Cloudera boss claims Hortonworks wedding planning is ahead of schedule

Plans for the merger between former Hadoop-flingers Cloudera and Hortonworks are ahead of schedule, Cloudera boss Tom Reilly has said.

Reilly talked up the financial and technical benefits of the deal during the earnings call for his firm's third quarter of fiscal 2019, which saw revenues for Cloudera increase revenues as losses narrowed.

Revenues were $118.2m for the three months to 31 October, up 25 per cent on the previous year's quarter, while operating losses dropped significantly, from $57m on the year-ago quarter, down to $26.4m.

The firm did spend less in Q3 though: operating expenses were $114.6m, down on $118.0m, with slightly less forked out on R&D ($37.6m) and about $10m less on sales and marketing ($55m).

Reilly bragged that, despite much of the quarter being taken up with preparations for the merger announcement on 3 October, the firm remained "focused and executed well to deliver strong results".

He also claimed success in the firm's go-to-market changes. After record net losses of $385.8m in fiscal '18, the firm split its business into three units, its sales team into two: logo-chasers aiming for new customers and those focused on expansions, and pledged to only chase target markets.

In Q3, Reilly said, its 63 new customers were predominantly in the target market and that new customer growth was increasingly driven by the firm's hybrid cloud service.

"There is little interest in a public cloud versus [the] on-premises deployment debate," he said. Customers, he claimed, were more interested in a hybrid cloud strategy and avoiding cloud lock-in.

Creating a - wait for it - hybrid and multi-cloud enterprise data cloud is Cloudera's big pitch. "As soon as our merger closes, we will be the only next generation data management company to run across all major public cloud infrastructure. Amazon Web Services, Azure, Google, IBM and Oracle," Reilly said.

He claimed the merger with Hortonworks could create "significant financial synergies" and allow the expanded organisation to "generate substantially more cash in a shorter timeframe" than if they had remained independent.

These comments are indicative of the tone of the call, in which Reilly championed preparations, saying integration teams were "ahead of schedule". The firms can't start operating as one until the merger is closed, but the boss said they had "made tremendous progress in planning" and had made many "critical integration decisions".

For instance, the engineering and product teams have already agreed on a joint product roadmap, and have independently finished engineering work to allow Cloudera's Data Science Workbench and Hortonworks' DataFlow to work on each others platforms and be cross-sold.

The merger – which Reilly said had been in discussions "for several years" – comes as the companies are facing new competitors in the data management and analytics markets.

Both have been focusing on large enterprise customers in recent years, and looking to lose the moniker of being simply Hadoop vendors, as they distanced themselves from the complex technology.

Reilly sought to emphasise that due to their common starting ground, the pair have complementary tech and a lot of identical code, "so there's very few products where we have to rationalize and pick one or the other". So far, so lovey-dovey.

But he added that in more recent years, the duo have invested in different areas that would offer cross-sell opportunities. "Hortonworks has invested in real time streaming and data ingest to support IoT use cases at the edge," he said. "Cloudera has invested heavily in machine learning and AI to empower data scientists with the state of art tooling to automate machine learning workflows."

Similarly, he pointed to the fact that fewer than 5 per cent of the firms' customers overlap, which would mean "very little disruption to customers and the account execs that they know".

Meanwhile, Reilly claimed he was yet to come across a partner or customer that didn't like the plan (perhaps he hasn't taken a look at the court cases filed against Hortonworks over the terms).

"When you talk to the GSIs, they're very ecstatic," he said, because the creation of one platform satisfies more customers and costs them less in training their teams.

ISVs will also have an easier time, Reilly said, as they will only have to integrate to one platform when the first combined platform is released next year.

Oh and lest we forget the cloud providers. "Amazon, Microsoft and to a degree Google” have "expressed excitement" as they won’t have to spread their time between two firms.

But despite his enthusiasm, the deal still has to be voted on by shareholders from both the companies – a majority of each of the two firms' voters will have to approve the plans at separate meetings on 28 December.

It is Reilly's job as CEO to make the merger sound as though it'll go off without a hitch, and maybe it will. ®