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Summary

As venture firms double down on their investments, MapR has just scored a $50m fifth round of funding, from largely the same backers as previous rounds. The company has stated that the financing, which comes on top of year-over-year results showing strong customer retention and net growth, should clear the path for a 2017 IPO.

VCs doubling down, not diluting investment

As a platform market, Hadoop has consolidated down to three players: Cloudera, which has drawn over $1bn in backing, trailed by Hortonworks and MapR, which have drawn fractions of that amount. It has consolidated as Ovum estimates that the market is still roughly doubling in revenue growth. While the Hadoop market is clearly a rising tide, those numbers obscure the fact that it is built on a land-and-expand model that typically features high investment up front, with the goal of growing the base at renewal time. This in fact reflects what Ovum is seeing on the ground: enterprises are beginning to embrace data lakes after early years of proof of concept, followed by departmental implementation.

But the costs of land and expand are significant, as Hortonworks has shown in its latest earnings: its Q2 results showed GAAP revenue up 46% YoY, although losses were up as well, to nearly 50%, missing expected targets. Hortonworks president Herb Cunitz stepped down in the wake of the announcement. By contrast, MapR forecasts that if current performance holds, it will be on target to become "cash neutral" by mid to late CY17. We believe that Cloudera is similarly confident.

Being private companies that don't disclose financials, breakeven predictions must be taken with a grain of salt. Nonetheless, MapR's disclosure of a fifth funding round of $50m (bringing the total to $194m to date) was clearly a vote of confidence from backers given its latest quarter numbers: renewal of 99% of clients, which on average are paying 43% more to expand their subscriptions. That's clearly a vindication of the land-and-expand strategy. With the exception of Australia-based Future Fund, the bulk of funding came from existing backers. By contrast, Hortonworks' share prices have yet to recover from last winter's $100m secondary IPO.

While Hortonworks is still ironing out its cost structure, the MapR funding is the latest proof positive that the Hadoop market is on the cusp of sustainability.

Appendix

Further reading

SWOT Assessment: MapR Distribution including Hadoop, IT0014-002974 (December 2014)

"MapR converges to a different drummer," IT0014-003100 (February 2016)

Author

Tony Baer, Principal Analyst, Information Management

tony.baer@ovum.com

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