Hortonworks, a Silicon Valley-based open-source platform for storing and analyzing big data, this afternoon filed for a $100 million IPO. It plans to trade on the Nasdaq under ticker symbol HDP, with Goldman Sachs (GS) listed as left-lead underwriter.
Here are some quick takes after skimming through the company’s S-1 filing:
1. Don’t get too bogged down by the bottom-line: Hortonworks is not a profitable company. In fact, its losses are growing — from $48 million during the first nine months of 2013 to $88 million during the first nine months of 2014 (revenue over same periods were $16 million vs. $33 million). But software-as-a-service (SaaS) companies, particularly young ones, don’t make a traditional financial argument to Wall Street. Instead, they tell prospective investors to focus on a non-GAAP measure called billings, since that also includes the amount of revenue that the company is contractually obligated to receive shortly (i.e. deferred revenue). For Hortonworks, gross billings climbed from $24 million to $53 million over those 9-month periods. So if you were to substitute “gross billings” for revenue, the loss curve flattens out a bit. (Note: This is not an editorial endorsement of elevating billings — simply an acknowledgment that investors generally have endorsed the practice.)
2. Take the over: Hortonworks is not planning to raise $100 million, despite the headline number on its S-1. That’s simply a placeholder. And, for context, companies almost never put a placeholder that’s higher than the anticipated amount.
3. 2014 issue: Hortonworks previously filed confidentially with the SEC, via a 2012 JOBS Act provision. If it wanted to actually list in calendar 2014, this was basically its last week to make the S-1 public (due to a combination of holidays and regulatory waiting periods). So don’t be surprised to see this one go out before the end of December.
4. Like looking in a mirror: Last week we wrote about Confluent, a new open-source software startup launched by a group of LinkedIn engineers who raised first-round funding from both LinkedIn (GS) and venture capital firm Benchmark. Well, Hortonworks is an open-source software startup launched by a group of Yahoo (YHOO) engineers who raised first-round funding from both Yahoo and Benchmark.
5. Cap table: Yahoo still holds a 19.6% stake in Hortonworks, while Benchmark has 18.7%. Other smaller shareholders include Index Ventures, Teradata (TDCQ) and Hewlett-Packard (HPQ).
6. Peanut gallery: Just last month, a senior executive for Hortonworks rival Cloudera said that Hortonworks “will not survive as a long-term business” because its open-source business model is “undependable.” Got to think that Hortonworks is intentionally pushing out into the public markets before Cloudera, in part so that it can try to define the market for Wall Street before Cloudera tells a story in which Hortonworks is an afterthought.
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