SANTA CLARA, Calif.—November 3, 2016—Hortonworks, Inc.® (NASDAQ: HDP), a leading innovator of open and connected data platforms, today announced financial results for the third quarter of 2016.
“Q3 was a milestone quarter for Hortonworks. We crossed the 1,000 customer count and our operating billings grew 66% year-over-year,” said Rob Bearden, chief executive officer and chairman of the board of directors of Hortonworks. “Customers in 60 countries have selected our connected data platforms to leverage a comprehensive data management strategy spanning on-premise, hybrid and public cloud environments. As we continue to work within the Apache Software Foundation to enhance the value to our customers, we are looking forward to future achievements in product functionality and the benefits to be derived from our industry leading solutions.”
Third Quarter 2016 Financial Highlights
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
Financial Outlook
As of November 3, 2016, Hortonworks is providing the following financial outlook for its fourth quarter of 2016 and full year 2016:
For the fourth quarter of 2016:
We expect total GAAP revenue to be $48.0 million.
We expect operating billings, the aggregate value of all invoices sent to our customers in a given period, to be $81.0 million.
We have historically provided guidance for Adjusted EBITDA, which we calculated as revenue plus change in deferred revenue minus non-GAAP expenses plus depreciation. Through the last quarter of 2016, when we expect to achieve Adjusted EBITDA breakeven, we will guide to each element of Adjusted EBITDA for the fourth quarter of 2016 separately, as follows:
GAAP Revenue: $48.0 million
Change in deferred revenue: $33.0 million
Non-GAAP expenses: $83.0 million
Depreciation: $2.0 million
For the full year 2016:
We currently estimate our total GAAP revenue to be $180.5 million.
We estimate operating billings, the aggregate value of all invoices sent to our customers in a given period to be $269.4 million.
We have historically provided guidance for Adjusted EBITDA, which we calculated as revenue plus change in deferred revenue minus non-GAAP expenses plus depreciation. Through the last quarter of 2016, when we expect to achieve Adjusted EBITDA breakeven, we will guide to each element of Adjusted EBITDA for the full year 2016 separately, as follows:
GAAP Revenue: $180.5 million
Change in deferred revenue: $83.0 million
Non-GAAP expenses: $331.9 million
Depreciation: $7.2 million
Hortonworks has not reconciled its expectations as to non-GAAP expenses to its most directly comparable GAAP measure because of the uncertainty regarding, and the potential variability of, certain costs and expenses that may be incurred in the future, such as stock-based compensation and litigation expenses. Accordingly, reconciliation is not available without unreasonable time and effort, although these factors could be material to Hortonworks’ results computed in accordance with GAAP.
Third Quarter 2016 Earnings Conference Call and Webcast Details
Hortonworks will hold a conference call and webcast today to discuss the Q3 results, Q4 and FY 2016 outlook and related matters at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time) on Thursday, November 3, 2016. 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 and, basic and diluted net loss per share 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 non-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 non-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 plus stock-based compensation expense and amortization of intangibles plus GAAP operating expenses plus 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 GAAP revenue adjustments and 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 non-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 GAAP revenue adjustments and 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 investor 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, including the forward-looking statements, including 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, 2016, our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2016 and June 30, 2016 filed on May 9, 2016 and August 9, 2016, respectively, 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, NiFi and Spark. Along with its 1,800+ 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.
