Cloudera, which in January merged with rival Hortonworks, is a major provider of software used by enterprises to carry out big data/analytics projects. Its products leverage the popular Apache Hadoop software framework and various other open-source solutions for big data projects, and are used to ingest, process, stream, manage and analyze large sets of structured and unstructured data.
On Wednesday afternoon, Cloudera, which had fallen sharply post-earnings in both March and June, topped its July quarter estimates and raised its fiscal 2020 (ends in Jan. 2020) revenue guidance to a range of $765 million to $775 million from a prior range of $745 million to $765 million. The company also reported its annualized recurring revenue (ARR) rose 16% when adjusted for the Hortonworks merger, and announced that it's buying assets belonging to business intelligence software firm Arcadia Data, with the goal of using Arcadia's technology to let customers more quickly analyze certain types of data.
Following Cloudera's report, I was able to talk with chairman and interim CEO Marty Cole. Here's a recap of notable comments he made.
Working with the Icahn Group
Cloudera's shares jumped in August on news that Carl Icahn had acquired a stake in the company, and added to their gains after it was learned that Icahn had upped his stake. On Aug. 12, Cloudera announced that it had reached a standstill agreement with Icahn and related entities (referred to as the Icahn Group) -- it calls for two Icahn-backed directors to join Cloudera's board (their terms expire at Cloudera's 2021 annual meeting), and for the Icahn Group to refrain from making board nominations at the company's 2020 annual meeting. The deal also prohibits the Icahn Group's Cloudera stake, which was 18.4% at the time of the deal, from rising above 20% for the time being.
Given Icahn's history, his stake in Cloudera has naturally fueled speculation that he might eventually push for a sale effort, major cost cuts or some other type of big strategic change. However, Cole says that while Cloudera "will be in regular discussion" with the Icahn-backed directors about potential strategies, there hasn't been any such demand as of yet.
"There have been no suggestions that any one particular strategy ought to be explored," he said. "We need to stay focused on growing the business because there is a significant market out there. At the same time, we need to be disciplined and optimize our cost structure, and there's lots of ways to do that."
Integrating Cloudera and Hortonworks' Offerings
Cole was eager to discuss the ways in which combining Cloudera and Hortonworks' product lines and technology strengths puts his firm on better competitive footing. Among other things, he noted that Hortonworks brought with it a strong solution for processing and managing data streams (it's known as DataFlow), and that solutions for machine learning and data science projects have been a strength of Cloudera's.
Cole added that pairing Cloudera and Hortonworks' engineering teams will prove quite valuable as the company continues developing its recently-announced Cloudera Data Platform, an end-to-end big data/analytics platform that aims to provide the same experience, as well as the same security and governance capabilities, when run within on-premise (local data center) or public cloud environments, or when used for hybrid cloud deployments that span the two environments.
"Neither company had the capacity to invest the resources, the money, to create this solution," he said.
Competing Against the Public Cloud Giants
Amazon.com (AMZN) - Get Report , Microsoft (MSFT) - Get Report and Alphabet/Google (GOOGL) - Get Report -- the public cloud services market's big-3 -- have each rolled out managed services for running big data/analytics projects involving Hadoop, the Apache Spark high-speed analytics engine and other open-source software on their infrastructures. Each company has also invested in developing hybrid cloud solutions that allow their services to run within on-premise corporate data centers.
When asked about Cloudera's view of these hybrid cloud efforts, Cole noted the on-premise offerings of the cloud giants might not be as "functionally rich" as what they offer on their own infrastructures. He also highlighted Cloudera's partnerships with Microsoft and IBM (IBM) - Get Report , and reiterated his company's stance that there are many large workloads and datasets that companies will want to keep local.
Separately, Cole suggested Cloudera's recent licensing policy changes, which will result in all of its software being provided via open-source licenses by February 2020, will better protect its work so that it can't be easily co-opted by public cloud providers for their own services (this has also been a concern for some other software firms, such as MongoDB (MDB) - Get Report and private Redis Labs). Much like IBM's Red Hat, Cloudera plans to make its software available to developers and trial users via free subscription agreements going forward, while providing businesses with paid subscription agreements that cover product support and maintenance services.
Where Cloudera Is Seeing Strong Interest
Cole indicated "regulated industries" such as financial services and pharmaceuticals remain a strong point for Cloudera, while adding that Cloudera's security/governance features and ability to support large workloads appealed to them. It's worth noting that such companies are often hesitant to migrate a lot of their data to public clouds -- and along the way, possibly use big data/analytics solutions provided by the cloud giants -- due to regulatory and security concerns.
With regards to the types of workloads for which Cloudera is seeing strong usage growth, Cole indicated workloads featuring more transient types of data, such as AI/machine learning projects and ones involving Spark, were growing strongly. IoT/edge computing projects were also mentioned.