonworks solutions. The Partnerworks program allows partners to access, align with and gain support from Hortonworks' open source technology experts and go-to-market capabilities. Partnerworks also offers new and more extensive trainings, access to deep technical resources and new certifications. The new program will help partners accelerate their business while providing best-in-class solutions for customers.
  • Arkena. In January 2016, Hortonworks announced that Arkena, one of Europe's leading media services companies, is using HDP to provide its media customers with an advanced analytics platform to deliver content to OTT customers through its content delivery network. The Apache Hadoop-powered platform enables Arkena to better serve customers' needs for real-time data analysis.
  • Munich Re. In December 2015, Hortonworks announced that Munich Re, one of the world's leading reinsurers, became a Hortonworks customer. Multiple Munich Re business units will benefit from its newly created data lake platform which leverages HDP for specific business analytics use cases as well as big data applications.
  • Apache Spark and Hortonworks Community Connection. In December 2015, Hortonworks announced coming advancements of HDP with the in-memory analytic capabilities of Spark. Specifically, Apache Spark 1.5.2 will include support for Spark SQL and Spark Streaming. Hortonworks' commitment to Spark is focused on helping customers accelerate data science, maintain seamless data access, drive innovation at the core and ultimately scale for the enterprise. In addition, Hortonworks launched Hortonworks Community Connection, a new online collaboration destination for developers, DevOps, customers and partners to get answers to questions, collaborate on technical articles and share code examples from GitHub.
  • Billy Mobile. In November 2015, Hortonworks announced that Billy Mobile, the fast-growing mobile marketing company, adopted HDP for data collection, processing and analysis for significantly more flexibility, scale and reliability than had previously been possible. By partnering with Hortonworks, Billy Mobile is positioned for continuous growth by leveraging Big Data to successfully serve the demanding telco and advertising markets.
  • SmartSense. In October 2015, Hortonworks announced that it is delivering proactive issue resolution and personalized Hadoop cluster insights to all of its HDP support subscription customers through its SmartSense™ technology. For Hortonworks' support subscription customers, Hortonworks SmartSense delivers the industry's first proactive monitoring features to build, manage and scale a Hadoop cluster.

Financial Outlook

As of February 10, 2016, Hortonworks is providing the following non-GAAP financial outlook for its first quarter and full year 2016:

For the first quarter of 2016, we expect:

  • Total revenue to be $39.5 million.
  • Gross billings to be $49.5 million.
  • Adjusted EBITDA to be a loss of $23.5 million.

For the full year 2016, we expect:

  • Total revenue to be $188.0 million.
  • Gross billings to be $261.0 million.
  • Adjusted EBITDA to be a loss of $55.0 million.

Fourth Quarter and Full Year 2015 Earnings Conference Call and Webcast Details

Hortonworks will hold a conference call and webcast today to discuss the results and outlook at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time) on Wednesday, February 10, 2016. Interested parties may access the call by dialing (877) 930-7786 in the U.S. or (253) 336-7423 from international locations. In addition, a live audio webcast of the conference call will be available on the Hortonworks Investor Relations website at http://investors.hortonworks.com.

Shortly after the conclusion of the conference call, a replay of the audio webcast will be available on the Hortonworks Investor Relations website for approximately seven days.

Statement regarding use of non-GAAP financial measures

The Company reports non-GAAP results for revenue, gross profit and margins, operating loss and margins, net loss, basic and diluted net loss per share, adjusted EBITDA and gross billings in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.

The Company's financial measures under GAAP include stock-based compensation expense, contra-revenue, acquisition-related items, amortization of intangible assets, depreciation expense, and other income/expense, net. Management believes the presentation of operating results that exclude these items provides useful supplemental information to investors and facilitates the analysis of the Company's core operating results and comparison of operating results across reporting periods. Management also believes that this supplemental non-GAAP information is therefore useful to investors in analyzing and assessing the Company's past and future operating performance.

