Cloudera bags AI biz, eyes up IBM customers... and continues to report operating losses

Big data company Cloudera has acquired an artificial intelligence research firm in a bid to expand its machine learning offering and get customers to part with more of their cash.

The smaller firm, Fast Forward Labs, focuses on machine learning and applied AI research, with its CEO Hilary Mason describing algorithms as her firm’s speciality.

By acquiring the New York-based biz, and bringing on the smaller firm’s staff, the Hadoop-flinger aims to benefit immediately from the extra expertise in an area of increasing interest to enterprise customers.

Chairman and chief strategy officer Mike Olson described the move as a “significant secular strategic bet” on the technologies.

“We see those use cases driving serious adoption and expansion among our clients, and we think that accelerates over time among large enterprises all across the region,” he added.

The acquisition was announced alongside Cloudera’s results for the quarter ended 31 July, which show the firm boosted revenues by 39 per cent year-on-year, to $89.8m. The bulk of this was for subscriptions, which increased 46 per cent to $73.9m.

Cloudera, which went public in April this year, reported an overall operating loss of $65.7m for Q2 this year, compared with $38.5m for the 2016 quarter.

But CFO Jim Franklola told investors on the company’s earnings call that this was a “significant improvement” on last year, as it represented negative 17 per cent of revenue, rather than negative 45 per cent.

The firm, established in 2008 by engineers from Facebook, Google and Yahoo, is competing in a crowded market that aims to make money from open-source Hadoop-based software.

However, IBM has recently announced closer ties with Hortonworks, which will see Big Blue adopt Hortonworks Data Platform for its Hadoop distribution - ditching its BigInsights distro.

When asked about the move, Cloudera CEO Tom Reilly claimed that the the further consolidation of the market spelled good news for his firm.

“In particular, this consolidation is forcing IBM’s prior customers to go through a migration, has opened up some opportunities for us to re-compete,” Reilly said. “It will benefit our competitor, Hortonworks in some of those migrations, but we think there’s a number of re-compete that as an opportunity for us.”

Reilly also took the opportunity to stick the knife into IBM’s reportedly struggling Watson.

He said Cloudera would be competing against the analytic workloads and machine learning in the Watson family, adding: “And I don’t know if you follow the news, but they clearly haven’t been doing very well as of late.” ®