Hortonworks Reports Financial Results for Third Quarter 2015

04 Nov, 2015, 16:02 ET from Hortonworks, Inc.

SANTA CLARA, Calif., Nov. 4, 2015 /PRNewswire/ -- Hortonworks, Inc.® (NASDAQ: HDP), the leader in Open Enterprise Hadoop, today announced financial results for the third quarter 2015.

"We are pleased with our third quarter performance which was highlighted by support subscription revenue growth of 168% year-over-year and solid customer momentum with the addition of 152 new support subscription logos," said Rob Bearden, chief executive officer and chairman of the board of directors of Hortonworks. "As leading enterprise organizations continue to deploy the Hortonworks Data Platform in production at scale, as evidenced by our 156% dollar-based net expansion rate over the trailing four quarters, we are excited to serve as their trusted IT partner during this transformational period in the data management industry."

Third quarter 2015 financial highlights:

  • Revenue: Total GAAP revenue was $33.1 million for the third quarter of 2015, an increase of 159 percent compared to the third quarter of 2014.
  • Gross Billings: Gross billings were $43.8 million for the third quarter of 2015, a 104 percent increase over the $21.5 million in the same period last year.
  • Gross Profit: Total GAAP gross profit was $18.3 million for the third quarter of 2015, compared to gross profit of $3.2 million in the same period last year. Non-GAAP gross profit for the third quarter of 2015 was $19.1 million compared to $3.4 million in the third quarter of 2014. Non-GAAP gross margin was 58 percent for the third quarter 2015, compared to 26 percent during the same period last year.
  • Operating Loss: GAAP operating loss for the third quarter totaled $44.4 million, compared to a loss of $37.4 million during the third quarter last year. Non-GAAP operating loss for the third quarter was $32.5 million, compared to a loss of $31.1 million for the same period last year.
  • Net Loss: GAAP net loss for the third quarter was $44.5 million or $1.01 per basic and diluted share, compared to a net loss of $39.5 million or $8.98 per basic and diluted share in the third quarter of 2014. Non-GAAP net loss for the third quarter of 2015 was $32.5 million or $0.74 per basic and diluted share, compared to a net loss of $30.9 million or $7.02 per basic and diluted share in the same period last year.
  • Adjusted EBITDA: Adjusted EBITDA for the third quarter of 2015 resulted in a loss of $20.7 million, compared to a loss of $22.0 million for the third quarter of 2014.
  • Deferred Revenue: Deferred revenue was $90.1 million, an 89 percent increase over the $47.7 million reported as of September 30, 2014 and a 43 percent increase over the $62.9 million reported as of December 31, 2014.
  • Cash & Investments: As of September 30, 2015, Hortonworks had cash and investments of $116.3 million, compared to $204.5 million as of December 31, 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

