With its long-awaited public offering, big data startup Cloudera showed its growth fast. But the company’s growth rate might not be able to justify the $4.1 billion value stamped on Cloudera when Intel Corp (INTC) invested in it several years ago, according to the Wall Street Journal. (For more, see: Big Data.)

Whispers of the IPO started in 2014 when Intel funneled $740 million into the Palo Alto, California-based company, which produces services and software to help clients analyze digital information from networked devices. Cloudera was started in 2008 by engineers from Facebook, Google, Yahoo! and Oracle. It’s one of about 200 private tech companies from around the world that in the last few years have raised funds of over $1 billion. Startup valuations skyrocketed, knocked higher by venture capital. (For more, see: A Primer On Investing In The Tech Industry.)

Some companies are having trouble living up to those lofty expectations, according to the Wall Street Journal. Cloudera will surely be compared to competitor Hortonworks Inc. (HDP), which also specializes in Hadoop, an open-source project that processes and stores large data sets across many different computers. (For more, see: How Big Data Has Changed Marketing.)

Heated Competition

Hortonworks went public in December 2014, and since the first day of trading, its share price has fallen by more than 60% and its market value tumbled to just over $600 million. Cloudera, like Hortonworks, posted a big loss last year—according to the Wall Street Journal—$187 million.

Cloudera has plenty of competition as well, from several big tech companies like IBM and Oracle, and cloud providers such as Microsoft and Amazon that are growing their business intelligence offerings. That competition could drag on earnings.

Cloudera also already valued itself a good deal lower than its last private-market share price, according to the Wall Street Journal. Intel paid $30.92 a share in 2014, and this month, Cloudera granted stock awards to employees at $17.85 a share.

Cloudera’s mutual fund investors marked down the estimated values of their shares to between $17 and $26 as of December, according to The Wall Street Journal’s Startup Stock Tracker. Early investors are likely to do well, such as Accel Partners, which owns 16.3% of Cloudera, and first bought shares at 39 cents a share in 2008, reports the Journal.

 

 

A Broader Reach

So far Cloudera has raised $1.04 billion in eight rounds from 18 investors. Its major investors include Accel Partners, Greylock Partners and Meritech Capital Partners.

On the bright side, the company has done well the last few years. Its clients include MasterCard Inc. and Marks & Spencer Group PLC. Cloudera increased its revenue from $109 million in the 12 months ending January 2015 to $261 million for the 12 months ending January 2017. And a good deal of the growth came from companies purchasing Cloudera software subscriptions, a sign the company is attracting customers. Some say the $187 million loss last year is not unusual for a tech company, and note it’s an improvement of losses over $200 million in 2015.

Cloudera also does have Intel going for it. The backing of a major brand provides it with a solid foundation. Cloudera is broadening its reach as well, breaking away from marketing itself solely as a Hadoop distribution platform. In its S-1 filing, Cloudera presents itself as “the leading modern platform for data management, machine learning and advanced analytics,” a move that could help set the company apart from the pack. But will it be enough to justify its lofty value? Time will tell.

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