News Release


Hortonworks Reports First Quarter 2017 Revenue of $56.0 Million, Up 35 Percent Year Over Year
Support Subscription Revenue Increased 52 Percent Year Over Year to $42.1 Million

SANTA CLARA, Calif., May 4, 2017 /PRNewswire/ -- Hortonworks, Inc.® (NASDAQ: HDP), a leading innovator of open and connected data platforms, today announced financial results for the first quarter of 2017.

Hortonworks logo. (PRNewsFoto/Hortonworks)

"Our momentum in the market has continued, as we grew first quarter revenue by 35 percent compared to the first quarter of 2016," said Rob Bearden, chief executive officer and chairman of the board of directors of Hortonworks. "We recorded solid customer wins across the food, healthcare analytics, software security, mobile gaming and financial services industries, where our connected data architecture was the platform of choice for their modern data applications and real-time computing analytics requirements."

First Quarter 2017 Financial Highlights

  • Revenue: Total GAAP revenue was $56.0 million for the first quarter of 2017, an increase of 35 percent compared to the first quarter of 2016.
  • Gross Profit: Total GAAP gross profit was $38.1 million for the first quarter of 2017, compared to $25.0 million for the same period last year. Non-GAAP gross profit was $39.5 million for the first quarter of 2017, compared to $26.3 million for the same period last year. GAAP gross margin was 68 percent for the first quarter of 2017, compared to 60 percent for the same period last year. Non-GAAP gross margin was 71 percent for the first quarter of 2017, compared to 64 percent for the same period last year.
  • Operating Loss: GAAP operating loss was $54.4 million for the first quarter of 2017, compared to $65.3 million for the same period last year. Non-GAAP operating loss was $30.5 million for the first quarter of 2017, compared to $34.9 million for the same period last year. GAAP operating margin was negative 97 percent for the first quarter of 2017, compared to negative 158 percent for the same period last year. Non-GAAP operating margin was negative 54 percent for the first quarter of 2017, compared to negative 84 percent for the same period last year.
  • Net Loss: GAAP net loss was $54.8 million for the first quarter of 2017, or $0.89 per basic and diluted share, compared to a GAAP net loss of $65.8 million, or $1.26 per basic and diluted share, in the first quarter of 2016. Non-GAAP net loss was $30.9 million for the first quarter of 2017, or $0.50 per basic and diluted share, compared to a non-GAAP net loss of $35.4 million, or $0.68 per basic and diluted share, for the same period last year.
  • Deferred Revenue: Deferred revenue was $198.2 million as of March 31, 2017, a 7 percent increase over the $185.4 million reported as of December 31, 2016 and a 66 percent increase over the $119.1 million reported as of March 31, 2016.
  • Cash & Investments: Cash and investments totaled $83.4 million as of March 31, 2017, compared to $89.2 million as of December 31, 2016 and $149.0 million as of March 31, 2016.
  • Operating Cash: Operating cash used was $9.0 million for the first quarter of 2017, compared to $35.7 million for the same period last 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 Congratulates 2017 European Data Heroes Award Winners. In April, we announced that individuals at Centrica plc, BMW Group and DNV GL were the winners of the 2017 European Data Heroes Awards. The awards recognize Hortonworks customers who have significantly transformed their enterprise by leveraging connected data platforms, highlighting real business value derived from data. Each winner exemplified outstanding achievements and meaningful results with Hortonworks Data Platform (HDPTM) and Hortonworks DataFlow (HDFTM).
  • Hortonworks Leads the Industry in Performance and Customer Choice with HDP 2.6. In April, we announced the general availability of HDP 2.6, which leverages open source innovations to deliver enhanced enterprise features. With HDP 2.6, customers benefit from interactive query in seconds, enhanced data science, enterprise-grade security and streamlined operations—in the cloud and on-premises—to harvest value from their data faster than previously possible.
  • Soleo Turns to Hortonworks for Real-Time Analytics. In March, we announced that Soleo Communications, Inc., a market-leading local search and digital media company, is leveraging HDP and HDF to connect people and businesses together. HDP gives Soleo the scalability and reliability to handle its growing data warehousing requirements, and HDF allows its data scientists to optimize service in real-time using incoming streams of data.
  • Clearsense Leverages Hortonworks to Drive Innovation in Healthcare. In March, we announced that Clearsense, LLC, a developer of an advanced healthcare data ecosystem and data applications focused on improving outcomes, is leveraging HDP and HDF to capture value from big data produced by the healthcare industry.
  • Pinsight Media Chooses Hortonworks to Expand Data Cluster. In February, we announced that Pinsight Media+, Inc., a mobile data company, is leveraging HDP, HDF and our professional services to enhance the scale and speed at which its data management platform ingests and processes data from mobile network operators.
  • IBM Delivers New Platform to Help Clients Address Storage Challenges at Massive Scale. In February, we announced the planned availability of HDP for IBM Elastic Storage Server and IBM Spectrum Scale. The agreement will lead to certification of HDP on Power with IBM Spectrum Scale and HDP on x86 with IBM Spectrum Scale. 

