Cloudera a decade ago was one of several startups that saw the promise of Hadoop at a time when the amount of data being generated was exploding. The company offered a commercial product based on the open-source Big Data technology to enable enterprises to analyze and manage all that data. Investors were throwing money at companies like Cloudera, Hortonworks and MapR, and the Hadoop space grew rapidly.
However, in recent years, the Hadoop market has been battered by the rise of public clouds like Amazon Web Services (AWS), Microsoft Azure and Google Cloud – which became a favored place for storing data and running analytics workloads – and new technologies like data lakes gave enterprises even more options.
It was a rough go for the top three commercial Hadoop providers. Cloudera eventually absorbed Hortonworks in 2019 in a $5.2 billion merger, and later that year MapR – after officials just weeks earlier had said the company would have to shut down unless it found a buyer or more financing – was acquired by Hewlett Packard Enterprise, which wanted to bolster its big data analytics and artificial intelligence (AI) capabilities. HPE reportedly paid less than $50 million for the company, which had raised more than $200 million over the years.
Turning to Data Management
Cloudera made a strategic shift to data management, launching its Cloudera Data Platform (CDP) in 2019 as a hybrid cloud tool organizations can use to more easily run and move their AI and analytics workloads on premises, in the cloud or at the edge. The company also started up partnerships with some of the same public cloud providers that had made its life so difficult just years before.
Now the company, with a market cap of about $3.7 billion, is being bought by private equity firms KKR and Clayton, Dubilier and Rice in a $5.3 billion deal that was announced this week, with a plan to take the company private. Cloudera also announced it is buying two software-as-a-service (SaaS) companies – Datacoral and Cazena – to bring no-code and self-service cloud-based data management tools into the fold.
“The acquisitions will enable Cloudera to usher in a new era of low-code, no-code self-service by automating complex operations – enabling our customers to focus on getting value from their data rather than configuring, operating and managing the underlying infrastructure,” Cloudera CEO Rob Bearden said in a statement. “Both businesses will enable our combined customers to enjoy a reduction in complexity and faster time to value for their data initiatives, leading to improved insights, faster innovation, and stronger engagements with their customers and partners.”
Cloudera, which has about 1,800 customers, announced the acquisition the same time it released its latest quarterly financial numbers, saying that both total revenue (at $224.7 million) and subscription revenue ($200.7 million) were up 7 percent year-over-year.
A Premium Price
Company officials said the amount the private equity firms are paying represent about a 24 percent premium over the company’s stock price. The deal was likely pushed by activist investor Carl Icahn, who in 2019 bought an 18 percent stake in Cloudera. Company shareholders still need to OK the deal. There is a 30-day “go shop” period where Cloudera can listen to offers from other potential buyers. That said, the equity firms expect the deal to close in the second half of the year.
Cloudera President Mick Hollison said the deal and going private will give Cloudera the flexibility to make decisions without having to worry about the prying eyes of financial analysts and that the company will benefit from the infusion of cash and other resources from the buyers. Cloudera went public in 2018.
“As a private company, we can be even more agile and will continue to be focused on investing in innovation, building on our leadership position and staying ahead of the competition,” Hollison wrote in a blog post. “The next chapter for Cloudera will allow us to concentrate our efforts on strategic business opportunities and take thoughtful risks that help accelerate growth. This means we can double down on our strategy – continuing to win the Hybrid Data Cloud battle in the IT department AND building new, easy-to-use cloud solutions for the line of business. It also means we can complete our business transformation with the systems, processes and people that support a new operating model.”
A New Mission
Cloudera’s new mission is to “make data and analytics easy and accessible, for everyone,” he wrote. “We mean all types of data – big and small, structured and unstructured. The analytics we deliver must be easy to use for both IT practitioners and line of business users. Our customers must also have secure access to their data from anywhere – from on-premises to hybrid clouds and multiple public clouds.”
The global enterprise data management market is expected to expand rapidly in the coming years. Analysts at Grand View Research predict it will grow from $61.9 billion in 2019 to almost $136 billion by 2027, populated by established companies like Cloudera, IBM and Informatica as well as well-financed younger vendors like Snowflake and Databricks (see Databricks’ $1 Billion Funding Round Puts Focus on Data Management, AI).
All this interest comes as the amount of data being generated worldwide is growing exponentially. IDC analysts have predicted that it will rise from 45 zettabytes in 2019 to 175 zettabytes in 2025.
“It seems like there is a lot of movement and money in” the data management space, Rob Enderle, principal analyst with The Enderle Group, told InternetNews. “Analytics and AI remain fascinating and exciting areas for development and investment, particularly as IoT sensors proliferate, creating massive amounts of data that need to be analyzed timely to make a decision. Knowledge is power, and the better an entity is at capturing and interpreting these data streams, the more successful they should be. Analytics and AI are equivalent to a management superpower and the market for this class of technology is vast.”
Hadoop is Still Viable
Despite the struggles of Cloudera, Hortonworks and MapR as commercial Hadoop vendors, Hadoop itself is still a viable technology that has evolved from a platform into more of a real business that OEMs are still talking about strategically, Enderle said. Market figures back it up. Allied Market Research analysts expected the global Hadoop space to grow from $26.74 billion in 2019 to $340.35 billion in 2027, based in part on its growing use by small to midsize enterprises, strength in the IT and telecommunications space, and the rise of Hadoop-as-a-service.
The idea of Hadoop still being an important technology at a time of continued data growth “suggests that the effort to go private allows [Cloudera] to accelerate against this opportunity without near-term revenue or profit concerts,” Enderle said. “If this works, the investors backing this move will get a mammoth return on their investment. The financial opportunity in the AI space alone for this is massive, but the world is in a race and Cloudera’s current financial performance has been less than compelling. By taking the financial pressure off the company, it should allow the company to reach its full potential and value, which is what is likely drawing the investors funding this move.”