INTC Intel Corporation

By Rolfe Winkler 

Big-data software company Cloudera Inc. filed paperwork to go public on Friday, revealing a business that is growing quickly but possibly not fast enough to deliver gains to its big investor Intel Corp.

Cloudera, based in Palo Alto, Calif., sells software and services that help customers analyze oceans of digital information flowing from networked devices. Its technology is built upon an open-source project called Hadoop that was developed to store and run computing processes across many different computers.

For the fiscal year ended Jan. 31, Cloudera's revenue rose 57% from a year earlier to about $261 million.

Cloudera will inevitably be compared to rival Hortonworks Inc., another Hadoop software specialist with a different business model, that went public in December 2014. Based on where Hortonworks trades on the public market, Cloudera's revenue and growth rate are unlikely to justify matching the $4.1 billion valuation that Intel stamped on the company in 2014 when the chip giant invested $740 million. Half of that money went to Cloudera and the other half to buy shares from early investors and company executives.

Hortonworks's share price has fallen over 60% since the first day of trading, pulling its market value down to just above $600 million. Compared with Cloudera, Hortonworks has about two-thirds the revenue, as well as a similar growth rate and gross profit margin. It now trades at about three times last year's revenue of $184 million, excluding cash on its balance sheet.

If investors use a similar valuation multiple on Cloudera, it could have a difficult time securing a value above $1 billion, depending on how much cash it raises in the IPO. Like Hortonworks, Cloudera has tun up a big loss -- $187 million in the latest year -- spending about three-quarters of its revenue on sales and marketing expenses.

A Cloudera spokeswoman declined to comment about the IPO filing.

Cloudera is among a group of nearly 200 private-tech companies worldwide that raised money at valuations over $1 billion in the past few years. A flood of venture capital pushed startup valuations to new heights, and now some companies are struggling to meet the hype. Health-benefits broker Zenefits and audio equipment maker Jawbone had their valuations cut in half last year, for example.

At least three U.S. tech companies -- Snap Inc., Mulesoft Inc. and Alteryx Inc. -- have gone public in 2017 following the slowest year for such offerings since 2009. Those three companies are all trading above their private-market valuations, a positive sign for the steady drumbeat of tech startups filing for offerings. Another software startup, Okta Inc., expects to price its own offering above its last private price.

Cloudera has already valued itself much lower than its last private-market share price. Intel, which owns 22%, paid $30.92 a share in 2014. This month, Cloudera granted stock awards to employees at $17.85 a share, according to the filing, a 42% decline in value. As of December, Cloudera's mutual-fund investors had marked down their estimated values of their shares to between $17 and $26, according to The Wall Street Journal's Startup Stock Tracker.

Early investors in the company will likely do well on their investments. Venture firm Accel Partners, which owns 16.3% of Cloudera, first bought shares at 39 cents a share in 2008, and along with another early investor, Greylock Partners, sold a part of its position to Intel at Cloudera's peak price. Greylock still owns 12.5% of Cloudera.

In the year ended Jan. 31, Cloudera burned through $124 million of cash, versus $95 million in the earlier period. The company had about $256 million in cash on its balance sheet as of Jan. 31, enough to fund operations for more than a year, even before any funds are raised in the IPO. It raised a total of $670 million in funding.

Cloudera filed to sell up to $200 million in stock, although that figure is typically a placeholder to calculate the registration fee and often changes. The company plans to list on the New York Stock Exchange under the symbol CLDR. Underwriters for the offering include Morgan Stanley, J.P. Morgan and Allen & Co.

Cloudera was founded in 2008 by a group of engineers from Alphabet Inc.'s Google, Facebook Inc., Oracle Corp. and Yahoo Inc., where the technology behind Hadoop originated. Customers include MasterCard Inc., which uses the technology to identify fraudulent merchants, and Marks & Spencer Group PLC, which uses its analytics system to gain insights from consumer behavior.

--Jay Greene contributed to this article.

Write to Rolfe Winkler at rolfe.winkler@wsj.com

(END) Dow Jones Newswires

March 31, 2017 16:14 ET (20:14 GMT)

Copyright (c) 2017 Dow Jones & Company, Inc.