Financial Outlook

As of May 4, 2017, Hortonworks is providing the following financial outlook for its second quarter and full year 2017:

For the second quarter of 2017, we expect:

Total GAAP revenue of $57.0 million.

GAAP operating margin between negative 106 percent and negative 101 percent, which includes stock-based compensation and related expenses and amortization of purchased intangibles of approximately $27 million.

Non-GAAP operating margin between negative 57 percent and negative 52 percent, which excludes stock-based compensation and related expenses and amortization of purchased intangibles of approximately $27 million.

For the full year 2017, we expect:

Total GAAP revenue between $235.0 million and $240.0 million.

GAAP operating margin between negative 85 percent and negative 80 percent, which includes stock-based compensation and related expenses and amortization of purchased intangibles of approximately $105 million.

Non-GAAP operating margin between negative 50 percent and negative 45 percent, which excludes stock-based compensation and related expenses and amortization of purchased intangibles of approximately $105 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.

First Quarter 2017 Earnings Conference Call and Webcast Details

Hortonworks will hold a conference call and webcast to discuss the Q1 2017 results, Q2 and FY 2017 outlook and related matters at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time) on Thursday, May 4, 2017. 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, acquisition-related items, amortization of intangible assets, depreciation expense, and other income/expense, net. 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 and amortization of intangibles. 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 expenses is calculated as GAAP cost of revenue less stock-based compensation expense and amortization of intangibles plus GAAP operating expenses less stock-based compensation expense and amortization of intangibles. Management believes non-GAAP expenses offers investors useful supplemental information regarding the cost structure of our business, and will help investors better understand our 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 effect of stock-based compensation expense, acquisition-related retention bonus, amortization of intangibles and other nonrecurring items 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 support subscription 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, or in other filings we make with the Securities 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 an industry-leading innovator that creates, distributes and supports enterprise-ready open data platforms and modern data applications that deliver actionable intelligence from all data: data-in-motion and data-at-rest. Hortonworks is focused on driving innovation in open source communities such as Apache Hadoop, Apache NiFi and Apache Spark. Along with its 2,100+ partners, Hortonworks provides the expertise, training and services that allow customers to unlock transformational value for their organizations across any line of business.

Hortonworks, Powering the Future of Data, HDP and HDF 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 Condensed Consolidated Statements of Operations

(in thousands, except share and per share data)










Three Months Ended March 31,


2017


2016





Support subscription and professional services revenue:




Support subscription

$      42,098


$      27,634

Professional services

13,873


13,708

Total support subscription and professional services revenue

55,971


41,342

Cost of revenue:




Support subscription

6,156


4,901

Professional services

11,699


11,455

Total cost of revenue

17,855


16,356





Gross profit

38,116


24,986





Operating expenses:




Sales and marketing

50,219


42,083

Research and development

25,506


22,151

General and administrative

16,795


26,054

Total operating expenses

92,520


90,288





Loss from operations

(54,404)


(65,302)

Other expense, net

(199)


(295)

Loss before income tax

(54,603)


(65,597)

Income tax expense 

232


155





Net loss

$    (54,835)


$    (65,752)





Net loss per share of common stock, basic and diluted

$        (0.89)


$        (1.26)





Weighted-average shares used in computing net loss per share of common




stock, basic and diluted

61,848,383


52,067,608

 

Hortonworks, Inc.

Unaudited Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)










 March 31, 2017 


 December 31, 2016 





ASSETS




Current assets:




Cash and cash equivalents

$                    60,933


$                    53,332

Short-term investments

22,438


31,764

Accounts receivable, net 

68,043


82,368

Prepaid expenses and other current assets

9,589


4,831

Total current assets

161,003


172,295

Property and equipment, net

18,710


19,381

Long-term investments

-


4,084

Goodwill

34,333


34,333

Intangible assets, net

2,904


3,121

Other assets

2,367


1,306

Restricted cash

1,319


1,316

Total assets

$                  220,636


$                  235,836





LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Accounts payable

$                      6,987


$                      6,749

Accrued compensation and benefits

15,934


17,978

Accrued expenses and other current liabilities

12,533


11,752

Deferred revenue 

142,279


129,840

Total current liabilities

177,733


166,319

Long-term deferred revenue 

55,943


55,550

Other long-term liabilities

2,439


2,605

Total liabilities

236,115


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 March 31, 2017 and December 31, 2016

