All that glitters in the world of big data is not necessarily gold - just ask Hadoop-flinging Hortonworks and its army of investors that are today counting the latest annual losses.
The Santa Clara-based business reported revenue of $121.9m for the twelve months ended 31 December, versus $46m in the prior year, as customer demand continued to swell. So far so good.
The top line comprised $77.7m in subscriptions and $44.2m in professional services, up 67.2 and 53.6 per cent respectively. And it is here in services where the model starts to unravel; Hortonworks paid $41.46m to deliver professional services in the year, meaning one half of its operating model isn’t working out so well in the profit stakes.
Add to this Hortonworks’ outgoings – like every company in the Hadoop sector it continues to burn cash – and profits evaporated. Sales and marketing costs came in at $133m, R&D also almost doubled to $66.6m, and general and admin overhead was $46.6m.
All this meant operating expenditure crossed the line at $246.3m compared to $138.6m in 2014, leaving operating losses at $179.6m versus $173.5m.
Tax and income expenses pushed the net loss to $179.1m, which is worse than the $177.36m in the previous financial year.
The old adage that revenue is vanity, profit is sanity and cash flow is reality doesn’t seem to have a place in Wall St. Hortonworks share price had risen five per cent today on the back of the results.
Still, this will provide some relief for company execs who witnessed a 22 per cent share price plunge earlier this year when Hortonworks announced a secondary IPO.
Hortonworks' strategy has been criticised for focusing on capturing logos and customers rather than building a sustainable business model. The company's financial results were accompanied by "Recent Business Highlights" which were comprised of six partnership and alliance programmes, with only one single technical advancement - the Apache Spark and Hortonworks Community Connection.
The company has rolled out a channel programme in the hope of formalising links with third-party sellers out there, and leaning on others to provide those professional services likely won’t hurt the balance sheet. ®