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Why Cloudera Stock Just Popped 10%

By Rich Smith – Dec 6, 2018 at 9:59AM

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Revenues were stronger than expected, and losses lighter.

What happened

Wall Street was thrilled when it learned, in October, that cloud computing company Cloudera (CLDR) was planning to team up with its rival Hortonworks in a $5.2 billion merger. Investors are even more thrilled, though, with what Cloudera just managed to accomplish all on its own.

This morning, Cloudera reported third-quarter 2018 financial results featuring a $0.03-per-share "adjusted" loss where Wall Street had expected  an $0.11 pro forma loss. Q3 sales came in at $118.2 million, also ahead of estimates. Shares of Cloudera stock are up 10% as of 12:30 p.m. EST in response.

Flowchart of a cloud with lines connecting to PCs

Wall Street likes what it sees in the clouds today. Image source: Getty Images.

So what

Cloudera's revenue rose 25% year over year in Q3; subscription revenue (considered more valuable than revenue in general, because it's more dependable, and recurring) was up 28%. Cloudera did not earn a profit, but its $26.4 million operating loss was less than half the amount of money it lost in last year's Q3. Calculated according to generally accepted accounting principles (GAAP), Cloudera suffered a $0.17-per-share net loss -- also less than half what it lost one year ago.

Now what

Cloudera also updated its guidance to incorporate the latest numbers. For fiscal 2018, ending on Jan. 31, 2019, Cloudera expects to record total revenues of $450 million to $453 million, up 23% year over year. Subscription revenue is expected to grow nearly as fast as we saw in Q3 -- by 27%.

Management did not give GAAP earnings guidance, but did note that its pro forma loss for the full fiscal year should range from $0.38 to $0.40 per share. Given that Wall Street had been projecting a $0.50-per-share pro forma loss, investors are taking even this likely loss as good news.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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