For Additional Information Contact:
Reuben Gallegos
VP, Corporate Development
Hortonworks, Inc. |
|||||||
Unaudited Condensed Consolidated Statements of Operations |
|||||||
(in thousands, except share and per share data) |
|||||||
Three Months Ended |
Nine Months Ended |
||||||
2016 |
2015 |
2016 |
2015 |
||||
Support subscription and professional services revenue: |
|||||||
Support subscription |
$ 32,468 |
$ 20,947 |
$ 91,120 |
$ 52,173 |
|||
Professional services |
15,055 |
11,303 |
41,382 |
32,350 |
|||
Total support subscription and professional services revenue |
|||||||
47,523 |
32,250 |
132,502 |
84,523 |
||||
Cost of revenue: |
|||||||
Support subscription |
6,400 |
3,629 |
17,181 |
9,214 |
|||
Professional services |
13,375 |
11,171 |
37,011 |
30,260 |
|||
Total cost of revenue |
19,775 |
14,800 |
54,192 |
39,474 |
|||
Gross profit |
27,748 |
17,450 |
78,310 |
45,049 |
|||
Operating expenses: |
|||||||
Sales and marketing |
48,807 |
34,017 |
137,065 |
95,083 |
|||
Research and development |
26,028 |
16,382 |
73,633 |
46,238 |
|||
General and administrative |
17,298 |
12,297 |
61,592 |
32,768 |
|||
Total operating expenses |
92,133 |
62,696 |
272,290 |
174,089 |
|||
Loss from operations |
(64,385) |
(45,246) |
(193,980) |
(129,040) |
|||
Other (expense) income, net |
(10) |
88 |
87 |
487 |
|||
Loss before income tax expense |
(64,395) |
(45,158) |
(193,893) |
(128,553) |
|||
Income tax expense |
291 |
135 |
742 |
330 |
|||
Net loss |
$ (64,686) |
$ (45,293) |
$ (194,635) |
$ (128,883) |
|||
Net loss per share of common stock, basic and diluted |
$ (1.10) |
$ (1.03) |
$ (3.47) |
$ (3.02) |
|||
Weighted-average shares used in computing net loss per share of common stock, basic and diluted
|
59,018,867 |
43,968,697 |
56,141,354 |
42,626,865 |
|||
Hortonworks, Inc. |
||||
Unaudited Condensed Consolidated Balance Sheets |
||||
(in thousands, except share and per share data) |
||||
September 30, 2016 |
December 31, 2015 |
|||
ASSETS |
||||
Current assets: |
||||
Cash and cash equivalents |
$ 35,830 |
$ 35,748 |
||
Short-term investments |
47,672 |
58,553 |
||
Accounts receivable, net |
78,003 |
53,913 |
||
Prepaid expenses and other current assets |
6,250 |
5,276 |
||
Total current assets |
167,755 |
153,490 |
||
Property and equipment, net |
20,671 |
15,422 |
||
Long-term investments |
12,061 |
2,592 |
||
Goodwill |
34,333 |
34,333 |
||
Intangible assets, net |
3,342 |
4,002 |
||
Other assets |
890 |
872 |
||
Restricted cash |
1,319 |
1,308 |
||
Total assets |
$ 240,371 |
$ 212,019 |
||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||
Current liabilities: |
||||
Accounts payable |
$ 9,990 |
$ 6,365 |
||
Accrued compensation and benefits |
15,495 |
12,685 |
||
Accrued expenses and other current liabilities |
10,772 |
14,989 |
||
Deferred revenue |
105,964 |
90,407 |
||
Total current liabilities |
142,221 |
124,446 |
||
Long-term deferred revenue |
50,837 |
16,372 |
||
Other long-term liabilities |
2,549 |
3,610 |
||
Total liabilities |
195,607 |
144,428 |
||
Stockholders’ equity: |
||||
Preferred stock, par value of $0.0001 per share—25,000,000 shares authorized; |
||||
none issued or outstanding as of September 30, 2016 and December 31, 2015 |
– |
– |
||