  • Hortonworks DataFlow. In August, Hortonworks announced it acquired Onyara, Inc., the creator of and key contributor to Apache NiFi, a top-level open source project. This acquisition will make it easy for customers to automate and secure data flows and to collect, conduct and curate real-time business insights and actions derived from data-in-motion. As a result of the acquisition of Onyara, Hortonworks introduced Hortonworks DataFlow (HDF) powered by Apache NiFi which is complementary to the industry's leading Open Enterprise Hadoop platform, Hortonworks Data Platform (HDP). The combination of these two platforms enables Internet-of-Anything (IoAT) applications with two way connections and security from the edge to the datacenter.
  • OpenSOC. In September, Hortonworks announced it partnered with ManTech and B23 to foster a vibrant open community to accelerate the development of OpenSOC, an open source cyber security analytic platform that was co-developed by engineers at Cisco and Hortonworks and built to rapidly detect and respond to advanced security threats. Additionally, James Sirota, the lead architect for OpenSOC, joined Hortonworks to head the security solutions effort.
  • ODPi. In September, ODPi, a nonprofit organization accelerating the delivery of Big Data solutions powering a well-defined platform called ODPi Core, announced new members (bringing the total to 27), technical milestone achievements, its formal governance structure and that it will be hosted at The Linux Foundation as a Collaborative Project. Originally launched as the Open Data Platform (ODP) in February 2015, membership investments have nearly doubled since then as the Hadoop community rallies around the ODPi Core which currently consists of Apache Hadoop (inclusive of HDFS, YARN and MapReduce) and Apache Ambari.
  • LHP Telematics. In October, Hortonworks announced LHP Telematics (LHPT), an industry leader in creating custom telematics solutions for both the heavy equipment OEM marketplace and aftermarket construction fleets, is using HDP to turn data into actionable insights for the Metro Transit of St. Louis (MTL). By using HDP, LHPT helps keep MTL buses operating safely and reliably, serving the greater St. Louis region all year round.
  • EY. In August, Hortonworks and Ernst & Young LLP (EY) announced a strategic business relationship to provide new data management offerings that leverage and extend HDP together with EY's data and information management services. EY has built expertise and solutions around Hadoop to help data-driven organizations leverage newly available structured and unstructured data to gain better insight, increase operational efficiency, improve profitability and reduce costs with the goal of obtaining a competitive edge in the marketplace. Additionally, EY became a Platinum Level partner in the Hortonworks System Integrator program.
  • Neustar. In September, Hortonworks and Neustar announced a co-development and collaboration effort to further the IoAT relating to device registry, security, policy management and enforcement. The results from this collaboration will be contributed to the open source Apache community in order to accelerate mass adoption of IoAT devices and technology.
  • NEC. In August, Hortonworks and NEC Corporation agreed to partner in the field of distributed processing of big data. The partnership now enables NEC's sales organization to resell HDP in Japan and other Asian markets.
  • Smarter Energy Grid. In September, Hortonworks and Open Energi, a company harnessing flexibility in demand for energy, announced a joint collaboration to transform the way energy is delivered and consumed through smart grids with HDP-powered, real-time, IoAT data.

Financial Outlook

As of November 4, 2015, Hortonworks is providing the following non-GAAP financial outlook for its fourth quarter and full year 2015:

For the fourth quarter of 2015, we expect:

  • Total revenue between $32.0 million and $34.0 million, representing year-over-year growth of 98 percent at the midpoint.
  • Gross billings between $52.0 million and $54.0 million, representing year-over-year growth of 66 percent at the midpoint.
  • Adjusted EBITDA resulting in a loss between $17.5 million and $19.5 million.

For the full year 2015, we expect:

  • Total revenue between $118.6 million and $120.6 million, representing year-over-year growth of 129 percent at the midpoint.
  • Gross billings between $165.7 million and $167.7 million, representing year-over-year growth of 91 percent at the midpoint.
  • Adjusted EBITDA resulting in a loss between $86.0 million and $88.0 million.

Third Quarter 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, November 4, 2015. 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 and Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 filed August 13, 2015 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 HDF 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 September 30,

Nine Months Ended September 30,

2015

2014

2015

2014

Support subscription and professional services revenue:

Support subscription

$

21,748

$

8,136

$

54,134

$

19,190

Professional services

11,303

4,628

32,375

14,198

Total support subscription and professional services revenue

33,051

12,764

86,509

33,388

Cost of revenue:

Support subscription

3,629

1,511

9,214

2,875

Professional services

11,171

8,024

30,260

19,125

Total cost of revenue

14,800

9,535

39,474

22,000

Gross profit

18,251

3,229

47,035

11,388

Operating expenses:

Sales and marketing

34,017

19,491

95,083

44,553

Research and development

16,382

10,111

46,238

26,270

General and administrative

12,297

7,025

32,768

17,634

Contribution of developed technology

3,971

3,971

Total operating expenses

62,696

40,598

174,089

92,428

Loss from operations

(44,445)

(37,369)

(127,054)

(81,040)

Other income (expense), net

88

(2,099)

487

(6,888)

Loss before income tax benefit

(44,357)

(39,468)

(126,567)

(87,928)

Income tax expense (benefit)

135

34

330

(1,196)

Net loss

$

(44,492)

$

(39,502)

$

(126,897)

$

(86,732)

Net loss per share of common stock, basic and diluted

$

(1.01)

$

(8.98)

$

(2.98)

$

(20.80)

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

43,968,697

4,399,053

42,626,865

4,169,679

 

 

Hortonworks, Inc.

