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Why Cloudera, Inc. Stock Fell 34% in April

By Keith Noonan - May 8, 2018 at 11:56AM

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Cloudera stock has returned to its $15 initial-public-offering price range.

What happened

Cloudera, Inc. (CLDR) stock dropped 34% in April, according to data provided by S&P Global Market Intelligence.

The cloud-software company's shares plummeted after guidance delivered in the company's fourth-quarter earnings report indicated that the business would face headwinds as it changes its sales team and approach.

CLDR Chart

CLDR data by YCharts

So what

Cloudera reported fourth-quarter and full-year results on April 3 and held a conference call in conjunction with the release. The company's fourth-quarter earnings performance actually came in significantly ahead of the average analyst estimate, but its stock sold off on disappointing guidance.

Losses came in at $0.10 per share for the March-ended quarter -- far better than the average analyst estimate of a $0.23 per share loss for the period. Sales climbed 42% year over year to reach $103.5 million -- once again beating the average analyst estimate of $98.7 million. Subscription revenues, an important metric to watch because this class of sales tends to be sticky and high-margin, were up 50% year over year to reach $84.3 million. However, these positive aspects of the report weren't enough to outweigh the disappointing guidance.

Digital lines moving toward a cloud icon.

Image source: Getty Images.

Following subscription-sales growth of 50% in fiscal year 2018, Cloudera expects that its annual subscription-sales growth rate will be roughly halved to 24% in the current fiscal year. The company is reorganizing its sales team and expects that implementing the initiative will reduce its capacity for sales growth in the year.

Now what

Cloudera stock has regained some ground in May so far, trading up roughly 10% in the month. There's not a whole lot of visibility as to how Cloudera's sales trajectory will play out. However, the stock does not appear to be outrageously priced given that the company operates in a growth industry and trades at a seemingly reasonable 4.4 times forward sales.

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