Hortonworks Reports Fourth Quarter and 2017 Annual Revenue
SANTA CLARA, Calif., Feb. 8, 2018 /PRNewswire/ -- Hortonworks, Inc.(® )(NASDAQ: HDP), a leading provider of global data management solutions, today announced financial results for the fourth quarter and full year 2017.
"We completed 2017 with a significant amount of momentum, resulting in record revenue of $261.8 million for the year and achievement of operating cash flow break-even exiting the fourth quarter," said Rob Bearden, chief executive officer and chairman of the board of directors of Hortonworks. "The breadth of our product portfolio, the execution of our team and the focus of our business strategy creates a strong foundation for us and our customers as we enter 2018."
Fourth Quarter and Full Year 2017 Financial Highlights
Revenue
-- Total revenue was $75.0 million for the fourth quarter of 2017, an
increase of 44 percent compared to the fourth quarter of 2016.
-- Total revenue was $261.8 million for the full year of 2017, an increase
of 42 percent compared to the prior year.
Gross Profit
-- Total GAAP gross profit was $53.6 million for the fourth quarter of
2017, compared to $34.0 million for the same period last year. Non-GAAP
gross profit was $55.8 million for the fourth quarter of 2017, compared
to $35.6 million for the same period last year. GAAP gross margin was 71
percent for the fourth quarter of 2017, compared to 65 percent for the
same period last year. Non-GAAP gross margin was 74 percent for the
fourth quarter of 2017, compared to 68 percent for the same period last
year.
-- Total GAAP gross profit was $180.7 million for the full year of 2017,
compared to $112.3 million for the prior year. Non-GAAP gross profit was
$188.4 million for the full year of 2017, compared to $118.0 million for
the prior year. GAAP gross margin was 69 percent for the full year of
2017, compared to 61 percent for the prior year. Non-GAAP gross margin
was 72 percent for the full year of 2017, compared to 64 percent for the
prior year.
Operating Loss
-- GAAP operating loss was $45.8 million for the fourth quarter of 2017,
compared to $57.2 million for the same period last year. Non-GAAP
operating loss was $14.6 million for the fourth quarter of 2017,
compared to $30.7 million for the same period last year. GAAP operating
margin was negative 61 percent for the fourth quarter of 2017, compared
to negative 110 percent for the same period last year. Non-GAAP
operating margin was negative 19 percent for the fourth quarter of 2017,
compared to negative 59 percent for the same period last year.
-- GAAP operating loss was $198.8 million for the full year of 2017,
compared to $251.2 million for the prior year. Non-GAAP operating loss
was $87.5 million for the full year of 2017, compared to $147.1 million
for the prior year. GAAP operating margin was negative 76 percent for
the full year of 2017, compared to negative 136 percent for the prior
year. Non-GAAP operating margin was negative 33 percent for the full
year of 2017, compared to negative 80 percent for the prior year.
Net Loss
-- GAAP net loss was $48.2 million for the fourth quarter of 2017, or $0.68
per basic and diluted share, compared to a GAAP net loss of $57.1
million, or $0.94 per basic and diluted share, for the same period last
year. Non-GAAP net loss was $17.0 million for the fourth quarter of
2017, or $0.24 per basic and diluted share, compared to a non-GAAP net
loss of $30.6 million, or $0.50 per basic and diluted share, for the
same period last year.
-- GAAP net loss was $204.5 million for the full year of 2017, or $3.08 per
basic and diluted share, compared to a GAAP net loss of $251.7 million,
or $4.40 per basic and diluted share, for the prior year. Non-GAAP net
loss was $93.1 million for the full year of 2017, or $1.40 per basic and
diluted share, compared to a non-GAAP net loss of $147.6 million, or
$2.58 per basic and diluted share, for the prior year.
Deferred Revenue
-- Deferred revenue was $275.2 million as of December 31, 2017, a 20
percent increase over the $229.8 million reported as of September 30,
2017 and a 48 percent increase over the $185.4 million reported as of
December 31, 2016.
Cash & Investments
-- Cash and investments totaled $72.5 million as of December 31, 2017,
compared to $63.2 million as of September 30, 2017 and $89.2 million as
of December 31, 2016.
Operating Cash
-- Operating cash flow was $6.4 million for the fourth quarter of 2017,
compared to operating cash used of $0.6 million for the same period last
year.
-- Operating cash used was $29.8 million for the full year of 2017,
compared to $82.4 million for the prior year.
