Cloudera Merger With Hortonworks Will Pay Off Long-Term: Company Exec

January 8, 2019
Updated 2mo ago

By Michael Teich

Cloudera may be confident the completion of its merger with cloud rival Hortonworks will create a powerhouse that can challenge Amazon, but investors have been difficult to convince.

"It has definitely been a challenge in the early days and look, I think the marketplace is in a little bit of a Missouri state of mind: a show-me state," said Cloudera's chief marketing officer Mick Hollison in an interview on Cheddar. "The market is simply looking for us to demonstrate the synergies that we told them would occur on the backside of this merger, and we are very early in that process."

Shares of both Cloudera and Hortonworks have declined sharply since the deal was announced in October. But Hollison is optimistic that Wall Street will reward shareholders once the benefits of joining forces begin to develop and mature.

Marketing costs have put a strain on both companies. Collectively, they spent more than 55 percent of revenue on sales and marketing in the previous three quarters. Cloudera expects the deal will reduce the costs associated with trying to convince customers to work with them, and not Hortonworks.

"It is very, very apparent right out of the shoot that we have great financial benefits by bringing the two companies together and those are already being experienced," Hollison said.

"We've already said to the public markets that we are looking out in to calendar 2020 as being a year we would approach the $1 billion mark in revenues, that we would see somewhere in the neighborhood of 20 percent top-line growth and more importantly, 15 percent operating cash-flow."

There is tough competition in the cloud space, particularly from Amazon ($AMZN). Cloudera sees the merger as a way to improve its value-proposition against the tech giant.

"It is both hybrid and multi-cloud, meaning you can run it on premises, or you can run it on any one of the public cloud providers: Amazon, Google ($GOOGL), Microsoft ($MSFT) etc.," Hollison said.

For full interview click here.