Cloudera – Investors Approve IPO Amidst Growth And Narrowing Losses
#Cloudera (CLDR) has gone public, as demand for the shares was relatively solid. Shares opened up 20% higher as the final price had already been raised from the indicative pricing range. Investors buy into Cloudera´s promise on delivering on growth amidst an increasing hyperconnected world. While Cloudera delivers on solid topline sales growth, this growth is coming down as the company continues to post sizable, although narrowing losses. The company operates in a crowding field as it is hard to judge the competitive position of the firm amidst rapid changes in technology and competition in the field. At current valuations the pricing seems largely “fair” as I see no convincing reasons to either go long or short. A Play On A #Hyperconnected World Cloudera has developed a platform for data management, machine learning and advanced analytics, all being very hot areas at this point in time. The company collaborates extensively with open source techniques for data management. Founded in 2008, Cloudera has been around for nearly a decade and has quickly grown its business, counting large multinationals among its clients. Cloudera’s platform allows customers to get an integrated suite of capabilities needed for data management, machine learning and analytics in an agile, scalable and cost effective solution. As it is widely accepted that great data and interpretation of that data is a key competitive advantage going forwards, corporate customers are in need to connect all their data generating devices in one infrastructure. The Hybrid open source software model (HOSS) allows corporate customers to take advantage of Cloudera´s platform which runs on standardized inexpensive hardware architecture. The open nature of the platform allows or a smooth integration with the cloud services hosted by all the major parties like AWS, Microsoft Azure and Google Cloud. Cloudera offers its platform on a subscription basis and focuses on the largest 8,000 global companies as well as large public organizations. These larger companies have much data and complex IT environments, which makes that Cloudera´s offerings can have the greatest impact in these organizations. As of January of 2017, Cloudera has some 500 of these 8,000 largest corporations are a client, combined making up 73% of sales. With billings approaching $320 million a year in 2016, average revenues of these large clients amount to nearly half a million. Part of this growth has been enabled by an extensive partnership which the company closed with Intel in 2014. This partnership solution resulted in optimized integration with Intel’s processors and architecture, while Intel made a large cash infusion into the business as well. The high profile deal furthermore gave Cloudera a public reputation in the marketplace and serious financial backing as Intel paid roughly $750 million to buy a near 20% stake in the business. This vote of confidence undoubtedly comforted many customers to use Cloudera´s solutions.