A reconciliation of GAAP to non-GAAP financial measures has been provided in the financial statement tables included in this press release.
Recent Business Highlights
-- Hortonworks is Named to the Deloitte Technology Fast 500 as One of the
Fastest Growing Technology Companies. In December, we announced that we
had been named by Deloitte as one of the fastest growing technology
companies in North America. This recognition comes as part of the
release of Deloitte's Technology Fast 500 annual rankings, which include
the fastest growing companies in the technology, media,
telecommunications, life sciences and energy technology sectors.
-- Hortonworks Data Platform Selected by Nissan Motor Company to Power Its
Data Lake. In October, we announced that Hortonworks Data Platform
(HDP(®)) was selected by Nissan Motor Company Ltd. to power its data
lake. HDP will power Nissan Motor's data lake infrastructure and will
enable the collection of all data across the business, including data
related to driving and vehicle quality. Powered by Apache Hadoop and
enabled by a robust ecosystem, HDP enables Nissan Motor to use big data
applications that require cross-functional data analysis, such as
analyzing the battery usage in electric vehicles and quality management
of vehicles to ensure users have a smooth and seamless enhanced driving
experience.
Financial Outlook
Hortonworks implemented accounting standards ASC 606 and ASC 340-40 beginning on January 1, 2018, following a modified retrospective approach and will disclose the final financial impacts commensurate with first quarter 2018 results. The Company's preliminary estimates relating to this accounting change are as follows: an unfavorable impact of approximately $15.0 million on total revenue for 2018, with approximately $2.0 million to $3.0 million of that within the first quarter, and an unfavorable impact of approximately 1 percent to 2 percent on non-GAAP operating margin for 2018. These impacts are addressed in the guidance below.
As of February 8, 2018, Hortonworks is providing the following financial outlook for its first quarter and full year 2018:
For the first quarter of 2018, we expect:
Total revenue of $75.0 million.
GAAP operating margin between negative 63 percent and negative 58 percent, which includes stock-based compensation and related expenses and amortization of purchased intangibles of approximately $26.0 million.
Non-GAAP operating margin between negative 29 percent and negative 24 percent, which excludes stock-based compensation and related expenses and amortization of purchased intangibles of approximately $26.0 million.
For the full year 2018, we expect:
Total revenue between $322.0 million and $327.0 million.
GAAP operating margin between negative 53 percent and negative 48 percent, which includes stock-based compensation and related expenses and amortization of purchased intangibles of approximately $101.0 million.
Non-GAAP operating margin between negative 23 percent and negative 17 percent, which excludes stock-based compensation and related expenses and amortization of purchased intangibles of approximately $101.0 million.
GAAP operating margin outlook includes estimates of stock-based compensation and related expenses and amortization of purchased intangibles in future periods and assumes, among other things, the occurrence of no additional acquisitions, investments or restructuring and no further revisions to stock-based compensation and related expenses.
Fourth Quarter and Full Year 2017 Earnings Conference Call and Webcast Details
Hortonworks will hold a conference call and webcast to discuss the Q4 and FY 2017 results, Q1 and FY 2018 outlook and related matters at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time) on Thursday, February 8, 2018. Interested parties may access the call by dialing (877) 930-7786 in the U.S. or (253) 336-7423 from international locations. In addition, a live audio webcast of the conference call will be available on the Hortonworks Investor Relations website at http://investors.hortonworks.com.
Shortly after the conclusion of the conference call, a replay of the audio webcast will be available on the Hortonworks Investor Relations website for approximately seven days.
Statement Regarding Use of Non-GAAP Financial Measures
Hortonworks reports non-GAAP results for gross profit and margins, operating loss and margins, net loss, basic and diluted net loss per share and expenses in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.
Hortonworks' financial measures under GAAP include stock-based compensation expense, amortization of intangible assets, advisory fees and other expense items that are nonrecurring. Management believes the presentation of operating results that exclude these items provides useful supplemental information to investors and facilitates the analysis of the Company's core operating results and comparison of operating results across reporting periods. Management also believes that this supplemental non-GAAP information is therefore useful to investors in analyzing and assessing the Company's past and future operating performance.
Non-GAAP cost of revenue is calculated as GAAP cost of revenue less stock-based compensation expense. Management believes non-GAAP cost of revenue offers investors useful supplemental information regarding the performance of our business, and will help investors better understand our business.
