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February 9, 2018updated 17 Jun 2022 12:34pm

Hortonworks rides positive cash flow for first time ever

Financial breakthrough affirms that open source software services can be monetised.

By Sabrina Dougall

Apache Hadoop development firm Hortonworks has posted positive operating cash flow for the first time in its seven-year history.

Big data handler Hortonworks attained operational resources in the black for Q4 2017, marking a turning point in the open source software developers’ history. The corporate data processing firm booked Q4 2017 operating cash flow of $6.4m, compared to operating cash used of $0.6 million for the same period last year

Based in Santa Clara, California, the firm is one of three main contenders in the Apache Hadoop market, which facilitates companies in distributed processing of large data sets across computer clusters. GAAP revenue for Q4 hit $75m, marking a 44% year on year increase. More than three-quarters of this consisted of support subscription revenue, which saw a 63% boost compared with the same period the year before.

Hortonworks CFO Scott Davidson, said: “We are extremely proud of what the company has achieved during the last quarter, recording not just positive operating cash flow but also the highest revenues to date. From an international perspective, we achieved a strong 61% percent growth year-over-year, with 28% of revenues coming from outside the United States. Additionally, seven of our largest Q4 deals came from international markets, showcasing the acceptance of our global data management platform and our ability to address the most challenge use cases across any geography.”

Hortonworks chalked up its best ever revenue of $261.8m in 2017.

The financial breakthrough goes some way to affirming the viability of a risky business strategy, namely, monetising services for an open source software product. Like several other open-source-based tech companies, Hortonworks is a member of the not-for-profit group which manages the evolution of its core tech: the Apache Software Foundation. A similar example is the Linux Foundation and its sub-division, the Cloud Native Computing Foundation (Kubernetes), demonstrating how collaboration is propelling the tech industry into enterprise-grade innovation.

The firm doubled the number of significant deals signed Q4 2017, inking 20 contracts over $1m, compared with nine in Q4 2016. In 2017, Hortonworks extended its data analytics services to international clients, seeing its GAAP revenue increase by 61% year-on-year for Q4. During the same year, IBM signed an agreement to integrate its Data Science Experience with the machine-learning-based Hortonworks Data Platform (HDP) aimed at developers.

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“We completed 2017 with a significant amount of momentum, resulting in record revenue of $261.8 million for the year and achievement of operating cash flow break-even exiting the fourth quarter,” said Rob Bearden, CEO of Hortonworks. “The breadth of our product portfolio, the execution of our team and the focus of our business strategy creates a strong foundation for us and our customers as we enter 2018.”

Yet Hortonworks continues to face some very real market challenges, not least that 45% of corporations using Hadoop have chosen free versions, according to Gartner. Meanwhile rival firms Cloudera and MapR seem unlikely to be muscled out of the market any time soon.

Although Hortonworks has enjoyed a strong relationship with Microsoft, the software giant slashed pricing for Hadoop-as-a-Service provided by Hortonworks in mid-December, indicating a levelling-off in demand.

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