-


-

Common stock, par value of $0.0001 per share—




500,000,000 shares authorized; 62,851,736 and 61,122,863 shares issued and outstanding as of March 31, 2017 and December 31, 2016, respectively

7


7

Additional paid-in capital

743,393


714,960

Accumulated other comprehensive loss

(851)


(1,063)

Accumulated deficit

(758,028)


(702,542)

Total stockholders' (deficit) equity

(15,479)


11,362

Total liabilities and stockholders' equity

$                  220,636


$                  235,836

 

Hortonworks, Inc.

Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)


 Three Months Ended March 31, 


2017


2016





CASH FLOWS FROM OPERATING ACTIVITIES:




Net loss

$ (54,835)


$ (65,752)

Adjustments to reconcile net loss to net cash used in operating activities:




Depreciation

2,058


1,478

Amortization of premiums from investments

115


284

Amortization of intangible assets

217


219

Stock-based compensation expense

23,375


29,442

Impairment of promissory note and related interest receivable

-


717

Loss on early exit of lease

349


-

Effects of exchange rate changes on monetary assets and liabilities denominated in foreign currencies

162


219

Provision for losses on accounts receivable

-


377

Other

76


(25)

Changes in operating assets and liabilities:




Accounts receivable

14,479


(11,147)

Prepaid expenses and other current assets

(4,812)


(3,468)

Other assets

(1,002)


(90)

Accounts payable

110


89

Accrued expenses and other current liabilities

586


335

Accrued compensation and benefits

(2,166)


303

Deferred revenue

12,513


11,686

Other long-term liabilities

(228)


(335)

Net cash used in operating activities

(9,003)


(35,668)





CASH FLOWS FROM INVESTING ACTIVITIES:




Purchases of investments

-


(73,754)

Proceeds from sales of investments

-


1,321

Proceeds from maturities of investments

13,300


22,199

Purchases of property and equipment

(1,218)


(2,359)

Net cash provided by (used in) investing activities

12,082


(52,593)





CASH FLOWS FROM FINANCING ACTIVITIES:




Proceeds from issuance of common stock

4,343


4,612

Payment of contingent consideration related to an acquisition

-


(1,625)

Payments of capital lease liability

(90)


(25)

Payment of fees for line of credit

(26)


-

Proceeds from follow-on public offering, net of issuance costs

-


87,848

Net cash provided by financing activities

4,227


90,810





Effect of exchange rate changes on cash and cash equivalents

295


214

Net increase in cash and cash equivalents

7,601


2,763

Cash and cash equivalents—Beginning of period

53,332


35,748

Cash and cash equivalents—End of period

$  60,933


$  38,511

 

Hortonworks, Inc.

Reconciliation of GAAP to Non-GAAP

(in thousands, except share and per share amounts)






 Three Months Ended March 31, 


2017


2016





Non-GAAP Gross Profit and Margin:




Gross profit

$      38,116


$     24,986

Stock-based compensation expense

1,410


1,358

Non-GAAP gross profit 

$      39,526


$     26,344

Gross margin percentages:




GAAP

68%


60%

Non-GAAP

71%


64%





Non-GAAP Operating Loss and Margin:




Operating loss

$    (54,404)


$    (65,302)

Stock-based compensation expense

23,375


29,442

Impairment of promissory note and related interest receivable

-


717

Loss on early exit of lease

349


-

Amortization of intangible

217


219

Non-GAAP operating loss

$    (30,463)


$    (34,924)

Operating margin percentages:




GAAP

(97)%


(158)%

Non-GAAP

(54)%


(84)%





Non-GAAP Net Loss and Net Loss per Share:




Net loss

$    (54,835)


$    (65,752)

Stock-based compensation expense

23,375


29,442

Impairment of promissory note and related interest receivable

-


717

Loss on early exit of lease

349


-

Amortization of intangible

217


219

Non-GAAP net loss

$    (30,894)


$    (35,374)





Weighted-average shares

61,848,383


52,067,608

Non-GAAP net loss per share

$        (0.50)


$        (0.68)





Stock-based compensation expense by function:




Cost of revenue 

$        1,410


$       1,358

Sales and marketing 

7,466


5,619

Research and development 

9,878


7,804

General and administrative 

4,621


14,661

Stock-based compensation expense

$      23,375


$     29,442

For Additional Information Contact:
Reuben Gallegos
VP, Investor Relations and Corporate Development
rgallegos@hortonworks.com

 

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SOURCE Hortonworks, Inc.