Non-GAAP gross profit is calculated as GAAP revenue less our non-GAAP cost of revenue. Management believes non-GAAP gross profit offers investors useful supplemental information to help compare our recurring core business operating results over multiple periods.
Non-GAAP gross margin is calculated as non-GAAP gross profit divided by GAAP revenue. Management believes that non-GAAP gross margin offers investors useful supplemental information in evaluating our ongoing operational performance, and will help investors better understand our underlying business.
Non-GAAP operating loss is calculated as GAAP operating loss plus non-GAAP cost of revenue and operating expense adjustments. The Company believes that non-GAAP operating loss is a useful metric for management and investors because it excludes the effects of stock-based compensation expense, amortization of intangible assets, advisory fees and other expense items that are nonrecurring so that our management and investors have a greater visibility to the underlying performance of the business operations.
Non-GAAP operating margin is calculated as non-GAAP operating loss divided by GAAP revenue. Management believes that non-GAAP operating margin offers investors useful supplemental information in evaluating our operating performance because it provides them with an additional tool to compare business performance across companies and across periods.
Non-GAAP net loss is calculated as GAAP net loss plus non-GAAP cost of revenue and operating expense adjustments. Management believes non-GAAP net loss offers investors useful supplemental information to help identify trends in our underlying business and perform related trend analyses.
Non-GAAP net loss per basic and diluted share is calculated as non-GAAP net loss divided by the weighted-average shares outstanding for the period. Management believes non-GAAP net loss per basic and diluted share offers investors useful supplemental information, and will help investors better understand our performance and return to shareholders.
Use of Forward-Looking Statements
This press release contains "forward-looking statements" regarding our performance within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements contain words such as "may," "will," "might," "expect," "believe," "anticipate," "could," "would," "estimate," "continue," "pursue," or the negative thereof or comparable terminology, and may include (without limitation) information regarding our expectations, goals or intentions regarding future performance, expenses or activity in international markets, including the forward-looking statements, in the section titled "Financial Outlook." Forward-looking statements are subject to known and unknown risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements. If any such risks or uncertainties materialize or if any of the assumptions prove incorrect, our results could differ materially from the results expressed or implied by the forward-looking statements we make.
The important factors that could cause actual results to differ materially from those in any forward-looking statements include, but are not limited to, the following: (i) we have a history of losses, and we may not become profitable in the future, (ii) we have a limited operating history, which makes it difficult to predict our future results of operations, and (iii) we do not have an adequate history with our offerings or pricing models to accurately predict the long-term rate of support subscription customer renewals or adoption, or the impact these renewals and adoption will have on our revenues or results of operations.
Further information on these and other factors that could affect our financial results and the forward-looking statements in this press release are included in our Form 10-K filed on March 15, 2017, our Quarterly Report on Form 10-Q for the quarters ended March 31, 2017, June 30, 2017 and September 30, 2017 filed on May 9, 2017, August 8, 2017 and November 7, 2017, respectively, or in other filings we make with the Securities and Exchange Commission from time to time, particularly under the caption Risk Factors.
All forward-looking statements in this press release are made as of the date hereof, based on information available to us as of the date hereof, and we undertake no obligation, and do not intend, to update these forward-looking statements.
About Hortonworks
Hortonworks is a leading provider of enterprise-grade, global data management platforms, services and solutions that deliver actionable intelligence from any type of data for over half of the Fortune 100. Hortonworks is committed to driving innovation in open source communities, providing unique value to enterprise customers. Along with its partners, Hortonworks provides technology, expertise and support so that enterprise customers can adopt a modern data architecture. For more information, visit www.hortonworks.com.
Hortonworks and HDP are registered trademarks or trademarks of Hortonworks, Inc. and its subsidiaries in the United States and other jurisdictions. For more information, please visit www.hortonworks.com. All other trademarks are the property of their respective owners.
Hortonworks, Inc.
