December 7, 2014

Notes on the Hortonworks IPO S-1 filing

Given my stock research experience, perhaps I should post about Hortonworks’ initial public offering S-1 filing. :) For starters, let me say:

And, perhaps of interest only to me — there are approximately 50 references to YARN in the Hortonworks S-1, but only 1 mention of Tez.

Overall, the Hortonworks S-1 is about 180 pages long, and — as is typical — most of it is boilerplate, minutiae or drivel. As is also typical, two of the most informative sections of the Hortonworks S-1 are:

The clearest financial statements in the Hortonworks S-1 are probably the quarterly figures on Page 62, along with the tables on Pages F3, F4, and F7.

Special difficulties in interpreting Hortonworks’ numbers include:

One weirdness is that cost of professional services revenue far exceeds 100% of such revenue in every period Hortonworks reports. Hortonworks suggests that this is because:

I’m struggling to come up with a benign explanation for this.

In the interest of space, I won’t quote Hortonworks’ S-1 verbatim; instead, I’ll just note where some of the more specifically informative parts may be found.

And finally, Hortonworks’ dealings with its largest customers and strategic partners are cited in a number of places. In particular:

Correction notice: Some of the page numbers in this post were originally wrong, surely because Hortonworks posted an original and amended version of this filing, and I got the two documents mixed up.  A huge Thank You goes to Merv Adrian for calling my attention to this, and I think I’ve now fixed them. I apologize for the errors!

Related links

Comments

8 Responses to “Notes on the Hortonworks IPO S-1 filing”

  1. Hortonworks business notes | DBMS 2 : DataBase Management System Services on December 7th, 2014 8:54 am

    […] used a figure of ~75 subscription customers. Edit: That figure turns out in retrospect to have been inflated. This does not include OEM sales through, for example, Teradata, Microsoft Azure, or Rackspace. […]

  2. chris wine on December 9th, 2014 3:06 pm

    I would be interested in your analysis of ratio of revenue to losses, based on other enterprise software IPOs in this sector.

  3. Curt Monash on December 9th, 2014 8:13 pm

    Chris,

    I don’t think such a figure would be particularly meaningful. All else being equal, losses have a lot to do with growth rate and the length of time it takes a salesperson to first become productive, because those two things have a large influence on the extent to which one spends ahead of revenues.

    Of course, it also has a great amount to do with perpetual license vs. subscription pricing.

    Finally, as noted above, Hortonworks’ revenue is anomalous in at least two ways — the large amount of subscription revenue from business partners, and the shadow over the large professional services component.

  4. A few numbers from MapR | DBMS 2 : DataBase Management System Services on December 10th, 2014 1:55 am

    […] Derrick Harris was incorrect in suspecting that this release was a reaction to my recent post about Hortonworks’ numbers. For one thing, press releases usually don’t happen that […]

  5. Hortonworks sets its IPO price; CEO says Hadoop is ready to explode — Gigaom Search on December 11th, 2014 7:14 pm

    […] analysts and investors wasted no time poring over the company’s paperwork and finding reasons to be worried about its revenue, profits and customer […]

  6. Kellblog Ten Predictions for 2015 | Kellblog on January 26th, 2015 1:29 pm

    […] continues. One of the odder things about this time period is that I’m repeatedly hearing that successful IPO companies are pricing at down-rounds relative to their last private financings.  This doesn’t spell danger in general – because the […]

  7. Kellblog Ten Predictions for 2015 - Enterprise Irregulars on January 26th, 2015 3:31 pm

    […] continues. One of the odder things about this time period is that I’m repeatedly hearing that successful IPO companies are pricing at down-rounds relative to their last private financings.  This doesn’t spell danger in general – because the […]

  8. Hadoop generalities | DBMS 2 : DataBase Management System Services on June 10th, 2015 10:10 am

    […] most reliable numbers about Hadoop adoption come from Hortonworks, since it is the only pure-play public company in the market. (Compare, for example, the negligible amounts of information put out by MapR.) But […]

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