CEO Tom Reilly quit, operating losses hit $35 million, customer churn spiked, revenues were far below consensus expectations and competition from public cloud rivals increased: as quarters go, it was a distinctly torrid one for data warehousing and analytics company company Cloudera.
Palo Alto-based Cloudera announced a merger with open source rival Hortonworks in October 2018 and one of the causes of the company’s travails is customers hitting pause on renewals as they await the arrival of the new Cloudera Data Platform (CDP); promised for “this summer” on AWS and Azure.
Pressure to deliver a compelling product at a competitive price point is growing, with customers sitting back (some jumping ship: customer churn hit 16 percent, up from an average of 10 percent) as they await to test the CDP’s capabilities, and learn what it will cost them to use; prices will be announced at launch.
The risk, meanwhile: they’ll lose patience and opt for public cloud offerings.
One positive note for Cloudera meanwhile: the announcement of an enhanced cross-selling partnership with IBM that lets Cloudera’s sales team sell a range of IBM products like Big SQL and IBM sell Cloudera’s enterprise data suite.
Outgoing CEO Tom Reilly (Board Chairman Martin Cole will step into the role on an interim basis) told investors on a conference call: “In our first quarter as a merged company, we experienced headwinds in bookings from existing customers. The announcement of our merger in October 2018 created uncertainty, particularly regarding the combined company roadmap, which we rolled out in March of this year.”
“During this period of uncertainty, we saw increased competition from the public cloud vendors…”
Total revenue for the first quarter was $187.5 million (well off analyst expectation consensus of $203 million) and subscription revenue was $154.8 million.
See also: Q&A: Cloudera’s Fight Back Begins in 3, 2, 1…
Arun Murthy, Chief Product Officer, said the company remains “laser focussed” on delivery of CDP to customers “this summer” in the public cloud as a hybrid SaaS offering and “later this year” as a private cloud offering. Pressed by investors for a specific launch date, he declined to provide one but said the company was on track to deliver as scheduled.
CDP will be a managed SaaS that offers distributed storage and processing of large, multi-source data sets. Built around a smorgasbord of Apache projects, nurtured over the years by Cloudera’s and Hadoop’s teams, the aim is to offer a truly one-stop Big Data and analytics shop, with a unified open architecture made infinitely flexible through “container cloud” that can run across any conceivable private/public cloud configuration by early 2021.
(As Cloudera’s Fred Koopmans, VP Product Management put it at the company’s annual Data Works Summit in Barcelona this March: “You can ingest data, process and clean it up, do something predictive on it… Multiple applications are great, but they need common governance mechanism [that the new platform will provide]. It includes open APIs to bring in other software development companies to enhance the platform and it’s 100 percent open source, which means no dead ends for our customers.”)
Cloudera Results: Trough to Come in Q2
Tom Reilly said: “In our first quarter as a merged company, we experienced headwinds in bookings from existing customers. These customers generally represent more than 90 percent of our growth with a focus of the quarter’s activity.”
CFO Jim Frankola said: “We believe that Q2 will be the trough for bookings growth. Coupled with soft Q1 bookings, first half bookings performance will weigh on growth rate through the balance of the year.”
He added, in an answer to an analyst question that may raise eyebrows: “We’re actually not generating CDP pipeline yet. So that will really start in the second half, maybe late Q2. The pipeline generation that we’ve seen is for all the legacy products that we have with those customers.”
Cloudera executives, asked if they saw an opportunity from travails of rival and former unicorn MapR, also a Hadoop specialist, which is seeking cash and at risk of closure, they told analysts: “We view their customer base as an opportunity for us, and it is part of our growing pipeline.” Nobody was rude enough to ask if they saw a risk of the company going the same way.
CDP can’t arrive soon enough for Cloudera.
Read This: Can Cloudera Win Back Market Confidence?