Non-GAAP revenue is calculated as GAAP revenue excluding the non-GAAP contra-revenue adjustments associated with the issuance of equity to an affiliate of AT&T. Management believes non-GAAP revenue offers investors useful supplemental information regarding the performance of our business, and will help investors better understand our business.

Gross Billings are calculated as non-GAAP revenue plus the change in total deferred revenue. Management believes gross billings offer investors useful supplemental information regarding the performance of our business, and will help investors better understand our business.

Non-GAAP gross profit is calculated as non-GAAP revenue less our non-GAAP cost of revenue. Management believes non-GAAP gross profit offers investors useful supplemental information regarding the performance of our business, and will help investors better understand our business.

Non-GAAP gross margin is calculated as non-GAAP gross profit divided by non-GAAP revenue. Management believes non-GAAP gross margin offers investors useful supplemental information regarding the performance of our business, and will help investors better understand our business.

Non-GAAP operating loss is calculated as GAAP operating loss plus non-GAAP revenue adjustments and non-GAAP cost of revenue and operating expense adjustments. Management believes non-GAAP operating loss offers investors useful supplemental information regarding the performance of our business, and will help investors better understand our business.

Non-GAAP operating margin is calculated as non-GAAP operating loss divided by non-GAAP revenue. Management believes non-GAAP operating margin offers investors useful supplemental information regarding the performance of our business, and will help investors better understand our business.

Non-GAAP net loss is calculated as GAAP net loss plus non-GAAP revenue adjustments and non-GAAP cost of revenue and operating expense adjustments. Management believes non-GAAP net loss offers investors useful supplemental information regarding the performance of our business, and will help investors better understand our business.

Non-GAAP net loss per basic and diluted share is calculated as non-GAAP net loss divided by the weighted average shares outstanding for the period. Management believes non-GAAP net loss per basic and diluted share offers investors useful supplemental information regarding the performance of our business, and will help investors better understand our business.

Adjusted EBITDA is calculated as gross billings minus non-GAAP cost of revenue and operating expenses plus adjustments to non-GAAP cost of revenue and operating expenses. Management believes adjusted EBITDA offers investors useful supplemental information regarding the performance of our business, and will help investors better understand our business.

Use of forward-looking statements

This release contains "forward-looking statements" regarding our performance, including in the section titled "Financial Outlook." Forward-looking statements are subject to known and unknown risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements. If any such risks or uncertainties materialize or if any of the assumptions prove incorrect, our results could differ materially from the results expressed or implied by the forward-looking statements we make.

The important factors that could cause actual results to differ materially from those in any forward-looking statements include, but are not limited to, the following: (i) we have a history of losses, and we may not become profitable in the future, (ii) we have a limited operating history, which makes it difficult to predict our future results of operations, and (iii) we do not have an adequate history with our support subscription offerings or pricing models to accurately predict the long-term rate of support subscription customer renewals or adoption, or the impact these renewals and adoption will have on our revenues or results of operations.

Further information on these and other factors that could affect our financial results and the forward-looking statements in this press release are included in our Form 10-K filed on March 27, 2015, our Quarterly Report on Form 10-Q for the quarter ended September 30, 2015 filed November 4, 2015 and our final prospectus dated February 1, 2016 and filed on February 2, 2016, or in other filings we make with the Securities Exchange Commission from time to time, particularly under the caption Risk Factors.

We undertake no obligation, and do not intend, to update these forward-looking statements.

About Hortonworks

Hortonworks is the leader in accelerating business transformations with Open Enterprise Hadoop by developing, distributing and supporting an enterprise-scale data platform built entirely on open source technology including Apache™ Hadoop®. Our team comprises the largest contingent of builders and architects within the Hadoop ecosystem who represent and lead the broader enterprise requirements within these communities.

The Hortonworks Data Platform provides an open platform that deeply integrates with existing IT investments and upon which enterprises can build and deploy Hadoop-based applications.

Hortonworks has deep relationships with the key strategic data center partners that enable our customers to unlock the broadest opportunities from Hadoop.

