Hortonworks Surges in Trading After $100 Million IPO

Hortonworks Inc., a startup that sells services and support for the Hadoop free data-analysis technology, jumped in its U.S. trading debut after raising $100 million in an initial public offering.

The shares rose 65 percent to $26.38 at the close in New York after they were sold yesterday for $16 apiece, above the marketed range. That values the Palo Alto, California-based company at $1.1 billion, close to its private valuation of greater than $1 billion.

“We’re more focused on the value we create for the customer,” Hortonworks Chief Executive Officer Rob Bearden said in an interview, when asked about the valuation. Customers will be more confident of Hortonworks’ business model now that it’s a public company, he said.

Hortonworks leads a pack of companies seeking to commercialize Hadoop, free software for storing, analyzing and managing large amounts of data, which was developed at Yahoo! Inc. in the mid-2000s to help the Web portal compete with Google Inc.

Hortonworks was spun out of Yahoo in 2011 by venture capital firm Benchmark and Yahoo. Its founding team included many of the people who developed Hadoop, except original creator Doug Cutting, who works at Cloudera Inc.

The IPO price valued Hortonworks at about 60 times sales for its 2013 fiscal year, which ended in April 2013, compared with 2.06 for International Business Machines Corp. and 4.97 for Oracle Corp., according to data compiled by Bloomberg.

Valuation Dips

Hortonworks named IBM and Oracle, as well as private firms Cloudera, MapR Technologies Inc. and EMC Corp. unit Pivotal Software, as major competitors in its prospectus. Red Hat Inc., another publicly traded open-source technology company, trades at a sales multiple of 7.3.

In March, the company was valued at more than $1 billion in a $150 million funding round from investors including BlackRock Inc. and Passport Capital LLC.

Hortonworks in November became the first Hadoop company to file for an IPO, ahead of MapR and Cloudera. Sales in the year that ended in April 2013 rose to $11 million from $1.6 million a year earlier, while Hortonworks’ net loss widened to $36.6 million from $11.5 million, according to filings.

The market for Hadoop products, software and services is projected to reach $50.2 billion in 2020, up from $1.5 billion in 2012, according to a report in March from Allied Market Research.

New Relic

Yahoo will own 16.8 percent of the company’s stock following the IPO, the prospectus shows, followed by 15.8 percent for entities affiliated with Benchmark; 8 percent for Index Ventures and affiliates; 7 percent for Teradata Corp.; and 5 percent for Hewlett-Packard Co.

Hewlett-Packard Chief Technology Officer Martin Fink sits on Hortonworks’ board. The computer maker invested $50 million in Hortonworks in July after Intel Corp. poured $740 million into Cloudera, giving the chipmaker an 18 percent stake in that firm.

Hortonworks shares are listed on the Nasdaq Stock Market under the symbol HDP. Goldman Sachs Group Inc., Credit Suisse Group AG and RBC Capital Markets LLC managed the IPO.

New Relic, a startup that makes tools to analyze the performance of Web and mobile software, also began trading on the public markets today.

The shares of New Relic rose 48 percent to $33.99, giving the company a market value of about $1.6 billion.

The San Francisco-based company raised $115 million in its initial public offering, pricing the shares at $23, above the previous marketed range of $21 to $22 a share.

“We’re in the golden age of software,” New Relic’s CEO and founder Lew Cirne said in an interview. “I am feeling that nervous twitch to go back and write code, I’m going to continue to do that from time-to-time as a public CEO.”

Before it's here, it's on the Bloomberg Terminal.