What: Shares of enterprise data management company Hortonworks (NASDAQ:HDP) slumped on Thursday following the company's third-quarter earnings report. Despite beating analyst estimates on all fronts and providing in-line guidance, shares closed down 18.7% on Thursday.
So what: Hortonworks reported quarterly revenue of $33.1 million, up 159% year-over-year and about $2.4 million higher than analysts were expecting. Deferred revenue rose to $90.1 million, up 89% over the past year, while gross billings of $43.8 million rose 104% year-over-year.
Non-GAAP net income was a loss of $32.5 million, or $0.74 per share, compared to a loss of $30.9 million during the same period last year. Analysts were expecting a non-GAAP loss of $0.83 per share. On a GAAP basis, the company lost $44.5 million, or $1.01 per share.
Hortonworks expects revenue to be between $32 million and $34 million during the fourth quarter, up 98% year-over-year at the midpoint of that range, and in-line with the average analyst estimate of $33.2 million.
Now what: Despite Hortonworks' positive results, the stock tumbled on Thursday, with shares carving out a new 52-week low in the process. After multiple quarters of Hortonworks handily beating analyst estimates for guidance, investors may have been expecting too much from the company.
Hortonworks trades at a lofty valuation, with the stock trading at about 7.5 times expected 2015 revenue prior to the decline on Thursday. With the company posting big losses on both a GAAP basis and a free cash flow basis, revenue growth is the main driver of the stock price. And while the company appeared to deliver during the third quarter, investors saw it differently.