For more information, visit www.hortonworks.com. Join us at the Apache Hadoop 10 year anniversary party, held at Hadoop Summit Europe and North America in 2016.

Hortonworks, HDP and SmartSense are registered trademarks or trademarks of Hortonworks, Inc. and its subsidiaries in the United States and other jurisdictions.

 

Hortonworks, Inc.

Unaudited Condensed Consolidated Statement of Operations

(in thousands, except share and per share data)

Three Months Ended December 31,

 

Years Ended December 31,

2015

2014

2015

2014

Support subscription and professional services revenue:

Support subscription

$

25,555

$

6,368

$

77,728

$

25,558

Professional services

11,866

6,292

44,216

20,490

Total support subscription and professional services revenue

37,421

12,660

121,944

46,048

Cost of revenue:

Support subscription

4,491

49,812

13,705

52,687

Professional services

11,206

9,067

41,466

28,192

Total cost of revenue

15,697

58,879

55,171

80,879

Gross profit (loss)

21,724

(46,219)

66,773

(34,831)

Operating expenses:

Sales and marketing

37,969

26,142

133,052

70,695

Research and development

20,407

11,501

66,645

37,771

General and administrative

13,901

8,597

46,669

26,231

Contribution of acquired technology to the Apache Software Foundation

3,971

Total operating expenses

72,277

46,240

246,366

138,668

Loss from operations

(50,553)

(92,459)

(179,593)

(173,499)

Other income (expense), net

422

1,911

908

(4,977)

Loss before income tax

(50,131)

(90,548)

(178,685)

(178,476)

Income tax expense (benefit)

103

85

432

(1,111)

Net loss

$

(50,234)

$

(90,633)

$

(179,117)

$

(177,365)

Net loss per share of common stock, basic and diluted

$

(1.11)

$

(5.38)

$

(4.13)

$

(24.16)

Weighted average shares used in computing net loss per share of common stock, basic and diluted

45,384,975

16,846,018

43,318,044

7,341,465

 

 

Hortonworks, Inc.

Unaudited Condensed Consolidated Balance Sheets

 (in thousands, except share and per share data)

December 31, 2015

December 31, 2014

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$                     35,748

$                        129,084

Short-term investments

58,553

75,381

Accounts receivable, net

53,913

32,900

Prepaid expenses and other current assets

5,276

3,728

Total current assets

153,490

241,093

Property and equipment, net

15,422

11,182

Long-term investments

2,592

Goodwill

34,333

2,119

Intangible assets

4,002

Other non-current assets

872

304

Restricted cash

1,308

1,341

TOTAL ASSETS

$                   212,019

$                        256,039

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:

Accounts payable

$                       6,365

$                            7,087

Accrued compensation and benefits

12,685

9,913

Accrued expenses and other current liabilities

14,989

6,333

Deferred revenue

90,407

50,280

Total current liabilities

124,446

73,613

Long-term deferred revenue

16,372

12,643

Other long-term liabilities

3,610

2,713

TOTAL LIABILITIES

144,428

88,969

STOCKHOLDERS' EQUITY:

Common stock, par value of $0.0001 per share—500,000,000 shares authorized as of December 31, 2015 and December 31, 2014; 45,692,391 and 40,987,583 shares issued and outstanding as of December 31, 2015 and December 31, 2014, respectively

5

4

Additional paid-in capital

518,986

439,005

Accumulated other comprehensive loss

(546)

(202)

Accumulated deficit

(450,854)

(271,737)

TOTAL STOCKHOLDERS' EQUITY

67,591

167,070

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$                   212,019

$                        256,039

 

 

Hortonworks, Inc.

