Hortonworks: Fiscal 4Q14 Financial Results

Hortonworks, Inc., contributor to and provider of enterprise Apache Hadoop, announced financial results for the fourth quarter and fiscal year 2014 ending December 21, 2014.

“We are very pleased with our strong fourth quarter performance highlighted by billings growth of 148% year-over-year,” said Rob Bearden, COB and CEO. “The completion of our initial public offering was an important milestone for us as it brought increased transparency, greater brand awareness and incremental resources to execute our growth strategy. Leading enterprise organizations have concluded that YARN-enabled Hadoop is foundational to their modern data architecture and the Hortonworks Data Platform is rapidly becoming the de facto standard to unlock business insight by bringing the new paradigm of data under management.”

Fourth quarter 2014 financial highlights:

• Revenue: Total GAAP revenue was $12.7 million, an increase of 55% compared to the fourth quarter of 2013. Excluding the contra-revenue impact of $4.0 million from the 2011 Yahoo! Warrant that became exercisable upon our IPO, total non-GAAP revenue was $16.7 million, an increase of 96% compared to the non-GAAP revenue for the fourth quarter of 2013.
• Billings: Total billings, defined as non-GAAP revenue plus the sequential quarterly change in total deferred revenue, were $31.9 million, a 148% increase over the $12.9 million in the same period last year, and a 48% increase over the $21.5 million reported in 3Q14.
• Gross Profit: Total GAAP gross loss was $(46.2) million, compared to gross profit of $2.9 million in the fourth quarter of 2013. Non-GAAP gross profit, which excludes non-GAAP financial measures provided in the financial statement tables included in this press release, for the quarter was $6.0 million compared to $3.4 million in the year ago period. Non-GAAP gross margin was 36% for the fourth quarter 2014, compared to 40% during the same period last year.
• Operating Loss: GAAP operating loss for the fourth quarter totaled $(92.5) million, compared to a loss of $(14.7) million during the fourth quarter last year. Non-GAAP operating loss, which excludes non-GAAP financial measures provided in the financial statement tables included in this press release, for the fourth quarter was $(37.0) million, compared to a loss of $(13.7) million during the same period last year.
• Net Loss: GAAP net loss of $(90.6) million, or a loss of $(5.38) per basic and diluted share, compared to a GAAP net loss of $(14.7) million, or a loss of $(4.23) per basic and diluted share, in the fourth quarter of 2013. Non-GAAP net loss, which excludes non-GAAP financial measures provided in the financial statement tables included in this press release, for the fourth quarter of 2014 was $(36.9) million or $(2.19) per basic and diluted share, compared to a net loss of $(13.7) million or $(3.93) per basic and diluted share in the same period last year.
• Adjusted EBITDA: Adjusted EBITDA, defined as total billings minus total non-GAAP expenses which exclude non-GAAP financial measures provided in the financial statement tables included in this press release, for the fourth quarter of 2014 was negative $(21.8) million, compared to negative $(9.3) million for the fourth quarter of 2013.
• Deferred Revenue: Deferred revenue was $62.9 million, a 125% increase over the $27.9 million reported as of December 31, 2013 and a 32% increase over the $47.7 million reported as of September 30, 2014.
• Cash and Investments: As of December 31, 2014, Hortonworks had cash and investments of $204.5 million, compared to $126.9 million as of September 30, 2014 and $38.5 million as of December 31, 2013.

“We added 99 support subscription customers in Q4, bringing our cumulative total support subscription customer count to 332, including many of the largest and most respected companies in the world, while investing to build out key elements of our company to position us for future growth,” noted Bearden. “We exited December 31, 2014 with total headcount of 601. Lastly, our quarterly average dollar-based net expansion rate was 144% for the trailing four quarters.”

Fiscal year 2014 financial highlights:

Revenue: Total GAAP revenue was $46.0 million, an increase of 91% compared to the prior year comprised of the 12-month unaudited period ended December 31, 2013. Excluding the contra-revenue impact from both the 2011 Yahoo! Warrant and AT&T relationship, total non-GAAP revenue was $52.1 million, an increase of 113% compared to fiscal year 2013.