Unaudited Consolidated Statements of Operations
(in thousands, except share and per share data)
Three Months Ended Years Ended
December 31, December 31,
------------ ------------
2017 2016 2017 2016
---- ---- ---- ----
Support subscription and professional services revenue:
Support subscription $57,847 $35,569 $198,935 $126,689
Professional services 17,159 16,390 62,875 57,772
------ ------ ------ ------
Total support subscription and
professional services revenue 75,006 51,959 261,810 184,461
Cost of revenue:
Support subscription 8,593 5,849 30,741 23,030
Professional services 12,837 12,129 50,354 49,140
------ ------ ------ ------
Total cost of revenue 21,430 17,978 81,095 72,170
------ ------ ------ ------
Gross profit 53,576 33,981 180,715 112,291
Operating expenses:
Sales and marketing 51,267 46,477 200,188 183,542
Research and development 23,576 25,569 101,094 99,202
General and administrative 24,538 19,131 78,282 80,723
------ ------ ------ ------
Total operating expenses 99,381 91,177 379,564 363,467
------ ------ ------- -------
Loss from operations (45,805) (57,196) (198,849) (251,176)
Other (expense) income, net (1,038) 625 (3,172) 712
------ --- ------ ---
Loss before income tax expense (46,843) (56,571) (202,021) (250,464)
Income tax expense 1,385 482 2,486 1,224
----- --- ----- -----
Net loss $(48,228) $(57,053) $(204,507) $(251,688)
======== ======== ========= =========
Net loss per share of common stock,
basic and diluted $(0.68) $(0.94) $(3.08) $(4.40)
====== ====== ====== ======
Weighted-average shares used in
computing net loss per share of
common stock, basic and diluted 71,132,432 60,606,303 66,356,474 57,203,067
Hortonworks, Inc.
Unaudited Consolidated Balance Sheets
(in thousands, except share and per share data)
December 31, 2017 December 31, 2016
----------------- -----------------
ASSETS
Current assets:
Cash and cash equivalents $62,739 $53,332
Short-term investments 9,773 31,764
Accounts receivable, net 112,013 82,368
Prepaid expenses and other current assets 10,809 4,831
------ -----
Total current assets 195,334 172,295
Property and equipment, net 16,383 19,381
Long-term investments - 4,084
Goodwill 34,333 34,333
Intangible assets, net 2,242 3,121
Other assets 1,559 1,306
Restricted cash 882 1,316
--- -----
Total assets $250,733 $235,836
======== ========
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
Current liabilities:
Accounts payable $6,134 $6,749
Accrued compensation and benefits 22,483 17,978
Accrued expenses and other current liabilities 10,948 11,752
Deferred revenue 194,901 129,840
------- -------
Total current liabilities 234,466 166,319
Long-term deferred revenue 80,269 55,550
Other long-term liabilities 1,034 2,605
----- -----
Total liabilities 315,769 224,474
------- -------
Stockholders' (deficit) equity:
Preferred stock, par value of $0.0001 per share-
25,000,000 shares authorized; none issued or
outstanding as of December 31, 2017 and December 31,
2016 - -
Common stock, par value of $0.0001 per share-
500,000,000 shares authorized; 72,830,962 shares
issued and 72,607,893 shares outstanding as of
December 31, 2017 and 61,161,029 shares issued and
61,122,863 shares outstanding as of December 31,
2016 8 7
Additional paid-in capital 842,875 714,960
Accumulated other comprehensive loss (219) (1,063)
Accumulated deficit (907,700) (702,542)
Total stockholders' (deficit) equity (65,036) 11,362
------- ------
Total liabilities and stockholders' (deficit) equity $250,733 $235,836
======== ========
Hortonworks, Inc.
Unaudited Consolidated Statements of Cash Flows
(in thousands)
Three Months Ended Years Ended
December 31, December 31,
------------ ------------
2017 2016 2017 2016
---- ---- ---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(48,228) $(57,053) $(204,507) $(251,688)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Depreciation 2,262 2,007 8,786 7,244
Amortization of premiums from
investments 45 135 308 856
Amortization of intangible
assets 222 221 879 881
Stock-based compensation
expense 30,881 23,263 110,036 98,823
Impairment of promissory note
and related interest
receivable - 1,966 - 2,683
Deferred income taxes (330) 27 (330) 27
Effects of exchange rate
changes on monetary assets
and liabilities denominated
in foreign currencies 486 (440) 1,802 (335)
Loss on early exit of lease - - 349 -
Provision for losses on
accounts receivable 74 105 176 514
Other 111 32 333 (43)