Common stock, par value of $0.0001 per share—500,000,000 shares authorized as |
||||
of September 30, 2016 and December 31, 2015; 59,920,186 and 45,692,391 shares |
||||
issued and outstanding as of September 30, 2016 and December 31, 2015, respectively |
7 |
5 |
||
Additional paid-in capital |
690,985 |
518,986 |
||
Accumulated other comprehensive loss |
(739) |
(546) |
||
Accumulated deficit |
(645,489) |
(450,854) |
||
Total stockholders’ equity |
44,764 |
67,591 |
||
Total liabilities and stockholders’ equity |
$ 240,371 |
$ 212,019 |
||
Hortonworks, Inc. |
|||||||
Unaudited Condensed Consolidated Statements of Cash Flows |
|||||||
(in thousands) |
|||||||
Three Months Ended |
Nine Months Ended |
||||||
2016 |
2015 |
2016 |
2015 |
||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|||||||
Net loss |
$ (64,686) |
$ (45,293) |
$ (194,635) |
$ (128,883) |
|||
Adjustments to reconcile net loss to net cash used in operating activities: |
|||||||
Depreciation |
1,949 |
1,141 |
5,237 |
3,061 |
|||
Amortization of premiums from investments |
203 |
214 |
721 |
756 |
|||
Amortization of intangible assets |
222 |
171 |
660 |
171 |
|||
Stock-based compensation expense |
24,220 |
11,379 |
75,560 |
23,719 |
|||
Impairment of promissory note receivable |
– |
– |
717 |
– |
|||
Loss on disposal of assets |
– |
10 |
– |
520 |
|||
Provision for losses on accounts receivable |
(34) |
– |
409 |
– |
|||
Other |
77 |
– |
30 |
– |
|||
Changes in operating assets and liabilities: |
|||||||
Accounts receivable |
(16,508) |
(4,279) |
(24,367) |
(13,259) |
|||
Prepaid expenses and other current assets |
431 |
(302) |
(557) |
(2,302) |
|||
Other assets |
140 |
(75) |
(57) |
(726) |
|||
Accounts payable |
(2,661) |
(2,305) |
4,108 |
78 |
|||
Accrued expenses and other current liabilities |
916 |
(838) |
(543) |
5,525 |
|||
Accrued compensation and benefits |
(139) |
(877) |
2,901 |
1,529 |
|||
Deferred revenue |
24,898 |
11,473 |
49,663 |
29,148 |
|||
Other long-term liabilities |
(167) |
(1,773) |
(742) |
106 |
|||
Net cash used in operating activities |
(31,139) |
(31,354) |
(80,895) |
(80,557) |
|||
CASH FLOWS FROM INVESTING ACTIVITIES: |
|||||||
Purchases of investments |
– |
(18,613) |
(80,519) |
(90,988) |
|||
Proceeds from sale of investments |
– |
– |
7,316 |
– |
|||
Proceeds from maturities of investments |
32,341 |
40,871 |
73,320 |
77,017 |
|||
Acquisitions, net |
– |
180 |
– |
(3,541) |
|||
Issuance of promissory note receivable |
– |
– |
– |
(2,500) |
|||
Purchases of property and equipment |
(3,790) |
(2,950) |
(11,065) |
(11,373) |
|||
Change in restricted cash |
(11) |
– |
(11) |
31 |
|||
Net cash provided by (used in) investing activities |
28,540 |
19,488 |
(10,959) |
(31,354) |
|||
CASH FLOWS FROM FINANCING ACTIVITIES: |
|||||||
Proceeds from follow-on public offering, net of issuance costs |
– |
– |
87,233 |
– |
|||
Proceeds from issuance of common stock |
2,969 |
6,187 |
8,821 |
8,752 |
|||
Payments for deferred offering costs |
– |
– |
– |
(835) |
|||
Purchase of treasury stock |
(377) |
– |
(474) |
– |
|||
Payment of contingent consideration related to an acquisition |
– |
– |
(1,625) |
– |
|||
Payment of acquisition-related liability |
(1,875) |
– |
(1,875) |
– |
|||
Payments of capital lease liability |
(39) |
– |
