We are investigating Cloudera, Inc. (CLDR) (“Cloudera” or the “Company”) for potential violations of the federal securities laws.
On April 3, 2018, post-market, Cloudera issued a press release announcing its fourth quarter and fiscal year 2018 results. The Company announced a negative operating cash flow of $22 million during the quarter and provided a disappointing outlook for fiscal year 2018, with total revenues of only $435 million to $445 million, representing a sharp deceleration in growth. On an earnings call discussing the foregoing results, Cloudera revealed that a sharp slowdown in the Company’s new expansion bookings had occurred in 2018. On this news, Cloudera’s stock price fell $8.95 per share, or 40.24%, to close at $13.29 per share on April 4, 2018. On October 3, 2018, Cloudera announced that it had entered into a definitive merger agreement with its primary competitor in the Hadoop data analytics space, Hortonworks, Inc. (the “Hortonworks Merger”). In the stock-for-stock deal, valued at $5.2 billion, Hortonworks shareholders would own 40% of the combined Company and receive 1.305 common shares of Cloudera for each share of Hortonworks stock they owned. On March 13, 2019, post-market, Cloudera issued a press release announcing its fourth quarter and fiscal year 2019 results, providing weak guidance for the first fiscal quarter after the completion of the Hortonworks Merger. On an earnings call to discuss the foregoing results, Cloudera’s Chief Financial Officer, Jim Frankola, revealed that the merged entity would need to take a $62 million “haircut” due to purchase price accounting adjustments and also a $28 million write-down of deferred commission expenses. Frankola further stated that differences in billing periods between the companies would reduce 2020 cash flows by $125 million as the legacy companies reconciled their billing cycles. On this news, Cloudera’s stock price fell $2.90 per share, or 19.85%, to close at $11.71 per share on March 14, 2019.
On June 5, 2019, post-market, Cloudera issued a press release announcing its financial and operating results for the first quarter of fiscal year 2020. Cloudera stated that its first quarter revenues were $187.5 million, but that several customers had elected to “postpone renewal and expansion” of their subscription agreements. Cloudera also announced that its losses from operations had increased to $103.8 million, roughly double the year-over-year period. In addition, Cloudera revealed that its highest-spending customers were essentially flat for the quarter, that middle-spend customers had declined sequentially, and that it was suffering an elevated dollar churn rate of 15%. Cloudera also slashed its full-year outlook, reducing total revenue guidance by $90 million and stating it expected recurring revenue growth of only 0% to 10% for the year (compared to 18% to 21% in the prior issued guidance) and that it now expected to suffer a negative cash flow from operations of between $75 million and $95 million for the year, more than double the amount stated in the previously issued guidance. The same day, Cloudera announced that its Chief Executive Officer, Thomas J. Reilly, would be abruptly retiring from the Company. On this news, Cloudera’s stock price fell $3.59 per share, or 40.8%, to close at $5.21 per share.