Changes in operating assets and liabilities:
Accounts receivable (31,188) (5,217) (26,885) (29,584)
Prepaid expenses and other
current assets (1,681) 1,506 (5,294) 29
Other assets 1,283 (407) (1,035) (464)
Accounts payable 583 (2,335) (767) 1,773
Accrued expenses and other
current liabilities 3,110 2,877 (1,151) 2,334
Accrued compensation and
benefits 4,713 2,729 3,978 5,630
Deferred revenue 44,201 29,830 84,564 79,493
Other long-term liabilities (191) 129 (992) (613)
---- --- ---- ----
Net cash provided by (used in)
operating activities 6,353 (625) (29,750) (82,440)
----- ---- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of investments (5,765) - (7,069) (80,519)
Proceeds from sales of
investments - 5,840 - 13,156
Proceeds from maturities of
investments 5,300 15,928 32,865 89,248
Purchases of property and
equipment (822) (1,716) (5,223) (12,781)
Change in restricted cash 411 - 437 (11)
--- --- --- ---
Net cash (used in) provided by
investing activities (876) 20,052 21,010 9,093
---- ------ ------ -----
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of
common stock 4,479 645 19,464 9,466
Repurchase of unvested shares
and tax withholding shares (1,494) (46) (2,666) (520)
Proceeds from the disgorgement
of short-swing profit 176 - 176 -
Payment of contingent
consideration related to an
acquisition - - - (1,625)
Payment of acquisition-
related liability - (1,651) - (3,526)
Payments of capital lease
liability (85) (69) (396) (172)
Payment of fees for line of
credit - (243) (79) (243)
Proceeds from follow-on
public offering, net of
issuance costs - - - 88,153
Net cash provided by (used in)
financing activities 3,076 (1,364) 16,499 91,533
----- ------ ------ ------
Effect of exchange rate
changes on cash and cash
equivalents 309 (561) 1,648 (602)
Net increase in cash and cash
equivalents 8,862 17,502 9,407 17,584
Cash and cash equivalents-
Beginning of period 53,877 35,830 53,332 35,748
------ ------ ------ ------
Cash and cash equivalents-End
of period $62,739 $53,332 $62,739 $53,332
======= ======= ======= =======
Hortonworks, Inc.
Unaudited Reconciliation of GAAP to Non-GAAP
(in thousands, except share and per share data)
Three Months Ended Years Ended
December 31, December 31,
------------ ------------
2017 2016 2017 2016
---- ---- ---- ----
Non-GAAP Gross Profit and Margin:
Gross profit $53,576 $33,981 $180,715 $112,291
Stock-based compensation expense 2,187 1,593 7,676 5,700
----- ----- ----- -----
Non-GAAP gross profit $55,763 $35,574 $188,391 $117,991
======= ======= ======== ========
Gross margin percentages:
GAAP 71% 65% 69% 61%
Non-GAAP 74% 68% 72% 64%
Non-GAAP Operating Loss and Margin:
Operating loss $(45,805) $(57,196) $(198,849) $(251,176)
Stock-based compensation expense 30,881 23,263 110,036 98,823
Impairment of promissory note and related interest receivable - 1,966 - 2,683
Litigation and legal related expenses - 852 - 1,452
Loss on early exit of lease - - 349 -
Amortization of intangible assets 222 221 879 881
Advisory fees 100 200 100 200
Non-GAAP operating loss $(14,602) $(30,694) $(87,485) $(147,137)
======== ======== ======== =========
Operating margin percentages:
GAAP (61)% (110)% (76)% (136)%
Non-GAAP (19)% (59)% (33)% (80)%
Non-GAAP Net Loss and Net Loss per Share:
Net loss $(48,228) $(57,053) $(204,507) $(251,688)
Stock-based compensation expense 30,881 23,263 110,036 98,823
Impairment of promissory note and related interest receivable - 1,966 - 2,683
Litigation and legal related expenses - 852 - 1,452
Loss on early exit of lease - - 349 -
Amortization of intangible assets 222 221 879 881
Advisory fees 100 200 100 200
--- --- --- ---
Non-GAAP net loss $(17,025) $(30,551) $(93,143) $(147,649)
======== ======== ======== =========
Weighted-average shares outstanding 71,132,432 60,606,303 66,356,474 57,203,067
Non-GAAP net loss per share $(0.24) $(0.50) $(1.40) $(2.58)
Stock-based compensation expense by function:
Cost of revenue $2,187 $1,593 $7,676 $5,700
Sales and marketing 8,604 6,479 35,210 25,787
Research and development 8,370 10,148 38,771 36,540
General and administrative 11,720 5,043 28,379 30,796
------ ------
Total stock-based compensation expense $30,881 $23,263 $110,036 $98,823
======= ======= ======== =======
For Additional Information Contact:
Reuben Gallegos
VP, Investor Relations and Corporate Development
rgallegos@hortonworks.com
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