Combined Cloudera And Hortonworks Plan To Take On Amazon

Together, the companies plan to leverage their skills to offer an enterprise data cloud and an end-to-end platform that will include data ingestion, warehousing, advanced analytics, and AI across all private data centers and public cloud. Besides providing access to all the major cloud providers, the combined entity will also cover a wider variety of partnerships with data warehouses hardware makers, such as Oracle, Intel, IBM, and Teradata. The two companies plan to take on the might of Amazon through the merger as Amazon has been expanding into Cloudera’s world through investments in the database segment.

In its latest third quarter, Hortonworks reported revenues of $87.2 million, up 26%, a net loss of $31.6 million, and an adjusted loss of $0.06 per share. Fiscal 2017 revenue was $261.8 million and net loss was $204 million. The merger was completed earlier this year. Prior to the merger, Hortonworks had raised $248 million in venture funding and $100 million through its 2014 IPO at a valuation of $659 million.

Cloudera was founded in 2008 and went public in April 2017 when it raised $225 million by selling shares at $15 apiece at a valuation of $1.9 billion, a significant fall from its pre-IPO valuation. Prior to the listing, Cloudera 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. Its last round of funding in March 2014 had valued it at $4.1 billion.

The open-source industry has seen much consolidation in the recent past. Last year, IBM acquired Red Hat for $34 billion and Microsoft acquired GitHub for $7.5 billion. Acquiring high-value companies may be the way to go for giants like Microsoft and Amazon. But does the same strategy work for the new Cloudera-Hortonworks combination?

The investors aren’t convinced. The new combined entity is called Cloudera and is currently trading at $13.19 with a market capitalization of $2 billion. It touched a 52-week high of $22.42 in March last year. It has recovered from the 52-week low of $10.07 in December last year. The stock had listed on the stock exchange in April 2017 at $15 with a valuation of $2.3 billion.

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