Here’s Why Cloudera Inc. Is Surging Today

What happened

Shares of Cloudera (NYSE: CLDR), a software-as-a-service business that focuses on data engineering, data warehousing, and machine learning, rose 21% as of 11:26 a.m. EDT Thursday. The release of better-than-expected fiscal 2019 second-quarter results was the reason for the jump.

So what

Here’s a look at the key numbers from Cloudera’s second-quarter report that traders are applauding:

  • Revenue jumped 23% to $110.3 million. This result was about $3 million higher than what Wall Street had expected.
  • Subscription revenue jumped 26% to $93.1 million and now comprises 84% of total revenue.
  • Dollar-based net expansion rate was 128% during the period.
  • Non-GAAP net loss was $0.08 per share. That was less than half the loss that was reported in the year-ago period and was much lower than the $0.15 loss per share that market watchers had predicted.

Image source: Getty Images.

Turning to guidance, here’s what management expects to happen in the upcoming quarter:

  • Revenue will land between $113 million and $114 million. This represents growth of about 20% year over year and compares favorably to the $111.2 million in total revenue that analysts were expecting.
  • Non-GAAP EPS is expected to land between negative $0.12 to negative $0.10. The midpoint of this figure is also $0.04 better than expected.

Full-year fiscal 2019 revenue guidance range was also boosted by $5 million, while non-GAAP EPS loss range was reduced by $0.09 per share.

Given the flurry of good financial news, it is easy to understand why shareholders are having a great day.

Now what

Today’s bullish move should come as some reprieve to Cloudera’s bulls, who had to stomach a 40% single-day drop during its last earnings report. While shareholders still haven’t been made whole, today’s move is certainly helping to close the gap.

On the flip side, it’s worth pointing out that Cloudera’s total revenue growth rate was lower than its dollar-based net expansion rate. That indicates that the company could be losing business to competitors such as Hortonworks (NASDAQ: HDP), which isn’t a great sign. For that reason, I think that investors that are interested in software-as-a-service business are probably better off looking elsewhere for opportunities.

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Brian Feroldi has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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