Hadoop vendor Hortonworks announced its first quarterly earnings as a publicly held company Tuesday, claiming $12.7 million in fourth-quarter revenue and $46 million in revenue during fiscal year 2014. The numbers represent 55 percent quarter-over-quarter and 91 percent year-over-year increases, respectively. The company had a net loss of $90.6 million in the fourth quarter and $177.3 million for the year.
However, [company]Hortonworks[/company] contends that revenue is not the most important number in assessing its business. Rather, as CEO Rob Bearden explained around the time the company filed its S-1 pre-IPO statement in November, Hortonworks’ thinks its total billings are a more accurate representation of its health. That’s because the company relies fairly heavily on professional services, meaning the company often doesn’t get paid until a job is done.
The company’s billings in the fourth quarter totaled $31.9 million, a 148 percent year-over-year increase. Its fiscal year billings were $87.1 million, a 134 percent increase over 2013.
If you buy Bearden’s take on the importance of billings over revenue, then Hortonworks looks a lot more comparable in size to its largest rival, Cloudera. Last week, Cloudera announced more than $100 million in revenue in 2014, as well as an 85 percent increase in subscription software customers up to 525 in total.
Hortonworks, for its part, added 99 customers paying for enterprise support of its Hadoop platform in the fourth quarter alone, bringing its total to 332. Among those customers are Expedia, Macy’s, Blackberry and Spotify, all four of which moved directly to Hortonworks from Cloudera, a Hortonworks spokesperson said.
There are, however, some key differences between the Hortonworks and Cloudera business models, as well as that of fellow vendor MapR, that affect how comparable any of these metrics really are. While Hortonworks is focused on free open source software and relies on support contracts for revenue, Cloudera and MapR offer both free Hadoop distributions as well as more feature-rich paid versions. In late-2013, Cloudera CEO Tom Reilly told me his company was interested in securing big deployments rather than chasing cheap support contracts.
I had a broad discussion with Bearden last week about the Hadoop market and some of Hortonworks’ recent moves in that space, including the somewhat-controversial Open Data Platform alliance it helped to create along with Pivotal, [company]IBM[/company], [company]GE[/company] and others. Here are the highlights from that interview. (If you want to hear more from Bearden and perhaps ask him some of your own questions, make sure to attend our Structure Data conference March 18 and 19 in New York. Other notable Hadoop-market speakers include Cloudera CEO Tom Reilly, MapR CEO John Schroeder and Databricks CEO (and Spark co-creator) Ion Stoica.)
Explain the rationale behind the Open Data Platform
Bearden wouldn’t comment specifically on criticisms — made most loudly by Cloudera’s Mike Olson and Doug Cutting, as well as some industry analysts — that the Open Data Platform, or ODP, is somehow antithetical to open source or the Apache Software Foundation. “What I would say,” he noted, “is the people who are committed to true open source and an open platform for the community are pretty excited about the thing.”
He also chalked up a lot of the criticism of the ODP to misunderstanding about how it really will work in practice. “One of the things I don’t think is very clear on the Open Data Platform alliance is that we’re actually going to provide what we’ll refer to as the core for that alliance, that is based on core Hadoop — so HDFS and YARN and Ambari,” Bearden explained. “We’re providing that, which is obviously directly from Apache, and it’s the exact same bit line that [the Hortonworks Data Platform] is based on.”
So, the core Hadoop distribution that platform members will use is based on Apache code, and anything that ODP members want to add on top of it will also have to go through Apache. These could be existing Apache projects, or they could be new projects he members decide to start on their own, Bearden said.
“We’re actually strengthening the position of the Apache Software Foundation,” he said. He added later in the interview, on the same point, that people shouldn’t view the ODP as much different than they view Hortonworks (or, in many respects, Cloudera or MapR). “[The Apache Software Foundation] is the engineering arm,” he said, “and this entity will become he productization and packaging arm for [Apache].”
So, it’s Cloudera vs. MapR vs. Hortonworks et al?
I asked Bearden whether the formation of the ODP officially makes the Hadoop market a case of Cloudera and MapR versus the Hortonworks ecosystem. That seems like the case to me, considering that the ODP is essentially providing the core for a handful of potentially big players in the Hadoop space. And even if they’re not ODP members, companies such as [company]Microsoft[/company] and [company]Rackspace[/company] have built their Hadoop products largely on top of the Hortonworks platform and with its help.
Bearden wouldn’t bite. At least not yet.
“I wouldn’t say it’s the other guys versus all of us,” he said. “I would say what’s happened is the community has realized this is what they want and it fits in our model that we’re driving very cleanly. . . . And we’re not doing anything up the stack to try and disintermediate them, and we de-risk it because we’re all open.”
The this he’s referring to is the ability of its partners to stop spending resources keeping up with the core Hadoop technology and instead focus on how they can monetize their own intellectual property. “To do that, the more data they put under management, the faster and the more-stable and enterprise-viable [the platform on which they have that data], the faster they monetize and the bigger they monetize the rest of their platform,” Bearden said.
Are you standing by your prediction of a billion-dollar company?
“I am not backing off that at all,” Bearden said, in reference to his prediction at Structure Data last year that Hadoop will soon become a multi-billion-dollar market and Hortonworks will be a billion-dollar company in terms of revenue. He said it’s fair to look at revenue alone is assessing the businesses in this space, but it’s not the be all, end all.
“It’s less about [pure money] and more about what is the ecosystem doing to really start adopting this,” he said. “Are they trying fight it and reject it, or are they really starting to embrace it and pull it through? Same with the big customers. . . .
“When those things are happening, the money shows up. It just does.”
Hadoop is actually just a part — albeit a big one — of a major evolution in the data-infrastructure space, he explained. And as companies start replacing the pieces of their data environments, they’ll do so with the open source options that now dominate new technologies. These include Hadoop, NoSQL databases, Storm, Kafka, Spark and the like.
In fact, Bearden said, “Open source companies can be very successful in terms of revenue growth and in terms of profitability faster than the old proprietary platforms got there.”
Time will tell.
Update: This post was updated at 8:39 p.m. PT to correct the amount of Hortonworks’ fourth quarter revenue and losses. Revenue was $12.7 million, not $12.5 million as originally reported, and losses were $90.6 million for the quarter and $177.3 million for the year. The originally reported numbers were for gross loss.