Unaudited Condensed Consolidated Balance Sheets

 (in thousands, except share and per share data)

September 30, 2015

December 31, 2014

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$                    25,090

$                        129,084

Short-term investments

88,664

75,381

Accounts receivable, net

46,159

32,900

Prepaid expenses and other current assets

5,847

3,728

Total current assets

165,760

241,093

Property and equipment, net

15,574

11,182

Long-term investments

2,567

Goodwill

34,333

2,119

Intangible assets

4,224

Other non-current assets

963

304

Restricted cash

1,308

1,341

TOTAL ASSETS

$                  224,729

$                        256,039

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:

Accounts payable

$                       4,223

$                            7,087

Accrued compensation and benefits

11,507

9,913

Accrued expenses and other current liabilities

12,380

6,333

Deferred revenue

77,753

50,280

Total current liabilities

105,863

73,613

Long-term deferred revenue

12,332

12,643

Other long-term liabilities

5,646

2,713

TOTAL LIABILITIES

123,841

88,969

STOCKHOLDERS' EQUITY:

Common stock, par value of $0.0001 per share—500,000,000 shares authorized as of September 30, 2015 and December 31, 2014; 45,120,488 and 40,987,583 shares issued and outstanding as of September 30, 2015 and December 31, 2014, respectively

5

4

Additional paid-in capital

499,883

439,005

Accumulated other comprehensive loss

(366)

(202)

Accumulated deficit

(398,634)

(271,737)

TOTAL STOCKHOLDERS' EQUITY

100,888

167,070

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$                   224,729

$                        256,039

 

 

Hortonworks, Inc.

Unaudited Condensed Consolidated Statements of Cash Flows

(In thousands)

Three Months Ended September 30, 

Nine Months Ended September 30,

2015

2014

2015

2014

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss

$

(44,492)

$

(39,502)

$

(126,897)

$

(86,732)

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

Depreciation

1,141

289

3,061

719

Amortization of intangible asset

171

171

Amortization of premiums from investments

214

272

756

575

Stock-based compensation expense

11,379

1,899

23,719

5,492

Contra-revenue adjustment related to share purchase agreement

2,040

Loss on disposal of assets

10

47

520

88

Loss on early exit of lease

449

449

Contribution of acquired technology to the Apache Software Foundation

3,971

3,971

Deferred income tax benefit      

(1,279)

Common stock warrant

2,286

7,186

Changes in operating assets and liabilities:

Accounts receivable

(4,279)

(2,181)

(13,259)

(8,594)

Prepaid expenses and other current assets

(302)

1,033

(2,302)

(2,108)

Other assets

(75)

(183)

(726)

(183)

Accounts payable

(2,305)

(513)

78

1,107

Accrued expenses and other liabilities

(2,611)

(580)

5,631

1,552

Accrued compensation and benefits

(877)

(753)

1,529

1,146

Deferred revenue

10,672

8,737

27,162

19,792

Net cash used in operating activities

(31,354)

(24,729)

(80,557)

(54,779)

CASH FLOWS FROM INVESTING

   ACTIVITIES:

Purchases of investments

(18,613)

(22,477)

(90,988)

(84,758)

Proceeds from maturities of investments

40,871

2,600

77,017

13,120

Acquisitions, net

180

(3,541)

(2,996)

Issuance of promissory note receivable

(2,500)

Change in restricted cash

31

(191)

Purchases of property and equipment

(2,950)

(687)

(11,373)

(1,884)

Net cash provided by (used in) investing activities

19,488

(20,564)

(31,354)

(76,709)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from sale of preferred stock, net of issuance costs

49,865

149,547

Proceeds from issuance of common stock

6,187

1,087

8,752

1,624

Payments for deferred offering costs

(2,117)

(835)

(2,373)

Proceeds from payments on promissory notes

119

119

Net cash provided by financing activities

6,187

48,954

7,917

148,917

Net (decrease) increase in cash and cash equivalents

(5,679)

3,661

(103,994)

17,429

Cash and cash equivalents—Beginning of period

30,769

39,072

129,084

25,304

Cash and cash equivalents—End of period

$

25,090

$

42,733

$

25,090

$

42,733

 

