Hortonworks (HDP) fly in the ointment

I don’t have time for a full review but I wanted to put this out there since there’s interest today.

Hortonworks Shares Outstandinng

Dec15: 45.4m
Mar16: 52.1m
Jun16: 57.3m
Sep16: 59.0m
Dec16: 60.6m
Mar17: 61.9m
Jun17: 64.4m
Sep17: 67.9m
Dec17: 71.1m
Mar18: 76.1m
Jun18: 79.5m

Unprecedented dilution. Just be aware.



Another way to look at dilution is SBC as a % of Rev. HDP has given out SBC at a rate of over 40% of quarterly revenue for 10 straight quarters (pre-Q2, havent run number yet for Q2 but assume similar story).

I track this metric across most of the stocks currently discussed on this board and all other companies SBC % of Rev range from high single digits to mid teens, so HDP is 2X+ the next highest company and ~3X the average.

I don’t have any fancy analysis on exactly what this means for someone’s valuation / decision on HDP, but it definitely should be considered. Causes big gap between gaap and non-gaap eps.



Thanks Bear - I didn’t notice this, since I’m invested in HDP mostly to be aware of where big enterprise data is going, and don’t focus tremendously on the financials.

I’ll take a look when I get a chance, but I wonder what the proceeds of this stock dilution are going to - compensation for executives, or R&D money for the company? In the middle of a fight for technology dominance, it would make lots of sense for them to get cash if available from the market - that may not be so bad for stockholders if the money is well spent.

On the other hand, if they are overusing stock compensation, that would not be so good.

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