The Street Reacts To Cloudera's Earnings, Concerning Guidance

Enterprise data cloud company Cloudera Inc CLDR on Wednesday reported its first earnings report since closing its acquisition of Hortonworks and disappointed investors with concerning guidance. Here is a summary of how some of the Street's top analysts reacted to the print.

The Analysts

Raymond James' Michael Turits maintains an Outperform rating on Cloudera with an unchanged $16 price target.

Bank of America's Kash Rangan maintains a Neutral rating with a price target lowered from $18 to $16.

Wedbush's Daniel Ives maintains at Neutral, price target lowered from $17 to $16.

Cloudera's stock plummeted 16 percent Thursday to $12.28 per share at time of publication.

Raymond James: Solid Quarter

Cloudera reported "solid" fourth-quarter earnings, which Turtis said came in better than expected on a standalone basis when excluding a whole month of Hortonworks' contribution. Specifically, revenue rose 23 percent year over year while adjusted annual recurring revenue rose 24 percent from last year.

There were some negative readouts in the quarter, including a $66-million one-time merger cash payment and a $125-million negative impact from taking Hortonworks' 19-month billing duration.

Nevertheless, Turtis said the bullish case for Cloudera remains unchanged based on expectations of a high-teens growth rate for the combined entity.

BofA: Lots Of Moving Pieces

Cloudera guided first-quarter and full-year revenue to be below what some Street analysts were expecting and introduce "many moving pieces" to the merger, Rangan said in a research report. Management now expects to see $45 million in revenue dis-synergies from near-term bookings, $82 million of revenue commission expense write-downs, among others.

Management's guidance also implies its objectives of 15 percent CFO margins are pushed back from fiscal 2021 and fiscal 2022. Since underlying business trends are difficult to model, investors may need to wait and see if the "story is intact due to merger disruption."

Wedbush: Not An Ideal Start

Cloudera's report was "good" but guidance marks an ideal start to the new combined entity, Ives said in a research report. Investors are now left digesting a "mathematical gymnastics exercise and signs of a slower growth trajectory.

Cloudera's stock has seen pressure since early October when the Hortonworks acquisition was announced amid multiple concerns like the integration of Everest, the analyst wrote, and Wednesday's print isn't giving investors the confidence needed to move forward. For the time being, the rationale behind the acquisition "makes clear sense on paper" but the unification of two competitors into one creates integration challenges that are difficult.

Ives said the next 12 to 18 months will bring "clear pitfalls and challenges" that need to be navigated at the risk of derailing the near-term strategy and recent go-to-market success.