Unaudited Condensed Consolidated Statements of Cash Flows

(In thousands)

Three Months Ended December 31, 

Years Ended December 31,

2015

2014

2015

2014

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss

$

(50,234)

$

(90,633)

$

(179,117)

$

(177,365)

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation

1,438

485

4,499

1,204

Amortization of intangible asset

222

393

Amortization of premiums from investments

193

346

949

921

Stock-based compensation expense

17,220

3,541

40,939

9,032

Contra-revenue adjustment related to share purchase agreement

2,040

Loss on disposal of assets

2

30

522

118

Loss on early exit of lease

(41)

407

Contribution of acquired technology to the Apache Software Foundation

3,971

Deferred income tax benefit      

(140)

(140)

(1,279)

Common stock warrant, including change in fair value

(1,795)

 

5,391

Contra revenue and cost of revenue adjustment related to vesting of the 2011 Yahoo! Warrant

52,000

52,000

Other

14

14

Changes in operating assets and liabilities:

Accounts receivable

(8,370)

(11,594)

(21,629)

(20,188)

Prepaid expenses and other current assets

783

(608)

(1,519)

(2,716)

Other assets

146

(99)

(580)

(282)

Accounts payable

1,570

(201)

1,648

906

Accrued expenses and other current liabilities

2,083

(4,949)

6,154

(4,287)

Accrued compensation and benefits

1,272

4,745

2,801

5,891

Deferred revenue

15,233

15,203

44,381

34,995

Other long-term liabilities

(211)

485

1,349

1,377

Net cash used in operating activities

(18,779)

(33,085)

(99,336)

(87,864)

CASH FLOWS FROM INVESTING

   ACTIVITIES:

Purchases of investments

(11,643)

(2,022)

(102,631)

(86,780)

Proceeds from maturities of investments

41,493

10,500

118,510

23,620

Acquisitions, net

(3,541)

(2,996)

Issuance of promissory note receivable

(2,500)

Change in restricted cash

(175)

31

(366)

Purchases of property and equipment

(1,466)

(4,392)

(12,839)

(6,276)

Net cash provided by (used in) investing activities

28,384

3,911

(2,970)

(72,798)

 

 

Hortonworks, Inc.

Unaudited Condensed Consolidated Statements of Cash Flows (continued)

(In thousands)

 

 

Three Months Ended December 31, 

Years Ended December 31,

2015

2014

2015

2014

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from sale of preferred stock, net of issuance costs

149,547

Proceeds from initial public offering, net of issuance costs

112,732

110,359

Payments for deferred offering costs

(835)

Proceeds from issuance of common stock

1,665

956

10,417

2,580

Proceeds from payments on promissory notes

4,746

4,865

Repurchase of restricted shares related to promissory notes

(2,909)

(2,909)

Payment of capital lease liability

(170)

(170)

Net cash provided by financing activities

1,495

115,525

9,412

 

264,442

Effect of foreign currency exchange rates on cash and cash equivalents

(442)

(442)

Net increase (decrease) in cash and cash equivalents

10,658

86,351

(93,336)

103,780

Cash and cash equivalents—Beginning of period

25,090

42,733

129,084

25,304

Cash and cash equivalents—End of period

$

35,748

$

129,084

$

35,748

$

129,084

 

 

Reconciliation of GAAP to Non-GAAP

(in thousands, except share and per share amounts)

Three Months Ended December 31,

Years Ended December 31,

2015

2014

2015

2014

Non-GAAP Revenue:

GAAP revenue

$

37,421

$

12,660

$

121,944

$

46,048

Contra-revenue

4,047

65

6,087

Non-GAAP revenue

$

37,421

$

16,707

$

122,009

$

52,135

Gross Billings:

Non-GAAP revenue

$

37,421

$

16,707

$

122,009

 

$

52,135

Deferred revenue — end of period

106,779

62,923

106,779

62,923

Less: Deferred revenue — beginning of period

(92,071)

(47,720)

(62,923)

(27,928)

Total change in deferred revenue

14,708

15,203

43,856

34,995

Gross billings

$

52,129

$

31,910

$

165,865

$

87,130

Non-GAAP Gross Profit and Margin:

Gross profit (loss)

$

21,724

$

(46,219)

$

66,773

 

$

(34,831)