 

Reconciliation of GAAP to Non-GAAP

(in thousands, except share and per share amounts)

Three Months Ended September 30,

Nine Months Ended September 30,

2015

2014

2015

2014

Non-GAAP Revenue:

GAAP revenue

$

33,051

$

12,764

$

86,509

$

33,388

Contra-revenue

65

65

2,040

Non-GAAP revenue

$

33,116

$

12,764

$

86,574

$

35,428

Gross Billings:

Non-GAAP revenue

$

33,116

$

12,764

$

86,574

$

35,428

Deferred revenue — end of period

90,085

47,720

90,085

47,720

Less: Deferred revenue — beginning of period

(79,413)

(38,983)

(62,923)

(27,928)

Total change in deferred revenue

10,672

8,737

27,162

19,792

Gross billings

$

43,788

$

21,501

$

113,736

$

55,220

Non-GAAP Gross Profit and Margin:

Gross profit

$

18,251

$

3,229

$

47,035

$

11,388

Stock-based compensation expense

825

149

1,616

320

Contra-revenue

65

65

2,040

Non-GAAP gross profit

$

19,141

$

3,378

$

48,716

$

13,748

Gross margin percentages:

GAAP

55

%

25

%

54

%

34

%

Non-GAAP

58

%

26

%

56

%

39

%

Non-GAAP Operating Loss and Margin:

Operating loss

$

(44,445)

$

(37,369)

$

(127,054)

$

(81,040)

Stock-based compensation expense

11,379

1,899

23,719

5,492

Contra-revenue

65

65

2,040

Acquisition-related retention bonus

333

3,839

Amortization of intangible

171

171

Contribution of developed technology

3,971

3,971

Loss on asset write-off

503

Loss on early exit of lease

449

449

Other

338

Non-GAAP operating loss

$

(32,497)

$

(31,050)

$

(98,757)

$

(68,750)

Operating margin percentages:

GAAP

(134)%

(293)%

(147)%

(243)%

Non-GAAP

(98)%

(243)%

(114)%

(194)%

Three Months Ended September 30,

Nine Months Ended September 30,

2015

2014

2015

2014

Non-GAAP Net Loss and Net Loss per Share:

Net loss

$

(44,492)

$

(39,502)

$

(126,897)

$

(86,732)

Stock-based compensation expense

11,379

1,899

23,719

5,492

Contra-revenue

65

65

2,040

Acquisition-related retention bonus

333

3,839

Amortization of intangible

171

171

Contribution of developed technology

3,971

3,971

Loss on asset write-off

503

Loss on early exit of lease

449

449

2014 Yahoo common stock warrant

2,286

7,186

Tax benefit related to XA Secure acquisition

(1,279)

Other

338

Non-GAAP net loss

$

(32,544)

$

(30,897)

$

(98,600)

$

(68,535)

Weighted average shares

43,968,697

4,399,053

42,626,865

4,169,679

Non-GAAP net loss per share

$

(0.74)

$

(7.02)

$

(2.31)

$

(16.44)

Adjusted EBITDA:

Gross billings

$

43,788

$

21,501

$

113,736

$

55,220

Less: Cost of revenue

(14,800)

(9,535)

(39,474)

(22,000)

Less: Operating expenses

(62,696)

(40,598)

(174,089)

(92,428)

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

Stock-based compensation expense

11,379

1,899

23,719

5,492

Depreciation expense

1,141

289

3,061

719

Acquisition-related retention bonus

333

3,839

Amortization of intangible

171

171

Contribution of developed technology

3,971

3,971

Loss on asset write-off

503

Loss on early exit of lease

449

449

Other

338

Adjusted EBITDA

$

(20,684)

$

(22,024)

$

(68,534)

$

(48,239)

Stock-based compensation expense by function:

Cost of revenue

$

825

$

149

$

1,616

$

320

Sales and marketing

3,518

543

6,882

978

Research and development

3,897

577

8,251

1,146

General and administrative

3,139

630

6,970

3,048

Stock-based compensation expense

$

11,379

$

1,899

$

23,719

$

5,492

 

 

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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