Cloudera crashes in its worst day ever after the company slashes sales outlook, announces CEO departure

Tom Reilly, the outgoing chief executive officer of Cloudera.

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Tom Reilly, the outgoing chief executive officer of Cloudera.
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Drew Angerer/Getty Images

  • Cloudera shares plunged as much as 42% Thursday, putting it on pace for a record intraday drop after the software company reported quarterly earnings the prior evening.
  • The firm also announced that its CEO and cofounder will depart the firm.
  • The report marks Cloudera’s second straight quarter of disappointing revenue guidance.
  • A slew of Wall Street analysts cut their targets, estimates, and investment ratings.
  • Watch Cloudera trade live.

Shares of Cloudera crashed by as much as 42% on Thursday for its largest intraday drop on record. The move came as the software company’s dismal first-quarter earnings report prompted Wall Street to issue scathing mea culpas.

Investors dumped the stock after Cloudera’s revenue fell short of analyst expectations and its sales outlook fell short. The company also announced its chief executive, Tom Reilly, and chief strategy officer and co-founder, Mike Olson, would depart.

“We were wrong,” Rishi Jaluria, a senior research analyst at the firm D.A. Davidson, said in a Thursday note to investors describing a quarter he called “disastrous” with “few silver linings” for the Palo Alto, California company.

“We have stubbornly stuck with Cloudera, as we felt concerns around competition were too severe,” Jaluria added. “In retrospect, we were very wrong, and perhaps relied too heavily on taking management at its word, especially since Cloudera has had sales execution issues in the past.”

More granularly, Cloudera’s tepid outlook was based upon weak bookings from customers who are waiting until the release of the Cloudera Data Platform, a higher churn than expected, and heightened competition from the likes of Amazon Web Services and Azure.

Still, Jaluria held onto his “buy” rating because he’s optimistic in the capabilities of Cloudera’s data platform. He added: “If all else fails, there’s private equity or IBM.”

Here’s what Cloudera reported compared with what Wall Street analysts polled by Bloomberg expected:

  • Revenue: $187.5 million ($188.4 million expected)
  • Adjusted loss per share (EPS): -$0.13 (-$0.23 expected)

Several Wall Street firms, including Stifel, Needham, and Raymond James, lowered their investment ratings on the stock. Others, like Barclays and Wells Fargo, cut their price targets and reduced their earnings estimates.

“Cloudera expects CDP private cloud product to be its biggest revenue growth driver, but the product is slated to be released towards the end of the year, which could lead to more churn,” the Barclays analyst Raimo Lenschow wrote to investors.

Even still, the stock has not garnered a single “sell” rating across Wall Street, according to Bloomberg data. Meanwhile, five Cloudera analysts have “buy” ratings, 15 have “hold” ratings.

This report wasn’t the first to pummel the company’s shares.

Last quarter the stock tanked nearly 20% after Cloudera’s outlook disappointed analysts’ expectations – even as sales topped estimates. It was the first report after the company’s Hortonworks merger.

Shares have fallen 69% in one year, and were trading just above $5 a share in Thursday trading.

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Cloudera shares.

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Cloudera shares.
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Markets Insider