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Cloudera's (CLDR) Q2 Loss Narrows, Revenues Increase Y/Y

Zacks Equity Research

Cloudera CLDR reported second-quarter fiscal 2020 adjusted loss of 2 cents per share, narrower than the Zacks Consensus Estimate of a loss of 10 cents and the year-ago quarter’s loss of 5 cents.

Revenues of $196.7 million surged 74.1% year over year driven by growth in subscription revenues and beat the consensus mark of $182 million. Adjusted annualized recurring revenues (ARR) were $672 million, up 21% year over year. Customers with annualized recurring revenues greater than $100,000 were 953.

Strategic Alliances to Aid Growth

During the reported quarter, Cloudera expanded partnership with International Business Machines IBM for a go-to-market initiative, aimed at bringing big data and AI solutions to users across the open Apache Hadoop ecosystem.

Moreover, Cloudera entered into an agreement to acquire Arcadia Data, a provider of cloud-native AI-powered business intelligence and real-time analytics.

Product Developments in the Quarter

Cloudera delivered the initial release of cloud-native data management and analytics offering, Cloudera Data Platform, including Data Hub, Data Warehouse, and Machine Learning public cloud services.

Additionally, Cloudera launched Enterprise data cloud solution for digital transformation aimed at driving customer retention and profitability, improving regulatory compliance, reducing fraud, and identifying AML (anti-money laundering). Notably, this solution has been adopted by a number of global financial services institutions.

The company also announced a new open source licensing and distribution framework, aligning Cloudera's model with the industry standard set by Red Hat. All Cloudera software will be licensed under an OSI-validated open source license in the future.

Cloudera, Inc. Price, Consensus and EPS Surprise

Quarter Details

The year-over-year growth in revenues was driven by 71.3% increase in subscription revenues (83.4% of revenues) that totaled $164.1 million. Moreover, services (16.6% of revenues) rallied 89.8% year over year to $32.6 million.

In the reported quarter, gross margin contracted 20 basis points (bps) to 76.6% on a year-over-year basis. Subscription gross margin contracted 120 basis points bps to 86.5% on a year-over-year basis. Notably, services gross margin was 26.8% compared with the year-ago figure of 16.2%.

While research and development (R&D) expenses rose 50.3% on a year-over-year basis to $47.3 million, sales and marketing (S&M) expenses surged 57.6% to $79.8 million. However, as percentage of revenues, R&D and S&M expenses declined 380 bps and 430 bps, respectively.

Moreover, general and administrative (G&A) expenses soared 139.8% to $31 million. As a percentage of revenues, G&A was 15.8%, up 430 bps from the year-ago quarter.

Loss from operations in second-quarter fiscal 2020 was $7.4 million, narrower than a loss of $8.3 million a year ago.

Balance Sheet & Cash Flow

As of Jul 31, 2019, Cloudera had total cash, cash equivalents, marketable securities and restricted cash of $508.6 million, compared with $547.5 million reported in the previous quarter.

Moreover, reported operating cash flow was negative $33 million compared with $11.5 million in first-quarter fiscal 2020.


Third-Quarter Fiscal 2020

Cloudera expects revenues between $187 million and $190 million.

Subscription revenues are estimated between $162 million and $164 million.

Non-GAAP net loss is expected between 6 cents and 8 cents per share.

Fiscal 2020

Cloudera expects revenues between $745 million and $765 million, down from the previous guidance of $835-$855 million.

Subscription revenues are estimated between $765 million and $775 million.

Non-GAAP net loss is expected between 24 cents and 28 cents per share.

Moreover, operating cash outflow is expected to between negative $65 million and $80 million .

Zacks Rank & Stocks to Consider

Currently, Cloudera carries a Zacks Rank #3 (Hold).

Chegg CHGG and HubSpot HUBS are some better-ranked stocks from the same industry. Both the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Chegg and HubSpot is currently pegged at 30% and 49.43%, respectively.

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