SANTA CLARA, Calif., Nov. 2, 2017 /PRNewswire/ — Hortonworks, Inc.^® (NASDAQ: HDP), a leading provider of global data management solutions, today announced financial results for the third quarter of 2017.

“Our record third quarter revenue of $69.0 million exemplified both strong enterprise demand for our platforms and our growing market share,” said Rob Bearden, chief executive officer and chairman of the board of directors of Hortonworks. “We continue to execute in the field and invest in innovation while maintaining operational excellence. I am very excited about the R&D investments we have made in our new Hortonworks DataPlane Service, which will enable our customers to more quickly transform their infrastructure to meet changing business needs driven by the explosion of data.”

Third Quarter 2017 Financial Highlights

• Revenue: Total GAAP revenue was $69.0 million for the third quarter of 2017, an increase of 45 percent compared to the third quarter of 2016.
• Gross Profit: Total GAAP gross profit was $47.7 million for the third quarter of 2017, compared to $27.7 million for the same period last year. Non-GAAP gross profit was $49.7 million for the third quarter of 2017, compared to $29.1 million for the same period last year. GAAP gross margin was 69 percent for the third quarter of 2017, compared to 58 percent for the same period last year. Non-GAAP gross margin was 72 percent for the third quarter of 2017, compared to 61 percent for the same period last year.
• Operating Loss: GAAP operating loss was $44.2 million for the third quarter of 2017, compared to $64.4 million for the same period last year. Non-GAAP operating loss was $15.4 million for the third quarter of 2017, compared to $39.9 million for the same period last year. GAAP operating margin was negative 64 percent for the third quarter of 2017, compared to negative 135 percent for the same period last year. Non-GAAP operating margin was negative 22 percent for the third quarter of 2017, compared to negative 84 percent for the same period last year.
• Net Loss: GAAP net loss was $45.4 million for the third quarter of 2017, or $0.67 per basic and diluted share, compared to a GAAP net loss of $64.7 million, or $1.10 per basic and diluted share, for the same period last year. Non-GAAP net loss was $16.6 million for the third quarter of 2017, or $0.24 per basic and diluted share, compared to a non-GAAP net loss of $40.2 million, or $0.68 per basic and diluted share, for the same period last year.
• Deferred Revenue: Deferred revenue was $229.8 million as of September 30, 2017, a 24 percent increase over the $185.4 million reported as of December 31, 2016 and a 47 percent increase over the $156.8 million reported as of September 30, 2016.
• Cash & Investments: Cash and investments totaled $63.2 million as of September 30, 2017, compared to $89.2 million as of December 31, 2016 and $95.6 million as of September 30, 2016.
• Operating Cash: Operating cash used was $15.4 million for the third quarter of 2017, compared to $31.1 million for the same period last year.   

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

• Hortonworks Advances Global Data Management with Hortonworks DataPlane Service. In September, we announced Hortonworks DataPlane Service (Hortonworks DPS^™), a solution that makes it simple to provision and operate distributed data systems, no matter what the use case, whether for data science, self-service analytics or data warehousing optimization. Governance capabilities are native and built on open source technologies such as Apache Atlas, which allow Hortonworks DPS users to enjoy easy access to trusted data available behind the firewall, in public cloud or in a combination. This enables organizations to get trusted lineage from source to destination, regardless of type or origin. Hortonworks DPS solves the struggle that data stewards, data engineers, architects, data scientists and analysts face as they contend with existing and new applications, diverse data types and data spread across several deployment environments. Additionally, IBM will integrate its IBM Unified Governance Platform with Hortonworks DPS. When used in tandem, clients will be able to define, implement and operate enterprise-wide governance programs that simplify compliance and analytics.
• NEC and Hortonworks Expand Partnership to Deliver a Distributed Processing Platform for Big Data. In September, we announced an expansion of our strategic partnership with NEC Corporation (NEC) to deliver a Big Data processing platform. The companies are combining NEC’s Data Platform for Hadoop with Hortonworks Data Platform (HDP^®), which will allow enterprise customers to process structured and unstructured data in a single platform. NEC will introduce and market the Big Data platform solution globally with support from Hortonworks.
• Hortonworks Introduces Real-Time Cybersecurity Threat Detection with Extensible Open Data Models. In September, we announced the general availability of Hortonworks Cybersecurity Platform (HCP) powered by Apache Metron. HCP visualizes diverse, streaming security data at scale to aid security operations centers in detecting and responding to threats. The open source platform is already being used by enterprises to detect cyber threats in real time and build business value through security services.
• DataWorks Summit Sydney Showcases Big Data and Analytics Use Cases Powered by Open Source.  In September, we hosted DataWorks Summit/Hadoop Summit in Sydney. Now in its second year, attendees learned best practices for how open source technologies enable organizations to leverage all their data, on-premises and in the cloud, to drive predictive analytics, data science and artificial intelligence initiatives.
• Hortonworks Announces Expanded Leadership Roles for Scott Gnau and Arun Murthy. In August, we announced expanded leadership roles for Scott Gnau and Arun Murthy. Scott Gnau’s new role awarded him direct responsibility for Hortonworks’ global engineering team, as well as the product management and support organizations. Co-founder Arun Murthy was named chief product officer and will lead engineering and research and development efforts across the Hortonworks portfolio.

Financial Outlook

As of November 2, 2017, Hortonworks is providing the following financial outlook for its fourth quarter and full year 2017:

For the fourth quarter of 2017, we expect:

Total GAAP revenue of $70.0 million.

GAAP operating margin between negative 65 percent and negative 60 percent, which includes stock-based compensation and related expenses and amortization of purchased intangibles of approximately $28.0 million.

Non-GAAP operating margin between negative 25 percent and negative 20 percent, which excludes stock-based compensation and related expenses and amortization of purchased intangibles of approximately $28.0 million.

For the full year of 2017, we expect:

Total GAAP revenue of $257.0 million.

GAAP operating margin between negative 80 percent and negative 75 percent, which includes stock-based compensation and related expenses and amortization of purchased intangibles of approximately $108.0 million.

Non-GAAP operating margin between negative 38 percent and negative 33 percent, which excludes stock-based compensation and related expenses and amortization of purchased intangibles of approximately $108.0 million.

GAAP operating margin outlook includes estimates of stock-based compensation and related expenses and amortization of purchased intangibles in future periods and assumes, among other things, the occurrence of no additional acquisitions, investments or restructuring and no further revisions to stock-based compensation and related expenses.

Third Quarter 2017 Earnings Conference Call and Webcast Details

Hortonworks will hold a conference call and webcast today to discuss the Q3 2017 results, Q4 2017 and FY 2017 outlook and related matters at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time) on Thursday, November 2, 2017. 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, basic and diluted net loss per share and expenses 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. 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 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 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 operating loss is calculated as GAAP operating loss plus 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 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 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 investors 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, expenses or activity in international markets, including the forward-looking statements, 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, 2017, our Quarterly Report on Form 10-Q for the quarters ended March 31, 2017 and June 30, 2017 filed on May 9, 2017 and August 8, 2017, 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 a leading provider of enterprise-grade, global data management platforms, services and solutions that deliver actionable intelligence from any type of data for over half of the Fortune 100.  Hortonworks is committed to driving innovation in open source communities, providing unique value to enterprise customers. Along with its partners, Hortonworks provides technology, expertise and support so that enterprise customers can adopt a modern data architecture. For more information, visit www.hortonworks.com. 

Hortonworks, HDP, DPS and DataPlane Service 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, Investor Relations and Corporate Development
rgallegos@hortonworks.com

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SOURCE Hortonworks, Inc.