Stock-based compensation expense

1,086

261

2,702

580

Contra-revenue

4,047

65

6,087

Cost of revenue adjustment for 2014 Yahoo! Warrant

47,953

47,953

Non-GAAP gross profit

$

22,810

$

6,042

$

69,540

$

19,789

Gross margin percentages:

GAAP

58

%

(365)

%

55

%

(76)

%

Non-GAAP

61

%

36

%

57

%

38

%

Non-GAAP Operating Loss and Margin:

Operating loss

$

(50,553)

$

(92,459)

$

(179,593)

$

(173,499)

Stock-based compensation expense

17,220

3,541

40,939

9,032

Contra-revenue

4,047

65

6,087

Cost of revenue adjustment for 2011 Yahoo! Warrant

47,953

47,953

Acquisition-related retention bonus

210

4,048

Amortization of intangible

222

393

Contribution of acquired developed technology to the Apache Foundation

 

3,971

Loss on asset write-off

503

Loss on early exit of lease

(41)

407

      Other

338

Non-GAAP operating loss

$

(32,901)

$

(36,959)

$

(133,645)

$

(105,711)

Operating margin percentages:

GAAP

(135)

%

(730)

%

(147)

%

(377)

%

Non-GAAP

(88)

%

(221)

%

(110)

%

(203)

%

 

 

Reconciliation of GAAP to Non-GAAP (continued)

(in thousands, except share and per share amounts)

Three Months Ended December 31,

Years Ended December 31,

2015

2014

2015

2014

Non-GAAP Net Loss and Net Loss per Share:

Net loss

$

(50,234)

$

(90,633)

$

(179,117)

 

$

(177,365)

Stock-based compensation expense

17,220

3,541

40,939

9,032

Contra-revenue

4,047

65

6,087

Cost of revenue adjustment for 2011 Yahoo! Warrant

47,953

47,953

Acquisition-related retention bonus

210

4,048

Amortization of intangible

222

393

Contribution of acquired developed technology to the Apache Foundation

 

 

3,971

Loss on asset write-off

503

Loss on early exit of lease

(41)

407

2014 Yahoo! common stock warrant

(1,795)

5,391

Tax benefit related to acquisitions

(140)

(140)

(1,279)

      Other

338

Non-GAAP net loss

$

(32,722)

$

(36,928)

$

(133,309)

$

(105,465)

Weighted average shares

45,384,975

16,846,018

43,318,044

7,341,465

Non-GAAP net loss per share

$

(0.72)

$

(2.19)

$

(3.08)

$

(14.37)

Adjusted EBITDA:

Gross billings

$

52,129

$

31,910

$

165,865

$

87,130

Less: Cost of revenue

(15,697)

(58,879)

(55,171)

(80,879)

Less: Operating expenses

(72,277)

(46,240)

(246,366)

(138,668)

Add: Non-GAAP cost of revenue and operating expense adjustments:

Stock-based compensation expense

17,220

3,541

40,939

9,032

Depreciation expense

1,438

485

4,499

1,204

Cost of revenue adjustment for 2011 Yahoo! Warrant

47,953

47,953

Acquisition-related retention bonus

210

4,048

Amortization of intangible

222

393

Contribution of acquired developed technology to the Apache Foundation

3,971

Loss on asset write-off

503

Loss on early exit of lease

(41)

407

Other

338

Adjusted EBITDA

$

(16,755)

$

(21,271)

$

(85,290)

$

(69,512)

Stock-based compensation expense by function:

Cost of revenue

$

1,086

$

261

$

2,702

$

580

Sales and marketing

4,806

903

11,688

1,881

Research and development

6,942

1,111

15,193

2,257

General and administrative

4,386

1,266

11,356

4,314

Stock-based compensation expense

$

17,220

$

3,541

$

40,939

$

9,032

 

For Additional Information Contact: Brian Marshall VP, Corporate Development bmarshall@hortonworks.com 650-305-7806

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SOURCE Hortonworks, Inc.



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