The News: SANTA CLARA, Calif., Dec. 3, 2020 /PRNewswire/ — Cloudera, Inc. (NYSE: CLDR), the enterprise data cloud company, reported results for its third quarter of fiscal 2021, ended October 31, 2020. Total revenue for the third quarter was $217.9 million, an increase of 10% as compared to the third quarter of fiscal 2020. Subscription revenue was $197.4 million, an increase of 18% as compared to the third quarter of fiscal 2020. Annualized Recurring Revenue grew 12% year-over-year. Read the full earnings release on Cloudera.
Analyst Take: The overall performance this quarter for Cloudera should give a good feeling to Cloudera investors as well as shines a light on the steady increase in demand for open source tools that enable enterprises to extract more value from their data.
The numbers not only beat the street expectations, but more importantly showed YoY growth, which has challenged parts of enterprise tech. Also, the positive EPS (Non-GAAP) is a nice bottom line result as most analysts had the company pegged to lose money.
As I see it, the stronger than expected results are a byproduct of a company that is executing on the demand for analytics. A few of the highlights for Cloudera this quarter:
- Annualized Recurring Revenue at the conclusion of the third quarter of fiscal 2021 was $756 million, representing 12% year-over-year growth
- Non-GAAP subscription gross margin for the quarter was 91%, up from 86% in the third quarter of fiscal 2020
- Acquired Eventador, a provider of cloud-native services for streaming analytics, to deliver more customer value for real-time analytics use cases
- Three new enterprise data cloud services designed specifically for data specialists were announced for Cloudera Data Platform (CDP): CDP Data Engineering; CDP Operational Database; and CDP Data Visualization
In short, double digit growth in recurring revenue, strong growth in gross margin on subscription services, an important incremental acquisition of Eventador, and a new set of sub-products that are designed to meet very specific needs. (Read my take on these product announcements here)
Recurring Revenue and Customer Growth – The Number to Watch
A couple of numbers to watch to gauge the continued momentum of Cloudera in its space will be the recurring revenue growth, which has seen moderate growth in six of the past seven quarters. This quarter’s 12% growth falls in line with many of its recent quarters in the high single to low double-digit range. With its new product mix and the GA of Cloudera Private Cloud, there may be opportunity to see that growth accelerate through expanded relationships with existing and net new customers.
Cloudera has deep roots throughout the Fortune 500, and considers the Fortune 2000 as its key targets. What I want to see is more about expanded scope with its customers through deeper offerings that drive greater revenue on a subscription basis. This has been, in practice, the Cloudera approach over the past several quarters. It will be important for the company to adapt to the growing hybrid cloud architecture and to keep an eye on competition from hyperscale cloud providers, which have seen their offerings expand exponentially over the past two years.
This quarter the company said to have more than 1,000 customers that spend more than $100,000 recurring and expanded from 172 to 179 that are now above $1,000,000. Perhaps more important to note is the significant transition to its new CDP Private Cloud service, which Cloudera said over 50% of its large customers (over $1 million) have started. These numbers are important to keep an eye on.
Outlook for Fiscal Q4
For its last fiscal quarter for FY ’21, this is on pace to grow around 4% from its FY ’20 result $211.7 million, and subscription revenue was $182.0 million. This isn’t exponential growth by any means, but what I like to see, especially in a challenging economic climate is resiliency, and that is what Cloudera is showing by not only beating expectations but growing on a YoY basis while continuing to innovate on its products and add customers to increase the annual recurring revenue.
Overall Impressions of Cloudera Q3 Earnings Results
Cloudera finds itself in a good place as the business of big data is booming. As its solutions continue to offer significant value both in its capabilities and its economics, it feels like the next few quarters should yield continued success for Cloudera–this perhaps being most evident in the company’s commitment to repurchase half a billion dollars in its stock, which should almost certainly send the stock in the right direction as well.
Futurum Research provides industry research and analysis. These columns are for educational purposes only and should not be considered in any way investment advice.