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Actionable news in HDP: HORTONWORKS Inc,

Goldman On Hortonworks: Big Data Still Has Legs

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Hortonworks Inc HDP 0.57% is scheduled to report its 1Q16 on May 4, after the close. Goldman Sachs’ Jesse Hulsing maintained a Buy rating for the company, with a price target of $16. The analyst said that while big data still had legs, focus would be on unit economics.

Analyst Jesse Hulsing expects Hortonworks to report its 1Q16 revenue at $39.5mn, representing 77 percent y/y growth, in-line with consensus. Billings are estimated at $49.5mn, with 76 percent y/y growth, and operating margins at -87.5 percent, versus consensus of -88.8 percent.

What The Numbers Mean

Hulsing mentioned that 1Q was a critical quarter for the company, following a February secondary and 4Q results that were strong, but missed the subscription billings estimates. She added, “Intra-quarter, data points were mostly positive on Hadoop adoption, expansion of existing clusters, and use case growth.”

Hortonworks had announced a reseller agreement with Pivotal, which not only eliminates a competitor but also adds another channel for distribution. “We expect revenue upside and subscription billings in line with our estimate of $35.8mn (+90% y/y, -14% q/q),” the analyst wrote.

Focus is likely to be on profitability and cash flow, after management pulled forward adjusted EBITDA breakeven to 4Q16, which implied a CFO breakeven in mid-2017.

Hulsing commented, “We will also be focused on underlying unit economics – net expansion rate and subscription billings CAC.” She said that both had been improving, and sustained improvements “are leading indicators of the sustainability of HDP’s business model.”

Feb 2016SusquehannaUpgradesNegativeNeutral
Feb 2016BarclaysMaintainsOverweight
Feb 2016BarclaysMaintainsOverweight

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