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Why Cloudera Is Slumping Today

By Brian Feroldi – Updated Apr 13, 2019 at 5:28AM

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Shares of the software-as-a-service provider swoon in response to mixed quarterly results. Here are the key details for investors.

What happened

Shares of Cloudera (CLDR), a software-as-a-service business that focuses on data engineering, data warehousing, and machine learning, had fallen 14% as of 11 a.m. EST on Thursday. The decline is attributable to the release of fourth-quarter and full-year results that failed to impress Wall Street. 

So what

Here are the key numbers from Cloudera's fiscal 2019 fourth quarter: 

  • Revenue grew 37% to $144.5 million. This figure greatly surpassed the $121 million in revenue that had been projected by market watchers.
  • Subscription revenue grew 42% to $123 million. 
  •   on-GAAP (generally accepted accounting principles) net loss was $30.2 million, or $0.15 per share. That was triple the loss in the year-ago period and higher than the expected net loss of $0.11.

Here's a review of the results from the full fiscal year 2019:

  • Revenue grew 29% to $479.9 million.
  • Revenue from the Hortonworks business, which was recently acquired, was $15 million for the period.
  • Non-GAAP loss was $67.3 million, or $0.41 per share.
  • Cash balance on January 31, 2019 was $540.6 million.

Check out the latest earnings call transcript for Cloudera.

Business man looking stressed at computer with cups of coffee everywhere

Image source: Getty Images.

Turning to guidance, here's what management expects will happen in the upcoming quarter and the fiscal year ahead:

  • Revenue in the upcoming quarter is expected to land between $187 million and $190 million.
  • Non-GAAP net loss in the upcoming quarter is expected to be in the range of $0.22 to $0.25 per share.
  • Revenue for the full fiscal year 2020 is expected to land between $835 million and $855 million. This represents growth of 76% at the midpoint.
  • Non-GAAP loss per share for the full fiscal year 2020 is expected to land between $0.32 and $0.36.

These numbers largely fell short of what market watchers were expecting. When you combine them with the higher-than-expected net loss per share, you can see why shares are taking a step back today.

Now what

On the company's conference call with Wall Street, Cloudera CEO Tom Reilly did his best to hammer home the enormous opportunity that lies in front of the newly combined entity:

loudera now has the scale and resources to address the growing opportunity in large enterprises. We begin the fiscal year with more than 2,000 enterprise customers. Less than 10% of those customers have broadly adopted our platform, reflected in ARR [annual recurring revenue] greater than $1 million. While there is still significant upside in those large customers, the key takeaway is that more than 90% of our customer base is ripe for expansion via the enhanced upsell and cross-sell motions enabled by the merger. In addition, we have grown our customer base, adding 140 new enterprise customers since we announced the merger.

The opportunity ahead of the company appears to be large, but Cloudera's stock has now fallen by more than 30% since its megamerger was first announced back in October of 2018. That tells me that Wall Street still has big questions about whether the acquisition will pay off for shareholders. 

Brian Feroldi 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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