Cloudera Goes Back to Being Privately Held

Enterprise cloud data services player Cloudera (NYSE: CLDR) recently announced its first quarter results that surpassed market expectations. The company recently announced its plans to go back to being a private player by getting acquired.

Cloudera’s Financials

Cloudera’s first quarter revenues grew 7% to $224.3 million, significantly ahead of the market’s forecast of $217.29 million. Net loss was $0.14 per share compared with a net loss of $0.20 per share a year ago. On an adjusted basis, net income was $0.12 per share which was better than the market’s forecast of an income of $0.08 per share.

During the quarter, subscription revenues grew 7% to $200.7 million and services revenues grew 1.08% to $23.6 million.

Cloudera did not provide any guidance for the quarter or the current year.

Cloudera’s Acquisitions

Recently, Cloudera announced the acquisition of Datacoral and Cazena. Founded in 2016 by Raghotham Murthy, Datacoral provides a secure, end-to-end, data infrastructure as a service, allowing data scientists to create data products quickly. Prior to the acquisition, Datacoral had raised $14 million in two rounds of funding from Social Capital and Madrona Venture Group. Terms of the acquisition were not disclosed.

Founded in 2014 by Prat Moghe, Cazena powers instant cloud data lakes. Prior to the acquisition, Cazena raised $38 million in four rounds of funding from Underscore VC, Andreessen Horowitz, North Bridge Venture Partners & Growth Equity, Persistent Systems, and Formation 8. Terms of the acquisition were not disclosed.

The acquisition of both companies will allow Cloudera to expand both its public cloud offering and its market opportunity. The two companies will also help Cloudera automate complex operations, allowing customers to focus on getting value from their data instead of configuring, operating, and managing the infrastructure. Customers will also have the ability to quickly value data initiatives, gather improved insights, accelerate innovation, and deliver stronger engagements with both customers and partners.

The big news, though, was the acquisition of Cloudera itself. Earlier this month, it announced that it entered into a definitive agreement to be acquired by affiliates of Clayton, Dubilier & Rice (CD&R) and KKR in an all cash transaction valued at approximately $5.3 billion. As a result of the acquisition, Cloudera will revert to a privately held organization during the second half of the year.

Cloudera’s management believes that this is the right approach for the company to help drive its long-term path to hybrid cloud leadership for analytics. As a private company, Cloudera will not only be able to leverage the expertise of CD&R and KKR but also have access to the resources that these two investors bring. Additionally, it will benefit from the flexibility available to a private player to drive product-led growth and expand its addressable market opportunity without worrying about quarterly results.

Its stock is trading at $15.77 with a market capitalization of $4.6 billion. The stock had fallen to a 52-week low of $9.34 in October last year. The stock had climbed to a 52-week high of $19.35 in February. Cloudera had listed in 2017 at a valuation of $1.9 billion. Prior to listing, it had raised $1.04 billion in funding from investors including Intel Capital, Google Ventures, T. Rowe Price, Accel Partners, Ignition Partners, Greylock Partners, Meritech Capital Partners, In-Q-Tel, Caterina Fake, Youssri Helmy, Diane Greene, Qi Lu, and Jeff Weiner.

Disclosure: All investors should make their own assessments based on their own research, informed interpretations, and risk appetite. This article expresses my own opinions based on my own research of product-market fit, channel execution, and other factors. My primary interest is in product strategy. While this may have bearing on stock movements, my writings tend to focus on long-term implications. The information presented is illustrative and educational, but should not be regarded as a complete analysis nor recommendation to buy or sell the securities mentioned herein. I am not a registered investment adviser and I am not receiving compensation for this article.

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