After years of sluggish profits and revenues, big data vendor Cloudera said today that it is going private in a $5.3 billion all-cash deal that will see the vendor acquired by private equity firms Clayton, Dubilier & Rice and KKR.
Cloudera, based in Santa Clara, Calif., went public in 2017 on the New York Stock Exchange at the height of the Hadoop big data boom that it helped lead. In 2018, Cloudera merged with Hadoop rival Hortonworks in a deal with a combined value for the companies of approximately $5.2 billion.
In the years since, Cloudera's value has barely expanded, as Hadoop has lost favor amid the rise of cloud infrastructure for data management.
Also today, Cloudera said it is acquiring privately held SaaS vendors Datacoral and Cazena. Financial terms of the acquisitions were not disclosed.
Datacoral, based in San Francisco, is a data pipeline engineering specialist that has raised $14 million in funding.
Cazena, based in Waltham, Mass., has developed an instant data lake service and raised $38 million in funding.
Along with the acquisition news, Cloudera released its first quarter fiscal 2022 financial results reporting revenue of $224.3 million for a 7% year-over-year gain.
Despite growing its revenues, Cloudera still lost money, reporting a loss from operations in the first quarter of $33.8 million. That is an improvement over the $55.8 million the company lost in the first quarter of its fiscal 2021.
Going private is good for Cloudera
Patrick Moorhead, president and principal analyst at Moor Insights & Strategy, said he sees Cloudera's going private as a good thing for the vendor, as it has to properly capitalize on the opportunity to move in a SaaS direction.
Patrick MoorheadPresident and principal analyst, Moor Insights & Strategy
"This is good news for Cloudera because it now has the capital and flexibility to dive headfirst into SaaS," Moorhead commented. "I am expecting an incredible amount of investment to build out this new capability that I don't think the public markets would have appreciated."
Moorhead noted that Cloudera helped pioneer the entire concept of a data lifecycle, implemented initially on premises and then extended to private and public clouds. In his view, adding enterprise SaaS opens Cloudera to more non-IT audiences such as business leaders and department data pros. Cloudera started out as an on-premises platform, and while it now has cloud SaaS capabilities, that doesn't mean users have to move.
"For current customers, these new capabilities will offer just a different way to consume the product," Moorhead said. "So, for the most part, if customers don't want to change, they won't have to."
Cloudera going private is a quest for value
Dave Menninger, an analyst at Ventana Research, said there are different reasons why a software vendor might choose to go private. The company might need to go through a transition that it expects will not be popular with the public markets, such as Cloudera's apparent move to a cloud-first business. Another reason is because private equity investors think the company is undervalued.
Menninger also noted that Cloudera, with its lackluster revenue and profits since it went public, is undervalued compared to another similarly sized data vendor, Databricks.
Databricks, which has been building out a cloud data lakehouse platform, is gearing up for an initial public offering this year. In February, Databricks raised $1 billion in a Series G funding round, giving the company a $28 billion valuation.
"In terms of a transition that Cloudera might want to make without the scrutiny of public markets, I'm sure there's still more work to do on its transition to a purely cloud- and subscription-based business," Menninger commented.
As for Cloudera's acquisitions of Datacoral and Cazena, both make sense for different reasons, Menninger said.
"Cazena helps them become more cloud- and self-service oriented," he said. "Datacoral continues the expansion of their end-to-end data platform strategy making it easier to acquire and transform data."
In a blog post about the deal, Cloudera president Mick Hollison said that by going private, the vendor will be able to expand its goal of making data and analytics easy and accessible for any type of business.
As part of that approach, Hollison explained that the acquisitions of Datacoral and Cazena will play a strong role.
The acquisitions will accelerate Cloudera’s public cloud roadmap, Hollison said in the statement.