(103) |
– |
|||
Net cash provided by financing activities |
678 |
6,187 |
91,977 |
7,917 |
|||
Effect of exchange rate changes on cash and cash equivalents |
(65) |
– |
(41) |
– |
|||
Net (decrease) increase in cash and cash equivalents
|
(1,986) |
(5,679) |
82 |
(103,994) |
|||
Cash and cash equivalents—Beginning of period
|
37,816 |
30,769 |
35,748 |
129,084 |
|||
Cash and cash equivalents—End of period |
$ 35,830 |
$ 25,090 |
$ 35,830 |
$ 25,090 |
|||
Hortonworks, Inc. |
|||||||
Reconciliation of GAAP to Non-GAAP |
|||||||
(in thousands, except share and per share amounts) |
|||||||
Three Months Ended |
Nine Months Ended |
||||||
2016 |
2015 |
2016 |
2015 |
||||
Non-GAAP Revenue: |
|||||||
GAAP revenue |
$ 47,523 |
$ 32,250 |
$ 132,502 |
$ 84,523 |
|||
Contra-revenue |
– |
65 |
– |
65 |
|||
Non-GAAP revenue |
$ 47,523 |
$ 32,315 |
$ 132,502 |
$ 84,588 |
|||
Non-GAAP Gross Profit and Margin: |
|||||||
Gross profit |
$ 27,748 |
$ 17,450 |
$ 78,310 |
$ 45,049 |
|||
Stock-based compensation expense |
1,332 |
825 |
4,107 |
1,616 |
|||
Contra-revenue |
– |
65 |
– |
65 |
|||
Non-GAAP gross profit |
$ 29,080 |
$ 18,340 |
$ 82,417 |
$ 46,730 |
|||
Gross margin percentages: |
|||||||
GAAP |
58% |
54% |
59% |
53% |
|||
Non-GAAP |
61% |
57% |
62% |
55% |
|||
Non-GAAP Operating Loss and Margin: |
|||||||
Operating loss |
$ (64,385) |
$ (45,246) |
$ (193,980) |
$ (129,040) |
|||
Stock-based compensation expense |
24,220 |
11,379 |
75,560 |
23,719 |
|||
Contra-revenue |
– |
65 |
– |
65 |
|||
Acquisition-related retention bonus |
– |
333 |
– |
3,839 |
|||
Loss on asset write-off |
– |
– |
– |
503 |
|||
Impairment of promissory note receivable
|
– |
– |
717 |
– |
|||
Litigation expense |
– |
– |
600 |
– |
|||
Amortization of intangible asset |
222 |
171 |
660 |
171 |
|||
Non-GAAP operating loss |
$ (39,943) |
$ (33,298) |
$ (116,443) |
$ (100,743) |
|||
Operating margin percentages: |
|||||||
GAAP |
(135)% |
(140)% |
(146)% |
(153)% |
|||
Non-GAAP |
(84)% |
(103)% |
(88)% |
(119)% |
|||
Non-GAAP Net Loss and Net Loss per Share: |
|||||||
Net loss |
$ (64,686) |
$ (45,293) |
$ (194,635) |
$ (128,883) |
|||
Stock-based compensation expense |
24,220 |
11,379 |
75,560 |
23,719 |
|||
Contra-revenue |
– |
65 |
– |
65 |
|||
Acquisition-related retention bonus |
– |
333 |
– |
3,839 |
|||
Loss on asset write-off |
– |
– |
– |
503 |
|||
Impairment of promissory note receivable
|
– |
– |
717 |
– |
|||
Litigation expense |
– |
– |
600 |
– |
|||
Amortization of intangible asset |
222 |
171 |
660 |
171 |
|||
Non-GAAP net loss |
$ (40,244) |
$ (33,345) |
$ (117,098) |
$ (100,586) |
|||
Weighted-average shares |
59,018,867 |
43,968,697 |
56,141,354 |
42,626,865 |
|||
Non-GAAP net loss per share |
$ (0.68) |
$ (0.76) |
$ (2.09) |
$ (2.36) |
|||
Stock-based compensation expense by function: |
|||||||
Cost of revenue |
$ 1,332 |
$ 825 |
$ 4,107 |
$ 1,616 |
|||
Sales and marketing |
7,650 |
3,518 |
19,308 |
6,882 |
|||
Research and development |
9,810 |
3,897 |
26,392 |
8,251 |
|||
General and administrative |
5,428 |
3,139 |
25,753 |
6,970 |
|||
Stock-based compensation expense |
$ 24,220 |
$ 11,379 |
$ 75,560 |
$ 23,719 |
|||
For Additional Information Contact:
Reuben Gallegos
VP, Corporate Development
rgallegos@hortonworks.com