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Like oxpeckers on a rhinoceros, the cloud era has spawned a number of companies that feed off the Cloud Czars, do their scut work and help the ecosystem work. Many, like Equinix (NASDAQ: EQIX ), are good investments, albeit without the steady predictable growth of the companies they serve. Others, like Cloudera (NYSE: CLDR ), are dicier propositions, as Cloudera stock is still trading at a 31% discount to its first trade as a public company, $18.97-per-share, back in May 2017.
But times change fast in the cloud, and Cloudera stock may finally be entering clear skies. Earnings released Sept. 5 that included a loss of $33.37 million, 22-cents-per-share, on revenue of $110 million , were much better than the 32-cents-per-share loss that was expected. As a result, CLDR shares have "soared."
Cloudera Stock Is Soaring to Neutral
Soaring is always a relative term on Wall Street. Cloudera's overnight gain was almost 15%, $2.15-per-share, but that still brings it to just $16.56-per-share - almost $2.50 short of what its first public investors paid 16 months ago.
But beyond the numbers, and a bump in full-year revenue estimates to $450 million , on a market cap of $2.1 billion, there are indications the CLDR may finally be finding its way in the vast cloud ecosystem.
Like Box (NYSE: BOX ), which I wrote about in August , Cloudera stock came to the market with a simple concept. Cloudera's concept was support for Hadoop , an open source tool essential to distributed processing of big workloads.
Turning Hadoop into products and services worth paying for has proven challenging. After all, the software is open source. Merely offering support for the software has proved inadequate. Shares that were priced at $15 for the IPO had once been bought by Intel (NASDAQ: INTC ) for twice that.
A New Hope for CLDR?
But recently Cloudera announced it was turning its data warehouse into a hybrid cloud tool with analytics , working either inside customers' data warehouses or on public clouds like Microsoft (NASDAQ: MSFT ) Azure or Amazon Web Services from Amazon.com (NASDAQ: AMZN ). This was done with help from a 2017 acquisition, Fast Forward Labs , which was doing research into machine learning and artificial intelligence. Subscription revenue is now growing at 26%-per-year, the company said in its earnings release, and it now has 568 customers paying it $100,000-per-year or more in recurring revenue.
The short form is it's not enough to just offer a warehouse for data. You need intelligence that keeps things humming and lets clients seamlessly arbitrate between their own resources and those of the Czars.
CLDR has also launched a modular Internet of Things architecture , alongside Italian IoT player Eurotech (OTCMKTS: EUOT ) and Red Hat (NYSE: RHT ). The new product is built on open source code from the Eclipse Foundation and Apache.
It's early it its days, but this holds out the promise of bigger things to come for Cloudera stock, especially with the company sticking to the open source mainstream, rather than trying to hose its users with an Open Core license , that makes key pieces of open source software proprietary.
The Bottom Line on CLDR Stock
Cloudera stock has turned a lot of corners in its history, and some of them have led the company into walls. But it now seems to be generating real revenue from subscriptions that make the future more predictable.
I remember the first big open source story I had, where a CEO discussed selling his company and said, while tucking into a lunchtime steak, that he could finally plan six months out without wondering where the money to meet those plans would come from.
Someone should buy CLDR CEO Tom Reilly a steak.
Dana Blankenhorn is a financial and technology journalist. He is the author of a new mystery thriller, The Reluctant Detective Finds Her Family , available now at the Amazon Kindle store. Write him at firstname.lastname@example.org or follow him on Twitter at @danablankenhorn . As of this writing, he owned shares in MSFT and AMZN.
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