Billings: Total billings were $87.1 million, a 134% increase over the $37.3 million reported in the prior year.

Gross Profit: Total GAAP gross loss was $(34.8) million, compared to gross profit of $5.4 million in fiscal year 2013. Non-GAAP gross profit, which excludes non-GAAP financial measures provided in the financial statement tables included in this press release, for the year was $19.8 million compared to $5.9 million in the year ago period. Non-GAAP gross margin was 38% for the fiscal year 2014, compared to 24% in the prior year.

Operating Loss: GAAP operating loss totaled $(173.5) million, compared to a loss of $(63.2) million during the fiscal year 2013. Non-GAAP operating loss, which excludes non-GAAP financial measures provided in the financial statement tables included in this press release, was $(105.7) million, compared to a loss of $(55.1) million during the prior year.

Net Loss: GAAP net loss was $(177.4) million in 2014, or a net loss of $(24.16) per basic and diluted share, compared to a GAAP net loss of $(63.1) million in 2013. Non-GAAP net loss, which excludes non-GAAP financial measures provided in the financial statement tables included in this press release, in 2014 was $(105.5) million or $(14.37) per basic and diluted share, compared to a net loss of $(55.1) million in 2013.

Adjusted EBITDA: Adjusted EBITDA, defined as total billings minus total non-GAAP expenses which exclude non-GAAP financial measures provided in the financial statement tables included in this press release, was negative $(70.7) million, compared to negative $(42.3) million for fiscal year 2013.

Recent Business Highlights

• Pivotal. An extensive collaboration was announced between Pivotal and Hortonworks last week highlighted by Hortonworks providing production-level technical support for Pivotal HD 3.0. Additionally, the partnership includes joint engineering to extend enterprise capabilities of Apache Hadoop and YARN with Pivotal technologies like HAWQ and GemFire as well as the certification of Pivotal’s big data Suite on the Hortonworks Data Platform (HDP).
• Open Data Platform Initiative (or ODP). Hortonworks and other companies recently announced the shared industry effort aimed at enhancing the benefits of Apache Hadoop and big data technologies for enterprise companies.
• Hitachi Data Systems. Hortonworks and HDS are now strategic partners with a joint engineering commitment to promote and support enterprise-ready Hadoop. Additionally, HDS can now resell the HDP offering to its enterprise customer base.
• Data Governance Initiative (or DGI). In January 2015, Hortonworks announced a collaboration with Aetna (insurance), Target (retail), Merck (healthcare) and SAS (technology) to address data stewardship and data lifecycle management across industry verticals.
• Google cloud Platform. In January 2015, HDP became certified and available on the Google Cloud Platform. Enterprises worldwide can now dynamically provision HDP clusters on Google Compute Engine (GCE) and Google Cloud Storage to store, discover and analyze a unified collection of structured and unstructured information assets.
• Initial Public Offering. On December 12, 2014, Hortonworks became a public company and began trading on the Nasdaq (ticker: HDP). The company closed its initial public offering, issuing a total of 7,187,500 shares of common stock at a price to the public of $16.00 per share, which included 937,500 shares of common stock issued upon the exercise in full of the underwriters’ over-allotment option. Excluded from this amount was an additional 486,486 shares of common stock issued in a concurrent private placement to Passport Capital. The offering and private placement generated net proceeds to the company of approximately $110 million.

Hortonworks is providing following non-GAAP financial outlook for its first quarter :

• Billings between $27.0 million and $29.0 million, representing year-over-year growth of 98% at the midpoint.
• Total revenue between $17.5 million and $18.5 million, representing year-over-year growth of 70% at the midpoint.
• Adjusted EBITDA between negative $(27.0) million and $(29.0) million.

For the full year 2015:

• Billings between $150.0 million and $156.0 million, representing year-over-year growth of 76% at the midpoint.
• Total revenue between $83.5 million and $86.5 million, representing year-over-year growth of 63% at the midpoint.
• Adjusted EBITDA between negative $(78.0) million and $(84.0) million.